Skip to main content

India's 65% firms report squeezing of profits, 50% plus say sales were less than normal: IIM-Ahmedabad survey

By Our Representative
An Indian Institute of Management-Ahmedabad (IIM-A) survey, based on responses from 1941 companies, has revealed that, while inflation and costs may not be issues with them, but squeezing profits and sales is surely bothering them. Called Business Inflation Expectations Survey (BIES), March 2018, it seeks to quantify “slack” that may have set into the India economy.
Providing a short and medium term perspective, the survey, carried out each month, asks questions about year-ahead cost expectations and the factors influencing price changes, such as profit, sales levels, etc.
IIM-A claims, “The survey is unique in that it goes straight to businesses, the price setters, rather than to consumers or households, to understand their expectations of the price level changes.”
As many as 44% of the firms in the IIM-A’s BIES’ 11th round survey indicate “much less than normal” profit margin, while over 65% of firms continue to report “squeezing of profit margins”, the survey report says, adding, “This proportion has remained more or less stable during last four months.”
Profit margins - % response
Pointing out that the “perception of higher profit margins in the current economic conditions is not supported by the data”, the report states, 28% of the firms in the sample reported that sales were “much less than normal”, and this proportion has been quite stable during last four consecutive months.
At the same time, the report says, over half of the firms in the sample continued to report that sales levels were “much or somewhat less than normal”, adding, “Overall data shows persistence of the pessimism about subdued sales conditions.”
Sales levels - % response
The IIM-A believes, “One major advantage of BIES is that one can get a probabilistic assessment of inflation expectations and thus can get a measure of uncertainty. It also provides an indirect assessment of overall demand condition of the economy.”
It adds, “Results of this survey are, therefore, useful in understanding the inflation expectations of business and complement other macro data required for policy making… The questionnaire of BIES is finalized based on the detailed feedback received from the industry, academicians and policy makers.”
Costs per unit compare with this time last year? – % responses
Companies, mostly in the manufacturing sector, were selected based on certain sampling criteria from the list of companies as available with the Ministry of Corporate Affairs (MCA).
As for inflation expectations, the report states, “One year ahead business inflation expectation in March 2018, as estimated from the mean probability distribution of unit cost increase, is placed at 3.73%, showing a decline from 3.85% observed in February 2018.”
One year ahead business inflation expectations (%)
It adds, “Uncertainty of business inflation expectations in February 2018, as captured by the square root of the average variance of the individual mean probability distributions, is estimated to be 1.99% (remained almost same as observed in February 2018).”
As regards cost perceptions, the report states, the data in does not indicate “significant increase” in costs, with “around 55% of the firms in reporting that “increase in costs has been more than 3% during the last one year. It adds, “This proportion has almost remained unchanged as compared to February 2018 data.”

Comments

TRENDING

Mystery around Gujarat PSU 'transfer' of Rs 250 crore to Canadian firm Karnalyte

By AK Luke, IAS (Retd)*
While returning from a Board meeting of the Oil India Limited (OIL) in Ahmedabad some time in 2012, two officers of the Gujarat State Fertilizers and Chemicals Ltd (GSFC), Nanavaty and Patel,  saw me off at the airport. They said they were proceeding to Canada in connection with a project GSFC had entered into with a company there. As we were running late, I hastily wished them the best.

J&K continues to be haunted, as parts of India 'degenerate' into quasi-Kashmir situation

By Rajendran Narayanan*, Sandeep Pandey**
“Jab har saans mein bandook dikhe toh baccha kaise bekhauf rahe?” (How can a child be fearless when she sees a gun in every breath?) remarked Anwar, a gardener from Srinagar, when asked about the situation in Kashmir. On November 30, 2019, a walk through an iron gate in a quiet neighbourhood of Srinagar took us inside a public school. It was 11 am when typically every school is abuzz with activity. Not here though.

Indians have made 119 nations their ‘karma bhumi’: US-based Hindu NGO tells Rupani

Counterview Desk
In a stinging letter to Gujarat chief minister Vijay Rupani, the US-based Hindus for Human Rights (HfHR), referring to the report citing his justification for the Citizenship Amendment Act (CAA) – that “while Muslims can choose any one of the 150 Islamic countries in the world (for residence), India is the only country for Hindus" – has said, he should remember, Hindus have made several countries, including USA, their home.

Savarkar in Ahmedabad 'declared' two-nation theory in 1937, Jinnah followed 3 years later

By Our Representative
One of the top freedom fighters whom BJP and Prime Minister Narendra Modi revere the most, Vinayak Damodar Savarkar, was also a great supporter of the two nation theory for India, one for Hindus another for Muslims, claims a new expose on the man who is also known to be the original proponent of the concept of Hindutva.

Dalits rights meet planned on how citizenship law 'negates' Ambedkar's equality focus

By Our Representative
A Dalit rights meet has been planned at the Dalit Shakti Kendra (DSK), Sanand, Ahmedabad district, to discuss implications of the Citizenship Amendment Act (CAA), passed by Parliament on December 10-11, for Dalits, Adivasis and other marginalized sections. Announcing the decision, DSK director Martin Macwan said, the meet would take place on December 25, 2019, at 11.00 am, to commemorate the anniversary of burning of copies of Manusmriti by Dr BR Ambedkar.

What about religious persecution of Dalits, Adivasis, asks anti-CAA meet off Ahmedabad

By Rajiv Shah
A well-attended Dalit rights meet under the banner “14 Pe Charcha” (discussion on Article 14 of the Indian Constitution), alluding to Prime Minister Narendra Modi well-known campaign phrase of the 2014 Parliamentary elections, “chai pe charcha” (discussion over cup of tea), organized off Ahmedabad, has resolved on Wednesday to hold a 14 kilometres-long rally on April 14 to oppose the controversial Citizenship Amendment Act (CAA), enacted on December 10-11.

Upendra Baxi on foolish excellence, Indian judges and Consitutional cockroaches

By Rajiv Shah
In a controversial assertion, top legal expert Upendra Baxi has sought to question India's Constitution makers for neglecting human rights and social justice. Addressing an elite audience in Ahmedabad, Prof Baxi said, the constitutional idea of India enunciated by the Constituent Assembly tried to resolve four key conflicting concepts: governance, development, rights and justice.

Kerala governor turned History Congress into political arena, 'insulted' Prof Irfan Habib

Counterview Desk
In a signed statement, office bearers of the Aligarh Society of History and Archaeology (ASHA), Prof Syed Ali Nadeem Rezavi (president), Prof Jabir Raza (vice-president), Prof Manvendra Kumar Pundhir (secretary) and Prof Farhat Hasan (joint secretary), have said that Kerala governor Arif Mohammad Khan had sought to insult veteran historian Prof Irfan Habib, 88, at the 80th session of the Indian History Congress, even as turning it into his “political arena”.

Population control? 10% Indian couples want to delay next pregnancy, but fail

Counterview Desk
Shireen Jejeebhoy, director at Aksha Centre for Equity and Wellbeing, previously senior associate at the Population Council, India, argues that the debate on the country's population was fuelled by Prime Minister Narendra Modi’s Independence Day address to the nation, where he drew attention to “concern” about the challenges posed by this ‘exploding’ population growth, needs to centre around the promotion of rights and education, instead of the language of explosion and the threat of coercion that this term implies.