Corporate India’s sales and profitability are expected to improve in FY10, the Centre for Monitoring Indian Economy (CMIE) said in its monthly review. “We expect the profit performance of corporate India to improve in FY10 with the petroleum products companies returning into profits in the March 2009 quarter,” the report said.

Aggregate net profits of Indian corporates are expected to rise by 74.4 per cent. The PAT margin will also improve to 7.7 per cent from 4.8 per cent in FY09, it said.

The prime reason behind the slower growth was the poor sales performance of the manufacturing sector due to the steep fall in prices of commodities such as ferrous metals, edible oils, petroleum products and the weak export demand for textiles, gems and jewellery.

Although aggregate net profits plummeted by 40.5 per cent, the PAT margin improved to 4.7 per cent compared with 3.5 per cent in the preceding quarter.

This was mainly because of the reduction in losses incurred by the petroleum products sector, it said. Other manufacturing industries and non-financial services, however, saw an erosion in margins on a sequential basis.

The CMIE expects corporate India’s sales to decelerate further in the March 2009 quarter. Further, sales are expected to decline marginally in the quarters ending June and September 2009 as the year-on-year fall in the commodity prices will become steeper during this period.

However, sales are expected to pick-up thereafter, it said.

Income of corporate India is expected to rise by 7.4 per cent in FY10. The growth will be mainly driven by the banking, construction, non-financial services and electricity sectors.

The construction and the banking sectors will continue to report robust growth of 38.3 per cent and 25.4 per cent, respectively, the report said.

The growth in electricity is expected to decelerate to 10.5 per cent. The manufacturing sector, however, is expected to report a 1 per cent fall in income because of the steep fall in commodity prices, the CMIE said.

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