Nascent industry recovery underway after unlocking measures: FICCI-Dhruva Advisors
Jul 06, 2020
New Delhi [India], July 6 : The opening up of economy and implementation of the economic package have led to initial signs of improvement in the performance of businesses, according to a recent survey conducted jointly by leading business chamber FICCI and Dhruva Advisors.
While close to 30 per cent of the firms are operating at 70 per cent plus capacity utilisation, nearly 45 per cent of the firms expect capacity utilisation to be above 70 per cent in the near term. The survey was conducted in June and saw the participation of over 100 CXOs from across sectors.
Unlocking of the economy is starting to have a positive impact on exports, cash flows, order books and supply chains. Nearly 22 per cent of the respondents said that exports have improved in recent times.
A total of 25 per cent reported a positive impact of unlocking of the economy on order books and 21 pr cent confirmed improvement in cash flows. Nearly 30 per cent of the firms are seeing their supply chains getting back on track.
In the April edition of this survey, only 5 per cent of the companies were expecting an increase in exports, 7 per cent had reported an increase in order books and 10 per cent expected improvement in cash flows.
"These numbers are on expected lines and underscore the nascent recovery that is currently underway," said FICCI President Sangita Reddy.
"Given the evolving situation, it is important that we continue to take measures that are supportive of businesses enabling them to tide over the current crisis as well as prepare well for the long-term opportunities," she said in a statement.
Survey results further show that on strategic issues like mergers and acquisitions and foreign direct investments, a majority of the firms still plan to wait for 6 to 12 months before decision making.
In the April edition of the survey, 54 per cent of the companies had reported that they would look at M&As in the long term. In June, this figure moved to 75 per cent -- a reflection of the recessionary conditions and fast-changing business dynamics.
On the economic package related questions, the feedback from respondents is on the conservative side. Only one in five companies said that the Emergency Credit Line Guarantee Scheme has started yielding results.
The interest rate reduction by banks has also benefitted just about a quarter of the firms with the gains being modest for most and in the range of 25 to 50 basis points.
The results on questions related to migrant workers show some interesting trends. While a majority (53 per cent) of the respondents believe migrant workers will come back as businesses have restarted, the industry is requesting for the provision of concessional transportation, availability of low rental housing near work-sites, adequate healthcare and medical facilities and subsidised meal programmes to be provided by the government to encourage workers to return.
Further, like MNREGA in rural areas, large scale public works program for city cleaning, sanitation and plantation of trees can be initiated in urban areas as these would generate jobs for the informal sector workers, according to the survey participants.
On income tax refunds, nearly 36 per cent of the respondents said that they have started receiving income tax refunds from the government. Almost an equal proportion are saying that the measures taken towards ease of doing business have started yielding results.
On the jobs front, nearly 32 per cent of the firms have reported that they see a job loss of over 10 per cent from their company's perspective. In the April edition of the survey, this figure was close to 40 per cent.
