India Inc losses rise 85% in Q4

Written by PK Dey | Mumbai | Updated: May 31 2009, 07:10am hrs
Even as India Inc tries its best to swim across the troubled waters, forth quarter results do not paint a rosy picture. Not only did corporate India register a decline in net profit in the January-March quarter, the amount of losses posted by them was significant. A study carried out by FE, with a sample of 1,946 quoted companies, reveals that around 623 companies (32.1% of the sample) made losses during Q4.

This is an 18.2% increase in the number reported during the same period last year. A combination of global slowdown and relatively high interest rates has affected domestic consumption materially over the last three 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 last quarter, said an analyst with an equity research firm.

The number of loss-making companies was 527 (27.1%) during Jan-Mar, 2008. And, it is not just the number of companies that has increased, even the quantum of losses has. In terms of value, the loss amount has increased steadily by 85.1% to Rs 3,540 crore in Jan-Mar, 2009 from Rs 1,912 crore in the same quarter of the previos year. The cumulative sales of 623 loss-making companies was Rs 18,757 crore in the forth quarter of 2009, against the cumulative sales of 527 loss-making companies, which was Rs 23,194 crore in Jan-Mar, 2008.

An analyst from a rating agency also said, The profit performance of listed companies is affected due to lower demand and global financial crisis during the fourth quarter. It can be seen that although some big companies (except some pharma and telecomm companies) registered better profit performance.

During Jan-Mar 2009, the top five loss-making companies are Ranbaxy (Rs 778 crore), Northgate Techno (Rs 261 crore), Raymond (Rs 239 crore), ITI (Rs 191 crore) and MTNL (Rs 84 crore).

Similarly, during Jan-Mar 2008, top five loss-making companies were Jet Airways (Rs 221 crore), Tech Mahindra (Rs 207 crore), Oriental Bank (Rs 99 crore), Moser Baer (Rs 72 crore) and Duncans Industries (Rs 64 crore).

Among the industries studied, more than Rs 100 crore loss was registered during Jan-Mar, 2009 by IT, NBFC, pharmaceuticals, tea, telecommunication and textiles. Significant increase in loss was seen in the case of pharmaceuticals (Rs 37 crore during Jan-Mar 2008 to Rs 850 crore during Jan-Mar.09), telecommunications (Rs 86 crore to Rs 347 crore), textiles (Rs 322 crore to Rs 483 crore), entertainments (Rs 10 crore to Rs 77 crore) and trading (Rs 10 crore to Rs 72 crore).

A downward trend in loss was seen in the case of tea ( Rs 135 crore to Rs 108 crore), construction (Rs 8 crore to Rs 6 crore) and engineering (Rs 17 crore to Rs 7 crore).