Stellar performance in bottomline

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: Corporate profits witnessed robust growth in FY2006-07. India’s GDP grew by 9.4%, as compared to 9% in the previous year. The main drivers of growth were the manufacturing services and construction sectors.

The overall industrial sector recorded a growth of 10.9% as compared to 9.6% in the previous year. Overall economic buoyancy, together with bullish domestic equity capital markets, boosted investor sentiments attracting robust capital inflows into the economy.

Profits at every level - operating, gross, before tax, and after, was higher than the sales growth for FE 500. Margins were healthy and increased in 2006-07.

The operating profits of the 500 companies increased by 33.70% (on an annualised basis) to Rs 3,03,717 crore in 2006-07 from the level of Rs 2,27,160 crore in 2005-06. The gross profits of the 500 companies sprinted by 33.87% in 2006-07, when sales cantered at the relatively more speedy pace of 28.02%. In absolute terms, gross profits increased from Rs 2,07,298 crore in 2005-06 to Rs 2,77,510 crore in 2006-07. On the whole, the bigger companies garnered bigger profits with higher growth rate.

The operating profit of the first 100 (according to composite ranks) companies increased by 34.39%. The next two groups of 100 registered profits at the growth of 55.04% and 25.65% respectively. The fourth group saw a decline of -4.52%. And the last group of 100 saw the lowest growth of 22.58%.

On the other hand, the gross profits of the first 100 companies grew at 34.41%. The next group of 100 saw profits rise at the higher pace of 61.04%. The third group of 100 saw a lower growth of 24.58% in gross profit. But the fourth group showed a decrease of 9.45% in its gross profit.

The last group saw a growth of 22.96% in gross profit during 2006-07.

The Top 10 (according to composite ranks) recorded a growth rate of 28.53% in operating profit and 28.26% in gross profit - slower than FE 500 as a whole. In terms of gross profit, the share of the Top 10 in the aggregate declined from 41.41% in 2005-06 to 39.67% in 2006-07.