With better economy, India Inc?s staff spend is steadily increasing. It is reflected in the corporates? manpower cost during April-June 2010. A study of 1,807 companies (excluding banks and NBFCs) carried out by FE reveals that growth of their staff cost increased from 2.6% during April-June 2009 to 16.3% during April-June 2010.
The staff cost of the above number of companies increased steadily from Rs 32,766 crore during April-June 2008 to Rs 33,630 crore during April-June 2009 and further increased to Rs 39,103 crore during April-June 2010.
On the other hand, the total expenditure of these companies taken together decreased from Rs 5.17 lakh crore during April-June 2008 to Rs 4.40 lakh crore during April-June 2009 and increased thereafter to Rs 5.64 lakh crore during April-June 2010.
The share of staff cost in total expenditure has increased from 6.33% in April-June 2008 to 6.93% in April-June 2010 after reaching a highest level of 7.64% in April-June 2009.The staff cost to sales ratio also followed the same trend.
The study also finds that 79% of the selected companies have increased their staff costs during April-June 2010, as compared to the same period to the previous year.
The total staff cost of the sample companies grew by 16.3% during April-June 2010, over the previous year in the same period, as against 22.8% increase in aggregate sales and 28.2% increase in total expenditure. This has resulted in a decrease in the share of staff costs in total expenditure and sales.
The top five companies in terms of manpower cost in April-June 2010 are Infosys Technologies, Wipro, TCS, SAIL and Bhel. Among these, the highest increase in manpower cost was registered in the case of SAIL.
The company saw employee costs rise 86% during first quarter to Rs 2,012 crore mainly due to additional provisions of Rs 299 crore towards employee related benefits.
Of the 1,807 companies in this study, 940 did better with a decline in staff cost to total expenditure ratio, while 852 experienced a rise in the period under consideration. The remaining 15 companies showed equal ratio during both the period.
Many of them, particularly those in labour-intensive sectors like hotels, IT, tea, telecommunications, entertainment and construction, showed a high staff cost to total expenditure ratio in all the three-month period which means they spent more on staff per unit of total expenditure. For example, Goodricke Group spent Rs 54 on staff for every Rs 100 spent on total expenditure during April-June 2010.
Among industries, significant increase in staff cost was seen in the case of automobile and ancillaries, construction, electronics, pharmaceuticals, steel, textiles and tyres. The aggregate staff cost of textiles companies increased by 20.4% to Rs 1,255 crore during April-June 2010.
A decline in staff spend was seen in the case of diversified, personal care, refineries and airlines.
A significant increase in the ratio of staff cost to total expenditure was seen in the case of electric equipment, electronics, entertainment, pharmaceuticals, electricity, shipping, steel, cement and cigarettes.
An opposite trend was seen in the case of aluminium, automobile and ancillaries, chemicals, IT, diversified, engineering, food and products, hotels, personal care, refineries, sugar, tea, telecommunications, textiles, trading ,airlines and tyres. The aggregate staff cost of steel companies increased by 67.1% to Rs 2,761 crore during April-June 2010.
