Credit rating agency Care Ratings in its latest report has stated that India Inc.'s profits dipped by 15.7% to Rs 87,475 crore in the first quarter of the fiscal year 2017-18, mainly due to destocking of goods by companies before execution of Goods and Services Tax (GST) regime from July 1, 2017. As per the rating agency’s analysis of 2,108 companies, the corporate net profits stood at about Rs 1.04 lakh crore in April-June period of 2016-17. The net sales of companies also slowed down to 8.7% in the three months ended June 2017, after registering a growth of 9.5% in the same period previous year.
The analysis showed that as many as 7 industries reported net loss, while 33 segments reported lower growth in net profit on year-on-year basis during the quarter ended June 2017. The maximum drop was seen in consumer goods, automobiles and related segments, construction & real estate, finance, refineries, paper & paper products, pesticides & agrochemicals sectors. Moreover, profitability of services sector like hospitality and retailing were also impacted.
According to the report, in terms of net sales, 40 industries saw positive growth in sales in the Q1FY18. Some of the leading industries include sugar, electronics, passenger cars and tractors, capital goods, metals, NBFCs, hotels, resorts and restaurants, mining, refineries, plastic products, industrial gases and fuels. However, 9 industries witnessed negative growth in net sales in the period under review with significant declines witnessed in pharmaceuticals and drugs, auto trucks/LCVs, ferrous metals, telecom service providers. It further added that industries related to households where demand is inelastic remained largely stable with minimal slowdown. However, pharmaceuticals and drugs industry saw a sharp dip on account of lower exports.
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