The study points out that expense management could be a critical area for India Inc's head honchos. This is because expenses have grown faster than revenues and have dented profitability. Sales growth in the quarter under review was pegged at 37.8%.
The study also found that 78% of the companies in the study group increased their staff costs during July-September 2008, as compared to the same period in the previous fiscal. Manpower intensive sectors like IT, tea, telecomm-unications, and power and construction, showed a high staff cost to total expenditure ratio in all the three month period. This means that they spent more on staff per unit of total expenditure. Satyam Computer, for instance, spent Rs 60 on staff for every Rs 100 spent on total expenditure during July-September 2008.
Among industry verticals, significant increase in staff costs was seen in the case of steel, solvent extraction, construction, entertainment, electric equipment, engineering and power. The aggregate staff cost of steel companies increased 78.6% (highest among the industries) to Rs 4,355 crore during July-September 2008. A significant decline in the ratio of staff cost to total expenditure was seen in the case of cement and products, fertilisers, oil exploration, pesticides, retailing, shipping, tea, telecomm and tyres. An opposite trend was seen in the case of cigarettes, IT, construction, electronics and steel.