India Inc has projected a better performance in the next six months on the back of a booming economy.
The outlook of corporates on all operational parameters like sales, selling price, profits, investments, employment and exports has improved further.
The strengthening domestic demand conditions coupled with the spurt in export demand have resulted in higher capacity utilisation levels and there are expectations that in the next six months employment generation would be much higher, not just in the services sector but also in manufacturing, Ficci's quaterly Business Confidence Survey for the last quarter of 2005-06, released on Monday, said.
The improved economic and business outlook augurs well for the overall industrial and economic performance in fiscal 2006-07, and a consecutive fourth year of high growth is well within reach, it said.
The performance of Indian economy has seen a quantum jump and it is moving on to a new growth trajectory. Business at the industry and firm level is booming, and there is all-round expectation that the next six months would be even better.
Almost 439 companies from across sectors like textiles, telecom, pharmaceuticals, financial services, food and beverages and BPO with turnovers ranging from Rs 1 crore (Rs 10 million) to Rs 89,000 crore (Rs 890 billion) took part in the survey.
The survey is based on responses from the heavy industry sector (48%), light industry (35%) and services (17%), secretary general of Ficci said.
Ficci president Saroj Poddar said all the three confidence indices computed in the present round of the survey have taken a value in the 'significantly optimistic' zone. The Current Conditions Index stands at 74.2, the Expectations Index stands at 76.1 and the Overall Business Confidence Index has taken a value of 75.5.
A majority 85 per cent of the respondents feel that current overall economic conditions are 'moderately to substantially' better compared to the last six months.
Further, nearly 80 per cent of the participating companies expect overall economic conditions to be "moderately to substantially better" in the coming six months.
Seventy-seven per cent of the respondents said the current performance of their industry sectors has been "moderately to substantially better" as compared to the last six months.
Industries' outlook for the performance in the near future is very positive with 81 per cent looking forward to a much better performance of their industry sectors in the next six months.
At the firm level, 74 per cent of the respondents reported a 'moderate to substantially better' current performance compared to last six months, while 20 per cent reported to have sustained their level of performance.
On expected performance, 85 per cent looked forward to turn out a 'moderately to substantially better' performance in the coming six months with 12 per cent foreseeing no change in their performance during the period.
However, faster growth is throwing up several supply constraints. The survey shows that rising cost of raw materials is the key challenge for the companies to maintain and improve their growth performance.
Seventy per cent companies reported this as a hindering factor which indicates that there is a supply crunch in the economy. The supply side pressures are also forcing more and more companies to resort to increasing their selling price and the results of the survey shows that 38 per cent of the companies are planning to increase their selling price in the coming six months.
This figure is more than double the corresponding figure of 15 per cent that was obtained in the Ficci survey for Q1 of 2005-06.
The Survey also points at another important thing, the recruitment plans of companies. With a significant 42 per cent of the participating companies reporting 'higher to much higher' employment in the next six months, the demand for talent is only going to further rise in the market.
Interestingly, while companies from the services sector have been at the forefront when it comes to recruitment, the survey shows that a large number of manufacturing companies are also drawing up plans to add to their employee strength.
Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group