labels: industry - general, economy - general
Small outperform the big in 2005news
23 January 2006

Mumbai: An analysis of the results of 275 companies in the 2005 October-December quarter reveals that the growth in net profits of the corporate sector was a healthy 22.5 per cent with net sales growth of 17.8 per cent.

Sales rose to Rs81,413 crore compared with Rs69,094 crore in the same period of the previous year while net profit increased to Rs9,814 from Rs8,012 crore during the same period. Interestingly, other income rose by only 2 person over the previous year.

However, the operating profit margin - which has stayed flat around 21 per cent, indicating that companies were trading off margins for aggressive sales or expanding operations — though operating expenditure rose 17.3 per cent to Rs66,226 crore, net profit margins improved only marginally from 11.60 per cent to 12.05 per cent.

The 25 largest companies in the survey - those with a turnover over Rs500 crore had a growth in turnover of 16.3 per cent and a rise in net profit of 18.4 percent.

Companies in the Rs100 to Rs500 crore range had a comparatively better growth in turnover of 21.2 per cent and a rise in net profit of 38.5 per cent.

Interestingly the sales-laggards had higher net profits — those with sales below Rs100 crore ramped up their profits 104.6 per cent on a 28.7 rise in sales.

Small and medium companies, particularly in the sugar sector, which have had a great year in 2005, emerged the best performers with their sales and profit growth outperforming the larger corporates.

Of the 25 large companies that have declared their results so far, only three have posted a decline in net profit — private sector major Reliance Industries (net down 15 per cent to Rs1,776 crore), Ranbaxy Laboratories (net down 56.2 per cent to Rs68.60 crore) and JSW Steel (net down 38.2 per cent to Rs139.20 crore).

The top performers were HCL Technologies (net up 263 per cent Satyam Computer (up 161 per cent), Bharat Earth Movers (up 130 per cent), Tata Power (up 120 per cent), Hindustan Zinc (up 102 per cent), Larsen & Toubro (81 per cent) and Sterlite Industries (up 67.8 per cent). The Singhania group firm JK Industries rebounded to the black, notching up a profit of Rs 2.47 crore from a net loss of Rs 9.20 crore.

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Small outperform the big in 2005