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Indian manufacturing sector is optimistic about '08: KPMG

Source : PTI
Last Updated: Thu, Feb 14, 2008 08:10 hrs

London: The manufacturing sector across BRIC region (Brazil, Russia, India, China) is showing signs of 'buoyant levels of confidence' regarding the prospects of business activities during 2008, according to a survey conducted by global consultancy firm KPMG.

According to the winter 2008 KPMG Business Outlook Survey, in contrast to the financial market gloom in the US, the picture was not as dim in BRIC countries and the European Union.

Exactly 70 per cent of survey respondents anticipated a rise in activity levels at their firms in the coming year, while just 6 per cent expected a decline.

Brazilian companies were the most optimistic lot, while positive sentiment was least among Chinese firms.

Ian Gomes, Chairman of KPMG's New and Emerging Markets Group, said: "Manufacturers across the BRIC countries expect to maintain rapid expansion in 2008, underpinned by continued buoyant demand conditions."

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Setting out expectations for business activities over the next 12 months in India, the survey said the outlook for India's manufacturing sector was positive in January, with companies highly confident that activity, new business, revenues, profits and employment would all be up on current levels in 12-month's time.

However, the outlook for inflation in India was also strongly on the upside, with widespread expectations that both average purchase prices and output charges would be higher at the start of 2009.

Almost two-third of Indian companies forecast a rise in business activities, with a similar proportion anticipating a hike in business revenues. The main factor expected to underpin growth of manufacturing revenues was successful marketing initiatives.

Indian companies expected to benefit from innovation, with the launch of new product lines set to lead to a rise in business revenues.

In line with achieving this strategy, over half of the survey panel reported that they planned to raise their investment in research and development over the next 12 months in India.

"High levels of investment into both capital spending and R&D are anticipated, supported by strongly rising company profitability, while capacity is set to receive a further boost from robust job creation," Gomes said.

Manufacturers forecast a marked increase in their ratios of finished goods stocks to output, suggesting that there will be a build-up of post-production inventory.

At 54.5, the net balance recorded for India was the highest among the BRIC nations.

The survey revealed that the volumes of new orders placed with BRIC manufacturers are expected to increase strongly during 2008.




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