“Indian companies reported an aggregate topline growth of 15.1 per cent for the quarter ended September 2007. This was very much in line with our expectations. We had forecast a sales growth of 16.3 per cent for the September quarter,” the think-tank said.
“We had expected this slowdown in the topline growth because of a higher base and slowdown in certain large sectors like software, steel, aluminium products, automobile ancillaries, petroleum products, commercial vehicles, paper, sugar and fertilisers,” it said.
The sugar sector, though it has not sufficiently aggregated in terms of number of companies, reported declining sales because of a 25-30 per cent dip in unit realisations. The aluminium and aluminium products sector suffered restricted growth on account of capacity constraints of companies.
The paper and paper products sector met with similar fate in the September quarter.
Slower growth
Commercial vehicles were suffering because of high interest rates, excess capacity additions on certain routes besides a very heavy year-ago base, the CMIE report said.
The slower growth in the fertilizer sector was due to low production on account of raw material shortage. The software sector was stung by the rising rupee while the slow down in the steel sector was purely on account of a higher base coupled with a less than seven per cent increase in steel prices.
“Sales growth of companies in the manufacturing sector sl ipped into single digit rates. The nine per cent growth in sales revenue was the slowest at least in the last 13 quarters,” the CMIE report said.
Margin expansion
CMIE pointed out that profitability, however, improved with net margins expanding to 8.8 per cent, the highest in at least the past 13 quarters.
The margin expansion came on the back of a comparatively  much slower growth in raw materials expenses. Raw material expenses grew by a mere 6.9 per cent while sales grew by 9.1 per cent.
Till a couple of quarters ago, raw materials expenses were growing at a faster pace than sales revenues. The trend reversed in the June 2007 quarter, the CMIE monthly review added.