MUMBAI, December 9: Contrary to the general belief that public sector units (PSUs) are laggards, PSUs have outperformed private sector companies in terms of growth in sales and profits during the first half of 1997-98.

Public sector companies recorded a 10.4 per cent increase in sales against the 10 per cent growth recorded by the private sector.

``The difference is sharp in terms of growth in profits. Public sector companies recorded a 20 per cent increase in profit after tax (PAT) as against the meagre three per cent growth recorded by private sector,'' according to the Centre for Monitoring Indian Economy (CMIE). The good show by PSUs was basically due to the good performance of PSUs like MTNL, Indian Oil, ONGC, BHEL, BPCL, HPCL, GAIL, VSNL and IPCL.

Corporate profits generally recovered during the first half of 1997-98. After having dropped about 10 per cent during 1996-97, profits increased by eight per cent during the first half of 1997-98. Growth in sales, however, has been lower at 9.6 per cent after the 14 per cent increase recorded during the preceding year. ``Manufacturing companies recorded a 9.4 per cent increase in sales compared to 14 per cent increase in the preceding year.

Inflation in manufactured goods has remained constant at around 4 per cent since 1996-97 and real growth in sales has declined from about 11 per cent to about five per cent,'' CMIE said in its latest report.

Growth in profit after tax of manufacturing companies at four per cent during first half of 1997-98 was only half of the overall increase in profits of eight per cent. ``Most consumer goods industries have recorded healthy growth in sales and profits. Tea, beverages and tobacco, textiles electronics, leather and fertiliser companies have recorded above average growth rates,'' CMIE said.

On the other hand, companies engaged in basic industries such as steel and cement, or companies in intermediates such as chemicals and companies engaged in the capital goods segments such as machinery and commercial vehicles faced sluggish growth rates. Among non-manufacturing companies, construction, hotels, hospitals and shipping companies fared poorly.

Profits of the top 50 business houses declined by 0.3 per cent in the first half of 1997-98. Several large companies recorded a sharp decline in net profits. The profit after tax of Telco fell sharply by 35 per cent during the first half of 1997-98 to Rs 214 crore. Tisco recorded a 30 per cent fall whereas PAT of ACC declined by 62 per cent during the first half of 1997-98.

Foreign companies recorded an impressive 16 per cent increase in PAT. Most of these are in industries which have done very well during the period-such as, tea and tobacco product. ITC recorded a 67 per cent increase in PAT.

Colour-Chem more than doubled its PTA to Rs 32 crore in the first half of 1997-98. The PAT of Ingersoll Rand also increased by impressive 78 per cent. Profit margins have improved essentially in the tea, coffee, textiles, computer industries and tobacco products.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.