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Tuesday, Oct 26, 2021
Outlook.com

More Qs Than As

The effects of the lean season are yet to kick in. The real test begins now.

More Qs Than As
T. Narayan
More Qs Than As
outlookindia.com
-0001-11-30T00:00:00+05:53
You can count on Union finance minister Palaniappan Chidambaram to deliver an upbeat speech, full of enthusiasm and laced with good news. But even this die-hard optimist was uncharacteristically sombre during the inaugural address at cii's annual session last week. He talked at length about the negative impact of rising crude prices: "If oil prices remain high, it'll rob developing countries (like India) of some valuable (economic) growth percentage points." What he forgot was that there could be a further impact due to inflation, sluggish demand, poor agricultural growth and, of course, the spectre of rising interest rates.

Largely unknown to him, and to many others, India Inc is already beginning to feel the heat. In their corner-room offices, CEOs are busy reworking figures; more often than not, they are downgrading them. A recent survey by ncaer found that most business leaders were not too sure about the corporate results for the next two quarters, and the think tank's business confidence index slipped several notches. "Last year, analysts were predicting high growth rates (for companies across sectors)—around 35-50 per cent—and those were coming true. But I think that is behind us now," predicts Andrew Holland, executive VP, DSP Merrill Lynch. Adds Dharmesh Mehta, head (broking), Enam Securities, "I think the next quarter will be crucial because that's when the impact of factors like rising oil prices and patchy monsoons will be felt."

But, contrary to common belief, the Q2 results for this fiscal have been a kind of "mixed bag." While most market leaders have done well—sometimes even going beyond expectations—there have been a number of laggards who seem to be grappling with both top- and bottomlines. Within the same sector too, often the financials have been inconsistent (see 'Size Matters' on Page 76). "Last year, growth was on a...
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