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Wage bill of small Cos falls up to 5% on salary, job cuts
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SME Times News Bureau | 01 Sep, 2021
The pandemic guided economic disruptions are pushing companies to become
leaner and meaner as a survival strategy to counter falling revenues.
A
large number of companies with a turnover of up to Rs 500 crore have
reduced their employee expenses between 1-5 per cent in the April- June
quarter of the current financial year. The expenses have fallen on
account wage and job cuts as companies, particularly smaller ones,
continue to face shrinking businesses with Q1 revenue falling up to 14
per cent.
According to SBI Ecowrap analysis of results of more
than 3,700 listed entities, reduction in employee cost up to 5 per cent
has been seen in companies with turnover of up to Rs 50 crore. These are
the companies that have also seen their Q1 FY22 revenue falling by 13.6
per cent.
The cut in employees expenses reduced as the size of
the companies increase. Accordingly, companies with turnover of Rs
50-100 crore have seen their employees expenses falling by 1.3 per cent,
between Rs 100-500 crore the fall is about 1 per cent.
Conversely,
larger companies with turnover of over Rs 500 crore, the emotes
expenses have actually risen by 2-3 per cent in Q1FY22 as compared to
Q4FY21 even though they have taken a bigger hit of over 13 per cent in
their April-June quarter revenues.
"The pandemic has impacted
smaller companies the most who are resorting to survival strategies by
cutting their cost and employees expenses to remain operational. For
larger entities, manpower retention seems to be the strategy and
economic recovery brings with it the hope that businesses would grow and
cement would pick up," said an economist with four big audit firms
asking not to be named.
On an overall basis, the Ecowrap study
suggests that these has been an overall around 9 per cent de-growth in
revenue and around 2 per cent growth in employee cost has been reported
in Q1FY22 as compared to previous quarter i.e. Q4FY22.
With GDP
growing at 20.1 per cent in Q1, fresh hopes have emerged for the
accelerated recovery of the economy. If this stands true and the country
is able to overcome any new wave of the pandemic without much
disruptions, the corporate sector could hope to recoup their falling
revenue and start moving on the path of higher top line and bottom line.
According
to SBI Ecowrap a rebound in the announcement of new infra projects by
both the Central and State Government agencies has helped the
infrastructure sector maintain its steady growth observed since Q2FY21.
New project announcements scaled a new high in July 2021. In the month
988 projects worth Rs 1.45 lakh crore were announced. The last instance
where a total number of new projects announced crossed the 900-mark was
way back in January 2019 when 926 projects announcements were seen.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
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64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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