Manufacturing activities may gain momentum in coming months, says HSBC survey

The HSBC Purchasing Managers' Index which measures the trends in manufacturing sector every month fell to 51 points in April, the lowest reading recorded since November 2011

Manufacturing activities in India may gain momentum in the coming months, given a pickup in export orders, declining prices and improved operating conditions, a survey by HSBC said today.


Although India’s manufacturing growth rate fell to its lowest in over four years last month, export orders picked up and both input and output inflation eased, as per a monthly Purchasing Manager survey conducted by HSBC India and financial information provider Markit.


Besides, operating conditions in the Indian manufacturing economy improved further during April and there was a modest increase in incoming new work, the survey said.


The slowing growth rate and declining inflation may prompt the central bank to cut the interest rates tomorrow, although there is not “plenty of scope for RBI to slash rates”.


The HSBC Purchasing Managers' Index measures the trends in manufacturing sector every month on the basis of changes in output, new orders, employment, suppliers' delivery times and stocks of purchases. The index fell to 51 points in April, the lowest reading recorded since November 2011.


“Growth in manufacturing continued to slow as domestic orders decelerated and power outages curbed output. On the bright side, new export orders picked up and inflation continued to ease,” it said.


HSBC said that growth needs a boost from further policy reforms and stepped up implementation of infrastructure related investment projects.


Commenting on the survey results, HSBC’s chief economist for India and ASEAN Leif Eskesen said: “Manufacturing activity lost momentum again in April, with output growth slowing further on the back of a deceleration in domestic orders and continued power outages.


“Export orders, on the other hand, picked up. Encouragingly, input and output price inflation eased. With the growth momentum slowing and inflation receding, the RBI is likely to cut the policy rate this week,” he said.


“To add juice to the economy again the reform momentum has to get its second wind and we need to see more implementation of key infrastructure related projects,” HSBC said.


“The latter is likely to gradually happen as some of the investment projects expedited through the investment committee are rolled out,” it said.


Dabur India reports strong Q4 results, confident for FY14, says Nomura

FY14F looks poised to be a year of strong profit growth, says Nomura Equity Research in its Quick Note on Dabur India

Dabur India reported solid results for the fourth quarter of FY13, with volume growth of 12%, which was a key positive. Margins improved by 120 basis points (bps), which was ahead of Nomura’s and consensus expectations. The management was confident of delivering robust volume growth and an improvement in margins in FY14F. Q4FY13F results gives confidence that some of the disruptions as a result of the revamp of the distribution system are now firmly behind and FY14F looks poised to be a year of strong profit growth. These observations were made by Nomura Equity Research in its Quick Note on the company’s performance.


Key highlights from Dabur’s Q4FY13 results

  • Revenue growth for the quarter was at 12.3% to Rs15.3 billion. This compares with Nomura’s estimates at Rs15.95 billion and consensus at Rs15.65 billion.
  • EBITDA margins came in at 17% versus Nomura’s forecast of 15.7% and consensus at 16.7%. This was a positive surprise.
  • Net income came in at Rs2.06 billion compared to the brokerage’s forecast of Rs1.94 billion and consensus at Rs1.99 billion.
  • Gross margins are +190bps y-o-y, which is a sportive and similar to the other consumer companies which have reported thus far. This is likely to be a positive across the sector in H1FY14F.



In segmental performance, Dabur’s consumer care business revenues rose 13.1% to Rs12.9 billion with margins improving by 10 bps y-o-y. Foods business revenues improved 19.4% with margins down 300bps. The Real brand delivered market share gains.

As per the management’s conference call, post-results:

  • Improvement of the distribution platform is now complete and has helped improve the volume growth trajectory. The company expects to benefit from this in the medium term as it helps to improve product mix across stores.
  • Skin care is the most discretionary segment within the HPC (home and personal care) portfolio and should continue to remain sluggish in the near term. This is similar to comments from Hindustan Unilever and shows that there are parts of the portfolio which will continue to be weak in H1FY14.
  • Namaste business has had a disappointing year, but given the changes to the management team, the company appears confident that FY14 will shape up better than FY13. However, this could be more back ended in FY14, so the first couple of quarters could continue to be soft.
  • The management is confident of taking price increases if required. However, given the benign input cost environment, outlook for price increases is more cautious. Management is now looking for price increases to the tune of 2%-3% in FY14, as against its earlier expectation of 4-5%.
  • On gross margins, the company expects c.100-150 bps improvement in FY14 on a y-o-y basis. This is a strong positive as it not only means that the management will have more levers to make investment in A&P, but also shows strong visibility on the input cost environment.
  • CSD channel has not yet returned to normalcy. However, the channel itself has adjusted to lower inventory levels, and going forward, the channel is likely to grow at the same pace as the domestic business but margins will be impacted negatively.
  • A&P to sales ratio is likely to be close to 13%, but as always, this is going to be volatile on a quarterly basis. The management remains confident that 13% level gives enough room to help support their brands in the domestic business.

Volume growth guidance for FY14F should continue to be 8%-12% as in most years. But for FY14F, management expects to come in at the top end of that guidance, which is a positive.


40% buildings in Mumbai do not have OCs. Will axe fall on them?

All those responsible for constructing illegal buildings often get away scot-free and the end user has to pay the price. If at all the government is keen on demolishing illegal buildings, why not start with unsafe buildings first instead of bringing down sound structures, asks Ramesh Prabhu

Hapless settlers evicted with nowhere else to go, living in illegal buildings, thanks to builders who flouted the laws, may become the norm across the Mumbai Metropolitan Region. The residents of the 35 illegal floors at the Campa Cola Compound, situated in upscale Worli in central Mumbai, are a case in point. The Supreme Court on Thursday gave a temporary reprieve to these families and gave them five months to vacate their flats.


However, this would well be the fate of residents of over 40% buildings in Mumbai, who do not have the mandatory occupation certificate (OC) from the BrihanMumbai Municipal Corporation (BMC). “It is reckoned that at least 6,000 buildings across Mumbai are paying double money for municipal water, which means they are not authorised. Many unauthorized structures are routinely regularised on payment of penalties... but there are many more that are not yet regularised for various reasons. Will the axe fall on them also? In addition, why only Mumbai? What about Thane, Mumbra and Ulhasnagar where thousands of unauthorised (and often unsafe) structures are standing—a disaster waiting to happen?” asks Ramesh Prabhu, chairman of the Maharashtra Societies Welfare Association (MSWA).


He said, “In all these places, builders have sold the flats, made off with the life savings of crores of families—worth several thousand crore rupees. Dozens of members of Parliament (MPs), members of legislative assembly (MLAs) and corporators from all political parties as well as civic officials are accomplices of these builders.”


Between 1981 and 1989 seven high rise buildings were constructed at the Campa Cola Compound. While the builders have permission to build only five floors, they constructed several floors above. For example, one of the buildings Midtown has 20 floors while Orchid has 17 floors. Needless to say all floors above the permitted five floors are illegal. Unfortunately, it is the buyers of such flats, who have to pay the price for illegality committed by the builder and developer.


“As it happened with the three builders of the seven buildings of Campa Cola Compound, developers perpetrate the crime and usually go scot-free. Thousands of architects and contractors who mastermind such unauthorized buildings will also never be caught. The municipal officials, state government bureaucrats and police officials who turned a blind eye to the goings on are unlikely to be punished,” said Mr Prabhu.


He said, when the comes to for buildings to be demolished, it will be you and me—the common man—who will be running helplessly from pillar to post like the residents of Campa Cola Compound are doing today.


Mr Prabhu admitted there are no easy solutions for the illegal buildings menace and to get rid of all such structures, a major surgery is required across the Mumbai Metropolitan Region.


“However,” he said, “may I humbly urge the state government and legislature to frame a humane policy to deal with unsafe buildings first, before demolishing sound structures like the Campa Cola buildings? May I humbly urge Maharashtra government to avoid shirking its responsibility, and letting municipalities take their own decisions?”


“If a comprehensive and humane ‘demolition policy’ is not framed, a humanitarian crisis looms large before at least 40% of us in the years to come. Until such a policy is framed, I cannot help feeling that we all are Campa Cola building residents, waiting for our houses to be demolished for one reason or another,” the chairman of MSWA added.


Recently, an illegal building in Thane collapsed killing many people. Moneylife had written an extensive report over here and here.



Prafull Khopkar

1 month ago

How About a Situation when you buy a Flat In a Society, Apply for a Housing Loan, having tenure of say 10 or 20 years, and very honestly repay the loan over the years without missing a single instalment, after 25 years you come to know about the land on which the society building is standing is taken away notionally by Maharashtra Govt by virtue of ULC Act, in spite of building having IOD, CC which is granted much before than the date on which ULC Law is applied and Land is Acquired by Maharashtra Govt ?

Prafull Khopkar

1 month ago

What is Urban Land Ceiling Act ? Why was it introduced and When ?

Prafull Khopkar

1 month ago

All the Buildings which does not have OC In Mumbai should be demolished ? Why OC is not Granted ? What are the Hurdles ? What is an alternative ?

Emerging Voice

3 years ago

Hiranandani Powai is a classic case. Bombay HC had directed BMC not to issue OC to any new bldgs nor permit new bldgs to be approved till Hiranandani Pays penalty. But BMC went to sleep. The new Bldgs are fully occupied wout OC (Next to Forest Club). Most of the residents own Audi, MERC, BMWs. Bldg is well lit. So BMC can't be blind to all this but money covers BMC eyes. Who will bell such cats??


3 years ago

Not having occupation certificate does not necessarily means that the structure or building is illegal.there are many buildings which have OC,but have also illegal alterations,additions,more than permissible fsi or constructed space.All corporations should check whether building consructed is as per sanctioned plans and issue OC if no violation has taken place.


3 years ago

The truth is that all of us have become "bakras" of the system - just because we are well fed and being taken care of, we forgot that the day of reckoning is only a year away at max.

When prices kept going higher and higher, we were so happy - not realizing that one day the same phenomenon would hit us badly - our children cannot buy houses in our areas anymore, they have to go 20 kms away and then slog their entire life to repay the EMI. But they will be happy doing so, as the perceived value of their house is so high !

So the conversion of need for housing became greed for housing - and naturally builders, netas, municipality officers, all of them got together to exploit this greed !

You created a bunch of rakshasas when you let loose the raskhas ( in this case, greed ) in you !


3 years ago

I agree with Mr.Purohit. why should a common man suffer for no fault of his. Many people take bank loans and it is assumed that banks verify all the details and then sanction the loan and those buyers buildings also do not get oc.who is the culprit?

Shadi Katyal

3 years ago

Why is Mr. Prabhu being so discrminatory or as it is a practice in India that those who have money and can grease the palms will go scot free.
India is one of the nationsw where Laws have no meaning as one can ignore,good example of these building, bend it and if all fails buy it.Why are we so lawless society?
It is not only in this case but look around how quickly we burn,destroy the public properties. What do we get out of such acts?
All buildings which are unlawfully constrcted should be brushed with same paint


Sachin Purohit

In Reply to Shadi Katyal 3 years ago

"All buildings which are unlawfully constructed should be brushed with same paint". But then the construction business is so non-transparent, that as a buyer, you do not know about the breach of laws the builder must have committed before you have bought the house with all your hard-earned savings. Let the builder be punished for the illegality. Why punish the buyer? He already got cheated by the builder. Now the system will also punish him?! First, the authorities need to punish themselves. Arrest those who allowed the illegal construction to take place. Then, check the condition of the building. If the structure is weak enough to be a threat to its tenants, evict it by all means, but after compensating them at least to the extent of the money spent by them. As for the buildings whose structure is strong enough, there is nothing else to do but to legalize them and then, make sure that such mess does not get repeated henceforth.

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