Sales growth of non-financial private corporate business falls

Sales of the manufacturing sector remained almost stagnant with a growth of only 0.8% in first quarter of the current fiscal

Annual growth in sales of non-financial private corporate business fell to a post-crisis low of 2.6 per cent in the quarter ended June, showed Reserve Bank of India data released on Friday.

According to the data, earnings before interest, tax, depreciation and amortisation (Ebitda, or operating profits) rose 1.1 per cent, against near-stagnation in the previous quarter.

However, net profits contracted for the second consecutive quarter. While the Ebitda margins remained range-bound, net profit margins declined further.

Sales in the manufacturing sector increased just 0.8 per cent during the quarter. While Ebitda and net profits fell, profitability in terms of Ebitda and net profit margin worsened.

Sales growth in the information technology sector improved. Ebitda also grew at a higher rate compared to the previous quarter. Net profit increased, after contraction in the quarter ended March. While the Ebitda margin improved, the net profit margin continued to decline.

Average growth in interest expenses, as well as for the manufacturing sector, rose during the quarter ended June. The interest coverage ratio (earnings before interest and tax/interest expenses) contracted for the manufacturing and services sectors.

The decline in sales growth was spread across industries. Sales contracted in the motor vehicles, iron & steel, cement, coke & refined petroleum products and electrical machinery & apparatus industries. The cement, iron & steel and construction industries recorded a significant fall in Ebitda and net profit.

For all these industries, profit margins contracted. Interest coverage declined for most industries, the data showed.