Pvt cos record 10.9% decline in net profit in Q1: RBI study

Findings based on abridged financial results of 2,768 listed non-government non-financial companies

Reflecting economic slowdown, listed non-financial private companies on an average posted a decline of 10.9% in net profit in the first quarter of the current fiscal, says a report by the Reserve Bank.

"Sales growth (Y-o-Y) continued to decelerate and reached the post crisis low of 2.6%. Total expenditure growth also declined to 2.2% mainly due to raw material expenses contraction," the Reserve Bank said

The findings are based on abridged financial results of 2,768 listed non-government non-financial (NGNF) companies.

As per the 'Performance of the Private Corporate Business Sector' presented by RBI, the average net profit of the companies declined by 10.9% in first quarter.

The net profit contracted for the second consecutive quarter, RBI said. The net profit (of 2686 companies factored in) had declined by 16% in January-March 2012-13 quarter.

The decline in the first quarter of last fiscal was 10.7% (of 2790 companies factored in by the RBI).

RBI said that coverage of companies in different quarters varies to some extent, depending on date of declaration of quarterly results but "it is not expected to alter the aggregate position significantly".

However, their operating profits (Earnings before Interest, Tax, Depreciation & Amortization or EBITDA), grew marginally by 1.1% in the April-June period against near stagnation seen in the previous quarter.

Decline in sales growth was spread across most of the industries, including motor vehicles, iron and steel, cement, coke and refined petroleum products and electrical machinery and apparatus industries.

"Cement, iron & steel and construction industries witnessed significant contraction in EBITDA and net profit," RBI said.

Sales of the manufacturing sector remained almost stagnant with a growth of only 0.8% in the first quarter.
    
RBI further said that sales growth for the non-IT services sector was lower than that of the previous quarter.

On the other hand, improvement in sales growth was noticed for the IT sector.

The total sales recored by the companies under review was Rs 7,25,800 crore at the end of June 2014 quarter.

The sales in the year-ago period was Rs 7,16,700 crore (of 2,790 companies factored in by the RBI).

India's GDP growth had slumped to 4.4% in first quarter of the fiscal, slowest in four years.