India Inc is not only getting back at its feet after fighting the recessionary pressures, but also recording strong growth numbers. Sterling profit figures clocked by most corporate giants as well as SMEs in India during October-December 2009 bear testimony to the end of the rough patch for the commercial sector and also marks the beginning of a good growth year ahead.

On the growth track

According to industry data, in the third quarter that ended in December 2009, India Inc has registered a net profit rise of 62%, with SMEs posting a 25-fold increase in net profit on the back of a 730 basis points jump recorded in operating margins.

The rise in net sales and profit margins of corporate companies, including SMEs have made the industry players as well as policy makers hopeful of witnessing a broad-based economic recovery soon, said A Somani, senior analyst at Balaji Securities, an equity broking firm in New Delhi.

Profit of corporate India recorded a surge of 310 basis points, with uptick witnessed in key sectors such as capital goods, consumer durables, auto, auto ancillary, chemicals and manufacturing.

The third quarter witnessed a rise in order inflow as well as sales of most SMEs engaged in auto components, chemicals, manufacturing and capital goods, among others. This resulted in good earnings for small businesses, thereby contributing to the overall rise in margin of corporate India, said Nand Kumar Laddha, an independent chartered accountant in Kolkata.

However, the total net profit recorded in the third quarter of 2009-10 stands at Rs 2,773 crore, as against Rs 3,394 crore recorded for the same period in 2007-08, reflecting a decline of 18.3%. Researchers at Edelweiss believe that SMEs need to catch up on the performance front and kick start initiatives to increase their revenues.