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India’s economic descent over the past few months may have been far worse than that of many other countries, but the mood in India Inc. is not all that sombre. Expectations of a V-shaped recovery are, in fact, quite high.

Roughly half of the 100-odd chief executive officers (CEOs) and founders who responded to the Mint-Bain India CEO Survey on the state of the country’s business environment predicted that their company’s net profit for FY21 may be on a par with or even slightly better than that of last year.

However, expectations of a swift recovery in revenue are more muted, indicating that much of the recovery in profits is likely to come via cost savings—particularly employee costs—rather than higher sales.

Hope and fears
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Hope and fears

More than half of the survey respondents have witnessed either salary cuts or layoffs in their organizations over the past few months. However, not every company can reduce costs in a similar fashion, given the diverse ways in which the various sectors operate.

The Mint-Bain India CEO survey, in which 105 CEOs, managing directors, founders and chairpersons representing companies across sizes and sectors participated, was conducted online between 22 July and 10 August, with approximately 35% responses from BSE 200 firms. The companies collectively employed more than a million people before the coronavirus outbreak.

While companies in information technology, consumer staples and healthcare providers were optimistic, builders, consumer discretionary businesses—from alcohol and pizza to shoes and home furnishing—and media firms were gloomier.

The biggest common concern among the chief executives is India’s limited fiscal and monetary space for a demand stimulus. Yet, their most common wish is a tripling of infrastructure spending.

Nearly two-thirds of the respondents worry about a fall in consumer purchasing power. Interestingly, about 40% also fear the post-covid era may see the rise of social and economic unrest.

About one-third of the respondents suggested that a reduction in goods and services tax (GST) rates could help the economy rebound. Only 10% of the CEOs saw the Atmanirbhar Bharat campaign as an economically significant exercise.

However, several firms retain memories of massive supply chain upheavals, which began crippling their operations even before the coronavirus lockdown. As a result, at least for the next 12-24 months, many are looking to localize supply chains. Roughly half of the respondents said they would like to source more locally, possibly opening up new opportunities for small enterprises.

Another key priority is engineering a digital shift. Consumer-facing firms—particularly in staples, discretionary goods or real estate—are using this year to digitize processes.

Two-third of CEOs said they are spending most of their working hours on this digital pivot, which also includes work from home (WFH). However, WFH may not become a permanent organizational imperative; only one-third of the respondents think more than a quarter of their current workforce would permanently shift to remote work.

India Inc.’s top honchos have already made up their minds on which companies are most likely to come out of 2020 largely unscathed: Reliance; tech giants Amazon, Google and Microsoft, Tata Consultancy Services Ltd; Britannia, and Hindustan Unilever, among others.

The Indian CEOs’ guide to charting the covidian era

Over 100 CEOs who helm firms that employ more than 1 million people and generate a combined annual turnover of 17.5 trillion were asked about the economy’s recovery, business challenges and what keeps them up at night. Here’s the Mint-Bain India CEO Survey in a snapshot.

Here’s the Mint-Bain India CEO Survey in a snapshot
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Here’s the Mint-Bain India CEO Survey in a snapshot
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