Costlier raw materials and higher wage bills have eaten into India Inc's profits in the latest quarter — and the overall figure has been further dragged down by losses incurred by public sector oil refiners.
An analysis by Hindustan Times shows profits for 327 companies from the BSE 500 list that have announced their results have dipped by 13.8 per cent year-on-year, even as their revenues grew 19.4 per cent in the April-June quarter.
The group as a whole saw profits slip to Rs 48,109 crore in the quarter, down from Rs 55,831 crore in the same period last year.
For these 327 firms, the quarterly raw material bill surged 37 per cent — to 55.8 per cent of total income from 48.7 per cent a year ago. The salary bill rose 16 per cent for the group, to Rs 39,645 crore from Rs 33,956 crore a year ago.
Metals, cement, fertiliser, chemicals, tyre and sugar companies were among those hit by higher input costs.
"There has been an impact of the input cost, rise in wages and interest costs in the current quarter along with a base effect on the bottomline which will continue in the second quarter too," said Aseem Dhru, CEO, HDFC Securities but added there was room for optimism.
"I expect profit growth in the second half as commodity prices have softened now and monsoon is also on schedule," he said.
Oil refiners IOC, BPCL and HPCL which had been forced by government regulations to sell their petroleum products at lower levels, lost Rs 6,990 crore because they could not pass on higher crude costs to consumers. Oil explorer ONGC saw its profits dip 25 per cent for the same reason.
Banking and finance and pharmaceuticals sector, however, shone in the quarter, with combined profits rising 29.4 per cent.