It’s not just the declining earning growth rate, but India Inc will now have to deal with the rising number of loss making companies and a larger quantum of loss. A study carried out by Financial Express with a sample of 3,496 quoted companies on BSE, reveals that around 825 firms (23.6%) made losses during April-June 2008. This is an 11.3% increase in the number reported during the same period last year. The number of loss-making companies was 741 (21.2%) during April-June 2007. And, it is not just the number of companies that has increased, even the quantum of losses has.
In terms of value, the loss amount of 825 companies was Rs 5,032 crore during April-June. The loss amount of 741 companies during the corresponding period of 2007 was Rs 2,054 crore.
An analyst from a rating agency said, “The profit performance of listed companies is affected due to inflation and higher fuel prices during the first quarter." It can be seen that although some large companies (except some refineries) delivered better earning performance, the same cannot be said for the small-cap corporates. This probably means that larger corporates have scaled themselves to rise up to the global competitive environment, whereas the small ones have been more susceptible to domestic environment alone.
During April-June 2008, top five loss-making companies are BPCL (Rs 1,067 crore), HPCL (Rs 888 crore), ITI (Rs 157 crore), Spice Comm (Rs 136 crore) and Dish TV (Rs 125 crore).
Similarly, during April-June 2007, top five loss-making companies were ITI (Rs 129 crore), Dish TV (Rs 90 crore), HPCL (Rs 87 crore), Spice Comm (Rs 63 crore) and Bajaj Hindustan (Rs 60 crore). Among top five loss-making companies, three companies—HPCL, ITI and Dish TV—are common during both quarters.
Among the industries studied, more than Rs 100-crore loss was registered during April-June 2008 by refineries, textiles, telecommunications, sugar, pharmaceuticals, NBFC, fertilisers, entertainment and IT sectors. Significant increase in loss was seen in the case of construction (Rs 4 crore during April-June 2007 to Rs 10 crore during April-June 2008.), diversified (Rs 38 crore to 93 crore), engineering (Rs 7 crore to Rs 32 crore), entertainment (Rs 125 crore to Rs 177 crore), NBFC (Rs 59 crore to Rs 158 crore), pharmaceuticals (Rs 42 crore to Rs 135 crore), refineries (Rs 93 crore to Rs1,955 crore), telecommunication (Rs 211 crore to Rs 414 crore) and textiles (Rs 179 crore to Rs 490 crore).
Refer: http://www.financialexpress.com/news/24--BSE-firms-made-losses-during-Q1/355527
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