India Inc profits to dip in next two quarters: NCAER

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New Delhi, Oct 22: Ecomomic think tank National Council of Applied Economic Research (NCAER) on Friday said the short-term business outlook remains stagnated and profits of India Inc are expected to take a marginal dip in the next two quarters.

“In line with the downswing in business confidence, firms in this round have marginally lowered their projections for both sales and production for the next six months,” NCAER said in its latest report on business sentiment.

“Thus, the business outlook is one of the near stagnation in output in the next six months”, it said, adding as a result firms are expecting their pre-tax profits to go down marginally in the next month.

The NCAER said the downward assessment of the overall economic conditions and financials by India Inc have adversely affected the perception of the investment climate.

“The indicator of investment climate in the present round of the business expectations survey shows a huge decline of 12.5 percentage points,” the report said.

The NCAER observed the only positive indicator was capacity utilisation which grew marginally by 0.5 percentage points.

It said the survey clearly indicates the fact that there is greater uncertainty ahead this fiscal.

The survey also showed that apart from consumer durables, business confidence index of every other sector, especially, capital goods and services sectors, turned negative.

The NCAER said the low confidence among India Inc would have a negative bearing on their hiring policies with majority of the corporates reporting no change upwards in the hiring in the past few months.

In the six months, most of the firms say there would be a decline in hiring of all types of labour, NCAER observed.

It said wages are also expected to decline in the next six months along with other overheads like costs of raw materials and electricity.

The survey also observed that local policies and events had an impact on the companies’ confidence.

It said that while business sentiment of companies located in East, West and South have declined, those located in North have increased.