Net profit of Indian corporate giants leaps 8-fold in 10 yrs

Corporate giants have posted a decline of 21.4 per cent in net profit on a 20.2 per cent rise in net sales during the financial year 2008-09. The healthy sales performance was spoiled by high cost of raw materials, as global prices of commodities such as metals, oil and coal surged more than 100 per cent during the year under review.

But, despite posting such a performance, the giants (the top 1,000 companies by net sales in 2008-09) are healthy in terms of profit and profitability. The cumulative net profit in 2008-09, at Rs 190,010 crore (Rs 1900.10 billion), is as much as eight times the Rs 24,305 crore (Rs 143.05 billion) in 1998-99.

Net profit margins are higher at 6.3 per cent against 4.7 per cent a decade earlier. The cumulative net sales of the giants, at Rs 30.06 lakh crore (Rs 3 trillion), are six times higher than a decade earlier.

The top two companies by net profit, the state owned oil and gas major, ONGC, and the private sector oil, gas and petrochemicals giant, Reliance Industries, have grown so big that the combined net profit of the duo, at Rs 35,449 crore (Rs 354.49 billion), is 1.46 times higher than the aggregate profit of the top giants a decade earlier. The duo also accounts for 88 per cent of the aggregate sales of Rs 514,092 crore (Rs 5140.92 billion) for the top 1,000 a decade ago.

As many as 38 giants now amass a net profit of over Rs 1,000 crore (Rs 10 billion), compared to only six a decade earlier. The private sector has outshone its peers in the public sector, with the number of companies with a net profit of Rs 1,000 crore (Rs 10 billion) each having grown from only Reliance Industries in 1998-99 to 28 now. The number of PSUs with net profit of Rs 1,000 crore each has doubled from five to 10.

The top giants grew phenomenally well, with the top five companies now having net sales of over Rs 100,000 crore (Rs 1,000 billion) each, compared to net sales of over Rs 10,000 crore for the top six in 1998-99.

The corporate sector now has 45 companies with annual net sales of over Rs 10,000 crore each, of which 33 are from the private sector, compared to only Reliance Industries 10 years ago.

The top ranking by sales continues to be dominated by oil PSUs, taking four of the top six positions. The private sector, with overseas acquisitions, has increased its presence in the top 10 from two to four. Tata Steel joined the Rs 100,000 crore sales club on the back of its acquisitions of Corus. Tata Motors doubled its sales after acquiring Jaguar-Land Rover, while Hindalco improved its sales five-fold in two years from the acquisitions of aluminium giant, Novelis.

The information technology sector, which changed the balance between the old economy and the new one in 1998-99, has grown manifold in 10 years. The three top IT firms now rake in export revenue of over $4-5 billion each. Infosys Technologies, which 10 years earlier ranked at 169, with net sales of Rs 509 crore (Rs 5.09 billion), has moved up to 24, with net sales of Rs 21,693 crore (Rs 216.93 billion). Infosys' net profit has gone from Rs 137 crore (Rs 1.37 billion) to Rs 5,988 crore (Rs 59.88 billion).

The opening of the telecom sector has proved a boon to private players, with Bharti Airtel and Reliance Communication having overtaken MTNL in no time and being now ready to shake up public sector telecom giant Bharat Sanchar Nigam.

Bharti Airtel, an unlisted entity till 2001, now ranks among India's top 14 companies, with net sales of Rs 37,352 crore (Rs 373.52 billion). Bharti Airtel is also the fourth largest profitable company in India, with net profit of Rs 8,044 crore (Rs 80.44 billion).