CORPORATE revenues declined by 31 per cent in the June quarter, but profit margins decreased by a lesser degree to 3.6 per cent in the April-June period, a report said on Thursday. Domestic rating agency Icra analysed financial results of 489 companies to arrive at the conclusion. It can be noted that the GDP of the country contracted by 23.9 per cent during the quarter, which had witnessed total lockdown of the country for the first two months to contain the spread of the coronavirus infections.
The rating agency said corporate revenues had been falling for three quarters prior to the last one due to the weak macroeconomic climate but had never declined by as high as the 31.1 per cent for April-June 2020 as compared to the year-ago period. “Restrictions on manufacturing, industrial, construction and consumption activities for the major part of Q1 FY2021 due to imposition of nationwide lockdown primarily hurt the financial performance of the Indian corporate sector,” its Vice-President Shamsher Dewan said.
He said the contraction in revenues was sharpest in consumer-oriented sectors where revenues contracted to nearly half of the year-ago levels, given customer wariness for large-ticket buys because of the uncertain economic environment and erosion of purchasing power. Sectors like airlines, hotels, retail, automotive, consumer durables which represent discretionary spending were significantly impacted, he said.