Today, the Reserve Bank released data on the performance of the private corporate sector during the first quarter of 2019-20 drawn from abridged financial results of 2,696 listed non-government non-financial (NGNF) companies. Data pertaining to Q1:2018-19 and Q4:2018-19 are also presented in the tables to enable comparison. The data can be accessed at https://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics#!2_42.

Highlights

Sales

• Demand conditions for the manufacturing sector weakened in Q1:2019-20, with a contraction (y-on-y) in nominal sales; petroleum products, iron and steel, motor vehicles and other transport equipment companies were the major contributors (Table 2A and Table 5A).

• Sales growth (y-on-y) of information technology (IT) companies moderated, whereas that of the non-IT services companies, especially in wholesale and retail trade, transport and storage services, posted higher sales growth (Table 2A and Table 5A).

Expenditure

• Softening of commodity prices resulted in lower input costs (i.e., raw materials), which aided manufacturing companies (Table 2A).

• Staff cost in manufacturing and IT companies decelerated marginally, but it increased for non-IT services (Table 2A).

Operating profit

• Operating profit for the manufacturing sector contracted by 4.3 per cent, mainly due to a production slowdown (Table 2A).

• Non-IT services companies, especially in wholesale and retail trade and telecommunication, registered sharp increases in operating profit (Table 2A and Table 5A).

Interest

• Interest expenses of manufacturing companies witnessed moderation in growth (y-on-y), primarily due to contraction in interest expenses of iron and steel companies (Table 2A and Table 5A).

• The interest coverage ratio (ICR) of the manufacturing sector remained stable at above five¹; while it improved for non-IT services companies (Table 2B).

Pricing power

• Pricing power improved in both manufacturing and services sectors; muted commodity prices supported profit margins of manufacturing companies (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 containing the methodology followed for compilation of data, and the glossary (including revised definitions and calculations that differ from previous releases) are given at the end.

Ajit Prasad
Director  

Press Release : 2019-2020/878

¹ The interest coverage ratio (ICR) is the ratio of earnings before interest and tax to interest expenses. It is a measure of a company’s debt servicing capacity. The minimum value for a viable ICR is 1.