CII and BCG monthly growth survey of CXOs across sectors to track sales performance shows that in May, sales grew by 7% across respondents, keeping with the pace reported the previous month. After the spike experienced in March, the growth of new order inflows (reflective of future growth) moderated, going down to 4.4%. The Northern region witnessed the highest growth of 7% in value terms, followed by the Southern and Western regions (6%), finally the Eastern region grew by 5%. Most sectors reported strong growth rates in May. One fourth of respondents would already revise their target for FY17-18 on the basis of the past two months. Among those, 57% would revise it upward and 43% downward. Market demand and government regulatory uncertainty are considered the key challenges for the industry by 64% and 44% of respondents, respectively. In both cases, GST implementation was identified as the root cause.
Building materials: The sector slowed down to 4.2% growth after the impressive performance seen in April (9.4%). Northern region witnessed the best performance (11%); whereas the South showed flat YoY growth.
Material Handling Equipment: With 8% value growth, the sector returned on the growth path experienced in March, after April’s low (3.8%). The performance improvement was driven both by a 4.5% value growth and big-ticket orders. Although sales value grew by 4% in the South, volume actually decreased by 1%.
Engineering Products: Engineering products registered 5.9% value growth and 5.2% volume growth, driven again by Southern (6%) and Western (5%) regions.
Welding: After the fluctuation to 14% in April due to big ticket orders, the sector witnessed a more solid growth in May: 6.1% value growth and 6.3% volume growth. Southern region back on a moderate growth path (5%) after the spike reported in April (15%). Value growth in Northern (4%) and Eastern (3%) regions were driven exclusively by big ticket orders, with flat volume growth.
Metals and Mining: The sector continues on the growth path of the previous months, with 8.8% YoY growth in value as well as volume terms. According to 75% of respondents, market demand and increased competition are the primary challenges in the sector for the current year.
Textile and Apparel: The textile and apparel sector grew by 5.8%. GST implementation is respondents’ major source of concern since there is still not full clarity on the applicable rates in this sector.
Automotive Components: Auto-components showed a good performance in May, growing at a rate of 8.6% by value and volume. Some companies are undergoing a significant growth in line with budget, others are even planning to revise their annual targets upward.
Arun Bruce and Mani Singhal from BCG, Sangita Das from CII