India Inc talks growth, finally
Partha Ghosh, Bhupesh Bhandari & Mahua Venkatesh
Amid the pall of gloom caused by the riots in Gujarat and the fragile political scenario, there is some good news: after a prolonged slump, several key industries are poised for a recovery in the current financial year.
Steel, commercial vehicles, colour televisions, cars and synthetic fibres are some sectors expecting an upturn in their fortunes.
Indian steel producers hope to clock a growth of 10 per cent in 2002-03 as against 6 per cent in the previous financial year.
In line with global prices, the prices of hot-rolled and cold-rolled coils have already firmed up in the domestic market and are likely to rise further.
With member-countries of the Organisation for Economic Co-operation and Development talking of closing inefficient steel capacity of up to 125 million tonnes in phases, the outlook for the Indian steel industry is good.
Officials at Steel Authority of India Ltd, the country's largest steel producer, are talking of coming out of the red by the end of the current year.
Tata Steel's vice-president (finance), Ramesh C Nandrajog, told Business Standard the company expected a 10 per cent topline growth during the current financial year.
Industry also expects sales of commercial vehicles - an indicator of economic activity - to return to the growth track this year.
Estimates made by the Society of Indian Automobile Manufacturers show that sales of medium and heavy commercial vehicles, which grew around 2 per cent in 2001-02 over the previous year, are expected to grow at least 5 per cent this year.
More encouraging is the fact that sales of light commercial vehicles are expected to jump 4 per cent as against a 12-per cent decline registered in the previous year.
"We will see a 5-7 per cent rise in commercial vehicle sales this year," Eicher group chairman S Sandilya said.
SIAM's figures also suggest that car sales in the domestic market are expected to grow 10 per cent as against flat sales in the previous financial year.
SIAM data says that the multi-utility vehicles segment comprising mainly of the Tata Sumo and the Toyota Qualis is expected to grow 4 per cent during the current financial year as against a decline of 3 per cent during the last financial year.
Says Hyundai Motor president, BVR Subbu: "I think there will be a growth of at least 7.5-8 per cent during the financial year. A 10 per cent growth maybe a little optimistic. The rollback of some of the harsh proposals announced in the Budget will have a positive impact on the consumer sentiments."
Sales of colour televisions are expected to grow at least 20 per cent in the financial year 2002-03 riding on the FIFA Football World Cup next month as well as the Cricket World Cup in the last quarter.
According to CETMA, industry sold around 5.5 million CTVs in 2001-02, which is expected to touch the 6.6 million mark in 2002-03.
Says Rajeev Karwal, president of CETMA and senior vice-president of Philips India: "In the financial year, there are several events coming up, especially the two world cups which will promote sales of CTVs. Price erosion will not be more than 5 per cent, yet volumes will continue to grow."
CETMA's projections are based on the assumption that there will be a GDP growth of around 6 per cent this year.
Plus, the positive impact of the rural electrification programme under the power sector reforms that the government has initiated will start showing this year.
The replacement market for old colour TVs as well as black and white sets will grow, as more quality software is made available, transmission quality improves.
The synthetic fibre industry is expecting to grow by 6-8 per cent this year as against 3-4 per cent last year on the basis of the improvement in textile exports as well as yarn exports which had come down in the last few months.
"The prices today are better than at anytime in the previous year," said Indo Rama Synthetics (India) managing director O P Lohia adding: "Growth is definitely going to be there."