Slowdown, soft commodity prices dent India Inc's Q2 revenue growth
Weak consumer sentiments along with slowdown in the infrastructure sector and soft commodity prices weighed heavily on the corporate sector's revenue growth in Q2FY20, ratings agency ICRA said here on Monday.
 
The ratings agency's analysis of 609 companies, excluding the financial sector entities, showed a YoY and sequential contraction in revenues for the "first time in almost four years" with an aggregate revenues contracting by 0.9 per cent YoY. 
 
ICRA said during the period under review Ebitda (earnings before interest, taxes, depreciation and amortisation) margin contracted 32bps YoY and by 100bps sequentially to 16.7 per cent. 
 
"The major impact on revenues came from commodity-linked sectors, revenues from which contracted 5 per cent YoY as well as sequentially," the agency said. 
 
"Consumer sentiment too remained muted, as reflected in YoY contraction of 1 per cent in revenues from consumer-oriented sectors. Additionally, demand from the infrastructure segment was down, due to extended monsoon, slow release of government funds, cancellation of orders and marginal decline in housing demand," it said.
 
The analysis revealed that profitability was impacted by negative operating leverage, high discounting and tepid realisation in commodity sectors.
 
"In terms of sector specific trends, consumer-linked sectors, like automobiles and FMCG, continued to report YoY and sequential weakening. Within the automobile sector, the passenger vehicle segment, which had started weakening from Q2FY19 as ownership costs increased and the macroeconomic environment weakened, continued sluggish," it said.
 
"Although FMCG companies reported volume growth, there was further sequential slowdown in both rural and urban markets."
 
As per the statement, cement production volume growth also slowed significantly to 1 per cent, given the continued slowdown in infrastructure, housing and industrial or commercial sectors. 
 
The IT sector reported 9 per cent revenue growth in Q2FY20 (in rupee terms), supported by inorganic growth, rupee depreciation YoY and traction in digital offerings across verticals, while the gems and jewellery segment grew 22 per cent on the back of increase in gold prices. 
 
Additionally, sectors like airlines, pharmaceutical and telecom helped arrest the extent of revenue contraction.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    MCA launches databank of independent directors
    The Ministry of Corporates Affairs (MCA) here on Monday launched the databank of independent directors with an aim to strengthen the institution of independent directors under the Companies Act.
     
    The databank, launched by Injeti Srinivas, MCA Secretary, can be accessed at "www.mca.gov.in" or "www.independentdirectorsdatabank.in". 
     
    According to an official statement, the initiative provides a platform for the registration of existing independent directors as well as individuals aspiring to become independent directors.
     
    "Companies also may register themselves with the databank to search, select and connect with individuals who possess the right skills and attitude for being considered for appointment as independent directors as the databank is expected to become a comprehensive repository of both existing independent directors as well as individuals eligible and willing to be appointed as independent directors," it said.
     
    It also provides for e-learning courses on various topics, including the Companies Act, securities laws, basic accountancy, board practices, board ethics and board effectiveness. 
     
    A number of value-added services is expected to be rolled out through the portal for capacity building of independent directors. 
     
    As per the notified rules, all existing independent directors are required to register themselves in the databank within three months, from December 1.
     
    They are also required to pass a basic online proficiency self-assessment test, which will available from March 2020 within 12 months thereafter.
     
    To provide sufficient practice to individuals, a number of online mock tests has been made available in the system. The real test can be taken online through a simple scheduling process. 
     
    The real test would be remotely proctored, the MCA said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    NDDB Asked to Share More Details on IndiaGen and Indian Immunologicals
    The central government has asked National Dairy Development Board (NDDB) to share detailed information and statements about IndiaGen Ltd and Indian Immunologicals Ltd (IIL) to examine the matter in consultation with the legal department. 
     
    Dr Sanjeev Kumar Balyan, minister of state for fisheries, animal husbandry and dairying, in a written reply in the Rajya Sabha, provided information shared by NDDB on setting up subsidiary of its subsidiary, obtaining post-facto approval and further approval for acquiring entire shareholdings in IndiaGen from IIL and Cooperative Resources International Inc (CRI). He said, "NDDB has been asked to furnish further details of statements made by them as mentioned above to examine the matter further in consultation with department of legal affairs."
     
    While NDDB sought permission from the government for setting up IIL as wholly owned subsidiary of the Board in New Zealand, it did not seek any approval from the government for setting up IndiaGen as joint venture with CRI, the minister said.
     
    According to the minister, NDDB had informed that it was asked by the department of animal husbandry, dairying and fisheries (DADF) to seek ex post-facto ratification from DADF regarding a subsidiary of NDDB forming further subsidiary companies. He said, "NDDB took the matter to its 84th Board meeting held on 24 October 2007 and the Board approved the proposal for seeking post-facto approval and further approved acquiring the entire shareholdings from IIL and CRI by NDDB at par considering the need for IndiaGen to carry out some of the development objectives of NDDB. Accordingly, NDDB acquired the entire shares of IndiaGen from IIL and CRI in March 2008 at par. As per NDDB’s information, this matter was informed to government on 26 March 2008 and it was requested to convey post-facto ratification for the formation of IndiaGen by NDDB."
     
    However, while replying to Moneylife, NDDB had claimed that it does not require permission to set up a stepdown subsidiary. “For an NDDB subsidiary to form another subsidiary, no prior Central government approval was taken as according to legal opinion this was not required,” it says, adding, "The DADF sought the views of the department of legal affairs, who were of the opinion that prior sanction of the government is required for subsidiaries to form other subsidiaries. It also stated that the views of the department of company affairs be taken. The department of company affairs were of the opinion that that the provisions of the Companies Act will apply. Since the memorandum and articles of association does not prohibit it, there is no legal bar on the floating of further subsidiaries." 
     
    While NDDB was expecting ex-post-facto approval for acquiring IndiaGen, it did not receive any such permission from the government. 
     
    "Talking about transfer of shares, NDDB, based on legal opinion obtained, had mentioned that as Indian Immunologicals is controlled by its object contained in its memoranda and the provisions of the Companies Act, 1956, in the absence of any provisions under Section 43, or any other provision of the NDDB Act, requiring the approval of central government for a wholly owned subsidiary of NDDB to form its own subsidiary, no question of inconsistency with any provision of NDDB Act will arise," the written reply says.
     
    Accordingly, Dr Balyan says, "as per NDDB’s information the entire shares of IndiaGen were transferred at par to Indian Immunologicals by them in December 2008 and thus IndiaGen became the wholly owned subsidiary of Indian Immunologicals. Subsequently, IndiaGen got amalgamated with Indian Immunologicals in April 2010 in line with the amalagamation scheme approved by the High Court of Andhra Pradesh as per information received from NDDB. All the statements are based on NDDB’s reply," he concluded.
     
    Indian Immunologicals was set up as its wholly owned subsidiary by NDDB in New Zealand for production of bovine serum, which is a critical imported raw material used in the production of vaccine for foot and mouth disease (FMD) and rabies. 
     
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