The Centre for Monitoring Indian Economy (CMIE) has come out with a report where it has cut profit forecasts of the manufacturing sector. The centre has revised downward its net profit forecast for the manufacturing sector for the quarter ending September 30, primarily due to a poor showing by petroleum products industry.
In an interview with CNBC-TV18, Mahesh Vyas, MD & CEO, Centre for Monitoring Indian Economy says petroleum and sugar will be strong growth sectors. While net sales of the manufacturing sector grew by 20%, he says a slower growth in raw material expenses will be seen in the second half of this fiscal.
Even though profits follow a very volatile path, he is confident that the manufacturing sector will see a 12.7% increase in the net profits of corporates in 2011-2012 fiscal as a whole compared to 2% growth last year. Below is a verbatim transcript of his interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar. For complete details watch the accompanying video. Q: Are you cutting the profit forecast of the entire manufacturing sector by 5.7% against an earlier rise of 34%. Is that right?
A: Yes, the whole problem over here is with respect to the petroleum sector. If you look at these numbers, quarter to quarter then there is a lot of volatility in their numbers. I would rather not focus on the quarter by quarter revisions that happen because of large changes in the performance of the petroleum sector.
If you look at the year as a whole, that is 2011-2012 then the picture is a lot clearer, a lot more reliable and a lot rosier. We are predicting 12.7% increase in the net profits of corporates in 2011-2012 fiscal as a whole compared to 2% growth last year. That is the real story I would like to put across rather than say we have cut the manufacturing sectors profit growth in this quarter because it has shifted to the next quarter. Q: Did you say that you are expecting a 12% rise in the profits of the manufacturing sector in FY12 compared to just 2% last year?
A: That is right. It is a very good increase but mind you profits do have a very volatile growth path. They can fall one year and rise very substantially the next year. We have a very good number looking like 12.7% growth in the net profits in 2011-2012 compared to 2% last year. Q: How does this tie in with the widespread fear of the capex cycle not taking off? Your earlier report on the economy itself brought down the GDP and the industrial forecast didn
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