India Inc’s staff cost up 1.5% in Q2

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Mumbai: With the economy showing clear signs of revival, companies are on a hiring spree once again. It is reflected in their manpower cost during July-September 2009. A study of 1,524 firms carried out by FE reveals that staff cost increased by 1.5% to Rs 39,131 crore in July-September ’09 from Rs 38,542 crore in the year-ago period. The total expenditure of these companies taken together decreased by 13.1% to Rs 5.40 lakh crore from Rs 6.21 lakh crore.

But the share of staff cost in total expenditure has steadily increased from 6.20% in July-September ’08 to 7.24% in July-September ’09. The staff cost-to-sales ratio also increased from 5.55% to 6.17% during the period under review.

The study also shows that 70% of the selected companies have increased their staff costs during July-September ’09.

The total staff cost of the companies under review grew by 1.5% during the period under review over the year-ago period, as against an 8.7% decrease in aggregate sales and a 13.1% decline in total expenditure. This has resulted in an increase in the share of staff cost in total expenditure and sales.

The top five companies in terms of manpower cost were Infosys Technologies, Wipro, TCS, SAIL and IOCL. Among these, the highest increase was registered in IOCL.

Of the 1,524 companies in this study, 504 did better with a decline in staff cost to total expenditure ratio, while 1,017 experienced a rise.

The remaining three companies showed equal ratio during both the periods.

Many of them, particularly those belong to labour intensive category like hotels, IT, tea, telecommunications, entertainment and construction, showed a high staff cost-to-total expenditure ratio in the three-month period, which means, they spent more on staff per unit of total expenditure. For example, Jay Shree Tea spent Rs 40 on staff for every Rs 100 spent on total expenditure during the July-September 2009 period.

Among the industries studied, a significant increase in staff cost was seen in the cases of cement, electric equipment, engineering, food-processing, petrochemical, refineries, sugar and tyres. The aggregate staff cost of refineries increased by 21% to Rs 2,535 crore during the reviewed period.