can – Marico grew its consolidated operating profit by 27% only because it reined in employee expenses, ad spends and other expenses even as its stand-alone gross margins dropped 530 basis points. How tight-fisted consumers have become can be in seen in the plight of retailers: same store sales at Shopper’s Stop, for stores older than five years, was a miserable 3.8% y-o-y and both customer entries and the conversion ratio actually fell during the quarter.
Clearly, companies are hesitant to expand their businesses; ICICI Bank, for instance, grew its loan book at 17% y-o-y, but much of the increase came in from retail loans – up 23% y-o-y. In a clear indication of the stress in the infrastructure sector, IDFC reported a large restructured loan book of 4.6% of gross loans – or Rs 2,700 crore in Q4FY14. The high level of provisions that the lender needed to make on these loans and non-performing assets, dragged down its earnings – net profits fell 52% y-o-y. Cement major ACC’s profits fell 13% y-o-y, with sales down 2% y-o-y as activity in the construction sector stays lacklustre. With industry not recovering, it may be a while for banks before the NPA (non-performing asset cycle peaks. Fresh restructuring at Axis Bank has been high at 2.1%. Between April 2013 and February 2014, the capital goods segment – within the IIP – has contracted 2.6%.