All round growth

The profits are rolling in across sectors. The excellent performance—a highlight of India’s growth story over the last couple of years—continued to gather steam in the first quarter of the financial year 2007-08. The stars were sturdy sectors like telecom, banking, cement, engineering and capital goods.

On the aggregate front, in the first quarter ended June 2007, revenues increased by 17.9 per cent over the corresponding quarter last year while net profits rose higher by 37.7 per cent.

The biggest sector, oil and gas, saw a steady increase in revenues by 8 per cent, but a higher profit growth of 41.1 per cent due to better refining margins. Telecom also rang in profits as economies of scale kicked in for companies. While the lifeline of the Indian economy, the banking sector saw a steady rise in profits of 43.4 per cent on improved net interest. And the power generation sector also improved its profitability on the rising energy demand across the country.

But it was the auto sector, including two- and three-wheelers and heavy commercial vehicles, that witnessed pressure on profits as it flattened out to a single digit growth of 9.1 per cent. Textiles, too, faced hiccups on the export front the last quarter due to rupee appreciation. IT, on the other hand, managed to brave the hardening of rupee—its profit growth was steady at 32.7 per cent.

Overall, the first quarter growth rates are comforting. Though the next couple of quarters are crucial, the results signal good times ahead.