bruce.arun@bcg.com singhal.mani@bcg.com dh t di@ ii i Monthly Report August 2 sangita.das@cii.in ii i sandhya.satwadi@cii.in
Draft For discussion only Summary growth trends: August 2 Overall, August registered a stronger growth of ~9% for the Indian industry compared to July that witnessed growth of %; latest IIP data also indicated a weak performance for July Growth was relatively high across different regions with South witnessing the highest growth of ~11% for the 5th consecutive month; West saw a growth of ~9% each, while East showed an improvement clocking growth of 7%; North witnessed the lowest growth of ~% Inflation seemed to be ~1% year-on-year similar to previous months in 2; South saw above average price increments as indicated by an inflation of ~% 2-wheelers (~2%), Passenger vehicles (~17%), Material Handling sector (%) emerged as winners in August; Engineering g sector (1%) and Building Materials (7%) showed healthy growth, while Auto Components (~%) showed modest growth and Commercial vehicles (~1.5%) witnessed relatively weak growth 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. Inflation reported above is the value over volume growth based on the survey results. Source: CII BCG Growth Index Survey; Industry association data on automotive sales 1 Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Draft For discussion only Survey results: August 2 performance Summary all respondents Regional growth All respondents 1 YoYY growth % 5% % 7% % 9% % % % 9% % Apr May Jun Jul Aug Value Volume North: % (%) Peer growth comparison Industry growth comparison 2 wheelers 25 2 PV Auto comp 2 Others MHE 1-2 Engg prod. - 5 CV & serv. - Build. mater - -5 - - - -2 2-5 5 1 2 25 West: 9% (%) South: 11% (%) East: 7% (7%) Region xx: xx% Value (yy%) Volume 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis Note: Building materials (BM) industry refers to cement, cementitious products, paints, tiles, roofing, scaffolding. Industry average is displayed only when there are + responses per industry. Other industries where responses were received include: consumer durables, Steel, chemicals, plastics, logistics, packaging, Consulting services, Financial services. Regional averages may not fully align with national average because of different regional exposures of respondent industries. All averages are 'simple averages' (i.e. not weighted by size of company). CV Commercial vehicles, PV Passenger vehicles, Auto Comp Auto Components, Engg prod & services Engineering products and services, Build. mater. Building Materials, MHE Material Handling Equipment Source: CII BCG Growth Index Survey; Industry association data on automotive sales 2 Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Draft For discussion only Building materials witnessed a renewed growth of over 7% after a sluggish growth (<1%) in July Peer growth comparison Regional growth All respondents 1 <5 cr 2 - - - - - - - - 2 Building materials clocked growth of ~7% after a sluggish growth sub-1% growth in July South continued to register the highest growth rates amongst all the regions like July Less than average monsoon (< -%) in East and South coincides with healthy growth rates in these regions High leasing activities, low vacancy, and high absorption rates in southern metro cities indicate positive sentiments in South Growth for roofing companies indicate revived demand in the rural and sub-urban sector due to normal monsoon this season Affordable housing launches grew by ~1% in 2 H1 North: % (%) West: 7% (%) South: % (9%) East: 11% (11%) Region xx: xx% Value (yy%) Volume 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. Building materials include cement, cementitious products, paints, tiles, roofing, scaffolding, and glass. No. of "visible" data points on the graph is less than the number of respondents due to overlaps. Source: CII BCG Growth Index Survey, CMIE, Projectstoday Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Low vacancy for offices and retail indicate positive sentiments; residential sector on the cusp of slow recovery 1 Demand drivers Infrastructure Key trends/indicators NITI Aayog to pump in, cr to bail out construction of govt. infra projects Roadways and Railways constitute projects worth >, cr. in the last months new ports Enayam, Sagar, Dugarajpatnam, and Vadhwan proposed; 11% capacity addition in the past 1 year 1 ; port traffic increased by ~% 2 Air traffic and freight load increased by >1% and ~% respectively, proposed p capacity expansion of airports in metro cities over the next years ~.5 lakh villages covered under DDUGJY, East 2 Real Estate (Residential) 2, units launched in April June quarter in top metros, demand geared towards completed projects Bangalore (%) accounted for the highest launches followed by Pune (21%) and Mumbai (%) ; Greater Noida still reeling with high inventory Personal home loans in July grew by ~1% Affordable houses launch up by 1% for 2 H1 Vacancy drops to ~%, lowest in the past 7 years; Vacancy rate for top metros: Bangalore %, Pune %, Hyderabad 9%, Mumbai %, Kolkata 19%, Delhi 2% (2 Q2) Real Estate Absorption of offices increased to 1.2 mn sq ft. across top metros registering a growth % (Office) (on-quarter); growth driven by Bangalore, Hyderabad, Mumbai IT/ITeS sector continued to be the largest consumer, followed by Engineering and BFSI sectors Realtors moving to pre-fabricated technology to absorb growing demand in less time Real Estate (Retail) Average vacancy in top cities decreased by 1.5% points (2 Q2) despite fresh supply of 2,, sq ft of retail space Credit to retail trade in July increased by 1.% 1. Capacity added from march 2 to March 2 2. YoY data for April July traffic. Traffic data for July 2..DDUGJY Deen Dayal Upadhyaya Gram Jyoti Yojana. Number of "visible" data points on the graph is less than the number of respondents due to overlaps. Source: BCG Internal Research, CMIE, Ministry of Power, RBI, Ministry of shipping, Airport authority of India Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
South witnessed highest project launches in Aug (by value); Roadways and railways dominate new launches overall Estimated cost (INR cr.) of new projects (Mar Aug) Estimated cost of new projects in August 2 Roadways Mar - May Jun - Aug Total 2 599 799 >,29 cr worth of projects launched >,2 cr worth of projects launched Ports/airport/ railways 19 2 272 North Power & Energy Real estate (Residential) Real Estate (Commercial) 197 295 25 5 91 5 929 19 Total 229 9951 >7,5 cr worth of projects launched West South East >2,2 cr worth of projects launched Roadways and Railways together constitute >2 cr worth of new projects over last months; East and South together constitute ~% (by value) of new projects in August Source: Ministry of power, CEA., GARV website. UE Unelectrified, DDUGJY Deen Dayal Upadhyaya Gram Jyoti Yojana 1. Amount =Aamount sanctioned for Rural electrification under th 5-year pland and DDUGJY. Only states who have UE villages are mentioned in the list. Multistate projects are not included in the regional split 5 Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Engineering products registered healthy growth across all the regions, strongest in South Peer growth comparison Regional growth All respondents 1 2 - - - 2 < 5 cr Engineering prod. and serv. showed high growth (~1%) improving on last month's performance of ~7% Heavy engineering and electrical segment get boost from capacity expansion in power sector; ~1,5 MW capacity and 7 ckms 2 of distribution line added Falling imports (~%), rising demand (1.5%) and export (2%) resulted in a healthy growth for Steel in August High growth in automotive sector (~2%) fuelled growth in the engineering sector Investments e s > 5, cr. lined up for capacity expansion and technology upgrade in Automotive comp sector North: % (7%) West: % (7%) South: % (11%) East: % (%) Region xx: xx% Value (yy%) Volume 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. 2. Capacity addition and distribution lines data is for Jul 2.. Export rise is on YoY for Apr Aug period. No. of "visible" data points on the graph is less than the number of respondents due to overlaps. The growth numbers reported are on an year-on-year basis. MHE Material handling equipments. Source: CII BCG Growth Index Survey Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Eastern region has high investment potential UE villages: 2 Sanctioned amount: INR 2,2 cr UE villages: 9 Sanctioned amount: INR,7 cr North West South UE villages: 727 Sanctioned amount: INR 2, cr East UE villages: Sanctioned amount: Rs. 2,19 cr State UE villages Amount 1 (INR cr.) Jammu & Kashmir 72.5 Uttarakhand 7 5 Himachal Pradesh 1 9 Rajasthan 1,292 Uttar Pradesh 17 1,22 Bihar 2 11,7 Jharkhand 1,2 5 Odisha 1,5 52 Chhattisgarh West Bengal 1 71,71 Manipur 259 Meghalaya Mizoram 17.5 Assam 1,19 2,95 Arunachal Pradesh 1,2 19 Nagaland 7 Tripura 1 91 Karnataka 1,9 Tamil Nadu Madhya Pradesh 9 7 East continues to receive the highest investment (INR 2, cr) from the Central Govt. under DDUGJY given the highest number of unelectrified villages Source: Ministry of power, CEA., GARV website. UE Unelectrified, DDUGJY Deen Dayal Upadhyaya Gram Jyoti Yojana 1. Amount =Amount sanctioned for Rural electrification under th 5-year pland and DDUGJY. Only states who have UE villages are mentioned in the list 7 Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
MHE witnessed double digit growth in the Southern peninsula; subliminal growth in the East Peer growth comparison Regional growth All respondents 1 < 5 cr 2 - - 2 MHE showed high growth (~%) improving on last months performance of ~7% High retail activity as indicated by ~1% 2 growth in the credits to the retail trade augured well for MHE Impressive growth in the automotive sector (~2%) fuelled growth in MHE sector Auto comp. sector plans invest >5, cr. for capacity expansion and technology upgrade Heavy infrastructure spending by Central govt. drove growth for Earth moving, construction equipment sector North: 7.5% (%) West: % (%) South: % (11%) East: 1.5% (%) Region xx: xx% Value (yy%) Volume 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. No. of "visible" data points on the graph is less than the number of respondents due to overlaps. MHE Material handling equipments Source: CII BCG Growth Index Survey, BCG internal research Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Automotive components saw a modest growth of ~% despite booming automotive industry Peer growth comparison Regional growth All respondents 1 < 5 cr 2 - - - - - - 2 Automotive components sector maintained a good growth of ~%, lower than July 2 Tractor and 2-wheelers segment saw high growth due to strong demand in rural and sub-urban regions PV sales continued growth for 1th consecutive month indicating strong demand d for PV components CV segment mainly driven by the replacement market as indicated by subliminal sales growth of CV sector North: 9% (9%) West: % (1%) South: % (5%) East: % (%) Region Exports relatively weak due to volatile international Value market xx: xx% (yy%) Volume 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. No. of "visible" data points on the graph is less than the number of respondents due to overlaps. Source: CII BCG Growth Index Survey 9 Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Automotive industry continued to grow on the account of new models and pre-festive season Passenger vehicle (PV) Commercial vehicle (CV) 2-wheelers 2 1 (1) (2) - - - 2 2 2 2 2 (2) -1 1 2 5 7 2 (2) () () () () () () (2) 2 PV industry grew in mid-teens (~17%), sustaining the high level of growth seen in July M&M's UV growth was strong at 29%, however that is on a low base. Maruti and Hyundai faced capacity constraint impacting overall sales volume CV growth is flat at 1.5% (YoY) 2 wheelers segment grew at 2% With moderation in replacement (YoY) due to channel filling by demand d and weakness in freight companies owing to coming festive rates, volumes are coming under season pressure for M&HCV Retail sales growth is estimated to LCVs are in recovery mode, grew by grow at 1% 11.2% Majority of companies have posted 2%+ volume growth Reducing channel filling in coming months may result in moderate growth 1. Not all respondents filled in regional growth numbers. Average of regional growths therefore, may not coincide with national average. The growth numbers reported are on an year-on-year basis. Revenue size of the companies not represented in the graph Source: CII BCG Growth Index Survey, Industry association data on automotive sales 1 Copyright 2 by The Boston Co onsulting Group, Inc. All rights reserved.
Lower than average monsoon in August despite positive predictions by IMD cause concern Monsoon 2 forecast Overall, -7% higherh than average monsoon expected (June Sept 2) Last year, % lower than average monsoon ~2% higher monsoon expected than last year Monsoon arrived a week late on June 7; July received ~7% higher monsoon than average August statistics Despite e higher than average age monsoon prediction, a third of India received ed lower rainfall a until August end August received % lower monsoon defying the higher than average monsoon predicted in August by IMD East and North-east: 2% below normal Central India: 1% above normal North and West India: 1% above normal Southern peninsula: 1% below normal Forecast for September September requires at least 1% higher than normal monsoon to cover two months of deficit rains (Jun, Aug) Southern peninsula and Eastern India (Bihar, Jharkhand, Odisha, WB, North-eastern states) India to receive higher than normal precipitation coinciding with the path of the retreating monsoon Source: Indian Meteorological Department Draft for discussion only 11
IIP index drops to -2.% registering the sharpest fall of the year; Manufacturing sector de-grows at -.% YoY growth (%) in July 2 Growth trends of various sectors Growth (YoY)% 1 5-5 Jul Aug Sep Oct Nov Dec Jan Mining Elect. Manf. General Feb Mar Apr May Jun Jul Aug Aug data not yet released by the Govt. IIP general index plummeted to an year-low of - 2.% Manufacturing sectors registered a sharp decline de-growing at -.% Growth rates declined for both Mining and Electricity sectors at.% and 1.%, respectively out of the 22 industry groups in the manufacturing sector saw negative growth Losers: Electrical machinery & apparatus (- 59.2%), Apparel (-.2%), leather products (- 1.1%), Wooden products (-7.9%) Winners: Tobacco products (22.%), coke and refined petroleum products (.%), Chemicals (5.%), Machinery equipments (.%) Consumer goods saw a marginal growth of 1.% on the account of good performance of consumer durables (5.9%) Source: CSO, Analyst Report. Note: list of "winners" and "losers" is not exhaustive Draft for discussion only
IIP indicated a slower growth for 5 out of core sectors in July 2 Core Sectors % weight in IIP Coal.79 Monthly yg growth rates (YoY) for core sectors 9 5 2 2-1 5 Crude Oil 5.2-2 - - -5 1-5 -2 - - -2 Natural Gas 1.7-1 -2 - - - 1-1 -7-7 - Petroleum Refinery 5.99-2 5 11 1 1 1 Fertilizers 1.25 9 1 1 1 1 2 1 Steel. -1 - -2-1 - - - 2-1 Cement 2. 1 5-2 -2 9 1 2 1 1 11 Electricity Generation 1. 2 9 Jul- Oct- Jan- Apr- Jul- 9 11 5 Source: CSO, Analyst Report. Draft for discussion only 1
Overall economic indicators: August 2 review Growth Indices Growth Indices Commercial vehicle sales Latest t Previous Latest t Previous Economy statistics month month Current account month month India GDP growth est. (%) 1 7.9 7. Exports growth* (%) (.) 1. (y-o-y) China GDP growth est. (%) 1.7.7 Oil imports growth* (%) (2.1) (.) (y-o-y) Inflation WPI (%) 2.7.55 Non-oil imports growth* (%) (.) (7.) (y-o-y) BSE Sensex 2 2,52 2,52 Trade deficit (US$ Bn) (7.7) (.1) ' +2% +2% 59 2 52 57 5 2 52 59 2 57 5 52 5 Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Select industry metrics Capital account Passenger vehicle sales IIP (%) (2.).9 (y-o-y) y) Energy req growth (%).5.1 (y-o-y) PV Auto vol growth 2 (%).. (y-o-y) CV Auto vol growth 2 (%) 1.5 1.1 (y-o-y) Cement production (Mn Tn) 2. 2.1 Steel production (Mn Tn) 7.5.2 NRI deposits (US$ Bn) FII flows (US$ Mn) 2 9 77 FDI flows (US$ Mn),19 2,7 Forex reserves (US$ Bn) 5 Currency competitiveness 7 7. 7.1 +17% % ' 222 29 21 2 22 22 259 2 1 222 22 252 22 257 22 2 Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- *Not comparable as one of the data points is negative 1. Average of GDP estimates for FY- for China and India made by leading international financial institutions in Q1 2. As of Aug & Jul. For Jul and Jun. As of Jul and Jun 5. For Aug and Jul, Includes only equity flows.. Total outstanding values as of Jul and Jun 7. As in Aug and Jul Note: PV and CV refer to passenger and commercial vehicles resp. Source: RBI, Thomson One, Ministry of Finance monthly Report, Capitaline, EIS, BCG analysis, Press Search. Draft for discussion only 1
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