Mumbai, January 19, 2004

Dun & Bradstreet India today released its Business Optimism Index (BOI) for India for the period Jan-Mar (Q1) 2004. The D&B Business Expectations Survey for Q1 2004 reveals that the business confidence has improved significantly compared to the previous quarter. The Business Expectation Survey for Q1 2004 was conducted in Dec 03 amidst signs of accelerating growth, booming stock market and record level of foreign exchange reserves.

The Composite Business Optimism Index for Q1 2004 rose 12.6% to a new high of 148.8 from 132.2 in the previous quarter. In the previous quarter, the index had increased by 4.5%. The increasing trend in the index has been carried into its seventh consecutive quarter now. Over a period of last four quarters, the Composite Business Optimism Index has increased by an impressive 25.5%. In Q1 2004, Optimism Indices for Volume of Sales, Selling Prices and Employees improved and recorded their all-time peaks.

Indian corporate sector appears to be extremely bullish about demand prospects for the Jan-Mar 04 quarter. 88% of the respondents expect sales volume to surge in the quarter, whereas a very small proportion of 6% expect it to decline. The resultant Optimism Index for Net Sales at 82% is a record high for this index. Players in the consumer durable segment are extremely upbeat about the prospect for sales volume followed by services and consumer non-durable.

India Inc seems to be extremely positive about their outlook on profitability as well. An overwhelming 82% of the executives expect their profitability to surge in the first quarter of 2004. Only 9% feel that profitability would decline. The Optimism Index for Net Profits is at a level of 73%. The optimism could have been higher but for the depressed outlook from players in the intermediate segment. Consumer durables, consumer non-durables and services were, however, extremely positive about their profit prospects in Jan-Mar 04.

Despite competitive pressures, Indian corporate sector appears to be positive about price realisation. Though a large number of respondents (51%) expect no change in selling prices, 38% expect prices to go up in Q1 of 2004. The resultant Optimism Index for Selling Prices stands at 26%, which is the highest level for this index since the inception of the survey in India. Nearly 86% of the respondents expect their order book position to improve as compared to 5% who expect it to deteriorate in Q1 2004. The Optimism Index for New Orders at 81%, although at an identical level as the preceding quarter, is nevertheless an all-time high.

In line with past trend, a significant proportion of the respondents (49%) expect no change in their inventory level during Jan-Mar 04. However, 35% expect to add to their inventory. The Optimism Index for Inventory stands at 19%. There is also an improvement in the hiring plans of India Inc. While 53% of the respondents have no plans to hire, 38% expect to add to the head count and a minuscule 9% expect net decrease in the number of employees. The Optimism Index for Employees at 29%, is an all-time high for this index in India. The sectors that are more positive on this parameter are capital goods and services.

"Improvement in business confidence reflects the upturn in the business cycle as also a sense of confidence with respect to India's competitiveness in different sectors", said Mr. Rajesh Mirchandani, Vice President and Managing Director, Dun & Bradstreet-South Asia. "Signals of acceleration on the reforms agenda and buoyancy in growth performance should help the feel-good factor sustain in the coming months."

The D&B Optimism Index is widely recognised as an indicator, which measures the pulse of the business community and serves as a reliable benchmark for investors. The index is arrived at on the basis of a quarterly survey of business expectations.

The survey is conducted on a sample of companies that are selected randomly from D&B's commercial credit file. The sample selected is a microcosmic representation of the country's business community and includes companies from several sectors including basic, capital goods, intermediate goods, consumer durables, consumer non-durables and service sectors. Respondents to the survey are asked six standard questions regarding whether specified parameters viz., net sales, net profits, selling prices, new orders, inventories, employee levels, will register an increase, decline or show no change in the ensuing quarter as compared to the corresponding quarter of the previous year. The indexes are then calculated by subtracting the percentage of respondents expecting decreases from those expecting increases.

For calculating the Composite Business Optimism Index, each of the six parameters is assigned a weight. The positive responses for every parameter for the period under review are expressed as a proportion of positive responses in the base period (Q2 1999). The parameter weights are then applied to these ratios and the results aggregated to arrive at the Composite Business Optimism Index.

Dun & Bradstreet (NYSE:DNB), the world's leading provider of business information, has been enabling business-to-business commerce for nearly 160 years. D&B's information and technology solutions help businesses reduce credit risk, find profitable customers, manage vendors efficiently and collect cash and receivables. Businesses also use D&B's information and technology to authenticate and verify potential trading partners online, increasing their trust and confidence in e-commerce transactions. That's why so many companies-including over 90 percent of the Business Week Global 1000 - rely on D&B as the most trusted source for information they need to make their business a success. For more information, please visit www.dnb.com.

Download D&B Q1 2004 Optimism Index for India