OREANDA-NEWS. October 11, 2011. The October issue of the Bulletin carries one special article viz: (i) Performance of the Private Corporate Business Sector, 2010-11. Highlights of the special article are:

Highlights:

1. Performance of the Private Corporate Business Sector, 2010-11

The article analyses the performance of the private corporate business sector during the financial year 2010-11 based on abridged results relating to 2763 non-government non-financial listed companies and provides, inter alia, a brief analysis by size and industry.

Main Findings:

Overall performance of 2763 select non-financial non-government companies showed that the sales grew by about 20 per cent during 2010-11 reflecting a sustained demand. The built up in aggregate stock-in-trade was higher in 2010-11 as compared with that of the previous year.  However, despite recording growth in sales, corporates on an aggregate could not improve their year-on-year profit growth largely on account of higher input costs and significant increase in interest payments.

With  faster increase in total expenditure in relation to sales, profitability in terms of operating, gross and net margins contracted by 100, 110 and 30 basis points respectively in 2010-11. Interest payments formed 2.7 per cent of sales and 19.8 per cent of gross profits.

An analysis of companies with value of sales as the size differentiator revealed that the bigger companies recorded higher sales growth and also relatively higher growth in operating profits, whereas the smaller companies, i.e., sales size less than ` 50 crore each, recorded a decline in sales in 2010-11. 

Companies engaged in manufacturing activities registered 22.6 per cent growth in sales and 12.1 per cent growth in operating profits in 2010-11. Companies engaged in Computer and related activities (IT) services also performed reasonably well with 16.2 per cent growth in sales and 11.5 per cent growth in operating profits. However, companies engaged in Services other than IT registered only 8.9 per cent growth in sales and 8.8 per cent growth in operating profits. Further, their net profits declined due to much higher growth in interest outgo.

Industry-wise analysis revealed that sales growth was broad based covering almost all the industries except wholesale & retail trade, electricity generation & supply and cement industries whereas their profit performance (PBDIT & PAT) was mixed.