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Deloitte India CFO Survey

CFOs optimism over macroeconomic conditions declines


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  • 46% expect inflation to increase, GDP growth to taper and industrial growth to stagnate
  • 39% expect stabilization in macroeconomic factors while 15% expect  an improvement
  • 43% consider political inefficiency as the most important cause of concern
  • 60% expect increase in foreign market access to hedge risks
  • 61% consider regulatory policies, inflationary pricing, and input cost as key deterrents to industrial growth
  • 35% are apprehensive about poor performance of their organisations going forward while 31% believe that their organizations would perform better going forward
  • 72% consider low consumer demand, domestic political uncertainties and declining exports as key challenges going forward

New Delhi, 11 September 2012: Deloitte Touche Tohmatsu India Pvt. Ltd. (DTTIPL) today released  the second edition of “Deloitte India 2012 CFO Survey”. The findings and analysis are intended to provide CFOs with information on their peers’ thinking on a variety of topics. The survey reflects CFO concerns for India’s macroeconomic outlook and its impact on future industrial growth and organizational sustenance. According to the study, a majority of senior finance executives of India Inc feel that the country's macro-economic conditions are likely to either worsen or remain the same by the end of FY’13 indicating weak business sentiments.

The findings of the survey shows that nearly half of the Indian CFOs expect further rise in prices, tapering of GDP growth and stagnation in industrial growth in 2012-13.  It also reveals that 43% of them view that political inefficiency is causing policy paralysis and hence arresting economic growth. This was substantiated with 60 per cent of the CFOs citing flawed regulatory policies, inflationary pricing and rising input cost as key deterrents to industrial growth. In contrast, a third of Indian finance heads expect stabilization in macroeconomic factors and a mere 15% expect an improvement on these counts. However, 31% of the respondents believe that their organizations would perform better going forward and 35% is apprehensive about poor performance due to increasing financial risks.

The survey further states that factors impacting the economy were also having an influence on consumer spending. Two thirds felt consumer demand would be low. Other challenges, two thirds of those surveyed felt, were domestic political uncertainties and declining export. According to Sanjoy Sen, Senior Director, DTTIPL, “CFOs are looking forward to policies that would ensure long-term economic sustenance, spur consumer growth and bolster investor confidence. As in the earlier survey, CFOs in this survey identified decreasing consumer demand as one of their organization’s key challenges. The others being fluctuating exchange rates and rising input costs.”

However, in the wake of current economic downturn, 60% expect more companies would access foreign market to hedge risks. As many as 136 CFOs from listed and unlisted companies in India spanning across sectors participated in the survey. A majority of CFOs share a common concern that the economic recovery is still hindered by concerns about consumer demand, squeezing margins, rising inflation and government inertia, among others.  A recent few downgrades by International credit rating agencies and slew of scams have only added to the concerns.

Based on the survey findings and associated sentiments on economic indicators, CFOs are faced with the need to (1) continue revenue growth/preservation, (2) as well as implement cost containment initiatives. In addition, their future strategies may include access to foreign markets to hedge risks, deliver better consumer solutions and/or products, rationalise resource and/or capacity/productivity, streamline operations and ensure prudent investments on business projects. Such practices may help them tailor business models that adapt swiftly to changes in the global economy.

To read the full report please click on –
http://www.deloitte.com/view/en_IN/in/insights-ideas/cfoprogram/index.htm

Notes
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK Private Company Limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.  Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

This press release has been given by Deloitte Touche Tohmastu India Private Limited

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