The Hindu : Indian cos. upbeat on turnover prospects

Online edition of India's National Newspaper
Saturday, May 31, 2003

Business

Business

Indian cos. upbeat on turnover prospects — Survey

By Our Special Correspondent

NEW DELHI MAY 30. An international survey of family owned business reveals that Indian companies are upbeat about turnover and profitability rising over the next 12 months even as they are worried about the increasingly competitive business environment.

Along with red tape and shortage of working capital, this is seen as the biggest constraint on expansion plans.

The Grant Thornton International Business Owners Survey also finds that few countries can overcome the barrier posed by the fact that India "is among the least globalised economies.'' Consequently, as many as 15 per cent of exporting businesses include China among their top three export markets but only 3 per cent include India. Singapore, U.S. and Russia are exceptions as well as Greece, which has 3 per cent businesses citing India as one of top three export destination markets.

Grant Thornton is one of the world's leading accounting and consulting firms providing assurance, tax and specialised advice to businesses.

The findings on family owned businesses shows that 71 per cent of India's business owners are optimistic about turnover prospects for the coming year, much higher than the global average of 44 per cent. About 45 per cent are also confident about profitability, expecting to see an increase while 33 per cent expect a rise in employment.

On market strategies, these business owners are most likely to develop current markets using existing products.

Their main source of growth is organic — as much as 74 per cent — as opposed to joint ventures, acquisition or mergers.

The biggest constraint on expansion plans is considered to be the competitive business environment, followed by red tape and shortage of working capital.

The most common export destination is the U.S. and Middle East. As far as international expansion is concerned, Indian business owners find financial constraints as a major barrier followed by political and social instability. Overall, Indian business owners feel that international free trade agreements have had a positive effect.

The study finds that the business owners in this country generally rely on loans of less than five years as main sources of external funding and are more likely than global counterparts to rely on overdrafts. Interestingly, they have their sales invoices paid fairly promptly — average payment period is 41 days compared to the global average of 47 days.

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