Dun & Bradstreet Composite CFO Optimism Index declined most in six quarters: D&B India’s CFO survey
Only 28% of CFOs stated need for raising short-term funds and 25% for long-term funds
Mumbai, January 30, 2017: Dun & Bradstreet, the world’s leading provider of global business information, knowledge and insight conducted a pan India survey of corporate CFOs in which they were asked about their confidence in the overall financial and macro-economic conditions for Q1 2017 (Jan-Mar of the calendar year 2017), as compared to the same quarter of the previous year. The survey reveals how optimistic the CFOs are with respect to the overall financial health of their respective companies, the business risk environment and the macroeconomic scenario in the country. The survey also tried to capture the CFO’s viewpoint regarding adoption of technologies.
The survey revealed interesting facts about CFOs’ perspective on the overall Business Climate:
- Dun & Bradstreet Composite Optimism Index for Q1 2017 declined most in six quarters on a q-o-q basis. The Composite CFO Optimism Index declined by around 8.0% on a q-o-q basis
- The fall in optimism among the CFOs in the industrial sector have turned out to be stronger than the CFOs in the services sector during Q1 2017
- Only 45% of CFOs expressed optimism for domestic macroeconomic scenario during Q1 2017 – lowest in 12 quarters
- Around 38% of CFOs are optimistic for mergers & acquisitions scenario – lowest since Q3 2014
- Only 40% CFOs stated their operating margin to increase during Q1 2017 – lowest in 12 quarters
- Compared to 66% of CFOs indicating availability of funds in the market to increase and 63% expecting cost of raising funds to decrease, only 28% have stated need for raising short-term funds and 25% for long-term funds during Q1 2017
- Compared to 60% of CFOs in Q4 2016, only 43% of CFOs expect liquidity position to improve in Q1 2017. Optimism of CFOs in the industrial sector (39%) for this parameter remained more muted than CFOs in the services sector (47%)
- Compared to last quarter, there has been an increase in the percentage of CFOs stating, reducing leverage, risk managements, dividend declaration, business restructuring and cash flow management, to be their top priorities for the next six months
- Percentage of CFOs indicating increase in close monitoring of strategic accounts have almost doubled from around 45% during the survey conducted for the period Apr to Sept of 2016 to an average of around 88% for the period between Oct 2016 to Mar 2017
Commenting on the findings of the survey, Arvind Raghav, Director, Dun & Bradstreet India stated that “The optimism of the CFOs for Q1 2017 declined most in six quarters as compared to seven quarter high recorded in Q6 2016. The slump in the optimism level has been led by deteriorating confidence for the overall macroeconomic scenario, especially the domestic one. The survey has been conducted in the month of December 2016, at a time when the domestic economy was reeling under the unanticipated demonetisation drive taken by the government. The shock of demonetisation that had macroeconomic and supply chain effects, which policy-makers even struggled to foresee, led to heightened business uncertainty, impacted adversely the balance sheet of MSMEs and dented the growth prospects for India. India’s overall growth projections for FY17 and FY18 has been revised downwards unanimously by various agencies including the Indian government. Depreciation in rupee, firming-up of global commodity prices including crude oil, rising risks to the banking sector primarily on account of deteriorating asset quality have also played a major role in weighing down the optimism levels among the CFOs. Going ahead, the announcements in the Union Budget for 2017-18 will set the tone and the direction for corporates to frame their expectations for the upcoming year”.
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