Despite being hard hit by the coronavirus-linked economic shutdown, the top 30 Sensex firms in India showed resilience, at least in terms of employee expenses. Amid all gloom and doom around mass lay-offs, they registered 5.2 per cent increase in their combined salary expenses in the June quarter of the current fiscal, on a yearly basis. That's a tall order to fill given the sharpest decline in revenues, at 16 per cent, in almost 15 years. Employee expenses grew at a higher rate of 9.5 per cent in the previous quarter when the sample reported almost flat sales growth. Besides, the aggregate bottom line of these Sensex firms plunged to a new low of nearly 42 per cent, year-on-year, during the June quarter. By dint of this massive contraction, the share of this expense head (as a per cent of net sales) too reached its high of 15.7 per cent during April-June 2020 compared to almost 13 per cent in the March quarter.
Altogether, 16 such firms have seen their top line dwindling in the first quarter, and 44 per cent of them were on the vanguard to pay more to their employees. These include Asian Paints and ITC which saw a 44 per cent and 14.2 per cent decline in total income, year-on-year, on a standalone basis, while their salary expenses grew 9.8 per cent and 1 per cent, respectively, during the period.
In the balance 14 companies where most managed a single-digit top line growth, employee expenses grew in nearly 80 per cent instances. FMCG majors like Hindustan Unilever and Nestle posted a sub-5 per cent revenue growth but their employee costs grew in double-digits, in Q1FY21.
Meanwhile, the unemployment rate tracked by the Centre for Monitoring Indian Economy (CMIE) jumped about 11 percentage points from 7.8 per cent in the March quarter to 18.9 per cent in the June quarter of fiscal year 2021.