An analysis by ET Intelligence Group has revealed that Indian manufacturing became less profitable over the past decade even though there was a marginal drop in the proportion of raw material cost in net sales.The analysis was done of over 2,000 publicly listed companies across sectors.
Decreasing profits makes it even more necessary for companies to seek for a lower interest rate regime.
The analysis showed that the aggregate operating margin before depreciation (EBITDA margin excluding other income) for the sample of 1,758 companies fell to a 10-year low of 11.4% in FY15 from 15.2% in FY05.
The wholesale inflation, due to which the profit is shrinking, dropped for the eighth straight month in June 2015.
"Clearly, these trends indicate continued weak pricing power among manufacturing sector even as it increased at the intermediary level, specially in the services sector," Dhananjay Sinha, economist and strategist, Emkay Global Financial Services told ET.
(Image: Reuters)