Now Reading: West Asia shock squeezes India Inc margins beyond 2022 levels
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West Asia shock squeezes India Inc margins beyond 2022 levels
Raw materials accounted for nearly 45% of net sales and about 50% of total expenditure at 642 non-financial companies in April-June, Mint reports. The figures were 42% and 47% respectively in the…
The Story in Brief
Raw materials accounted for nearly 45% of net sales and about 50% of total expenditure at 642 non-financial companies in April-June, Mint reports. The figures were 42% and 47% respectively in the first quarter of FY23, after the Russia-Ukraine war began. Aggregate net profit fell nearly 9% year-on-year, while operating and net profit margins dropped to 15.3% and 8.4%.
Mint’s separate analysis of 3,620 companies found power and fuel costs had fallen to around 1.5% of sales and expenditure by March 2026, from 2.5% in September 2022. Lower energy intensity, renewable capacity and stronger balance sheets offer some protection, but analysts expect inventory replacement and repriced contracts to increase pressure in the second and third quarters.
The Indian Opinion
The loudest claims will either call this a repeat of the 2022 crisis or treat efficiency gains as proof that industry is now insulated. Both are incomplete. Input costs have already cut margins more sharply in one quarter, yet power and fuel costs are lower than during the earlier shock. The real test is whether companies can absorb higher costs without repeated price rises, especially in cement, chemicals and packaging. Watch margins in Q2 and Q3, not forecasts.
Sources (2): livemint.com, livemint.com (2)
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
