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It's pouring out there, but India Inc sees mixed fortunes

Surajeet Das Gupta & Bhupesh Bhandari

The monsoons are here and looking good, but India Inc is still hedging its bets on how beneficial it would be to the industry.

While cement, fertiliser, tyre, steel and some auto manufacturers expect business to grow in the next three to four months, others like FMCG and two-wheeler companies expect little improvement in fortunes despite the steady rains. Fertiliser companies expect the market to grow by at least 4-5 per cent this year compared to a de-growth of 6-7 per cent last year.

Says HS Bawa vice chairman of Chambal Chemicals & Fertilisers and managing director of Zuari Industries: "In many regions, fertilisers have already started moving fast. For the last three years, Rajasthan, MP and Gujarat have received very little rain. This year it is going to be different and the industry will benefit from it."

Steel companies are also seeing firming up of prices in some sectors. For instance, long product prices have gone up by Rs 2000 a tonne reflecting some growth in demand.

"We expect an upturn sometime in October after the monsoon season and a growth target of around 5- 6 per cent this year seems achievable," says Prashant Ruia, director in Essar Steel. Avers a senior SAIL executive: "Thanks to the monsoons, we expect the market growth to be of the order of 6-7 per cent."

Similarly, the downward pressure on textile prices witnessed in May has been arrested and there are signs of prices firming up.

Says OP Lohia, managing director, Indo Rama Synthetics: "Overall, I think that the industry this year will grow by 8-10 per cent as against 3-5 per cent last year."

Consumer electronics companies which have been reeling under falling sales are bullish. Says Samsung India vice-president, sales, Ravinder Zutshi: "I think the worst is over. We are already seeing the offtake improving in states like Kerala where monsoons have started. The industry was expecting a growth of not more than 4 per cent but the figures could be better."

In the auto sector, however, the prospect on the upturn are divided. Two wheeler companies like Bajaj Auto do not see any major change in demand as a result of better monsoons.

Says RL Ravichandran, vice-president, marketing and product development, Bajaj Auto: "We see a lull in demand in rural India. Even if monsoons are good, the problem is that the support price is not attractive and this is a problem for agriculturists."

Car companies are showing more cautious optimism. Says B V R Subbu, director, marketing and sales, Hyundai Motors: "If monsoons are good all across the country, we expect demand to pick up in September-October."

Maruti Udyog expects sales of its lower end products to go up as a result of an expected rise in rural income due to good monsoons.

Related to the auto sector, tyre companies also see an upturn. Last year, sales were flat and there was prices fell 8-10 per cent. Says Raghupati Singhania, MD, JK Industries and president, ATMA: "This year will be better than last year."

But the news in the FMCG sector still does not show any major turnaround. Dabur, for instance, projects the market to be flat during the year.

Says a spokesperson of the company: "We are not clear whether or not the monsoons will be eventually good in the entire country. And even a good monsoon does not assure a good price. I do not see rural demand showing an upturn."

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