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Your celebratory mood for New Year may be dampened if you go through the latest quarterly survey of FICCI. For building materials industry, that is for cement and ceramics, subdued mood will be prolonged and you will enter the New Year with not that cheerful mood.
50% of the respondents surveyed by FICCI are expecting higher production in October-December quarter vis-à-vis the same quarter last year. However, there is a varied outlook for quantum of orders as equal number of respondents reported a rise/ fall or same number of orders on a sequential basis.
Though the majority of the respondents are expecting a rise in the capacity utilization vis-à-vis corresponding period in the previous year, no major expansion projects are planned in the next few months. Also, there is bad news on employment generation front as 75% of the people surveyed are not planning to hire new work force in next six months. Again 75% of the sample is reportedly maintaining average inventory levels while others are having lower levels.
While the building materials industry is availing credit at the average rate of 10%, about 75% of the respondents reported a rise in the cost of production as a percentage of their sales for current quarter.
Deficiency and high prices of raw materials and sluggish domestic and export demand are the major issues affecting the growth in the sector. There was a general feeling that there was a need for large scale development projects especially in housing. They also want reduction in input cost and lending rates.