The Hindu : Karnataka / Bangalore News : Electronics, steel sectors on growth path

Online edition of India's National Newspaper
Thursday, May 01, 2008
ePaper | Mobile/PDA Version

Karnataka

Karnataka - Bangalore

Electronics, steel sectors on growth path

Special Correspondent

Profit margins in IT sector to fall 7.5 per cent: CII survey

Automobile among top five sectors in Karnataka
Rising price of inputs causing concern

BANGALORE: The Confederation of Indian Industry – Southern Region’s survey of industry for October 2007-March 2008 shows that the electronics and steel industries registered impressive growth.

The survey was based on feedback from senior executives of companies in the “top five” segments of the industry in Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu.

The survey made forecasts for the April 2008-September 2008 period. The top five sectors were identified on the basis of their contribution to State Gross Domestic Product (SGDP). The top five for Karnataka are automotive and auto components, electronics, information technology, engineering and steel.

Production in the sector grew by 10 to 20 per cent in the half yearly period covered by the survey. Sales in this sector increased 10 to 15 per cent during this period, when compared to the corresponding period last year. However, prices, profit margins and employment levels remained unchanged. The survey observed that rising raw material prices and supply are major issues that may hamper the growth of the industry.

The value of output generated by the steel industry in Karnataka grew 10 per cent in the half year covered by the survey. Inventory increased by 8 per cent and although prices remained stagnant, profit margins in the industry fell 3 per cent.

The CII forecasts that the steel industry is likely to slow down during April-September. The value of output, sales and capacity utilisation are all projected to fall 15 per cent.

Profit margins are projected to fall 3 per cent. The decline is mainly on account of the sharp increase in the cost of raw material such as iron ore, imported coking coal, melting scrap, apart from the increase in freight costs.

The Information Technology sector showed “mixed performance” October 2007-March 2008. Despite revenues increasing by 5-10 per cent and a 10-15 per cent increase in overseas billing, the profit margin declined 7 per cent. Employment levels remained stagnant during the period under review as the industry was impacted by the rising rupee and rising interest rates. The industry does not expect any change in pricing. It expects profit margins will fall by up to 7.5 per cent during this period.

Printer friendly page
Send this article to Friends by E-Mail

Karnataka