India Inc’s finance outlook records 4.3% fall, says D&B
While corporate India’s overall optimism regarding the broader macroeconomic scenario remained unchanged for the April-June quarter, their outlook on companies financial performances have deteriorated when compared to previous quarters.
The Dun & Bradstreet Composite CFO Optimism Index for Q2 CY2017 increased merely by 0.1 per cent when compared to the same period last year. However, optimism amongst CFOs for the financial performance of the firms remained weak declining by 4.3 per cent.
The optimism amongst the CFOs in the industrial sector declined by -2.8 per cent (y-o-y), while optimism amongst CFOs in the services sector moderated for Q2 2017 on a year on year basis as it grew by just 4.3 per cent in Q2 2017 compared to 9.9 per cent in Q1 2017.
Compared to around 62 per cent of the CFOs in the services sector who stated their operating margins are likely to increase only 43 per cent of the CFOs in the industrial sector expect an increase during Q2 2017.
“Since the survey was conducted in the month of March and April 2017, uncertainty prevailing amongst businesses, especially the MSMEs, regarding the decision on GST rates on goods and services and the various technological and other changes that GST would demand might have dented the optimism level of the CFOs, especially regarding the financial performance of the companies,” said Arvind Raghav, director, Dun & Bradstreet India.
According to D&B, the underlying moderate consumption and investment demand continues to dent the overall optimism levels. Given weak capacity utilisation rate, more than 3/5th of the respondents during the survey indicated no change in need for raising short-term as well as long term funds. Adding to the concerns are the US protectionist policies and Brexit ongoing process, it said.
The survey highlighted that the percentage of CFOs who expect the level of financial risk for corporate sector as a whole to increase or remain same for Q2 2017 has also increased from 78 per cent in Q12017 to 85 per cent.
COMPARED TO 62% of CFOs in services sector who stated their operating margins are likely to increase only 43% of CFOs in industrial sector expect a rise
ACCORDING TO D&B, the underlying moderate consumption and investment demand continues to dent the optimism