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FICCI Business Confidence Survey: Demand, Capacity Utilisation Improve For India Inc

FICCI’s latest business confidence survey showed an improvement in the optimism level among Indian companies. The Overall Business Confidence Index stood at 67.6 in the current round as compared with 63.9 in the previous survey round, backed by improvement in both current conditions as well as expectations.

The FICCI report, titled ‘Business Confidence Survey April 2022’, said the improved optimism among industry members was reflected in the near-term outlook on some of the operational parameters including sales and investments. “The proportion of respondents anticipating better sales prospects over the near term stood at 62 per cent in the current survey round. This was higher than 50 per cent respondents stating the same in the previous round.”

It added that the demand situation is witnessing an improvement and the same has been reflected in the latest survey results as well. In the current survey round, 46 per cent of the participants cited weak demand as a constraining factor vis-à-vis 60 per cent stating likewise in the previous round and about 70 per cent citing the same last year, according to the survey report.

“The investment outlook of participating companies has also reported a discernible improvement. A little over 50 per cent of the respondents anticipated higher investments vis-à-vis 40 per cent stating likewise in the previous round. The capacity utilisation levels also seem to be gaining momentum. 45 per cent of the respondents indicated a capacity utilisation rate of over 75 per cent in the present round of the survey, vis-à-vis 30 per cent stating the same in the previous round,” it said.

The report, however, said escalating raw material prices amid the ongoing geopolitical tension is weighing heavy on the near-term outlook for profits and exports. The percentage of participants citing higher profits over the next six months declined to 22 per cent in the latest survey from 30 per cent of respondents stating likewise in the previous round.

The survey drew responses from about 165 companies with a turnover ranging from Rs 1 crore to Rs 11,000 crore and belonging to a wide array of sectors. The survey gauges expectations of the respondents for the period April to September 2022, the report said.

Further, 48 per cent respondents said they have witnessed an increase in their cost of production by a margin greater than 10 per cent. About 43 per cent of the participants said that their cost of production increased between 5 per cent and 10 per cent, while the remaining 9 per cent had witnessed an increase in production costs by up to 5 per cent, it said.

Participants also indicated that it is becoming increasingly difficult for them to endure the increasing cost pressures, and the same is being passed on to the consumers — a majority 77 per cent of the participants indicated the passage of higher costs to the consumers.

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