India Inc’s Performance Fails to Impress, Again

Companies’ falling revenues and weak profit margins in the March quarter of 2013 reflect the country’s lacklustre GDP growth

    The March 2013 quarter results season has drawn to a close with India Inc’s scorecard more or less reflecting the country’s GDP growth performance, which at best can be described as lacklustre. Revenue growth is slipping, profit margins are dull, while the bottom line depends heavily on non-operating other income. An ETIG analysis of aggregate numbers of 1,747 companies, for which the past 13 quarter’s data is available, showed that India Inc continues to face a slowdown in revenue growth. The sample excludes petroleum majors for their ability to skew the aggregates due to their disproportionate size, and banking and finance companies for their different business and reporting structure. Wherever available, consolidated numbers are considered. India Inc’s revenue growth during the March 2013 quarter was just 4.8% over the same period last year, which was lower than 6.6% of December 2012 quarter and slowest in at least two years. The operating profit margin, or the pre-interest depreciation-tax profits on every . 100 of sales, dipped below 14% — lowest in the past 13 quarters at least. This was mainly because of a rise in staff, fuel and other expenses, although raw material costs were benign. The pressure of interest and depreciation costs was slightly lower during the quarter compared to the immediately preceding couple of quarters, which enabled net profit margins to maintain a level on a sequential basis. However, this doesn’t mean there is any meaningful correction in interest or depreciation costs of India Inc.
The mid-season result reviews done earlier, when the results season was under way, had projected a positive picture: there was an expectation that India Inc’s performance might have bottomed out with hopes for an uptrend. However, the aggregate results review shows that there are hardly any signs of a turnaround.