The Telegraph
Since 1st March, 1999
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Survey sees industry revival

New Delhi, Feb. 9: India Inc remains upbeat about the prospects of industry coming out of a two-year demand recession that clobbered its profits.

The third business confidence survey in the current fiscal carried out by the Federation of Indian Chambers of Commerce and Industry (Ficci) says the next six months will see an industrial revival with a surge in sales and growth in exports but tempered by platueauing profits, flat growth in jobs and a slightly spooky threat from cheaper imports.

Ficci’s survey covers 521 companies from a wide range of sectors, including pharmaceuticals, FMCG, heavy equipment and machinery, food and beverages, petrochemicals, construction and real estate, textiles, financial services, cement, automobiles, chemicals, entertainment and telecom.

Almost 53 per cent of the respondents expect ‘higher to much higher’ exports in the next six months, while 33 per cent expect to maintain their exports at the existing level.

On the other hand, the prospect of reduction in import duties on raw materials and capital goods in the forthcoming budget has threatened the corporate sector. While the last survey saw only 14 per cent respondents worried, the number rose to 23 per cent this time.

The response to various enterprise level parameters says that sales will rise, with 65 per cent of the respondents expecting ‘higher to much higher sales’ in the coming six months. Almost 30 per cent of the companies expect profits to be ‘higher to much higher’ while 43 per cent expect the profits to remain at the current level in the coming six months.

Nearly 70 per cent respondents plan to maintain their current levels of employment while only 9 per cent plan ‘higher to much higher employment levels’.

Industry, however, seems perturbed by weak demand. Almost 61 per cent of the respondents have expressed concerns regarding the languishing market conditions. The previous survey also saw 61 per cent respondents expressing the same concern.

Low demand correlates with the fact that approximately 34 per cent respondents complained about having excess capacity which determine weak market conditions.

“Excess capacity is holding back fresh investments,” says the survey. While a majority of 56 per cent respondents plan to hold on to their investments, only 26 per cent are planning ‘higher to much higher sales’.

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