India Inc still on dream run

280 firms see 74% rise in fourth-quarter net profit, 29% rise in sales.

Corporate India's profits surge continues. The results reported by 280 companies in the January-March quarter show a 29 per cent rise in sales and a 74 per cent jump in net profit.

The operating profit of these companies increased 46 per cent to Rs 9,194 crore and the gross profit jumped 53 per cent to Rs 8,224 crore.

Engineering, shipping, steel, sugar and information technology (IT) companies posted a healthy growth in net profit, while cement, fertiliser, paper and pharmaceutical companies reported an erosion in their bottom lines.

Among the performers, Bharat Earth Movers' net profit rose by 561 per cent to Rs 123.62 crore; Indian Petrochemicals Corporation (IPCL) recorded a 239.39 per cent increase in net profit to Rs 336 crore and Essar Steel posted a 178 per cent growth in its net profit to Rs 273 crore.

In terms of revenue growth, sugar companies stole the show. The sales of Simbhaoli Sugar increased by 221 per cent to Rs 148.66 crore and that of Sakthi Sugars by 177 per cent to Rs 212.43 crore.

In the steel sector, Jindal Vijaynagar Steel's sales rose by 126 per cent to Rs 2,182.82 crore during the quarter. Overall, profit margins substantially increased in this period.

The operating profit margin of these companies climbed from 19.39 per cent to 22.04 per cent, the gross profit margin from 16.58 per cent to 19.71 per cent and the net profit margin from 9.15 per cent to 12.39 per cent.

The other income of the 280 companies increased by 57 per cent, from Rs 648 crore in the quarter ending in March 2004 to Rs 1,016 crore in the quarter ending in March 2005.

With rising interest rates, the interest outgo, too, increased by 7 per cent to Rs 970 crore. A sectoral analysis of the quarterly results shows that companies in the shipping, engineering and sugar sector posted over 400 per cent rise in net profits.

Non-banking finance companies (NBFCs), petrochemical and polymer and information technology companies reported a bottom line growth of 100-400 per cent during the quarter.

As many as 26 sectors outperformed the industry's average sales growth of 28.86 per cent. Twenty-three NBFCs led with 88 per cent growth in sales income to Rs 145.11 crore.

Thirty-nine IT companies posted 78 per cent rise in sales income, followed by five hot and cold rolls steel companies (74.3 per cent), nine sugar (52 per cent) and two shipping firms (45 per cent).