India Inc's profit growth slows

Net profit of 1,765 firms rises 46%, sales increase by 15% in Q1.

India Inc continues to shine but its sales and profit growth rates in this quarter have failed to match the scorching pace set in the previous quarters. An analysis of the financial results of 1,765 companies in the first quarter (April-June) of 2005-06 showed net profits increased by 46.02 per cent and sales moved up by 15.01 per cent.

During the previous two quarters (January-March 2005 and October-December 2004), the net profit of these companies had grown by over 50 per cent and sales were up by 21 per cent. The good news is small and medium companies are scaling up their performance substantially. 
 

Corporate show
Quarter ended	Growth rate in net profits
	No of cos	Average growth (%)	Over 100% % chg (Cos)	Average % chg (Cos)
April-June 05	1765	46.02	282.09 (388)	120.99 (595)
January-March 05	1882	56.59	197.84 (336)	116.19 (437)
October-December 05	1882	50.16	160.77 (329)	88.44  (498)
July-September 05	1882	34.14	193.22 (295)	93.36  (509)
April-June06	1882	51.40	210.20 (282)	151.22 (435)

The net profit of over 22 per cent companies increased by an average of 282 per cent and their sales rose at a healthy pace of 36 per cent. This accounts for 15.7 per cent of the sales turnover of the entire lot.

However, their share in profits moved up substantially "" from 6.91 per cent in the quarter ended June 2004 to 18.1 per cent in the quarter ended June 2005.

The trend was very different in the past four quarters as around 15-18 per cent of the companies accounted for 30 per cent of the net profit and 20 per cent of sales. The quarterly results show the number of companies outperforming the average growth rate of the corporate sector has been increasing.

During the quarter ended June 2005, 33.7 per cent of the companies outperformed the corporate sector, posting an average net profit growth rate of 121 per cent.

In the previous four quarters, around 23-26 per cent companies outperformed the corporate sector.

Small and medium size companies were increasingly playing a bigger role. About 33.7 per cent companies, which posted a profit growth of 121 per cent during the April-June quarter, accounted for 42.5 per cent of the net profit of the entire corporate sector. However, their share in sales was lower at 38.8 per cent.

During the previous four quarters, 23-26 per cent companies, which a recorded net profit growth of over 100 per cent each, mopped up 60-70 per cent share in net profit. These companies accounted for over 50 per cent of India Inc's sales turnover.