Anurag Jain's Blog
Tuesday, August 05, 2003

India Inc Quarter results: Revenues +11%, Profits +42%

According to Economic Times, the latest quarterly results of 1005 Indian companies show an average profit net growth of 42 % (!) and a topline growth of 11 %.

Now thats quite interesting. Y-o-Y Profit increments of more than 40% is really huge, and thats not for a single company. Its an average of a basket of 1005 firms! But what's more interesting is the 'modest' topline growth (Well, industrial topline is atleast outstripping the overall economy growth rate.) But isn't the dichotomy between revenues and profit growth rates is a big one here? You see, this big gap between the two can not be a long-term phenomena obviosuly. It has to be one-off thing. I mean, the only way you can explain this is that there seems to be a serious cost-cutting going on the India Inc. Thirty-one percent to be precise. And since there's a limit to cost-cutting (%-wise), such big cost cutting while growing profits disproportionately can only continue in the short-term (2-3 quarters). And then there's factors such as seasonality etc accounting for specific patterns in corporate financials. So we can't, of course, dig too much into a quarter's data but it would be very interesting to see how have the firms achieved such huge cost savings. Being an IS person, I put my bet on technology being one of the main money savers.


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