25 September, 2020

That Recession Bogey...

Half-yearly results indicate an industrial slowdown, but it may be too early to panic

That Recession Bogey...

SLOWDOWN? Yes. Recession? No. Not yet, that is. Belying all soothsayers of doom, India Inc. has done better than expected. If the half-yearly results of fiscal year (FY) 1997 trickling out of the financial laboratories of corporate India are to be believed, the growth rate has been positive on all fronts. Even margins have gone up.

Consider some cold statistics: sales are up 16.9 per cent, operating margins are up 0.7 percentage points to 25.6 per cent, operating profits are up 20.4 per cent, and the bottomline has flattened out—but is up nonetheless—at 2.3 per cent. Interest costs, which were supposed to have drained the corporate coffers dry, have only risen in tandem with the rest of the company’s costs. In fact—and this may come as something of a surprise—the growth of financial charges on companies has actually declined if you compare this year’s performance with that of the previous year’s. Against a growth of 51.5 per cent in interest costs in the first half of FY 1996, the figure for this year actually stood at a much more...



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