India's Manufacturing Firms Report Strong Q2 FY17 Turnaround
Manufacturing companies in India have shown a significant turnaround in the second quarter of FY17. Net sales grew by 3.9%, reversing a 1.4% contraction seen in the same period a year ago. Profitability also improved substantially.
The manufacturing sector's profitability growth in 2QFY17 surged to 28.3%, more than double the 13.6% recorded in 2QFY16. This improvement was largely driven by a decrease in input costs, particularly commodities, in the preceding period.
Meanwhile, global oil markets have been volatile. OPEC's recent decision to cut production led to a 15% increase in Brent crude futures in the week till 2nd December. This has significantly impacted oil and gas companies, especially those involved in crude oil extraction and refining. However, companies in cash-dependent sectors like retail and small-scale manufacturing are facing challenges due to government demonetization programs.
The manufacturing sector's strong performance in 2QFY17 is a positive sign for the Indian economy. However, the impact of OPEC's production cuts and demonetization on various sectors needs to be monitored closely as they may affect sales and profitability going forward.
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