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Plunging profits, big losses cloud India's growth story

Unitech MD Sanjay Chandra said: "The slowdown in the real estate sector has prolonged more than expected. Though green shoots of recovery can be seen in some segments and in certain pockets of the country, a more widespread and sustained recovery is yet to take hold of the sector." State-run NTPC's net profit also dipped by 5% to Rs 2,944.03 crore in the same quarter due to higher depreciation, among other reasons.

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Reflecting a disconnect with GDP growth numbers, big corporations such as M&M, Cipla and Sun Pharma as well as state-owned heavyweights, NTPC, SAIL and IOC have announced lower quarterly profits while many others have fared even worse, hit by rising costs and subdued demand.

The January-March quarter earnings season has been bad for a host of other companies as well, including public sector giants like NMDC and Coal India which announced their results last week.

Similar was the case for Hindalco, Wockhardt, Omaxe, United Breweries and Bajaj Hindustan from the private sector.

The disappointing results have come at a time when India has overtaken China to become the world's fastest growing economy by clocking 7.5% GDP for the March quarter.

However, a sharp downward revision of growth figure for the previous quarter has led to economists raising concerns.

Besides, agriculture remains a weak area for the economy.

For Mahindra and Mahindra, unseasonal rains played the spoilsport as rural economy took a hit and impacted its key tractor business. The case was similar for Escorts Ltd.

Things appeared to be no better for Sun Pharma, which has been fast emerging as a multinational giant from India, as its net profit plunged almost 45% to Rs 888 crore in the fourth quarter ended March 31.

Drug major Cipla's consolidated net profit remained flat at Rs 259.66 crore for the quarter ended March 31.

Realty firm Unitech reported consolidated net loss of Rs 162.54 crore for the fourth quarter of last fiscal on lower sales and higher expenditure.

Unitech MD Sanjay Chandra said: "The slowdown in the real estate sector has prolonged more than expected. Though green shoots of recovery can be seen in some segments and in certain pockets of the country, a more widespread and sustained recovery is yet to take hold of the sector." State-run NTPC's net profit also dipped by 5% to Rs 2,944.03 crore in the same quarter due to higher depreciation, among other reasons.

SAIL reported much deeper plunge of 26% in its fourth quarter net profit to Rs 334 crore, while its total income declined by 13% to Rs 11,684 crore.

For another PSU giant Indian Oil, the quarterly net profit fell by one-third as it received lump sum subsidy in the same period of previous fiscal.

"The just concluded Q4 earnings season indicates that the economic recovery has been sluggish and H1 FY16 could remain challenging," said Hitesh Agrawal - Head Research, Reliance Securities.

Homegrown auto major Mahindra & Mahindra reported a 38.61% decline in standalone net profit at Rs 550.56 crore, hurt by slowdown in automotive and farm equipment segments.

This is the biggest fall in fourth-quarter profits in over six years. Market experts said the numbers mostly are a shade below

Market experts said the numbers mostly are a shade below expectations and very few companies have been able to surprise positively.

"Currency fluctuations, lower demand from China and high borrowing cost are the main reasons behind the disappointing quarterly show by corporates," said Alex Mathews, Research Head of Geojit BNP Paribas Financial Services.

Wind turbine maker Suzlon Energy's consolidated losses widened to Rs 1,212.06 crore during the March quarter due to fall in income and provision for impairment of goodwill following sale of its German subsidiary Senvion.

Hurt by higher depreciation expenses, automotive component manufacturer Bosch reported a 11.90% decline in net profit at Rs 287.45 crore for the quarter ended March.

State-run manganese ore producer MOIL also reported 31.3% drop in net profit at Rs 102.46 crore for the quarter ended March 31, 2015 on lower sales.

However, there have been some positive surprises as well.

N Srinivasan-led India Cements returned to the black by registering a quarterly net profit of Rs 36.60 crore, as against a net loss of Rs 157.12 crore in the year-ago period.

Financial services conglomerate Reliance Capital reported 53% rise in fourth quarter net profit to Rs 407 crore on robust gains in mutual fund and general insurance.

Its group firm Reliance Communications also reported 46.15% jump in consolidated net profit at Rs 228 crore in the fourth quarter, while total income rose by 5.3% to Rs 5,694 crore.

Sun TV also reported a modest 2.74% increase in net profit at Rs 202.99 crore for the fourth quarter. Income from operations of the Kalanithi Maran-owned Sun TV Network in the quarter rose by 5.45%.

NMDC reported a plunge of 31% in quarterly net profit to Rs 1,347 crore while its turnover and iron ore output for the quarter also took a hit.

Aditya Birla group's Hindalco Industries saw its net profit slip by 36% at Rs 160 crore for the quarter ended March 31, 2015 due to higher finance cost and falling premiums on aluminium.

State-run Coal India's net profit dipped 4.4% to Rs 4,238.55 crore for the quarter due to higher expenses and coal being diverted to the regulated power sector.

However, some major surprises have come from the airline sector, which has been reeling under huge losses for a long time along with a host of other problems.

Low-cost carrier Spicejet has returned to profit after seven quarters, while Jet Airways reported that its fourth quarter losses narrowed to Rs 1,729 crore, from a record high loss of Rs 2,154 crore in the year-ago period. The full year losses also more than halved to Rs 2,097 crore. 

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