COVID shock: Over 1700 companies may have faced mortality in 2020-21, says CMIE

As a result of the COVID-19 pandemic and the subsequent lockdowns, 1,780 companies in the Indian corporate sector faced mortality, the Centre for Monitoring Indian Economy (CMIE) estimated.

The report looked at Prowess database in the website of the Ministry of Corporate Affairs, which contained the financial statements of 28,462 companies in 2020-21. However, the website did not have the financial statements of 1,780 companies as on April 9, 2022.

As it is over a year since the pandemic year of 2020-21, the companies should have filed their financial statements with the ministry by now, unless they are in some financial stress or facing possible mortality, the CMIE said.

Meanwhile, listed Indian companies saw their total income shrink by 3.4 percent even as their net profits soared 176.5 percent during the COVID-19 year 2020-21, the CMIE’s Economic Outlook report said.

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During the pandemic year, listed companies logged in a net profit of Rs 5.6 lakh crore, which is 44 percent higher than its previous historical peak in 2013-14. There are around 5,270 listed companies in India.

At the same time, total income of the 28,386 Prowess companies shrunk by 1 percent in 2020-21, but their net profit increased by 131 percent. Total net profit of these companies stood at Rs 7.5 lakh crore, 79 percent higher than their previous peak of Rs 4.19 lakh crore in 2016-17.

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Attrition stress 

However, the real stress in 2020-21 was the attrition rate, which shot up to 6.3 percent. The attrition rate in 2016-17 and 2017-18 was 1.7 percent, which rose marginally to 1.9 percent in 2018-19.

According to an India Today report, India's labour force shrunk by 3.8 million during March this year to 428 million, hitting the lowest in eight months.

Both employment and unemployment are declining in the country, the report said quoting CMIE data. In the month of March, employment shrunk by 1.4 million to 396 million, while the number of unemployed fell by 2.4 million.