Profits of 729 companies down in poor Q2 performance

Pradip Kumar Dey, FE Research Bureau

The aggregate net profit of 729 companies which declared their second quarter results last week decreased by 11.4 per cent during July-September 2001. This was probably due to the significant declines in net profit by the major companies like BPCL, EIH, Eveready Ind, Grasim, Kochi Refineries, Madras Cements and Supreme Industries.

The net profit figure of BPCL declined by 49.3 per cent to Rs 181.90 crore during July-September 2001 from Rs 358.90 crore during July-September 2000. The company’s sales also decreased by 9.1 per cent during the quarter.

On the other hand, net sales of these 729 companies declined by 1.1 per cent to Rs 1,36,853 crore. But the other income of the above number of companies significantly rose by 43.7 per cent to Rs 5,186 crore during July-September 2001. This has occurred probably due to the significant increases in other income by the companies like Bank of Baroda (104.7 per cent), Dr Reddy’s Labs (783.1 per cent), Jindal Photofilms (685.5 per cent), Karnataka Bank (357 per cent), Punjab Tractors (311.1 per cent) and Rural Electrifications (296 per cent).

On the profit front, the operating profit of these 729 companies marginally increased by 2.7 per cent to Rs 33,149 crore during July-September 2001. But gross profit declined by 4.2 per cent to Rs 16,954 crore from Rs 17,709 crore. Profit before tax (PBT) also declined by 9.8 per cent to Rs 10,664 crore in July-September 2001.

As we mentioned earlier, the aggregate net profit of these 729 companies decreased by 11.4 per cent to Rs 7,394 crore from Rs 8,350 crore, the PAT to net sales ratio declined from 6.04 per cent to 5.4 per cent during July-September 2001.

Of the 729 companies, 177 registered a decline in gross profit. Significant among them are Dynamatic Techno, FCL Techno & Prod, Foseco India, Ginni Filaments, National Organic, Rama Newsprints and Zenith Computers.

There are 29 companies which doubled their gross profit during the second quarter. Significant among them are Agro Dutch Ind, Central Pulp, DCW, IDBI Bank, Nucleus Securities, Parry Agro Ind, Precision Wires, Sai Service Station, Selvas Photographics and SPS International.

In PBT, 60 companies witnessed an increase of 100 per cent or more during the second quarter. Notable among them are Aspinwall & Co, Balmer Lawrie & Co, Birla Global Fin, Central Pulp, Dr Reddy’s Labs, Flex Ind, IDL Ind, Jaiprakash Ind, Karnataka Bank, Power Finance, Shree Cement and VLS Finance.

However, 244 companies have recorded a lower PBT during July-September 2001. In the case of PAT, significant losses were made by Arvind Mills (Rs 44.59 crore), CESC (Rs 22 crore), Jindal Iron & Steel (Rs 24.01 crore), Jindal Vijaynagar Steel (Rs 85.34 crore), Mafatlal Finance (Rs 16.12 crore), Power Finance (Rs 24.77 crore) and SAIL (Rs 328.72 crore).

As many as 253 companies recorded lower net profits during July-Sept 2001. On the other hand, 51 companies have witnessed an increase of 100 per cent or more in PAT during the second quarter. Notable among them are Aarti Drugs (144.9 per cent), Dr Reddy’s Labs (754.3 per cent), e-Serve International (237 per cent), Kanohar Electrical (733.3 per cent), OCL India (108 per cent), Perfect Circle (134.7 per cent), Schentctady-beck (263.8 per cent) and Vysya Bank (106 per cent).

Higher PAT to sales ratio was observed in the case of Aftek Infosys, Dr Reddy’s Labs, Flexo Film, India Securities, Kabra Comm, Poona Ind Hotel, Simtools and Unique Estate.

PAT formed less than 0.5 per cent of sales during July-September 2001 in the case of Agro Tech Foods, Amal Prod, Amit Spg, Excel Glasses, Fem Care Pharma, Flawless Diamond, Gangotri Text, Omnitex Ind, Pudumjee Agro Ind, Remsons Ind, Ruby Mills, Sai Service Stations, Samtex Fashion, Supreme Ind, Veejay Lakshmi Engg, Vintron Informatics, Welspun Syntex and Zenith Computers.

A significant increase in the ratio was recorded by Avon Organics (1.4 per cent to 7.57 per cent, Dr Reddy’s Labs (17.9 per cent to 50.93 per cent), Gujarat Ambuja Cements (8.63 per cent to 15.65 per cent), Schentctady-beck (6.42 per cent to 22.69 per cent) and Tata Tea (15.85 per cent to 28.17 per cent).

A reverse trend can be seen in the case of Adlabs Films (25.24 per cent to 16.97 per cent), Aurobindo Pharma (9.36 per cent to 5.86 per cent), DS Kulkarni Dev (51.09 per cent to 1.38 per cent), EIH (7.59 per cent to 1.88 per cent), Essar Shipping (21.84 per cent to 11.82 per cent) and Hind Dorr-Oliver (15.94 per cent to 4.81 per cent).

The average EPS of these 729 companies declined by 16.8 per cent to Rs 1.43 during July-Sept 2001 from Rs 1.72 during July-September 2000.

Aggregate
This week’s addition of 729 companies with previous 375 companies’ second quarter results showed a dismal picture. The sales of the total of 1,104 companies marginally increased by 1.3 per cent to Rs 1,78,632 crore from Rs 1,76,383 crore.

Other income of these companies increased by 39.8 per cent to Rs 7,073 crore. The operating profit registered a rise of 7.6 per cent to Rs 48,274 crore (Rs 44,845 crore). Gross profit also increased by 4.3 per cent to Rs 24,380 crore (Rs 23,380 crore). PBT showed a marginal growth of 1.6 per cent to Rs 16,311 crore (Rs16,058 crore). But the PAT declined by 0.2 per cent to Rs 11,686 crore during July-September 2001 from Rs 11,706 crore during July-September 2000. The profit margin declined to 6.54 per cent (6.64 per cent).

The average EPS of 1,104 companies declined by 6 per cent to
Rs 1.82 during July-September 2001.