Group wise analysis of Large Scale Manufacturing (LSM)

Engineering Post Report

In continuation of an insight into three sub-sectors of Manufacturing Sector i.e. Large Scale Manufacturing (LSM), Small Scale Manufacturing (SSM) and Slaughtering, presented last month i. e. November 2021, here is a group wise analysis of LSM during the period of July-March FY 2021 versus  July-March FY2020.

!5 LSM groups , performance of which is being reported here, include Textile; Food, Beverages and Tobacco; Pharmaceuticals; Chemicals; Automobiles; Iron and Steel Products; Fertilizers; Electronics; Leather Products; Paper & Board; Engineering Products; Rubber Products; Non-Metallic Mineral Products and Wood Products.

According to the information available from official sources concerned, Textile sector has the highest weight of 20.91 in Quantum Index of Manufacturing (QIM) thus having a significant impact  on overall performance of LSM. During the period underreport, textile production had increased  by 5.90 per cent during July-March FY2021 against 2.58 per cent decline  in the same period previous year. Major jump had originated  from woolen segment production . Pandemic of Corona Virus had proved  as a blessing of disguise for garments manufacturers as there was a flurry of export orders from European and American  markets for Pakistan’s garment sector due to the severe impact of COVID-19 on our regional countries. Cotton yarn production  and cotton cloth had also contributed well as they had grown by 3.1 and 3 per cent respectively. The federal government had also  facilitated the sector i.e. tax refunds and dury drawbacks, which was bearing fruits and this sector started picking up the pace.

Food Beverages & Tobacco had the highest weight of 12.37 in QIM . This sector had bounced back with 11.73 per cent increase  as compared to 1.69 per cent decline previous year. Sugar, cigarette and wheat milling came up with significant  growth which boosted the overall sector.

Coke and Petroleum industry production  expanded by 12.71 per cent  against  double digit  contraction of  17.54 per cent in the previous year. Production of petrol,  furnace oil  and diesel  grew significantly as demands spurred  from resumption of    transportation activities accompanied  by robust  sales of automobiles. Comparatively  lower prices of  retail fuels  during the period also pushed up the petroleum sales by 14 per cent thus encouraging  the petroleum production.

In the wake of gas shortages, furnace oil use for electricity generation  had increased the fuel’s demand. Besides, Federal Bureau of Revenue (FBR)  crackdown  against  smuggled petroleum products had also led to increase in demand for domestic products. All these factors had thus provided cushion to the otherwise dwindling petroleum industry.

Automobile sector had witnessed a broad-based  growth of 23.38 per cent  against 37.66 per cent in the previous year. Reduced interest rates,  stable exchange rate   and huge  investments  by the new and existing players  were having  positive impact  on this segment  as well as enhancing competition .Car production and  sale accordingly increased  by 20.1 and 31 .5 per cent respectively. Trucks and buses production and sale  on the other hand declined  by 7.5 and 1.5 per cent respectively. Total tractors production and sale, however, remained promising  and recorded as high as 57.5 and 57.1 per cent growth, respectively. Automobile sector was still working  below  its potential  thus offering a lucrative opportunity for manufacturing sector.

Iron and Steel production inched up by 1.66 per cent  during July-March  FY2021 as compared to 7.96 per cent dip in the same period last year.The federal government had announced  multiple incentives  for the construction  sector which had already started bearing fruits.

Fertilizers production grew by 5.69 per cent as compared to  5.81 per cent  growth during last year. The fertilizer subsidies of the federal government  had incentivized  manufacturers  to expand capacity  and upgrade plants by offering  gas at lower rates. That  also attracted investments in this sector  and enhanced local urea production capacity. Improved farm economics, lower input costs and better support prices  offered by the government  had duly supported this industry.

The electronics  exhibited lackluster performance and plunged to 20.77 per cent  against 15.58 per slump in corresponding period. Electric motors, bearing the  highest weight in this segment, had so far been responsible for overall  electronics dip. During the period under review, electric motors  had dived by 31.8 per cent and dragged down  the whole electronics industry. Likewise,  electric fans, tv sets and deep freezers  also witnessed  decline as pandemic had affected the spending patterns and majority was focusing  on essentials only.

Non-metallic Mineral Products had surged by 24.31 per cent as compared to 1.87 per cent increase last year.  This was mainly driven by  17 per cent jump in cement production. Total cement dispatches during July-March FY2021 had increased to 43.32 million tonnes from 37.03 million tonnes last year. 

Engineering   products had plunged to 25.53 per cent as compared to 7.28 decline last year. This drag had mainly come from sewing machines and bicycles production which had declined  by 43 and 59 per cent respectively.