Business outlook improves, reveals CII survey

Further, the number of the optimists have more than doubled to 38 from 16 in the last survey. The 51st business outlook survey relates to the actual performance of the Indian industry during October-March 1998-99 and the forecast for April-September 1999.

About 38 of the respondents to the survey are manufacturers goods, 32 are manufacturers of capital goods, 12 are manufacturers of consumer goods both durable and non-durable while ten are manufacturers of basic goods, eight other sector companies. According to a preliminary analysis of the latestsurvey, the number of those who expect the present trend to continue were 40 compared to 37 in the previous survey.

Of the responding corporates those expecting to authorise higher capital expenditure have increased from 45 in the previous survey to 63. As a percentage of the total response a break up of the respondents predicting an increase shows that 32 expect higher capital expenditure between 5 to 10 15 between 10-20 six between 20-50 and ten above 50.

Of the respondents, 37 expect of authorise less capital investment during the same period as against 55 in the previous survey. As a percentage of the total response, a break-up of those expecting lower capital expenditure shows that 20 expect it to decrease between 5-10 six between 10-20 four between 20-50 and seven above 50.

The survey reveals a return to stability on the prices front with 80 of the respondents expecting the inflation rate to be within the five to ten range as against 59 in the previous survey.

Only20 of the respondents expect an upward pressure on inflation and the inflation rate to exceed ten. While 89 of the respondents expect an increase in production, 11 foresee a decline in production in their organisation.

After a tardy growth during most of 1998-99, industrial production is again expected to record a moderate growth during the next financial year, 24 of the respondents have forecast a production growth in their organisation to be between 0-5 and 27 foreseeing production growth to be between 5-10.

A moderately high 38 of the respondents forecast a high growth in production of above ten as against only 17 in the last survey. The respondents foreseeing negative growth of production during 1999-2000 have decreased to 11 from 24 in the previous survey.

The respondents projecting an increase in employment have increased from 39 in the previous survey to 54 in the current survey. A break up of those projecting an increase as a percentage of total respondents shows that 39 of therespondents envisage an increase in employment between 0-5. Eleven between 5-10 and four expect employment to increase above ten.

Of the respondents, 46 expect lower employment in their organisation down from 61 in the last survey. A break up of those who foresee a decline in employment in their organisations from the current levels shows the 33 expect the decline to be between zero to five, ten between 5-10 and three above ten.

Low to moderate levels of capacity utilisation reflects the lull in demand in the economy and the low growth in production, the survey added.

While only 21 of the respondents achieved capacity utilisation above 80 of the respondents, 47 reported a capacity utilisation between 61-80, 23 between 41-60 and nine reported a capacity utilisation of below 40.

About 34 expect to achieve capacity utilisation above 80 in the next six months, 45 of the respondents reported a capacity utilisation between 61-80, 15 between 41-60 and six reported a capacityutilisation of below 40.

A comparative look at the projections in the last survey against the actual performance as reported in the current survey shows that against 18 respondents projecting more orders in the last survey, 46 experienced more orders in the previous six months.

Those projecting more orders in the next six months are 57 while those projecting the same trends to continue are 27 and those foreseeing lower orders are 16. In the past six months the value of output was higher for 45, stagnant for 28 and lower for 27 of the respondents.

While 31 of the respondents expect profit margins to improve, 34 expect same trends and 35 foresee lower profits during the next six months. In the past six months the profit margins were higher for only 22 of the respondents, same for 29 and lower for 49 of the respondents.