India Inc in fast lane on buoyant Q1 sales, profits

Pradip Kumar Dey
Posted: Sunday, Aug 26, 2007 at 0000 hrs IST
Updated: Sunday, Aug 26, 2007 at 0146 hrs IST

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Mumbai, Aug 25: India Inc is galloping in the fast lane with zooming sales and profits. A study undertaken to observe the performance of 20 large business houses in India shows that their net earnings for the first quarter of fiscal 2007-08 have increased an impressive 33.40% (over the same period last year) to touch Rs 14,712 crore. This is higher than the average growth of 25% in earnings recorded by overall industry.

On the other hand, the total sales of the 20 houses increased 16.9% to Rs 1,12,505 crore in April-June 2007 against Rs 96,216 crore in April-June 2006. A higher growth rate in earnings than revenues points towards management of profitable operations and savvy money management.

The total other income for the 20 business houses increased 81.6% to Rs 3,631 crore in April-June 2007 from Rs 1,999 crore in April-June 2006. A large part of these earnings have emanated from smart treasury and money management. Income from this source, analysts believe, will reduce in the wake of stricter overseas borrowing norms and as money raised get deployed in genuine capital expansion.

Of the 20 business houses surveyed, five houses more than doubled their earnings in the first quarter over the previous year quarter. These include the Om Prakash Jindal group, Essar, RP Goenka, UB group and Ruchi Soya.

On the sales front, the Mukesh Ambani-owned Reliance Group and the Tata Group each accounted for 19% or more of the total sales of the top 20 business houses in all the two quarters under study. The Mukesh group also scored well on the overall profitability front as measured by net profit margin ratio (profit after tax as a percentage of sales) as the margins grew to 11.69% in Q1 FY08 from 9.91% in the previous year. However, the growth in margins was more significant in the sibling’s Anil Dhirubhai Ambani Group (ADAG) where the margins rose to touch 25.53% from 18.74% in the previous year.

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