Emerging Economic Rebound – 30 Percent Companies Now Operating At 70 Percent Capacity Utilisation: FICCI Survey

The Federation of Indian Chambers of Commerce & Industry (FICCI) conducted a survey capturing the post lockdown effect.

The survey revealed that firms saw positive growth in exports, cashflows and supply chain functioning. The survey conducted in June 2020, saw the participation of over 100 top corporate executives (CxOs) from across sectors.

The results show that at present, close to 30 percent of the firms are operating at 70 percent plus capacity utilisation. Moreover, nearly 45 percent expect capacity utilisation to be above 70 percent in the near term.

However, firms foresee that they will continue to face challenges even during the unlocking phase. Managing costs, weak demand and financial liquidity remain the top three concerns with 60 percent, 59 percent and 57 percent reporting the same.

“While the green shoots of recovery are being seen, it is important to emphasise that sustaining this improvement in the operational parameters of businesses will require continuous support from the government. The support is particularly needed in the realm of strengthening market demand in the absence of which this initial recovery may fizzle out,” Ficci emphasised.

On the jobs front, nearly 32 percent of the firms have reported that they see a job loss of over 10 percent from their company’s perspective. In April edition of this survey, this figure was close to 40 percent.

Unlocking of the economy is starting to have a positive impact on exports, cash flows, order books and supply chains, it observed. It revealed that 22 percent of the respondents have said that exports have improved in recent times. 25 percent have reported a positive impact of unlocking of the economy on order books and 21 percent have confirmed improvement in cash flows. Nearly 30 percent of the firms are seeing their supply chains getting back on track.

Notably, in the April edition of the survey, only 5 percent of the companies were expecting an increase in exports, 7 percent had reported an increase in order books and 10 percent expected improvement in cash flows.

On the economic package related questions, only 1 in 5 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 25-50 basis points.

On income tax refunds, nearly 36 percent 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.