India Inc turning optimistic about economy, corporate performance: ASSOCHAM Bizcon survey

An overwhelming large part of India Inc. is getting increasingly optimistic about performance of the economy in coming six months, leading to higher sales and profitability on the back of uptick in the company order-book and capacity utilization, according to a latest ASSOCHAM Bizcon Survey.

The optimism is reflected both at the levels of firms and the industry, for April-September period even though the feel good is yet to convert into increased appetite for fresh investment and better employment opportunities, noted the survey conducted by ASSOCHAM Economic Research Bureau (AERB).

As many 57.1 per cent of the respondents in ASSOCHAM Bizcon Survey across different industry segments shared a sense of optimism about the economy for the next months. Then, it is trickled down to the firm level with 61.9 per cent respondents feeling confident about the same.

Breaking the first half of the fiscal 2016-17 into two quarters, a big chunk of the respondents (66.7 per cent) feel for the immediate April-June 2016 quarter sales value would pick up. Similarly, there would be an improvement in the profitability as well, the survey noted.

Since the industry has been operating much below its capacity for a long period, there would still be a lag for fresh investment while a pickup in increased employment would still be away, ASSOCHAM President Mr Sunil Kanoria said, sharing a sense of optimism reflected in the latest round of the Bizcon Survey.

The flip side of the survey is that a large part of India Inc. still feels that the present state of economy and its undercurrent has not changed much qualitatively as compared to the previous six months. This is true in the case of profitability at the industry and firm level.

Since there has not been much improvement in the employment situation, the wage costs for the industry have remained stagnant. The majority of the industry (57.1 per cent) opines that in the January to March 2016 quarter, there has been no change in terms of the expenditure incurred on wages. Going forward as well big chunk of the industry respondents (47.6 per cent) feel that the wage costs will not change in the April to June 2016 quarter.

Likewise, in the face of current subdued demand, in January to March 2016 quarter, 76.2 per cent of industry feels that there is no change in terms of the expenditure incurred on electricity and fuel cost. Again the majority of the industry (57.1 percent) expects that there will be no change in the electricity and fuel cost in April to June 2016 quarter as well.

The ASSOCHAM Bizcon Survey looks at nine key parameters which include sales, profits, inventories, investments, employment, cost of raw material, electricity and fuel cost, wages and cost of credit.

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