Q4  Upshots

A positive growth of India Inc in the March quarter has been made less heartening by the evident slowdown from the obtaining Q4 numbers. But when seen against the odds of rising inflation, hardened interest rate, currency woes, higher base and forex troubles, the lesser performance seems quite creditable.

EXPERT SPEAK -

”The spurt in inflation has not been caused by excess demand in the economy, but has been caused by supply side constraints. When inflation builds up from supply side problems, there is very little that the monetary policy of RBI can do. But despite that if certain monetary instruments are used, you actually end up attacking the demand side of the economy. So, monetary tightening can come only at the cost of foregoing growth"

Sunil K Sinha
Head & Senior Economist
CRISIL

“Despite being a mixed bag, the March quarter results are in line with the street expectations. Of course, better results got moderated by higher raw material costs and the pinching forex exposure for companies.”

Jayesh Shroff, Fund Manager, SBI

So what  do the Results Foretell ?
The sustained India growth story has soared expectations from corporate India. The brilliant performance in the last few years of India Inc has fostered the utopian belief that nothing can go wrong. Even as the country corporates have lived up to investors’ expectation quarter after quarter, it would be a harebrained logic to presume that there would be no reversals in the thriving trend. The Q4FY08 results are a mild reminder of the cyclical performance of businesses that are prone to see both highs and lows as they tug ahead in not-always-favourable currents.The cautioning reminder comes from the fourth quarter numbers. In Q4FY08, the topline has appreciated 21 per cent while the bottomline has gone up 18 percent. When seen in isolation, the numbers indicate an unmarred growth. But, when compared with the 30 per cent rise in the topline and 45 per cent in the bottomline of Q4FY07, the slowdown in growth over the year comes out loud and clear.

But, if the obtaining numbers are analyzed against the backdrop of global and domestic developments of the last one year, it would bring more cheer than despondency. Inflation, hardened interest rate, stronger rupee and higher base were the  adversities against which India Inc was sailing. Add to that stack of odds the rising input costs and forex exposure and you would endorse the view that the 21 per cent-plus topline and the 18 per cent bottomline posted by Indian Inc such a disadvantageous environment are still commendable.