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Date : Jan 15, 2016
Industrial Outlook Survey- Q3: 2015-16 (Round 72)

The Industrial Outlook Survey conducted during October-December 2015 (Round 72)1, provides qualitative assessment of business situation of companies in the Indian manufacturing sector for Q3:2015-16 and their expectations for the ensuing quarter Q4:2015-16. The survey elicited response from 1,337 manufacturing companies.

Highlights:

Summary Table: Net response2 (NR in %) comparison over previous quarter
Indicator Assessment period Expectation period
Q2:2015-16 Q3:2015-16 Q3:2015-16 Q4:2015-16
Production 15.2 16.0 29.2 31.1
Order Books 11.4 11.5 25.5 29.1
Pending Orders 13.5 14.3 7.6 6.3
Capacity Utilisation 3.6 7.1 17.5 19.1
Exports 5.7 5.7 16.7 16.9
Imports 8.4 6.1 9.2 7.7
Employment 5.9 5.8 9.6 8.6
Financial Situation 13.5 13.2 26.0 24.7
Availability of Finance 10.4 12.9 16.8 20.0
Cost of Finance -11.4 -5.4 -7.6 -5.5
Cost of Raw Material -24.8 -26.4 -28.1 -27.3
Selling price -4.0 -1.4 6.2 7.2
Profit Margin -16.9 -15.3 -1.3 -2.0
Overall Business Situation 13.9 17.4 31.6 33.3
Salary 28.9 25.1 22.0 22.1
Business Expectation Index3 102.4 103.6 113.4 114.2


Assessment Quarter (Q3:2015-16)

  • Assessment of major indicators in Q3:2015-16 remained broadly unchanged from the previous quarter. Moderate increase in optimism is observed in ‘Overall Business Situation’.

  • As a result, the business sentiments of the Indian manufacturing sector, as inferred from the Business Expectation Index (BEI), remained range bound in the assessment quarter.

Expectation Quarter (Q4:2015-16)

  • The outlook on business sentiments also remained similar. BEI moved from 113.4 for the previous quarter to 114.2 for Q4:2015-16.

  • While marginal increase in optimism was observed for production, order books, capacity utilisation and overall business situation, optimism on employment and profit margin reduced marginally.

Sangeeta Das
Director

Press Release : 2015-2016/1676


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
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 1299 34.1 17.8 48.1 16.3 39.6 10.9 49.5 28.7
Q2:2015-16 1304 34.1 18.9 46.9 15.2 40.3 11.4 48.3 28.9
Q3:2015-16 1337 34.2 18.2 47.6 16.0 40.5 11.3 48.2 29.2
Q4:2015-16           41.2 10.2 48.6 31.1
‘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
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 1299 30.8 17.7 51.5 13.2 37.8 10.5 51.7 27.3
Q2:2015-16 1304 31.1 19.7 49.3 11.4 37.4 11.6 51.0 25.8
Q3:2015-16 1337 30.4 18.8 50.8 11.5 37.4 11.9 50.8 25.5
Q4:2015-16           39.7 10.6 49.8 29.1
‘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
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 1299 18.6 5.1 76.3 13.6 13.1 6.9 80.1 6.2
Q2:2015-16 1304 18.6 5.1 76.3 13.5 14.6 6.1 79.4 8.5
Q3:2015-16 1337 19.2 5.0 75.8 14.3 14.1 6.5 79.4 7.6
Q4:2015-16           13.3 7.0 79.7 6.3
Pending orders ‘Below Normal’ is optimistic.

Table 4: Assessment & Expectation for Capacity Utilisation
(Percentage responses)
Indicator Options Assessment Expectation
Q3:2014-15 Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2015-16
Capacity Utilisation (CU)-(main product) Increase 22.4 23.5 23.3 21.7 23.4 28.2 27.5 27.7 27.8 27.8
No Change 60.1 61.2 60.0 60.2 60.4 61.6 63.7 62.1 62.0 63.5
Decrease 17.5 15.3 16.7 18.1 16.3 10.2 8.8 10.2 10.2 8.7
Net Response 4.9 8.2 6.7 3.6 7.1 18.1 18.7 17.6 17.5 19.1
Level of CU (compared to the average in last 4 quarters) Above normal 9.6 10.6 10.2 8.8 8.7 10.6 12.1 10.5 9.2 9.4
Normal 70.8 70.6 71.3 71.9 72.6 76.8 75.6 75.5 77.6 78.2
Below Normal 19.5 18.9 18.6 19.3 18.6 12.6 12.3 13.9 13.1 12.4
Net Response -9.9 -8.3 -8.4 -10.5 -9.9 -2.0 -0.2 -3.4 -3.9 -3.0
Assessment of Prod. Capacity (with regard to expected demand in next 6 months) More than adequate 14.0 14.7 15.1 14.1 14.3 12.7 13.9 15.8 14.4 14.5
Adequate 77.0 76.9 76.9 78.3 77.2 80.4 79.2 77.5 78.8 78.5
Less than adequate 9.0 8.5 8.0 7.7 8.5 6.9 6.9 6.8 6.8 7.0
Net Response 5.0 6.2 7.2 6.4 5.8 5.8 7.0 9.0 7.5 7.5
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
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 1299 24.1 14.0 62.0 10.1 27.6 8.1 64.3 19.5
Q2:2015-16 1304 23.5 17.8 58.7 5.7 27.5 8.0 64.5 19.6
Q3:2015-16 1337 23.3 17.7 59.0 5.7 27.3 10.6 62.1 16.7
Q4:2015-16           26.9 10.0 63.1 16.9
‘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
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 1299 19.8 9.1 71.0 10.7 20.3 7.9 71.8 12.4
Q2:2015-16 1304 18.8 10.4 70.7 8.4 18.0 8.1 73.9 9.9
Q3:2015-16 1337 17.2 11.1 71.8 6.1 18.0 8.8 73.2 9.2
Q4:2015-16           16.4 8.6 75.0 7.7
‘Increase’ in imports is optimistic

Table 7: Assessment & Expectations for level of Inventory (Raw Material and Finished Goods)
(Percentage responses)
Indicator Options Assessment Expectation
Q3:2014-15 Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2015-16
Inventory of raw material Below average 8.3 8.4 6.5 7.4 6.5 5.6 7.1 5.5 5.5 5.3
Average 79.7 77.5 79.3 78.9 81.4 84.6 83.0 83.0 83.9 84.8
Above average 12.0 14.1 14.2 13.7 12.2 9.8 10.0 11.5 10.6 9.9
Net Response -3.6 -5.7 -7.7 -6.3 -5.7 -4.3 -2.9 -6.0 -5.1 -4.7
Inventory of finished goods Below average 8.4 8.1 7.2 6.9 7.0 6.1 5.8 6.4 6.3 6.2
Average 75.6 73.8 74.7 75.6 75.7 83.1 80.9 78.9 82.1 81.6
Above average 16.0 18.2 18.1 17.5 17.4 10.8 13.4 14.6 11.6 12.1
Net Response -7.6 -10.1 -10.9 -10.6 -10.4 -4.7 -7.6 -8.2 -5.3 -5.9
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
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 1299 16.7 9.3 74.0 7.4 15.8 7.0 77.2 8.8
Q2:2015-16 1304 15.2 9.3 75.5 5.9 16.5 6.6 76.8 9.9
Q3:2015-16 1337 15.3 9.4 75.3 5.8 15.7 6.1 78.2 9.6
Q4:2015-16           15.3 6.7 78.0 8.6
‘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
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 1299 27.9 13.2 59.1 14.4 34.3 8.0 57.7 26.3
Q2:2015-16 1304 27.5 14.0 58.6 13.5 34.2 9.1 56.7 25.1
Q3:2015-16 1337 26.2 12.9 60.9 13.2 34.8 8.8 56.4 26.0
Q4:2015-16           33.3 8.5 58.2 24.7
‘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
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 1299 30.2 6.8 63.0 23.5 32.3 5.1 62.6 27.2
Q2:2015-16 1304 30.2 6.0 63.8 24.2 29.6 4.7 65.7 25.0
Q3:2015-16 1337 30.3 6.7 62.9 23.6 29.9 4.3 65.8 25.5
Q4:2015-16           30.1 4.9 65.0 25.2
‘Increase’ in working capital finance is optimistic.

Table 11: Assessment & Expectation for Availability of Finance
(Percentage responses)
Indicator Options Assessment Expectation
Q3:2014-15 Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2014-15 Q1:2015-16 Q2:2015-16 Q3:2015-16 Q4:2015-16
Availability of finance (from internal accruals) Improve 23.0 22.9 21.5 21.1 22.3 26.3 24.7 23.9 23.5 26.1
No Change 66.1 66.8 68.3 68.1 68.3 66.9 68.8 68.9 69.8 67.8
Worsen 10.9 10.3 10.1 10.8 9.4 6.8 6.6 7.2 6.7 6.1
Net Response 12.1 12.6 11.4 10.4 12.9 19.4 18.1 16.7 16.8 20.0
Availability of Finance(from banks & other sources) Improve 19.7 20.3 19.1 19.3 19.2 20.5 22.6 21.2 20.0 20.6
No Change 73.1 72.8 75.6 75.0 74.4 75.1 72.4 75.0 76.3 74.7
Worsen 7.3 6.9 5.4 5.7 6.3 4.4 4.9 3.8 3.8 4.7
Net Response 12.4 13.4 13.7 13.6 12.9 16.1 17.7 17.3 16.2 16.0
Availability of Finance (from overseas, if applicable) Improve 11.4 15.0 13.0 11.1 11.3 12.4 14.4 12.9 11.5 12.1
No Change 82.9 79.4 82.2 83.9 83.5 83.8 81.6 83.6 85.0 84.1
Worsen 5.7 5.6 4.8 5.0 5.2 3.8 4.0 3.5 3.5 3.9
Net Response 5.8 9.4 8.2 6.1 6.2 8.6 10.4 9.3 8.0 8.2
‘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
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 1299 10.2 22.3 67.5 -12.1 8.8 21.8 69.4 -13.0
Q2:2015-16 1304 9.4 20.8 69.7 -11.4 9.9 18.7 71.4 -8.7
Q3:2015-16 1337 14.0 19.4 66.6 -5.4 10.2 17.9 71.9 -7.6
Q4:2015-16           10.5 15.9 73.6 -5.5
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
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 1299 8.6 44.5 46.9 -35.9 6.0 38.8 55.2 -32.8
Q2:2015-16 1304 13.2 38.1 48.7 -24.8 5.2 38.1 56.6 -32.9
Q3:2015-16 1337 12.4 38.7 48.9 -26.4 7.1 35.2 57.7 -28.1
Q4:2015-16           6.9 34.2 58.9 -27.3
‘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
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 1299 18.3 15.2 66.5 3.1 19.1 8.8 72.1 10.3
Q2:2015-16 1304 15.8 19.8 64.4 -4.0 19.5 11.6 68.8 7.9
Q3:2015-16 1337 16.7 18.0 65.3 -1.4 18.3 12.2 69.5 6.2
Q4:2015-16           17.9 10.7 71.4 7.2
‘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
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 1299 14.2 28.5 57.3 -14.2 18.8 19.3 61.9 -0.5
Q2:2015-16 1304 13.1 30.0 56.9 -16.9 18.5 20.0 61.5 -1.6
Q3:2015-16 1337 14.3 29.5 56.2 -15.3 18.4 19.7 61.9 -1.3
Q4:2015-16           18.1 20.1 61.8 -2.0
‘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
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 1299 32.5 12.9 54.6 19.6 42.7 6.7 50.6 36.0
Q2:2015-16 1304 30.2 16.3 53.6 13.9 40.3 8.2 51.5 32.0
Q3:2015-16 1337 31.3 14.0 54.7 17.4 39.9 8.3 51.8 31.6
Q4:2015-16           40.9 7.6 51.5 33.3
‘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
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 1299 36.9 2.6 60.5 34.2 27.4 3.9 68.7 23.5
Q2:2015-16 1304 31.7 2.8 65.6 28.9 30.0 2.7 67.3 27.3
Q3:2015-16 1337 28.4 3.2 68.4 25.1 24.3 2.3 73.4 22.0
Q4:2015-16           25.0 2.8 72.2 22.1
‘Increase in Salary / other remuneration’ is optimistic.

Table 18: Business Expectation Index (BEI)
Quarter BEI-Assessment Quarter BEI-Expectation Quarter
Q3:2014-15 104.6 117.7
Q4:2014-15 106.7 115.6
Q1:2015-16 104.8 115.2
Q2:2015-16 102.4 113.1
Q3:2015-16 103.6 113.4
Q4:2015-16   114.2

1 The 71st round (Q2:2015-16) survey results were released on September 29, 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 (details are indicated in the relevant tables).

3 The Business Expectation Index (BEI) is a composite indicator calculated as weighted (share of GVA of different industry group) net response of nine business indicators. The nine indicators considered for computation of BEI are: (1) overall business situation, (2) production, (3) order books, (4) inventory of raw material, (5) inventory of finished goods, (6) profit margin, (7) employment, (8) exports and (9) capacity utilisation. It gives a single snapshot of business outlook in every quarter. BEI lies in the range of 0 to 200, and 100 is the threshold separating expansion from contraction.


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