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India Inc Q3 results disappoint as net income falls over 6.5%

Under the new GDP calculations, economy grew at 7.5 % in Q3 and is on course to clip at 7.4 % for the full fiscal, according to the latest government data.

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Economic indicators may be beginning to look up, but corporate earnings are not backing up on the macro-front with Q3 numbers being disappointing, according to the newly launched international rating agency ARC Ratings.

The deterioration in the financial condition of corporates in the just-concluded third quarter is especially steep, with net sales contracting by 0.2% as against growth of a over 6.5 % in Q3 of FY14 while net profit declined by a steep 28.3 % compared to an over 2.5 % growth in Q3 of FY14, the agency said.

The London-based ARC Ratings has partnered with the domestic agency Care Ratings.

Under the new GDP calculations, economy grew at 7.5 % in Q3 and is on course to clip at 7.4 % for the full fiscal, according to the latest government data.

The report, which has tracked the performance of close to 3,000 corporates, both financial as well as non-financials, reveals a slackening performance of the corporate sector.

The report said for data excluding the banking sector, the growth rates were minus 1.8 % against over 5.3 % growth last year and minus 36.6 % against over 9.1 %, respectively in December quarter of FY15.

The study has found out the large-sized firms, those with sales exceeding Rs 1,000 crore, which is 15.6 % of the sample, performed much better than smaller firms. These firmsrecorded a 4.8 % increase in net sales and 9.2 % growth in net profits.

Against this, small-sized firms, especially those with sales of under Rs 100 crore, which constitute 50 % of the sample, incurred losses.

For the first three quarters, the aggregated financial data for 3,000 companies showed a muted 4.2 % growth in net sales, against 7.5 % in the same period last fiscal, while net profit growth inched up 3.3 % from 4.2 % a year earlier.

Excluding banks, deceleration was more pronounced with sales growth declining to 3.1 % from 6.7 %, and net profit growth falling to 0.9 % from 10.1 %.

The non-financial sector's lackluster performance in the first nine months of FY2015 was largely attributed to the "weakness of global and domestic demand conditions." Among the sectors that bucked the trend include metals at 43.9 % (37.9 %) and telecoms at 9 % vs. 3.5 %, mining & minerals (25.4 % vs. 61.9 %), TV broadcasting and software (4.4 % vs. 12.7 %), oil exploration (25.1 % vs. 31.8 %) and tea/coffee (9.6 % vs. 13.5 %).

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