Corporate profits more than double in 2 years

Corporate India's net profit has more than doubled in two years. A study of 1,350 companies shows that they posted an aggregate net profit of Rs 41,055 crore for the year ended March 31, 2004, up 152 per cent from the net profit of Rs 16,232 crore in the year ended March 31, 2002.

The annual results of refinery companies Indian Oil Corporation and Oil and Natural Gas Corporation for the year ended March 2004 are awaited.

But this will not make any material difference to the change in the rate of growth of net profits. The net profit of these two companies had risen by 75 per cent between March 31, 2002, and December 31, 2003, on an annualised basis.

The surge in profits is due to the double-digit growth in sales in two consecutive years and interest savings of Rs 5,500 crore in two years.

Tight inventory management and operational efficiency, too, helped bolster profit margins, with net profit margins (NPM) up almost 300 basis points from 3.34 per cent in 2001-2002 to 6.31 per cent in 2003-2004.

Of the 1,350 firms, as many as 181 turned around, posting an aggregate net profit of Rs 5,592 crore in 2003-2004 versus a net loss of Rs 4,444 crore in 2001-2002.

Also, 330 firms reduced their losses and only 76 recorded a combined net loss of Rs 1,025 crore (they'd made a net profit of Rs 158 crore). What is more, the net profit of 289 companies rose by over 100 per cent in the last two years.

The so-called old economy companies, in particular, saw an upswing in their fortunes, on account of corporate debt restructuring and buoyant international commodity prices.

Steel manufacturers, which had incurred a net loss of Rs 1,899 crore in 2001-2002, reported a sizeable net profit of Rs 4,347 crore in 2003-2004.

Interestingly, nearly a third of their net profits in 2003-2004 can be attributed to interest savings of Rs 1,340 crore in two years.

In the textiles industry, cotton and man made fibre producers returned to the black, posting a net profit of Rs 590 crore against a net loss of Rs 155 crore in the previous year.

In the automobiles industry, commercial vehicle companies rolled into the black with a net profit of Rs 922 crore against a loss of Rs 86 crore in the previous year.

The industries that posted a hefty growth in net profits were automobile cars (675 per cent), fertilisers (611 per cent), chemicals (437 per cent) and refineries (400 per cent).