After a difficult fourth quarter (Jan-Mar), businesses are feeling more positive about their growth prospects going into the new financial year. Recently, we ran the Q1FY23 (Apr-Jun) edition of our quarterly Business Confidence and Performance Index (BCPI) survey. The headline index, which had dropped to 66 in January, from a 6-year high in October, inched up to 69.6 in April. Most businesses report a strengthening outlook on their performance while remaining cautiously optimistic about the external environment. At a recent joint session of the India CEO and CFO Forums, we presented the headline results of the BCPI’s latest edition. This set the context for an open-house discussion among our members about their respective organisations and sectors.

The BCPI index inched up to 69.6 in April

Macroeconomic conditions have not noticeably improved, but capex continues to strengthen, as does top-line growth


The BCPI index is a weighted average of current (40%) and future (60%) conditions. Numbers above 50 indicate net optimism while those below 50 indicate net pessimism. The headline index, which dropped to 66 in January from a 6-year high of 76.6 in October, inched up to 69.6 in April.

  • The macroeconomic outlook is broadly unchanged from three months ago. This reflects not just external pressures (the Russia-Ukraine war, lockdowns in China) but also the absence of major domestic policy measures.
  • The capex index has consistently stayed above the 50 mark for the last 5-6 quarters, and has continued to edge up. Many companies are making or planning new investments.
  • On a weighted-average basis, respondent companies project that their top-line will grow by 17.8% in FY23, up from 16% in FY22.
  • Profitability, however, is under strain, with cost pressures intensifying across the board. Services firms are hit by rising people costs and industrial ones by high energy costs and commodity prices.
  • Going by hiring trends, a good lead indicator, growth appears to be strengthening. 53% of companies plan to increase their net hiring this quarter and another 40% plan to continue hiring at the same pace as in the Jan-Mar quarter. Services companies are more bullish than manufacturers.
  • Travel, team-building and advertising and marketing expenses have also risen substantially compared to the previous three quarters. As with hiring, such ‘soft spends’ are a lead indicator of future growth.
  • Compared to last year, businesses are taking a more expansive view on new product launches, capex, hiring, and geographical expansion. They are somewhat more conservative about taking on additional office space, or exploring M&A opportunities.
  • Attrition is an increasingly serious issue, with services-oriented companies harder-hit than manufacturers.

The average listed company in India has a 31% ID share on the Board

Profitability is a concern for manufacturers

Chemical manufacturers are seeing a slowdown in sales

Capex is picking up in the auto sector…

…while ‘revenge travel’ has benefited the hospitality sector

FMCG revenues are up but this is mainly on account of value growth rather than volume

Logistics companies face a host of supply-side issues…

…and OTT companies are seeing slow demand growth


  • Within manufacturing, top-line growth is slowing while the bottom line is under pressure – the result of continued supply-chain disruptions and rising raw-material costs. With Shanghai’s port locked down, for instance, there is a severe shortage of finished steel. On the plus side, attrition rates in the industry are generally low.
  • The chemicals industry expects sales growth to halve in the current financial year. Largely, this is the result of global factors, such as disruptions in the fertiliser and related industries resulting from the Ukraine war and the Chinese lockdowns. However, this also presents an opportunity for local manufacturers to ramp up production.
  • The automotive industry is seeing a jump in capex, which can be attributed to three factors: the Make in India programme, which is reducing import dependence; the PLI scheme; and rising lead-times owing to the lockdowns in China, Germany etc. Moreover, the global chip shortage is likely to ease.
  • An easing of mobility restrictions has given rise to ‘revenge travel’. Supply remains constrained but demand is exploding within the hospitality industry. Domestic hotels have done exceedingly well and are now above their 2019 levels on room-rates and occupancy. However, manpower shortages are a severe constraint on this labour-intensive industry. Many workers went back to their hometowns and villages, and are now demanding 30-40% pay hikes to return. However, this trend is expected to be short-lived: workers may soon start missing the ‘city life’ and return of their own accord.
  • FMCG has seen solid (~18-19%) revenue growth, but this is projected to slow significantly in the next few quarters. Moreover, the recent growth seems to be driven more by rising product prices than a jump in volumes. In fact, volume growth has slowed markedly with high input costs and supply-side disruptions pushing up prices. People costs are a minor line-item for FMCG firms, which are less affected than most sectors by rising wage costs. However, with the start-up ecosystem attracting talent in large numbers, the ‘talent war’ does have an indirect bearing on the sector.
  • The pandemic has profoundly affected the logistics business. High freight rates are expected to persist for at least the next 6 months owing to a continuing shortage of containers and limited shipping capacity. However, rates should subsequently fall, though perhaps not to pre-pandemic levels. To help ease the situation, the Indian government is looking at ways to incentivise the production of containers.

The OTT (over-the-top media) business is seeing slower-than-expected demand growth, primarily owing to slack rural demand and rising inflation, which impacts disposable income. To counter this, the industry is rolling out various offers, including combo packs tying in other partner companies.



For the CFO, the significance of day-to-day ‘Finance’ work is diminishing relative to new demands around business leadership. Apart from a basic technical/accounting background, the key skills and competencies today’s CFO must possess rest on four fundamental pillars: leadership, operations, controls and strategy. Sumendra Jain, CFO (India & Asia Pacific) at SMS India, believes that for Finance leaders to be effective business partners, they must have the necessary leadership and communication skills. Additionally, to be able to offer an independent perspective, they must possess a strong understanding of the company's business model and industry. CFOs should also be able to identify opportunities for top-line growth, manage downside risks and drive profit improvement, not just through the traditional methods of cost-control, but using new methods like product line/regional profitability analysis and benchmarking against industry players. Sumendra’s 25-year-long career offers insightful lessons and learning for executives in general and CFOs in specific.