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| The corporates have further sharpened their operational efficiencies in the quarter-ended September 2003, with operating profit margins (OPM) rising to a new 12-quarter high of 6.02 per cent. This beats the previous high of 4.67 per cent posted in the quarter-ended June 2003.
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| A study of the quarterly results of 1,800 companies show the rise in operating margins mounting out of operational efficiencies, as interest expenses and other income have been excluded from operating profits.
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| The OPM, which was a low 0.44 per cent in the quarter-ended December 2001, increased to 3.45 per cent in the corresponding period in the following year. It hovered around 4.70 per cent in the preceding two quarters.
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| For the purposes of this study, operational efficiency of the private corporate sector was compiled by netting out interest costs from the total expenditure of 1,800 companies.
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| Similarly, other incomes had been removed on the income side. The operating efficiency increased by 51.89 per cent in the quarter-ended September 2003, over the same quarter last year. The strong surge was better than the 51.06 per cent rise reported in the quarter-ended December 2002.
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| The other income, though a major force in corporate profits, was not the driving force. The study of other income in operating profits has declined from 26.80 per cent in the quarter-ended September 2002 to 24.77 per cent in the corresponding period of the following year.
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| Sector-wise trends show only 21 sectors have recorded a decline in OPM during the quarter-ended September 2003, while 87 have recorded improvements. Steel and steel-product companies have reported major improvements. The OPM of integrated steel companies has risen from a negative 4.52 per cent in the quarter-ended September 2002 to 11.22 per cent in the quarter-ended September 2003.
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| Other top performers were companies in plastic & polymers, pharmaceuticals, hot and cold rolled coils, oil drilling, shipping, pesticides, two wheelers, auto ancillaries, telephone cables, bearing and engineering sectors.
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| However, telecommunication, domestic appliances, automobiles cars, refineries, personal care (FMCG) and diamond & jewellery companies have recorded a substantial fall in OPM. |
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