KOLKATA, Oct 26: The advent of festive season has brought mixed results for corporate sector as the net profit of India Inc surged by 15 per cent in the second quarter (Q2) during July-September of the ongoing financial year 2013-14 (FY14), according to a just-concluded ASSOCHAM study on corporate performance.
‘There has been a marginal year-on-year (Y-o-Y) decline of 1.8 per cent in the rate of growth of net profit mainly due to slow macroeconomic conditions both domestically and globally,’ according to an eco-pulse study titled, ‘Performance Trends of India Inc in 2013: Q2,’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
‘Substantial cut in total expenses has resulted in limited moderation in profits and though there has been a decline in both expenditure and sales, the rate of decline in expenditure is higher than rate of decline in sales which led to this meagre 1.8 per cent fall in total profits,’ highlighted the study prepared by The ASSOCHAM Economic Research Bureau (AERB).
‘Though the general trend indicates that both top lines and bottom lines of corporate India either remained indifferent or have shown a mellowed performance, however, certain firms across sectors remained unfazed and successfully weathered the slow economic conditions to register impressive growth figures,’ further added the ASSOCHAM study.
‘Large Indian corporate firms have benefitted by cheap imported raw material as raw material prices remained down in global markets, besides cheap cost of credit raised in foreign markets has also proved lucrative for them,’ said Mr D S Rawat, secretary general of ASSOCHAM while releasing the chamber’s study.
‘However, rupee depreciation against major currencies on one hand negated certain positive effects in case of import dependent firms and on the other it also favoured export-intensive units,’ he said.
While growth in net sales declined by about two per cent Y-o-Y, the cost of raw materials have also dipped as companies have adopted efficient cost-management systems. Besides, interest payments have also gone southwards, further highlighted the ASSOCHAM study.
The manufacturing sector has continued to stay under pressure as net sales dipped from 14 per cent to 12.8 per cent while growth in total expenditure declined from 15.8 per cent to 11.8 per cent and even profit rates have declined by 3.9 per cent during the aforesaid period. ‘The underlying explanation is that as borrowing of firms increased, interest payments too increased by 13.8 per cent.’
(UNI)
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