Economic slowdown pulls down revenue, profits of manufacturing, services sector cos

NEW DELHI: Slowdown in economic growth and capital expenditure has pulled down revenue growth of manufacturing and services sector companies to a six quarter low and impacted the net profit, according to CRISIL Research.

"Weak revenue growth and high input costs, have resulted in de-growth in the operating profits of nearly half of the companies (manufacturing and services sector)," CRISIL said in a report.

The poor operating performance, coupled with high interest rates and forex hedging losses, has resulted in a 13.6 per cent de-growth in net profits, it said.

Economic growth has slumped to a nine year low of 6.5 per cent in the 2011-12 fiscal, mainly on back of poor performance of manufacturing sector.

The continuing weak demand environment is resulting in tepid revenue growth of close to 14.3 per cent (y-o-y) excluding refining and marketing companies, it said.

It also said that revenue growth for consumption-driven sectors like retail and two-wheelers has also slowed down on account of weak consumer sentiment.