Production activities showed improvement during the second quarter of the current financial year (2021-22) compared to the first quarter, which was subdued due to raging second wave of the Coronavirus pandemic.
According to industry body Ficci’s quarterly manufacturing survey, the percentage of respondents who reported higher production during the ongoing July-September quarter was 61 per cent, much above the 50 per cent mark.
The assessment also reflected in order books as 72 per cent of respondents in July-September quarter of the current fiscal expected higher number of orders compared to the first quarter of the current fiscal, i.e. April-June period of 2021-22.
The second quarter response was also much higher than the 24 per cent response which was witnessed during the same period of the corresponding year.
However, the survey noticed a high percentage of respondents experiencing rising cost of doing business and production. The cost of production as a percentage of sales for manufacturers in the survey rose for 80 per cent respondents in the first quarter of 2021-22. This is considerably higher than that reported in the fourth quarter of 2020-21, where 72 per cent respondents recorded increase in their production costs.
Industry respondents have attributed the hike in productions costs primarily to high fixed costs, higher overhead costs for ensuring safety protocols, drastic reduction in volumes due to lockdown, lower capacity utilisation, high freight charges and other logistic costs, increased cost of raw materials, power cost and high interest rates.
Ficci’s latest quarterly survey assessed the sentiments of manufacturers for the July-September period for eleven major sectors namely automotive, capital goods, cement and ceramics, chemicals, fertilisers and pharmaceuticals, electronics & electricals, metal & metal products, paper products, textiles, textiles machinery, toys and miscellaneous.
Responses have been drawn from over 300 manufacturing units from both large as well as small and medium enterprises having a combined annual turnover of over 2.7 lakh crore.