India Inc Hopes For Better Show In 6 Months: Cii

Corporates are optimistic about their business prospects in the next six months, according to the Business Outlook Survey conducted by the Confederation of Indian Industry (CII). According to the bi-annual study, India Inc is riding high on hopes of a pick-up in domestic as well as export demand.

As many as 56 per cent of the respondents foresee an improved performance on the part of their companies, compared to only 16 per cent in the last survey, which was conducted six months ago. Similarly, 41 per cent were as optimistic about the prospects of their respective sectors as a whole, compared to the previous 9 per cent.

The CII Business Outlook Survey covered all industry sectors, and included 175 member companies. The survey studies the actual performance of industry during October 2001-March 2002 and forecasts for April-September 2002. Conducted over the past one month, the responses to the CII survey might not have factored in recent political developments.

While 36 per cent of the respondents were of the opinion that the same trends would continue in the general business scenario, only 8 per cent predicted a deterioration. In the last survey, 44 per cent of the respondents made negative predictions.

Looking forward to an improvement in general business prospects, the companies are also planning to hike production and investments, as well as add to their work force. Around 70 per cent of the respondents expect to increase production, 20 per cent will be continuing at the current levels, while 10 per cent foresee a decline in output in the next six months. Around 53 per cent of the respondents said it was likely they would pump in more capital in the coming six months. The same percentage of firms also envisaged an increase in employment in their organisations.

The primary reason for the optimistic outlook is the expectation that demand will pick up considerably in the next six months. While the past six months saw 49 per cent of the respondents registering an increase in their order books, 69 per cent predicted an increase in the next six months. Most of the respondents also expect to continue improving bottomlines, with 42 per cent expecting increased profit margins as against 34 per cent in the past six months.

Around 44 per cent felt a loss of momentum could impact growth prospects in the next six months. An equal number continued to list high rates of interest as a limiting factor. As expected, power continues to be the predominant problem for industry, in terms of infrastructure bottlenecks. The rapid pace of improvement in telecom infrastructure is reflected in the responses, with only 15 per cent still unhappy with the state of affairs.