RBI: Corp sales growth at lowest level post crisis

Sales growth in Q3 FY13 was 9.2% to Rs 7.5 lakh cr, as compared to 19.2% in the same period of the previous year

Sales growth in the Indian corporate sector in the October-December period hit the lowest level in the post-2008 crisis period, amid a slowing economy and high interest rates, data from the Reserve Bank of India show.

According to the central bank, which analysed data of 2,745 non-financial private sector companies, sales growth in the third quarter of the previous financial year was 9.2 per cent to Rs 7.5 lakh crore, as compared to 19.2 per cent in the same period of the previous year. In the second quarter, growth in sales was 11.3 per cent.

This was the first time the sales growth touched a single-digit mark since the 2008 global financial crisis, triggered by the collapse of Lehman Brothers, the Wall Street investment bank.

Interestingly, the net profit of companies rose 23 per cent in Q3, on the back of similar growth in the previous quarter. During the third quarter of 2011-12, the net profit of these companies dipped 31.3 per cent.

"Year-on-year growth rates of Ebitda (operating earnings) and net profits remained positive for a consecutive quarter, although they were lower than the previous quarter," RBI said.

The Central Statistics Office has estimated India's growth to be five per cent in 2012-113. RBI data also showed a decline in the operating profit margin in the third quarter. "With negligible support from 'other income', gross and net profit margins recorded a sharper decline," the report observed.

While the slide in sales growth was spread across the manufacturing and information technology (IT) sectors, the latter witnessed a larger fall, across the companies.

Sales of large companies - that is, sales above Rs 1,000 crore - decelerated. They contracted for all other groups. On a year-on-year basis, operating earnings recorded a positive growth for large companies and contracted for others, RBI said.