1,036 Firms Net Profit Grows 26.6%

A universe of 1,036 companies, which have declared their full- year results till date, posted a net profit growth of 26.6 per cent to Rs 19,746 crore for year ended March 2000.

The excellent bottomline performance was backed by a strong topline performance, with the aggregate sales figure growing by 15.1 per cent to Rs 2,26,022 crore from Rs 1,96,591 crore in the previous year.

Much of the growth in aggregates came from a surge in the second half of the year. The aggregate sales for the second half of the fiscal increased 19.1 per cent and the net profit scored a fabulous 30.6 per cent growth against the first-half growth of 11.1 per cent in sales and 21.6 per cent in net profit.

 

However, there seems to be a dichotomy between corporate performance and the bottomline. At the operating level, profit growth looks a little squeezed at 16.1 per cent compared with the 26 per cent-plus net profit growth. The operating profit of the 1,036 companies rose to Rs 49,115 crore. Thus, operating profit margins showed a small dip to 21.6 per cent in the year from 21.7 per cent in 1998-99.

But the low non-operating expenses pushed the gross profit and net profit margins. GPM climbed to 15.8 per cent from 15.2 per cent in the previous year, while the net profit margin surged to 8.7 per cent from 7.9 per cent.

This reflects that the corporates failed to fully control their operating expenses, but managed to curtail non-operating expenses to report a better bottomline.

In non-operating expenditure, a low interest outgo and a modest rise in the tax provision propelled the bottomline. While interest outgo rose 7.3 per cent to Rs 13,386 crore, tax provisions increased 9.7 per cent to Rs 3,799 crore.

A sectoral break-up of operating level corporate performance suggests that sectors like petrochemicals, automobiles, fertilisers, domestic appliances and lubricants were unable to report much growth in their operating profit margins, despite a strong topline growth in these sectors.

The fertiliser industry put up a less than satisfactory performance with lower sales realisations and an increase in operating costs due to a hike in raw material duties in the past two years. The automobile industry, specially the commercial vehicle segment, has been weighed down with competition and price wars. The domestic appliances sector managed to report increased sales in terms of volumes, but the outgo on accompanying freebies and a rise in advertisment expenses restricted the operating level profits.

Good Numbers, Stagnant Operations

Quarter ended (1301) Financial year ended (1036)

Rs Crore Mar-99 Mar-2000 % Chng Mar-99 Mar-2000 %chng

Sales 70,628.20 82,764.74 17.2 196,590.90 2,6,21.52 15.2

Other income 2,211.80 2,618.97 18.4 5,653.14 5,726.81 1.6

OP 14,311.11 17,759.53 24.1 42,375.98 49,114.67 16.1

Interest 4,148.41 4,596.50 10.8 12,494.71 13,385.92 7.3

Gross profit 10,162.70 13,163.03 29.6 29,881.27 35,728.75 19.8

Depreciation 3,603.32 4,237.26 17.6 10,787.07 12,183.04 13.1

Tax 1,159.04 1,441.58 24.4 3,465.49 3,799.46 9 .7

Net profit 5,400.35 7,484.19 38.6 15,628.71 19,746.25 26.6

OPM(%) 20.3 21.5 - 21.6 21.7 -

GPM(%) 14.4 15.9 - 15.2 15.8 -

NPM(%) 7.7 9.0 - 7.9 8.7 -