Indian business profits, sales deteriorate, no significant change in costs: IIM-A survey

Profit margins: % response

By Our Representative
The periodical Indian Institute of Management-Ahmedabad’s (IIM-A’s) Business Inflation Expectations Survey (BIES), which seeks to provide ways to examine the amount of slack in the economy by polling a panel of business leaders, has said that about 61% of the firms reported ‘much less than normal’ or ‘somewhat less than normal’ sales in July 2023 – up from 56% reported in June 2023.
Stating that the percentage of firms reporting ‘about normal’ sales has remained somewhat steady around 24% -- down from 26% reported in June 2023 – the BIES report says, the term "normal" is defined as compared to the average level obtained in the preceding three years, excluding the Covid-19 period.
The survey seeks answers to questions about year-ahead cost expectations and the factors influencing price changes, such as profit, sales levels, etc., claiming, it is unique in that it goes straight to businesses -- the price setters -- rather than to consumers or households, to understand their expectations of the price level changes.

Sales levels: % response

Noting that the survey provides an indirect assessment of overall demand condition of the economy, the report insists, results of this survey are useful in understanding the inflation expectations of businesses and complement other macro data required for policy making.
Carried out by the Misra Centre for Financial Markets and Economy, IIM-A, based on responses of around 1,200 companies, the survey report says, around 69% of the firms reported profit ‘much less than normal’ or ‘somewhat less than normal’ in July 2023, suggesting that, overall, the profit margins expectations have further deteriorated.
The survey finds deterioration in sales and profits at a time when the cost perceptions data show that majority (over 27%) of the firms perceived that costs have gone up only moderately – in the range of 3.1% to 6%. The report adds, the survey does not indicate significant increase of cost pressures. The percentage of firms perceiving significant (over 6%) cost increase remained unchanged around 33%.

Costs: % response

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