India's industrial production down

The Quick Estimates of Index of Industrial Production (IIP) with base 2004-05 for the month of October 2011 have been released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation. 

The General Index for the month of October 2011 stands at 158.1, which is (-) 5.1% as compared to the level in the month of October 2010. The cumulative growth for the period April-October 2011-12 stands at 3.5% over the corresponding period of the previous year.

2.    The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of October 2011 stand at 120.9, 165.9 and 152.1 respectively, with the corresponding growth rates of (-) 7.2%,    (-)6.0% and 5.6% as compared to October 2010 (Statement I). The cumulative growth in the three sectors during April-October, 2011-12 over the corresponding period of 2010-11 has been (-)2.2%, 3.7% and 8.9% respectively, which moved the overall growth in the General Index to 3.5%.

3.   In terms of industries, thirteen (13) out of the twenty two (22) industry groups (as per 2-digit NIC-2004) in the manufacturing sector have shown positive growth during the month of October 2011 as compared to the corresponding month of the previous year (Statement II). The industry group ‘Medical, precision & optical instruments, watches and clocks’ has shown the highest growth of 30.8%, followed by 18.4% in ‘Office, accounting & computing machinery’ and 15.3% in ‘Radio, TV and communication equipment & apparatus’. On the other hand, the industry group ‘Electrical machinery & apparatus n.e.c.’ has shown a negative growth of 58.8% followed by 12.1% in ‘Machinery and equipment n.e.c.’ and 11.4% in ‘Rubber and plastics products’.

4.    As per Use-based classification, the growth rates in October 2011 over October 2010 are (-) 0.1% in Basic goods, (-) 25.5% in Capital goods and (-) 4.7% in Intermediate goods (Statement III).  The Consumer durables and Consumer non-durables have recorded growth of (-) 0.3% and        (-) 1.3% respectively, with the overall growth in Consumer goods being  (-) 0.8%.

5.    Some of the important items of capital goods showing high negative growth during the current month and thus contributing to the low growth of the overall index for the month include ‘Cable, Rubber Insulated’ [(-) 82.9%], ‘Cement Machinery’ [(-) 74.6%], ‘Insulated Cables/Wires all kind’ [(-) 38.2%], ‘X-ray equipment’ [(-) 35.8%] and ‘Plastic Machinery including Moulding Machinery’ [(-) 32.3%]. However, some important items of the capital goods are also showing significant growth. These are:  ‘Conductor, Aluminium’ (46.6%), ‘Boilers’ (45.8%), ‘Heat Exchangers’ (35.5%) and ‘Machine Tools’ (31.4%).

6.    The other important items showing growth during the month are: ‘Fruit Pulp’ (254.2%), ‘Cashew Kernels’ (91.9%), ‘Petroleum Coke’ (69.7%), ‘Rice’  (54.4%), ‘Marble Tiles/Slabs’ (47.2%), ‘Steel Castings’ (41.7%), ‘Leather Garments’ (33.6%), ‘Aluminium Tubes/Pipes’ (30.8%) and ‘Woollen Carpets’ (30.7%).

7.    Along with the Q.E. of IIP for the month of October 2011, the indices for September 2011 have undergone the first revision and those for July 2011 have undergone the final revision in the light of the updated data received from the source agencies. (It may be noted that these revised indices (first revision) in respect of September 2011 shall undergo final (second) revision in IIP for the month of December 2011)

8.    Statements giving Quick Estimates of the Index of Industrial Production at Sectoral, 2-digit level of National Industrial Classification (NIC)-2004 and by Use-based classification for the month of October 2011, along with the growth rates over the corresponding month of previous year, including the cumulative indices and growth rates, are enclosed.

India emerging as global role model for economic development

by Ashok Handoo*

The forward march of the Indian economy is continuing on the expected lines. The comfortable indicators promise to drive the economy out of the slowdown it faced in 2008-9, when the growth rate dipped to 6.7 per cent, after experiencing a 9 per cent growth for five consecutive years.

The most gratifying is the fall in food inflation which has been coming down consistently for the last five weeks and has now touched the 17 month low of 10.3 per cent. It stood at about 14 per cent in the corresponding period last year.

High food inflation has been a major source of worry to the Government for the past one year as it has been hitting hard the poorer sections of the society. Fall in food inflation is attributed to a better Kharif crop leading to increased supplies of agricultural products in the markets. With the end of the rainy season, disruptions in production and supplies of agricultural commodities have also ended. Economists believe that the stage is now set for food inflation to come down to a single digit soon. It was first witnessed in July this year but that was a brief relief.

The Centre for Monitoring Indian Economy (CMIE) has, in its latest report, estimated a 10 per cent rise in Kharif crop to 114 million tonnes against a 2 per cent decline a year ago. It estimates the Rabi crop to rise by 2 per cent, compared to 1.7 per cent drop in the last season. That should be quite reassuring for the country.

A good monsoon at 102 per cent this year, led to increase in sown area by 7 per cent during the current Kharif season, said the CMIE. It thus predicts an all round rise in agricultural commodities with oilseeds expected to grow at 11 per cent, sugarcane at 15 per cent and food grains at 5.3 per cent.

All this has naturally led to easing of pressure on the headline inflation as well. It has thus come down to a 9 month low at 8.58 per cent in October against 8.62 per cent in September. The Government expects the overall inflation rate to fall to 5-6 percent by the end of this financial year.

It is in this backdrop that forecasters have revised upwards the growth rate for India this year. RBI’s professional forecasters have predicted the growth rate at 8.5 per cent this fiscal. It had put the figure at 8.4 per cent earlier.

Other economic parameters also are showing encouraging trends. FDI inflows during September rose by 40 per cent to $ 2.11 billion. Net capital inflows are expected to reach $ 91 billion by the end of this fiscal. Last fiscal, this figure was only $53.6 billion. The Government expects to touch the target of one trillion dollars in public- private investment in the next five years.

The remarks made by the Chairman of the World Economic Forum Klaus Schwab at the just concluded India Economic Summit in New Delhi, were therefore in line with the ground situation. He said “at a time when the world is searching for a new model of economic development India’s experience as a crucible for new types of economic growth gives it a special role among developing economies.” The conference took note of the fact that amid the slowdown in the world economy, India stood alongside China to register impressive growth rate.

At the leadership summit in New Delhi too, former British Prime Minister Gordan Brown said that the Indian economy will double in size in next 7 years and that achieving a 10 per cent growth is possible. India’s role at the G-20 is ‘absolutely critical’ and is right at the centre of discussion, he said.

India and China provide a huge market to the world. While the US and Europe account for 20 per cent of world’s consumption, India consumes less than 1 percent while China stands at 3 percent.

A fall in food inflation and slackness in industrial production could now perhaps prompt the Central bank to ease its tight money policy which it has adopted to control inflation. Obviously, the bank will look at other indicators as well at its policy review meeting on December 16.

What is of concern is the sharp fall in industrial growth to 4.4 per cent in September, against 8.2 per cent in September last year. This was because of a slackening in the manufacturing sector which forms about 80 per cent of industrial production in the country. But the fact that industrial growth stood at over 10 per cent in the first six months against 6.3 last year, gives confidence that it would improve in the coming months, more so when agriculture is showing a rebound.

The challenge however remains to ensure inclusive growth to enable the marginalised sections of the society to share the fruits of development. As Dr. Manmohan Singh put it at the Leadership Summit, welfare of vulnerable segments of the society, reducing regional imbalances and increasing social and economic opportunities for backward classes, minorities and women remains the key challenge for the country. The Government has taken a number of steps in this direction which should help in achieving the objective. Its flagship programmes like the Mahatma Gandhi National Rural Employment Guarantee Act are doing wonders to reach to the economically weaker sections in rural areas. Similar other programmes need a push to speed up the process. (PIB Features)

EIL offer to kick-start fresh PSU divestment

Mumbai, July 26, 2010: Public sector undertaking Engineers India Limited proposes to enter the capital markets tomorrow with its follow-on public offer of 33,693,660 equity shares of Rs 5 each. The Offer comprises a net offer to the public of 32,981,660 Equity Shares and reservation of 712,000 Equity Shares for subscription by Eligible Employees. 

The Offer marks a divestment of 10% in EIL by the President of India, acting through the Ministry of Petroleum and Natural Gas, Government of India.

The Offer is being made through a 100% book building process wherein up to 50% of the Net Offer will be available for allocation on a proportionate basis to Qualified Institutional Buyers. Further, not less than 15% of the Net Offer will be available for to Non-Institutional Bidders and not less than 35% of the Net Offer  will be available to Retail Individual Bidders.

The Selling Shareholder currently holds 90.40% of the pre-Offer paid-up capital of the Company. The object of the Offer is to carry out divestment of 33,693,660 Equity Shares held by the Selling Shareholder, wherein all proceeds of the Offer will go to the Selling Shareholder.

EIL has provided a range of engineering consultancy and project implementation services on more than 49 refinery projects, including eight greenfield refinery projects, seven petrochemical complexes, 35 oil and gas processing projects, 205 offshore platforms projects, 37 pipeline projects, 11 ports and storage and terminals projects, eight fertilizer projects and 26 mining and metallurgy projects. In the infrastructure space, it has provided a range of engineering consultancy services for more than 26 projects, including for airports, highways, flyovers, bridges, water and sewer management, as well as energy-efficient “intelligent” buildings. The Company has also completed 16 turnkey projects, including refinery and petrochemicals projects and offshore platforms.

About Engineers India Limited:

EIL was incorporated on March 15, 1965 under the Companies Act as a private limited company under the name Engineers India Private Limited pursuant to a formation agreement dated November 20, 1964 and in accordance with a memorandum of agreement dated June 27, 1964 between the GoI and Bechtel International Corporation. In May 1967, it became a wholly-owned GoI enterprise. In 1996, the GoI disinvested approximately 6.0% of its shareholding in the Company and it became a public listed company. It has two wholly-owned subsidiaries, Certification Engineers International Limited and EIL Asia Pacific Sdn. Bhd. incorporated in India and Malaysia, respectively, and two strategic joint venture companies, TEIL Projects Limited and Tecnimont EIL Emirates Consultores e Servico, LDA, incorporated in India and Portugal, respectively.

EIL is an engineering consultancy company providing design, engineering, procurement, construction and integrated project management services, principally focused on the oil and gas and petrochemicals industries in India and internationally. It also operates in a diverse set of other sectors including nonferrous mining and metallurgy and infrastructure. The Company is also a primary provider of engineering consultancy services for the Government of India's energy security initiative under its Integrated Energy Policy for strategic crude storages. EIL’s portfolio includes various technologies for petroleum refining, oil and gas processing and aromatics. It currently holds 10 patents and has 20 pending patent applications relating to various process technologies and hardware developed by the Company.

EIL’s services in these industries and sectors cover the entire spectrum of activities from concept to commissioning of a project. The Company's services include preparation of project feasibility reports, technology selection, project management, process design, basic and detailed engineering, procurement, inspection, project audit, supply chain management, cost engineering, planning and scheduling, facilitation of statutory and regulatory approvals for Indian projects, construction management and commissioning.

EIL has leveraged its track record in India to successfully expand its operations internationally, and has provided a wide range of engineering consultancy services on various international projects, particularly in the Middle East, North Africa and South East Asia. It has established strategic international offices in Abu Dhabi, London, Milan and Shanghai to expand its international operations.

The Company's total income increased at a CAGR of 47.28% from Rs.6,876.5 million for the year ended March 31, 2007 to Rs.21,969.6 million in the year ended March 31, 2010, while its profit after taxation, as restated, increased at a CAGR of 47.31 % from Rs.1,390.0 million in the year ended March 31, 2007 to Rs.4,443.4 million in the year ended March 31, 2010.

During the quarter ended June 30, 2010 of the current financial year, EIL recorded a net profit of Rs. 1,145.6 million as against net profit of Rs. 942.2 million for the the corresponding quarter ended 30^th June 2009 of the previous financial year. The Net Sales for the quarter ended June 30, 2010 was Rs. 6,060.3 million as against Rs. 3,914.3 million for the corresponding quarter ended 30^th June 2009 of the previous financial year.