We survey about 1,300 CEOs globally, says KPMG's Arun Kumar

What we find is that there has been a fair degree of consistency year over year. Three years ago there was an obsession that you better get moving with technology or it would be too late. In fact the report was titled ‘Now Or Never’. The next year we found that companies had already gotten into technology and majority of them were of the view that they should be disrupting rather than be disrupted. This year they are working through it and we called it what growing pains because they are tackling the issues of working through new technologies and the changes that are needed.

The other interesting point I would make is that there is a fair amount of consistency between Indian CEOs concerns and global CEOs concerns. So there are not many differences. For instance, optimism in the global economy. Generally this year we found huge increase in optimism. Last year it was like 63 percent, this year it is 89 percen; that is a pretty big jump.

Kumar: However, what I want to say is that out of the 11 countries, about 4 major economies also had the same sense; they had less confidence in their economies.

Kumar: It tells us in India, considering that the survey was done earlier part of the year, we were just coming out of the GST implementation etc. so those could have been some of the concerns that they had. However, I would not generalize that too much. The paradox is that people said very good about the global economy and were much more cautious about their own country’s economy.

Kumar: The fourth edition.

Kumar: It is certainly looking ahead. So, we look to the next three years and see what are companies projecting for the next three years, what are they going to prioritize for the next three years. So really looking forward.

However, what I said was that when you look at the last two years you find some continuity and evolution in what they said earlier and what they moved on to do next year.

Shah: If I talk about my business which is in financial services, everybody is very upbeat. However, in way the finding of this survey seems to be what the underlying mood is because we are seeing that there is a clear uptick in earnings, corporate earnings there is an uptick, people’s topline, margins, profits are growing, but people are still not upbeat. So, we call it uptick but not upbeat yet.

The part of the reason people are cautious about India as a whole are the macroeconomic headwinds that we are facing. Oil price, interest rates going up, liquidity, rupee is little bit under pressure. So that makes them cautious at an overall macro level. However, individual industries whether it is automobiles, whether it is cement, whether it is financial services, our industry, they are all doing very well. In financial services, private sector, NBFCs, or bank, it is showing 20-25 percent growth in profits.

Shah: It is, but auto is also not doing badly. Auto is doing well. Cement is doing well. We are seeing a lot of other sectors which are also doing well from a growth point of view. Even real estate in the last quarter we have started seeing an uptick in that. So it is spreading. I think there are many parts – steel is doing very well and we are seeing a clear uptick.

Chandra: The way Arun Kumar described it, the survey was done at the beginning of the year and we were just coming off the major implementation of GST. So I can understand why there were some degree of cautiousness. However, when I look at the optimism right now, I actually feel very confident. In fact the last couple of quarters have been extremely strong. The unique position HP has, is we serve virtually all customer segments whether it is consumers, SMEs, or even enterprise and government customers.

Right now we are seeing great buoyancy in the small and medium businesses and the consumer segment. Enterprise I would say is the slowest growing right now and I think that is reflection of some of the sentiment that you are just talking about. However, I do think the optimism or the sentiment has improved over the last couple of quarters. So I feel really optimistic and I see 70 percent as a very good number; it is more than glass half full in my view.

Kumar: Threat and opportunity – I would say the threat is what we are hearing about tariffs and policies from many parts of the world. That certainly is disruptive. So that is a big issue that CEOs have to confront with. This was not such a big issue a year ago. It is very much front and center this year, not just for Indian CEOs, but globally.

However, what Indian CEOs are also doing is looking for opportunities in that. So for example, Brexit, I think IT companies are finding that maybe there is an opportunity especially when you are serving the financial services sector, to reconfigure systems, to do a new outsourcing because they have to be reconfigured to cope with Brexit. Similarly, Indian companies based in the UK, are looking at what should their future plans be, should they expand there, etc. So it is interesting that while there are these protectionist headwinds, CEOs are looking at how to make the most of it.

The second part is in terms of geographic expansion. Indian CEOs and global CEOs are looking more at emerging markets than the developed markets. Couple of years ago there was much more interest in investing in the developed market. Today they are looking at Latin America, Eastern Europe, and Africa. Indian CEOs are doing the same as global CEOs.

Shah: It varies from company to company and industry to industry, but clearly Indian companies are setting up manufacturing facilities outside of India to cater to local market because the expectation is that the trade war and the boundaries will go up. So if you want to cater to a particular market, it is actually better to have a base out there and we are seeing more and more companies also doing that.

We are seeing a lot of companies in India also starting to look at acquisition of operating assets. We have seen all the NCLT cases that have been there up till now, there has been a huge amount of interest and even the pricing that we are seeing for those assets, are at least 10-20 percent higher than what we all would have thought about a year ago. So I think there is a lot of interest.

People are starting to see growth. However, as I said earlier, because of the headwinds and the recent past, because GST, demonetization, Indian economy has gone through a fair amount of turmoil, so people are not euphoric and are not very gung-ho, but they are actually starting to experience uptick and expansion in profits and all. It is not just the large corporates, I think the small SME, like we have a SME loan book in Edelweiss, and we are seeing a huge amount of interest in SME loans and MSME is borrowing. They are seeing business opportunities now emerging more and more.

Chandra: I think the way we look at, there is a lot of change happening in the world right now. Across pretty much every continent you can see a lot of change and I think we look at change as an opportunity. I think global companies tend to be pretty well hedged. They have a portfolio of different country exposures, so, I think while one country does maybe not so well, you balance it off with other countries that are doing well.

As far as India is concerned, I agree, I think there is a lot of opportunity and I would say India to a large extent is probably hedged from some of the turbulence you are seeing in other parts of the world. So I continue to believe there is a lot of opportunity ahead across pretty much all sectors in India.