Home >News >India >Demand picks up but recovery is still far off
Photo: Reuters
Photo: Reuters

Demand picks up but recovery is still far off

The Mint-Bain India CEO survey saw companies in IT, consumer staples and healthcare space express optimism

Business outlook has brightened from the dark days of the coronavirus lockdown, but demand will take longer to revive as consumer sentiment remains muted, participants at a Mint-Bain India CEO Survey webinar said.

“I think consumers want to conserve cash and are gravitating towards value, so they are spending on basic goods. Discretionary spends are still taking some time to pick up," said Vivek Gambhir, whole-time director, Godrej Consumer Products Ltd.

The Mint-Bain India CEO survey, which saw participation from 100-odd CEOs and founders, predicted that though their company’s net profit for FY21 may be on a par with or even slightly better than that of last year, revenue recovery may be muted on the back of lower sales.

“Our credit card spends are down 33%, and what we see is that discretionary spends are not there. It is a mixed kind of recovery that we are seeing. Some sectors are bouncing back, and some would take a while to come back," said Zarin Daruwala, chief executive officer (CEO), Standard Chartered Bank, India.

The survey saw companies in information technology (IT), consumer staples and healthcare space express optimism while builders, consumer discretionary businesses—from alcohol and pizza to shoes and home furnishing—and media firms painted a gloomy picture.

“The pandemic has not impacted everyone in the same measure. In the fast-moving consumer goods, or FMCG, segment, though the food business has held its own during the pandemic, in other categories such as apparels, fashion, general merchandise, etc., there is still some stress," said Devendra Chawla, CEO and managing director, Spencer’s Retail, adding that sectors such as automotive, hospitality and aviation have seen a setback and will take a few quarters to recover.

“There are certain sectors, including real estate, which are struggling. However, some companies in the real estate sector have actually sprung back or are on the way of springing back, so sectoral improvements are definitely happening," said Niranjan Hiranandani, co-founder and managing director, Hiranandani Group.

Hiranandani added that in the last three weeks, his company saw huge sales in ready flats and apartment segments. “People are buying, and things have started to happen. I am positive. What is worrying me is the spending on infrastructure, and there is something drastically lacking," he added.

While a common concern for CEOs is India’s limited fiscal and monetary space for a demand stimulus, their most common wish is a trebling of infrastructure spending.

The CEOs agreed that creating opportunities is key in sectors including construction, infrastructure and real estate.

“We have seen this in many other economies, over the years and over multiple crises—that capital expenditure on construction and infrastructure is one of the single biggest drivers of rapid recovery," said Gopal Sarma, senior partner, Bain and Co.

kalpana.p@livemint.com

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePapermint is now on Telegram. Join mint channel in your Telegram and stay updated

Close
×
My Reads Redeem a Gift Card Logout