In what signals a deeper trouble for India Inc, third quarter results show while sales figures registered a higher growth, bottomline of companies declined considerably due to costs pressures.
Results of 1,046 companies, available with FE for the the Oct-Dec quarter, show 56.4% decrease in aggregate net profit to Rs 36,176 crore while overall sales grew 14.9% to Rs 4.05 lakh crore. Other income increased 6.4% to Rs 22,278 crore. The PAT to sales ratio also decreased from 23.54% during Q307 to 8.94% during Q308. DR Dogra, DMD, CARE said, ?With global recession looming large, companies all over the world are expected to post poor results in the December 2008 quarter along with India Inc. The reporting season has started with dismal performance of major companies in various sectors like cement, construction, automobiles and aviation. This is mainly due to hitherto higher interest rates, lower consumer spending and thereby lower demand.?
?However, industries like telecom and banking have not been affected to that extent. Telecom industry continues to enjoy higher subscriber additions with rural penetration and banks have benefited from RBI rate cuts and higher income from treasury operations,? he added. Industry-wise analysis indicates that sugar, electricity, engineering and banks have done exceptionally well during the quarter. The total net profit figure of 16 sugar companies rose by 362.9% to Rs 117 crore during Oct-Dec 2008 from Rs 25 crore during Oct-Dec 2007. The sales figure also increased 31.9% to Rs 2,236 crore during the period. Most sugar companies such as Dhampur Sugar (net up 453.4% to Rs 13.67crore), Bannari Amman Sugar (net profit up from Rs 2.64 crore to Rs 33.86 crore) and Ugar Sugar (net profit up 169.7% to Rs 32.20 crore compared with a figure of Rs 11.94 crore during Q307) registered good profit performance during Q3.
The 7 electricity companies covered in the study have posted 15.2% jump in their aggregate net profit to Rs 3,113 crore, while sales grew 35.7% to Rs 19,802 crore during the third quarter. NTPC, PTC, Torrent Power were the main contributors to strong profit and sales growth during Q3 NTPC posted a 26.5% increase in net profit to Rs 2,251 crore , while sales increased by 20.8% to Rs 11,277 crore during Oct-Dec.2008.
The aggregate net profit of the bank group (comprising 29 major banks) increased by 38.8% to Rs 10,819 crore during Oct-Dec.2008 from Rs 7,793 crore during Oct-Dec. 2007. The main income figure of the group increased by 33.2% during the above period. SBI, HDFC Bank and Bank Of India were among the major achievers.
Among the 35 industry groups studied, significant growth in net sales during Q308 was observed in the case of fertilisers, trading, tea, oil drilling and sugar . A decline in sales was noticed in the case of jems&jewellery (-30.9%), automobiles (-27.9%) and hotels (-16.6%). In terms of PAT, as many as 8 industries recorded positive growth in net profit during Q308.
On the other hand, 22 industries?aluminium, automobiles, chemicals, hotels, entertainments , oil&gas and pharma ?witnessed a decline during Q3. PAT accounted for less then 5% of sales in the case of chemicals, electric equipment, electronics, food processing, oil&gas, pharmaceuticals, retailing, tea and trading. A significant decrease in the ratio during Q3 was seen by aluminium, auto, cement&products, construction and hotels.