Indian manufacturing firms dazzle

The sales and net profits of 1,894 companies increased 16.3 per cent and a hefty 50 per cent, respectively, during the quarter ended September 2003 -- the biggest ever year-on-year growth rate in sales and profits posted by non-refinery manufacturing companies in the last three years.

But the slower growth in sales and profits of public sector refineries pulled down the overall corporate performance -- they account for almost a third of the sales and profits of the corporate sector.

Including the refinery companies, the sales of 1,900 firms increased 13.89 per cent, while their net profits increased 29.38 per cent.

The eight refinery companies posted an 8.58 per cent growth in sales, while their net profits were almost flat -- these rose a mere 1.81 per cent -- the lowest sales and profits growth rate recorded by refineries in the past five quarters.

Refineries were the major sales and profit drivers in the quarters ended in September 2002, December 2002 and March 2003.

But the rest of Corporate India is ticking along quite nicely. Sales at three in every five companies have grown, as have net profits in three in every four companies, in the quarter ended September 2003.

Also, 44 per cent of the sample of companies outperformed the average growth rate in sales and profits posted by the corporate sector.

Most encouraging is the increasing contribution of core sector companies to overall sales and profits. The share of composite steel firms in total sales increased to a three-year high of 4.35 per cent.

Their share in net profits increased almost five-fold, from 1.15 per cent in the quarter ended December 2002 to 5.37 per cent in the quarter ended September 2003.

Prior to the quarter ended December 2002, steel firms had posted net losses in six quarters in a row.

The other core sectors to have increased their share in profits are the power, engineering, electrical equipment and metal industries.

The export-oriented sector, information technology and pharmaceuticals companies, too, have done well by improving their contribution to sales and profits.