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    IIP April 2012-06-12-2012

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    - Industrial growth in India remained subdued in April 2012 at 0.1%, much lower than the 5.3% growth seen in April 2011, as mining and manufacturing growth slowed. - Mining saw negative growth of 3.1% compared to 1.6% growth the prior year, while manufacturing growth stagnated at 0.1% compared to 5.7% previously. - Electricity growth also moderated to 4.6% from 6.5% the year before.

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    IIP April 2012-06-12-2012

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    - Industrial growth in India remained subdued in April 2012 at 0.1%, much lower than the 5.3% growth seen in April 2011, as mining and manufacturing growth slowed. - Mining saw negative growth of 3.1% compared to 1.6% growth the prior year, while manufacturing growth stagnated at 0.1% compared to 5.7% previously. - Electricity growth also moderated to 4.6% from 6.5% the year before.

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    - Industrial growth in India remained subdued in April 2012 at 0.1%, much lower than the 5.3% growth seen in April 2011, as mining and manufacturing growth slowed. - Mining saw negative growth of 3.1% compared to 1.6% growth the prior year, while manufacturing growth stagnated at 0.1% compared to 5.7% previously. - Electricity growth also moderated to 4.6% from 6.5% the year before.

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    13 views3 pages

    IIP April 2012-06-12-2012

    Uploaded by

    shruti_dasgupta20
    - Industrial growth in India remained subdued in April 2012 at 0.1%, much lower than the 5.3% growth seen in April 2011, as mining and manufacturing growth slowed. - Mining saw negative growth of 3.1% compared to 1.6% growth the prior year, while manufacturing growth stagnated at 0.1% compared to 5.7% previously. - Electricity growth also moderated to 4.6% from 6.5% the year before.

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    of 3

    Index of Industrial Production for April 2012

    Economics
    The Central Statistics Office (CSO) has released the data for industrial production for the first month of the new fiscal FY13. Industrial activity continues to remain subdued, with growth in industrial production at just 0.1% in April 2012, when compared with 5.3% in April 2011 (and cumulative growth of 2.8% in the whole of FY12).

    June 12, 2012

    Highlights Mining continues to register negative growth of -3.1% in April 2012, as against 1.6% during the same month last year Manufacturing growth has stagnated at near-zero level in April 2012, when compared with 5.7% in April 2011 Growth in electricity has moderated to 4.6% in April 2012, as against 6.5% in April 2011 Table 1: Growth in IIP (%) Apr-2011 Apr-2012 Mining 1.6 -3.1 Manufacturing 5.7 0.1 Electricity 6.5 4.6 Overall IIP 5.3 0.1
    Source: MOSPI

    Performance: Industry-based classification 12 out of 22 industries in the manufacturing sector have registered positive growth (y-o-y) o Segments such as Publishing, printing and reproduction of recorded media, Medical precision and optical instruments, etc registered buoyant growth. These segments however, have low weight in overall IIP o Industries with significant weight in IIP that have registered negative growth include, chemical and chemical products (-2.8%), wearing apparel, etc. (-9.1%), electrical machinery, etc. (-49.2%) coke, refined products, etc. (-2.7%) As per the use-based classification capital goods registered a sharp dip, from growth of 6.6% in April 2011 to negative growth of 16.3% in April 2012 o Consumer goods production on the other hand, has registered higher growth in April 2012 of 5.2%, when compared with 3.2% in April 2011. 1

    Economics

    Moderation in inflation has ostensibly, created space for the release of latent consumer demand that has prompted increased production activity in this segment (durable and non-durables alike) Table 2: IIP growth (%) Use based classification Apr-2011 Apr-2012 Basic goods 7.1 2.3 Capital goods 6.6 -16.3 Intermediate goods 3.9 -1.4 Consumer goods 3.2 5.2
    Of which

    Consumer durables Consumer non-durables


    Source: MOSPI

    1.6 4.6

    5.0 5.4

    Early signs Core sector production The continuation of moderate industrial production activity was rather expected with the release of subdued production growth numbers, last week, of the eight core sectors for the month of April 2012. The cumulative growth of these eight core sectors, having a weight of 37.9% in overall IIP, touched 2.2% in April 2012, when compared with 4.2% in April 2011. Table 3: Core industries production (%) Apr-2011 Apr-2012 Natural gas -9.3 -11.3 Crude oil 11.0 -1.3 Petro refinery 6.6 -2.8 Fertilizer -1.3 -9.3 Coal 2.7 3.8 Steel 2.9 5.8 Cement 0.1 8.6 Electricity 6.4 4.6 Core industries 4.2 2.2
    Source: MOSPI

    The construction segment registered a pick-up in activity, prior to onset of slack season during monsoons. Both cement and steel production has consequently grown considerably, turning out to be the boost factors in the core segment. Growth in Automobile Sector Growth in automobiles production and sales is viewed as a signal of greater productive activity being driven by consumer demand. The month of April 2012, registered a y-o-y growth of around 6% in commercial vehicles

    IIP, April 2012

    Economics

    (capital good) and passenger cars (consumer good). Sales of two wheelers registered a growth of nearly 11% during the same month, indicating increased demand in this segment of manufacturing. Going forward, estimates for the month of May suggest that car sales are up by 3% and sale of bikes by 7%, suggesting that this segment may be expected to lend some support to manufacturing growth in the coming months. Outlook Given that IIP in the first month of the year has registered only near-zero growth, sentiments are downbeat and re-emphasise the need for a boost in capital investments, in the manufacturing sector. Furthermore, exports during the month of April 2012 have grown by just above 3% (imports growing by 3.8% during the month), which is an additional pressure. There is a strong case for the RBI to step into a monetary easing regime in order to boost investments, industrial output, domestic growth and exports. We expect the RBI to cut interest rates by 50 bps in the upcoming monetary policy review to be held on June 18, 2012, primarily with an intention to improve sentiments. The RBI would however, continue to pay due attention to inflation, especially because it has remained high (the stance of monetary tightening has yielded little relief in terms of inflation). This would also be important in order not to squeeze out consumer demand, which would be critical for a pick-up in manufacturing activity.

    Contact: Madan Sabnavis Chief Economist [email protected] 91-022-67543489

    Krithika Subramanian Associate Economist [email protected] 91-022-67543521

    Disclaimer This report is prepared by the Economics Division of Credit Analysis & Research Limited [CARE]. CARE has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to the user of this report. Credit Analysis and Research Limited proposes, subject to receipt of requisite approvals, market conditions and other considerations, to make an initial public offer of its equity shares and has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The DRHP is available on the website of SEBI at www.sebi.gov.in as well as on the websites of the Book Running Lead Managers at www.investmentbank.kotak.com, www.dspml.com, www.edelcap.com, www.icicisecurities.com, www.idbicapital.com, and www.sbicaps.com. Investors should note that investment in equity shares involves a high degree of risk and for details relating to the same, see the section titled Risk Factors of the DRHP. This press release is not for publication or distribution to persons in the United States, and is not an offer for sale within the United States of any equity shares or any other security of Credit Analysis & Research Ltd. Securities of Credit Analysis & Research Ltd., including its equity shares, may not be offered or sold in the United States absent registration under U.S. securities laws or unless exempt from registration under such laws.

    IIP, April 2012

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