The general uncertainty in the Indian economic environment has taken a toll on companies and in turn, business optimism in the country has hit its lowest level in 12 quarters, a report showed.
The Dun & Bradstreet (D&B) business optimism index has dropped to its lowest in 12 quarters in the third quarter (July- September) of the current year. While the optimism for net profit is the lowest in 12 quarters, the optimism for volume of sales is the least in 13 quarters in the third quarter of 2012.
The composite ‘Business Optimism Index’ declined to 136.1 for the quarter, a 5.2% drop compared to the same period last year. “The index reveals that businesses are more pessimistic than they have been in three years,about prospects for sales, orders and profits,” said Kaushal Sampat, President & CEO-India, D&B.
Expectations on demand remain subdued for the quarter. Around 64% of the respondents expect their sales volume to increase while 23% expect it to remain unchanged. The remaining 13% anticipate sales volume to decline. The resultant optimism for volume of sales stands at 51 %, a fall of 17% and the lowest in 13 quarters.
Around 63% of the respondents expect their net profits to increase. A significant 24% anticipate their profits to remain unchanged while the remaining 13% expect a decline. The resultant optimism for net profit stands at 50% in the third quarter, a 12 % decrease compared to the same period last year and 6% lower than the preceding quarter in 2012.
The optimism for selling prices stands at 40%, a 10% increase compared to the same period the previous year. The resultant optimism for new orders stands at 63%, a 7% decrease. Despite the drop in optimism levels for new orders, 72 % of the respondents expect their order book position to improve.
“Even marginal policy actions could go a long way in propping up business sentiment. Further, the progress of monsoon will also be critical in shaping business sentiment and influencing the pace of food inflation,” Sampat said.
Source: The Times of India