IMA Analysis

Monday December 1, 2014

The Business Confidence and Performance Survey: Q3 - 2014-15

THE Q3 FY15 BCPI: PAUSING FOR BREATH?

In Brief:

  • After going up 30 points over four quarters, the headline BCPI held broadly steady in Q3 at 71.5, a rise of just 0.2 points over the Q2 levels, indicating a bullish industry, but one in 'wait and watch' mode.
  • Expectations of the macro-economy remain high - the sub-index fell slightly, from 87 to 85.5. However, government action on policy in the next couple of months will now be key to driving up growth - despite the high index ranking, far fewer firms (a still majority 67.5%) saw conditions improve in Q2 over a massive 83.5% that expected the same when queried in the July round of the survey.
  • Hearteningly, the business-performance index went up by two points to 70.9, led by a buoyant sales index at 75.7 and new orders at 75.5. In line, net new hiring and advertising spends are now rising.
  • Caution is however strikingly evident, and for good reason. The key barometer of capital spending slipped to 50.8, just above 'net negative, after rising higher in the previous two quarters for the first time in years.
  • In contrast to a few months ago - when they appeared to be in lock-step - our eight sectoral groupings are now moving to their own tunes, with mixed results on our various business-performance metrics.
  • IT (71.5, up from 67.8) and ITeS (74.9, up from 68.3) were the only sectors to see marked increases in their headline numbers, while pharmaceutical and healthcare firms (70.4, down from 73.9) were the only ones to see a meaningful decline. The other five sectors have hardly budged from an overall business-confidence perspective.
  • Crucial to a decisive breakout - in either direction - from today's business confidence readings would be the government's policy announcements over the next few months, and the Budget in February.

After running up a massive 30 points in a year, our headline Business Confidence and Performance Index (BCPI) held broadly steady in Q3: at 71.5, only marginally up from its Q2 level. Moreover, almost all of the sub-indices - for the macro-economy, and for business-level performance - as well as the sector-level numbers, were in the 'no change' (± 3 points) zone. Clearly, whilst confidence in the government's commitment to reform remains strong - signalled by the fact that the indices have managed to hold at 4-year highs - industry seems to have entered into a holding pattern, waiting for concrete steps beyond the tailwind provided by macro-improvements such as the drop in inflation.

   
 

This shift to a more cautious, 'wait and watch' approach is to be expected. Close observation reveals the government's intent to move forward on multiple planes to kick-start the investment cycle, but the next few months will reveal just how far the PM and FM are willing to push reforms, and the resultant pace at which fledgling signs of returning growth will strengthen.

Current data on industrial growth indicates sharp unevenness in growth, with IIP numbers fluctuating over months. Year to date (YTD) figures show the IIP barely in the black in September, whilst the key YTD IIP for Capital Goods, is still in the 5% range - 4.3% in August and 5.8% in September. This is positive but still far below needed levels. This sluggishness in a key indicator of investment expansion is reflected also in the BCPI for CapEx, which, after a single blip above 50 in three years in Q2 FY 15, has shrunk back again to barely above 50. The exact shape of the current recovery will become more obvious as the government releases the entire set of half-year data for economic indicators. In the meantime, the BCPI's lead indications remain of recovery, (with actual performance of the respondent set higher in Q2 than in Q1), but cautiously (expectations of Q3 have fallen, festive season notwithstanding).

   
 

THE MACRO OUTLOOK: STATUS QUO

Each of the last four survey rounds reflected a brightening view of the economy. This time, though, our members are reporting a marginal quarter-on-quarter pullback in expectations. Plainly, the 'culprit' here is that people's hopes ran ahead of reality. Three months ago, more than 4 companies in 5 (83.5%) had expected economic conditions to strengthen further over the course of Q2 (July-September), and almost no one thought that they would worsen. Unfortunately, a fewer, (though still in majority) percentage of firms - 67.5% of the total - saw an actual improvement during this period when assessed in October, a sharp break from the past, when expectations lagged the pace of recovery that was underway. Looking ahead, there is a slight uptick, with 75% of companies believing that the operating environment will become more robust by year's end than it is today. Hardly anyone (0.8%) is 'pessimistic'.

BUSINESS PERFORMANCE: INCHING UPWARDS

A similar story holds for the five main parameters of business performance that we track: sales, profitability, new orders, net hiring, and capacity utilisation rates.

   
 

On each of these metrics, firms are continuing to report strengthening QoQ expectations of performance: more are ticking the 'up' box, and fewer and fewer (less than 4% this time) the 'down' option. Yet, as with the broader economy, expectations do seem to have run up ahead of the reality. In the July-September quarter, significantly fewer companies did better, on a sequential basis, on all 5 parameters, than the number that had expected to at the start of the quarter. The great grey middle - those ticking the 'same' box - still holds sway.

Clearly, however, the median for business performance is now in the 'improving' zone. The overall index (a weighted average of the five parameters - see graph)has gone up by two points, to 71.9 today, indicating a slow, but possibly sure, return to growth. Meanwhile, the sub-indices are each up by 3 points or less, which signals two quarters of a (fortunately high) plateau. Firms remain the most optimistic about sales (75.7, up from 73.8) and new orders (75.5, compared to 72.8 three months ago). Reiterating this, the median firm expects sales growth in the 10-15% range in Q3, compared with the 5-10% actually seen in the previous quarter. At the same time, fewer than 4% of firms expect negative growth (compared to 7% that did last quarter), and nearly 16% expect 20%+ rates. Also continuing to improve, albeit gently, are capacity utilisation rates (71.3, up from 70.2) and profitability (70, up from 67.1). The average company expects profit growth to remain in the 5-10% range in Q3, but fewer companies (4.7%, compared to 9.5% in Q2) are anticipating de-growth this quarter.

   
 

A key indicator that India is not out of the woods quite yet, however, is the index for capital spending. Significantly, at 50.8, it has fallen by 4 points this quarter, to within touching distance of the 'net negative' zone. Plainly, firms are still hesitant about putting money on the ground, and until that changes, the business cycle cannot decisively turn around.

Sectorally, the infrastructure/telecom/energy sectors at one end, and the ITeS sector in services, are leading fresh investment. 74% of all infra/tele/energy firms confirmed they have made/will make fresh investments in Q3, followed by ITeS firms 63% of whom indicate the same. Pharma/healthcare and consumer goods firms, after a rally in Q2, signalled the sharpest cut back. The fact of infrastructure/energy firms being buoyant is valuable at this juncture, given their status as the fount of further investment and expansion in the economy. Conjoining these sub-sectoral indices on fresh investments with the macro-economy and overall business performance indices, however, you realise how crucial government action in Q3 and Q4 is going to be. Whilst investment buoyancy in ITeS is led by a sharp improvement in business performance (index is the highest among all sectors), that in infrastructure/energy/telecom is led by high marks for the macro-economy. Business performance is reasonably strong at 65.5, but it is the macro changes -low prices (and forecasts) of commodities, the unlocking of various stalled projects, deregulation of diesel etc - that are giving hope.

Compared to all parameters other than CapEx, industry remains the most careful - as it has for several years - about net new hiring. The index entered positive territory in Q1 of this fiscal after many quarters of contraction. In Q3, it stands a full 10 points above its Q1 level of 52. However, as we have noted in the past, it is only when the hiring numbers truly pick up - to 70+ levels, for instance, or if they are within touching distance of the sales/profitability index numbers - that a strong recovery is certain, reflecting in a recovery. This is not necessarily a bad thing at the company level, as it could signal a higher focus on productivity and internal 'stretch'. However, for the macro-economy, this parameter will remain important as a means to expanding consumption.

Sectorally, the ramp up in hiring is led by ITeS and Consumer Goods, both up strongly over the last quarter. Industrial firms too are more bullish than in the previous quarter, when they first came into 'net expansion' on hiring. Despite bullishness on CapEx, infrastructure firms have actually pulled back on this key parameter, again a signal of how their expectations on the macro economy are leading the uptrend, as also the fact that these businesses typically see a lag of 12-18 months after feeder sectors expand in order to translate into real growth.

SOFT SPENDING... AT 59, THE INDEX IS UP, THIRD TIME IN A ROW

HR-related purse strings are opening, though slowly...

Discretionary spend in the HR arena on team building or indeed, on aggregate travel expenditure, remains muted, though in the positive since April 2014 after multiple quarters of contraction. However, the year is markedly different from the same quarter last year, when more than 26% of all firms were pulling back on team building spends and barely 13% were expanding focus (even to pick up morale etc). This quarter, just 7.6% are still pulling back, and whilst two-thirds of all firms are maintaining status quo, a full 25% are expanding spends in this area. Travel too, is picking up - evident from the mad crush at airports (airline profitability notwithstanding) - each quarter for the last three (including this one) has seen a quarter of the firms increase aggregate travel expenditure. Barely 3% are still pulling back - perhaps a sign of industry aggressively out to expand sales and grow business.

   
 

...and advertising and marketing spend is also accelerating

Over a third of all firms have also expanded spends on marketing and advertising (just 5% are now pulling back on this) - a sharp contrast to the same quarter last year, when just over 10% did, while 20% contracted spends. The acceleration is clearly visible, quarter on quarter (see chart on the previous page). Whilst the trend is led by the consumer goods and BFSI sectors (and ITeS and services), it is important to note that industry remains alert and intent does not always translate into action. A volatile Q2 with tempering expectations of growth reflected in just 18% of the response base actually spending more marketing dollars compared to 29% that expected to do so when queried in July 2014.

Again, these numbers point to cautious optimism, not outright recovery. Anecdotal conversations with advertising and media firms reveals intense pressure on pricing and margins and hence, the 'big grey' of 'same spends' in the survey could actually indicate a higher volume of marketing initiatives, just at values that are more competitive. Equally, the massive change engineered by the onset of digital media deserves closer reflection. Not inexpensive by any means when done right and holistically, most firms are still using the lower hanging fruit offered by this powerful new channel, where spends can be more muted.

SECTOR-WISE: A NOTE OF DISSONANCE, CREEPING BACK IN

In the previous 3-4 BCPI surveys, we have seen a growing convergence between sectors, if not in absolute levels, at least in the direction of change from one quarter to the next. For the most part, our eight sectoral groupings have moved either up or down in lock-step, with a few stray exceptions on some parameters. Even today, the gap between the headline figures for the most and the least optimistic sectors - consumer goods (75.5, up from 75.4 in Q2) at one end and industrials (69, down slightly from 69.5) at the other - is fairly small. However, with the euphoria over the new government dying down, industry- and firm-level factors are starting to exert a bigger pull. Nearly everyone is sanguine about the economy - all eight groups have macro-index readings in the 80s - but some are less cheery about their own businesses.

  • Only two sectors, IT (74.9, up from 68.3) and ITeS (71.5, up from 67.8) have seen a meaningful rise in their headline numbers in the last three months, but conversely, only one - pharmaceuticals and healthcare (70.4, down 3 points) - has seen a decline.
  • Buoying the two technology industries are a steep rise in new orders (ITeS: 80, up 9 points; IT: 77.1, up by 7 points); profitability (ITeS: 71.7, up 10; IT: 70.8, up 4 points); capacity utilisation rates (ITeS: 74.3, up 4 points; IT: 70.6, up 10); capex spends; and spending on the 'soft things'. Also pushing up the ITeS numbers are rising sales (77.5, up from 69.7) and net hiring (74.2, up from 65).
  • At the other end of the scale, the pharma/healthcare industry has been a mixed bag, with gains in some areas - sales (up from 72.2 to 80) and profitability (78.5, up from 66) - more than cancelled out by declines in others, including hiring (55.8, down from 66.3) and capex (a lowly 33, down from 65 in Q2).

Our remaining five sectors paint a picture with no clearly discernible theme.

  • Consumer goods (76.9, up from 74) and services (72.2, up from 69.9) companies are at or near the top of the pile in terms of overall business performance, but the rise in their headline numbers is within the 3-point range that indicates no real change. They have seen gains in new orders (consumer: 85.3, up from 72.5; services: 76.5, up from 73.2) and net hiring (consumer: 70, up 10 points; services: 64.8, up by 6).
  • Consumer goods firms also remain the most bullish of all eight sectors about sales (82.9), report the highest capacity utilisation rates (78.5), and have seen rising 'soft' spends.
  • However, both sectors are reporting falling capex spends, while profitability growth (68, down from 77.2) appears to have slowed among consumer firms.
  • Meanwhile, among infrastructure, energy and telecom-related companies, there is on the one hand declining business performance (65.5, down from 69.7, the lowest score of any sector) - led by a plunge in the hiring index (55, down from 70.8), and declining capacity utilisation rates (69.7, down from 72.9) - but on the other hand, a marked bullishness on capital spending (63, up from 52, and the highest of all 8 sectors).
  • BFSI firms have seen a small decline (74.4, down from 75.2) in overall business performance, led by falling profitability (72.7, down from 76.4) and net hiring (65.4, from 68.7), but they are also (alongside consumer goods firms) the most optimistic about spending on advertising/marketing, team-building, and travel.
  • Rounding off the list, industrial firms have long competed with infra-related companies for bottom place in our sectoral rankings, and nothing has changed this time around. These companies today report the lowest BCPI figures overall and the second-lowest in terms of business performance, coming in last in terms of sales (71.8) and soft spending (53.5). On a slightly brighter note, they have seen an improvement in profitability (67.8, up from 64.7) in the last three months.

ANNEXURE

 
REVENUE AND NET PROFIT GROWTH

 
Revenue: Quarterly YoY, % change
Net profit: Quarterly YoY, % change
   
   
   
   
REVENUE GROWTH: SECTOR-WISE
   
Revenue: Quarterly YoY, % change  
   
   
   
NET PROFIT GROWTH: SECTOR-WISE
 
Net profit: Quarterly YoY, % change  
   
   
   
   

INDICES: SECTORAL VIEW

 
BFSI Services
   
Information Technology ITeS
 
Industrials (Manufacturing) Infrastructure/Telecom/Energy
   
Consumer Goods (including FMCG) Pharmaceuticals/Healthcare
   
INDICES: SUB-INDEX VIEW
 
Sales New Orders
   
Capacity Utilisation Profitability
   
Hiring         Investments
   
 
CapEx
   
Sales Growth  
   
New orders growth  
   
Capacity utilisation  
   
Net hiring  
   
Profitability growth  
   

  Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15
Overall                    
All 46.1(↔) 56.1(↑) 52.6 (↓) 54.3(↔) 41.3(↓) 50.4(↑) 53.8(↑) 60.1(↑) 71.3(↑) 71.5(↔)
BFSI 52.0(↑) 62.0(↑) 63.8(↔) 53.8(↓) 37.2(↓) 60.5(↑) 52.7(↓) 62.5(↑) 75.7(↑) 74.6(↔)
Consumer Goods 50.7(↔) 54.8(↑) 52.6(↔) 53.4(↔) 37.1(↓) 51.2(↑) 56.7(↑) 64.2(↑) 75.4(↑) 75.5(↔)
ITeS 56.6(↔) 64.5(↑) 54.1 (↓) 59.3(↑) 46.6(↓) 52.9(↑) 65.0(↑) 60.0(↓) 68.3(↑) 74.9(↑)
Industrials 39.7(↓) 49.9(↑) 43.9 (↓) 50.2(↑) 37.3(↓) 42.0(↑) 49.6(↑) 55.5(↑) 69.5(↑) 69.0(↔)
IT 51.1(↔) 57.8(↑) 56.8(↔) 60.6(↑) 50.2(↓) 54.8(↑) 58.1(↑) 66.1(↑) 67.8(↔) 71.5(↑)
Infra /Telecom / Energy 40.8(↔) 54.2(↑) 50.5 (↓) 50.1(↔) 41.1(↓) 47.8(↑) 48.5(↔) 56.9(↑) 72.4(↑) 70.8(↔)
Pharma / Healthcare 47.6(↓) 59.5(↑) 54.2 (↓) 54.9(↔) 43.8(↓) 51.2(↑) 55.0(↑) 62.5(↑) 73.4(↑) 70.4(↓)
Services 43.9(↓) 55.8(↑) 55.8(↔) 55.9(↔) 45.3(↓) 53.5(↑) 58.2(↑) 63.4(↑) 72.6(↑) 72.4(↔)
Macroeconomic Conditions                  
All 33.8(↔) 60.1(↑) 53.9 (↓) 56.2(↔) 22.7(↓) 47.9(↑) 52.3(↑) 67.8(↑) 87.0(↑) 85.5(↔)
BFSI 34.5(↔) 67.6(↑) 58.7 (↓) 51.7(↓) 17.2(↓) 50.0(↑) 54.9(↑) 70.3(↑) 91.7(↑) 88.7(↔)
Consumer Goods 36.6(↔) 57.8(↑) 47.8 (↓) 60.4(↑) 14.9(↓) 41.9(↑) 53.1(↑) 75.2(↑) 85.5(↑) 84.9(↔)
ITeS 48.1(↑) 63.8(↑) 55.2 (↓) 59.5(↑) 26.7(↓) 56.5(↑) 54.4(↔) 60.9(↑) 82.8(↑) 81.7(↔)
Industrials 30.2(↔) 56.1(↑) 46.3 (↓) 52.7(↑) 21.8(↓) 38.9(↑) 50.3(↑) 62.2(↑) 86.6(↑) 83.4(↔)
IT 37.9(↓) 59.1(↑) 57.7(↔) 56.0(↔) 34.7(↓) 52.9(↑) 55.6(↔) 75.2(↑) 85.6(↑) 85.2(↔)
Infra / Telecom / Energy 33.2(↔) 58.1(↑) 53.1 (↓) 55.3(↔) 21.3(↓) 44.8(↑) 49.8(↑) 69.8(↑) 91.3(↑) 88.3(↔)
Pharma / Healthcare 34.4(↓) 59.1(↑) 55.5 (↓) 55.4(↔) 22.7(↓) 50.0(↑) 48.6(↔) 68.6(↑) 85.2(↑) 87.4(↔)
Services 29.4(↔) 62.9(↑) 62.0(↔) 60.1(↔) 21.6(↓) 56.9(↑) 57.3(↔) 71.9(↑) 86.7(↑) 86.8(↔)
Overall Business Conditions                  
All 50.8(↓) 57.1(↑) 54.6(↔) 56.6(↔) 48.6(↓) 54.6(↑) 56.5(↔) 59.8(↑) 68.9(↑) 70.9(↔)
BFSI 59.9(↑) 65.7(↑) 68.7(↔) 58.1(↓) 46.5(↓) 68.7(↑) 57.3(↓) 63.0(↑) 75.2(↑) 74.4(↔)
Consumer Goods 56.7(↓) 55.9(↔) 55.0(↔) 53.7(↔) 45.8(↓) 55.0(↑) 60.3(↑) 64.7(↑) 74.0(↑) 76.9(↔)
ITeS 58.8(↓) 67.0(↑) 58.9 (↓) 61.0(↔) 54.7(↓) 58.9(↑) 68.8(↑) 60.5(↓) 67.4(↑) 75.6(↑)
Industrials 41.4(↓) 49.0(↑) 43.7 (↓) 50.5(↑) 43.9(↓) 43.7(↔) 50.9(↑) 55.3(↑) 66.3(↑) 67.3(↔)
IT 56.9(↔) 59.1(↔) 59.5(↔) 65.4(↑) 55.8(↓) 59.5(↑) 62.9(↑) 65.6(↔) 67.3(↔) 72.0(↑)
Infra / Telecom / Energy 45.3(↔) 56.9(↑) 53.2 (↓) 53.3(↔) 49.5(↓) 53.2 (↑) 50.3(↔) 53.0(↔) 69.7(↑) 65.5(↓)
Pharma / Healthcare 52.0(↓) 60.9(↑) 54.2 (↓) 57.2(↔) 51.5(↓) 54.2(↔) 60.6(↑) 63.7(↑) 70.5(↑) 72.7(↔)
Services 49.8(↔) 56.6(↑) 58.6(↔) 59.5(↔) 53.9(↓) 58.6(↑) 60.3(↔) 63.0(↔) 69.9(↑) 72.2(↔)
Sales Sub-Index                  
All 57.7(↔) 64.4(↑) 59.1 (↓) 60.9(↔) 51.3(↓) 59.1(↑) 60.2(↔) 63.0(↔) 73.8(↑) 75.7(↔)
BFSI 64.8(↑) 75.5(↑) 75.6(↔) 63.1(↓) 45.3(↓) 75.6(↑) 63.6(↓) 64.8(↔) 79.2(↑) 77.4(↔)
Consumer goods 64.1(↓) 61.3(↔) 56.5 (↓) 54.7(↔) 48.4(↓) 56.5(↑) 69.0(↑) 72.1(↑) 81.4(↑) 82.9(↔)
ITeS 63.3(↓) 72.3(↑) 63.0 (↓) 64.8(↔) 56.5(↓) 63.0(↑) 71.7(↑) 64.3(↓) 69.7(↑) 77.5(↑)
Industrials 47.4(↓) 54.9(↑) 47.9 (↓) 55.6(↑) 48.3(↓) 47.9(↔) 53.9(↑) 58.3(↑) 72.1(↑) 71.8(↔)
IT 63.5(↔) 64.4(↔) 61.6(↔) 70.2(↑) 57.0(↓) 61.6(↑) 65.1(↑) 67.7(↔) 75.5(↑) 77.8(↔)
Infra / Telecom / Energy 53.7(↔) 62.3(↑) 61.7(↔) 60.5(↔) 53.1(↓) 61.7(↑) 53.7(↓) 53.8(↔) 71.7(↑) 73.0(↔)
  Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15
Pharma / Healthcare 59.4(↓) 68.9(↑) 55.7 (↓) 60.3(↑) 52.6(↓) 55.7(↑) 66.8(↑) 67.7(↔) 72.2(↑) 80.0(↑)
Services 56.8(↔) 67.5(↑) 63.4 (↓) 63.4(↔) 56.2(↓) 63.4(↑) 63.6(↔) 66.9(↑) 76.3(↑) 77.3(↔)
Order Book Size / New Orders Sub-Index                
All 53.9(↓) 60.1(↑) 58.6(↔) 60.0(↔) 52.0(↓) 58.6(↑) 59.7(↔) 63.4(↑) 72.8(↑) 75.5(↔)
BFSI 61.3(↑) 70.6(↑) 70.3(↔) 56.2(↓) 47.6(↓) 70.3(↑) 59.5(↓) 65.4(↑) 76.6(↑) 78.8(↔)
Consumer Goods 60.0(↓) 57.1(↔) 56.5(↔) 55.0(↔) 50.9(↓) 56.5(↑) 65.4(↑) 75.7(↑) 72.5(↔) 85.3(↑)
ITeS 58.3(↓) 67.6(↑) 59.0 (↓) 66.2(↑) 52.8(↓) 59.0(↑) 70.2(↑) 61.5(↓) 70.7(↑) 80.0(↑)
Industrials 46.4(↓) 50.9(↑) 48.8(↔) 54.6(↑) 47.8(↓) 48.8(↔) 55.1(↑) 60.1(↑) 72.9(↑) 72.7(↔)
IT 58.1(↓) 63.0(↑) 65.3(↔) 71.8(↑) 57.6(↓) 65.3(↑) 67.3(↔) 67.7(↔) 69.5(↔) 77.1(↑)
Infra / Telecom / Energy 53.3(↔) 60.7(↑) 60.3(↔) 59.2(↔) 53.6(↓) 60.3(↑) 52.1(↓) 61.1(↑) 70.4(↑) 67.0(↓)
Pharma / Healthcare 53.0(↓) 67.6(↑) 53.3 (↓) 59.5(↑) 58.3(↔) 53.3(↓) 62.3(↑) 65.1(↔) 76.8(↑) 76.3(↔)
Services 51.8(↓) 59.4(↑) 64.7 (↑) 63.4(↔) 58.8(↓) 64.7(↑) 63.2(↔) 65.8(↔) 73.2(↑) 76.5(↑)
New Hiring Sub-Index                  
All 41.3(↓) 45.0(↑) 44.7(↔) 48.1(↑) 40.7(↓) 44.7(↑) 48.7(↑) 52.6(↑) 60.6(↑) 62.0(↔)
BFSI 50.0(↑) 51.4(↔) 58.3 (↑) 55.1(↓) 40.0(↓) 58.3(↑) 41.2(↓) 55.8(↑) 68.7(↑) 65.4(↓)
Consumer Goods 44.0(↓) 46.6(↔) 46.1(↔) 44.0(↔) 38.0(↓) 46.1(↑) 47.1(↔) 50.6(↑) 60.5(↑) 70.0(↑)
ITeS 57.8(↔) 60.7(↔) 51.3 (↓) 56.8(↑) 50.5(↓) 51.3(↔) 68.7(↑) 60.4(↓) 65.0(↑) 74.2(↑)
Industrials 31.4(↓) 38.8(↑) 32.2 (↓) 42.5(↑) 35.0(↓) 32.2(↔) 43.6(↑) 45.7(↔) 54.2(↑) 57.2(↔)
IT 49.4(↔) 47.3(↔) 50.0(↔) 55.6(↑) 49.0(↓) 50.0(↔) 55.8(↑) 61.8(↑) 64.9(↔) 63.6(↔)
Infra / Telecom / Energy 32.3(↓) 47.2(↑) 37.1 (↓) 38.0(↔) 42.2(↑) 37.1(↓) 44.2(↑) 41.5(↔) 70.8(↑) 55.0(↓)
Pharma / Healthcare 47.4(↓) 48.7(↔) 50.4(↔) 52.9(↔) 43.6(↓) 50.4(↑) 49.5(↔) 56.2(↑) 66.3(↑) 55.8(↓)
Services 39.9(↔) 37.5(↔) 51.8 (↑) 46.6(↓) 43.6(↔) 51.8(↑) 53.1(↔) 57.7(↑) 59.1(↔) 64.8(↑)
Profitability Growth Sub-Index                
All 49.9(↔) 58.3(↑) 54.0 (↓) 56.1(↔) 48.7(↓) 54.0(↑) 56.1(↔) 58.5(↔) 67.1(↑) 70.0(↔)
BFSI 60.1(↑) 70.5(↑) 68.0(↔) 59.1(↓) 51.4(↓) 68.0(↑) 60.5(↓) 63.3(↔) 76.4(↑) 72.7(↓)
Consumer Goods 55.5(↔) 57.1(↔) 59.0(↔) 57.7(↔) 41.7(↓) 59.0(↑) 61.4(↑) 59.8(↔) 77.2(↑) 68.0(↓)
ITeS 57.8(↓) 65.4(↑) 58.3 (↓) 55.5(↔) 56.9(↔) 58.3(↔) 65.3(↑) 56.2(↓) 61.4(↑) 71.7(↑)
Industrials 39.5(↓) 49.6(↑) 44.2 (↓) 48.9(↑) 43.1(↓) 44.2(↔) 48.2(↑) 54.1(↑) 64.7(↑) 67.8(↑)
IT 55.5(↑) 59.2(↑) 55.9 (↓) 61.8(↑) 57.6(↓) 55.9(↔) 62.6(↑) 64.7(↔) 66.6(↔) 70.8(↑)
Infra / Telecom / Energy 41.7(↔) 58.7(↑) 50.3 (↓) 54.7(↑) 47.2(↓) 50.3(↑) 50.6(↔) 51.4(↔) 62.6(↑) 63.0(↔)
Pharma / Healthcare 48.8(↓) 56.3(↑) 53.3(↔) 52.5(↔) 51.7(↔) 53.3(↔) 60.9(↑) 63.7(↔) 66.0(↔) 78.5(↑)
Services 51.7(↔) 61.6(↑) 57.2 (↓) 63.0(↑) 53.8(↓) 57.2(↑) 61.2(↑) 62.0(↔) 67.9(↑) 70.4(↔)
Capacity Utilisation Sub-Index                
All 51.4(↓) 57.6(↑) 56.6(↔) 57.8(↔) 50.5(↓) 56.6(↑) 57.9(↔) 61.5(↑) 70.2(↑) 71.3(↔)
BFSI 63.5(↑) 60.5(↔) 71.5 (↑) 56.9(↓) 48.2(↓) 71.5(↑) 61.6(↓) 65.7(↑) 75.2(↑) 77.9(↔)
Consumer Goods 60.0(↔) 57.4(↔) 56.8(↔) 57.2(↔) 50.1(↓) 56.8(↑) 58.5(↔) 65.2(↑) 78.4(↑) 78.5(↔)
ITeS 56.7(↓) 68.9(↑) 62.9 (↓) 61.9(↔) 56.8(↓) 62.9(↑) 68.3(↑) 59.9(↓) 70.1(↑) 74.3(↑)
Industrials 42.0(↓) 50.5(↑) 45.4 (↓) 51.0(↑) 45.1(↓) 45.4(↔) 53.7(↑) 58.3(↑) 67.4(↑) 67.1(↔)
IT 58.1(↓) 61.5(↑) 64.7 (↑) 67.7(↔) 57.5(↓) 64.7(↑) 63.5(↔) 66.2(↔) 60.0(↓) 70.6(↑)
Infra / Telecom / Energy 45.5(↔) 55.8(↑) 56.6(↔) 54.3(↔) 51.5(↔) 56.6(↑) 51.3(↓) 57.3(↑) 72.9(↑) 69.7(↓)
  Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15
Pharma / Healthcare 51.1(↓) 62.8(↑) 58.2 (↓) 60.8(↔) 51.2(↓) 58.2(↑) 63.6(↑) 66.0(↔) 71.4(↑) 73.0(↔)
Services 48.7(↓) 56.9(↑) 55.6(↔) 60.9(↑) 57.2(↓) 55.6(↔) 60.5(↑) 62.7(↔) 73.2(↑) 72.2(↔)
CapEx Index                    
All 47.7(↔) 45.3(↔) 42.1 (↓) 42.1(↔) 42.9(↔) 37.9(↓) 45.0(↑) 48.7(↑) 54.8(↑) 50.8(↓)
BFSI 49.7(↑) 37.8(↓) 52.7 (↑) 40.0(↓) 33.3(↓) 44.8(↑) 30.8(↓) 47.6(↑) 51.2(↑) 51.8(↔)
Consumer Goods 49.9(↔) 45.4(↓) 51.4 (↑) 40.5(↓) 39.3(↔) 51.6(↑) 48.2(↓) 44.2(↓) 64.5(↑) 53.8(↓)
ITeS 61.8(↔) 55.7(↓) 33.1 (↓) 51.9(↑) 47.6(↓) 22.7(↓) 67.2(↑) 56.8(↓) 48.0(↓) 61.1(↑)
Industrials 48.6(↔) 43.2(↓) 40.5(↔) 44.7(↑) 37.2(↓) 40.2(↔) 43.2(↔) 45.4(↔) 53.9(↑) 51.9(↔)
IT 50.0(↔) 50.7(↔) 44.7 (↓) 48.8(↑) 53.9(↑) 39.4(↓) 43.2(↑) 53.2(↑) 40.0(↓) 46.5(↑)
Infra / Telecom / Energy 35.7(↑) 36.4(↔) 35.0(↔) 28.7(↓) 40.2(↑) 31.0(↓) 39.1(↑) 50.7(↑) 52.0(↔) 63.0(↑)
Pharma / Healthcare 52.1(↔) 54.5(↔) 52.4(↔) 45.3(↓) 48.5(↑) 40.9(↓) 43.3(↔) 47.4(↑) 65.0(↑) 33.0(↓)
Services 44.3(↓) 40.7(↓) 34.5 (↓) 35.0(↔) 50.5(↑) 27.5(↓) 51.3(↑) 51.0(↔) 59.6(↑) 49.0(↓)
Index for spending on the 'soft' things                
All 41.0(↓) 43.4(↔) 42.8(↔) 44.3(↔) 41.4(↔) 43.1(↔) 47.8(↑) 53.5(↑) 57.5(↑) 59.0(↔)
BFSI 46.3(↑) 50.9(↑) 51.6(↔) 53.2(↔) 40.0(↓) 52.7(↑) 41.6(↓) 53.2(↑) 61.1(↑) 65.7(↑)
Consumer Goods 44.6(↓) 48.1(↑) 41.9 (↓) 42.6(↔) 40.5(↔) 41.8(↔) 46.5(↑) 56.4(↑) 57.3(↔) 65.7(↑)
ITeS 45.8(↓) 51.6(↑) 44.6 (↓) 44.0(↔) 46.4(↔) 42.0(↓) 56.7(↑) 55.7(↔) 55.5(↔) 61.1(↑)
Industrials 37.7(↓) 36.3(↔) 36.1(↔) 38.6(↔) 38.3(↔) 35.5(↔) 44.3(↑) 48.1(↑) 56.2(↑) 53.5(↔)
IT 45.9(↔) 43.6(↔) 46.2(↔) 44.7(↔) 45.4(↔) 46.5(↔) 56.9(↑) 58.7(↔) 50.9(↓) 62.9(↑)
Infra / Telecom / Energy 30.0(↓) 39.8(↑) 43.6 (↑) 36.2(↓) 38.8(↔) 44.3(↑) 46.2(↔) 51.3(↑) 55.5(↑) 56.8(↔)
Pharma / Healthcare 40.2(↓) 46.8(↑) 36.4 (↓) 58.9(↑) 37.6(↓) 37.9(↔) 48.8(↑) 56.1(↑) 62.0(↑) 61.7(↔)
Services 39.9(↓) 42.3(↔) 48.8 (↑) 46.3(↔) 46.0(↔) 51.0(↑) 51.8(↔) 58.0(↑) 60.8(↔) 61.5(↔)

SURVEY METHODOLOGY AND SAMPLE SET

Over 350 firms responded to an on-line questionnaire in the 19th BCPI survey. Responses are divided into eight industry segments. The 'headline' (overall) BCPI is a weighted average of current conditions (40%) - including macroeconomic conditions (25%), business performance (60%), and new investments (15%) - and expected future conditions (60%) - including macroeconomic conditions (25%), business performance (60%), and new investments (15%).

   
 

The business performance index is computed on the basis of 5 equally weighted parameters - sales growth, order-book size or new orders/business, profitability growth, capacity utilisation rates, and net (not replacement) new hiring. Respondents are asked to rank current (October-December) macroeconomic conditions relative to a quarter earlier according to a 'stronger', 'unchanged', or 'weaker' scale, and business performance for the last quarter relative to a quarter ago on an 'up', 'same', and 'down' scale. Firms are also asked to respond on a 'Yes/No' scale on new capital expenditures in the last quarter (July-September). Similarly, they are asked to rank expected future macroeconomic conditions three months from now, and business performance in the current quarter (October-December) relative to a quarter ago. Firms are also asked to respond on a 'Yes/No' scale on new capital expenditures in the current quarter.

The Index ranges between 0 and 100, with values above 50 indicating a net positive outlook for industry as a whole, or for a particular sector. A value of 100, theoretically, would suggest that every respondent has a positive view on each parameter. Further, the survey tracks spending in the previous quarter (July-September) and expected spending in the current quarter (October-December), on an 'up', 'same', and 'down' scale, for three types of expenses - advertising and marketing; company off-sites, parties, and other team/morale-building activities; and aggregate, net (i.e. inflation-adjusted) travel expenditures.