Chennai: Corporate profit is expected to remain strong at 30.3% for the December quarter and at 15.5% for the March 2013 quarter. "However, the high level of growth achieved in the September quarter will not be sustained.
Corporate profits shot up in the second quarter due to the announcement of the cumulative oil subsidy for the April-September quarter by the government and forex gains made by companies on their short term foreign exchange liabilities consequent to the appreciation of the rupee. Also, the low base of last year made the profit growth look impressive," CMIE ( Centre for Monitoring Indian Economy) said in its November review.
Moving forward, growth in profits is expected to be led by moderation in input prices, reduction in forex losses and announcement of oil subsidies by the government on a regular basis. "Receipt of Rs 20,000 crore oil subsidies, flat crude oil prices and lower forex losses compared to the year-ago quarter are expected to help the petroleum products industry report a 10% growth in profits during the quarter," CMIE said.
And with the manufacturing sector procuring imported raw materials one to two months in advance, the positive impact of the rupee appreciation is expected to be visible on the raw material expenses of manufacturing companies during the third quarter.
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