Sectors Facing Slowdown Pressures

Some sectors face adverse situations despite the state of the economy for their own unique reasons. We identified four sectors that are struggling because of their own dynamics, with most of the companies in these sectors being loss making. Some of them are consistently losing on profits with time. In the following page, check out what ails four sectors and why they are unlikely to revive soon. THE LISTED COMPANIES IN THE AIRLINES INDUSTRY have never made profits in the past five years. They are struggling and fighting with each other on fares, especially in the low fare segment. The three listed companies; Jet Airways, Spicejet and Kingfisher made a cumulative loss of around ₹10,000 crore in FY14. The major issue that plagues this sector is that of managing input cost, especially fuel. This accounts for more than 50 per cent of revenues and is not in the hands of the company. Secondly revenues have struggled due to intense competition, and the inability to pass on the rising costs to consumers. It is a structural shortcoming and this sector is expected to continue like this in the current scenario. Airlines CompanyMarket cap (Rs cr)Net profit FY14 (Rs cr)Net profit FY13 (Rs cr)Net profit FY12 (Rs cr)Jet Airways2868-4129-780-1420Spicejet1009-867-255-410Kingfisher Airlines278-4836-3311-1532 THE SUGAR SECTOR IS HIGHLY CYCLICAL IN nature, however, its down cycle is quite prolonged. The companies are either loss making or have seen their profitability fall year on year consistently. The two factors that govern the sector: revenue and input costs are both regulated by the government. For instance, the maximum sale price and quantity of export is determined by the government. Likewise, companies can't even control their main raw material, which is sugar cane, as the minimum support price that is to be paid to the farmer, is again fixed and regulated by the government. A long tern solution that could bring respite to this sector, but that is sadly not visible in the nearn future. Sugar CompanyMarket cap (Rs cr)Net profit FY14 (Rs cr)Net profit FY13 (Rs cr)Net profit FY12 (Rs cr)E.I.D. Parry3679219363527Shree Renuka Sugars2633-1479-374-155Balrampur Chini Mills194681610Bajaj Hindusthan1915-1480-252-154Bannari Amman Sugars125329142106Triveni Engineering779-1993-117Dhampur Sugar Mills358-782330KCP Sugar & Industries280334129Sakthi Suga