The working results of 1,085 sample companies for the quarter ended September showed a double-digit growth in net profit at 17.2 per cent after a gap of nearly three years.
In 1998-99, net profit of the corporate sector had dipped by over 14 per cent.
In the first quarter of the current fiscal, net profit had declined by about 2 per cent against the previous corresponding period.
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The growth is commendable, considering that sales grew less than 10 per cent in the first quarter ended June.
Fortytwo per cent of the firms registered over 15 per cent growth in sales. Thirtyfive per cent of them registered a negative growth in sales, while sales of 23 per cent companies rose between 1 and 15 per cent.
The sample companies currently account for 81.8 per cent of the market capitalisation on the Bombay Stock Exchange.
Results for the quarter ended September reflected a shift in corporates' focus towards prudent working capital management and aggressive cost-cutting to boost bottomlines.
Lower interest rates reflected in a modest 4.5 per cent rise in interest burden. The interest-to-sales ratio of the sample firms indicated that the corporate sector may have saved about Rs 600 crore on interest costs alone.
The commendable performance of the corporate sector, however, was dragged down by steel giant Steel Authority of India Ltd (SAIL,) which continued to be in the red with a net loss of Rs 737.5 crore in the quarter ended September.
This resulted in a decline in rate of growth in net profit for the sample companies in the July-September quarter. During the quarter ended September 1999, 243 companies reported net losses, aggregating Rs 1,570 crore compared with 240 companies with a total net loss of Rs 1,171 crore in previous quarter. There were 74 turnaround cases during the quarter.
First-half results (April-September 1999) of 954 companies show a sales growth of 12.9 per cent. Poor first quarter showing by these firms proved to be a drag on the aggregate half-yearly results, with net profit growth falling to 4.9 per cent.
The sector-wise growth in net profit shows that cyclicals have benefited by a smart rally in the international commodity prices during the second quarter of the current year.
The petrochemicals sector reaped the benefit of rising petrochemical prices with a net profit growth of 34.7 per cent. The petrochemical giant Reliance Industries and IPCL clocked major improvements in bottomline growth.
The FMCG sector benefited by smart improvement in profit margins. Hindustan Lever's set the trend with a smart 45.9 per cent rise in net profit. Fertiliser firms reported 70.3 per cent surge in net profit.
The cement sector clocked 454.4 per cent rise in net profit, largely on account of smart improvement in cement prices and higher volume in cement volume during the second quarter. The net profit of aluminium firms surged on better LME prices for aluminium. The growth in exports prices of steel products saw hot-rolled, cold-rolled, and GP steel manufacturers showing 204.7 per cent in net profit.
Large companies with quarterly sales over Rs 100 crore have been instrumental in boosting the aggregate performance of the 1085 companies. Sales of the 180 companies with the quarterly sales of over Rs 100 crore grew at a higher pace of 17.4 per cent. The bottomline of these companies rose by 16.9 per cent. Indian Oil Corporation's sales climbed 25.1 per cent, Reliance Industries' by 29.7 per cent, Telco 45.2 per cent, Cochin Refineries 51.08 per cent, Madras Refineries 37.7 per cent, IPCL 32.1 per cent and Indo Gulf Corporation 62.2 per cent. ITC was a disappointment with sales growth of only three per cent, Videsh Sanchar Nigam's topline grew by one per cent, while MTNL's sales fell by 7.8 per cent. (Inputs from Deepak Korgoankar, Ashok Divase and R P Sharma) and Exchange Board of India (Sebi) chairman D R Mehta has told the Delhi High Court he is not going to seek an extension once his tenure ends in February. Lobbying for the key post has already begun, though the market is rife with speculation that Mehta may be given an extension.">