The corporate sector is heading towards a record dismal performance for the quarter ended December 2001. The 467 companies which have declared their results thus for, have reported a single-digit growth in sales and profits. While sales increased by 5.9 per cent at Rs 48,074 crore, net profit increased by a meagre 1.1 per cent at Rs 3,188 crore.
The results, thus far, indicate that the other income component, which had always come in handy to bolster profits even in tough quarters, has actually declined by 23.01 per cent in the December quarter. The deferred tax payment which corporates now have to provide every quarter has played a major role in pulling down the net profit growth.
The tax provision during the quarter increased by a hefty 44.36 per cent at Rs 1,095 crore, over the same quarter of last year. However, a decline in interest costs saved the corporate sector the blushes of having to report a decline in net profits. The interest costs for 467 companies declined 1.28 per cent to Rs 2,625 crore.
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The automobile sector churned out an excellent performance with 2/3 wheelers companies showing a 32.6 per cent rise in sales and a 143.6 per cent growth in net profit. The pharmaceuticals and cement sectors joined the auto bandwagon. The 24 pharma firms in the sample reported a 31.3 per cent rise in sales and a 20.7 per cent growth in net profits. The nine cement companies reported a 10.9 per cent growth in sales and a 133.2 per cent rise in net profits.
The service sector, infotech, media, telecommunication, personal care (FMCG) and hotels were poor performers. Sales of the 41 software companies increased by 5.83 per cent, while net profit declined by a marginal 1.9 per cent. The six media companies recorded a 11.9 per cent decline in sales and a 36.5 per cent drop in net profit.
The decline in hotel occupancy rates, on account of slowdown, hit the industry hard. Seven hotel firms reported a 30.8 per cent decline in sales and a 91.4 per cent decline in net profit. Sales of personal care companies, led by Hindustan Lever, grew by a modest 2.9 per cent, while the net profit were up 16.7 per cent.