Upbeat CEOs see more investments, hiring this fiscal

New Delhi: A snap CEO poll by the Confederation of Indian Industry (CII) shows more than 70% of participants plan to increase hiring in the current fiscal year with over 44% substantially raising investments.

That’s good news for the election-bound Narendra Modi government days after data showed the economy is growing at its fastest pace in over two years in the June quarter.

Job creation and private investment are two key concerns that the government has been grappling with.


The snap poll was conducted at the CII National Council meeting held in New Delhi on Saturday, the results of which were shared exclusively with ET.

A total of 71 CEOs were surveyed in the the exercise that came a day after the GDP numbers were released. Those polled included Rakesh Bharti Mittal, vice-chairman, Bharti Enterprises; Satish Reddy, chairman, Dr Reddy’s Lab; Uday Kotak, CEO, Kotak Mahindra Bank; Raghupati Singhania, chairman of JK Tyre; Tulsi Tanti, CMD, Suzlon; TV Narendran, CEO, Tata Steel; and Bharat Puri, managing director, Pidilite, among others.

The Indian economy grew 8.2% in the June quarter, driven by strong private spending and government capital expenditure, leading to double-digit manufacturing growth and a robust construction sector.

A majority of CEOs polled expect key economic indicators such as consumer demand, private investment, employment and exports to improve. Nearly 70% of those polled see GDP growth in excess of 7.25% in FY19 while 31.3% expect it to cross 7.5%.

HIGH CAPACITY UTILISATION LIKELY
The strong demand is expected to push up capacity utilisation, with nearly 60% of manufacturing companies polled seeing this in excess of 80% and 19.5% at over 90%. Low capacity utilisation has been one of the reasons why private capex has been lacklustre. A rise in capacity utilisation would spur investments.

The strong economy is expected to deliver good corporate performance with more than a quarter seeing revenue growth exceeding 20%. Another 47.1% see it in the 10-20% growth range. Over a third see profit growth in excess of 15% while only 18.8% see an increase of less than 10%.

Interestingly, while there are some divisions within the government about India’s participation in the Regional Comprehensive Economic Partnership Agreement (RCEP), the private sector seems more upbeat.Over half the respondents in the snap poll feel RCEP will help India become part of the regional and global value chain.

In terms of industry-wide performance, 43.3% of those polled expect their respective industry to grow over 12% in the current year.

Despite banks being burdened with bad debt, they continue to be an important source for funding. In FY18, 37.1% of the respondents relied on banks for additional finance while an equal number deployed their own capital. Despite the booming markets, only 4.8% approached the equity market to meet capital needs.