Private Corporate Sector Sales Expand In Q3FY21 After Witnessing Contraction During Previous Six Quarters

Reserve Bank of India has released data on the performance of the private corporate sector during the third quarter of 2020-21 drawn from abridged quarterly financial results of 2,692 listed non-government non-financial (NGNF) companies. With gradual easing of restrictions related to the Covid-19 pandemic and rebound in demand conditions, sales of 1,685 manufacturing companies expanded by 7.4 per cent (Y-o-Y) in Q3:2020-21 after recording contraction during the preceding six quarters; the recovery was led by iron and steel, automobiles, cement, chemicals and pharmaceuticals companies.

Information technology (IT) sector remained in positive terrain throughout the Covid-19 pandemic period and their sales increased by 5.2 per cent (Y-o-Y) in Q3:2020-21.

Non-IT services sector recorded lower contraction (Y-o-Y) in sales [(-)5.7 per cent in Q3:2020-21 vis-vis (-)14.5 per cent in the previous quarter], which was supported by better performance of telecommunication, real estate and trade sector companies.

Manufacturing companies increased their expenditure on raw materials during Q3:2020-21 in tune with rise in sales. Staff cost growth (Y-o-Y) increased for manufacturing and IT companies in Q3:2020-21, whereas it remained in contraction zone for non-IT services sectors. Operating profits for all group of companies improved in Q3:2020-21.

With rise in profits, interest coverage ratio (ICR) of manufacturing companies improved noticeably to 6.6 in Q3:2020-21 (4.6 in the previous quarter); ICR of non-IT services companies remained below one.

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