India Inc's net profit has slowed down to 15 per cent in the September quarter so far compared to a 16.8 per cent rise in the same period last fiscal due to the ongoing economic slowdown, industry body Assocham said.
"There has been a marginal year-on-year (Y-o-Y) decline of 1.8 percentage points in the rate of growth of net profit mainly due to slow macroeconomic conditions both domestically and globally," Assocham said in a statement.
A 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, it said.
While growth in net sales declined, the cost of raw materials also dipped as companies have adopted efficient cost-management systems. Besides, interest payments have also reduced, the Assocham study showed.
"Large Indian corporate firms have benefitted from cheap imported raw materials as input prices remained down in global markets...cheap cost of credit raised in foreign markets has also proved lucrative for them," Assocham Secretary General D S Rawat said.
The manufacturing sector has continued to stay under pressure. Their 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. "Even profit rates declined by 3.9 per cent during the aforesaid period," Assocham said.