Quarter 4: Sales flat, profits sharply down

For all the better-than-expected numbers turned in by some companies, the picture at an aggregate level is far from encouraging. For a sample of nearly 1,000 companies, excluding banks and financial services, net profits for the March 2009 quarter are down a very sharp 20 per cent year-on-year.

That's not surprising because operating profit margins have come off by nearly 200 basis points, indicating that India Inc's problems have more to do with costs -- whether it's raw materials or interest -- because the top line has held up fairly well.

For the same sample, studied by the Business Standard research bureau, net sales stayed flat year-on-year during the March 2009 quarter. Of course, some of the top line growth can be attributed to inflation -- Hindustan Unilever, for instance, saw volumes fall 4 per cent.

According to a study done by Morgan Stanley, of the 18 companies in the BSE Sensex that have reported results, aggregate earnings are down 11 per cent as against an expected fall of 7 per cent. The picture is worse, if the energy sector is excluded -- the earnings for this set of firms are 14 per cent below the brokerage's expectations.

Consumer staples are among the best performers, with Asian Paints and Glaxo SmithKline Consumer throwing up biggest surprises. And technology hasn't done too badly either.

The laggards have been engineering firms, real estate companies and players in the metals space.

Morgan Stanley observes that the performance of the broad market has been worse -- it points out sales for 1,571 companies are up 1.6 per cent year-on-year, net profits are down 11 per cent year-on-year. In fact, excluding banks -- many of whose profits have been boosted by treasury income rather than interest income -- the profits are actually lower by 21 per cent.

And the bad news: Of these 1,571 companies, more than a third, or 34 per cent, have reported losses during the quarter with many losing money on foreign exchange exposures.