Performance of Private Corporate Business Sector during 2019-20

Today, the Reserve Bank released data on the performance of the private corporate sector during 2019-20 drawn from abridged financial results of 3,064¹ listed non-government non-financial (NGNF) companies. Data pertaining to 2018-19 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.

• Sales of manufacturing companies declined by 7.4 per cent during 2019-20 as against 14.8 per cent growth in the previous year; this contraction in sales was broad based across industries (Table 2A and Table 5A).

• Service sector companies in the information technology (IT) and non-IT sectors recorded sales growth of 8.4 per cent and 6.9 per cent, respectively, during 2019-20 which was lower than their growth in the previous year (Table 2A); telecommunication and hospital sectors, however, recorded higher sales growth (Table 2A and Table 5A).

• Subdued production related activities resulted in lower expenditure on raw materials by manufacturing companies during the year (Table 2A).

• Growth in staff cost remained steady for services (IT and non-IT) sector companies but decelerated for the manufacturing companies (Table 2A).

• Interest expenses of services sector companies (IT and non-IT) surged during 2019-20 as the new accounting norms² prescribed inclusion of lease payment obligations under this head (Table 2A).

• The interest coverage ratio (ICR)³ of manufacturing companies declined to 4.3 in 2019-20 from 5.4 in the previous year; ICR remained very high for IT companies but it slipped below the unity level for non-IT service companies (Table 2B).

• Subdued demand conditions resulted in 11.0 per cent decline in net profits of manufacturing sector companies during 2019-20 as against 42.2 per cent growth in the previous year and the net profits of the services (non-IT) sector companies remained in contraction; net profits of IT companies, however, increased (Table 2A).

• 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.

     
Chief General Manager

¹ Due to Covid-19 pandemic, the Securities and Exchange Board of India (SEBI) extended the deadline for submission of financial results for the year 2019-20 by listed companies to July 31, 2020.

² As per Indian Accounting Standard (Ind AS) 116 which came into effect on April 1, 2019.

³ 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.