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April Industrial Growth up 7%

June 12, 2008

The Indian Industrial Production – IIP for APRIL-08 was 7% Vs 3.9% in MARCH-08. Led by mining up 8.6%, manufacturing up 7.5% while electricity came in at a poor 1.4%. The slowdown in industry coupled with a deceleration in service growth (mainly financing and insurance) is likely to result in overall GDP growth coming in at 7.7% in FY09 v/s 9% in FY08.

Capital goods at 14.2% remained in the double-digit range but lower than trends last year. This supports the view that investment growth in the coming year is likely to be relatively lower than last year.

In the autos sector, higher interest rates, curtailment in retail finance and a slowdown in growth has curbed demand, but this has been offset in the past two months by aggressive discounting and financing schemes.

In the construction sector, rising input costs coupled with an oversupply due to the export ban in cement, delays in raw material availability and a slowing economic outlook remain risky.

A month from now we will have Q1-FY2009 results and guidance by managements paving way for a clear picture.

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