Financial Daily from THE HINDU group of publications
Monday, Aug 12, 2002
Industry & Economy
Corporate - Performance
Job outlook to remain sombre, says FICCI survey
NEW DELHI, Aug. 11
THE Federation of Indian Chambers of Commerce and Industry's Business Confidence Survey of July 2002 shows that the outlook for employment is likely to remain sombre.
While the majority of those surveyed, almost 67 per cent, expected the current levels of employment to be maintained, 18 per cent expected it to further decline and only 15 per cent expected higher employment.
"However, it is reassuring that no major downsizing is imminent,'' Dr Amit Mitra, Secretary-General FICCI, said.
An industry survey of 403 respondents covered companies with turnover ranging from Rs 1 crore to Rs 15,000 crore.
"A noteworthy aspect of the survey was that 66 per cent of the respondents felt that the current overall economic conditions are `substantially to moderately better' compared to last six months,'' Dr Mitra said at a press conference.
As much as 71 per cent of the respondents expected overall economic conditions to be better in the coming six months, while 61 per cent of the respondents felt that their respective industry/sector was currently performing ``substantially to moderately better'' as compared to the industry's performance in the last six months.
Besides, nearly 70 per cent felt that their industry would to perform moderately better in the coming six months. It is the light industry which was the most optimistic, the survey said.
Further, there was a distinct note of optimism at the firm level with almost 73 per cent of the companies reporting ``substantially to moderately better'' performance currently compared to the last six months.
This improved even further with as many as 84 per cent expecting a ``substantially to moderately better performance'' in the coming six months, the survey said.
The `current conditions' index is at a level of 67.3 and reflects moderate optimism. The expectation index is at 73, showing significant optimism and indicates that the conditions are going to improve further. The composite business confidence index at 71.1 also reflects ``significant optimism'', according to the survey.
The response to the various enterprise-level parameters for the next six months showed that 75 per cent expect higher sales, 59 per cent expect higher profits and 59 per cent expect higher exports.
However, on investments, the survey presented a more cautious picture with only 35 per cent planning higher investments.
Good news on profit front
FICCI undertook a separate analysis of the first quarter financial results of 502 major corporates.
The analysis showed that the sales of Corporate India in the first quarter of the current financial year have gone up by 13.17 per cent as compared to the first quarter of 2001-02. Further, net profits have also risen by 19.24 per cent over the first quarter of 2001-02.
"A part of this increase can be explained to higher advance tax payments, which is again a reflection of higher confidence on part of the corporates regarding their future performance, and improved implementation of tax collection measures by the authorities,'' FICCI said.
Another significant reason is the slowdown in the investments by corporates due to which there has not been an appreciable increase in the depreciation in the first quarter of the current financial year.
Due to this, the incidence of tax (tax/PBT) has gone up from about 25 per cent in the first quarter of 2001-02 to nearly 33 per cent in the first quarter of 2002-03.
It was also observed that there was increase in both the net and gross profit margins.
While gross profit margin increased from 10.42 per cent to 11.19 per cent, net profit margin went up from 4.37 per cent to 4.6 per cent.
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