Fewer companies have posted losses in the December 2009 quarter compared to the year-ago period, according to an FE analysis of the results of 3,884 companies listed on the stock exchanges. The good results reveal the benefits of the government?s stimulus packages and the cost reduction exercises companies carried out during the quarter that compensated for a flat sales growth in most of the cases.
Of the 3,884 listed companies covered in the study, only around 876 companies (22.5%) made losses during the quarter under review, compared to 1,444 in the year-ago period (Oct-Dec ?08), a fall of 39.3%. Moreover, it is not just the number of companies that has decreased, the quantum of losses has also followed suit. In terms of value, the loss amount decreased steadily by 68% to Rs 4,570 crore in the december 2009 quarter from Rs 14,284 crore in the corresponding quarter of the previous fiscal.
The cumulative sales of 876 loss-making companies were Rs 33,661 crore compared with Rs 1.18 lakh crore for 1,444 loss making companies in the year-ago period.
An analyst from a rating agency said, ?Stimulus packages offered by various central banks across the world have led to demand growth in most of the regions, particularly in India. The direct benefit of the stimulus packages is seen in sectors like automobiles, metals, tyre, textiles and consumer durables owing to improved consumer spending, lower interest rates and fiscal measures. Growth in sales has been flat. However, with cost reduction measures and lower interest rates, these companies show better profitability on a y-o-y basis.?
During the quarter under review, the top five loss-making companies are MTNL, Kingfisher Airlines, Suzlon Energy, Essar Oil and Wockhardt. Kingfisher Airlines? losses increased 1.7% to Rs 420 crore from Rs 413 crore during the year-ago period.
Similarly, during the October-December 2008 quarter, the top five loss making companies were CPCL, Essar Oil, Ranbaxy Lab, Ispat Industries and HPCL. Essar Oil is the only company common on both the lists.
Among the industries studied, IT, electric equipment, entertainment, NBFC, pharmaceuticals, steel, telecommunications, textiles and airlines companies reported more than Rs 100-crore losses. During the Oct-Dec 2008 quarter, 15 industries registered more than Rs 100-crore losses. The list included automobiles and ancillaries, chemicals, gems & jewellery, fertilisers, petrochemicals and sugar.
A significant increase in loss was witnessed in the cases of cement, paper and telecommunications. The loss of telecommunication companies increased from Rs 275 crore the Oct-Dec 2008 quarter to Rs 1,123 crore during the latest one. A downward trend in loss was seen in the cases of auto & ancillaries, chemicals, IT, gems & jewellery, engineering, entertainment, fertilisers, NBFC, food products, petrochemicals, etc.