The production data received from the Oil Companies Advisory Committee (OCAC) comprising 11 items, Ministry of Industries and Production 36 items and the Provincial Bureau of Statistics 65 items, respectively, have contributed to LSM growth as -0.26 percent, 0.75 percent and 0.55 percent, respectively.
The growth rate in Large Scale Manufacturing (LSM) has recovered, largely due to good performance among sub categories such as food, beverages and tobacco, paper and board, textile, non-metallic mineral products, pharmaceutical and leather products compared to negative growth seen during the second quarter of the current fiscal year.
The year to year positive growth during the start of current fiscal year (July-Sept) can be partially attributed to export demand which has increased the production in the short run. Dismal performance was seen in the winter season (October-December) which was due to persistent gas shortages. Moreover, agro-based industries which were recovering from the impact of the floods of 2010, was again hit by another natural calamity in the form of heavy rains in Sindh during August 2011. The cotton crop is most vulnerable to floods and almost all major sugarcane producing districts were affected but losses to sugarcane were lower as the crop is relatively resilient to flooding.
The floods also damaged industrial supply networks and rural demand and this coupled with severe power and natural gas shortages led to a number of key industries (textile, fertiliser, steel, glass, etc) not operating at expected levels. LSM production began to revive in December 2011 as the impact of flood began to subside. A remarkable growth of 6.0 percent was witnessed in February-2012. Effective fiscal policy helped in revitalising the growth to some extent due to reduction in duties on beverages, automobiles, cement and air conditioners.
In addition, the growth in agro-based industries was based on increase in cotton (Punjab) and sugarcane production during the current fiscal year. In March 2012, the year to year performance of the sector turned negative by registering a decline of 3.7 percent owing to prolonged power and gas shortages.
Some of the groups in the Large Scale Manufacturing (LSM) experienced a positive growth during the first nine months (July-March) of the current fiscal year. The groups showing substantial increase include pharmaceuticals (10.89 percent), paper and board (8.38 percent), wood product (7.39 percent), food beverages and tobacco (6.53 percent), non-metallic mineral products (2.87 percent), leather products (1.76 percent) and textiles (0.77 percent).
Growth was mainly derived from consumer goods. Food and pharmaceuticals showed the strongest contribution. In addition, intermediate goods such as building materials, fertilisers and petroleum products posted a modest contribution in overall LSM performance.
Some important items wise contribution in Large Scale Manufacturing growth witnessed in generating sets (143.88 percent), blankets (109.87 percent), electric transformer (31.15 percent), juices, syrups and squashes (26.68 percent), heavy machinery & equipment (20.99 percent), sugarcane machine (19.24 percent), electric tubes (17.86 percent), kerosene oil (14.56 percent), liquids/syrups (14.09 percent), footwear (6.15 percent) and LPG (3.44 percent).