A pan India survey of Corporate CFOs in which they were asked about their confidence in the overall financial and macro-economic conditions for Q3 2013 (Jul-Sept of the calendar year 2013), as compared to the same quarter of the previous year, reveals that Optimism among the CFOs in both the manufacturing and services sector regarding the overall macroeconomic conditions for Q3 2013; the overall financial health of their respective companies and the business risk environment remains very low as compared to the year ago period.
The survey conducted by Dun & Bradstreet, also brings forth other disturbing facts. Already, the Dun and Bradstreet Composite CFO Optimism Index for Q3 2013 stands at an all time low. The Composite CFO Optimism Index for Q3 2013 declines by 4.1% on a y-o-y basis and by 3.4% on a q-o-q basis.
The % of CFOs who perceive increase in the level of financial risk on their company’s balance sheet as compared to the year ago period has been steadily increasing over the past 6 quarters.
Around 87% of the surveyed CFOs revealed that they expect the level of financial risk for the corporate sector as a whole to increase or remain the same as compared to the previous year quarter. The survey reveals that around 39% of the CFOs consider risk management tools to be their priority during the following six months as compared to 30% in the previous quarter. Hedging (44%) and effective recovery system (41%) of CFOs say would be the preferred tool for risk management for the CFOs during the next six months
The % of CFOs (around 37%) expecting increase in availability of funds in the market for Q3 2013 has come down significantly as compared to the first quarter of 2013 (around 50%).
Reducing cost remains the topmost priority among the surveyed CFOs for the sixth consecutive quarter. Around 50% of the CFOs surveyed expect the operating margin of their company to increase during Q3 2013 as compared to the year ago period
Commenting on the findings of the survey, Arvind Raghav, Director-Risk Management Solution, Dun & Bradstreet India said “The recent sharp depreciation in rupee, measures taken to drain the excess liquidity in the banking system, expectations regarding rise in interest rates coupled with the rising global crude oil prices have severely dented the optimism level among the CFOs.”