Reliance group, Tatas increase profit margins in H108-09

It pays to be big. When Corporate India is rueing over faltering bottomline, the big brothers have succeeded in bucking the trend. Mukesh Ambani Reliance group, the biggest in terms of sales or the Tatas, the second biggest, both have increased their margins in the first half of the current year over the same period last year when most of the smaller groups have witnessed a decline in their margins. The aggregate net profit of Mukesh Ambani group has increased 10.2% in the first half of 2008-09 while that of 27 companies of Tata Group has risen 10.4%. The growth rate of profit of both of them has decelerated compared to the same period of 2007-08 net profit of Reliance and the Tatas had increased 32% and 24.5%, respectively, in the first six months of 2007-08 over the same period of 2006-07 but what is important is that amidst faltering bottomline they have managed to increase their profit. Much of the rise in Tata Group profit in the current year owes its origin to the good performance of its flagship company Tata Steel which has witnessed a sharp 35.8% rise in net margins in the first half following sharp rise in turnover net sales increased 45% during this period. The net profit of Tata Motors, however, has declined during this period as tight demand conditions resulted in a fall in unit price realisation. Net profit of Tata Motors has declined a huge 32.3% in the first half of the current year against a 24% rise in the same period last year. Of the 27 group companies , 16 have increased their net profit in the current year. Titan Industries and Tata Coffee have more than doubled their net profit during this period. The deceleration in profit growth of Reliance in the current year at the other end, has largely been due to sharp rise in expenditure . The net sales of Reliance Industries (RIL) have grown by a huge 40.3% in the first half of the current year, but its total expenses have grown 47.2% during the same period following higher crude prices. The raw materials cost of RIL, which accounts for more than 90% of its total expenses , have increased 67% during this period. The company has, however, still managed to increase its net profit by over 10%.