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Voice of CFO Survey November 2012 CONFIDENTIAL AND PROPRIETARY Any use of this material Voice of CFO Survey November 2012 CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of CII & Mc. Kinsey & Company is strictly prohibited

Summary Statistics from 32 CFO respondents (1/2) CFO believes India’s GDP growth will be Summary Statistics from 32 CFO respondents (1/2) CFO believes India’s GDP growth will be >7% believe India’s GDP growth will be <6% believe GST, New Companies Act and IFRS are steps in the right direction believe GAAR is a step in the wrong direction believe India’s FDI attractiveness and economic and fiscal policies will be same or better than last year believe corruption and bureaucracy will be worse than last year believe their company’s topline growth will be same or more than last year CFOs believe corporate India’s bottom line growth will be negative in the coming year © Confederation of Indian Industry

Summary Statistics from 32 CFO respondents (2/2) ‘Government has initiated many landmark reforms in Summary Statistics from 32 CFO respondents (2/2) ‘Government has initiated many landmark reforms in the last 3 weeks and these measures will go a long way in restoring investor confidence and keeping a upward trajectory in GDP growth’ ‘India now has dubious distinction of being amongst the most corrupt governments in the world’ ‘The government should continue the reform agenda initiated by it’ ‘Uncertainty in regulations is a cause of concern’ ‘We welcome the constitution of the PMO committee for the IT sector for resolution of disputes in a speedy manner’ ‘Faster implementation of policies is required’ ‘GST is a great opportunity to give India a clean, efficient and effective indirect tax regime’ ‘Bring transparency in governance, zero tolerance in corruption’ ‘When it comes to the convenience of running the business, India is at the bottom of the list’ © Confederation of Indian Industry

Global events that will have a negative impact on India SOURCE: Voice of CFO Global events that will have a negative impact on India SOURCE: Voice of CFO survey © Confederation of Indian Industry

Global events that will have a positive impact on India SOURCE: Voice of CFO Global events that will have a positive impact on India SOURCE: Voice of CFO survey © Confederation of Indian Industry

Outlook of the Indian economy remains “cautiously optimistic” Economic growth Expect a 5 -6% Outlook of the Indian economy remains “cautiously optimistic” Economic growth Expect a 5 -6% GDP growth next year Exchange rate (INR / USD) Expect it to be 50 -55 Inflation Expect it to remain range bound 6 -8% Suggested measures to improve include … Encourage FDI Encourage capital inflows Remove supply constraints ‘Open out the Economy by allowing FDI in Retail & Insurance’ ‘Take firm decisions on FDI’ ‘Allow lower withholding tax for all FII investments in debt’ ‘Relax norms for FIIs to invest in Indian equities’ ‘Address supply side bottlenecks in logistics’ ‘Arrest the artificial hoarding of commodities by traders’ Focus on infrastructure Control fiscal deficit ‘Revive infrastructure projects viz. power’ ‘Give tax exemption for Infra projects’ ‘Decontrol petrol & diesel prices thereby reducing consumption & Forex outgo thereby reducing Current Account deficit’ Encourage agricultural produce Simplify taxation and Implement GST ‘Rationalize tax structure to reduce cascading effect’ ‘Clear GST’ SOURCE: Voice of CFO survey Encourage exports ‘Provide impetus to exports including fiscal incentives’ © Confederation of Indian Industry ‘Enhance efficiency on the supply side - agricultural productivity Reduce wasteful govt expenditure ‘Reduce non planned and unproductive government expenses’

Apart from GAAR, CFOs believe recent policy changes are in the right direction Step Apart from GAAR, CFOs believe recent policy changes are in the right direction Step in the right direction 100% = GST 12 New Companies Act 25 28 IFRS 25 23 26 Land acquisition policy GAAR Medium High Perceived impact on business % responses with ‘Yes’ DTC Low 70 0 20 26 46 26 ‘IFRS can simplify the process of raising capital in the overseas markets’ ‘GAAR should be deferred as it may have adverse impact on business sentiment and capital flows’ Illustrative quotes ‘DTC policy should be transparent and should not have room for bureaucracy & corruption’ ‘Reduce Corporate Tax Rate to 22%, make it compete with HK and Singapore’ SOURCE: Voice of CFO survey ‘Land Acquisition Policy should facilitate quick acquisition instead of creating bottlenecks and bureaucratic hassle’ ‘Mandate the international version for IFRS’ ‘Timing of implementation should be aligned with major advanced economies’ © Confederation of Indian Industry ‘Speedy implementation should be done for GST’ ‘Subsume all Central, State and Local Level indirect taxes on supply of goods and services in to GST’

What will be better compared to last year? What will be worse? Compared to What will be better compared to last year? What will be worse? Compared to last year Measures to further improve FDI 1 = worst, 3 = Better FDI attractiveness Stable and clear policies Stable economic & fiscal policies ‘Provide a transparent, stable, efficient and secure business environment and consistent policies’ ‘Provide stable investment & tax policies. Give clarity on land, environment, power and other FDI rules’ Confidence in economy Regulatory climate Security & social harmony Job opportunities Easier approvals ‘Provide single window clearance to Foreign Investors’ ‘Fast track clearance of proposals based on merits’ Open sectors ‘Increase & allow FDI in major sectors like multibrand retail, civil aviation, insurance & pension Bureaucracy & corruption SOURCE: Voice of CFO survey © Confederation of Indian Industry

Majority of the CFOs are confident of beating last year’s performance Significantly lesser About Majority of the CFOs are confident of beating last year’s performance Significantly lesser About the same Significantly Less More Percent Key challenges voiced Contribution to exchequer 23 4 12 4 Topline growth 4 15 4 ‘Global uncertainty is impacting growth’ PAT growth 8 4 ‘Very low business demand due to lower domestic capex’ ROCE ROE 23 0 15 35 0 15 38 Debt issuance 16 Employment 15 Capex 12 Dividends 23 12 21 12 Equity Issuance SOURCE: Voice of CFO survey 17 24 4 21 38 28 4 59 22 0 39 35 Higher costs/lower margins ‘Rise in fuel prices and talent costs’ ‘Increased rates of Interest i. e. high borrowing cost’ Currency risk 32 0 23 Inventory build up 4 Slowdown in growth 35 ‘Exchange fluctuation and hedging is a big challenge’ ‘Managing uncertainty of Fx is becoming even more difficult’ © Confederation of Indian Industry

What are the priorities for CFOs in the next 12 months Key priority areas What are the priorities for CFOs in the next 12 months Key priority areas for CFOs 1 = low priority, 10 = high priority ‘Controlling spending, improving profitability and managing cash flow effectively is a top priority’ Cost reduction Introducing new products/services Entering new markets Going international New acquisitions Reduce leverage Capital raising Dispose assets Reduce dividends Share buyback SOURCE: Voice of CFO survey © Confederation of Indian Industry

THANK YOU © Confederation of Indian Industry THANK YOU © Confederation of Indian Industry