Mumbai: India Inc.
has reported doubling profit after tax on FY21 although 5% dip in the top row on the back of a lower tax rate and a sharp decline in interest costs.
A report by the SBI Economic Research Department said that around 4,000 registered entities reported a 5% decline in the upper line, but their EBITDA (Profit before interest, depreciation, tax, and amortization) rose 24% while profit after tax jumped 105%.
“The most important, 15 sectors have now reduced loan funds around Rs 2.1 lakh crore during the FY21 pandemic year.
Sectors such as refineries, steel, fertilizers, textiles, mining, etc., have reduced their loan funds in the range of 6% to 64% At FY21, “said the report.
According to the report, the reduction in the effective tax rate (ETR) in the FY20, coupled with a prolonged period of the low interest rate regime driven by Coronavirus seems to have become a blessing in disguising it as a year of pandemics.
Last year, the government reduced ETR for the company to 26% from 35% in FY20.
However, the actual tax paid increases more than Rs 50,000 Crore.
Many sectors including engineering, realty, cars and trade have reported the ETR reduction in the range of 1-24% in FY21 compared to FY20.
Even so, the tax collection at FY22 is at the highest record.
Sectors such as cement, tires and consumer endurance show significant contributions even more than 50%, the report said.
A short period of low interest rates has also helped companies in large deleveraging and contributed to an average of 5% to the overall top line.
Sectors such as consumer durability, health care and cement benefit most.
In terms of reducing expenditure, the overall contribution in the top row has been as much as 31%.
Sectors such as clothing and refineries have cut costs as much as 107% on average.
While the cost of financing fell, the increase in commodity prices encouraged expenditure in sectors such as metal and agrochemicals.
The average employee cost has been cut by 3% on FY21.
The maximum cutting in the cost of employees has existed in the sector faced by consumers.
According to SBI, the improved tax collection will widen the gap between gross domestic product and gross added value because GDP growth will be supported by increased tax discoveries.
The report said that the period of the accommodative policy was extended, as desired by the RBI, Augur well for better company results.