While Indian economy was reeling under the impact of the global economic slowdown induced by the worsening the global macro-economic conditions, the years FY12 and FY13 posed several challenges to the Indian economy, said Dun & Bradstreet India in its report.
Rising commodity prices, high interest rate environment, depreciating rupee, delay in implementation of projects and policy logjams added to the woes of businesses.
Total income of the companies featured in last five editions of Top 500 grew at a CAGR of 14.3%. The year 2009-10 witnessed adoption of several cost management practices by the companies. As a result, the total expenses of the Top 500 companies in 2010 edition declined by 11.3% compared to 2009 edition. Manpower cost, which declined by 20.4% in 2010 compared to the earlier year, contributed the most to the decline in total expenses of the companies during the period, it said.
In 2014 edition, the raw material expense, constituting over 55% of the total expenses, emerged as the single most factor driving the expense of Top 500 companies. This dented their profits, which grew marginally by 3.4% during 2014 as compared to 2012.
The expenses during the five year period grew at a CAGR of 14.5%. Raw material which accounted as the most important cost component grew at a CAGR of 24.8%, which is faster than the sales which grew at a CAGR of 14.3% during FY09-13, indicating the sharp increase in the commodity prices.
Sectors | 2009 | 2014 |
No of co's | No of co's | Shares in PAT | No of co's | No of co's | Shares in PAT |
Banks | 38 | 14.2 | 18.9 | 40 | 16.5 | 21.2 |
Construction | 22 | 2 | 1.3 | 29 | 2 | 0.9 |
Pharmaceuticals | 31 | 1.9 | 2.3 | 25 | 1.6 | 2.4 |
Textiles | 22 | 1.2 | 0 | 25 | 1.6 | 1 |
Iron | 33 | 5 | 6.5 | 22 | 4 | 3.3 |
Engineering/Capital Goods | 25 | 3.9 | 4.1 | 20 | 3.6 | 4 |
Auto | 12 | 0.6 | 0.4 | 20 | 0.9 | 0.8 |
Source: D&B
Sector wise comparative financial performance
Banks and textiles sectors witnessed maximum increase in their contribution towards the total income and PAT of Top 500 companies in 2014 edition. These sectors collectively accounted for 30.3% of the total income and 33.5% of the net profit of Top 500 companies in the 2014 edition.
Gems and Jewellery sector emerges as the top performing sector
Total income of 15 sectors registered a growth of over 15% CAGR for five years outperforming the overall 14.3% CAGR of Top 500 companies during the same period. Of these, net profit of 10 sectors grew at CAGR of over 20% during the five years, which again outperformed the overall net profit CAGR of 12.6% of the Top 500 companies. Revenue of majority of these sectors is driven by domestic markets except for the gems and jewellery, where exports play an important role. Of all the 15 sectors, gems and jewellery sector registered a maximum CAGR of over 35% in total income and over 53% CAGR in net profit, mainly due to strong demand in the international market.
Banks and oil and gas sectors emerge as the top equity dividend payers
The total dividends paid by the Top 500 companies increased by 24.6% in FY13 on a y-o-y basis to Rs 1,097.4 bllion, higher as compared to FY12. The top six dividend paying sectors contributed over 56% of the dividends paid by Top 500 companies in 2014, which was higher that all the earlier editions. Of the six sectors, the banks contributed to the most (14.4%) to the overall dividends paid by Top 500 companies in 2014, followed by oil and gas exploration at 11.1% and software and ITeS at 9.2%. In FY13, software and ITeS companies registered the highest y-o-y dividend paid out growth of 47.2%, followed by coal & coal products at 38.8%.