Cost reduction exercises and government’s stimulus package has brought out good results and enabled companies to perform better this quarter compared to last year. A study conducted on 3,884 companies listed on the stock exchanges revealed that fewer companies posted losses in the December 2009 quarter. Only around 22.5 percent (876 companies) made losses during December 2009 quarter compared to 39.3 percent (1,444) last year. In terms of value, compared to the loss of Rs. 14,284 crore in December 2008 quarter, the loss amount decreased by 68 percent to Rs.4,570 crore in December 2009 quarter.

During December 2009 quarter, the top five loss-making companies are MTNL, Kingfisher Airlines, Suzlon Energy, Essar Oil and Wockhardt. Similarly, during the October-December 2008 quarter, the top five loss making companies were CPCL, Essar Oil, Ranbaxy Lab, Ispat Industries and HPCL. According to an analyst the reason for the improvement is due to the stimulus packages offered by various central banks across the world which has led to demand growth in most of the regions, particularly in India. Government stimulus package has also benefited certain sectors like metals, tyre, automobiles, textiles and consumer durables. Improved consumer spending, lower interest rates and cost reduction measures have also improved the profitability of companies compared to last year.

The much-awaited budget presentation is over and it is time for analyzing Finance Minister Pranab Mukherjee’s rationale and reasoning behind each detail in the Budget speech.

The consensus is that the Budget is growth-oriented. The FM has given the public and industry sources a reason to cheer. While some tax sops were offered to appease the common man and India Inc, hiking of excise duty and MAT rate proved dampeners. Withdrawal from stimulus packages is only partial, paving way for continuation of low-interest loans. Mukherjee has decided to postpone the introduction of GST by one year to April 2011.

Despite going soft on taxes and other revenue collections, Mukherjee has managed to bring down government borrowings. For this, FM is banking heavily on a 10%+ growth rate. Also, he is assuming that the rise in fuel prices by way of 2% increase in excise duty, will not further inflation.

Mukherjee has acknowledged the part played by domestic consumers in bailing out the economy in its hour of crisis. By raising the tax limits, he has tried to woo them to spend more and propel the growth rate to double digits. FM is relying on the additional purchase power accorded to the taxpaying public to compensate for the rise in prices of various consumer products due to higher tax rates and excise duty.

FM has tried to appease rural India by continuing the loan waiver scheme for six more months up to June 2010. The interest rate for crop loans has been brought down to 5% and a four-pronged scheme for the agriculture sector has been introduced. However, the increased allocation for NREGS may not be enough even to compensate for inflation.

One of the surprises in the Budget is the plan to issue fresh banking licenses to private players and non-banking financial companies. Plans are afoot to revamp the FDI policy. Budget announcement points to setting up a regulator and introduction of FDI in retail.

How the Budget will impact the big problems of inflation and fiscal deficit remains to be seen.

The threat of poaching is very real for India Inc as the economy shows signs of recovery. With the economic recovery, India Inc is on a hiring spree again. Of course, this makes the threat of poaching very real for most organisations. Companies are therefore, now trying to put in succession plans to safeguard the employees and the talent that they have built up over the years.

The succession plans of most companies are targeted towards the top and the middle management. The potential leadership blueprint is being prepared in companies like LG, Dabur, Maruti Suzuki, Indian Oil and more. This way, they will be able to offer more lucrative offers to existing employees, thereby preventing attrition.

LG has already formed a five year career plan for all their employees. Structured trainings and initiatives of development will be forwarded to not only the critical talent but to the entire workforce. This will not only help them nurture their talent but also allow them to build loyalties.

Though the New Year started with much optimism regarding hiring activity, India Inc still remains cautious about hiring. In December 2009, hiring activity saw a drop of 6 percent compared to November due to year-end holiday season. Companies remain cautious about hiring even this quarter (January-March), though the employment outlook index for the January to March period is estimated to be at 47 index points, 1 percent higher than the previous year.

According to Vice-President Rajesh, TeamLease Services, a leading staffing firm, said that “Hiring sentiments have marginally improved this quarter, in line with the Industry’s positive outlook. Our estimates show that there would be a leap of faith during this current quarter and trends will not just hold out, they will be bolder and result in higher employment gains. That said, employers are cautious and are placing stronger emphasis on skill-gap and employability. It must be noted that the intention to hire is still weak this time around. The jitters have been shaken off, however, and the numbers are now likely to ramp up steadily.”

IT companies have started hiring employees after a year of flat growth. The intention for hiring is increased for marketing and customer service levels and not much on managerial positions. According to the survey done by TeamLease, there has been a rise in employment outlook index points of all cities except Mumbai, Delhi, Hyderabad and Ahmadabad. And hiring sentiments is on the rise across most of the sectors except financial and pharmaceutical sector.