India Inc's biz confidence sees steepest fall in 3 years: D&B

The business confidence of India Inc for April-June quarter witnessed the steepest fall in the last three years as the Union Budget did not have any major steps towards reforms, says research firm Dun and Bradstreet.

The Dun & Bradstreet Composite Business Optimism Index (BOI) stands at 150.0 during the second quarter of 2012, a decline of 18.2 per cent compared to the corresponding quarter in 2011.

"The survey was conducted in March at a time when Corporate India were pinning their hopes on the Union Budget 2012-13. The absence of major reforms in the Union Budget could have been responsible for the steep decline," Dun & Bradstreet President and CEO for India Kaushal Sampat said.

Moreover, the budget proposal to hike excise and service tax rates has the potential to further squeeze corporate margins, Sampat added.

On a quarter-on-quarter basis, however, the fall in the Composite Business Optimism Index is only 4

per cent.

"This needs to be viewed against the backdrop of possible rate cuts by the RBI around June 2012, which could bolster business confidence," Sampat added.

The report further said that the demand conditions for the April-June 2012 quarter is likely to remain "subdued", while the profit expectation have also plunged.

The order book positions are likely to improve, but corporates are not likely to effect any change in the selling prices of products during the second quarter of this year.

For calculating the composite BOI, each of the six parameters, net sales, net profits, selling prices, new orders, inventories and employee levels, is assigned a weight.

The parameter weights are then applied to these ratios and the results aggregated to arrive at the Composite Business Optimism Index.

It was observed that all the six optimism indices have declined as compared to the corresponding quarter a year ago, the release said.