Manufacturing Profit Outlook in Oct-Dec Remains Negative

With businesses yet to revive amid the pandemic, the outlook for profit margins by Indian manufacturing companies continues to remain negative for the October-December quarter, according to a survey by the Reserve Bank of India (RBI).

The 'Industrial Outlook Survey of the Manufacturing Sector for Q2:2020-21' noted that respondents maintained negative sentiments on selling prices and profit margins in the July-September quarter, though pessimism moderated.

However, manufacturers expect further improvements in production, capacity utilisation and order books in Q3 of FY 2020-21. Going forward, respondents polled some recovery in the external demand situation and job landscape, the survey showed.

"The business expectations index (BEI) reverted to the expansion zone and stood at 111.4 in Q3:2020-21 from 99.5 in the previous quarter," it said.

Further, the overall financial situation and availability of finance portrayed optimism.

It noted that the overall business sentiment in the Indian manufacturing sector, as reflected by the business assessment index (BAI), surged from a record low at 55.3 in the first quarter of FY 2020-21 to 96.2 in the second quarter, though it remained in the contraction zone.