Indian companies' profit margins 'still not showing' signs of improvement: IIM-A survey

By A Representative
The Indian Institute of Management-Ahmedabad’s (IIM-A’s) Business Inflation Expectations Survey (BIES), released last week, has said the profit margins of 75% of the firms have been failing to show any signs of improvement, a trend which has has continued since June 2019. “Overall”, the BIES report says, “The profit margin scenario is still not showing any clear signs of improvement.”

BIES selects companies primarily from the manufacturing sector, and the survey results are based on the responses of over 1,200 companies. The survey report says, “The cost perceptions data shows that the signs of significant cost pressures building up have ebbed”, adding, “Nearly 47% of the firms believe that the current cost increase is 3.1% and above as compared to the same time last year. Over 1/4th of the firms perceive that the current cost increase is over 6%.”

As for the sales perception, the report says, “Data still does not show clear signs of recovery”, adding, “In January 2020, around 70% of the firms in the sample reported that sales are ‘somewhat or much less than normal’ as against 72% reporting in December 2019. This proportion has remained around 70% since June 2019.”