Weak demand strains India Inc

By: | Published: February 2, 2015 1:29 AM

Mid-way through the earnings season, the trends aren’t really getting any better...

Mid-way through the earnings season, the trends aren’t really getting any better, reports fe bureau in Mumbai. Indeed, despite tempered expectations, corporate India’s performance has been very mediocre, suggesting very tepid demand conditions. Cash flows of companies remain strained as seen from the higher quantum of toxic loans at some of the country’s top banks and despite a smaller raw materials bill, profits have been dull. The problem is in the topline where companies are neither able to push through volumes nor get the realisations they would like; net sales for a sample of 457 companies (excluding banks and financials) have actually fallen, an indication just how weak the demand is for both consumer and capital goods. To be sure, the sharp fall in the prices of crude oil and other commodities has also played a part as has the fact that there has been little benefit from a weaker rupee but volume growth, whether for two-wheelers or consumer staples, has been weak — showing just how low consumer confidence is. That’s not surprising, given job creation is probably slowing down.

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