The stock markets, in general, may have been anticipating a better performance by many industry segments in the months ahead, a closer look at India Inc?s second quarter performance reflects a not-so-rosy picture. Broadly, companies in may sectors have achieved higher profit growth mainly on account of cost optimisation, better inventory management and lower interest costs. However, there has been a decline in the topline growth. The 1,314 companies for which second quarterly results were available with FE, posted a 8.1% decrease to Rs 5.93 lakh crore in aggregate net sales while overall net profit grew 43.9% to Rs 55,462 crore during the quarter ended September 2009. Other income increased 22.3% to Rs 24,073 crore during the second quarter. The PAT to sales ratio also increased from 5.97% during the second quarter of the previous fiscal to 9.35%. Raw material cost of these companies has increased marginally by 3.2% to Rs 2.11 lakh crore during Q2.

But the interest outgo of these companies increased by 21.1% to Rs 81,686 crore during Q2.

DR Dogra, DMD, CARE said: ? On account of slowdown in several industries, the demand for various products have reduced, thereby, resulting in reduction in the total income of corporates during the quarter ended September 2009, compared same period last fiscal. However, due to various cost-optimisation measures adopted by many companies during the slowdown as also reduction in cost of raw materials coupled with reduction in interest cost have resulted in increase in profits during the second quarter.?

Industry-wise analysis indicates that sugar, automobiles and tea have done exceptionally well during the quarter.

The total net profit figure of sugar companies rose 535.9% to Rs 151 crore during the second quarter of 2009, from Rs 24 crore. The sales figure of this segment also increased by 34.2% to Rs 2,193 crore during Q2. Most sugar companies such as KCP Sugar & Industries (net profit up 210.6% to Rs 17.02crore), Sakthi Sugar (net profit up from Rs 2.17 crore to Rs 43.34 crore) and Bannari Amman Sugar (net profit increased 39.9% to Rs 42.09 crore) registered good profit performance during Q2.

The automobile companies covered in the study have posted 106.8% jump in their aggregate net profit to Rs 3,886 crore, while sales increased 22.2% to Rs 34,736 crore during the second quarter. Hero Honda, Tata Motors, Maruti Suzuki were the main contributors to strong profit and sales growth during Q2. Tata Motors posted a 110.1% increase in net profit to Rs 729 crore, while its sales increased 12.7% to Rs 7,978 crore during the period.

The aggregate net profit of the tea group increased 147.9% to Rs 505 crore during the second quarter, from Rs 204 crore during the same period last fiscal. The sales figure of this industry segment increased 14.9% during July-September period. Tata Tea, Mcleod Russel were among the major achievers.

Among the 35 industry groups studied, significant growth in net sales during Q2 was seen in construction, electronics, FMCG, food processing, automobiles and sugar. A decline in sales was noticed in aluminium, fertilisers, hotels, shipping, steel and trading firms. In terms of profit after tax (PAT), as many as 20 industries recorded positive growth in net profit during the second quarter. On the other hand, 5 industries – aluminium, diversified, electricity, fertilisers, hotels, paper, shipping and steel – witnessed a decline in PAT during the second quarter. PAT formed less than 5% of sales in the case of electronics, food processing, hotels jems & jewellery, oil&gas, retailing, trading and textiles. A significant decrease in the ratio during the second quarter was observed in the case of aluminium, construction, hotels, shipping, and steel.

A reverse trend can be noticed in automobiles, cement, electric equipment, entertainments, fertilisers, pharmaceuticals, sugar and tea.