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Manufacturing companies post 6.1% sales growth in last quarter

Samata Dhawade & Deepak Korgoankar

Manufacturing companies chugged along with single-digit growth in sales through the last quarter of 2000-01.

The 563 private sector manufacturing companies-whose results were available till Tuesday-together reported only a 6.1 per cent increase in sales to Rs 378.28 billion. However, tighter control over costs, tax sops, and lower interest rates boosted the bottomline 12.2 per cent to Rs 24.78 billion.

The sample excludes banks, financial institutions, non-banking finance companies, infotech and public sector companies.

Compared to earlier rounds when the economy went into a slump, this time it is not the medium and small corporates that are bearing the full brunt.

Indeed, the top 10 private manufacturing companies-India's largest and brightest companies which accounted for 60 per cent of the net profit of the 563 private companies-reported a miserable one per cent increase in net profit and a 4 per cent increase in terms of sales income.

The top 10 companies also accounted for 40 per cent of the total sales sample during the quarter.

Reliance Industries, which tops the private sector leagues in terms of sales, was largely responsible for dragging the aggregates lower. The company reported a 2 per cent drop in sales and a 17 per cent drop in net profits during the quarter.

FMCG major Hindustan Lever, second in the pecking order, turned in just one per cent increase in sales but notched a 29 per cent increase in net profit.

Two-wheeler major Hero Honda, though scoring with a 46 per cent in sales income, was grounded with its net profit declining 10 per cent in the quarter.

However, the full sample of 725 companies which includes public sector companies, and NBFCs reported a 14.2 per cent increase in net profit to Rs 53.67 billion and a slightly higher sales income growth of 11 per cent to Rs 581.65 billion during the quarter ended March 2001.

Surprisingly, the 76 infotech companies in the sample contributed nearly one fifth to the aggregate net profit of the 725 companies, even though they accounted for just 7 per cent in terms of sales income.

Thus, the 76 techies which reported a 33 per cent increase in sales income and 76 per cent growth in net profit, largely skewed the aggregates during the quarter.

The 11 PSUs accounted for 23 per cent of total sales income and had a single digit growth rate in sales income.

Sales increased 8 per cent to Rs 136.62 billion and net profit increased by 12 per cent to Rs 20.36 billion. In net profit terms, the PSUs accounted for 38 per cent of the total aggregates.

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