The post tax profit margins of India Inc are expected to inch up by 1 percentage points to 7.1 per cent this fiscal in tune with an expected 30.6 percent rise in the net profit, economic think-tank CMIE says.

“We expect corporate India to show an improvement in profit performance in FY13. Net profits are expected to grow by 30.6 per cent after falling by 6.6 per cent in FY12,” the Centre for Monitoring India Economy (CMIE) said in its latest report.

Consequently, the PAT is expected to expand by 1 per cent at 7.1 per cent, the report said, attributing the projected growth to fall in input prices, inflation and softer interest regime.

The CMIE forecasts international prices of raw materials such as crude, natural gas, edible oils and coking coal to fall in FY13.

“This will restrict the rise in raw material expenses of the manufacturing sector to 8.2 percent, much lower than the sales growth of 10.1 percent projected for the year.”

The softening of interest rates is expected to augur well for the manufacturing sector, the report said, adding, “we expect net profits to grow by a robust 51.4 percent in 2012-13 as against 25.4 percent fall estimated for the last fiscal.”

The non-financial sector too is expected to reap the benefit of a projected softer interest rate regime as its profit could grow by 11.2 percent in the ongoing fiscal on the back of a 9.9 percent reduction in the interest outgo.

The government’s grant of permission to aviation firms to raise $1 billion for working capital loans through the external commercial borrowing route, thereby reducing the interest costs, and electricity sector getting permission to refinance its debts with ECBs, would also help the industry, it said.

The removal of customs duty on imported coal and liquefied natural gas (LNG) is also expected to boost the bottomline of the sector, CMIE said.

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