CFOs expect macro conditions to worsen or remain same

Most of the senior finance executives surveyed feel that the country's macro-economic conditions are likely to either worsen or remain the same in the current quarter indicating weak business sentiments, says a study.

"Nearly 60% of the surveyed CFOs stated that they consider the overall macroeconomic conditions to worsen or remain the same during April-June of the calendar year 2012, as compared to same quarter of the previous year," the Dun & Bradstreet (D&B) CFO Optimism Index Survey said.

The survey conducted among 500 Chief Financial Officers (CFOs) noted that 86% of the respondents expect the level of financial risks for the corporate sector would increase or remain at existing levels in second quarter of calender year 2012, as compared to the year-ago period.

In contrast, only 14% of the respondent expected a decline in financial risks in the corporate sector during the quarter under review.

Also, 82% of the CFOs surveyed consider the level of financial risks on their company's balance sheet to either rise or remain unchanged during the quarter under review.

Another 18% of the respondent expected a decline in the level of the financial risks on the balance sheet of their respective companies.

"The CFO survey conducted by D&B clearly reveals a significantly heightened risk perception in the Indian economy in Q2 (Apr-Jun) 2012," D&B India Chief Operating Officer Mohan Ramaswamy said.

"CFOs are clearly focused on risk management as a key priority area and implementing risk mitigation tools that will help them minimise the impact of the volatile economic and political environment on the balance sheet of their respective companies," he added.

The survey suggested that CFOs are understanding the importance of risk management as it has figured a very high in their priorities for the next six months.

"Seventy% of the CFOs surveyed had enhanced risk management, business restructuring and reducing leverage as key priority areas for 2012," the survey noted.

In order to reduce the risk management, 60% of the respondent said that their focus would be largely on hedging their exposures, tightening credit appraisal mechanisms for new customers and monitoring strategic accounts more closely for payment risks.