Today, the Reserve Bank released data on the performance of the private corporate sector during the second quarter of 2020-21 drawn from abridged quarterly financial results of 2,637 listed non-government non-financial (NGNF) companies. Data pertaining to Q2:2019-20 and Q1:2020-21 are also presented in the tables to enable comparison. The data can be accessed at the web-link https://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics#!2_42.

Highlights

Sales

• Demand conditions in the manufacturing sector moved to the path of recovery with a softer contraction of 4.3 per cent (Y-o-Y) in nominal sales after a contraction of 41.1 per cent in the previous quarter, which witnessed major country-wide lockdown due to the COVID-19 pandemic; the recovery was led by iron and steel, food products, cement, automobile and pharmaceuticals companies (Table 2A and Table 5A).

• Nominal sales of non-IT services sector also registered lower contraction of 14.5 per cent (Y-o-Y) led by expansion in sales of telecommunication and real estate companies (Table 2A and Table 5A).

• Sales growth of IT sector companies remained steady at 3.6 per cent (Y-o-Y) in Q2:2020-21 (Table 2A).

Expenditure

• Input cost pressure from raw materials remained subdued for manufacturing sector in Q2:2020-21 (Table 2A).

• Staff cost growth (Y-o-Y) decelerated for IT companies in Q2:2020-21, whereas it remained in contraction zone for the manufacturing and non-IT services sectors (Table 2A).

Operating profit

• Operating profits of manufacturing companies increased on the back of savings in expenditure; operating profits of services (both IT and Non-IT) companies also increased in Q2:2020-21 (Table 2A).

Interest

• With rise in profits, interest coverage ratio (ICR)¹ of manufacturing companies improved to 4.6 in Q2:2020-21 from 2.4 in the previous quarter; the ICR of non-IT services companies remained below one (Table 2B).

Pricing power

• Profit margins improved across manufacturing and services companies on account of rise in profit from cost saving (Table 2B).

Notes:

• The coverage of companies in different quarters varies, depending on the date of declaration of results; this is, however, not expected to significantly alter the aggregate position.

• Explanatory notes detailing the compilation methodology, and the glossary (including revised definitions and calculations that differ from previous releases) are appended.

Ajit Prasad
Director   

Press Release: 2020-2021/830

¹ ICR (i.e., ratio of earnings before interest and tax to interest expenses) is a measure of debt servicing capacity of a company. The minimum value for a viable ICR is 1.