India Inc logs decline in net profits, topline growth

Written by Pradip Kumar Dey Research Bureau | Updated: Aug 15 2008, 06:42am hrs
Corporate India's first quarter performance reflects a continuing pressure on the bottomline due to oil PSUs, even as several non-oil companies managed to improve bottomlines substantially because of lower expenditure and higher other income.

The 3,009 companies, posted a 3.7% decrease in net profit to Rs 63,497 crore during April-June '08, from Rs 65,966 crore during January-March '08, while overall sales grew 4.4% to Rs 7.56 lakh crore during the quarter ended June'08 from the level of Rs 7.25 lakh crore during the quarter ended March '08.

The net profit to sales ratio decreased from 9.10% during January-March '08 to 8.39% during April-June'08. Total expenses rose slightly lower than proportionately when compared with total sales, indicating some improvement in controlling costs by the corporate sector. The total expenditure of the sample companies increased by 4.2% to Rs 6.06 lakh crore during April-June '08.

Without refineries, the net profit of 3,000 companies decreased by 3.54% to Rs 59,254 crore during April-June'08, from the level of Rs 61,425 crore during January-March 2008.

The sales of the above number of companies also decreased by 2.25% to Rs 5.20 lakh crore during April-June'08. The net profit to sales ratio decreased from 11.55% to 11.39%.

An analyst from a rating agency said, "The prices of petrol and diesel were revised recently but it was not sufficient to match the sharp increase in international prices.

Also, slight revision of LPG prices resulted in higher subsidy under recovery. This resulted more losses for integrated oil PSUs."

Among the industries studied, entertainment, paints, pharmaceuticals, personal care, paper, electricity and shipping have done exceptionally well during the first quarter compared to the preceding quarter.

Significant increase in sales during April-June '08 was seen in the case of fertilisers (26.9%), refineries (22.7%), chemical others (10.1%), petrochemicals (8.9 %) and pharmaceuticals (7.1%).

Of the 35 industries studied, 15 industries showed an increase in the net profit to sales ratio in April-June 2008. Some of these industries were cement and products (15.65% to 16.03%), cigarettes (17.71% to 18.84%), entertainment (6.09% to 10.66%), petrochemicals (6.91% to 7.18%) and pharmaceuticals (10.25% to 13.14%).