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Aarati Krishnan

Raw material price swings and interest costs have sizeably dented Corporate India’s profits in the December quarter.

But what is the picture on sales growth, the basic indicator on whether companies are still witnessing demand for their goods and services?

Though the sales numbers for the latest quarter are not as bad as the profit numbers, there are clear signs of slackening growth.

The topline (gross sales) for the 1020 NSE-listed companies grew by about 8 per cent in the December quarter over the same period last year. (The number is higher at 11 per cent for the larger companies making up the BSE 500).

However, sales have declined by 14 per cent on a sequential basis, relative to the September quarter.

Even if you do attribute this to a seasonal blip, the number of companies witnessing a sales decline has shot up this quarter.

Four out of every ten (425 of the 1020) listed companies witnessed a contraction in their topline in the December quarter, relative to December 2007.

Less than half this number (194) had seen a contraction in their topline in the September quarter (again, relative to last year).

Real estate, led by larger players such as DLF, Unitech and Parsvnath (sales down 70-80 per cent), automobiles, led by commercial vehicle makers (sales down by 30-40 per cent), brokerages (revenues down by 55 per cent), apart from metal and steel companies, have fared badly on topline growth.

There are however, a good number of sectors that have bucked the slowdown and registered strong revenue/sales growth this quarter.

Infrastructure players such as L&T, Punj Lloyd, IVRCL and Jaiprakash Industries, power generation companies, large software companies (they averaged 25 per cent growth), and FMCG companies managed fairly strong double digit growth.

Cement companies (sales expanded by 13 per cent) managed a surprisingly strong showing helped by better despatches, even as prices remained flat.

While sectors such as power, cement and infrastructure owed their revenue growth to still healthy demand from their users, growth for sectors such as sugar and FMCGs was driven in good measure, by price increases on products, even as volume growth was sedate.

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