Mumbai: A majority of senior executives of top Indian firms said there is more pain left in the system and were cautiously optimistic about the current business environment, a poll to gauge corporate confidence showed.
View from the top: Grasim’s D.D. Rathi says demand next year may not be as good as expected.
Only 10% of the surveyed executives believed that that worst was over. As many as 55% saw mixed signals for demand next year.
“While we see good demand currently and I don’t see de-growth, next year’s demand growth may not be as good as we were expecting when the cement industry was putting up capacity. I think most people think it will be 6-8%,” said D.D. Rathi, wholetime director and chief financial officer of Grasim Industries Ltd.
“If you look at other sectors, I think there are only few sectors with sustainable demand growth. I think by and large people are not clear if this is sustainable or is just momentary,”
The executives were surveyed on a host of issues that ranged from the global business situation to politics and coalition governments.
On liquidity, 60% said that the situation has improved slightly. Several pointed out that even though there was ample liquidity in the system, it had not percolated to businesses that really needed it.
Ahead of the central bank’s annual monetary policy, an overwhelming 95% said they wanted to see a cut of about 100-300 basis points. One basis point is a hundredth of a percentage point.
Some admitted that though interest rate cuts are desirable, it is unlikely that the Reserve Bank of India would cut rates aggressively.
As many as 70% of the respondents were confident of going ahead with capital expenditure. A few were quick to point that they remained committed to their ongoing capital expenditure but may not necessarily want to pursue new such spending aggressively.
An overwhelming 90% felt politics played an important role, 35% said they were worried about the current political scenario, and 55% said they need to see which parties constitute the coalition government, with some adding that the industry needed a new government that is focused on good governance and growth.