India was the world’s second-fastest-growing economy in 2014-15, with its gross domestic product (GDP) growing 7.3 per cent, next only to China’s 7.4 per cent. This bullishness about the economy, however, did not reflect in India Inc’s books of account.

The combined net sales of around 1,700 Indian companies (excluding financial and oil & gas ones) rose 5.9 per cent on a year-on-year basis – the slowest rate in two years. India Inc’s bottom line fared worse, with core operating profit (excluding other income) declining 0.5 per cent annually, and net profit falling 7.45 per cent. In 2013-14, these companies’ net sales and operating profit had grown 9.6 per cent and 11.6 per cent, respectively, while their net profit had grown 1.7 per cent.

Historically, when India’s GDP has grown 7.5 per cent at constant prices, corporate revenues have grown an average 14-15 per cent, and profits about 20 per cent.

India Inc’s scorecard in the quarter ended March 2015 was even weaker, with near-flat revenue growth and decline in profits. While companies’ net sales grew only 0.4 per cent on a year-on-year basis during the quarter, their operating and net profits declined 22.2 per cent and 59.9 per cent, respectively. The numbers were the worst in three years.

For more visit: Business Standard

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