Economic Survey: Sales of over 1.7k mfg firms contracted by 7.7% in Q2

Net profit for the manufacturing sector contracted in Q1 (June quarter) of 2019-20, mainly due to a production slowdown, it added

Over 1,700 listed private manufacturing firms witnessed their sales contract by 7.7 per cent in the second quarter of 2019-20, after remaining mostly in expansionary zone for three years, according to the Economic Survey 2019-20.

The Survey, tabled in Parliament on Friday by Finance Minister Nirmala Sitharaman said demand conditions for the manufacturing sector weakened in September quarter of 2019-20 with a contraction in nominal sales, citing RBI studies on corporate performance.

"Petroleum products, iron and steel, motor vehicles and other transport equipment companies were the major contributors to slowdown," it said.

Net profit for the manufacturing sector contracted in Q1 (June quarter) of 2019-20, mainly due to a production slowdown, it added.

It, however, said net profit of corporate sector recovered in the second quarter of 2019-20 and was 17.4 per cent.

In terms of capacity utilisation of India's manufacturing sector, the Survey said it remained stable at 73.6 per cent in June quarter of 2019-20 as compared to 73.8 per cent in the year-ago period.

As per the use-based classification of Index of Industrial Production (IIP), the Survey said growth of capital goods and consumer durables declined 11.6 per cent and 6.5 per cent, respectively during 2019-20 (April-November).

"Consumer durables segment was hit mainly due to lack of demand from the household sector especially in automobile industry," it said.

Industrial sector performance in terms of its contribution in GVA (gross value added) improved in 2018-19 over 2017-18.

However, as per the estimates of Gross Domestic Product by National Statistical Office (NSO), the real GVA of industrial sector grew 1.6 per cent in the first half (April-September) of 2019-20, as compared to 8.2 per cent in the year-ago period, it added.

"The low growth in industrial sector is primarily due to manufacturing sector which registered a negative growth of 0.2 per cent in 2019-20 H1," the Survey said.