The top line growth of subsidiary firms in India were higher than their parent companies during the April-June quarter this fiscal. According to the first quarter results of the 343 odd companies available with FE, aggregate net sales of the subsidiaries rose 24% to Rs 1.08 lakh crore while overall net profit stood at Rs 7,299 crore from a loss of Rs 215 crore during the June quarter of the last fiscal.
Though operating profit increased 97% to Rs 20,296 crore during the period, interest cost dropped marginally, by 1.7%, to Rs 3,252 crore from Rs 3,308 crore in the corresponding period of the previous fiscal. The OPM of the subsidiary companies increased by 692 basis points to 18.69% from 11.77%.
On the other hand, standalone sales of the 343 companies increased 14% to Rs 1.28 lakh crore during the June quarter this fiscal. But other income of this group decreased 16.8% during the period. Operating profit rose by 10.7% to Rs 32,889 crore from Rs 29,722 crore recorded during the June quarter last fiscal. Interest cost increased by 68.9% to Rs 4,705 crore. The OPM of this group marginally decreased by 78 basis points to 25.67% from 26.45% a year ago. This indicates that the subsidiary companies performance are better than their parent companies during first quarter.
The top five companies according to subsidiaries sales in April-June 2010 were Tata Steel, Tata Motors, Adani Enterprises, Grasim Industries and Tata Power. The highest growth in sales was registered by the 10 subsidiaries of Grasim Industries. Sales of these subsidiaries rose 102.7% to Rs 4,110 crore during the quarter from Rs 2,027 crore registered during the June quarter of FY10. The OPM decreased by 988 basis points to 27.11% during the June quarter this fiscal from 36.99% in the corresponding quarter of the previous financial year.
On the other hand, top five companies in terms of subsidiaries? operating profit were Tata Motors, Tata Steel, Reliance Communications, Sterlite Industries and Grasim Industries. The subsidiaries of Tata Motors registered the highest growth in operating profit.
There are 109 subsidiaries of Reliance. The operating profit of the Reliance subsidiaries has increased by 92.3% to Rs 2,034 crore during April-June ?09 and decreased thereafter by 26% to Rs 1,506 crore during April-June ?10. This trend proves India Inc is acquiring better companies to improve their consolidated profit performance.