The Hindu Business Line : CII survey finds robust growth in key sectors except manufacturing

THOUGH Andhra Pradesh recorded robust growth in key sectors such as information technology and agro-based industries during 2004-05, its manufacturing sector was hit by increasing raw material costs, dwindling profit margins and growing competition from cheap Chinese products.

According to a business outlook survey conducted by the Confederation of Indian Industry's (CII) Southern Region recently, the manufacturing sector's capacity has gone up by 20 per cent to cope with higher demand in the financial year.

The survey, carried out in Karnataka, Kerala, Tamil Nadu, Pondicherry and Andhra Pradesh, was aimed at analysing the performance of the top five sectors in each of these States during the last financial year. It was also targeted to identify their issues and concerns.

This survey was conducted by Cygnus Business Consulting & Research, a knowledge partner of CII.

The top five sectors were identified on the basis of their contribution to the respective State Gross Domestic Product. In Andhra Pradesh, the sectors identified for the survey were agro-based industry, pharmaceuticals, manufacturing, information technology and textiles.

The survey took into consideration the opinions of senior executives of leading companies in each of these sectors.

With regard to the manufacturing sector, it had observed that prices of coke, oil, steel, aluminium and copper had gone up steeply, putting burden on the sector.

The survey found that the overall performance was robust in the year. Information technology reported the highest sales growth of 25 per cent owing to higher overseas billing.

"But margins came under pressure due to stiff competition," it said.

The order book position for 2005-06 was promising. The IT industry saw the need for better enforcement of intellectual property laws.

The agro-based industry reported over 25 per cent sales growth due to good domestic demand. The profits were also higher by 10 per cent. "The industry expected to post higher sales in 2005-06," the survey said.

"Profits are also expected to improve owing to better price realisations. Lack of processing and extraction facilities, unorganised value chain, lack of research and development support, high cost of imported technology, lack of irrigation facilities and poor power supply are major areas of concern," it felt.

The pharmaceutical industry registered sales growth of over 10 per cent. The bulk drug manufacturers were hopeful of bagging more contract manufacturing orders this financial year. It, however, found no great hope for formulations market.

The key concerns of the industry included high production costs, price control on products and excise duty on maximum retail price.

The textiles industry posted a 10 per cent growth in sales in the year and hoped to maintain growth at current levels this fiscal due to higher demand.

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