Early results show corporate profits above 45 pc

New Delhi, July 19: Corporate India completed the first quarter of the fiscal 2006-07 recording impressive growth of about 45 per cent in net profit, showing credible improvement in the margins on 36 per cent rise in sales income, early indicators have shown.

An ASSOCHAM Eco Pulse (AEP) analysis of over 50 companies, first quarter results for which have so far been made available, shows that three-fourth of the firms have come out with a minimum net profit growth of 16 per cent.

Some of the companies like Mc Dowell, CRISIL, Sakthi Sugar, IL&FS, Maharashtra Seamless, TTK Prestige and India Cement have posted very impressive results. Infosys, which performed above expectations recorded a rise of over 52 per cent in the net profit whereas ING Vyasa also recorded an increase of 61.64 per cent.

Though a large number of companies have yet to post their first quarter results, early indications show that the Indian Industry has managed to continuously log in growth on the back of sound economic fundamentals. The AEP analysis has revealed that an overwhelming majority of 75 per cent of the companies continue to reap dividend of a healthy demand despite inflationary pressures building up. It is clear a good majority of India Inc has so far been able to withstand the inflationary expectations.

''It is early to judge the overall trends because a large number of companies have not posted their results. However, the early indications are that the performance of Indian Industry, the most important link in the GDP growth, remains robust'', said ASSOCHAM President Anil K Agarwal.

A big rise in staff cost partly because of the expansion in the headcount, seems to have taken a toll on one-fourth of the companies that have slipped on their bottomline. However, a good majority of the firms which have produced sound results, managed to absorb well the increase in their salary bill. The total staff cost of the firms under the AEP track went up by 44.5 per cent.

Interestingly, the companies which have done well are spread across different sectors like information technology, banking and finance, cement, automobile and consumer durables. However, some trends are visible among the companies which have reported a drop in their net profits. The two media firms tracked by AEP came out with huge decline in their profitability. While Mid Day saw a bottomline erosion of 155 per cent from Rs 3.17 crore in first quarter of 2005-06 to Rs 1.74 crore in the corresponding period, current fiscal, the TV Today Network saw a drop of 74.5 per cent in its bottomline from Rs 5.81 crore last year to Rs 1.48 crore in current fiscal. Both these firms had to bear higher cost of staff, thanks to a high attrition rate in the print and electronic media. Some of the metal firms also came under pressure. These include TATA Metaliks, TATA Sponge Iron etc.

Among the good performers, cement stole the show with India Cement reporting a huge jump in margins from Rs 5.21 crores to enormous Rs 112 crore. Sakthi Sugars was the next best performer reporting a tremendous rise in net profit from Rs 1.74 crore to Rs 35.9 crore.

Reflecting a robust demand, despite increase in the cost of raw materials and staff, over 80 per cent of the firms taken from the early samples, showed a marked improvement in their sales figures.

Overall the sales improvement was to the extent of 36 per cent.

Interestingly, some of the firms like Godavari Fertilizers, TATA Metaliks and Maharashtra Seamless which had shown erosion in their net profit had recorded reasonable growth in sales income. It was only the two media firms which reported either drop or stagnation in their sales along with sharp decline in profitability.

UNI