The sales and profits of the top 500 companies in the first quarter ended June 2005 (on a sequential quarter-wise comparison) declined by 8.91 per cent and 26.75 per cent, respectively, compared with the preceding quarter of January-March.
The usual seasonal fall is greater in the first quarter of this financial year than it was in the corresponding period last year for these 500 companies.
For example, sales and net profits had declined by 4.79 per cent and 16.37 per cent, respectively, in the quarter ending June 2004. Sales and profits have always declined in the first quarter compared with the previous quarter over the past three years.
The slowdown becomes all the more evident from the fact that a total of 284 companies showed a decline in their profit in the first quarter this year against 164 companies in the preceding quarter. For sales, the corresponding figures are 268 against 183.
Oil companies influenced the fall in profits in the first quarter this year. These companies collectively showed a net loss of Rs 993 crore (Rs 9.93 billion) in the quarter compared with a net profit of Rs 1,774 crore (Rs 17.74 billion) in the preceding quarter. If oil marketing companies are excluded from the sample, the decline will be 18.56 per cent.
The increase in sales in the January-March quarter (on a sequential quarter-wise comparison) was also slower at 4.72 per cent than 8.72 per cent a year earlier.
This is a sign of an incipient sales slow-down for two successive quarters. However, this was not true of profits, which went up by 24.69 per cent in January-March 2005 compared with 18.79 per cent a year ago.
Analysts said both quarters' figures could be pointing to a peaking of the rapid growth. The top 500 companies have been ranked by their net profits for the trailing twelve months ended June 2005.
Also, 59 sectors accounting for 70 per cent of the first quarter profits, fuelled the decline with a 37.62 per cent dip in net profits. The other 52 sectors showed a 23 per cent increase.
The decline in first quarter profits has been a constant factor in sectors such as electrical equipment, engines, engineering, telecommunication, refineries, steel, hotels, textiles, chemicals and fertilisers, and trading.
The profits of these sectors have declined by over 30-80 per cent in the June quarter in the last three years.
Sectors like leather products, cement products, industrial explosive, electrical equipment, tea, packaging, lubricants and food products have been showing quarter-on-quarter profit growth in the June quarter.
The profit growth in June for the information technology sector was modest at 0.29 per cent compared with 7.40 per cent in January-March 2005, 7.80 per cent in October-December 2004 and 7.51 per cent in July-September 2004.
The pharmaceutical sector bucked the trend with a net profit growth of 101 per cent. This was largely because of value-added tax, which had scaled down the sales and profits growth of pharmaceutical companies during the quarter ended March 2005.
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