The December 2008 quarter is turning out to be one of the worst in several years as the number of companies posting losses has shot up. While the profits of blue chips are under pressure, small and mid-cap companies are bleeding.
“I expect the problem of corporate growth and profitability will continue for around 12-18 months,” said the head of equities of a large global financial firm. “Smaller companies will find harder to survive if they suffer cash losses and will face a larger growth problem.”
As many as 17 out of 163 companies from the list of BSE 200 companies that have declared their results have posted losses — several of them after a few years of stable growth and turnaround.
While Tata Motors posted losses for the first time since December 2001, JSW Steel went into the red for the first time since September 2002. Suzlon Energy showed losses in its quarterly result for the first time since June 2004 and Mangalore Refinery witnessed the same for the first time since March 2006.
Others in the list that registered losses also did so in the quarter ended September 2008.
More than half the companies — 86 out of 163 — registered a negative growth in their profits, while the total profits for all the 163 companies contracted by 12.3 per cent over the same quarter last year.
The results of the 169 companies in the list of the BSE mid cap index that have announced their results reveal that these companies have posted a contraction in profits of 52 per cent even though their revenues are up by 19 per cent.
Similarly, the results of the 221 companies in the BSE small cap index show the situation to be even worse: profits have contracted by 62 per cent, with almost one in four companies witnessing losses.