Three quarters make a full glass for India Inc.

This year may not raise hopes of a great economic recovery, but for some stalwarts, ‘02-’03 will definitely be worth writing home about, at least compared to the last year.

In just nine months, of the current fiscal, 288 companies have mopped up more than the entire net profit they made over all four quarters in ‘01- ‘02.As sales haven’t kept pace comparably, firms in oil refining, steel and banking are just stuffing more into their bottomlines this year.Collectively, the 288 companies showed a net profit of Rs 12,927 crore during April-December ‘02, one fourth higher than the total of Rs 9,791 crore they recorded till the year ended March ‘02. Sales stood lower at Rs 2,37,759 crore compared to Rs 2,88,694 crore in the whole of fiscal ‘01-02.

Higher profits despite lower sales reflects the fact that margins have improved substantially due to a combination of factors like higher other income and lower costs, according to analysts. Besides, higher demand and rising trend in product prices also boosted margins in case of select sectors like steel and oil refiners, say analysts.

Examples are IOC, HPCL, IPCL, Tata Steel, Bank of India, Grasim, Sterlite, TVS Motor, Indo Rama Synthetics and Indian Rayon. The list is dominated by PSU banks like Andhra Bank, PNB, Bank of Baroda, Bank of India, Corporation Bank, Dena Bank and Vijaya Bank.

Their results show that higher other income seems to have contributed substantially to bottomline of some banks. Andhra Bank posted a net profit of Rs 261 crore during April-December ’02 (Rs 202 crore). The bank posted higher other income of Rs 374 crore against Rs 304 crore. Corporation Bank posted net profit and other income of Rs 369 crore and Rs 406 crore respectively compared with the previous year’s figure of Rs 308 crore and Rs 382 crore respectively.

In the manufacturing sector, steel firms have done exceedingly well thanks to rising international steel prices and higher overseas demand, especially China. Tisco posted a net profit of Rs 549 crore compared with Rs 205 crore in the previous fiscal, while sales stood at Rs 6,433 crore as against Rs 7,607 crore. Jindal Strips, Jindal Steel & Power and National Steel are a few others where this trend was observed.

Oil refiners are looking up in the current year due rising prices of petroleum products in the international market. Leading the pack is IOC (net profit of Rs 3,915 crore compared to Rs 2,885 crore last fiscal).

600450 Three quarters make a full glass for India Inc.
Date: 4 February 2003

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