Faced with poor demand and shortage of working capital,big corporates are not optimistic about improvement in their financial performance in January- March,said a Reserve Bank report.
“Major constraints faced by the companies are due to lack of domestic demand,shortage of power and working capital. Though the big-cap companies are optimistic about demand growth in January-March quarter with annual production of Rs 1,000 crore or above,they are very less optimistic about their financial conditions,” the RBI report said.
In October-December quarter,about 50 per cent of the companies reported constraints to attain normal production levels.
The report said that majority of the industry groups were more optimistic about input costs,and less optimistic about profit margins.
“However,food products,cement,electrical machinery and pharmaceuticals industries reported optimism in demand conditions in October-December period.
The pressure from cost of raw materials continued to increase in the assessment quarter and expected to elevate further in the next quarter (Jan-Mar),” the report said.
The economy grew at 6.1 per cent in third quarter (October-December),the slowest in over two years,prompting corporates and experts to press for faster reforms to boost industrial output.
The economic growth rate in October-December quarter declined mainly due to poor performance of manufacturing,mining and farm sectors. The economy had expanded by 8.3 per cent during the corresponding quarter a year ago.
The RBI data,however said textiles and basic metals felt higher productions as compared to other sectors as a whole.
The falling growth rate may prompt the Reserve Bank to cut rates at its mid-quarterly policy review on March 15.