Date:28/11/2005 URL: http://www.thehindubusinessline.com/2005/11/28/stories/2005112800900500.htm

Back Sales, investment, exports to see surge in next 6 months: FICCI survey

Our Bureau

New Delhi , Nov. 27

INDIA Inc expects a surge in sales, employment, investment and exports in the next six months, says the FICCI second quarter Business Confidence Survey. These would happen because of strong demand conditions and a pick-up in industrial activity in the latter part of the second quarter of the current fiscal.

A majority 74 per cent of the respondents feel that current overall economic conditions are `moderately to substantially' better compared to the last six months.

The survey includes responses from 425 companies, with turnover ranging from Rs 1 crore to Rs 20,000 crore from sectors such as pharmaceuticals, textiles, food and beverages, heavy equipment and machinery and financial services.

Fifty per cent of the respondents represent the heavy industry sector, 35 per cent are from light industry while 15 per cent are from the services sector.

Eighty six per cent of the respondent companies expect `higher- to- much higher' sales in the next six months. Sixty five per cent expect `higher -to- much higher' profits.

While industry members have made a favourable assessment of the prevailing and expected economic conditions, what is noteworthy is the improvement in the current industry and firm level performance as well as in the respondent's outlook for the industry and firm level performance in the coming six months, says the survey.

The survey indicates that despite a slow start in the beginning of the second quarter, industrial activity is picking up and one can expect strong growth in the remaining two quarters of the current fiscal.

The strong demand conditions prevailing in the economy are resulting in high capacity utilisation levels at the firm level, with 70 per cent of the firms in the present survey reporting capacity utilisation levels of over 75 per cent.

In fact, the proportion of firms citing weak demand as a constraining factor has declined to 18 per cent in the present survey and is the lowest proportion seen in the last 14 quarters.

The increasing raw material costs and freight charges is a serious concern for companies, says the survey. Seventy six per cent of the firms reported rising cost of raw materials as a constraint.