Data analysed by FE showed the aggregate sales of 100 MNCs increased 21.5%, from Rs 29,770 crore during April-June 07 to Rs 36,185 crore in the comparable period of the ongoing fiscal. Total profit before sales (PBT) rose 20%, bringing down the profitability ratio (measured as a percentage of PBT to sales) from 18.20% to 17.97% year-on-year. This shows that despite higher sales and higher profit growth, MNCs have not been able to raise their return on sales. Among MNCs, Sesa Goa registered a significant improvement in profitability ratio. Its PBT increased 382.6% year-on-year to touch Rs 851.07 crore. PBT to sales ratio for the same period rose from 38.83% to 66.85%, while sales rose by 180.3%.
Around 44% of the MNCs studied showed a rise in profitability ratio year-on-year, while 34% of the domestic companies registered a similar increase. On the whole, the average profitability ratio of MNCs was higher than that of the domestic companies during April-June 08. The following figures point to that end: Indian companies that formed part of the study achieved a significant 45.7% growth in sales to touch Rs 4,65,101 crore during April-June08. Their PBT for the first quarter increased marginally by 4.6% year-on-year to touch Rs 50,974 crore. This brought the profitability ratio down from 15.27% to 10.96%.
Among the 100 domestic companies that constituted the study, significant increase in profitability was seen in the case of Jet Airways.