Higher sales and other income combined to help India Inc report its highest net profit growth in the last three years in the 2006-07 financial year.

A total of 1,700 companies that have declared their results so far have reported a 47 per cent increase in net profit.

The same sample of companies posted record 53 per cent growth in net profit in FY04, 42 per cent in FY05 and 14 per cent in FY06. These companies accounted for 75 per cent of the market capitalisation of the Bombay Stock Exchange.

Companies also appeared to have managed their resources more efficiently, with operating profit growth rising a record 40 per cent, against 11 per cent in FY06, 27 per cent in FY05 and 24 per cent in FY04.

This was despite a 28 per cent increase in interest burden last year and a 27 per cent increase in staff costs. Even raw material costs went up by 28 per cent, against 25 per cent in FY06.

Analysts say the party will continue, with the economy growing at breakneck speed and most companies utilising their full production capacity.

"Production has increased on the same assets base, so profitability had to go up in the last financial year," said Lalit Thakkar of Angel Broking.

High-profile investor Rakesh Jhunjhunwala, however, feels earnings may be "diluted" this year due to the high base effect.

Overall, the 1,700 companies posted a 27 per cent rise in sales income to Rs 14,11,844 crore (Rs 41,118.44 billion) in FY07, against Rs 11,12,388 crore (Rs 11,123.88 billion) in FY06, while income from other sources increased by 28 per cent to Rs 34,967 crore (Rs 349.67 billion) {Rs 27,333 crore (Rs 273.33 billion)}.

In FY06, these companies had posted 20 per cent topline growth and a 14 per cent rise in other income.

Despite a slowdown in profit growth in the fourth-quarter (January-March 2007), healthy bottom-lines in the first three quarters helped India Inc post robust figures for the full year.

Higher interest rates saw companies post a 19 per cent rise in net profit in Q4, which was significantly lower than 85 per cent in Q3 (October-December, 2006), 57 per cent in Q2 (July-September) and 45 per cent in Q1 (April-June).

The Q4 performance was dented principally by refineries, and aluminium and automobile sectors. Refineries, in particular, saw net profits decline 41 per cent in Q4, although the sector ended the financial year with a 47 per cent jump.

Almost all sectors performed well in the full year. The net profit of the cement, telecommunication, non ferrous metal, tyre, paint, steel hot rolled and cold rolled, construction and transmission line tower sectors more than doubled in FY07.

Pharmaceutical, information technology, engineering, textile, auto ancillary, pump and compressor and food processing sectors posted bottom-line growth in the range of 49 per cent to 100 per cent.