IMA Analysis

Monday March 30, 2015

The Business Confidence and Performance Survey: Q4 2015-16

THE Q4 FY16 BCPI: GREEN SHOOTS?

In Brief:

  • IMAs headline Business Confidence and Performance Index (BCPI) dropped to a 7-quarter low in Q3 (October-December), but recovered to 60.6 in Q4 (January-March). On net therefore, the index remains unchanged from six months ago, or for that matter, from its pre-Modi' levels.
  • Industry's view of operating conditions in India might be described as guardedly optimistic', with the pluses outweighing the minuses by a small but appreciable distance, and expectations having been reset to more realistic' levels.
  • The macro-economy index fell 30 points from a high of 87 in the September quarter of 2014, to 57 in the December quarter. It has strengthened marginally, to 58.4 this quarter, with the outlook remaining cloudy on account of political and policymaking setbacks in recent months.
  • A successful' Budget session of Parliament-guided by a prudent Finance Bill that sets the stage for rate cuts and enhanced infrastructure spends, and marked by some degree of legislative progress-might change the tone of the macro outlook going forward, but this will only become clear in the weeks ahead.
  • Most importantly, at 62.8, the overall business parameters index is up not only quarter-on-quarter (it was 58.6 in Q3), but also in comparison to Q2 (60). Making this possible is a recovery in all five of the sub-indices-sales, new orders, net hiring, profitability and capacity utilisation. Additionally, the soft spend' and capex indices are up, the latter to its highest levels in several years. This could, if sustained, signal the start of an investment cycle turn-around that has been long in the making.
  • A more aggressive stance by industry to create growth-and perhaps as a result of greater confidence-is visible in the fact of both advertising/marketing spends rising, as well as greater spends on travel.
  • Sector-wise, Q2 and Q3 were clear pain points for most industries, but Q4 appears to have brought some reversal. Barring industrial firms, which are in the high-50s, all sectors now have an overall (headline BCPI') reading of more than 60 points. Moreover, the greater share of firms across sectors indicate a strengthening outlook on nearly all business performance parameters, including crucially, in infrastructure. This signals solid and broad-based growth, though not a spectacular recovery.
  • Pharmaceutical and healthcare firms, with a reading of 65.8, are at the head of the pack, closely followed by IT (64.8) companies. The gap between them and other sectors-which lie mainly in the 60-63 range-is not, however, very large. Consumer goods firms, which saw the biggest dip in sentiment in Q2, falling below the red line' of 50, have made a gentle turnaround, climbing back to 60.1 in Q4. This may point to a nascent revival in consumer demand in the economy more generally.

After dropping to a worrying 7-quarter low in Q3 (October-December 2015), IMA's headline Business Confidence and Performance Index (BCPI) clawed back to 60.6 in Q4. This suggests that industry's overall mood' remains, despite vocal expressions of greater gloom, as it has for much of 2016. The balance continues to weigh marginally on the side of optimism, though the gains' made by the index in the post-election euphoria have dissipated. Effectively, corporate expectations have been reset' in line with gradually-but not dramatically-improving business conditions. Yet, while the quarter-on-quarter shifts merely restore the headline number to where it was in September, there are some promising trends to watch in the underlying business-performance data. Significantly, on every count-from sales to capital spending-more firms report a strengthening outlook for Q4 than they have in a year, and all of the sub-indices are back up above the switchover' point of 50 that separates net optimism from pessimism. Equally important, all of our eight sectoral groupings have moved, in tandem, well into the 55+ ranges, which could signal a slow but broad-based recovery.

   
 

THE MACRO-ECONOMY: ON THE MEND?

From a high of 87 in the second quarter of FY15, the macro-economy index fell 30 points, touching a 2-year low of 57 in Q3, before recovering slightly, to 58.4 in Q4. A fifth of companies report that the environment had worsened between September and December, with slightly fewer (18.2%) believing that things had improved during this time. Worryingly, this represents a sharp climb-down from the mid-2015 outlook, when just over half of our industry sample anticipated a pick-up by Q3. In comparison, the forward view is mildly optimistic, with nearly two-fifths of firms expecting things to get better in the next 3 months, i.e. by the first quarter of fiscal 2016-17. All in all, macroeconomic conditions have exerted a drag on the headline index for a year now, though the Q4 outlook has pushed it marginally upwards.

   
 

Recent political events-the BJP's loss in Bihar, two stalled sessions of Parliament, and the government's seeming tilt towards a more pro-poor' policy agenda-have fed into this low-key outlook. However, with Finance Minister Arun Jaitley sticking to his guns on fiscal consolidation in the February Budget-while also promising a boost to infrastructural and rural spending-and with a small window of hope of getting serious legislative work done in the current Parliamentary session, one should expect a gradual improvement in the macro reading over the next 1-2 survey rounds.

BUSINESS PERFORMANCE: CONSOLIDATING

   
 

Six months ago, sections of industry were either actually seeing or anticipating a slowdown in each of the five key business performance parameters we follow-sales, new orders, net hiring, profitability and capacity utilisation rates. Also in retreat were capital spending and soft spends' such as advertising and marketing, travel budgets, and team/morale-building expenses. The Q3 numbers reflect a sustained fall in all of these areas, with some of the sub-indices dropping to 2-year lows, and a few dipping into the red' (sub 50 levels). Yet the Q4 data marks a steep reversal, with major gains in all areas, taking each of the micro measures' firmly back into the black. Leading the way-as is usually the case-are sales (68.3, up from 63 in Q3) and new orders (65.2, compared to 61.9). More than half of all firms expect the January-March quarter to bring stronger sales than the previous quarter, with fewer companies (9%, compared to 14% in Q3) anticipating negative growth and more (16.5%, up from 13.3%) forecasting 20%+ growth rates for the quarter. Net hiring, which had slipped marginally into the red (49.4) in Q3 is back up to 53.8, which is low but net-positive. Also improving are the profitability (from 59.5 to 62.7) and capacity utilisation rate (63.9, up from 59.1) figures.

Revenue and Profit Growth: A More Positive Q4

Of note is the fact that respondents have maintained revenue and profit growth forecasts in the region of 5-10% for the last quarter of the year, but the number of respondents indicating year on year de-growth has fallen with every successive quarter. 9% still expect de-growth but that number is down from the 15%/14% that de-grew in Q2 and Q3.

The BFSI, IT, consumer goods, pharma/healthcare sectors are above this broader median with expectations of 10-15% revenue growth, whilst the ITeS sector stands at the cusp of 10%. The services sector, of the kind reflected in IMA's member base (more B2B and urban-focused services) continues to reflect muted expectations of growth at 5-10%. Industrial and Infrastructure/Energy firms barely make it into that band on the median, standing much closer to 5%. Almost 50% of these firms, and 35% of services firms stand below 5%.

On net profit in Q4, consumer goods firms predictably lead with 15% growth on the median, followed by BFSI between 10-15%, ITeS at 10% and services, pharma/healthcare, IT and infrastructure/energy firms between 5-10% and industrials lagging at 0-5% profit growth.

   
 

Capital expenditures and spending on the soft things' are two critical weathervanes in any downturn. When demand slackens, these are the first areas to see cuts, but they are also the last to recover-usually in the final leg or two of the up-turn. Indeed, both indices have been subdued for the last three years, mostly staying in the low-40s to low-50s, and dropping into the contractionary zone' in Q3 of the current fiscal. The Q4 numbers indicate a mild improvement in terms of soft spends, with ~30% of firms reporting a quarter-on-quarter rise in all three components of expenditures. What is notable, however, is that the capex index has jumped from 46.3 to 55.4-its highest level in over 10 quarters. This could yet prove to be a flash in the pan, but if it holds up, it would be good news.

   
 

Greater outreach, higher aggression

Greater business activity and more aggressive outreach are also visible in the fact that (inflation adjusted) travel expenditure is up-more than 30% of firms have increased the same in the January-March 2016 quarter. The same can be said for advertising and marketing, with 30% of the firms factoring in an overall increase in the same period.

SECTOR-WISE: RISING IN TANDEM, AGAIN-AND INFRASTRUCTURE OFFERS A KEY SIGNAL

While the overall BCPI numbers give us a broad-brush view of business conditions in India, it is really the sectoral data that paint in the finer details. Q2 (July-September) was plainly a time of pain and retreat for the majority of businesses, with each of our eight sectoral groupings witnessing falling confidence/performance levels. Q3 was a mixed bag, with five sectors seeing further dips, two reporting a marginal turn-around, and just one (consumer goods) signalling a marked QoQ improvement. The January-March quarter results paint a very different picture. All eight sectors have now picked up relative to the previous quarter, albeit to varying degrees. Significantly-and perhaps indicative of the gentle-but-evenly-spread recovery that is visible in the overall results-for seven of these groupings (industrial companies being the outlier), the headline index values, at 60 or higher, are back on very solid ground. Further, with only a handful of exceptions, the majority of firms across sectors are either holding steady or seeing improvements in all of the business-parameter indices.

   
 

Pharmaceutical and healthcare firms (65.8, up from 62.1 in Q3) have now maintained pole position' in the business confidence/performance race' for three quarters running, with the IT sector (64.8, up from 63.2) trailing close behind. Next come BFSI (62.7, up from 60.5), ITeS (62.6, compared to 60.8), infrastructure, telecom and energy companies (61.3, an 8-point rise over Q3), and then services (60.3, recovering from 56.8 three months ago). At the back of the pack, industrial companies (57.8, up from 52) are up strongly QoQ, but perhaps the most interesting shift is in the consumer goods space. After plunging to 48.7 in Q2-the lowest reading for any sectoral grouping-this group has seen a smart turnaround, rising to 55.1 in Q3 and 60.1 in Q4. Its sales index is up to a high of 75 on the back of its new orders index at 67.9-gaining almost 10 points over last quarter. Going forward, it will be important to watch how the sector shapes up, for this could signal a more generalised recovery of domestic demand.

Importantly, the infrastructure sector, after falling successively from the highs of the 80s in terms of its expectations of policy and macro-economic impetus over 2014-15 to 53.5 last quarter, has seen its macro index rise to 56.8, and importantly, an improvement in its business conditions index to 62.9. The last rise of the sector's overall index was based on expectations of massive improvements unleashed by the then-new government at the centre. Today, the rise is based on an actual improvement in sales and new orders, which stand at 67.6 and 70.9 respectively. Capital expenditure too seems set for a rise in this sector, with the index at 61.9, higher than the mid-50 range of almost all others (except a buoyant ITeS sector on this score). These are all fortunate signs for a bellwether sector, which, if it sees gains next quarter too, will be the greatest signal of expected demand for the core sector, in construction, and in key feeder sectors in the coming year.

Undeniably, industrials remain on a slower growth path, with the business performance index up over the last quarter, but only to 58.9, with sales at 64.4 and new orders at 61.5. The overall index is pulled back on account of low profitability-the index again, is up, but only to 58.2. Even as input prices have fallen, people costs as well as strong pressure on margins from end-consumer industries has ensured pressure. Presumably, interest service costs also remain high.

ANNEXURE

 
REVENUE AND NET PROFIT GROWTH

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

Q3 ‘14

Q4 ‘14

Q1 ‘15

Q2 ‘15

Q3 ‘15

Q4 ‘15

Q1 ‘16

Q2 ‘16

Q3 ‘16

Q4 ‘16

Overall

                   

All

50.4(↑)

53.8(↑)

60.1(↑)

71.3(↑)

71.5(↔)

62.6(↓)

67.7(↑)

60.1(↓)

56.3(↓)

60.6(↑)

BFSI

60.5(↑)

52.7(↓)

62.5(↑)

75.7(↑)

74.6(↔)

70.5(↓)

74.5(↑)

66.0(↓)

60.5(↓)

62.7(↔)

Consumer Goods

51.2(↑)

56.7(↑)

64.2(↑)

75.4(↑)

75.5(↔)

60.2(↓)

63.0(↔)

48.7(↓)

55.1(↑)

60.1(↑)

ITeS

52.9(↑)

65.0(↑)

60.0(↓)

68.3(↑)

74.9(↑)

65.7(↓)

70.5(↑)

59.2(↓)

60.8(↔)

62.6(↔)

Industrials

42.0(↑)

49.6(↑)

55.5(↑)

69.5(↑)

69.0(↔)

59.0(↓)

64.8(↑)

58.4(↓)

52.0(↓)

57.8(↑)

IT

54.8(↑)

58.1(↑)

66.1(↑)

67.8(↔)

71.5(↑)

65.1(↓)

72.9(↑)

62.6(↓)

63.2(↔)

64.8(↔)

Infra /Telecom / Energy

47.8(↑)

48.5(↔)

56.9(↑)

72.4(↑)

70.8(↔)

52.7(↓)

59.0(↑)

57.6(↔)

53.4(↓)

61.3(↑)

Pharma / Healthcare

51.2(↑)

55.0(↑)

62.5(↑)

73.4(↑)

70.4(↓)

68.8(↔)

70.2(↔)

68.9(↔)

62.1(↓)

65.8(↑)

Services

53.5(↑)

58.2(↑)

63.4(↑)

72.6(↑)

72.4(↔)

64.3(↓)

69.4(↑)

63.0(↓)

56.8(↓)

60.3(↑)

Macroeconomic Conditions

                 

All

47.9(↑)

52.3(↑)

67.8(↑)

87.0(↑)

85.5(↔)

76.9(↓)

76.1(↔)

65.3(↓)

57.0(↓)

58.4(↔)

BFSI

50.0(↑)

54.9(↑)

70.3(↑)

91.7(↑)

88.7(↔)

85.6(↔)

88.6(↔)

74.0(↓)

63.1(↓)

62.5(↔)

Consumer Goods

41.9(↑)

53.1(↑)

75.2(↑)

85.5(↑)

84.9(↔)

71.0(↓)

68.1(↔)

58.9(↓)

54.3(↓)

56.7(↔)

ITeS

56.5(↑)

54.4(↔)

60.9(↑)

82.8(↑)

81.7(↔)

73.7(↓)

75.9(↔)

51.6(↓)

49.0(↔)

51.7(↔)

Industrials

38.9(↑)

50.3(↑)

62.2(↑)

86.6(↑)

83.4(↔)

74.2(↓)

73.2(↔)

64.4(↓)

54.8(↓)

56.7(↔)

IT

52.9(↑)

55.6(↔)

75.2(↑)

85.6(↑)

85.2(↔)

76.5(↓)

77.0(↔)

70.6(↓)

63.6(↓)

57.3(↓)

Infra / Telecom / Energy

44.8(↑)

49.8(↑)

69.8(↑)

91.3(↑)

88.3(↔)

76.3(↓)

71.3(↓)

64.0(↓)

53.5(↓)

56.8(↑)

Pharma / Healthcare

50.0(↑)

48.6(↔)

68.6(↑)

85.2(↑)

87.4(↔)

78.9(↓)

82.5(↑)

75.0(↓)

67.3(↓)

68.6(↔)

Services

56.9(↑)

57.3(↔)

71.9(↑)

86.7(↑)

86.8(↔)

80.9(↓)

79.2(↔)

65.1(↓)

54.8(↓)

60.3(↑)

Overall Business Conditions

                 

All

54.6(↑)

56.5(↔)

59.8(↑)

68.9(↑)

70.9(↔)

61.9(↓)

67.9(↑)

60.0(↓)

58.6(↔)

62.8(↑)

BFSI

68.7(↑)

57.3(↓)

63.0(↑)

75.2(↑)

74.4(↔)

70.3(↔)

72.7(↔)

66.5(↓)

65.3(↔)

68.7(↑)

Consumer Goods

55.0(↑)

60.3(↑)

64.7(↑)

74.0(↑)

76.9(↔)

61.7(↓)

67.1(↑)

47.6(↓)

57.4(↑)

64.8(↑)

ITeS

58.9(↑)

68.8(↑)

60.5(↓)

67.4(↑)

75.6(↑)

67.9(↓)

71.3(↑)

60.8(↓)

67.3(↑)

66.1(↔)

Industrials

43.7(↔)

50.9(↑)

55.3(↑)

66.3(↑)

67.3(↔)

57.7(↓)

65.7(↑)

58.5(↓)

52.4(↓)

58.9(↑)

IT

59.5(↑)

62.9(↑)

65.6(↔)

67.3(↔)

72.0(↑)

65.2(↓)

72.6(↑)

62.6(↓)

69.1(↑)

69.9(↔)

Infra / Telecom / Energy

53.2 (↑)

50.3(↔)

53.0(↔)

69.7(↑)

65.5(↓)

49.1(↓)

59.3(↑)

53.9(↓)

54.3(↔)

62.9(↑)

Pharma / Healthcare

54.2(↔)

60.6(↑)

63.7(↑)

70.5(↑)

72.7(↔)

73.1(↔)

69.7(↔)

70.6(↔)

63.1(↓)

66.8(↑)

Services

58.6(↑)

60.3(↔)

63.0(↔)

69.9(↑)

72.2(↔)

62.7(↓)

67.6(↑)

62.9(↓)

60.6(↔)

61.8(↔)

Sales Sub-Index

                 

All

59.1(↑)

60.2(↔)

63.0(↔)

73.8(↑)

75.7(↔)

68.1(↓)

75.6(↑)

63.9(↓)

63.0(↔)

68.3(↑)

BFSI

75.6(↑)

63.6(↓)

64.8(↔)

79.2(↑)

77.4(↔)

73.6(↓)

78.1(↑)

70.4(↓)

72.5(↔)

80.0(↑)

Consumer goods

56.5(↑)

69.0(↑)

72.1(↑)

81.4(↑)

82.9(↔)

65.8(↓)

71.9(↑)

52.1(↓)

67.9(↑)

75.0(↑)

ITeS

63.0(↑)

71.7(↑)

64.3(↓)

69.7(↑)

77.5(↑)

74.8(↔)

80.3(↑)

60.9(↓)

69.4(↑)

64.6(↓)

Industrials

47.9(↔)

53.9(↑)

58.3(↑)

72.1(↑)

71.8(↔)

65.6(↓)

75.2(↑)

62.1(↓)

55.6(↓)

64.4(↑)

IT

61.6(↑)

65.1(↑)

67.7(↔)

75.5(↑)

77.8(↔)

69.6(↓)

78.4(↑)

66.7(↓)

75.8(↑)

74.4(↔)

Infra / Telecom / Energy

61.7(↑)

53.7(↓)

53.8(↔)

71.7(↑)

73.0(↔)

61.5(↓)

70.2(↑)

59.1(↓)

60.3(↔)

70.9(↑)

 

Q3 ‘14

Q4 ‘14

Q1 ‘15

Q2 ‘15

Q3 ‘15

Q4 ‘15

Q1 ‘16

Q2 ‘16

Q3 ‘16

Q4 ‘16

Pharma / Healthcare

55.7(↑)

66.8(↑)

67.7(↔)

72.2(↑)

80.0(↑)

81.3(↔)

77.5(↔)

79.1(↔)

65.2(↓)

69.0(↑)

Services

63.4(↑)

63.6(↔)

66.9(↑)

76.3(↑)

77.3(↔)

65.5(↓)

72.6(↑)

65.8(↓)

64.1(↔)

66.6(↔)

Order Book Size / New Orders Sub-Index

               

All

58.6(↑)

59.7(↔)

63.4(↑)

72.8(↑)

75.5(↔)

65.0(↓)

73.2(↑)

63.0(↓)

61.9(↔)

65.2(↑)

BFSI

70.3(↑)

59.5(↓)

65.4(↑)

76.6(↑)

78.8(↔)

75.6(↔)

74.3(↔)

68.1(↓)

67.3(↔)

72.7(↑)

Consumer Goods

56.5(↑)

65.4(↑)

75.7(↑)

72.5(↔)

85.3(↑)

64.2(↓)

72.3(↑)

49.2(↓)

58.3(↑)

67.9(↑)

ITeS

59.0(↑)

70.2(↑)

61.5(↓)

70.7(↑)

80.0(↑)

70.6(↓)

76.3(↑)

62.7(↓)

72.3(↑)

66.6(↓)

Industrials

48.8(↔)

55.1(↑)

60.1(↑)

72.9(↑)

72.7(↔)

60.2(↓)

71.4(↑)

62.2(↓)

54.8(↓)

61.5(↑)

IT

65.3(↑)

67.3(↔)

67.7(↔)

69.5(↔)

77.1(↑)

69.2(↓)

79.2(↑)

66.7(↓)

75.2(↑)

72.9(↔)

Infra / Telecom / Energy

60.3(↑)

52.1(↓)

61.1(↑)

70.4(↑)

67.0(↓)

56.9(↓)

69.6(↑)

58.9(↓)

55.8(↓)

67.6(↑)

Pharma / Healthcare

53.3(↓)

62.3(↑)

65.1(↔)

76.8(↑)

76.3(↔)

81.3(↑)

74.0(↓)

76.2(↔)

67.6(↓)

67.6(↔)

Services

64.7(↑)

63.2(↔)

65.8(↔)

73.2(↑)

76.5(↑)

63.7(↓)

71.6(↑)

65.4(↓)

64.3(↔)

62.9(↔)

New Hiring Sub-Index

                 

All

44.7(↑)

48.7(↑)

52.6(↑)

60.6(↑)

62.0(↔)

53.7(↓)

59.3(↑)

52.4(↓)

49.4(↔)

53.8(↑)

BFSI

58.3(↑)

41.2(↓)

55.8(↑)

68.7(↑)

65.4(↓)

55.2(↓)

67.9(↑)

63.4(↓)

54.3(↓)

55.7(↔)

Consumer Goods

46.1(↑)

47.1(↔)

50.6(↑)

60.5(↑)

70.0(↑)

55.4(↓)

52.7(↔)

42.6(↓)

44.3(↔)

50.0(↑)

ITeS

51.3(↔)

68.7(↑)

60.4(↓)

65.0(↑)

74.2(↑)

70.3(↔)

72.2(↔)

57.3(↓)

60.3(↑)

62.9(↔)

Industrials

32.2(↔)

43.6(↑)

45.7(↔)

54.2(↑)

57.2(↔)

45.2(↓)

50.9(↑)

47.5(↔)

42.3(↓)

47.7(↑)

IT

50.0(↔)

55.8(↑)

61.8(↑)

64.9(↔)

63.6(↔)

65.4(↔)

75.8(↑)

56.8(↓)

63.0(↑)

70.5(↑)

Infra / Telecom / Energy

37.1(↓)

44.2(↑)

41.5(↔)

70.8(↑)

55.0(↓)

29.1(↓)

36.3(↑)

43.9(↑)

38.1(↓)

47.8(↑)

Pharma / Healthcare

50.4(↑)

49.5(↔)

56.2(↑)

66.3(↑)

55.8(↓)

68.1(↑)

70.0(↔)

58.8(↓)

55.7(↓)

61.9(↑)

Services

51.8(↑)

53.1(↔)

57.7(↑)

59.1(↔)

64.8(↑)

59.3(↓)

65.2(↑)

59.9(↓)

57.1(↔)

58.6(↔)

Profitability Growth Sub-Index

               

All

54.0(↑)

56.1(↔)

58.5(↔)

67.1(↑)

70.0(↔)

61.7(↓)

64.8(↔)

60.6(↓)

59.5(↔)

62.7(↑)

BFSI

68.0(↑)

60.5(↓)

63.3(↔)

76.4(↑)

72.7(↓)

77.0(↑)

76.0(↔)

66.6(↓)

66.1(↔)

67.9(↔)

Consumer Goods

59.0(↑)

61.4(↑)

59.8(↔)

77.2(↑)

68.0(↓)

65.4(↔)

75.0(↑)

46.9(↓)

63.3(↑)

67.5(↑)

ITeS

58.3(↔)

65.3(↑)

56.2(↓)

61.4(↑)

71.7(↑)

57.6(↓)

60.3(↔)

60.5(↔)

67.1(↑)

68.3(↔)

Industrials

44.2(↔)

48.2(↑)

54.1(↑)

64.7(↑)

67.8(↑)

59.6(↓)

64.5(↑)

60.7(↓)

54.4(↓)

58.2(↑)

IT

55.9(↔)

62.6(↑)

64.7(↔)

66.6(↔)

70.8(↑)

62.4(↓)

63.6(↔)

62.9(↔)

63.6(↔)

64.7(↔)

Infra / Telecom / Energy

50.3(↑)

50.6(↔)

51.4(↔)

62.6(↑)

63.0(↔)

53.6(↓)

62.1(↑)

52.4(↓)

58.4(↑)

66.3(↑)

Pharma / Healthcare

53.3(↔)

60.9(↑)

63.7(↔)

66.0(↔)

78.5(↑)

61.9(↓)

53.8(↓)

68.9(↑)

64.3(↓)

69.5(↑)

Services

57.2(↑)

61.2(↑)

62.0(↔)

67.9(↑)

70.4(↔)

62.6(↓)

63.7(↔)

61.9(↔)

59.3(↔)

60.5(↔)

Capacity Utilisation Sub-Index

               

All

56.6(↑)

57.9(↔)

61.5(↑)

70.2(↑)

71.3(↔)

61.0(↓)

66.7(↑)

59.8(↓)

59.1(↔)

63.9(↑)

BFSI

71.5(↑)

61.6(↓)

65.7(↑)

75.2(↑)

77.9(↔)

70.0(↓)

67.1(↔)

64.1(↔)

66.1(↔)

67.3(↔)

Consumer Goods

56.8(↑)

58.5(↔)

65.2(↑)

78.4(↑)

78.5(↔)

57.7(↓)

63.5(↑)

47.0(↓)

53.3(↑)

63.7(↑)

ITeS

62.9(↑)

68.3(↑)

59.9(↓)

70.1(↑)

74.3(↑)

66.1(↓)

67.4(↔)

62.7(↓)

67.1(↔)

68.3(↔)

Industrials

45.4(↔)

53.7(↑)

58.3(↑)

67.4(↑)

67.1(↔)

57.7(↓)

66.3(↑)

59.9(↓)

54.7(↓)

62.8(↑)

IT

64.7(↑)

63.5(↔)

66.2(↔)

60.0(↓)

70.6(↑)

59.6(↓)

66.2(↑)

59.7(↓)

67.9(↑)

67.0(↔)

Infra / Telecom / Energy

56.6(↑)

51.3(↓)

57.3(↑)

72.9(↑)

69.7(↓)

44.5(↓)

58.2(↑)

54.9(↓)

58.7(↑)

62.2(↑)

 

Q3 ‘14

Q4 ‘14

Q1 ‘15

Q2 ‘15

Q3 ‘15

Q4 ‘15

Q1 ‘16

Q2 ‘16

Q3 ‘16

Q4 ‘16

Pharma / Healthcare

58.2(↑)

63.6(↑)

66.0(↔)

71.4(↑)

73.0(↔)

73.1(↔)

73.1(↔)

69.8(↔)

62.9(↓)

65.7(↔)

Services

55.6(↔)

60.5(↑)

62.7(↔)

73.2(↑)

72.2(↔)

62.5(↓)

64.9(↔)

61.5(↓)

58.1(↔)

60.2(↔)

CapEx Index

 

 

 

 

 

 

 

 

 

 

All

37.9(↓)

45.0(↑)

48.7(↑)

54.8(↑)

50.8(↓)

41.4(↓)

53.0(↑)

51.7(↔)

46.3(↓)

55.4(↑)

BFSI

44.8(↑)

30.8(↓)

47.6(↑)

51.2(↑)

51.8(↔)

46.4(↓)

58.2(↑)

50.3(↓)

37.0(↓)

39.3(↔)

Consumer Goods

51.6(↑)

48.2(↓)

44.2(↓)

64.5(↑)

53.8(↓)

36.7(↓)

37.9(↔)

36.0(↔)

47.0(↑)

46.6(↔)

ITeS

22.7(↓)

67.2(↑)

56.8(↓)

48.0(↓)

61.1(↑)

43.5(↓)

58.2(↑)

65.4(↑)

54.3(↓)

66.9(↑)

Industrials

40.2(↔)

43.2(↔)

45.4(↔)

53.9(↑)

51.9(↔)

39.1(↓)

47.1(↑)

47.8(↔)

46.1(↔)

55.2(↑)

IT

39.4(↓)

43.2(↑)

53.2(↑)

40.0(↓)

46.5(↑)

45.4(↔)

66.9(↑)

49.7(↓)

38.8(↓)

57.0(↑)

Infra / Telecom / Energy

31.0(↓)

39.1(↑)

50.7(↑)

52.0(↔)

63.0(↑)

27.8(↓)

37.1(↑)

62.1(↑)

49.7(↓)

61.9(↑)

Pharma / Healthcare

40.9(↓)

43.3(↔)

47.4(↑)

65.0(↑)

33.0(↓)

34.7(↔)

52.0(↑)

51.8(↔)

49.5(↔)

57.1(↑)

Services

27.5(↓)

51.3(↑)

51.0(↔)

59.6(↑)

49.0(↓)

43.1(↓)

60.0(↑)

60.0(↔)

44.8(↓)

54.5(↑)

Index for spending on the ‘soft’ things

               

All

43.1(↔)

47.8(↑)

53.5(↑)

57.5(↑)

59.0(↔)

55.6(↔)

58.7(↔)

52.2(↓)

48.6(↓)

52.7(↑)

BFSI

52.7(↑)

41.6(↓)

53.2(↑)

61.1(↑)

65.7(↑)

64.8(↔)

63.7(↔)

53.9(↓)

58.3(↑)

64.4(↑)

Consumer Goods

41.8(↔)

46.5(↑)

56.4(↑)

57.3(↔)

65.7(↑)

60.8(↓)

58.6(↔)

46.4(↓)

49.0(↔)

49.6(↔)

ITeS

42.0(↓)

56.7(↑)

55.7(↔)

55.5(↔)

61.1(↑)

56.2(↓)

62.8(↑)

54.6(↓)

54.0(↔)

53.8(↔)

Industrials

35.5(↔)

44.3(↑)

48.1(↑)

56.2(↑)

53.5(↔)

52.5(↔)

57.1(↑)

49.1(↓)

45.1(↓)

52.2(↑)

IT

46.5(↔)

56.9(↑)

58.7(↔)

50.9(↓)

62.9(↑)

56.1(↓)

61.0(↑)

53.7(↓)

51.0(↔)

51.3(↔)

Infra / Telecom / Energy

44.3(↑)

46.2(↔)

51.3(↑)

55.5(↑)

56.8(↔)

39.5(↓)

42.8(↔)

50.8(↑)

43.9(↓)

48.9(↑)

Pharma / Healthcare

37.9(↔)

48.8(↑)

56.1(↑)

62.0(↑)

61.7(↔)

64.6(↔)

55.6(↓)

59.3(↑)

51.9(↓)

54.0(↔)

Services

51.0(↑)

51.8(↔)

58.0(↑)

60.8(↔)

61.5(↔)

58.7(↔)

62.2(↑)

57.9(↓)

49.9(↓)

50.4(↔)

SURVEY METHODOLOGY AND SAMPLE SET

~330 firms responded to an online questionnaire in the 22nd 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 macroeconomic conditions relative to a quarter earlier according to a ‘stronger’, ‘unchanged’, or ‘weaker’ scale, and business performance for the last quarter (October-December) 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 previous quarter (October-December). Similarly, they are asked to rank expected future macroeconomic conditions three months from now, and business performance in the current quarter (January-March) 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 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 (July-September) 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 (April-June). Similarly, they are asked to rank expected future macroeconomic conditions three months from now, and business performance in the current quarter (July-September) 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 (October-December) and expected spending in the current quarter (January-March), 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.