India Inc rolls in profits; infotech, pharma sectors lead the charge

Data for 120 companies reveal the aggregate net profit of these companies shot up by 56 per cent over the previous year. Sales rose by 18 per cent during the same period.

‘‘All the software companies led by Infosys have reported a surge in sales growth driven by outsourcing demand and stable billing rates. For the corporate sector the restructuring of operations carried out over the past 3-4 years has started paying off, ’’ says Bharat Mehta, a Mumbai analyst.

‘‘Besides, a lot of companies have become more focussed and they have improved their operating efficiencies over the years,’’ he adds.

Some of the best performers are: Infosys , Satyam Computers, Hughes Software, Bharti Tele-Ventures, Aptech and Hexaware Technologies and among pharmaceutical companies like Ranbaxy Laboratories, Nicholas Piramal and Ankur Drugs & Pharma.

‘‘Today we have the required size, brand, compelling value proposition and ambition to build the next generation software and consulting company,’’ says Nandan Nilekani, CEO and MD of Infosys, about the company entering the $ 1-billion revenue club. Usually good performers announce their results within days after the end of the financial year and bad ones come later.

“Fund managers maintained an overall positive stance on corporate profitability. But we would like to highlight that along with a moderation in the degree of bullishness, there was a small section of fund managers that felt corporate profitability would actually deteriorate slightly,” warns a Merrill Lynch study, however.

The corporate sector has been benefiting from falling interest costs over the last couple of years or so as companies have swapped high cost debt with low cost ones. Interest costs have also come down partly due to better working capital management.

In the IT sector, Infosys’ performance has turned out to be impressive. While sales jumped by 31.4 per cent to Rs 4,761 crore, net profit rose by 29.8 per cent to Rs 1,243 crore during the year 2003-04. Satyam Computer is another IT company which posted a sharp 25.6 per cent jump in sales to Rs 2,542 crore and a 80.8 per cent rise in net profit to Rs 556 crore.A surge in rural demand due to a good monsoon and revival in the industrial sector has boosted the top line growth of the corporate sector. The growth in some of the sectors like pharma, automobiles and cement has also been due to low base effect of the March 2003 quarter.

Among others responsible for boosting the overall profit growth rate of early birds were Vijaya Bank, Gujarat Alkalies & Chemicals, GTC Industries, Varun Shipping, Monnet Ispat, Mercator Lines, Kalyani Forge and Orient Abrasives.