Indian economy might be showing signs of a bounce back with the first quarter GDP rising a strong 5.7 per cent, the fastest pace in more than two years, and the stock market hitting new highs every day, but India Inc's financial performance for the last fiscal indicates it’s too early to pronounce that the good times are back again.
Corporate India's sales growth slowed down and bottom-line worsened as per data compiled by Reserve Bank of India (RBI).
According to the central bank, which captured performance of 2,854 non-financial private companies during 2013-14, aggregate revenue growth rate declined from 9.1 per cent in FY13 to 4.7 per cent last year.
This was due to a decrease in the sales growth of manufacturing sector and the services sector (other than IT). IT sector recovered in 2013-14 showing higher growth in sales.
While the sales growth of large companies (annualised sales more than Rs 1,000 crore) moderated, sales growth of companies with annualised sales of Rs 500-1,000 crore remained near stagnant and sales of smaller companies continued to contract, RBI said.
Overall expenditure growth declined due to a fall in the growth rates of raw material expenses and staff costs. Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) growth declined at the aggregate level.
Meanwhile, growth in interest expenses dropped at the aggregate level and also across sectors. Interest coverage ratio, which captures the ability of the firm to service interest costs from their operations, improved as compared with the previous year.
Pricing power as measured by EBITDA margin showed no change at the aggregate level, declined for the manufacturing sector and services (non-IT) sector and improved to some extent for the IT sector.
Net profit margins remained at similar levels for aggregate level and for the manufacturing and improved for the services (IT and non-IT) sectors. But overall net profits declined 5.1 per cent against a fall of 2 per cent in FY13.
(Edited by Joby Puthuparampil Johnson)