MNI India Business Sentiment Report April 2014

MNI India Business Report
April 2014
Insight and data for better decisions

MNI India Business Report - April 20142
About MNI Indicators
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businesses and consumers every month.
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Written and researched by
Philip Uglow, Chief Economist
Shaily Mittal, Economist
Release Time
Embargoed until 9:45 a.m. New Delhi time
April 23, 2014
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MNI India Business Report - April 2014 3
Contents
4 Editorial
6 Executive Summary
10 Economic Landscape
14 Indicators
15 MNI India Business Indicator
16 Production
17 New Orders
18 Export Orders
19 Productive Capacity
21 Order Backlogs
22 Employment
23 Inventories
24 Input Prices
25 Prices Received
26 Financial Position
27 Interest Rates Paid
28 Effect of Rupee Exchange Rate
29 Supplier Delivery Times
30 Availability of Credit
31 Special Question
32 What the Panel Said
34 Data Tables
38 Methodology

Spitzzeile Titel4
Elections are usually periods of great uncertainty
but the continued rise in the Sensex as national
elections get underway in India belies this.
Election Fever

Elections are usually periods of great uncertainty but
the continued rise in the Sensex as national elections
get underway in India belies this.
The Sensex hit a fresh all-time high of 22,740 on
April 9, buoyed by international investors who see a
post-election India being able to dig itself out of the
economic hole it’s in. Recent opinion polls have
shown the business friendly opposition BJP, led by
Narendra Modi, holding a strong lead. The party has
promised to kick-start the economy, improve
infrastructure, contain inflation and promote foreign
investment.
The danger for equity markets is that they are strongly
pricing in a Modi win. Elections are full of surprises
and India’s opinion polls have been grossly inaccurate
in each of the two previous national elections. In
2004, Congress won even after the polls suggested
the BJP would retain power, leading the biggest
single-day sell off of stocks in more than four years.
In 2009, most opinion polls predicted a close fight,
although Congress won with the largest tally in 20
years.
Even if business positive Modi wins, the rally in equity
markets has been nothing but spectacular given the
current economic malaise, leaving them very open to
disappointment.
Our monthly Business and Consumer Sentiment
surveys suggest that companies have turned the
corner and appear optimistic that a new government
will turn the economy around. Indian politicians are
expected to spend around $5 billion on campaigning
for elections – so at least this splurge would give
India’s staggering economy a temporary boost!
The important question is what will happen next?
India’s diverse political landscape makes election
results hard to forecast and there are still four weeks
until the polls close. Whatever the outcome is, an
unclear verdict or a weak government would worsen
the situation. A stable government with clear reform
objectives is a must for stronger economic growth in
the coming years.
Philip Uglow
Chief Economist
MNI Indicators

Spitzzeile Titel6
Business confidence weakened at the start of the
new financial year in April, while expectations hit a
record high on hopes that a new government will
turnaround the economy.
Executive Summary

The MNI India Business Indicator decreased to 61.9
in April from 65.5 in March, a fall of 5.5% on the
month. The deceleration was mainly led by service
sector companies, offsetting part of the gain seen in
the previous month. Business sentiment remained
stable for manufacturing and construction companies.
India’s national elections started on April 7 and will
conclude after a series of stages on May 12. Both
businesses and markets are confident that economic
conditions will improve when the new government is
in power, with polls pointing to a win by pro-business
BJP leader Narendra Modi.
Expectations for business conditions in three months’
time increased significantly to 79.1 in April compared
with 70.1 in March. The Future Expectations Indicator
increased across all three sectors.
For the April survey, which was taken at the start of
the month, we asked our panel of the largest Indian
companies how they think their business will perform
after the general election. Only just over half of
respondents, 51.5%, thought that their business will
be better after the general election. A significant
portion of companies, 38%, said that they were
uncertain about how the elections would impact their
businesses. An important concern was the stability of
the government and its ability to push through
reforms.
Production fell in April to the lowest since December,
but was well above the same level a year earlier. April
marks the beginning of the new financial year for
Indian companies and typically activity slows following
a pick-up towards the end of the previous year.
The New Orders Indicator increased for the first time
in three months, mainly led by manufacturing and
construction sector companies.
The Employment Indicator which asks companies
whether they have an adequate number of employees,
remained broadly stable in April as the majority of
companies continued to say that the number of
employees they had was “just right”.
The Prices Received Indicator rose sharply in April to
56.8 from 52.2 in March, the highest level since
January.
The Financial Position of companies increased to
68.9 in April from 67.2 in March, well above 53.4
recorded in the same month a year earlier.
Interest Rates Paid declined for the second consecutive
month in April to 55.3 from 57.6 in March as fewer
companies reported that they paid higher interest
rates compared with the previous month.
The Effect of the Rupee Exchange Rate Indicator
increased to 46.4 in April from 40.8 in March, the
highest level since June last year as the proportion of
companies who reported that the current level of the
rupee was helping their business doubled compared
with the previous month.

Overview
Feb-14 Mar-14 Apr-14
Highest
Since
Lowest
Since
3-Month
Average
Monthly
Change
Monthly %
Change
MNI India Business Indicator
Current Conditions 58.2 65.5 61.9 - Feb-14 61.9 -3.6 -5.5%
Future Expectations 69.5 70.1 79.1 series high - 72.9 9.0 12.8%
Production
Current Conditions 62.0 64.8 62.0 - Dec-13 62.9 -2.8 -4.3%
Future Expectations 69.7 67.7 70.6 Jan-14 - 69.3 2.9 4.3%
New Orders
Current Conditions 62.3 61.5 62.9 Jan-14 - 62.2 1.4 2.3%
Future Expectations 67.2 70.9 76.9 Sep-13 - 71.7 6.0 8.5%
Export Orders
Future Expectations 68.2 70.6 68.8 - Feb-14 69.2 -1.8 -2.5%
Productive Capacity
Current Conditions 56.1 57.4 60.7 Nov-13 - 58.1 3.3 5.7%
Order Backlogs
Current Conditions 39.8 50.0 55.4 May-13 - 48.4 5.4 10.8%
Employment
Future Expectations 57.5 53.3 52.0 - Nov-13 54.3 -1.3 -2.4%
Inventories
Current Conditions 64.9 57.2 60.0 Feb-14 - 60.7 2.8 4.9%
Future Expectations 53.5 58.8 51.3 - Oct-13 54.5 -7.5 -12.8%
Input Prices
Future Expectations 72.0 64.0 58.0 - series low 64.7 -6.0 -9.4%
Prices Received
Current Conditions 56.2 52.2 56.8 Jan-14 - 55.1 4.6 8.8%
Future Expectations 61.2 56.6 59.8 Feb-14 - 59.2 3.2 5.7%
Financial Position
Interest Rates Paid
Current Conditions 67.3 57.6 55.3 - May-13 60.1 -2.3 -4.0%
Future Expectations 60.7 52.8 50.7 - May-13 54.7 -2.1 -4.0%
Effect of Rupee Exchange Rate
Current Conditions 44.2 40.8 46.4 Jun-13 - 43.8 5.6 13.7%
Future Expectations 45.2 45.5 54.4 Jul-13 - 48.4 8.9 19.6%
Supplier Delivery Times
Current Conditions 55.6 53.2 52.9 - Oct-13 53.9 -0.3 -0.6%
Future Expectations 56.2 56.3 56.2 - Jan-14 56.2 -0.1 -0.2%
Availability of Credit
Current Conditions 54.9 59.6 63.1 series high - 59.2 3.5 5.9%

w
Business confidence
weakened in April,
while expectations
hit a record high...
...on hopes that a new government will kick-start the
economy after the national elections.

Spitzzeile Titel10
Latest economic data from India have been
disappointing and dashed hopes of a quick recovery.
Economic Landscape

Latest economic data from India have been
disappointing and dashed hopes of a quick recovery.
Industrial production fell in February following a small
rise in January. Consumer price inflation ticked up
again in March owing to higher food prices and the
trade deficit widened to the highest level since
October, due to higher gold imports in March.
The Reserve Bank of India kept the policy rate
unchanged at 8% at its April meeting, allowing the
rate increases undertaken between September 2013
and January 2014 to work their way through the
economy. However, there are increased fears that the
monsoon will be below normal and put pressure on
food prices and restrain further the RBI’s ability to
ease policy later this year.
Disappointing economic growth
Economic growth in India slowed to 4.7% on the year
in the three months to December, down from 4.8% in
the previous quarter. It was, though, marginally above
the 4.4% rate seen in the same period a year ago.
Data on an output basis showed that growth was
boosted by services which grew 7% on the year,
compared with 4.2% in the previous quarter. A
bountiful harvest was expected to translate into strong
agricultural growth but output here was disappointing
as it slowed to 3.6% compared with 4.6% in the
previous quarter. Manufacturing fell back into
contraction, declining by 1.9% compared with 1%
growth in the previous quarter.
The Finance Minister P Chidambaram expects the
economy to grow by 4.9% this year and to accelerate
to 6% in the next fiscal year. The economy must
expand by 5.5% in the January-March quarter to
achieve the forecast which on current evidence looks
highly unlikely. The RBI has revised down its forecast
for 2014 to 4.7% from 4.8% previously owing to weak
industrial production and investment. This would be
the first time in 26 years that growth will be below
5% for two successive years.
Industrial output slumps
Industrial production recorded the sharpest decline in
nine months in February, falling by 1.9% on the year
following a rise of 0.8% in January.
Much of the decline was led by weakness in
manufacturing output which contracted by 3.7% on
the year following a 0.7% decline in January. Thirteen
out of the 22 industry groups within the manufacturing
sector contracted in February, led by a 34.1% fall in
‘Radio, TV and communication equipment &
apparatus’, followed by 24.6% drop in ‘Electrical
machinery & apparatus’ and 21.3% in ‘Wearing
apparel; dressing and dyeing of fur’.
After increasing 0.7% on the year in January, mining
output grew by 1.4% in February. Output of consumer
durables, a measure of consumer demand, posted the
fifteenth consecutive decline, falling 9.3% in February
compared with an 8.3% decline in the previous
month. Capital goods output, a proxy for investment,
fell sharply by 17.4% on the year, compared with a
decline of 4.1% in January.
Economic Growth
0%
2%
4%
6%
8%
10%
12%
Q12009
Q32009
Q12010
Q32010
Q12011
Q32011
Q12012
Q32012
Q12013
Q32014
GDP Y/Y % , fiscal year
Source: Central Statistical Organisation, India

Governor Raghuram Rajan said that the Reserve
Bank’s policy stance will be firmly focused on keeping
the economy on a disinflationary glide path that is
intended to hit 8% inflation by January 2015 and 6%
by January 2016. A central bank panel recently
proposed to revamp its policymaking structure by
setting a long-term consumer price inflation target of
4%, plus or minus 2%. As inflation remains high, it
recommended that the goal should be phased in
gradually.
Rajan has said that if inflation falls as expected,
further policy tightening in the near term is not
anticipated.
Inflation ticks up
Consumer price inflation rose for the first time in four
months to 8.3% compared with a revised 8% rate in
February. The rise was driven by an increase in food
prices. Food price inflation, which makes up almost
half of the basket, increased to 9.1% from 8.6% in the
previous month. Softer prices for clothing, footwear,
public transport and communication helped to keep
core CPI unchanged from the previous month at 7.9%.
Wholesale price inflation rose sharply to 5.7% in
March from a nine month low of 4.7% in February,
with both food and fuel inflation increasing but also a
general rise in the price of manufactured goods.
In the coming months, there are additional risks of
less-than-normal monsoon rains due to possible El
Niño effects, which could have a negative impact on
India’s agricultural output.
Repo rate unchanged at 8%
The RBI left the key policy rate unchanged at 8% at
its first bi-monthly monetary policy of the financial
year on April 1.
Inflation
0%
2%
4%
6%
8%
10%
12%
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Wholesale Price Inflation*
Consumer Price Inflation**
Source: *Office of the Economic Advisor, India, **MOSPI
Industrial Production
-10%
-5%
0%
5%
10%
15%
20%
25%
50
100
150
200
250
2007
2008
2009
2010
2011
2012
2013
2014
Industrial Production y/y % (RHS)
Source: Central Statistical Organisation, India
Fiscal budget deficit
The government budget deficit stood at Rs. 5.99
trillion in the April-February period, or 114.3% of the
target for the year ending March 2014, compared with
97.4% at the same point a year ago. Net tax receipts
totalled Rs. 6.27 trillion in the first eleven months to
March, while total expenditure was about Rs. 14
trillion.

The government has proposed to bring down the
fiscal deficit to 4.6% of GDP in 2013-14. It plans to
defer some subsidy payments to next year, while
focusing on speeding up the sale of stakes in state-
run firms and minority stakes in some private
companies. The government raised over Rs. 610
billion from selling licences for the mobile internet
spectrum in February.
The fiscal deficit for 2014-15 is projected at 4.1% of
GDP and 3% of GDP in 2016-17.
Foreign reserves rise
Foreign exchange reserves rose to $306.7 billion in
the week ending April 4, from $303.7 billion a week
earlier. This was the sixth consecutive week they have
increased as overseas investors poured money into
the stock market. According to the RBI’s weekly
statistical supplement, foreign currency assets, the
biggest component of the forex reserves, rose by $2.4
billion to $278.8 billion. These are expressed in dollar
terms and include the effect of appreciation or
depreciation of the non-US currencies such as the
euro, pound and yen, held in its reserves.
Moves by the RBI over the months have greatly
strengthened India’s foreign exchange reserve
position, leaving the country less vulnerable to another
run on the currency. The value of India’s gold reserves
increased to $21.6 billion from $21 billion a week
earlier.
Trade deficit widens in March
India’s trade deficit widened to a five month high in
March to $10.5 billion, up from $8.1 billion in
February.
Exports declined for the second consecutive month
on the year to $29.6, 3.2% below the level seen last
year, although 15.1% above February’s $25.7 billion.
Imports fell 2.1% on the year to $40.1 billion in March
and were 18.5% above the $33.8 billion recorded in
February. Oil imports climbed from February’s $13.7
billion to $15.8 billion in March, the highest in 24
months. Gold imports rose to $2.7 billion from $1.6
billion in February, suggesting that underlying demand
for gold is still firm and would increase if import curbs
were lifted. For the fiscal year 2013-14, the trade
deficit narrowed to $138.6 billion, down from $189.6
in the previous year aided by a rise in exports and fall
in imports.
The current account deficit narrowed to $4.2 billion,
or 0.9% of GDP in the October-December quarter,
from $31.9 billion a year earlier, on the back of curbs
on gold imports and a moderate pick-up in exports.
The government expects to keep the current account
deficit at $45 billion in the fiscal year that ends in
March.
Car sales shrink in 2013
Passenger car sales decelerated by 4.7% in the fiscal
year that ended on March 31, the second consecutive
year of decline. For the year as a whole, car sales
totalled 17.9 billion, down from 18.7 billion in the
previous year. In March, car sales increased by 6.7%
over the previous month but were 5.1% below March
2013’s level. Many consumers in India have chosen
to defer purchases of vehicles given the slowdown in
the economy, higher loan rates and rising fuel prices.
The automobile industry is optimistic that sales will
increase in 2014 as the economy rebounds and
interest rates and inflation stabilise. Companies are
looking forward to the new government’s budget to
see if the excise tax cut from 12% to 8% that was
announced in the interim budget in February will be
continued.
Many car makers are launching compact cars to
attract price sensitive customers and there have been
reports that various new car models have generated a
lot of interest and are expected to boost sales.

Spitzzeile Titel14
Business confidence weakened in April, although
sentiment was well above the same month a year
earlier, while expectations hit a record high on
hopes that a new government will kick-start the
economy after the national elections.
Indicators

The MNI India Business Indicator decreased to 61.9
in April from 65.5 in March, a fall of 5.5% on the
month. The deceleration was mainly led by service
sector companies, offsetting part of the gain seen in
the previous month. Business sentiment remained
stable for manufacturing and construction companies.
While the Business Indicator fell in April it was well
above the 47.5 level seen in April 2013. Business
confidence was hit hard in the first half of 2013 as
India faced a potential financial meltdown following
fears the US Federal Reserve would taper its bond
purchases, which caused widespread panic in all
emerging markets. Business sentiment has
subsequently recovered and has trended higher since
the summer of 2013, indicating that the worst is over
for the Indian economy.
India’s national elections started on April 7 and will
conclude after a series of stages on May 12. Both
businesses and markets are confident that economic
conditions will improve when the new government is
in power, with polls pointing to a win by pro-business
BJP leader Narendra Modi.
Expectations for Business Conditions in three months’
time increased significantly to 79.1 in April compared
with 70.1 in March. The Future Expectations Indicator
increased across all three sectors.
In April, six out of the 15 current conditions indicators
included in the survey declined. For business
expectations in the next three months, three indicators
rose to series’ highs and nine rose compared with the
previous month.
61.9
Business Confidence Weakens
Apr-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14
Current Conditions 47.5 64.6 57.8 63.4 58.2 65.5 61.9
Future Expectations 49.7 69.5 71.1 72.0 69.5 70.1 79.1
40
45
50
55
60
65
70
75
80
85
Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14
Current Conditions
Future Expectations
“The overall business situation in the coming
months will depend on the upcoming
election‘s results.” Diversified Industrials
manufacturing company
“Unless and until there is a change in the
RBI’s key policy rates, there will be no change
in business conditions.” Investment services
company

Production fell in April to the lowest since December,
but was well above the same level a year earlier. April
marks the beginning of the new financial year for
Indian companies and typically activity slows following
a pick-up towards the end of the previous year.
The Production Indicator declined to 62.0 in April
from 64.8 in the previous month. Production bottomed
out in the spring a year ago and has subsequently
been on a rising trend, averaging 60.0 over the past
12 months.
Service and construction sector companies reported a
decline in the Production Indicator while it remained
broadly stable for manufacturing companies.
Latest official data showed that industrial production
contracted in February by 1.9% on the year, having
shown a small rise in January. Manufacturing, which
constitutes over 75% of industrial production, declined
3.7% after remaining flat in January and well below
the growth of 2.1% in the same month a year ago.
Expectations for Production over the next three
months rose after declining for two months in a row.
The Future Expectations Indicator increased to 70.6
from 67.7 in March.
Service sector companies were more optimistic about
the future level of production. Fewer construction
sector companies expected their production to rise in
three months‘ time, while the Expectations Indicator
for manufacturing companies remained broadly
stable.
Production
Slows in April
Production
62.0
30
35
40
45
50
55
60
65
70
75
80
Production
Current Conditions
Future Expectations
-3%
-2%
-1%
0%
1%
2%
3%
4%
30
35
40
45
50
55
60
65
70
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
Industrial Production y/y % (RHS)*
MNI Production
*Source: Central Statistical Organisation, India

The New Orders Indicator increased for the first time
in three months, mainly led by manufacturing and
construction sector companies.
The indicator increased to 62.9 in April from 61.5 in
March and was well above the level seen in April a
year ago, when the economy bottomed out as shown
by our survey results.
Expectations for New Orders in three months rose for
the fourth consecutive month to 76.9 in April
compared with 70.9 in the previous month. The rise
in the indicator was across the board, with most
companies looking forward to the higher demand of
the summer season and an improved business
environment after a new government is elected.
New Orders
Highest Since January
New Orders
62.9
30
40
50
60
70
80
90
New Orders
Current Conditions
Future Expectations
“Our order book has increased due to our
marketing effort as well as world trade
exhibition.” Tobacco manufacturing company
“There is uncertainty towards future orders as
people are waiting for elections to end and
will then make investments in residential and
commercial spaces.” Real Estate Holding &
Development company

Export Orders have trended upwards since April last
year and this month’s fall partially offset the gain seen
in March. The Export Orders Indicator declined to
61.7 in April from 67.4 in the previous month.
Fewer manufacturing and service sector companies
reported higher export orders, the former being the
most optimistic among the three sectors.
The depreciation of the rupee has increased the
competitiveness of Indian exports, although rising
import costs have offset much of this gain for a lot of
companies. Also, the rupee rose as high as 59.72
against the US Dollar in late March and has gained
3.7% so far in April and if this trend continues, it will
impact export orders negatively.
Companies’ future expectations about Export Orders
declined for the first time in three months. The
Expectations Indicator fell from 70.6 in March to 68.8
in April. Manufacturing and construction sector
companies were less optimistic about future Export
Orders, although the indicator remained broadly
stable among service companies.
Export Orders
Shrink Significantly
61.7
30
35
40
45
50
55
60
65
70
75
80
Feb-13 May-13 Aug-13 Nov-13 Feb-14
Export Orders
Current Conditions
Future Expectations
Export Orders
Export Orders Movement
20
30
40
50
60
70
20
22
24
26
28
30
32
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
MNI Export Orders (RHS)
Exports,FOB, USD B*
*Source: Indian Ministry of Commerce and Industry

Following a sharp decline at the end of 2013, the
Productive Capacity Indicator has recovered and rose
to 60.7 in April compared with 57.4 in the previous
month.
The Productive Capacity Indicator has been above the
50 breakeven mark since May, and averaged 56.7 in
the 12 months to April.
Productive Capacity improved significantly among
construction companies, as the indicator rose to the
highest level in 10 months. Manufacturing companies
witnessed a small decline in Productive Capacity.
Companies’ expectations about Productive Capacity
in the next three months improved to a series high, as
the Future Expectations Indicator rose by 4.7% to
70.7 in April from 67.5 in March. The Expectations
Indicator improved for both construction and
manufacturing sector companies.
Productive Capacity
Future Expectations Hit Series
High
60.7
30
35
40
45
50
55
60
65
70
75
Productive Capacity
Current Conditions
Future Expectations
Productive Capacity

Spitzzeile Titel20
w
More companies
reported that the
current level of the
rupee was helping
their business.
highest level since June last year.

Order Backlogs had fallen sharply over the past year
as the economy slowed considerably, although have
picked up since January potentially signalling a
bounce back in demand.
The indicator moved above the 50 breakeven level
that separates expansion from contraction in April to
55.4, up from 50.0 in March, the highest since May
2013.
Companies expected a rise in Order Backlogs over the
next three months in anticipation of higher demand.
The Future Expectations Indicator increased to 56.7
from 55.4 in March. More manufacturing companies
expected higher backlogs in the coming months while
construction companies expected them to contract.
Order Backlogs
Rise Markedly
55.4
25
30
35
40
45
50
55
60
65
Apr-13 Jul-13 Oct-13 Jan-14 Apr-14
Order Backlogs
Current Conditions
Future Expectations
Order Backlogs
Future Expectations - 48.8 43.7 35.2 40.1 55.4 56.7
“We anticipate higher order backlogs in the
coming months due to higher expected new
orders.” Electricity manufacturing company

The Employment Indicator asks companies whether
they have an adequate number of employees, and it
remained broadly stable in April as the majority of
companies continued to say that the number of
employees they had was “just right”.
The Employment Indicator remained broadly stable at
51.7 compared with 52.1 in March, although there
was a significant rise in those who said their number
of employees was “not enough”.
Employment rose among manufacturing sector
companies, while it declined for services companies,
both remaining above the 50 mark that separates
whether they have the right number of employees or
not. The Indictaor for construction companies
remained stable at 50.
Companies’ expectations about future employment
declined for the second month in a row after hitting a
record high in February. The Expectations Indicator
fell to the lowest level since November 2013 to 52.0
in April compared with 53.3 in the previous month.
Hard hit manufacturing companies expected
employment levels to contract in the coming three
months as a growing proportion of companies
expected to have too many employees. The indicator
rose for construction companies and fell for service
companies, although both were well above the 50
mark, indicating future demand for workers.
Employment
Future Expectations Dampen
51.7
40
42
44
46
48
50
52
54
56
58
60
Employment
Current Conditions
Future Expectations
Employment
“We have an adequate number of employees.
However, we are short of skilled employees
due to high attrition.” Auto parts manufacturing
company

The Indicator for the Inventory level of Finished Goods
increased by almost 5% to 60.0 from 57.2 in the
previous month led mainly by manufacturing
companies. Many companies reported that business
activity would be slow until the elections ended,
leading to a build-up of stocks.
Companies expected their Inventories of Finished
Goods to decline in the next three months with the
Expectations Indicator falling significantly to 51.3
from 58.8 in March. Between March and April, a
significantly lower proportion of manufacturing and
construction companies expected inventories to rise
as it was generally perceived that inventories would
be depleted due to greater demand in the coming
months.
Inventories
Future Expectations Fall Sharply
60.0
25
30
35
40
45
50
55
60
65
70
Inventories
Current Conditions
Future Expectations
Inventories

The majority of the companies in our panel continued
to pay higher or the same input prices in April,
although the Input Prices Indicator remained broadly
stable compared with the previous month.
The Input Price Indicator stood at 66.1 in April
compared with 66.0 in March but significantly below
February’s 73.0. The Indicator for manufacturing and
construction sector companies decreased, while it
rose for service sector companies.
Input Prices remained uncomfortably high throughout
2013 with the indicator rising to 73.5 in the quarter
ending September. The first three months of 2014
saw the indicator fall as low as 69.6 and this month’s
stability provides relief to companies suffering from
the high cost of inputs.
Expectations for three months’ time decelerated to a
series low of 58.0 in April, down from 64.0 in the
previous month, driven by a fall in expectations across
all three sectors.
Input Prices
Future Expectations Hit Series
Low
66.1
45
50
55
60
65
70
75
80
85
Input Prices
Current Conditions
Future Expectations
Input Prices
“Fuel prices have increased and hence input
costs are high.” Electricity manufacturing
company
“Excise tax has gone down, so it will help in
managing our costs.” Consumer Finance
service company

The Prices Received Indicator rose sharply in April to
56.8 from 52.2 in March, the highest level since
January.
The increase in the Prices Received Indicator over the
past year has been closely matched by the official
inflation data. Latest data showed that wholesale
price inflation rose to 5.7% in March from 4.7% in
February, led by higher food and fuel prices.
Expectations for Prices Received in three months’
time also rose to 59.8 from 56.6 in March. Between
March and April, the proportion of service sector
companies who expected the prices charged for their
goods to rise in the coming months, almost doubled.
Manufacturing companies also expected a rise but a
growing proportion of construction companies
expected them to fall in the coming three months.
Prices Received
Rises Significantly
56.8
30
35
40
45
50
55
60
65
70
75
80
Prices Received
Current Conditions
Future Expectations
Prices Received
3%
4%
5%
6%
7%
8%
9%
30
40
50
60
70
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
Prices Received and Wholesale Price Inflation
MNI Prices Received
Wholesale Price Inflation y/y % (RHS)*
*Source: Office of the Economic Advisor, India
“If the rupee becomes weaker, then we will
increase the prices we charge as our import
costs would increase.” Speciality Chemicals

The Financial Position Indicator increased to 68.9 in
April from 67.2 in March, well above 53.4 recorded in
the same month a year earlier.
Between March and April, the indicator for construction
sector companies rose to the highest level in 10
months as the majority of companies reported an
improvement in their financial situation. Service sector
companies reported a slight improvement in the
indicator, although the majority said it was the same
as the previous month. Manufacturing companies,
which have been hit hard by the economic slowdown,
were less optimistic about their financial position.
The BSE benchmark Sensex rose to a record high of
22,740.04 on April 9 helped by positive overseas
investors, who bought Indian shares worth 7.03
billion rupees, totalling nearly $4.5 billion so far in
2014. More recently the Sensex, along with other
Asian markets, have slipped following weak Chinese
data and increased tensions in Ukraine.
Companies, across all three sectors, were more
optimistic about their financial position in the coming
three months as the Expectations Indicator rose to
79.6 in April from 76.1 in the previous month.
Financial Position
Strengthens in April
68.9
45
50
55
60
65
70
75
80
85
90
Financial Position
Current Conditions
Future Expectations
Financial Position
“If interest rates are lowered, our financial
position may improve.” Real Estate Holding &
Development company
“Our financial position will improve in the
next three months as the summer season
brings more revenue.” Hotel

The Interest Rates Paid Indicator declined for the
second consecutive month in April to 55.3 from 57.6
in March as fewer companies reported that they paid
higher interest rates compared with the previous
month. The Indicator fell across all sectors, with
construction posting the largest decline, falling into
contraction for the first time in 10 months.
While in March, 25.8% of the companies surveyed
reported higher credit costs, in April this fell to almost
20%. In contrast, the percentage of companies who
reported they faced the same interest rates increased
from 63.5% in March to 70.8% in April.
The RBI kept the key policy rate unchanged at 8% at
its monetary policy meeting on April 1 allowing the
rate increases between September 2013 and January
2014 to work their way through the economy.
Governor Raghuram Rajan said that the Reserve
Bank‘s policy stance will be firmly focused on keeping
the economy on a disinflationary glide path.
Expectations for Interest Rates Paid remained high
throughout most of last year with the indicator hitting
a record high in June, although it has trended down
since November. Between March and April, an
increasing proportion of companies expected to see
lower credit costs in the next three months. The
Expectations Indicator declined from 52.8 in March to
50.7 in April, very close to a record low of 50.0
recorded in May 2013.
Interest Rates Paid
Lowest Since May 2013
53.3
45
50
55
60
65
70
75
Feb-13 May-13 Aug-13 Nov-13 Feb-14
Interest Rates Paid
Current Conditions
Future Expectations
Interest Rates Paid
Manufacturing companies expected Interest Rates
Paid in the next three months to contract while for
services companies, the indicator fell to the breakeven
level. In contrast, the expectations indicator for
construction companies increased significantly above
the 50 level.

highest level since June last year as the proportion of
companies who reported that the current level of the
rupee was helping their business doubled compared
with the previous month.
Businesses are asked whether the exchange rate is
helping or hurting their company and a value above
50 shows more firms reported that it was helping,
while a reading below 50 shows the exchange rate
was hurting.
The indicator has moved sharply over the past year in
line with the movement in the exchange rate. In March
2013, the indicator stood at 69.1, showing businesses
were benefitting from the rupee. The indicator fell into
contraction in July, before hitting a record low in
October and has since partially recovered in line with
the recovery in the rupee, although has remained
below the 50 mark.
From the start of the month until April 15, the rupee
was 3.7% up on the same period a month earlier.
Appreciation in the currency helps the majority of the
Indian companies due to their dependence on imports
of fuel and other raw materials.
Companies expected the rupee to start helping their
businesses in the coming three months. The
Expectations Indicator increased considerably to 54.4
in April from 45.5 in March. This was the first time
the indicator has climbed above the breakeven level
since July 2013, before the sharp depreciation in the
currency.
Will Help Business In the Future
46.4
20
30
40
50
60
70
80
90
Current Conditions
Future Expectations
0.000
0.002
0.004
0.006
0.008
0.010
0.012
0.014
0.016
0.018
0.020
0
10
20
30
40
50
60
70
80
90
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
Exchange Rate
MNI Effect of Rupee Exchange Rate
US Dollar versus Indian Rupee (RHS)*
*Source: Reuters

After steadily increasing for four straight months, the
Supplier Delivery Times Indicator shortened in March
to 53.2 and remained broadly stable in April at 52.9.
Supplier Delivery Times were expected to remain
broadly stable over the next three months as well,
with the Future Expectations Indicator standing at
56.2 in April compared with 56.3 in March.
Manufacturing companies expected supplier delivery
times to lengthen while construction companies
expected the opposite, with both above the breakeven
level.
Broadly Stable
52.9
30
35
40
45
50
55
60
65
Current Conditions
Future Expectations

The indicator measuring the Availability of Credit
accelerated to a series high of 63.1 in April from 59.6
in March.
After falling to a record low in April 2013, the trend for
Credit Availability has been positive and the rise on
the month puts the indicator over 50% above the
same period a year ago.
More service sector companies registered an increase
in credit availability and manufacturing companies’
credit availability improved slightly to the highest level
in seven months. In contrast, the proportion of
construction companies who experienced better credit
availability declined compared with the previous
month.
Businesses also expected credit availability to improve
considerably in the next three months as the Future
Expectations Indicator increased to a series high of
67.8 from 59.5 in March. The increase was broad-
based across the three sectors.
Hits a Series High
63.1
30
35
40
45
50
55
60
65
70
Current Conditions
Future Expectations
“Many banks are ready to give us credit
because of our company’s track record.”
Heavy construction company
“Credit availability is a bit problematic.”
Industrial machinery manufacturing company

For the April survey, which was taken at the start of
the month, we asked our panel of the largest Indian
companies how they think their business will perform
after the general election. Indian elections started on
April 7 and will take place in a series of stages until
May 12.
Only just over half of respondents, 51.5%, thought
that their business will be better after the general
election. 9.9% of respondents thought that their
business performance will remain the same and less
than 1% thought it would worsen. A significant portion
of companies, 38%, said that they were uncertain
about how the elections would impact their business.
An important concern was the stability of the
government and its ability to push through reforms.
The BJP party is widely seen as benefiting from the
rising popularity of its pro-business prime ministerial
candidate, Narendra Modi. Latest opinion polls
suggest that the BJP and its allies could win the
majority of legislative seats in the national elections.
Special Question
How do you think your business
will perform after the election?
51.5%
9.9%
0.7%
37.9%
How do you think your business will perform after
the general election?
“Business conditions will improve only if the
new government is stable.” Heavy construction
company
“We have the same set of clients and a fixed
number of orders. So there will not be any
impact due to elections.” Food products
“If BJP party gets elected, business scenario
might improve.” Consumer goods
“Due to political stability after change in the
government, there may be favourable policies
for sugar industries.” Food Products
Better
Worse
Same
Don‘t Know
“Market will be better after a stable election
outcome.” Software Services company
“We expect a better performance as probably
goods and services tax will come into effect
after the new government is formed.”
Consumer Electronics manufacturing
company
“The new government would take at least 6-8
months to get their policies rolling.” Real
Estate Holding & Development company
“If BJP comes to power, there is hope for
betterment.” Asset management company

Spitzzeile Titel32
A selection of comments from the panel of
businesses surveyed over the past month.
What the Panel Said

“Due to lower demand, we have reduced the prices we
charge.” Paper manufacturing company
“Due to higher labour charges, we have increased the
prices charged for our goods.” Heavy construction
company
“Fuel prices have increased and hence input costs are
high.” Electricity manufacturing company
“We expect higher orders May onwards.” Consumer
Finance services company
“Cement and steel prices have increased.” Real estate
Holding and Development company
“Due to an increment in salary of employees, the input
costs to our company are higher.” Software services
company
“Unless and until there is a change in the RBI’s key
policy rates, there will be no change in business
conditions.” Investment services company
“We got six more clients this month.” Investment
services company
“New orders have started coming in.” Containers &
packaging manufacturing company
“There is uncertainty towards future orders as people
are waiting for elections to end and will then make
investments in residential and commercial spaces.”
Real Estate Holding & development company
“We expect higher demand in the coming months and
are sales and marketing team is working towards it.”
Hotelier Group
“Our profitability has increased by 10%.” Mortgage
Finance company
“We have just the right number of employees.”
Pharmaceuticals manufacturing company
“We have an adequate number of employees. However,
we are short of skilled employees due to high attrition.”
Auto parts manufacturing company
“If rupee becomes weaker, then we will increase the
prices we charge as our import costs would increase.”
Speciality chemicals manufacturing company
“We anticipate higher order backlogs in the coming
months due to higher expected new orders. “ Electricity
Manufacturing company
“Our financial position will improve in the next three
months as the summer season brings more revenue.”
Hotelier
“We hope that the overall business conditions would
improve after election. Single party with majority should
come to power.” Water manufacturing company
“If interest rates are lowered, our financial position may
improve.” Real Estate Holding & Development company
“The overall business situation in the coming months
will depend on the upcoming election‘s results.”
Diversified Industrials manufacturing company
“Credit availability is a bit problematic.” Industrial
Machinery manufacturing company
“We will raise our prices in the coming months due to
expected higher demand during summer vacations.”
Hotelier
“Summer holidays are good for our business, so the
coming months will see increased business activity.”
Recreational services company
“Improvement in the US economy is boosting our
business.” Investment services company
“The new government would take atleast 6-8 months
to get their policies rolling.” Real Estate Holding &
Development company
“Many banks are ready to give us credit because of our
company’s track record.” Heavy construction company
“Excise tax has gone down, so it will help in managing
our costs.” Consumer Finance service company

Spitzzeile Titel34
35 Historical Summary
36 Historical Records
37 Historical Records - Quarterly
Data Tables

Historical Summary
2013 2014
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
MNI India Business
Indicator
Current Conditions 47.5 50.5 60.6 51.8 64.0 59.4 59.8 64.6 57.8 63.4 58.2 65.5 61.9
Future Expectations 49.7 52.0 60.6 67.6 75.5 77.1 68.8 69.5 71.1 72.0 69.5 70.1 79.1
Production
New Orders
Export Orders
Productive Capacity
Order Backlogs
Future Expectations - 59.6 32.8 43.6 39.4 57.5 43.4 48.8 43.7 35.2 40.1 55.4 56.7
Employment
Inventories
Input Prices
Prices Received
Financial Position
Interest Rates Paid
Effect of Rupee
Exchange Rate
Supplier Delivery Time

Historical Records
2012 - Current
Minimum Maximum Mean Median
Current Conditions 47.5 65.5 58.7 59.6
Future Expectations 49.7 79.1 66.1 69.5
Production
New Orders
Export Orders
Productive Capacity
Order Backlogs
Employment
Inventories
Input Prices
Prices Received
Financial Position
Interest Rates Paid

Historical Records - Quarterly
Q3 13 Q4 13 Q1 14 Quarterly Change Quarterly % Change
Current Conditions 58.4 60.7 62.4 1.7 2.8%
Future Expectations 73.4 69.8 70.5 0.7 1.0%
Production
New Orders
Export Orders
Productive Capacity
Order Backlogs
Current Conditions 49.8 43.3 41.8 -1.5 -3.5%
Future Expectations 46.8 45.3 43.6 -1.7 -3.8%
Employment
Inventories
Input Prices
Prices Received
Financial Position
Interest Rates Paid

Methodology
MNI India Business Sentiment is a monthly poll of
Indian business executives at companies listed on
BSE (formerly known as the Bombay Stock Exchange).
Companies are a mix of manufacturing, service,
construction and agricultural firms.
Respondents are asked their opinion on whether a
particular business activity has increased, decreased
or remained the same compared with the previous
month as well as their expectations for three months
ahead, e.g. Is Production Higher/Same/Lower
compared with a month ago?
A diffusion indicator is then calculated by adding the
percentage share of positive responses to half the
percentage of those respondents reporting no change.
An indicator reading above 50 shows expansion,
below 50 indicates contraction and a result of 50
means no change.
Data is collected via telephone interviews. Over 200
companies are surveyed each month.

Discovering trends in Emerging
Markets
MNI‘s Emerging Markets Indicators explore attitudes, perspectives and confidence
in Russia, India and China. Our data and monthly reports present an advance
picture of the economic landscape as perceived by businesses and consumers.
Our indicators allow investors, economists, analysts, and companies to identify
economic trends and make informed investment and business decisions. Our data
moves markets.

Published by
MNI Indicators | Deutsche Börse Group
Westferry House
11 Westferry Circus
London
E14 4HE
Copyright© 2014 MNI Indicators | Deutsche Börse
Group.
Reproduction or retransmission in whole or in part is
prohibited except by permission. All rights reserved.

MNI India Business Sentiment Report April 2014

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