A comparative study has been made for 300 major companies (sales above Rs 100 crore) from 2001-02 to 2002-03. These companies aggregated a gross profit of Rs 49,003.80 crore in 2002-03 as against Rs 43,159.61 crore in 2001-02. Total capital employed of the companies increased by 9.34 per cent to Rs 3,56,820.84 crore (Rs 3,26,339.81 crore) during 2002-03.
The study on these 300 major companies reveals that the ratio of gross profits to total assets (which is used to measure the return on investment) increased from 13.23 per cent in 2001-02 to 13.73 per cent in 2002-03, indicating higher return on investment during 2002-03.
A significant upward trend can be seen in the case of Tisco (6.28 per cent in 2002-02 to 15.30 per cent in 2002-03), Ranbaxy Labs (13.54 per cent to 28.33 per cent), GlaxoSmithKline Pharma (14.66 per cent to 21.41 per cent), TVS Motors (14.09 per cent to 30.25 per cent), Matrix Labs (15.79 per cent to 37.12 per cent) and Balaji Telefilms (58.29 per cent to 74.49 per cent).
Gross profit of Balaji Telefilms at Rs 94.76 crore for the year-ended March 31, 2003 are up by 105.84 per cent on an annualised basis over the previous period.
According to the directors report, Balajis gross profit improved primarily on account of higher hourly realisations from commissioned and sponsored programmes. Balajis capital employed increased from Rs 78.99 crore in 2001-02 to Rs 127.22 crore in 2002-03, an increase of 61.06 per cent. This has helped the company to increase the return on investment during the year.
On the other hand, a significant downward trend can be seen in the case of VSNL (32.21 per cent in 2001-02 to 22.14 per cent in 2002-03), Dr Reddys Labs (36.12 per cent to 23.06 per cent), Britannia Industries (37.86 per cent to 22.91 per cent), Essar Shipping (20.27 per cent to 7.96 per cent), Polaris Software (27.25 per cent to 16.76 per cent), HCC (14.89 per cent to 8.67 per cent) and Coromandel Fertilisers (20.65 per cent 11.04 per cent).
The return on investment of VSNL showed a significant decline during 2002-03 from the level of 2001-02. This has happened due to the significant decline in the gross profit figures during 2002-03. The gross profit of the company decreased by 36.46 per cent to Rs 1,401.07 crore during 2002-03 from the level of Rs 2204.95 crore during 2001-02.
Among the 300 companies, the top five companies according to return on investment during 2002-03 are Balaji Telefilms (74.49 per cent), Nestle India (48.22 per cent), Godrej Consumer Products (47.41 per cent), e-Serve International (46.35 per cent) and Amrit Banaspati (44.16 per cent). Among these top five, significant increase in return on investment was seen in the case of Amrit Banaspati during 2002-03 from the level of 2001-02.
In the sector-wise analysis, the return on investment increases from 2001-02 to 2002-03 in the case of 14 industries out of 26.
Prominent among them are auto & ancillaries (14.55 per cent in 2001-02 to 17.75 per cent in 2002-03), chemicals others (11.73 per cent to 13.79 per cent), engineering others (12.85 per cent to 15.63 per cent), pharmaceuticals (18.78 per cent to 20.15 per cent), steel (7.53 per cent to 13.88 per cent), textiles (8.92 per cent to 11.55 per cent) and tyres (10.32 per cent to 17.39 per cent).
In 2002-03, the top five industries in terms of return on investment are cigarettes (27.40 per cent), food processing (24.79 per cent), pharmaceuticals (20.15 per cent), computers (19.37 per cent) and auto & ancillaries (17.75 per cent).
Though the cigarettes industry topped the list of return on investment during 2002-03, but the ratio decreased marginally by 0.8 percentage points during 2002-03 from the level of 2001-02.