Manufacturing improves in Jul-Sep

Ficci’s latest survey says 24 per cent of respondents reported higher output

By   |  Published: 22nd Nov 2020  8:26 pm
Future investment outlook, however, is subdued as only 18% respondents reported plans for capacity additions for the next six months.

New Delhi: The manufacturing sector witnessed some recovery during the July-September quarter compared to the preceding quarter, according to FICCI’s latest quarterly survey on manufacturing. The percentage of respondents reporting higher production in second quarter of 2020-21 increased in comparison to the first. The proportion of respondents reporting higher output during July-September rose to 24 per cent, as compared to 10 per cent in Q1 of 2020-21.

The percentage of respondents expecting low or same production is 74 per cent in Q2 2020-21, as against 90 per cent in Q1 of 2020-21. The overall capacity utilisation in manufacturing has witnessed a rise to 65 per cent as compared to the preceding two quarters. During the first quarter of the current fiscal, manufacturing, other than the essential goods, was nearly halted and in the fourth quarter of FY20, capacity utilisation was recorded at 61.5 per cent.

The survey, however, found that the future investment outlook is subdued as only 18 per cent respondents reported plans for capacity additions for the next six months as compared to 22 per cent in the previous quarter. Further, high raw material prices, high cost of finance, shortage of skilled labour and working capital, high logistics cost, low domestic and global demand due to imposition of lockdown across all countries to contain spread of coronavirus along with other factors have been major constraints affecting expansion plans of manufacturing businesses. The FICCI survey showed that around 77 per cent of the respondents had either more or same level of inventory in July-September 2020, whereas around 74 per cent of the respondents maintained either more or same level of inventory in April-June quarter of 2020-21.

Govt plans 10% stake sale in MIDHANI

New Delhi: The government is planning to sell up to 10 per cent stake in defence PSU Mishra Dhatu Nigam Ltd (MIDHANI) in the current fiscal ending March, an official said. The company got listed on stock exchanges in April 2018 and the government had raised Rs 438 crore by selling 26 per cent stake through IPO.

ManufacturingThe official said that with the opening of space sector to foreign investment and bringing defence sector under automatic route for 74 per cent foreign direct investment (FDI), MIDHANI shares are expected to attract investors. MIDHANI manufactures special steel and super alloys for use in defence, nuclear and space sectors. “We are looking at up to 10 per cent stake dilution via offer for sale,” the official said.

Shares of MIDHANI closed at Rs 193.50 apiece on the BSE on Friday. At the current market price, the government can raise about Rs 360 crore by selling 10 per cent stake in the company.

The official further said that with big ticket divestment plans hit by the COVID-19 pandemic, the government is readying public sector companies for minority stake sale in the remaining months of current fiscal. So far this fiscal, the government has raised Rs 6,138 crore by selling minority stake in Hindustan Aeronautics Ltd and Bharat Dynamics Ltd through offer for sale so far this year. The government also divested 15.2 per cent in Mazagon Dock Shipbuilders Ltd through an initial public offering.

The government has set a Rs 2.1 lakh crore disinvestment target in current fiscal. This includes Rs 1.20 lakh crore through CPSE stake dilution and Rs 90,000 crore through stake sale in financial institutions — more than four times what it raised last financial year.

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