Mumbai: Despite high interest rates and tax provisions, private sector companies posted a 26% rise in net profits in the financial year to end-March, primarily driven by a healthy sales growth, the Reserve Bank of India, or RBI, said.
Net profits of 2,359 non-government, non-financial firms in 2007-08 stood at Rs1,34,291 crore, up 26.2% from the Rs1,11,107 crore reported in the previous fiscal year, RBI’s September bulletin said. Sales during the period grew 18.3%.
The results were achieved despite a “noticeable” 14.8% increase in depreciation provisioning and a whopping 28.8% jump in interest payments, the bulletin said.
Total provisioning made by companies in the fiscal year rose to Rs40,664 crore compared with Rs37,095 crore a year ago. Total interest payments increased to Rs25,677 crore as against Rs21,500 crore in the previous fiscal year.
Companies in the manufacturing and IT industries lagged behind those in the services sector because of their inability to pass on higher costs in raw materials, fuel and transportation, it said. Gross profits in textiles fell 6.7%, hit by high expenditure compared with sales, mainly due to higher input prices, the bulletin said.
RBI data showed that around 2,164 companies recorded an average 19.6% rise in staff costs.
Though total expenditure rose 18.2% in fiscal 2008, staff costs as a share of total expenditure were 9.2%, compared with 9.1% in the previous fiscal year.
Post-tax profits of companies in the last quarter of fiscal 2008 declined to 14.1% compared with 33.9% in the first quarter of that year, it said.