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Industry-wise financial performance in 2009-10

Financial performance reported by the top echelons of Corporate India (represented by sample set of BSE 200 companies) was marked by a sharp movement in parameters across quarters. The trend in annual performance was starkly different from the fourth quarter 2010. While sales grew 4.4%, net profit surged 16.5% in 2009-10 over the previous year. Sales growth has been slow during the year as revenues recorded a YoY decline in the June and September 2009 quarters. Pick-up in demand for automobiles and metals and rise in commodity prices led to higher sales.

  • Petroleum oil & products contributed to 31.2% rise in incremental sales growth of the sample set. Lower prices of petroleum products, including petrol and diesel, as well as non-regulated petro-products in FY10 pulled down overall sales by 3.7%. Also, demand for petro-products gathered pace from the third quarter. Crude oil prices recorded a YoY rise from the December 2009 quarter onwards. This resulted in a 3.1% fall in raw material cost for the year. The industry registered a 7.6% growth in employee cost. A fall in interest charges and other expenses, together with lower raw material expenses, enabled the industry record a 27.9% rise in net profits.
  • Recording 8.7% growth in income (taken as sales for comparison purposes), the banking & financial services industry is the second largest revenue generator in the sample set. Sales of banks include interest earned on advances, investments, deposits with RBI and other sources. The only two banks to record a decline in sales were ICICI Bank and HDFC Bank. While the industry’s employee cost rose 17.5% (48.5% of the incremental rise in total wage cost), its interest expenses rose by a slower 4.4%. This enabled it to register a 17.4% rise in net profits. This industry’s profits accounted for 22.2% of the total figure of the sample set in 2009-10.
  • The automobiles industry has been a performer through all four quarters of FY10. Its net sales grew 29.7% — highest among all representative industry sets. Higher incomes, new launches and the various government stimulus packages led to higher sales volumes. Lower raw material prices compared to the previous year enabled 89% growth in PAT.
  • Since metal prices were lower than the previous year levels until December 2009, the sector registered a 3.9% rise in net sales. This resulted in a modest 8.7% rise in net profits during the year.
  • Pick-up in infrastructure development and construction of real estate led to higher cement sales (12.2%) and construction (15.4%).
  • Led by higher sugar prices, the food & beverage industry registered a 16.2% increase in net sales. Realisations were higher because of a sharp rise in prices of food articles. A less-than-proportionate hike in raw material cost (as a major part of the increase was passed on to consumers), resulted in 72.6% growth in net profit.
  • Telecom was the worst performer. The industry saw the pan-India launch of GSM services of Tata Teleservices with its attractive per-second billing scheme. This led to an intense tariff war between existing and new telecom operators. As a result, average revenue per user and minutes of usage of GSM operators nosedived. Network cost, the industry’s largest cost component, soared. Regulatory charges, mainly including licence and spectrum fees charged as a percentage of sales, also rose sharply, resulting in a 38.1% fall in net profit.
Financial Performance of BSE 200 Cos        (% YoY growth)
 

FY 2009

FY 2010

Net sales

21.7%

4.4%

Other income

18.6%

14.7%

Raw materials, stores, spares & purchase of finished goods

22.8%

1.0%

Salaries and wages

24.0%

9.2%

Power & fuel

24.3%

6.7%

 Advertising expenses

35.2%

17.5%

Marketing expenses

12.1%

-3.1%

Other expenses

28.1%

3.8%

Interest expenses

34.7%

2.1%

Depreciation

15.8%

24.1%

Total tax provision

-5.0%

25.1%

Net profit

-0.5%

16.5%

PAT/Total income

9.6%

10.7%

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