Profits of big biz surged in FY21, when economy contracted

livemint.com:

₹5 crore and more have reported double digit annual profit growth. The higher the income range of the company, the more the pace of profit growth. CBDT data showed that not only has the number of companies in the ₹50 crore- ₹100 crore gross income range gone up from 1,395 in FY20 to 1,715 in FY21, the sum of gross income in this class of companies surged 21% annually in FY21 to ₹1.19 trillion.

Similarly, the number of companies in the ₹100 crore- ₹500 crore range shot up from 1,472 in FY20 to 1,851 in FY21 and the gross income of all companies in this range shot up 24% to ₹3.87 trillion. The number of the largest companies in the ₹500 crore plus income range grew from 413 in FY20 to 554 in FY21 and the sum of gross income of businesses in this range shot up 39% in FY21 to ₹12.7 trillion from ₹9 trillion a year ago. Overall, gross corporate income shot up 29.7% in FY21 to ₹21.5 trillion.

However, businesses in the lower income range reported a dismal performance in FY21. Smaller companies with income up to ₹1 crore have seen either a contraction or very subdued growth in income. Their performance ranged from a 3.7% contraction to a growth of a maximum of 3.7% in FY21, implying that smaller businesses were not as capable of withstanding the pandemic’s impact on the economy.

Sudhir Kapadia, partner, tax and regulatory services at EY, said after the lockdown, the economy opened up in India fairly quickly in FY21. “The broad inference, one could make is that larger companies were able to withstand the lockdown much better because of their logistical strength and wider reach of distributors, etc. In addition, they were able to benefit from the boost that e-commerce received in the period.