Mark-to-market losses, oil & gas companies drag profits; sales growth moderates
Rising commodity prices are set to hurt margins of India Inc in the on-going fourth quarter of FY 11, even though revenues are seen higher than the previous year, ratings agency Crisil said on Monday.
The rupee breached the 80-mark against the dollar on Tuesday. The steady depreciation in the value of the rupee against the US dollar is likely to prove expensive for corporate India. The listed companies' revenue expenses in foreign currency or imports exceed their export revenues or revenue earnings in forex. In their latest financial year, BSE500 companies, excluding banks and non-banking finance companies and insurance (BFSI), reported combined forex expenses of Rs 12.31 trillion against forex earnings of around Rs 10 trillion.
Initial projections, at least, suggest that things are not looking good enough for India Inc, as margins are expected to soften further.
Brokerages expect revenue growth at a 7-quarter high but profitability may disappoint.
In a culture where children take up the profession of their father, her becoming a politician was seen as natural and acceptable.
The Indian industry is paranoid about the USA's plan to impose reciprocal tariffs and wants early conclusion of a bilateral trade agreement, sources said on Wednesday. They said that the talks for the proposed bilateral trade agreement are going well.
Dollar debt and higher import cost might impact earnings by up to 30%.
A weak rupee, though seemingly good for exporters, would push up input cost further for Indian companies.
More than a third of 83 mainboard IPOs this year ended their debut sessions in the red, with losses of up to 35 per cent.
Finance Minister Pranab Mukherjee on Tuesday admitted the Reserve Bank of India's move to hike short-term lending and borrowing rates will hurt growth in the near-term, but exuded confidence that economic expansion will gather pace later as a consequence.
Foreign currency loans raised by Indian companies nosedived to $210 million in the September quarter (Q2), 93.3 per cent less than the year-ago period when five firms raised $3.1 billion. The Q2 amount is the lowest since December 2003 quarter when India Inc raised $191 million. Companies cited volatility in the currency markets, sharp rise in interest rates in the United States, and fund availability in India as the main reasons behind the sharp fall.
Capex plans for the next six months imply a 20 per cent increase in calendar 2010.
India Inc on Thursday expressed fear that the RBI's decision to raise key short-term rates will push up the cost of borrowing, making some of their projects unviable and hurting expansion plans.
Stocks such as NIIT, Punj Lloyd, Gati, Welspun India and BEML are favourites of the trading community.
India Inc on Tuesday described the United States President Barack Obama's announcement to punish American firms by levying high taxes on their outsourcing business as 'protectionist' and a retrograde measure that, it said, will hurt the US companies.
If financials and oil sectors were removed, India Inc has done quite well.
There's no change in Apple Inc's India strategy, said a top government source. 'It can only be enhanced'.
In 2001-02, demand recession had clipped the sales growth rate of corporate India to 2.6 per cent from the double-digit one of the earlier years.
The move to ban Rs 500 and 1000 notes may not curb the root cause of black money.
Over 60 per cent of these borrowings are slated to be mopped up in the festival season.
Corporates' forex borrowings have grown at a CAGR of 15.6% since 2008.
'India Inc has been afraid to criticise the government of the day for many years now, and it is perhaps unfair to blame the current one alone,' says Shyamal Majumdar.
The proposal to levy a minimum tax based on assets undoes most of the good that the code seeks to do and will discourage capital-intensive industries.
'Kerala isn't as dependent on agriculture like Bihar or Odisha or even other southern states.' 'Economic losses would not be too intense, unlike other states.' 'The floods could, at best, impact India Inc's earnings for a quarter or two.'
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The Reserve Bank is scheduled to unveil its first quarter review of the monetary policy on July 30.
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Q1 results indicate more pain ahead, as slowdown has spread to more sectors, pricing power has come down and rising interest cost is eating into profits.
Reacting to strong criticism from industries and chambers of business, the Left parties brushed aside figures circulating about losses incurred by India Inc, and sought to counter claims that such work stoppages would spurn investors.
The Crisil study covered 600 companies excluding financial services and oil companies, representing 71 per cent of the overall market capitalisation of India Inc.
The industry urged the central bank to consider a rate even before the next monetary policy review on July 30.
June indicates a change in trend from previous quarters in terms of how much companies are spending on employees. The worst hit sectors included steel, air transport service and automobile firms.
RBI is expecting the rupee to stay close to Rs 75 to a dollar, as COVID-19 forces foreign funds to withdraw from emerging markets.
Cascading effect of rising raw materials will result in inflation, high rates, slow capex
Union Minister of Commerce and Textiles Piyush Goyal has stirred up a hornet's nest by taking on India Inc, specifically the Tata group, which is among the companies that lobbied against the Modi government's pro-consumer draft e-commerce policies. While Goyal's comments, made at a Confederation of Indian Industry (CII) event, were streamed live on YouTube, the industry lobbying body later edited the video and subsequently withdrew the entire speech. Goyal had said the Tata group and other Indian companies often lobbied for their interest, while ignoring national interest.
The rupee has depreciated by 0.95 per cent in two days.
It is the six per cent target RBI is more concerned about.
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