Corporate profits witnessed a significant increase in FY2009-10. India’s GDP grew by 7.4% as compared to 6.7% in the previous year. The higher growth of manufacturing sector and construction sector was responsible for this upturn. The overall manufacturing sector recorded a growth of 10.9% during 2009-10 (April 2009-March 2010) as compared to 7.7% ( April-November 2009) in the previous year. Overall economic upturn together with bullish domestic equity capital markets, improved investor sentiments increased capital inflows into the economy.
Profits growth at every level-operating, gross, before tax and after was positive for the FE 500. Margins were strong and increased in 2009-10. The operating profits of the 500 companies increased significantly by 27.2% (on an annualised basis) to Rs 5.71 lakh crore in 2009-10 from the level of Rs 4.49 lakh crore in 2008-09.
The gross profits of the 500 companies increased by 32.36% in 2009-10 when sales cantered at the relatively low speedy pace of 5.18%. In absolute terms, gross profits increased from Rs 3.74 lakh crore in 2008-09 to Rs 4.95 lakh crore in 2009-10. On the whole, the smaller companies garnered bigger profits with higher increase. The operating profit of the first 100 (according to composite ranks) companies increased by 25.17%.
The next group of 100 registered profit at the growth of 26.92 per cent during 2009-10. The third group saw an increase of 38.94%, third highest increase among the groups. The fourth 100 registered an increase of 53.68%. And the last group of 100 saw a second highest increase of 40.83%. On the other hand the gross profits of the first 100 companies increased at 29.57%. The next group of 100 saw profits increase at the higher pace of 32.34%. The third group of 100 saw a significant increase of 51.54% in gross profit. And the fourth group showed a highest increase of 80.71% in its gross profit. The last group saw a second largest increase of 56.26% in gross profit during 2009-10.
The Top 10 (according to composite ranks) recorded a growth rate of 29.02% in operating profit and an increase of 33.02% in gross profit -higher than the FE 500 as a whole. In terms of gross profit, the share of the Top 10 in the aggregate increased from 37.73% in 2008-09 to 37.92%