Non-financial private firms’ sales decline continues in Q3

Sales of listed non-financial private companies continued to decline in the third quarter of this fiscal for the aggregate level and manufacturing mainly due to fall in petroleum products and iron and steel industry, according to the RBI data.

Net profit, however, grew by 15.9 per cent in the third quarter this fiscal against 9.9 per cent in the previous quarter, the RBI data released on Wednesday showed. RBI said the data is based on abridged financial results of 2,736 listed non-government non-financial companies.

“Among the sectors, net profit showed a significant improvement for the manufacturing sector, contracted for the services (Non-IT) sector and decelerated sharply for the IT sector,” RBI said while releasing the data on ‘Performance of the Private Corporate Business Sector’ during the third quarter of 2015-16.

It said that contraction in sales continued in the third quarter for the aggregate level and manufacturing sector, primarily driven by the contraction in ‘Petroleum Products’ and ‘Iron & Steel’ industry”. Further, year-on-year sales growth of the IT sector and services (other than IT) sector moderated in October-December. On the expenditure front, expenses in raw material continued to contract. “Y-o-Y growth rate of staff costs increased for the IT sector and the services (other than IT) sector,” RBI said.

Also, cost of raw materials to sales ratio declined at the aggregate level and in the manufacturing sector. The data also revealed that at the aggregate level, operating profit, which was stagnant in third quarter of the last fiscal grew by 9 per cent in third quarter of 2015-16.

As per the data, operating profit growth for the manufacturing sector improved to 11.7 per cent from a contraction of 3.1 per cent in the third quarter of 2014-15. Though, it decelerated slightly for the Services (Non-IT) sector and sharply for the IT sector. Further, year-on-year growth in interest expenses declined significantly in the quarter at the aggregate level and across all sectors. “Debt servicing capacity as measured by interest coverage ratio declined in Q3:2015-16 as compared with the previous quarter.

“However, it showed marginal improvement as compared with Q3:2014-15 at the aggregate level and in the manufacturing sector,” the data said. On pricing power the companies, RBI said it decreased in October-December 2015-16 from the levels observed in the previous quarter for the aggregate level, manufacturing and IT sectors. However, it remained higher than the levels observed in the third quarter of the last fiscal for the aggregate level, manufacturing and services (Non IT) sectors. RBI also released the data related to the performance of Non-Government Non-banking Financial and Investment (NGNBF&I) companies (including chit fund/Kuri and mutual fund companies) for 2014-15.

Financial income of the select 23,293 NGNBF&I companies witnessed a growth of 17.1 per cent in 2014-15 (15.1 per cent in 2013-14) mainly due to higher interest income.

Total income increased by 17.4 per cent during 2014-15 as against 13.1 per cent increase recorded in the previous year. On the liabilities side, share of short-term and long-term borrowings increased during 2014-15 as compared to the previous year. However shareholders’ fund declined gradually over the three years period -- 2012-13 to 2014-15.

On the assets side, share of short-term loans and advances along with current investment increased during 2014-15. The share of long-term loans and advances as well as non-current investment declined in 2014-15 as compared to the previous year.