PSU banks continued to report large losses in the quarter ended June 2018 due to forced accelerated recognition of bad loans. The losses affected Corporate India's aggregates heavily and made proper analysis impossible. Hence, the results of PSU banks have been excluded from the aggregates.

Consolidated priority sales of Corporate India excluding PSU banks and PSU oil and gas companies increased 15%, the operating profit margins rose to 19% from 18.3%, leading to 19% increase in operating profit in the June 2018 quarter over a year. Other income was up 6% and interest cost 15%, resulting in profit before depreciation and tax growing 17%. Post 14% higher provision for depreciation, profit before tax was up 19%. With provision for tax jumping 25%, profit after tax (Pat) could go up 15%. Cash profit improved 15%. Profit attributable to owners after adjusting for minority interest and associates' profit or loss increased 15%. Such a growth has been reported after several quarters of flat to negative rates. However, the June 2018 quarter had the benefit of a low base of the June 2017 quarter that was affected by the planned slowdown in economic activity ahead of the implementation of the goods and services (GST) from 1 July 2017. Many companies had reported fall in sales and profit in the June 2017 quarter. Hence, the bounce in growth should not be seen in isolation.

Including PSU banks and PSU oil and gas companies, Corporate India's consolidated priority sales were up 15% but Pat inched up just 5% in the quarter ended June 2018 compared with the quarter ended June 2017. Excluding only PSU oil and gas companies, Corporate India's consolidated priority sales went up 13% but Pat declined 2%.

Industries posting profit in the June 2018 quarter compared with losses in the corresponding previous quarter included cables-power, finance-term lending, hotels, paper, solvent extraction, steel–large and textiles-cotton/blended. Industries reported a sharp increase in profit comprised electrodes-graphites, glass and glass products, computers-education, packaging, aluminum and aluminum products, fertilizers, castings and forgings, tyres, electrodes-welding, cholor alkali/soda ash, pumps, compressors, petrochemicals, pharmaceuticals-MNCs, steel-sponge iron, aquaculture and molded luggage.

Airlines, telecommunications-equipment, sugar, diamond/jewelry, construction and PSU banks reported losses in the June 2018 quarter compared with profit in the corresponding previous quarter. Losses of shipping, telecommunication - service providers and electronics-consumer widened.

Industries recording a sharp fall in profit consisted of textiles-processing, travel agencies, electric equipment, cement-south India, ceramics-tiles/sanitary-ware and air-conditioners.

Among leading industrial houses, PSUs posted the best 77% growth rate in Pat on 14% rise in sales. MNC associates registered 16% Pat growth and 15% sales growth. Idea's losses marred the Aditya Birla group's show.

Among the index constituents, S&P BSE Midcap index companies posted the best growth of 32% in Pat. The S&P BSE Sensex companies notched the best 22% sales growth. The S&P BSE Smallcap index fared poorly, with 2% dip in Pat on 11% jump in sales. The CNX Nifty companies reported 9% growth in Pat compared with the BSE Sensex companies' 14% Pat growth.

Pat of about 59% of the companies increased and that of 41% declined. The balance had almost stagnant profit. Most companies (13.3% of total) reported Pat expansion between 50% and 100%. The number of companies reporting profit in the quarter compared with losses in the corresponding previous quarter (401) was higher than the number of companies reporting losses in the quarter compared with profit in the corresponding previous quarter (393).

Sail, Heg, Jindal Steel, Fact, Ruchi Soya, JK Tyre, Tamil Nadu Newsprint, Satin Creditcare, Usha Martin, Aster DM Healthcare and Ipca Labs were among the companies reporting a positive turnaround (profit against losses). Companies showing a sharp increase in profit comprised Talwalkar Bettervalue, India Gelatine, Nath Pulp, Khaitan Chemical, CMI FPE, Rane (Madras), Entertainment Network, Roto Pumps, Dharamsi Morarji, BASF, KDDL, Seamec, Emami, Ceat, Intellect Design, Graphite India, Hindustan Oil Exploration, Glaxo Pharma, Disa India, Ineos Styrolution, Sequent Scientific and WPIL.

Companies registering a sharp fall in Pat included H T Media, Interglobe Aviation, IVP, Mandhana Retail, Nahar Industrial Enterprises, Vakarangee, OnMobile Global, Welcast Steels, Mirc Electronics, ITDC, NLC India, Tanla Solutions, HSIL, J&K Bank, TBZ, Saurashtra Cement, South Indian Bank, Skipper and Gati.

Companies recording a negative turnaround (losses against profit) consisted of most PSU banks topped by State Bank of India, Allahabad Bank and Punjab National Bank. Other negative turnarounds included Suzlon Energy, Tata Power, GE Shipping, IL&FS Transport, JP Associates, GTL Infra, Lakshmi Vilas Bank, Reliance Communications, Tata Communications, Fortis Healthcare, GTL, Rolta India, Pioner Distolleries, PNB Gilts, Rajshree Sugars, Sunil Hitech and Rana Sugars.

The Sensex started the June 2018 quarter at around 32,969 and ended the quarter up 7% to about 35,423. The benchmark was trading at the 38,722 level on 29 August 2018. The surge in the main index was primarily led by concentrated buying in a few stocks and domestic institutional investors deploying the investable funds being garnered through systematic investment plans that have gained popularity among retail investors. The broad market crashed in the March 2018 quarter and again in April-May but recovered in June-July and became range bound in August even as the Sensex and the Nifty kept scaling new highs.

The concerns of increase in inflation, higher oil prices, rupee depreciation
and hardening interest rates are being offset by benefits of GST, near-normal south-west monsoon, improving rural demand and good global demand. While
Corporate India enjoyed the benefit of a low base in the June 2018 quarter, their real strength will be visible in the subsequent quarters.