Business for Indian companies shone better, at least in terms of total income, than it did for MNCs over five years from 2005-06 to 2009-10. A comparison between 100 major MNCs operating and 100 major domestic companies by FE shows that the compounded annual growth rate (CAGR) in total income for Indian companies was higher over the period. In terms of operating profit, however, MNCs registered higher CAGR.

An analyst from CNI Research said : ? MNCs are always quality conscious and their spread is always higher where as domestic companies believe in lower margin and higher volume growth. As far as quality is concerned they can not beat MNCs, so they try to compete on pricing.?

The profitability ratio (OP to total income) at the aggregate level showed an increase during 2009-10 from the level of 2005-06 for both set of firms.

The total income of the 100 MNCs rose 84.9% (CAGR: 16.61%) from Rs 93,492 crore in 2005-06 to Rs 1.73 lakh crore in 2009-10. Total OP rose 98.8% ( CAGR :18.74%), increasing the profitability ratio measured as a percentage of the OP to total income ratio from 18.42% to 19.80%.

India Inc achieved 90.7% growth (CAGR: 17.51%) in income to Rs 18.41 lakh crore during 2009-10, and the OP rose 95.7% ( CAGR:18.29%) to Rs 3.10 lakh crore during 2009-10 from Rs 1.58 lakh crore during 2005-06. So, the profitability ratio marginally increased from 16.39% to 16.83%.

Significant CAGR in operating profit was seen for Larsen & Toubro. Its operating profit rose 340.9% (CAGR: 44.91%) from Rs 1,573 crore in 2005-06 to Rs 6,936 crore 2009-10. Total income rose 154.1% (CAGR: 26.25%) to Rs 38,796 crore in 2009-10 Rs 15,268 crore in 2008-09. Profitability ratio rose 10.30% to 17.87%.

Among MNCs, Siemens showed a significant improvement in CAGR for operating profit. Which rose 294.7% (CAGR: 40.96%) to Rs 1,463 crore in 2009-10 from the level of Rs 371 crore in 2005-06. .Total income rose 206.1% (32.27%) to Rs 8,829 crore in 2009-10 Rs 2,884 crore in 2005-06. The OP to total income ratio of the company increased from 12.84% to 16.57%.

In terms of operating profit, more than 35% of the MNCs showed higher CAGR than the average of 100 MNCs, while 66% domestic companies showed higher CAGR than the average of 100 companies .

For total income, nearly 31% MNCs showed higher CAGR than the average of 100 MNCs, while 60% of the domestic companies showed higher CAGR than the average of 100 companies.

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