India Inc is likely to witness 22.8 per cent growth in its profit after tax (PAT) in the current fiscal, an economic think-tank said in its report.
“Corporate sales growth will average at a meagre 4.1 per cent in 2009-10. At the same time, PAT will rise by a robust 22.8 per cent,” the Centre for Monitoring Indian Economy (CMIE) said in its latest report on the state of the economy.
The manufacturing sector (excluding petroleum sector) would report a 24.3 per cent PAT growth mainly on account of low raw material prices and soft interest rates, CMIE said.
It also said that the PAT of the financial and non-financial services would rise by 32.2 per cent and 20.4 per cent, respectively.
According to the report, corporate India took a hit on its sales due to fall in commodity prices, drying up of export demand and postponement of purchases by the domestic consumer following the global liquidity crisis.
“From 35 per cent in the first-half of 2008-09, India Inc’s sales growth slumped to 12.1 per cent and 0.1 per cent in December 2008 and March 2009 quarters, respectively,” CMIE said.
However, the corporates managed to protect their profits from the impact of the global liquidity crisis as PAT rose by 16 per cent in the March-2009 quarter and its growth further accelerated to 19.9 per cent in the June-2009 quarter.
“We estimate corporate profits to have grown 44 per cent in Q2 FY’10 due to the handsome PAT likely to have been made by the petroleum products sector against the losses incurred in the year-ago quarter,” it said.
The aggregate PAT of the rest of the manufacturing sector is also estimated to have risen by a modest 4.5 per cent, the report said.