Financial Daily from THE HINDU group of publications
Friday, Mar 08, 2002
Not all gloom & doom in India Inc
BL Research Bureau
DESPITE all the groans one hears of an economic slowdown, one in four companies have made higher profits this year than in the previous year.
In other words, the cumulative performance of the last three quarters of the current fiscal has had some streaks of silver as well.
Throw in cases of turnaround in performance and reduction in losses, and a we see that a number of companies have, in the nine-month period ended December, fared better than what they did during the same period last year.
That turns out to be a little over 40 per cent of a sample of companies surveyed by Business Line.
In the sample of 1,387 companies, some 337 companies have managed to post higher profits of Rs 3,485 crore in the first three quarters of the current fiscal compared to the profits in the same period last year, an increase of 30.5 per cent.
Similarly, as many as 92 companies managed to stanch the flow of red ink in their books, emerging with cumulative profits aggregating Rs 354 crore in 2001 - an improvement of 106 per cent over the previous year.
The period under review also saw 157 companies in the sample pare down their losses by Rs 831 crore, from Rs 1,938 crore to Rs 1,107 crore.
The sample of 1,387 companies from 82 industry groups analysed registered a net profit of Rs 16,306 crore, as against Rs 18,893 crore earlier.
Again, only 868 companies out of the total sample made profits in 2001, compared to as many as 940 last year.
Size does seem to play a dominant part in the quality of performance. Of the total of 868 companies that reported profits in 2001, the top 50 per cent - in turnover - companies accounted for 77 per cent of the total profits.
There were industries whose top companies by turnover had more profit-making companies than loss-making ones.
Arranged in the top 80 per cent of turnover, these were pharma (11 of 12), cement (3 of 3), auto (3 of 5), chemicals (15 of 18), infotech (11 of 13) and textiles (29 of 41).
In contrast, there were some industries whose top 80 per cent of the companies by sales had more loss-making companies than profit-making ones. These were textile machinery (2 of 3), ferrous metals (4 of 8) and plastics (5 of 9).
Across industry segments, a higher proportion of sample companies managed to effect a turnaround in performance suggesting that hostile environment is not industry-specific.
In certain industry groups, companies have uniformly performed much better compared to the previous year.
Travel services, travel luggage, tobacco & tobacco products, office automation equipment, lighting systems, graphite electrodes, engines, cycles and accessories, courier services, compressors & drilling equipment, carbon black and abrasives were industries that saw all the constituent companies in the sample make profits in both 2000 and 2001.
None of the industries saw all their company constituents make losses in both the years. Photographic and allied products and watches and accessories were industries whose companies all reported profits in 2000 but losses in 2001. These industries also have just one listed company under their banner.
Laboratory equipments was the lone industry whose companies posted losses in 2000 but profits in 2001. The period under review is also significant for the fact that quite a few prominent companies managed to reverse the trend of losses in the previous year to report profits this year.
Cases in point are companies such as Birla Corporation, ACC, Telco, Gujarat Alkalies, DCL Polyesters, Welspun India and JK Synthetics. The companies chosen for the survey represent a cross-section of almost all industries, accounting for over two-thirds of corporate India's earnings and market capitalisation.
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