A majority of CEOs from top Indian companies including ICICI Bank, Bajaj Auto, TVS Motor GE India, and HUL, do not foresee any production slowdown in this fiscal, even as rising input and interest costs are affecting the net profit margins, a CII survey has found.
The chief executives in a snap poll conducted by CII said even as uncertainty remained on overall industrial and GDP growth, the firms do not expect production to slow down at their companies.
About 50 per cent of CEOs surveyed said their top line growth would not be hampered, 18 per cent said it would be affected. Despite the relative optimism, the downside risks to the economic outlook remain high on account of high inflation being fuelled by the rise in global commodity prices, the survey said.
Raw material costs
However, the increase in raw material costs as well as interest costs were having an impact on net profit margins, it said.
About 39 per cent of respondents said their cost of production had increased by 10 per cent while 32 per cent said the increase had been 10-20 per cent .
The economic scene may not be as bad as some of the numbers indicate, as the medium to long term prospects for the manufacturing sector remains positive. This is being borne out by the fact that large capacity addition plans are being carried out unaltered, the survey said.
The creations of these new capacities are part of the larger investments in pipeline, which could be worth as much as 700 billion USD for the next three years. These investment plans would ensure that the economic growth prospects remain positive, CII said.
Services sector had not been affected by global downswing. Though profitability in most segments of services have reduced, the sector is still in good health, it said. CEOs who were part of this survey included CII President CEO KV Kamath, TVS Motor Chairman & Managing Director Venu Srinivasan, Bajaj Auto Chairman Rahul Bajaj, Ashok Leyland Managing Director R Seshasayee, et al.
