The Hindu Business Line : CII survey predicts mixed trends in key sectors

Bangalore, April 30 Electronics industry is expected to maintain its élan while the software sector would see a mixed performance trend during the first nine months of the current fiscal (2009-09), according to a CII’s Industry Monitor Survey for the five Southern States of Andhra Pradesh, Karnataka, Kerala, Pondicherry and Tamil Nadu.

The survey carried out to analyse the performance of top five sectors in each of these States during October - March of the financial year 2007-08, provides an outlook for April 2008-September 2008.

The survey captured the views of senior executives of leading companies in the five sectors. The top five sectors for the survey were identified on the basis of their contribution to State Gross Domestic Product (SGDP).

The key sectors that contributed to the Karnataka’s economy are automotive and auto components, electronics, information technology, engineering and steel.

Electronics

The electronics industry improved its performance during October 2007 - March 2008. During April 2007 - September 2007, the production increased by 10-20 per cent and sales by 10-15 per cent. Both the capacity utilisation and the production value went up by 10-15 per cent. However, pricing, profit margin and employment levels remained unchanged.

The rising raw materials price, its inadequate availability and the expectation of further price rise are major issues that hamper electronics industry’s growth. The industry leaders expressed their concerns over the lack of availability of skilled manpower. They suggested the removal of Central Sales Tax forms and bringing in uniform taxation policy throughout India.

Steel industry

The steel industry of Karnataka witnessed good performance during October 2007-March 2008. And during April 2007-September 2007, the sales, capacity utilisation and production value increased by 10 per cent.

The inventory increased by 8 per cent. Though the price levels remained the same, the profit margins came down by 3 per cent, the survey pointed out.

The steel industry is likely to register a decline in its performance during April 2008 - September 2008. The industry predicts a 15 per cent decline in sales, capacity utilisation, production value. The inventory levels may come down by 12 per cent. Product pricing is not expected to change during the period but a decline of 3 per cent in profit margins was likely.

IT sector

The IT sector is expected to witness mixed performance trends during April 2008-September 2008. The demand is likely to decline by up to 5 per cent but the revenue and overseas billing could increase by 5 per cent. The industry does not expect any change in pricing, while it expects a decline in profit margin up to 7.5 per cent.

The industry is concerned about the rising cost of manpower and the cost of providing on-the-job training. Also, the cost of manpower has been increasing with increasing real estate prices Industry leaders suggest that college curriculum should be modified in a way that it supplies manpower matching the required skills.

Engineering

The engineering industry recorded a moderate performance during October 2007-March 2008. The production and sales grew by 10-15 per cent, the exports rose by 15-20 per cent and the capacity utilisation by 12-15 per cent. Also the value of production went up by 30 per cent. However, the inventory remained unchanged and the profit margins declined by 2-6 per cent, according to the survey.

The survey said the sector is likely to witness mixed performance trends during April 2008-September 2008. It predicts 12-15 per cent decline in the production with sales growing by 10-15 per cent. However, the capacity utilisation and inventory are likely to remain unchanged.

Automobile

The performance indicators of Karnataka’s automobile and auto components industry reveal a mixed trend during October 2007-March 2008, against April 2007-September 2007. Both the production and sales went up by 5-10 per cent. Though the production value and prices increased by 6-9 per cent, the profit margins decreased by 3 per cent.

The industry is expecting a near stagnant performance in most of the parameters during April 2008-September 2008. It expects the demand to go up by 15-25 per cent. However, other parameters such as capacity utilisation, production value, inventory levels, pricing, profit margins and employment are expected to remain unchanged.

More Stories on : Economy | Industry Associations | Karnataka

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page