'We do not see people getting reduced, but because of automation, we will do more work.'
In recent months, several pharma multinational corporations (MNCs) are increasingly turning to Indian companies to expand market reach in the country's pharmaceuticals sector. Sanofi's partnerships with Dr Reddy's, Cipla, and Emcure, AstraZeneca and Mankind Pharma - teaming up for asthma medication distribution - are a few instances of this trend. This strategy allows MNCs to leverage established Indian networks and reach a wider audience. Indian companies also benefit from global brands and expertise, say analysts.
The hospitality industry has seen plenty of interest since the catastrophic impact of the pandemic, which led to losses in FY21. The hotel industry market cap has more than tripled since 2019 on the combination of a strong earnings rebound and positive surprises, as well as three recent listings. The industry has good tailwinds. The anticipation is, demand for rooms will outrun supply for a few years despite capacity expansions.
There has been a sharp recovery in the headline corporate earnings in the April-June 2023 quarter (Q1FY24), after a dismal showing by early bird companies. The combined net profit of the 983 listed companies that have declared their quarterly results, so far, was up 64.7 per cent year-on-year to record a high of Rs 2.68 trillion in the first quarter, but growth in earnings remained lopsided because most of the incremental gains came from a handful of companies. Moreover, the quarterly numbers showed a continued slowdown in revenue growth.
To mitigate the impact of the economic slowdown on their businesses, a majority of Indian firms have implemented significant cost reductions and are reviewing their operational effectiveness, a PwC survey says.
India's industrial production growth slowed to 3.8 per cent in December 2023, mainly due to poor performance of mining and power generation segments, according to official data released on Monday. The factory output growth measured in terms of the Index of Industrial Production (IIP) was at 5.1 per cent in December 2022. In November last year, IIP growth stood at 2.4 per cent.
He said the government has offered enhanced tax breaks to entities that spend on in-house research and development.
Indian IT services sector's revenue growth will slow down to 3 per cent in the current fiscal from 9.2 per cent in the previous financial year, a domestic ratings company said on Tuesday. Icra Ratings said the profitability will also take a beating in this financial year and the operating profit margin will narrow by up to 1 percentage point to 20-21 per cent. The topline growth will come down to 3-5 per cent in FY24 from the 9.2 per cent posted in FY23, the agency said, attributing the slowdown to softening demand.
The earnings of India Inc hit a record high in the 2022-23 (FY23) January-March quarter (fourth quarter, or Q4), compared with their poor showing in the previous two quarters of the financial year. The rise in earnings, however, is exclusively led by banking, financial services, and insurance (BFSI) companies. A better-than-expected showing by banks and non-bank lenders in Q4FY23 more than compensated for the earnings contraction in the non-BFSI space.
In April, the inflows into equity schemes dropped 60% compared to the previous month to Rs 4,608 crore, the lowest since Sept 2016.
The froth in the small and midcap (SMID) space is limited to a few pockets, but regulatory scrutiny could lead to sustained volatility, observe India's top-drawer wealth managers. They add that they have been advising clients to reduce their exposure to smallcaps. Anand Rathi Wealth, which manages investor wealth through mutual funds (MFs), reports that its exposure to smallcap stocks, both through MFs and directly, has decreased by nearly 7 percentage points in the past few months, now standing at 23 per cent.
"The need of the hour is to go back to the man-centred economics, the village-centred approach that forms the core of the Gandhian philosophy. This means following the Gandhian ethic based on simplicity, self-sufficiency and self-reliance to be achieved through gram rajya, sarvodaya and satyagraha, which has ahimsa as its core," Professor Veena Sikri, former Indian high commissioner to Malaysia and Bangladesh, said in a lecture organised by the Mahatma Gandhi Centre.
With the last quarter of 2023-24 (FY24) expected to have been soft owing to lower discretionary spend and macro uncertainty, many are hoping FY25 will be a year of recovery for the information-technology (IT) industry. The fourth quarter, January-March, is considered soft, and will continue to see the headwinds the sector has been facing. And the sector has entered the new financial year on a weak footing. Analysts are expecting Tier-I firms to report sequential growth of -1 per cent to 1.5 per cent and midcap players' growth may range between 0.7 per cent and 4 per cent.
Over the past year, the National Stock Exchange Nifty FMCG Index, which tracks the market capitalisation of the top 15 companies in the fast-moving consumer goods (FMCG) sector, has surged by 17.3 per cent. In contrast, the Nifty50, a broader market index, has witnessed an 8.8 per cent increase during the same period. The FMCG stocks have also been rally leaders in the current calendar year.
One million more go globe trotting in 2008-09.
As each month's economic numbers roll in, the slowdown gets more serious; and each month it gets clearer than before that government spokesmen who keep predicting an upturn are whistling in the dark.
'A cutback in hiring and compensation growth by IT companies will have a significant impact on consumer demand, especially in the urban sector of the economy.'
Among the Sensex firms, Hindustan Unilever, Tech Mahindra, Infosys, Reliance Industries, Bajaj Finance, Tata Consultancy Services, Titan and UltraTech Cement were the major laggards. Mahindra & Mahindra, Power Grid, IndusInd Bank, Tata Motors, Larsen & Toubro and Maruti were among the gainers.
In value terms, India's exports to that country grew 37.3 per cent in 2011-12, to $34.7 billion, according to data released recently.
"There is growing worldwide concern that economic slowdown could lead to a parallel slowdown in environmental progress, with governments less willing to advocate hard steps essential for reducing greenhouse emission," Pachauri, head of the United Nation's Nobel Prize-winning scientific panel said, in an article published in the Guardian.
Retirement planning and secondary sources of income have become key financial priorities for Indians, as they look to prepare for higher inflation, health concerns, and economic slowdown risks. PGIM India Mutual Fund's Retirement Readiness Survey shows that at present 67 per cent Indians have their retirement plan in place, compared to 49 per cent in 2020. "The pandemic was probably the factor making people realise the importance of saving and investing, leading to an increase in people planning for it.
While several key economic legislations, including insurance and PFRDA bills, are pending in Parliament, the government had to recently put on hold its decision to open the multi-brand retail sector to foreign investors.
Addressing the BRICS investment seminar in Mumbai ahead of the 5-nation Summit in Goa on October 15-16, Jaitley said the government has put FDI on automatic route in almost 90 per cent of the areas that are eligible for foreign direct capital.
Closely watched by the world for any escalation, the Iran-Israel conflict is already showing early signs of stress for India Inc - longer deliveries, doubling freight rates, extended working capital cycles, and higher costs. For those yet to feel the heat, there is growing apprehension and nervousness over future developments, observed industry executives.
With profit margins of companies being hit, the firms are taking a host of measures including closing down the unprofitable stores. The stores promoted by REI Agro recently closed 30-odd discount stores that were running into losses.
Private life insurers experienced reasonable growth in the July-September quarter (second quarter, or Q2) of 2023-24 (FY24), and the October data is also encouraging. The individual weighted received premium (WRP) for private players grew by 19.8 per cent year-on-year (Y-o-Y) in October. However, Life Insurance Corporation (LIC) of India had slower growth, pulling the industry growth rate down to 13 per cent Y-o-Y.
The government and realty players have admitted that the prices are likely to move upwards and the supply would be affected.
The town houses some 1,500 small and tiny units, of which 75 per cent are engaged in manufacturing components for the automotive industry. The town houses some 1,500 small and tiny units, of which 75 per cent are engaged in manufacturing components for the automotive industry.
Smaller real estate entities have been active in the past six to eight months in launching big-ticket residential projects. Factors like the high debt of realty companies listed on the exchanges and small builders not having the capacity to hold on to a licence for too long have influenced launches.
Attendance at the Singapore Grand Prix, one of the most popular races on the calendar fell this year, hurt by a slowdown in the local and global economy.
As the global economic crisis unfolds, India expects further moderation in foreign capital flows and exports leading to slowdown in economy, minister of state for finance P K Bansal told the Rajya Sabha on Tuesday. Referring to the impact of crisis on the country, Bansal, to another query said, "Industrial activity, particularly in the manufacturing and infrastructure sectors, is decelerating."
The third quarter numbers show the effect of the slowdown on the media business. There is a decline in net profits and margins for a sample of 16 listed companies such as HT Media, Deccan Chronicle and Zee among others. But what is eerie is the similarity between the print and TV numbers, which have generally been on different growth trajectories so far.
Several mutual funds (MFs) have recently approached the Reserve Bank of India (RBI) as they renew efforts to increase their overseas investment limit. In June 2022, the capital markets regulator Securities and Exchange Board of India (Sebi) permitted MFs to invest in foreign stocks within the aggregate mandated limit of $7 billion after a correction in stocks. One of the proposals shared with the RBI is to link MFs' foreign investment limit to the country's foreign exchange reserves.
The recent price correction in broader markets has hit cement companies hard. So far in the current month, smallcap firms like Visaka Industries, Andhra Cements NCL Industries, Sahyadri Industries, and KCP have lost 19.7 per cent, 14.3 per cent, 13.8 per cent, 13.5 per cent, and 11.5 per cent, respectively. On the contrary, largecap companies, while registering losses for the month, have seen a softer blow.
The companies' combined net profit declined by 10.1 per cent y-o-y during June '19 quarter against 26.2 per cent y-o-y growth a year ago.
The economic slowdown has taken off the road nearly a quarter of the total trucks in the country. In fact, the number is as high as 80 per cent in the mining belts of Karnataka, Orissa and Chhattisgarh.
'More than investors, fund houses, and advisors have raised caution and limited flows on small-and mid-caps.'
According to ICRA, even in a high-growth scenario, wherein the second half of FY20 sees the incremental bank credit rise to Rs 6.5-7 trn, there will still be a 40-45% year-on-year decline.
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Silk exporters are already hit by rupee appreciation and competition from Chinese firms, Mittal said, adding that of the total 50 lakh workers in the sector, over 100,000 have lost jobs. The industry is apprehensive that the situation could worsen this year due to deepening of the US economic slowdown, which is spreading to other economies as well.
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