Indian companies’ cost pressures reappear, profits and sales ‘sharply down’: IIM-A survey

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By our representative
The latest Business Inflation Expectations Survey (BIES), conducted by the Misra Center for Financial Markets and Economy, Indian Institute of Management-Ahmedabad (IIM-A), expressed concern over the “re-emergence of cost pressures” on Indian companies, noting: “Around 59% of companies participating in the survey perceive a significant increase (more than 6%) in costs, compared to 53% reported in the first phase of the survey. »
Based on responses from around 900 companies, mostly in the manufacturing sector, the BIES report states: “The percentage of companies perceiving a cost increase of more than 10% year-on-year has also increased. costs have increased very significantly (more than 10%) – slightly up from the 24% recorded in July 2022.”

The report also worries that “business expectations for sales have fallen sharply”, noting that “the percentage of companies reporting ‘slightly below normal’ sales rose to 32% in August 2022, down from 26% in July 2022.”
It adds: “As of August 2022, around 19% of businesses report that sales are ‘about normal’, down sharply from the 25 reported in July 2022.”
At the same time, the report – whose survey results stand in stark contrast to the recovery in Indian activity perceived earlier – states: “Expectations for profit margins have fallen. More than 36% of companies participating in survey estimate profit margins to be ‘slightly less than normal’ – up sharply from the 23% reported in the first round of the survey.”

The BIES, the report asserts, “is unique in that it speaks directly to businesses – the price-makers – rather than to consumers or households, to understand their expectations regarding price level changes.” He adds that the survey “provides an indirect assessment of the general state of demand in the economy”.

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