KPMG’s business outlook survey reveals that Indian manufacturers are more optimistic about their business in the coming year, due to indications of firmer demand and improved domestic and global economic prospects.
As many as 22.5 per cent of Indian manufacturers surveyed now expect a rise in business activity in the coming year, as compared to a generally negative perce-ption in January 2009. However, the confidence level is lower than what was in the same month a year ea-rlier and the lowest among Bric (Brazil, Russia, Indian and China) nations. The ave-rage business improvement expectation of all the Bric nations is 46.5 per cent, which is 3.6 per cent higher than the last survey in January.
“The Indian manufacturing sector is expected to enhance its attractiveness over the coming year. Domestic dem-and, stimulated by gover-nment spending and coupled with favourable global senti-ments, will have a positive impact on confide-nce levels,” said Yezdi Nagpore-walla, Head of Industrial Markets, KPMG India.
The survey, which covered 1,800 manufacturing firms across the Bric region, revealed that 47.7 per cent of Indian firms expected their own business revenues to rise strongly, up from 24.8 per cent in January, while 18.8 per cent expect a rise in new orders. Around a fifth of the manufacturers surveyed expect the profitability of their operations to improve ,while around 10 per cent expect staffing levels to increase over the next year.
However, the percentage of firms expecting an increase in research and development came down to 4.6 per cent from 16.1 per cent in January.
18.2 per cent of the firms anticipate a sharper inflation of input costs in the next twelve months, up from 10.8 per cent in January. Most of the companies also expect to pass on a significant portion of the rise in costs to clients through higher output prices.
Of the BRIC nations, Brazil witnessed the greatest improvement in business sentiments, followed by China. As mentioned earlier, Indian manufacturers, though more optimistic than in January, were the least upbeat about their business and profitability among the four nations.