Delhi: Senior finance executives across India, Asia and Australia plan to invest in growth by actively looking to expand their market reach, by investing in new production capacity, new products and service developments and raise hiring.

At the same time CFOs say they plan to allocate more capital to shareholders through dividends or share buybacks, according to the results of a survey of 370 senior financial executives from around the world.

The reponses are based on a survey of 370 senior finance executives at large and global companies across a wide range of industries with revenues ranging from $500 million to over 20 billion in the US, Canada, Mexico, Europe, Asia (including India) and Australia, conducted in April and May 2008, by CFO Research Services. The survey explores companies' investment priorities and spending plans over the next 12 months, as well as how their strategic priorities have shifted in light of the current economic environment.

With 8 out of 10 respondents from Asia and Australia expecting their primary industry to grow and their company's revenue to increase over the next 12 months, companies in this region are less pessimistic about the economy and their business prospects than their global counterparts.
While times are certainly challenging, companies are looking back to their actions during previous downturns to help guide them towards growth this time around. 81 per cent said their investment priorities have changed in light of recent economic developments.

''In India as elsewhere, rising energy costs are an urgent concern," said, Firdaus Mogul, head, American Express Commercial Card. "While companies plan to be conservative in their spending, they're also looking to enhance investments in growth areas and are actively pursuing opportunities to expand market reach. They are pursuing investments that will allow them to reach more customers in new and better ways – all in an effort to preserve the bottom line while promoting top-line growth. This includes increasing spend in areas such as public relations, marketing, advertising and exploring M&A opportunities. They are also pursuing efficiencies through a combination of organizational, technology and process improvements.''

Deloitte Consulting India's chief financial officer- region 10, Pashupati Kumar said ''Companies have learned from the last downturn and they are not going to over react this time around but will play things carefully. In India, businesses are most concerned about capital costs which are constantly rising. Interest rates and inflation are a real concern. Additionally wage inflation has increased significantly and there is no indication of same cooling down.''

Of the companies surveyed in India, other Asian markets and in Australia, 35 per cent said they should have invested more in product and service development during the last economic downturn compared to 23 per cent globally and 40 per cent said they should have invested more in market access compared to 34 per cent globally. ''While it is hard for one to deny the uncertainties of today's economic climate, companies in Asia and Australia are looking for ways to maintain their growth momentum and are a lot more optimistic than their counterparts in the US and Europe,'' said Tracey Bowra, senior vice president, global commercial card at American Express Japan, Asia Pacific and Australia.

Shareholders top priority for Asian, Australian Companies
Companies in this region are significantly more likely to return profits to shareholders through dividends or share buybacks than their global counterparts (31 per cent compared to 19 per cent). In fact, companies seem to be more willing to commit resources to a range of priorities compared with some of their global counterparts including; capital spending, strengthening the balance sheet and mergers and acquisitions.

At the same time, these respondents said their companies are more likely than those in other regions to increase purchases of goods and services over the next 12 months. Technology purchases and investments to expand production and market access are especially strong. 38 per cent plan to purchase more computer hardware, enterprise level IT systems and advertising and marketing services while 35 per cent plan to purchase more labour and production inputs.

Oil tempers growth expectations
Rising energy costs outstrip other supply-side worries across the globe with 42 per cent of all respondents and 40 per cent from India, rest of Asia and Australia saying rising energy costs are an "urgent concern".

In this region, companies are far more likely to consider the cost of capital, (cost of equity, cost of debt and cost of credit etc) an urgent concern with 35 per cent of respondents citing this compared to only 26 per cent globally and only 15 per cent of US respondents.

In a separate question 54 per cent of companies from this region believe government policy and regulation presents the greatest threat to global expansion, 50 per cent cite currency exchange rates, 44 per cent cite access to financing and 31 per cent cite unfamiliar political systems/business customs.

On the demand side Indian, other Asian countries and Australian companies are far more concerned than their global counterparts about foreign exchange rates (44 per cent consider it an urgent concern compared to 30 per cent globally), interest rates (40 per cent compared to 30 per cent globally) and consumer price inflation (35 per cent compared to 25 per cent globally).

Travel investments remain strong
Most survey respondents expect travel frequency and spend to stay the same or increase which paints a different picture to what we are seeing on a global level where companies are working to maintain travel frequency while spending less through tight policy control.

Asian and Australian companies are more likely however to plan to improve the level of automation currently in place for expense management and business travel which supports the view that they tend to have more money to spend in general than global counterparts.

US respondents (45 per cent) are more likely than their peers (36 per cent in Asia, and 21 per cent in Europe,) to say they plan to restrict domestic travel, in addition to travel that is less likely to be critical to business growth such as conferences, retreats and training events.