India Inc's net profit has been growing at an over 50 per cent clip for two quarters in a row.
The 1,553 companies that have reported their financial performance for the quarter ended December 2002 have posted a net profit growth of 56.14 per cent during the quarter, in line with the 55 per cent growth in net profits for the quarter ended September 2002.
The highlights of the latest quarterly results?
First of all, sales growth figures are moving up into the double digit zone.
Sales of these 1,553 companies climbed by 13.66 per cent, versus 9.50 per cent in the quarter ended September 2002.
Secondly, inventory levels at companies are on a downswing, suggesting that companies are actually selling products more quickly.
The closing stocks of finished goods dropped Rs 1,500 crore (Rs 15 billion) from the levels in the corresponding period of the previous year.
Thirdly, a decline in interest costs has helped push up net profits at companies. The interest costs of 1,553 companies declined by 10.43 per cent over the corresponding quarter of last year, resulting in an interest cost saving of around Rs 1,400 crore (Rs 14 billion).
In the sample of 1,553 companies, the interest costs of around 700 companies declined, while those of 411 firms increased by Rs 465 crore (Rs 4.65 billion).
Costs on account of salaries and wages too have been growing at a slower pace than the rate of growth in sales. Salaries and wages at 1,553 companies increased by 9.83 per cent, compared with their sales growth rate of 13.66 per cent.
Excluding the staff costs of IT companies, salaries and wages increased by a more modest 6.77 per cent.
Strikingly, 40 per cent of the companies clocked a sales growth of more than 14 per cent. Of the 111 sectors classified by the BS Research Bureau, sales in as many as 40 sectors increased by more than 14 per cent.
As for profitability, the net profit of 268 companies increased by over 56 per cent. What is more, the aggregate loss of loss-making firms declined from Rs 2,553 crore (Rs 25.53 billion) in the quarter ended December 2001 to Rs 1,629 crore (Rs 16.29 billion) in the quarter ended December 2002.
Interestingly net profit margins too increased from 4.23 per cent to 5.80 per cent between this period.