69
Notice
Directors’ Report
(69-103)
Management Discussion & Analysis
Corporate Governance
Secretarial Audit Report
BUSINESS OVERVIEW
India’s GDP growth continues to remain weak, at 4.7% in FY 2013-14
(advance estimates) after growing at 4.5% in FY 2012-13. Industrial
activity continues to remain weak. Index of Industrial production
(IIP) was negative at 0.1% during FY 2013-14. The stagnation in
the industrial activity was broad-based. While mining output
registered a negative of 1.1%, manufacturing output registered a
negative of 0.7% during the same period. FY 2013-14 witnessed a
decline in investments in new projects in line with slowdown in
overall growth.
Growth rate in GDP
FY 2012-13
FY 2013-14
Q1
4.5
4.7
Q2
4.6
5.2
Q3
4.4
4.6
Q4
4.4
4.6
4.5
4.7
Source: Ministry of Statistics and Programme implementation
MANAGEMENT DISCUSSION AND ANALYSIS
As a result, the domestic auto industry saw decline after a long time.
With the continued high interest rates and inflation, households
were forced to spend more on essentials and discretionary spend
reduced, leading to deferring of purchase decisions. The consistent
stagnation of the industrial growth mainly in the areas of mining and
quarrying, manufacturing and infrastructure adversely impacted the
domestic auto industry.
On the global economy front, it was still a struggle, with the Euro
zone in recession for much of 2013. However, in the developed
world which had started as an uneven and patchy, recovery began
to strengthen. The US economy, despite having to cope with feuding
over its budget, seems to have sped up. It has been creating jobs
and its housing market and stock indicator have moved up sharply.
By the end of the year 2013, the UK had become, on some counts
the fastest growing large developed economy. UK labour market
conditions improved as employment increased. Rising consumer
and business confidence helped to underpin stronger retail sales
and investment spending, while the recovery in house prices helped
shore up household wealth. This was led by higher consumption, in
turn leading to fears of overheating in the housing market.
Germany had a solid year, reducing unemployment and boosting
living standards. However, across the Mediterranean the pattern
was more disappointing, with Italy, Spain, Portugal and Greece all
enduring a year of rising unemployment. Europe and the euro are
not out of trouble, but the acute phase of their difficulties may be
past. However, there is still a long way to go: deflation risks remain,
the sovereign and banking crisis is not fully resolved, and there
is a considerable gulf in performance between the core and the
periphery.
The structural shift from the developed world towards the emerging
world continued but at a slightly slower pace than before. Industrial
activity picked up pace throughout the year, supporting continued
employment growth. With asset prices buoyant and confidence
returning, the pillars of support for consumer spending fell back into
place during 2013. In the emerging markets due to announcement
by the US Federal Reserve in May, that it would soon begin
reducing its monthly asset purchases (so-called “tapering”), caused
currencies to depreciate, stock markets to fall and borrowing costs
to rise. Countries with large current account and fiscal deficits were
worst affected.
On the back of tight monetary policy, limited Fiscal spending, rising
Inflation and slowing investments, over the previous year, FY 2013-
14 saw many of the same challenges continuing into the year.
FY 2013-14 was marked by the challenge to the Government to
contain the fiscal deficit, and the Government expenditure on
infrastructure and other key sectors suffered. Current account
deficit was brought in control .
7.2
Q1
Q2
Agriculture & Allied
Industry
Services
GDP at factor cost
2013-14
Q3
Q4
Q1
Q2
Q3
Q4
6.4
7.2
63
7.2
6.3
6.9
7.6
4.5
6.3
4.6
4.7
4.4
4.4
4.6
1.8
4.6
3.7
4.0
2.1
1.7
1.8
0.3
2.6
1.6
0.8
-0.4
-0.4
-0.4
-0.2
5.2
5.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
2012-13
