The last financial year has been the slowest year in four years for corporate India, according to the financial results for 1,354 companies released so far.
Cumulative net sales grew by 18.2 per cent in fiscal 2007-08, in contrast to the 29.3 per cent growth in the previous financial year, 21.1 per cent in FY06 and a rapid 31.5 per cent in FY05.
The 1,354 companies covered reported an aggregate net sales of Rs 10,15,391 crore in FY08 as against Rs 8,59,128 crore in FY07. Half of the companies (678) from the total sample registered a lower than 18.2 per cent growth in net sales during the year.
The results covered do not include banks, financial institutions and non-banking financial companies (NBFCs).
Net profit also grew slower at 29.8 per cent to Rs 1,30,110 crore in FY08 as compared with 47 per cent (Rs 1,00,244 crore) in the previous year. Net profit growth for the same sample of companies in FY06 was 20 per cent and 59 per cent in FY05.
State-run oil refiner ONGC, marketing companies BPCL, HPCL and IOC, and some private biggies like Shipping Corporation of India and Mahindra and Mahindra have not yet declared their financial results for FY08.
Sluggish sectors
The sectors that were sluggish were metals, aluminium, automobiles, power generation, petrochemicals and electronics, which all registered single-digit growth in sales.
Refineries, gas distribution, pharmas, auto ancillaries, paints and tyre makers posted lower than 19 per cent sales growth.
The cement sector saw a 25 per cent growth in net sales in FY08 as compared with a 50 per cent growth in the previous year, hit by the government warning against price hikes.
Sales in the information technology (IT) sector were also slower on account of a slowdown in the US economy and a weakening dollar. The 104 IT companies in the sample posted a 24 per cent growth in sales overall in FY08, as compared with a 39 per cent growth in the previous year.
The steel sector posted a 19 per cent growth in FY08 as against 22 per cent in the previous year.
Not as bad
However, telecom, engineering, construction, mining, cables and the diversified sector outperformed the others with a more than 30 per cent topline growth.
Reliance Industries, BHEL, Infosys Technologies, ITC and Aditya Birla Nuvo reported their lowest topline growth in four years.
Hindalco, Sterlite Industries, Hero Honda Motors, Jindal Stainless and Century Textiles reported single-digit sales growth, while Hindustan Zinc, National Aluminum, Dr Reddy's Laboratories, SRF and MTNL registered a decline in net sales.
Other income
Net profit growth overall was due mainly to a record growth in income from other sources and controls on input costs. This, despite a rise in interest costs.
Income from other sources jumped by 47 per cent from Rs 24,073 crore to Rs 35,457 crore in FY08.
The sample companies spent Rs 3,289 crore more on interest payouts after the hike in PLR by 250 basis points (100 basis points = one per cent) in the past two years. The total interest outgo for these companies increased by 22.6 per cent to Rs 17,849 crore (Rs 14,560 crore) during the financial year.
Good ones
The operating profit margins improved by 100 basis points from 20.6 per cent to 21.7 per cent in the year, while the net profit margins were better by 110 basis points at 12.8 per cent (11.7 per cent).
Some of the compannies that did well were Reliance Industries, Bharti Airtel, NMDC, Grasim Industries, Sesa Goa, GE Shipping and Idea Cellular which posted a more than 40 per cent growth in net profit during FY08.
