India Inc need not only be bothered about the fall in earnings growth, but also the number of companies registering losses and the loss amount. A study carried out by FE, with a sample of 3,025 quoted companies, reveals that around 1,033 companies (34.1% of the sample) incurred losses during October-December ’08. This is a 10.4% increase over the number of companies that reported losses during the year-ago period.
Harish Menon, ED, H-Zone Capital, said, ?A combination of the global economic slowdown and the relatively high interest rates has affected domestic consumption materially over the last two quarters. Resultantly, the topline and bottomline of corporates have been impacted negatively. Despite price cuts across sectors, producers have not been able to retain margins due to relatively high input costs till the last quarter.? The number of loss making companies was 936 (30.9%) during October-December ’07. However, it is not just the number of companies making losses that has increased. Even the quantum of losses has jumped.
The loss amount during the quarter leapt 327.2% at Rs 13,758 crore, as compared to Rs 3,220 crore during the year-ago period.
The cumulative sales of 1,033 loss making companies was Rs 1.15 lakh crore during October-December ’08. The same during the year-ago period was Rs 48,454 crore for 936 loss making companies.
An analyst from a rating agency said, ?The profit performance of listed companies during the third quarter was affected due to inflation and the global financial crisis. It can be seen, though, that although some big companies (except some refineries and steel companies) registered better profit performance.?
During October-December ’08, the top five loss-making companies were CPCL (Rs 1,270 crore), Essar Oil (Rs 1,230 crore), Ranbaxy Labs (Rs 807 crore), Spice Comm (Rs 741 crore) and Ispat Industries (Rs 652 crore). During October-December ’07, the top five loss making companies were Hind Photo Film (Rs 192 crore), Kingfisher Air (Rs 191 crore), Strides Arcolade (Rs 133 crore), ITI (Rs 118 crore) and Dish TV (Rs 116 crore).Among the industries studied, losses amounting to more than Rs 300 crore during the quarter was seen in the case of automobiles, electric equipment, entertainment, fertilisers, pharmaceuticals, refineries, steel, telecommunication, textiles and airlines.
Significant increase in loss was seen in the case of refineries (Rs 30 crore during October-December ’07 to Rs 3,431 crore during October-December ’08), airlines (Rs 283 crore to Rs 645 crore), textiles (Rs 233 crore to Rs 1,013 crore), entertainment (Rs 161 crore to Rs 346 crore) and pharmaceuticals (Rs 189 crore to Rs 972 crore).
A downward trend in loss was seen in the case of hotels (Rs 12 crore to Rs 9 crore), sugar (Rs 200 crore to Rs 174 crore), cement (Rs 8 crore to Rs 5 crore) and diversified (Rs 104 crore to Rs 87 crore).