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Date : Apr 07, 2015
Industrial Outlook Survey- Q4: 2014-15 (Round 69)

The Industrial Outlook Survey conducted during January-March 2015, provides qualitative assessment of the business situation of companies in the Indian manufacturing sector for Q4:2014-15 and their expectations for the ensuing quarter Q1:2015-16. The survey elicited response from 1,565 manufacturing companies.

Highlights:

Summary Table: Net response2 (NR in %) comparison over previous quarter
Parameters Assessment period Expectation period
Q3:2014-15 Q4:2014-15 Q4:2014-15 Q1:2015-16
Production 15.6 21.7 32.3 28.7
Order Books 11.6 16.3 28.7 27.3
Pending Orders 13.9 10.8 7.1 6.2
Capacity Utilisation 4.9 8.2 18.1 18.7
Exports 10.5 10.1 21.1 19.5
Imports 10.7 9.4 13.1 12.4
Employment 5.8 8.4 9.0 8.8
Financial Situation 13.0 14.9 26.4 26.3
Availability of Finance 12.1 12.6 19.4 18.1
Cost of Finance -18.3 -17.7 -14.4 -13.0
Cost of Raw Material -41.5 -32.8 -36.3 -32.8
Selling price 5.9 2.6 12.8 10.3
Profit Margin -15.1 -12.5 -0.8 -0.5
Business Situation 18.6 21.2 36.0 36.0
Salary 19.6 24.5 15.6 23.5
Business Expectation Index3 104.6 106.7 115.6 115.2

A1

Assessment Quarter (Q4: 2014-15):

  • Business outlook of the Indian manufacturing sector, as inferred from movements in Business Expectation Index (BEI) improved in assessment quarter (104.6 to 106.7).

  • The improvement in BEI for the assessment quarter is mainly due to improved optimism in production, order books, capacity utilisation, employment, financial situation, availability of finance coupled with reduced pessimism in cost of finance, cost of raw material and profit margin.

Expectation Quarter (Q1: 2015-16):

  • Business sentiments in Q1: 2015-16 remained broadly unchanged from that of the previous quarter.

  • Reduced pessimism is observed in cost of raw material, cost of finance and profit margin, whereas, reduced optimism is witnessed in production, order books, imports, exports and employment.

Table 1: Assessment & Expectation for Production
(Percentage responses)@
Quarter Total response Assessment Expectation
Increase Decrease No change Net response# Increase Decrease No change Net response
Q4:2013-14 1114 36.6 16.6 46.7 20.0 42.3 10.2 47.5 32.1
Q1:2014-15 1293 34.4 17.2 48.4 17.2 39.2 12.2 48.6 27.1
Q2:2014-15 1225 35.2 16.7 48.1 18.5 43.4 9.7 46.8 33.7
Q3:2014-15 2088 34.9 19.3 45.9 15.6 43.6 9.8 47.3 34.5
Q4: 2014-15 1565 37.2 15.5 47.3 21.7 42.6 10.3 47.0 32.3
Q1: 2015-16           39.6 10.9 49.5 28.7
‘Increase’ in production is optimistic.
@Due to rounding off percentage may not add up to 100. This is applicable for all the tables from 1 to 17.
#: Net Response (NR) is the difference of percentage of the respondents reporting optimism and that reporting pessimism. The range is -100 to 100. Any value greater than zero indicates expansion and any value less than zero indicates contraction.

Table 2: Assessment & Expectation for Order Books
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 32.1 17.3 50.6 14.8 38.1 10.5 51.4 27.6
Q1:2014-15 1293 31.8 15.4 52.9 16.4 36.2 11.5 52.3 24.6
Q2:2014-15 1225 31.2 15.8 53.0 15.4 38.2 9.1 52.6 29.1
Q3:2014-15 2088 30.5 19.0 50.5 11.6 40.0 8.4 51.6 31.6
Q4: 2014-15 1565 32.3 16.0 51.7 16.3 38.6 9.8 51.6 28.7
Q1: 2015-16           37.8 10.5 51.7 27.3
‘Increase’ in order books is optimistic.

Table 3: Assessment & Expectation for Pending Orders
(Percentage responses)
Quarter Total response Assessment Expectation
Below Normal Above Normal Normal Net response Below Normal Above Normal Normal Net response
Q4:2013-14 1114 16.1 5.4 78.5 10.7 14.2 6.0 79.8 8.1
Q1:2014-15 1293 15.6 5.1 79.3 10.5 14.0 5.8 80.1 8.2
Q2:2014-15 1225 16.8 4.2 79.1 12.6 12.3 5.7 82.0 6.5
Q3:2014-15 2088 18.3 4.4 77.3 13.9 11.8 5.2 83.1 6.6
Q4: 2014-15 1565 17.7 6.9 75.3 10.8 12.4 5.3 82.4 7.1
Q1: 2015-16           13.1 6.9 80.1 6.2
Pending orders ‘Below Normal’ is optimistic.

Table 4: Assessment & Expectation for Capacity Utilisation
(Percentage responses)
Parameter Options Assessment Expectation
Q4:2013-14 Q1:2014-15 Q2:2014-15 Q3:2014-15 Q4:2014-15 Q1:2014-15 Q2:2014-15 Q3:2014-15 Q4:2014-15 Q1:2015-16
Capacity Utilisation (CU)-(main product) Increase 24.9 22.3 23.8 22.4 23.5 23.8 29.5 29.5 28.2 27.5
No Change 60.1 61.3 59.5 60.1 61.2 63.6 60.4 60.9 61.6 63.7
Decrease 15.0 16.3 16.7 17.5 15.3 12.6 10.1 9.6 10.2 8.8
Net Response 9.9 6.0 7.1 4.9 8.2 11.2 19.4 19.9 18.1 18.7
Level of CU (compared to the average in last 4 quarters) Above normal 10.1 10.3 8.7 9.6 10.6 9.7 10.6 10.0 10.6 12.1
Normal 72.2 71.8 72.3 70.8 70.6 75.4 76.6 77.3 76.8 75.6
Below Normal 17.6 17.9 19.0 19.5 18.9 14.9 12.7 12.7 12.6 12.3
Net Response -7.5 -7.6 -10.3 -9.9 -8.3 -5.2 -2.1 -2.7 -2.0 -0.2
Assessment of Prod. Capacity (with regard to expected demand in next 6 months) More than adequate 13.9 13.8 13.3 14.0 14.7 13.4 12.9 13.0 12.7 13.9
Adequate 77.9 78.1 78.7 77.0 76.9 79.5 80.3 80.9 80.4 79.2
Less than adequate 8.2 8.1 8.0 9.0 8.5 7.1 6.8 6.1 6.9 6.9
Net Response 5.7 5.7 5.3 5.0 6.2 6.3 6.1 6.9 5.8 7.0
‘Increase’ in capacity utilisation is optimistic.

Table 5: Assessment & Expectation for Exports
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 29.3 12.9 57.9 16.4 28.3 8.9 62.8 19.5
Q1:2014-15 1293 24.6 14.1 61.2 10.5 31.7 10.0 58.3 21.6
Q2:2014-15 1225 25.6 13.2 61.2 12.4 29.9 8.5 61.5 21.4
Q3:2014-15 2088 25.2 14.7 60.1 10.5 28.5 7.6 63.9 20.9
Q4:2014-15 1565 23.9 13.8 62.3 10.1 29.3 8.3 62.4 21.1
Q1:2015-16           27.6 8.1 64.3 19.5
‘Increase’ in exports is optimistic.

Table 6: Assessment & Expectation for Imports
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 19.3 10.0 70.7 9.3 20.8 7.3 71.9 13.4
Q1:2014-15 1293 18.8 9.4 71.8 9.3 18.3 7.8 73.9 10.5
Q2:2014-15 1225 20.9 8.2 70.9 12.7 21.2 6.2 72.6 15.0
Q3:2014-15 2088 20.2 9.5 70.3 10.7 19.4 6.5 74.1 12.9
Q4:2014-15 1565 19.4 10.0 70.6 9.4 20.5 7.4 72.1 13.1
Q1:2015-16           20.3 7.9 71.8 12.4
‘Increase’ in imports is optimistic.

Table 7: Assessment & Expectations for level of Inventory (Raw Material and Finished Goods)
(Percentage responses)
Parameter Options Assessment Expectation
Q4:2013-14 Q1:2014-15 Q2:2014-15 Q3:2014-15 Q4:2014-15 Q1:2014-15 Q2:2014-15 Q3:2014-15 Q4:2014-15 Q1:2015-16
Inventory of raw material Below average 7.7 7.2 8.4 8.3 8.4 6.7 6.4 6.1 5.6 7.1
Average 79.2 80.2 79.4 79.7 77.5 83.6 83.7 84.0 84.6 83.0
Above average 13.2 12.6 12.3 12.0 14.1 9.7 9.9 9.9 9.8 10.0
Net Response -5.5 -5.4 -3.9 -3.6 -5.7 -3.1 -3.5 -3.8 -4.3 -2.9
Inventory of finished goods Below average 7.7 6.7 7.5 8.4 8.1 7.6 6.4 6.7 6.1 5.8
Average 76.9 79.1 76.7 75.6 73.8 81.8 82.9 82.6 83.1 80.9
Above average 15.4 14.1 15.8 16.0 18.2 10.6 10.8 10.8 10.8 13.4
Net Response -7.6 -7.4 -8.3 -7.6 -10.1 -3.0 -4.4 -4.1 -4.7 -7.6
Inventory of raw material and finished goods ‘Below average’ is optimistic.

Table 8: Assessment & Expectations for Employment Outlook
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 16.1 10.7 73.2 5.4 14.3 7.4 78.3 7.0
Q1:2014-15 1293 15.0 9.6 75.4 5.4 15.7 8.4 75.9 7.2
Q2:2014-15 1225 14.6 8.3 77.1 6.3 15.2 6.2 78.6 8.9
Q3:2014-15 2088 15.2 9.4 75.4 5.8 16.6 5.4 78.0 11.2
Q4:2014-15 1565 17.0 8.6 74.4 8.4 15.6 6.7 77.7 9.0
Q1:2015-16           15.8 7.0 77.2 8.8
‘Increase’ in employment is optimistic.

Table 9: Assessment & Expectation for Overall Financial Situation
(Percentage responses)
Quarter Total response Assessment Expectation
Better Worsen No change Net response Better Worsen No change Net response
Q4:2013-14 1114 25.0 13.1 61.9 11.9 33.0 9.5 57.5 23.5
Q1:2014-15 1293 26.2 12.3 61.5 14.0 30.7 8.4 60.8 22.3
Q2:2014-15 1225 27.2 12.3 60.5 14.9 33.6 6.8 59.6 26.8
Q3:2014-15 2088 27.1 14.1 58.8 13.0 36.0 6.2 57.8 29.8
Q4:2014-15 1565 27.9 13.0 59.2 14.9 34.6 8.2 57.2 26.4
Q1:2015-16           34.3 8.0 57.7 26.3
‘Better’ overall financial situation is optimistic.

Table 10: Assessment & Expectation for Working Capital Finance Requirement
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 34.9 6.2 58.8 28.7 35.3 4.7 60.0 30.6
Q1:2014-15 1293 31.6 6.6 61.7 25.0 33.1 5.0 61.9 28.1
Q2:2014-15 1225 30.5 6.0 63.5 24.5 33.5 5.0 61.5 28.5
Q3:2014-15 2088 33.8 6.6 59.7 27.2 31.7 4.8 63.5 26.9
Q4:2014-15 1565 34.2 6.6 59.2 27.6 32.9 5.0 62.1 27.9
Q1:2015-16           32.3 5.1 62.6 27.2
‘Increase’ in working capital finance is optimistic.

Table 11: Assessment & Expectation for Availability of Finance
(Percentage responses)
Parameter Options Assessment Expectation
Q4:2013-14 Q1:2014-15 Q2:2014-15 Q3:2014-15 Q4:2014-15 Q1:2014-15 Q2:2014-15 Q3:2014-15 Q4:2014-15 Q1:2015-16
Availability of finance (from internal accruals) Improve 21.9 23.1 23.5 23.0 22.9 23.4 26.7 26.5 26.3 24.7
No Change 67.1 66.3 65.7 66.1 66.8 69.2 67.3 66.8 66.9 68.8
Worsen 11.0 10.6 11.1 10.9 10.3 7.4 6.1 6.8 6.8 6.6
Net Response 10.8 12.4 12.1 12.1 12.6 16.0 20.6 19.7 19.4 18.1
Availability of Finance(from banks & other sources) Improve 18.2 20.1 18.8 19.7 20.3 20.5 21.5 20.8 20.5 22.6
No Change 72.4 72.3 74.4 73.1 72.8 73.6 74.7 75.1 75.1 72.4
Worsen 9.3 7.6 6.8 7.3 6.9 5.9 3.8 4.2 4.4 4.9
Net Response 8.9 12.5 12.0 12.4 13.4 14.6 17.6 16.6 16.1 17.7
Availability of Finance (from overseas, if applicable) Improve 10.9 9.9 8.8 11.4 15.0 11.8 12.2 10.8 12.4 14.4
No Change 83.4 84.8 86.1 82.9 79.4 83.6 84.8 86.3 83.8 81.6
Worsen 5.7 5.3 5.1 5.7 5.6 4.6 3.0 2.9 3.8 4.0
Net Response 5.2 4.6 3.7 5.8 9.4 7.2 9.1 7.9 8.6 10.4
‘Improvement’ in availability of finance is optimistic.

Table 12: Assessment & Expectation for Cost of Finance
(Percentage responses)
Quarter Total response Assessment Expectation
Decrease Increase No change Net response Decrease Increase No change Net response
Q4:2013-14 1114 5.0 32.9 62.0 -27.9 4.4 31.1 64.6 -26.7
Q1:2014-15 1293 5.3 27.4 67.3 -22.2 5.4 27.7 66.9 -22.2
Q2:2014-15 1225 6.5 25.0 68.6 -18.5 6.0 23.2 70.8 -17.2
Q3:2014-15 2088 7.1 25.4 67.4 -18.3 5.6 22.8 71.6 -17.2
Q4:2014-15 1565 7.4 25.1 67.5 -17.7 7.4 21.8 70.8 -14.4
Q1:2015-16           8.8 21.8 69.4 -13.0
Decrease’ in cost of finance is optimistic.

Table 13: Assessment & Expectation for Cost of Raw Material
(Percentage responses)
Quarter Total response Assessment Expectation
Decrease Increase No change Net response Decrease Increase No change Net response
Q4:2013-14 1114 2.6 56.7 40.7 -54.1 2.8 49.1 48.0 -46.3
Q1:2014-15 1293 3.0 52.5 44.5 -49.5 2.9 49.7 47.4 -46.9
Q2:2014-15 1225 4.6 49.3 46.2 -44.7 3.7 45.8 50.6 -42.1
Q3:2014-15 2088 7.4 48.9 43.7 -41.5 4.3 43.5 52.2 -39.2
Q4:2014-15 1565 9.6 42.4 48.0 -32.8 4.9 41.2 53.9 -36.3
Q1:2015-16           6.0 38.8 55.2 -32.8
‘Decrease’ in cost of raw material is optimistic.

Table 14: Assessment & Expectation for Selling Price
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 22.0 12.4 65.6 9.6 23.3 8.2 68.5 15.1
Q1:2014-15 1293 22.0 12.2 65.8 9.8 23.4 8.4 68.2 15.1
Q2:2014-15 1225 20.1 13.3 66.6 6.8 20.6 8.0 71.4 12.5
Q3:2014-15 2088 20.1 14.2 65.8 5.9 20.5 7.2 72.3 13.3
Q4:2014-15 1565 18.1 15.5 66.4 2.6 21.3 8.5 70.2 12.8
Q1:2015-16           19.1 8.8 72.1 10.3
‘Increase’ in selling price is optimistic.

Table 15: Assessment & Expectation for Profit Margin
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 14.1 30.6 55.3 -16.5 18.2 22.2 59.7 -4.0
Q1:2014-15 1293 14.3 29.4 56.4 -15.1 16.8 22.2 61.0 -5.4
Q2:2014-15 1225 12.6 27.9 59.4 -15.3 18.0 20.3 61.7 -2.3
Q3:2014-15 2088 14.0 29.0 57.0 -15.1 18.9 17.9 63.2 1.0
Q4:2014-15 1565 15.4 27.9 56.7 -12.5 19.4 20.2 60.4 -0.8
Q1:2015-16           18.8 19.3 61.9 -0.5
‘Increase’ in profit margin is optimistic.

Table 16: Assessment & Expectation for Overall Business Situation
(Percentage responses)
Quarter Total response Assessment Expectation
Better Worsen No change Net response Better Worsen No change Net response
Q4:2013-14 1114 30.9 13.5 55.7 17.4 40.6 9.1 50.3 31.5
Q1:2014-15 1293 31.7 12.6 55.7 19.1 36.5 9.1 54.4 27.4
Q2:2014-15 1225 34.6 12.6 52.8 22.0 43.9 7.0 49.1 37.0
Q3:2014-15 2088 32.9 14.3 52.8 18.6 45.4 5.7 48.9 39.7
Q4:2014-15 1565 34.1 12.9 53.0 21.2 43.0 6.9 50.1 36.0
Q1:2015-16           42.7 6.7 50.6 36.0
‘Better’ Overall Business Situation is optimistic.

Table 17: Assessment & Expectation for Salary/Other Remuneration
(Percentage responses)
Quarter Total response Assessment Expectation
Increase Decrease No change Net response Increase Decrease No change Net response
Q4:2013-14 1114 28.7 3.5 67.9 25.2 25.3 3.2 71.5 22.1
Q1:2014-15 1293 38.5 3.1 58.4 35.4 31.8 2.8 65.4 28.9
Q2:2014-15 1225 32.5 3.0 64.4 29.5 30.2 2.1 67.7 28.1
Q3:2014-15 2088 25.3 5.7 69.0 19.6 24.0 2.4 73.6 21.6
Q4:2014-15 1565 28.1 3.6 68.3 24.5 21.5 5.9 72.6 15.6
Q1:2015-16           27.4 3.9 68.7 23.5
‘Increase in Salary/other remuneration’ is optimistic.

Table 18: Business Expectation Index (BEI)
Quarter BEI-Assessment Quarter BEI-Expectation Quarter
Q4:2013-14 104.3 112.7
Q1:2014-15 105.2 111.1
Q2:2014-15 106.3 114.7
Q3:2014-15 104.6 117.7
Q4:2014-15 106.7 115.6
Q1:2015-16   115.2

1 The 68th round (Q3:2014-15) survey results were released on January 2, 2015 on the RBI website. The survey results are those of the respondents and are not necessarily shared by the Reserve Bank of India.

2 Net Response (NR) is the difference of percentage of the respondents reporting optimism and that reporting pessimism. The range is -100 to 100. Any value greater than zero indicates expansion/optimism and any value less than zero indicates contraction/pessimism i.e., NR = (I – D); where, I is the percentage response of ‘Increase/optimism’, and D is the percentage response of ‘Decrease/pessimism’ and E is the percentage response as ‘no change/Equal’; I+D+E=100. For example, increase in production is optimism whereas; decrease in cost of raw material is optimism.

3 The Business Expectation Index (BEI) is a composite indicator calculated as weighted net response of nine business parameters. It gives a single snapshot of business outlook in every quarter. BEI lies between 0 to 200, and 100 is the threshold separating expansion from contraction.

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