Core sector, cheap credit prop business sentiment

The US-led war in Iraq, Sars, government's hesitation on divestment and the value- added tax have failed to discourage Indian business.

This was seen in a nationwide survey of 75 chief executives of leading manufacturing, service and infotech companies carried out by Business Standard.

A large majority of the CEOs expect the environment to be conducive for better financial performance by corporates in the coming months. Almost a third of them are confident that nothing can derail growth.

Over 78 per cent of the respondents said the overall business scenario would be good over the next six months. Another 13.04 per cent said it would be fair, and 6.52 per cent said it would be very good.

None of them forecast a dismal business scenario for the period. A handful of CEOs refused to comment because their firms are against issuing guidance.

Around 74 per cent said their performance in the first half of 2003-04 would be better than in 2002-03 in terms of turnover and profit. Another 21.73 per cent said figures would be the same as last year.

None of the CEOs covered in the survey said his company's performance in the first half of 2003-04 would be worse than last year.

In the manufacturing sector, 48 per cent of the respondents said growth would be spurred by increased spending on infrastructure in the months to come.

"The momentum we gained last year through investments in infrastructure will help growth this year," Homi Khusrokhan, managing director of Tata Tea, said.

"Housing, roads and infrastructure," ACC Executive Director A K Jain replied, when asked about growth factors.

Another 26 per cent said the low interest rates would lead to higher industrial growth, while another 15 per cent placed their hopes on a good monsoon.

In the infotech sector, 86 per cent of the CEOs said the increasing number of global outsourcing contracts would lead to growth.

"One of the biggest factors that will help the sector grow is the cost-cutting drive by global firms," R Ravishankar, CEO (international operations) of i-flex Solutions, said.

In a display of optimism, 31.73 per cent said there was nothing to make them scale down their projections. "Growth cannot be derailed," Ispat Industries Director (finance) Anil Sureka said.

However, 21 per cent of the CEOs said political instability could play spoilsport. While 18 per cent pointed out that insufficient rains could affect their growth projections, another 13.04 per cent cited the war in Iraq as a possible hurdle to growth.

Sify CEO R Ramraj said, "Worsening of relations with Pakistan could affect growth."

"El Nino could be a problem," Hoshedar Press, president of Godrej Consumer Products, pointed out.

Over half (52.17 per cent) of the CEOs covered in the survey said the strengthening rupee could affect exports. However, 32.6 per cent said exports would not be impacted because of this, and 15.23 per cent chose not to answer.

"Exports will be healthy despite the rise in the rupee because India Inc is getting its act together," Duncan-Goenka Group Chairman G P Goenka said.