Impact on companies' quarterly results despite only seven-day lockdown in March

Mumbai, Ta. 19 June 2020, Friday

The last quarter of the last financial year was weak in terms of revenue for Indian companies. Covid-17 has had a serious impact on the financial condition of the country's companies both annually and quarterly.

A review of the March quarterly results of 12 non-financial companies by rating agency ICRA found that companies' net profits declined by 22 per cent year-on-year. The March quarter results have affected the performance of the entire financial year 2018-20.

While gross income has declined by 2.50 per cent year-on-year, margins have declined by 20 basis points. Profitability has come under pressure due to a slowdown in demand and lower prices in the commodity sector.

The pre-tax profit margins of the companies under review fell to 3.10 per cent, the lowest level in several quarters. The impact of the lockdown is likely to be even worse in the June quarter results, the report said.

The lockdown has had the most serious impact on the revenue of commodity and consumer sector companies. Sales of goods such as fast moving consumer goods and consumer durables declined in the first half of the March quarter, after showing good growth.

Sales volume has been affected due to the sluggish mindset of consumers. In addition, the revenue of oil and gas, metals and mines companies also declined due to sluggish demand and lower prices. Due to the impact on revenue and profits, companies' priorities have shifted to cost cutting, liquidity management and digital infrastructure reform.