The Hindu Business Line : Net sales, profit growth rates slowing: CII report

New Delhi, Feb. 17 The Confederation of Indian Industry, in its ‘State of the Economy Feb 2009’ report, analyses the corporate performance for the quarter ended December 2008.

It says average net sales registered a growth rate of 21.5 per cent, slowing from the 30 per cent plus growth of the previous two quarters. Net profit growth has also been slowing steadily over the last few quarters.

Average net profit growth, computed from a sample of 549 companies — 324 manufacturing, 107 financial services and 118 non-financial services — remained subdued at 4.3 per cent during the quarter ending December 2008.

This is a sharp decline from 27.9 per cent a year ago, says CII.

While raw material cost also slowed down sharply, cost on account of salaries and wages, interest payments and power and fuel remained high, it adds.

Net profit margin declined slightly to 11 per cent during quarter ending December 2008, from 12.8 per cent during the same period in the previous year.

Sectoral performance

According to the report, the manufacturing sector has been particularly affected by the sharp increase in costs on account of power and fuel and interest expenses.

Net sales growth declined to 6.6 per in the latest quarter from 32.4 per cent in the preceding quarter.

Growth in net profit continued to decline, falling by 28.5 per cent in December 2008 compared to 4.3 per cent in September 2008, the report adds.

In comparison, the service sector registered a growth of 23.4 per in the December 2008 quarter compared to 10.1 per cent on the preceding quarter.

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