Distorted View

I was surprised to read the headline India Inc reels as net profits slide by an average 12.7 per cent (BS, June 5). At a time when the nation is in dire need of foreign direct investment, such a dramatic headline in one of its premier business dailies will hardly help promote the cause of India Inc. What makes matters worse is that the report seemed determined to paint a dreary picture of the Indian corporate scenario. While results have been generally below expectations, the fact remains that more than one corporate has reported good performance in the financial year.

 

In this regard, the examples of Telco, Hero Honda, VSNL and Bajaj Auto come readily to my mind. All these companies have posted profits well above market expectations, notwithstanding all the doomsday prophecies made by financial pundits. Telco recorded a turnover of over Rs 10,000 crore while Hero Honda almost doubled its profits by recording a net profit of Rs 50.36 crore 91.2 per cent above the previous year.

A publication of your standing should be aware that at the end of the day, the net profit is of interest only to investors. To use the parameter to judge the health of the economy is to look at only one side of the picture. Other parameters such as turnover, expansion, improvements in quality and economic value added should also be taken into consideration before arriving at an overall conclusion regarding the corporate sectors performance.