FIRM COMMODITY PRICES SUPPORT INDIA Inc GROWTH

Despite reverses of note ban, India Inc was able to post a 5.1 per cent revenue growth in the December quarter on commodity price recovery and a low-base effect, a report said today. "Indian corporate sector posted healthy revenue growth of 5.1 per cent in Q3FY2017...revenue growth was supported by recovery in commodity prices and low-base effect," domestic rating agency Icra said in a note. In the analysis of 497 companies, the agency said the 5.1 per cent revenue growth, which is significantly higher than the preceding quarters of the fiscal, was supported by commodity prices which is reflected in performance of sectors such as metals, oil and gas and capital goods. On demonetisation, it said consumption-driver sectors like auto, cement and fast moving consumer goods suffered a contraction of revenues during the quarter. Companies had to adopt strategies like offering credit to its channel partners, higher incentives and supply chain efficiencies to reduce the impact of demonetisation, it said. For the consumer durable segment, which witnessed a contraction in sales during November and December, the impact was limited as most companies were entering new product segments during the time. Cement volumes contracted by 0.8 per cent during the October-December period, with the north and west regions impacted the most, it said. "Demonetisation impact was felt across many domestic economy-oriented sectors," it said, specifying that e-commerce, toll roads, realty, construction and commercial vehicles were among other sectors hurt by the move. It, however, said that margins of the corporate sector expanded by 1 percentage point to 18.1 per cent but said this was on account of a low base effect where the earnings of metal and capital goods companies were impacted severely in the same period last year. Companies in the airlines, automobiles and auto components, logistics, tyres, telecom and shipping sectors, however, witnessed a contraction in margins, it said. The interest coverage ratio was stable at 3.3x, while that for stressed sectors like steel and construction improved.