RBI bullish on industrial outlook

Private sector companies, mainly in iron and steel, cement and IT, reported strong sales and net profit growth in the first six months of this fiscal, according to a latest RBI bulletin.

"The performance of private corporate business sector during the first half of 2004-05 improved significantly as evidenced by marked increases of more than 25% and 50% respectively in sales and profits after tax," the RBI said in the bulletin.

Despite increases in interest payments and tax provisions the profits after tax of 1,171 companies increased by about 50%, it said.

The profit margin on sales at 13.1% and return on sales at 8.1% were higher than those in the year-ago period, indicating enhanced profitability, it noted.

"Profitability, defined in terms of gross profit margin and returns to sales, improved in respect of all major industries except companies belonging to pharmaceutical and textiles," it said.

On an industry-wise analysis, it said the companies in iron and steel and allied industries, accounting for 12.8% of the total paid-up capital, showed impressive growth in sales (44.7%) and profits at every level.

"Particular mention may be made for iron and steel companies for which gross profit margin and return to sales improved notably by 5.4 and 4.3 percentage points respectively and stood at 21.0 and 11.5 per cent in H1 of 2004-05," it said.