The signs of an economic revival have been flying all over the place for some time now.
Further evidence now comes from the hefty net profit growth rate that Corporate India notched up last financial year.
The Indian corporate sector clocked a growth rate of 57.84 per cent in its net profits in 2002-2003 -- the second highest in the last nine years. Only in 1994-95 was net profit growth higher at 68 per cent.
The unaudited results of 1,581 companies for the year ended March 2003 show that these companies clocked an aggregate net profit of Rs 43,816 crore (Rs 438.16 billion), 57.84 per cent higher than the aggregate net profit of Rs 27,759 crore (Rs 277.59 billion) in the previous year.
After high growth in 1994-95, India Inc suffered a setback with the net profit growth rate slowing to 13.88 per cent in 1995-96.
In fact, after 1995-96, net profits consistently declined. After two years of growth (1999-2001), they declined again in 2001-2002, albeit by 4.38 per cent.
The 57.84 per cent net profit growth in 2002-2003 can be traced to four major factors: double digit growth in sales, low interest rates, a decline in finished goods inventory and the nearly 100 per cent growth in net profit recorded by the public sector refineries.
Sales of 1,581 companies increased by 13.31 per cent, while interest costs declined by 14 per cent (Rs 3,500 crore) and the inventory of finished goods declined by over Rs 8,000 core (Rs 80 billion).
The seven state-owned refineries accounted for 42.2 per cent of the net profit of the corporate sector.
The steel industry chipped in with a sharp turnaround in 2002-2003. The aggregate net profit of steel companies jumped to Rs 809 crore (Rs 8.09 billion), versus a net loss of Rs 2,069 crore (Rs 20.69 billion) in 2001-2002.
Cotton textiles firms, too, registered a turnaround with a net profit of Rs 205 crore (Rs 2.05 billion), compared with a net loss of Rs 252 crore (Rs 2.52 billion) in the previous year.
The non-ferrous metals industry reported a net profit of Rs 159 crore (Rs 1.59 billion) compared with a net loss of Rs 45 crore (Rs 450 million) in 2001-2002.
Heavy commercial vehicle companies drove out of the woods with net profits of Rs 489 crore (Rs 4.89 billion) in 2002-2003 on a sales growth of 22 per cent.
The net profit of man-made fibre companies increased by a mammoth 1,569 per cent to Rs 235 crore (Rs 2.35 billion).
The growth in net profit also came from industries like castings, forging, chemicals, engineering, tyres, automobile ancillaries, solvent extraction and alkalis. All these sectors recorded a 100 per cent or more growth in net profit.
However, industries like fertilisers, telecommunications, lubricants and engines recorded a hefty decline in net profit during the year.
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