RPOFIT MARGIN FALLS ASS DEMAND DECLINES

'Poor demand shaves off top cos' profit;margin by 37% in FY14' Mumbai, May 23 (PTI) India Inc witnessed a massive 37.4 per cent drop in profit growth and narrowing of margins in FY'14 due to muted investments and lower demand, says a report by Care Ratings. Net profit of 880 companies, excluding SBI (which reported its numbers earlier in the day), was up by 8.2 per cent in the recently concluded FY14, down 37.4 per cent, as against the 13.1 per cent achieved in the previous fiscal, it said in a note today. Net profit margins narrowed moderately to 9.5 per cent, as against 9.8 per cent in the previous fiscal. Net sales increased 12 per cent as against 15.3 per cent in the year-ago period, it said. "The deterioration in the overall performance has been the outcome of muted investment and lower market demand... corporate performance during the year was affected by the muted pace of economic growth." the agency said. The government expects the economy to grow below 5 per cent mark in FY14, up from the revised number of 4.5 per cent in FY13. A slew of reasons, including an alleged inaction of the then government on policy front, slowdown in the global markets and high interest rates have been blamed for the slowdown in the economic growth to under 5 per cent. On the expenses side, it said the total expenditure by 880 companies was up 11.4 per cent in 2013-14 as against 14.5 per cent in the previous fiscal. The softening in rates got reflected in the interest expenses as well, it said, adding growth on this front dipped to 17 per cent from the 27.3 per cent in FY'13. With worries over asset quality due to gloomy economic environment dominating the discourse in banking sector, the Care Ratings note said there was a 37 per cent rise in provisions and contingencies by lenders.