1. Voice of CFO Survey November 2012 CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission of CII & McKinsey & Company is strictly prohibited

2. Summary Statistics from 32 CFO respondents (1/2) believe India’s FDI attractiveness and economic and fiscal policies will be same or better than last year believe corruption and bureaucracy will be worse than last year believe their company’s top- line growth will be same or more than last year CFOs believe corporate India’s bottom line growth will be negative in the coming year believe GST, New Companies Act and IFRS are steps in the right direction believe GAAR is a step in the wrong direction CFO believes India’s GDP growth will be >7% believe India’s GDP growth will be <6% © Confederation of Indian Industry

3. Summary Statistics from 32 CFO respondents (2/2) ‘India now has dubious distinction of being amongst the most corrupt governments in the world’ ‘Bring transparency in governance, zero tolerance in corruption’ ‘Uncertainty in regulations is a cause of concern’ ‘Faster implementation of policies is required’ ‘When it comes to the convenience of running the business, India is at the bottom of the list’ ‘Government has initiated many landmark reforms in the last 3 weeks and these measures will go a long way in restoring investor confidence and keeping a upward trajectory in GDP growth’ ‘The government should continue the reform agenda initiated by it’ ‘We welcome the constitution of the PMO committee for the IT sector for resolution of disputes in a speedy manner’ ‘GST is a great opportunity to give India a clean, efficient and effective indirect tax regime’ © Confederation of Indian Industry

4. Global events that will have a negative impact on India SOURCE: Voice of CFO survey © Confederation of Indian Industry

5. Global events that will have a positive impact on India SOURCE: Voice of CFO survey © Confederation of Indian Industry

6. Outlook of the Indian economy remains “cautiously optimistic” SOURCE: Voice of CFO survey Expect it to remain range bound 6-8% Inflation Remove supply constraints ‘Address supply side bottlenecks in logistics’ ‘Arrest the artificial hoarding of commodities by traders’ Encourage agricultural produce ‘Enhance efficiency on the supply side - agricultural productivity Reduce wasteful govt expenditure ‘Reduce non planned and unproductive government expenses’ Suggested measures to improve include … Expect a 5-6% GDP growth next year Economic growth Encourage FDI ‘Open out the Economy by allowing FDI in Retail & Insurance’ ‘Take firm decisions on FDI’ Focus on infrastructure ‘Revive infrastructure projects viz. power’ ‘Give tax exemption for Infra projects’ Simplify taxation and Implement GST ‘Rationalize tax structure to reduce cascading effect’ ‘Clear GST’ Expect it to be 50-55 Exchange rate (INR / USD) Encourage capital inflows ‘Allow lower withholding tax for all FII investments in debt’ ‘Relax norms for FIIs to invest in Indian equities’ Control fiscal deficit ‘Decontrol petrol & diesel prices thereby reducing consumption & Forex outgo thereby reducing Current Account deficit’ Encourage exports ‘Provide impetus to exports including fiscal incentives’ © Confederation of Indian Industry

7. Apart from GAAR, CFOs believe recent policy changes are in the right direction SOURCE: Voice of CFO survey % responses with ‘Yes’ New Companies Act GST GAAR DTC Land acquisition policy IFRS 2512 100% = 2646 260 2070 2623 2528 LowMediumHigh Step in the right directionPerceived impact on business ‘Speedy implementation should be done for GST’ ‘Subsume all Central, State and Local Level indirect taxes on supply of goods and services in to GST’ ‘DTC policy should be transparent and should not have room for bureaucracy & corruption’ ‘Reduce Corporate Tax Rate to 22%, make it compete with HK and Singapore’ ‘Land Acquisition Policy should facilitate quick acquisition instead of creating bottlenecks and bureaucratic hassle’ ‘Mandate the international version for IFRS’ ‘Timing of implementation should be aligned with major advanced economies’ Illustrative quotes ‘GAAR should be deferred as it may have adverse impact on business sentiment and capital flows’ ‘IFRS can simplify the process of raising capital in the overseas markets’ © Confederation of Indian Industry

8. What will be better compared to last year? What will be worse? SOURCE: Voice of CFO survey Bureaucracy & corruptionBureaucracy & corruptionBureaucracy & corruptionBureaucracy & corruption Job opportunities Security & social harmonySecurity & social harmonySecurity & social harmonySecurity & social harmony Regulatory climate Confidence in economy Stable economic & fiscal policiesStable economic & fiscal policiesStable economic & fiscal policiesStable economic & fiscal policies FDI attractiveness 1 = worst, 3 = Better Compared to last year Stable and clear policies ‘Provide a transparent, stable, efficient and secure business environment and consistent policies’ ‘Provide stable investment & tax policies. Give clarity on land, environment, power and other FDI rules’ Measures to further improve FDI Easier approvals ‘Provide single window clearance to Foreign Investors’ ‘Fast track clearance of proposals based on merits’ Open sectors ‘Increase & allow FDI in major sectors like multi- brand retail, civil aviation, insurance & pension © Confederation of Indian Industry

9. Majority of the CFOs are confident of beating last year’s performance SOURCE: Voice of CFO survey Percent 823154 Topline growth415234 Contribution to exchequerContribution to exchequerContribution to exchequerContribution to exchequer Equity Issuance 412234 2435 Inventory build up172239 Dividends 038124 ROCE035154 PAT growth 023590 Capex122832 Employment 1512384 Debt issuance1621 ROE Significantly lesser Less About the same More Significantly more Key challenges voiced Slowdown in growth ‘Global uncertainty is impacting growth’ ‘Very low business demand due to lower domestic capex’ Higher costs/lower margins ‘Rise in fuel prices and talent costs’ ‘Increased rates of Interest i.e. high borrowing cost’ Currency risk ‘Exchange fluctuation and hedging is a big challenge’ ‘Managing uncertainty of Fx is becoming even more difficult’ © Confederation of Indian Industry

10. What are the priorities for CFOs in the next 12 months SOURCE: Voice of CFO survey Key priority areas for CFOs 1 = low priority, 10 = high priority Reduce leverage Going international Entering new markets Introducing new products/services Cost reduction New acquisitions Share buyback Reduce dividends Dispose assets Capital raising ‘Controlling spending, improving profitability and managing cash flow effectively is a top priority’ © Confederation of Indian Industry

11. THANK YOU © Confederation of Indian Industry