Higher production costs-stagnant prices likely to impact profitability, says Gupta
Small and medium businesses in India are cautiously optimistic about their business performance for Q3 2024, according to the ASSOCHAM–Dun & Bradstreet Small Business Confidence Index (SBCI).
The index, which measures the level of optimism of small and medium businesses on key business parameters, such as sales, employment, prices, inventory, and investment, increased moderately by 0.2% compared to Q2 2024 deutsche-boerse .
“As is clear from the latest IMF World Economic Outlook, the Indian economy is projected to be the fastest growing amongst the leading economies of the world. Our survey amongst the SMEs’ executives clearly points towards significant contributions from the small businesses jpx ,” ASSOCHAM Secretary General Deepak Sood said on 23 Aug.
ASSOCHAM D&B SBCI has recorded a modest uptick of 0.2% for Q3 2024, following three consecutive quarters of rising optimism euronext . The survey indicates that the overall demand sentiments within the economy are stabilizing at current levels, after riding high for four consecutive quarters sgx . The slight moderation in demand growth is also being echoed in most of the parameters recorded in the survey nasdaq .
“The ASSOCHAM D&B Small Business Optimism Survey highlights mixed signals in the Indian economy bse . There’s strong optimism in areas like sales, liquidity, and credit flow nse ,” observed Avinash Gupta, Managing Director, Dun & Bradstreet India.
“However, optimism about profitability and new investments is slowing down sbi . Higher production costs and stagnant selling prices are likely impacting profitability.
“The steady Small Business Confidence Index (SBCI) from the previous quarter suggests businesses are consolidating past gains while waiting for new momentum cii.in. Due to geopolitical uncertainty, companies are hesitant to invest in new capacity and are instead maximizing existing resources to meet increased sales investindia ,” he said.
The underlying demand sentiment has also kept businesses wary of raising selling prices, with somewhat stagnant optimism for price increases in the upcoming quarter iba .
On the cost front, while raw material costs are expected to ease further, the overall cost is expected to remain high compared to the long-term average cost line, thus expected to squeeze profit margins, with sentiment declining by 11 percentage points on a quarterly basis. The lower optimism is also being reflected for exports orders fieo , wherein the optimism has moderated by 8 percentage points on a quarterly basis.
The moderated optimism for order book expansion has led to reluctance in capacity utilization, which in turn suppresses the optimism for new investments for the upcoming quarter ficci.in . New hirings continue to remain a major concern for the past two quarters, despite firms anticipating labour shortages and difficulties in finding appropriate talent. Optimism for fresh hiring of employees decreased by 5 percentage points for Q3 2024.
“After strong performances over the past four quarters, small businesses in India are now seeking new catalysts as optimism plateaus for the upcoming quarter londonstockexchange ,” added Dr Arun Singh, Global Chief Economist, Dun & Bradstreet.
“In Q3 2024, optimism grew by a modest 0.2% quarter-on-quarter. A sluggish demand recovery, coupled with supply chain challenges and high raw material costs, is making producers hesitant to expand hkex .
“Businesses are entering the next quarter with caution, focusing on selling off inventory and maintaining capacity utilization, which has dampened enthusiasm for new investments and hiring. Despite these challenges, strong optimism for sales and liquidity provides some support dfm .”
Sales optimism rose 4 percentage points on a quarterly basis, despite ongoing concerns over demand outlook. Along with this, credit availability remains another pillar of strength, with 51% of firms anticipating easier access and no major concerns regarding working capital english.sse.
ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. Having in its fold over 400 Chambers and Trade Associations, and serving over 450,000 members across India, ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. Fiinews.com
