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Indian Express
30-06-2025
- Business
- Indian Express
May factory output growth drops to 9-month low as rains hit power demand
Growth in India's factory output fell to a nine-month low in May as cooler temperatures due to rains drove down demand for electricity, with mining output also affected. According to data released on Monday by the Ministry of Statistics and Programme Implementation (MoSPI), industrial growth as measured by the Index of Industrial Production (IIP) declined to 1.2 per cent in May, down from 2.6 per cent in April and 6.3 per cent in May 2024. Production of electricity was down 5.8 per cent year-on-year in May – the first time it was down on a year-on-year basis since August 2024. In fact, the year-on-year fall in electricity generation in May was the most since June 2020, when much of the country had come to a halt due to the coronavirus pandemic. The decline in electricity output in May can be attributed to the early onset of the southwest monsoon, which made landfall on May 24, the earliest it has done so since 2009. Along with electricity, mining output also declined in May, albeit by a marginal 0.1 per cent. In April, it had declined by 0.2 per cent. Rains affect mining activities. Meanwhile, manufacturing sector output – which makes up more than three-fourth of the IIP – rose by 2.6 per cent year-on-year, down from 3.1 per cent in April and 5.1 per cent in May 2024. Consumer weakness According to the latest statistics ministry data, production of consumer goods was lower in May compared to a year ago. While output of non-durable goods fell 2.4 per cent – down for the fifth time in six months – that of durable goods was 0.7 per cent lower. This is the first time in one-and-a-half years that production of consumer durable goods has fallen on a year-on-year basis. According to Paras Jasrai, Associate Director and Economist at India Ratings & Research, the contraction in non-durable goods' output in May 'points to weak goods consumption by households'. Output of primary goods also fell in May and was down 1.9 per cent after having posted a 0.2 per cent fall in April. However, growth in capital goods output was in the double-digit territory in May for the second month in a row, following up a 14 per cent growth in April with a 14.1 per cent increase, indicating 'sustained progression in investment activity in the economy', Jasrai said. According to data on the government's finances, also released on Monday, the Centre's capital expenditure in May was up 39 per cent year-on-year at Rs 61,564 crore. For April-May, the Indian government's capex was up 54 per cent from last year at Rs 2.21 lakh crore. Production of intermediate and infrastructure goods was up 3.5 per cent and 6.3 per cent, respectively. In April, output of intermediate goods had increased by 3.5 per cent, while that of infrastructure goods had risen 4.7 per cent. 'Overall, use-based data and manufacturing IP sectoral data shows capital-intensive sectors (metals, machinery, auto, construction) continue to outperform, while consumer durables and non-durables output remains subdued, pointing towards limited impulses from private consumption,' Barclays economists Aastha Gudwani and Amruta Ghare said in a note. A decline in industrial growth in May was expected due to the early rains, with commerce ministry data released on June 20 showing core sector output – which accounts for 40 per cent of the IIP – had increased by a mere 0.7 per cent in May, the least in nine months. Core sector data – which includes sectors such as coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity – is seen as a leading indicator of industrial activity in the country. For the first two months of 2025-26, IIP growth clocked in at 1.8 per cent, less than a third of the 5.7 per cent increase posted in April-May 2024. Looking ahead, industrial growth is seen subdued, with daily data showing power generated in June was down 2.1 per cent as of June 29. 'This may keep the factory output growth around 1.5% yoy (year-on-year) in June 2025, in Ind-Ra's view,' Jasrai said. IIP data for June will be released on July 28. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
Business Standard
28-06-2025
- Business
- Business Standard
India Ratings & Research revises rating outlook Aegis Vopak Terminals to 'positive'
Aegis Vopak Terminals said that India Ratings & Research has revised the outlook on the company's bank facilities to 'positive' from 'stable' while affirming credit rating on the same at 'IND AA'. The agency has also affirmed the companys short term rating at IND A1+. India Ratings & Research stated that the positive outlook reflects a likely improvement in the consolidated scale of operations in the near term, led by operationalisation and ramp-up of the newly added and upcoming capacities to meet the rising import/export demand for liquid and liquefied petroleum gas (LPG) in India. The overall operational liquid capacity and LPG static capacity continue to increase, and presently stand at 1.9 million kilolitre (kl) (FYE24: 1.6 million kl) and 1,99,000 metric tonnes (MT) (1,17,000 MT), respectively. The company plans to augment its liquid storage capacity by 176,000kl at various locations and its static LPG storage capacity by 48,000MT at Pipavav over FY26-FY27. Furthermore, it plans to add an ammonia terminal with a static storage capacity of 36,000MT at a capex of around Rs 5.3 billion at Pipavav. The consolidated EBITDA improved to Rs 11.0 billion in FY25 (FY24: Rs 9.2 billion; FY23: Rs 6.7 billion) and is likely to continue to improve in the medium term, supported by continued ramp-up of the newly added and upcoming capacities. Furthermore, in June 2025, Aegis Vopak Terminals (AVTL) has successfully raised funds amounting to Rs 28 billion through an initial public offering (IPO), enabling term debt repayment of Rs 20.2 billion. This has led to a substantial improvement in the capital structure, allowing significant headroom for capacity expansion over the medium term. India Ratings expects the company to achieve a net cash position in FY26, led by debt repayment and high cash balances. The company, apart from liquid and LPG capacity additions, is also evaluating opportunities in the ammonia terminal, industrial terminal and alternative energies and the management has envisaged a cumulative capex of Rs 90 billion by FY30 with a step-up in the annual capex run rate. The agency believes this might lead to debt-funded capex, and hence, the companys net leverage might turn positive again over the medium term. India Ratings notes the precedence of conservative funding strategy for the companys growth investments and the recent fund raise to support the same. However, the impact of the higher-than-expected capex, acquisitions, newly added capacities utilisation levels and return profile of newer segments such as ammonia terminals on the credit metrics will continue to be a key rating monitorable. With respect to AVTLs IPO, the promoters, AELL and Vopak, are required to dilute around 12% additional stake as part of the regulation to meet minimum public shareholding requirement within three years of the IPO, and would thereby be able to raise additional equity, leading to lower debt drawdown for the planned capex. Aegis Vopak Terminals is a JV between AELL and Vopak, a Dutch company that provides storage and logistics solutions for chemicals, oils, gases, LNG and biofuels. The company owns and operates terminalling assets in Pipavav, Haldia, Kandla, Kochi, JNPT and Mangalore. The scrip rose 0.85% to end at Rs 254.55 on the BSE on Friday.
Mint
17-06-2025
- Business
- Mint
Indian economy faces crosswinds with mounting global shocks
New Delhi: India's post-pandemic growth story may be heading into rougher waters. Economists warn that the finance ministry's projected gross domestic product (GDP) growth of 6.3% to 6.8% for FY26 could come under pressure as global headwinds, rising geopolitical tensions, volatile capital flows, trade disruptions and weak private investment intensify. On the domestic front, India must address challenges in private sector investment and weak urban demand. Trump's tariffs hit export-heavy Asian economies like China and Vietnam harder than India, which leans more on domestic consumption. Also read: CBDT probes crypto-related tax evasion Still, headwinds at home led chief economic advisor V. Anantha Nageswaran to urge India Inc. in February to step up domestic investment to sustain long-term growth. Reviving demand While benign inflation and a manageable current account deficit have been a buffer against global headwinds, economists said sustaining momentum will require deeper demand-side support and a sharper pickup in private capital spending. Devendra Kumar Pant, chief economist at India Ratings & Research, said private sector investment will pick up once demand is broadly revived. 'Earlier, rural demand was an issue, but in the last year, urban demand has been struggling. On top of it, sluggish global demand makes it difficult for across-the-board demand and thus investment revival," he added. A recent report by Axis Securities stated that fast-moving consumer goods (FMCG) companies reported a muted performance in Q4 FY25 due to continued weakness in the urban market, subdued demand environment and increased competition. Also read: What 16th Finance Commission's thinking on giving higher tax share to states Urban markets account for about 50-60% of total FMCG sales, the report added. Government capex According to the ministry of statistics & programme implementation data, Gross Fixed Capital Formation (GFCF), which indicates investment demand, picked up pace to 9.4% in Q4 FY25, as against 5.2% in Q3 FY25 and 6% in the year-ago period. However, much of India's recent capital expenditure has been powered by the government, with central capex doing the heavy lifting in the absence of a broad-based private investment revival. For FY26, the Centre has pegged capex at ₹11.21 trillion, a slight uptick from ₹11.11 trillion (budget estimates) in FY25. Sustaining 7%+ growth on government capex alone is mathematically possible in the short term but structurally unsustainable beyond the near term, said Rishi Shah, partner and economics advisory lead at Grant Thornton Bharat LLP. Shah said while India's consumption challenge runs deep, with household spending making up nearly 60% of GDP—and urban consumption remaining held back by weak jobs and uneven income growth—consumption and investment must grow together to sustain long-term growth. 'The realistic path to 7%+ growth involves using the current government-led (capex) phase to create conditions for private sector revival while ensuring consumption support through employment generation," he said. 'It's a delicate balance, but one that needs to be successfully navigated," he added. Meanwhile, foreign portfolio investors (FPIs) pulled out $3.2 billion in June (till 10 June), undoing May's $3.6 billion inflow, rating agency CareEdge said in a report last week. Also read: Retail inflation cools to a six-year low of 2.82% in May on moderating food prices So far in 2025 (till 10 June), net outflows stood at $9.8 billion, driven by $11.2 billion in equity exits, partly offset by $1.6 billion in debt inflows, with volatility likely to persist in FY26, it added. Spotlight on policy agility The finance ministry's latest economic review, released last month, flags mounting global headwinds, from rising policy uncertainty and volatile trade shifts to escalating geopolitical tensions, demographic pressures and climate-related disruptions. The International Monetary Fund's latest World Economic Outlook warned that the global outlook remains clouded by inflation, debt burdens and shrinking labour forces in advanced economies. India's growth momentum will hinge on strong domestic demand, driven by consumption, investment and exports, with key engines being private spending, capital formation and a steady export push, said D.K. Srivastava, chief policy advisor, EY India. 'There would remain an atmosphere of uncertainty regarding the contribution of net exports. Both monetary and fiscal policy should be continuously calibrated to minimize the volatility of growth," he said. Srivastava said government-led capex is likely to remain India's key growth engine for at least two more years and with rising geopolitical tensions, a greater share may shift toward defence. 'At any rate, infrastructure deficiencies in India must be overcome to make Indian industry more competitive. As global demand picks up, the contribution of net exports to India's GDP growth will become stronger and reliance on government capex may be eventually reduced," he added. Policy bets To be sure, policymakers are betting on an above-normal monsoon, easing interest rates, and robust government capex to drive growth and shield the economy from global headwinds. 'There's cautious optimism for FY26, with India projected to grow between 6.3% and 6.8%. Even if global headwinds intensify, 6.3% appears to be the lower bound, while 6.8% is achievable if global conditions remain supportive," said a senior official who did not wish to be named. The official cited opportunities from upcoming trade deals (with the US and EU), a growth-friendly monetary policy stance, middle-class tax relief (announced in the latest budget), and a well-distributed monsoon as key tailwinds for the economy. The World Bank projects India's economy to grow at 6.3% in FY26, while the International Monetary Fund pegs it slightly lower at 6.2%. In its Global Economic Prospects-June 2025 report released last week, the World Bank emphasized that global risks are intensifying, with the spectre of further trade barriers and heightened policy uncertainty looming large. It also highlighted concerns about higher-than-expected global inflation, which could lead to tighter financial conditions, potentially weakening regional currencies and spurring capital outflows. India's growth is robust, but global shocks now outpace policy responses, squeezing margins and shaking markets, warns Grant Thornton Bharat's Shah. 'Our economy has built substantial buffers and adaptive capacity, but even the most resilient systems face stress when global policy uncertainty becomes the dominant variable," he added.
Business Standard
28-05-2025
- Business
- Business Standard
Prism Johnson receives affirmation in credit ratings
From India Ratings & Research Prism Johnson announced that India Ratings & Research has affirmed its ratings/outlook for the existing Non convertible Debentures, term loans and fund based working capital limits of the Company as 'IND A+/Positive'. Further, the ratings for non-fund based working capital limits, unsecured short-term loans and commercial paper program of the Company has been affirmed as 'IND A1+'. The ratings of unallocated fund based / non-fund based limits of Rs 1.1 crore have been withdrawn in line with India Ratings' policy on Withdrawal of Ratings given that the facility rating is no longer required to be maintained as this debt is not expected to be by Capital Market - Live News
The Hindu
26-05-2025
- Business
- The Hindu
Tamil Nadu's capital expenditure grew over 16% in fiscal 2025
Tamil Nadu's capital expenditure grew over 16% to ₹46,076.54 crore in fiscal 2025, when compared to ₹39,540.90 crore in fiscal 2024, according to the preliminary un-audited provisional figures from the Comptroller and Auditor General of India (CAG). Capital expenditure (capex) goes towards creation of fixed assets, such as roads and bridges, irrigation structures, schools, hospitals, along with investments made in Public Sector Undertakings. It helps in improving economic activity and generating employment. The capital expenditure for fiscal 2025 is also in line with the projection made in the revised estimates. The overall Capital Expenditure in the Revised Estimates was projected at ₹46,766 crore, as compared to ₹47,681 crore in the initial Budget Estimates for 2024-25, as per the State Budget for 2025-2026. 'The 16% growth in fiscal 2025 indicates a sustained focus on capex by the State government. The capex growth achieved in fiscal 25 provisional is much better than the compounded annual growth rate (CAGR) of 12.3% during fiscal 2018-2024,' Paras Jasrai, associate director, India Ratings & Research, said. He said this is a positive development. 'In fact, a better way to look at it is comparing the actual overall capex (including loans and advances) as a proportion of the budgeted numbers. A closer look at the data reveals that Tamil Nadu has met 95.2% of the budgeted target in fiscal 2025, which is much better than fiscal 2024 number of 86.2% and 95.4% in fiscal 2023, as well as the average of 88.1% during FY18-FY24,' Mr. Jasrai said. According to him, the State has also fared better in terms of quality of expenditure. The quality of expenditure can be gauged by capital outlay to total expenditure (COTE). The COTE stood at 12.2% in fiscal 2025 provisional numbers and has hit a three-year high (it was 12.6% in fiscal 2022), Mr. Jasrai said. The metric for fiscal 2025 provisional is also better than the average of 11.4% during fiscal 2018-fiscal 2024. For fiscal 2026, the State government has estimated capital expenditure of ₹57,231 crore, which is a growth of 22.38% from the revised estimates for fiscal 2025. The total capital outlay of the State, including Net Loans and Advances, is estimated at ₹65,328 crore in the Budget Estimates 2025-26. 'Capex remains a sustained focus for the government, which is quite favourable for the continuing the economic momentum in the state. The State has been actively focusing on fiscal consolidation as evident even in the FY26 budget,' Mr. Jasrai said.
