The Reserve Bank of India today released the November 2013 issue of its monthly Bulletin. The Bulletin includes one special article: Finances of Non-Government Non-Financial Private Limited Companies, 2011-12. The article analyses the financial performance of select 1,741 non-government non-financial (NGNF) private limited companies during 2011-12, based on their audited annual accounts. It also draws a comparative picture over the five year period from 2007-08 to 2011-12 based on the previous studies on private limited companies published earlier.

Main Findings:

• Growth in sales of select NGNF private limited companies moderated in 2011-12 following the recovery in 2010-11, across manufacturing and services sectors. Higher growth in operating expenses than that of value of production led to lower growth in earnings before interest, tax, depreciation and amortisation (EBITDA). Rise in interest payments in 2011-12 resulted in lower net profit.

• EBITDA growth of most of the industries in manufacturing sector was low or negative in 2011-12, whereas in the services sector it remained high as the sector could contain growth in its operating expenses.

• Total net assets of select companies grew at a much lower rate in 2011-12. Slower pace of expansion was observed in all the major sectors viz., manufacturing, services and construction. It was also spread across most of the industries and across companies in different sales-size classes.

• The borrowings to equity ratio, at aggregate level, which declined during 2010-11 increased in 2011-12. Debt to equity ratio also increased in 2011-12. The increase was observed mostly in services sector industries.

• The interest coverage ratio (EBIT to interest ratio) at the aggregate level registered a significant decline in 2011-12 and reached the lowest level during the last five years.

Alpana Killawala
Principal Chief General Manager

Press Release : 2013-2014/964