Sales growth of companies slide for sixth consecutive quarter: RBI

Only IT sector sales growth higher than previous quarter

Sales growth of Indian companies continued to decelerate in the fourth quarter last year, according to data compiled by Reserve Bank of India (RBI). This is the sixth consecutive quarter of declaration in sales growth.

Sales grew by 4.2% in the fourth quarter compared to 9.2% in the previous quarter and 15% in the corresponding quarter last year.   

The data is based on declared financial results of 2,686 non government non financial listed companies for the fourth quarter of FY13.           

Sales growth was lowest since second quarter of fiscal 2010. Earnings before interest, tax, depreciation and amortization (EBITDA) and net profits of the companies contracted after observing growth in the preceding two quarters, RBI said.

Growth in companies interest expenses also slowed down compared to third quarter which resulted in lesser interest burden and improved interest coverage ratio. Interest expenses grew by 10.9% in the quarter compared to 17.2% in the third quarter and 34.8% a year ago.    

Even if EBITDA contracted, EBITDA and Earnings before interest and tax (EBIT) margins improved slightly, RBI said in a statement. Net profit margin declined nominally for the companies in fourth quarter.

EBITDA growth improved for the IT sector and decelerated for the manufacturing sector, central bank said adding EBITDA contracted for non-IT services sector. Net profits contracted for all three sectors, said RBI.   

Sales growth deceleration was spread across all sectors excluding IT. IT sector sales growth was better than third quarter.  
Large companies witnessed a slower increase in sales and expenditure with marginal rise in EBITDA and contracting net profits, said RBI data.

Companies with sales between Rs 500 – 1,000 crore performed better than the previous quarters and all other companies witnessed contraction said RBI.