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Manufacturing sector's profit seen falling by 5.7% in Q2: CMIE

Last Updated: Sunday, September 4, 2011 - 13:55

Mumbai: Centre for Monitoring Indian Economy (CMIE) has revised its forecast for net profit of the manufacturing sector in the September quarter downwards, primarily due to the poor show of petroleum products industry.
"We now expect net profit to fall by 5.7 percent, against our earlier expectations of a 34.2 percent rise. This is on account of a downward revision in the profit forecast of the petroleum products industry," it said in its monthly review.
However, CMIE expects the manufacturing sector to maintain its growth momentum by reporting a 20.7 percent rise in net sales in the September quarter.
A steep fall in profit of the petroleum products industry and huge losses to be incurred by the aviation industry are expected to restrict the growth in corporate profit in the second quarter, the agency said.
The report points out that removal of 5 percent import duty on crude in June was expected to have a positive impact on the profits of petroleum products industry in the current quarter. However, "a sharp rise in crude prices in July prompted us to revise our forecast for crude prices upwards for the September quarter and for the full fiscal," it says.
"We expect the rise in crude prices to offset the impact of duty removal. The industry is now expected to report a steep 56.7 percent fall in net profit in the second quarter as against 33.1 percent fall expected earlier," CMIE says.
The agency forecasts net profit growth of manufacturing sector (excluding petroleum products) in the quarter almost unchanged at 32.5 percent.

"Growth will be driven by an improvement in the profit performance of sugar and the drugs industry. We expect both the industries to make net profit in the current quarter as against the losses incurred in the year-ago period," it says.
Manufacturing companies (non-petroleum) reported a 19.7 percent rise in aggregate net sales in the June quarter. This was a combination of higher sales volumes and an increase in unit realisation.
For the full fiscal, CMIE expects net profit of the manufacturing sector to grow by 17.5 percent. Net profit of the petroleum products industry is expected to grow by 12.9 percent, while that of the rest of the manufacturing sector is expected to grow by 19.1 percent.
"We expect net sales of the manufacturing sector to rise by 18.7 percent in FY12. Growth will be combination of higher sales volumes and a rise in average unit realisation," it said.


First Published: Sunday, September 4, 2011 - 13:55
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