Sales growth of the private (non-financial) corporate
business sector moderated for the third consecutive year
during 2013-14 caused by decrease in the sales growth of
manufacturing sector and the services sector (other than
IT). IT sector has recovered in 2013-14 showing higher
growth in sales and net profit after some moderation last
year. Net profit of the manufacturing sector contracted
in 2013-14 after recovering to some extent last year. The
performance of small companies has further deteriorated
as seen from the contraction of the sales, EBITDA and net
profit in 2013-14. Percentage share of small companies
in aggregate sales is small and steadily shrinking since
2007-08. This may be a cause of concern as small
companies play an important role in industrial growth,
innovation and employment generation. Small companies
across all sectors (manufacturing, IT and non-IT service)
have shown increase in their interest expenditure to sales
ratios since 2007-08. Sales growth, however showed an
improvement in the medium sized textile companies and
for the pharmaceuticals industry, primarily driven by the
large companies. EBITDA margins improved for the small sized construction companies. Quarterly results of 2,291
common companies showed an overall declining trend in
sales growth during the previous eight quarters. However,
it also showed increase in net profit growth in Q4:2013-
14 on a Y-o-Y basis. Limited results for Q1:2014-15
hinted an improvement in sales growth and profitability.
The article analyses the performance of the
private corporate business sector during 2013-14
based on the profit and loss statements of 2,854 listed
non-government non-financial (NGNF) companies.
Other important financial statements have also been
referred, subject to availability. Besides analyzing the
aggregate performance, the article provides a brief
analysis by size and major industry groups. It also
captures the evolving trend in sales, expenditure and
profit margins of the corporate sector over a longer
horizon. Detailed data has been made available in the
Reserve Bank of India website.
1. Aggregate sales growth moderated and net profits
contracted
1.1. Sales growth (Y-o-Y) of 2,854 companies of the
private corporate sector continued to decelerate in
2013-14, for the third consecutive year. Sales growth
this year was the lowest since 2000-01 (Chart 1).
Table 1 : Performance of the Listed
Non-Government Non-Financial Companies |
No. of companies |
2013-14 |
2012-13* |
2,854 |
2,931 |
Items |
Amount
(` billion) |
Y-o-Y
Growth@ in
Per cent |
Y-o-Y
Growth@ in
Per cent |
1 |
2 |
3 |
Sales |
29,496 |
4.7 |
9.1 |
Value of Production |
29,535 |
4.0 |
8.8 |
Expenditure |
25,771 |
4.2 |
9.6 |
CRM** |
13,897 |
2.0 |
9.1 |
Staff Cost |
2,228 |
11.8 |
14.6 |
Power and Fuel |
947 |
1.0 |
10.3 |
Operating Profits (EBITDA) |
3,764 |
2.3 |
3.5 |
Other Income@@ |
747 |
15.2 |
14.9 |
Depreciation |
1,029 |
8.8 |
9.7 |
Gross Profits (EBIT) |
3,482 |
3.0 |
3.8 |
Interest |
1,091 |
11.5 |
17.5 |
Earnings Before Tax (EBT) |
2,391 |
-0.5 |
-0.2 |
Tax Provision |
618 |
3.6 |
5.1 |
Net Profits^ |
1,706 |
-5.1 |
-2.0 |
Paid-up Capital |
1,110 |
3.8 |
5.5 |
* : Published in October 2013 issue of the RBI Bulletin.
@ : Growth rates calculated on the basis of common set of companies
during any period.
** : CRM : Consumption of Raw Materials.
@@ : Includes forex gain while forex losses are included in Expenditure
^ : Adjusted for non-operating surplus/deficit. |
Though, the expenditure on various heads grew
at lower rates in 2013-14 as compared to 2012-13,
the earnings before interest, tax, depreciation and
amortization (EBITDA) growth also moderated in
2013-14 (Table 1). The trends in various components of
expenditure as a proportion to sales since 2007-08 till
2013-14 revealed that at the aggregate level, CRM (cost
of raw materials) to sales recorded a steady increase
till 2011-12 and then moderated to some extent in
the last two years, while staff cost to sales ratios have
increased in the recent two years after remaining
stable for three consecutive years (2009-10 to 2011-12)
(Table 6). EBITDA margin remained steady in 2012-13
and 2013-14, although significantly at a lower level
than that in 2007-08 (Table 2).
Table 2: Important Performance Parameters |
Period |
No. of
Companies |
Sales Growth
(Y-o-Y) |
Expenditure
Growth
(Y-o-Y) |
EBITDA
Growth
(Y-o-Y) |
Net Profit
Growth
(Y-o-Y) |
EBITDA
Margin
(Per cent) |
Net Profit
Margin
(Per cent) |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
2007-08 |
3,238 |
21.6 |
21.4 |
25.0 |
27.2 |
17.4 |
11.0 |
2008-09 |
2,549 |
17.2 |
19.5 |
-1.0 |
-18.4 |
15.1 |
8.1 |
2009-10 |
2,629 |
11.7 |
9.6 |
26.6 |
28.8 |
16.9 |
9.4 |
2010-11 |
2,763 |
19.8 |
22.1 |
12.4 |
15.8 |
15.6 |
9.0 |
2011-12 |
2,679 |
18.5 |
20.7 |
1.7 |
-16.8 |
13.5 |
6.4 |
2012-13 |
2,931 |
9.1 |
9.6 |
3.5 |
-2.0 |
12.9 |
5.9 |
2013-14 |
2,854 |
4.7 |
4.2 |
2.3 |
-5.1 |
12.8 |
5.8 |
1.2. With ‘non-core’ income growth staying at similar
level in 2013-14, as that of previous year, earnings
before interest and tax (EBIT) growth slowed down.
Net profit of listed NGNF companies contracted in
2013-14 for the third consecutive year. Consequently,
net profit margin of the private corporate sector
declined over the last three years. This is due to the
moderation in expenditure growth during the period.
2. Performance of small companies further worsened
2.1. Size-wise comparison of private corporate sector
showed that small companies (sales less than `1
billion) faced major setback in 2013-14. It reported
sharp contraction in sales following a trend set since
2008-09. This impacted EBITDA growth heavily.
Large companies (sales more than `10 billion)
recorded higher EBITDA growth, while sales growth
moderated. Medium companies (sales between
`1 billion to `10 billion) also recorded lower sales
growth and contraction in profits. For small and
medium companies EBITDA and net profit margins
have been declining since 2009-10. Large companies
showed both margins at last year’s level. Interest
coverage ratio (EBIT/Interest Expenses) showed a
steady decrease since 2007-08 across all sizes. Small companies are struggling to service their debt as
evident from alarmingly low interest coverage ratio in
2013-14 (Chart 2).
2.2. Sales of small companies have remained low
as a percentage of aggregate sales of the listed non-financial private companies. Even that share has
declined further over the years to stand at a meagre
1.3 per cent in 2013-14 (Table 3). However, they still
continue to be the largest group in terms of numbers.
The number and share of sales of large companies have improved over time, and has accordingly dominated
the aggregate sales growth. Only large sized companies
have maintained positive net profit margins in the
last two years, while the small and medium sized
companies are into losses. Declining fortune of the
small companies is a matter of concern as they have
important role to play in economic growth and in
employment generation.
Table 3: Size class wise per cent share in
sales and no. of companies |
Period |
Large |
Medium |
Small |
No. of
Companies |
Per cent
share in
sales |
No. of
Companies |
Per cent
share in
sales |
No. of
Companies |
Per cent
share in
sales |
1 |
2 |
3 |
4 |
5 |
6 |
2007-08 |
363 |
74.5 |
1,091 |
22.2 |
1,784 |
3.2 |
2008-09 |
268 |
76.8 |
933 |
20.7 |
1,348 |
2.5 |
2009-10 |
323 |
79.1 |
973 |
18.8 |
1,333 |
2.2 |
2010-11 |
401 |
81.7 |
1,049 |
16.6 |
1,313 |
1.7 |
2011-12 |
414 |
84 |
998 |
14.6 |
1,267 |
1.4 |
2012-13 |
462 |
85.3 |
1079 |
13.3 |
1,390 |
1.3 |
2013-14 |
474 |
86.3 |
1,001 |
12.4 |
1,379 |
1.3 |
3. IT sector showed improvement
3.1. Manufacturing sector have shown moderation
in the sales growth. Services sector (other than IT)
recorded its lowest sales growth in last seven years.
On the other hand, IT sector has shown overall
improved performance in 2013-14, recording increase
in sales and EBITDA growth. It also, recorded a
sizeable increase in net profit growth in 2013-14
(Table 5). EBITDA margins declined for the
manufacturing and the non-IT services sectors.
However, like small companies across the sectors,
the small IT companies recorded contracting sales.
Furthermore, small IT companies witnessed losses at
the operating level itself (EBITDA negative).
Table 4: Size class wise performance parameters |
Size Classes |
Large |
Medium |
Small |
Period |
Sales Growth
(Y-o-Y) |
EBITDA Growth
(Y-o-Y) |
Net Profit Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Profit Margin
(Per cent) |
Sales Growth
(Y-o-Y) |
EBITDA Growth
(Y-o-Y) |
Net Profit Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Profit Margin
(Per cent) |
Sales Growth
(Y-o-Y) |
EBITDA Growth
(Y-o-Y) |
Net Profit Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Profit Margin
(Per cent) |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
14 |
15 |
2007-08 |
21.7 |
23.5 |
26.1 |
18.5 |
12.1 |
22.9 |
32.5 |
37.6 |
14.8 |
8.4 |
11.4 |
16.9 |
-6.8 |
10.1 |
5.4 |
2008-09 |
20.3 |
1.6 |
-12.5 |
16.2 |
9.3 |
10.2 |
-7.9 |
-40.6 |
11.9 |
4.3 |
-7.8 |
-40.2 |
-84.1 |
8.4 |
1.4 |
2009-10 |
13.0 |
27.1 |
26.4 |
17.6 |
10.2 |
9.6 |
25.0 |
45.7 |
14.7 |
6.5 |
-8.8 |
12.4 |
42.7 |
9.2 |
3.5 |
2010-11 |
20.6 |
13.3 |
18.1 |
16.2 |
9.8 |
19.1 |
7.5 |
4.1 |
13.2 |
5.6 |
-4.4 |
2.2 |
-70.4 |
8.7 |
1.1 |
2011-12 |
20.8 |
3.7 |
-15.0 |
14.0 |
7.0 |
9.5 |
-9.5 |
-34.6 |
11.1 |
3.4 |
-9.2 |
-23.6 |
125.7 |
6.3 |
1.2 |
2012-13 |
10.7 |
4.0 |
3.2 |
13.3 |
6.8 |
1.5 |
0.7 |
-62.1 |
10.5 |
1.3 |
-9.3 |
-14.4 |
$ |
5.4 |
-4.7 |
2013-14 |
6.0 |
5.2 |
0.2 |
13.4 |
6.8 |
1.0 |
-15.1 |
-77.3 |
9.6 |
0.6 |
-26.3 |
-58.2 |
$ |
3.2 |
-11.9 |
Sales less than `1bn for small companies; between `1 bn to `10 bn for medium companies and more than `10bn for large companies.
$: Numerator / denominator Nil/Negligible. |
3.2. During 2013-14, CRM to sales ratio declined for
the manufacturing sector as a whole, while staff costs
increased. For services sectors (IT and non-IT), CRM
to sales ratio declined over a period of time whereas
staff cost to sales has steadily increased. Across the
sectors and size groups it is observed that staff cost
to sales ratio is higher for small companies (Table 6).
This hints at the importance of labour as a factor of
production amongst the small companies. Staff cost
to sales ratio is also high for IT companies irrespective
of size. At the aggregate level, interest to sales ratio has increased from 2.3 per cent in 2007-08 to stand
at 3.7 per cent in 2013-14, witnessing fluctuations in
between.
4. Sales moderated across industries but smaller
companies suffered more even in comparatively
better performing industries
4.1. Most of the industries followed the general
trend of lower sales growth and lower profit (EBITDA)
margins in 2013-14 compared to 2012-13 except the
pharmaceuticals industry.
Table 5: Sector wise important performance parameters |
Sector |
Manufacturing |
Services (other than IT) |
IT |
Period |
Sales Growth
(Y-o-Y) |
EBITDA Growth
(Y-o-Y) |
Net Profit Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Profit Margin
(Per cent) |
Sales Growth
(Y-o-Y) |
EBITDA Growth
(Y-o-Y) |
Net Profit Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Profit Margin
(Per cent) |
Sales Growth
(Y-o-Y) |
EBITDA Growth
(Y-o-Y) |
Net Profit Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Profit Margin
(Per cent) |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
14 |
15 |
2007-08 |
17.7 |
18.4 |
19.2 |
15.9 |
9.7 |
28.0 |
39.4 |
43.7 |
22.8 |
13.1 |
26.0 |
17.5 |
24.3 |
20.7 |
17.8 |
2008-09 |
16.3 |
-4.1 |
-25.6 |
13.5 |
6.6 |
12.2 |
-8.2 |
-22.0 |
20.9 |
10.7 |
18.1 |
17.9 |
2.7 |
20.6 |
15.5 |
2009-10 |
13.3 |
33.9 |
45.2 |
16.1 |
8.6 |
3.7 |
0.0 |
-19.8 |
18.0 |
8.2 |
5.0 |
19.1 |
19.1 |
23.4 |
17.8 |
2010-11 |
23.0 |
11.9 |
20.6 |
14.4 |
8.3 |
7.1 |
9.3 |
3.4 |
17.7 |
7.8 |
15.0 |
11.4 |
12.5 |
22.2 |
16.7 |
2011-12 |
19.5 |
0.1 |
-21.7 |
11.9 |
5.5 |
14.3 |
-0.7 |
-42.2 |
16.1 |
3.7 |
18.6 |
14.9 |
23.3 |
21.6 |
17.5 |
2012-13 |
9.4 |
3.1 |
3.6 |
11.3 |
5.4 |
10.7 |
6.0 |
-29.6 |
16.0 |
2.7 |
11.3 |
17.0 |
7.1 |
22.5 |
16.8 |
2013-14 |
4.3 |
-0.2 |
-7.5 |
10.9 |
4.9 |
1.9 |
-4.5 |
-33.5 |
15.0 |
3.6 |
17.0 |
28.6 |
25.8 |
25.5 |
19.1 |
Table 6: CRM, Staff Cost and Interest Expenditure as percentage to Sales |
Period |
CRM |
Staff Cost |
Interest
Exp. |
CRM |
Staff Cost |
Interest
Exp. |
CRM |
Staff Cost |
Interest
Exp. |
CRM |
Staff Cost |
Interest Exp. |
Large |
Medium |
Small |
All Companies |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
Manufacturing |
2007-08 |
55.0 |
4.3 |
1.8 |
55.9 |
5.8 |
3.3 |
54.6 |
7.1 |
4.2 |
55.2 |
4.7 |
2.2 |
2008-09 |
55.4 |
4.1 |
2.6 |
56.3 |
6.0 |
4.0 |
50.5 |
7.8 |
5.3 |
55.5 |
4.6 |
2.9 |
2009-10 |
56.4 |
4.1 |
2.2 |
53.9 |
6.3 |
3.5 |
50.4 |
8.2 |
5.0 |
55.8 |
4.6 |
2.5 |
2010-11 |
58.9 |
4.0 |
2.0 |
55.4 |
6.4 |
3.5 |
49.5 |
8.0 |
3.9 |
58.1 |
4.5 |
2.3 |
2011-12 |
62.5 |
3.8 |
2.5 |
56.0 |
6.6 |
4.2 |
51.1 |
9.4 |
5.0 |
61.4 |
4.3 |
2.8 |
2012-13 |
61.5 |
4.0 |
2.8 |
56.4 |
7.0 |
4.3 |
51.7 |
9.4 |
6.4 |
60.7 |
4.5 |
3.1 |
2013-14 |
60.4 |
4.2 |
2.7 |
56.3 |
7.0 |
4.7 |
50.2 |
9.8 |
9.7 |
59.7 |
4.7 |
3.1 |
Services (Other than IT) |
2007-08 |
10.3 |
5.9 |
2.8 |
14.3 |
7.2 |
4.2 |
14.4 |
8.5 |
4.2 |
11.3 |
6.3 |
3.2 |
2008-09 |
15.7 |
5.2 |
5.0 |
15.7 |
9.6 |
5.3 |
18.0 |
10.7 |
6.8 |
15.8 |
6.2 |
5.1 |
2009-10 |
18.8 |
5.2 |
3.1 |
14.1 |
9.6 |
5.0 |
14.8 |
11.9 |
7.5 |
17.8 |
6.2 |
3.6 |
2010-11 |
18.7 |
5.3 |
4.3 |
10.1 |
10.1 |
6.7 |
19.6 |
10.5 |
7.5 |
17.3 |
6.2 |
4.7 |
2011-12 |
7.8 |
5.3 |
5.1 |
8.2 |
10.0 |
11.2 |
15.1 |
10.3 |
6.6 |
8.0 |
6.3 |
6.2 |
2012-13 |
6.8 |
4.6 |
4.7 |
9.4 |
10.9 |
14.9 |
20.6 |
10.8 |
6.3 |
7.6 |
5.9 |
6.6 |
2013-14 |
5.4 |
4.9 |
4.1 |
10.3 |
11.4 |
11.6 |
16.1 |
11.0 |
11.6 |
6.5 |
6.1 |
5.5 |
IT |
2007-08 |
4.7 |
33.9 |
0.5 |
6.5 |
30.8 |
1.9 |
12.8 |
24.8 |
2.1 |
5.2 |
33.1 |
0.7 |
2008-09 |
5.2 |
32.4 |
1.0 |
4.7 |
30.9 |
2.5 |
12.0 |
26.1 |
3.5 |
5.3 |
32.0 |
1.3 |
2009-10 |
4.8 |
31.4 |
0.6 |
4.9 |
34.6 |
2.9 |
12.2 |
21.7 |
3.6 |
5.0 |
31.5 |
1.0 |
2010-11 |
4.2 |
34.8 |
0.7 |
4.1 |
34.0 |
2.4 |
15.5 |
24.3 |
7.0 |
4.4 |
34.5 |
1.0 |
2011-12 |
3.3 |
36.6 |
1.0 |
7.9 |
35.5 |
4.2 |
15.2 |
31.6 |
9.1 |
4.0 |
36.4 |
1.5 |
2012-13 |
2.0 |
39.4 |
0.8 |
7.6 |
36.2 |
6.0 |
10.5 |
33.5 |
9.2 |
2.7 |
39.0 |
1.5 |
2013-14 |
1.3 |
38.4 |
0.5 |
2.1 |
41.2 |
7.2 |
17.3 |
28.4 |
18.7 |
1.6 |
38.5 |
1.2 |
All Companies |
2007-08 |
42.2 |
7.2 |
1.9 |
46.3 |
7.4 |
3.4 |
43.4 |
8.8 |
4.3 |
43.2 |
7.3 |
2.3 |
2008-09 |
42.7 |
6.9 |
2.8 |
47.1 |
7.9 |
4.2 |
41.3 |
9.9 |
5.4 |
43.6 |
7.2 |
3.1 |
2009-10 |
45.0 |
6.7 |
2.4 |
45.8 |
8.1 |
3.9 |
41.7 |
9.9 |
5.2 |
45.0 |
7.0 |
2.7 |
2010-11 |
46.7 |
6.7 |
2.4 |
46.3 |
8.4 |
3.9 |
41.4 |
10.0 |
5.2 |
46.5 |
7.0 |
2.7 |
2011-12 |
49.6 |
6.6 |
3.0 |
46.5 |
8.8 |
5.2 |
41.3 |
11.4 |
6.2 |
49.0 |
7.0 |
3.4 |
2012-13 |
48.6 |
6.9 |
3.4 |
46.4 |
9.1 |
6.0 |
42.0 |
11.7 |
7.2 |
48.2 |
7.2 |
3.8 |
2013-14 |
47.3 |
7.3 |
3.2 |
46.9 |
9.0 |
6.1 |
39.6 |
11.7 |
11.3 |
47.1 |
7.6 |
3.7 |
Sales is less than `1 bn for small companies; between `1 bn to `10 bn for medium companies and more than `10bn for large companies. |
4.2. In the basic goods sector, sales growth of two
major industries viz., cement and iron & steel declined
sharply, taking them into contraction in 2013-14 to
-0.1 and -1.3 respectively from a peak of 24.5 and 18.3
per cent respectively in 2011-12. EBITDA margins
continued to decline for two consecutive years in
both cement and iron & steel industries (Chart 3 & 4). Also, a size wise analysis indicates a pronounced
difference in sales growth and profit margins of small
and large size companies of both these industries
(Table 7). While the small cement companies could
still record positive profit margins, small companies
in iron & steel industry suffered a very steep sales
contraction, accompanied by losses at the operating
(EBITDA) and net (Net Profit) levels in 2013-14. Based on the available cash flow statements, it is observed
that, the iron & steel industry made higher amount of
investments along with further additions to inventory in 2013-14. The cement industry, on the other hand
showed lesser investments and also decrease in
inventories in 2013-14.
4.3. In consumer goods sector, motor vehicles
industry witnessed a huge decline in sales growth in
2011-12 which was followed by further contraction
in sales in 2012-13 and 2013-14 (Chart 5). Textile
industry also witnessed decline in sales growth for
three consecutive years (Chart 6) with noticeable
differences between the large and the small size
companies (Table 7). Sales growth in pharmaceuticals
and medicines industries (Chart 7) witnessed upward
trend in 2013-14 at aggregate level and in respect
of the large size companies only. Sales growth of
the small and the medium size companies declined
during the year 2013-14 (Table 7). Net profit margins
in consumer goods sector showed a marginal
improvement except in textiles industries. Small
companies in textile industry suffered negative net profit margins successively for 2012-13 and 2013-14.
Among major industries, the motor vehicles industry
generated higher operating cash flows as compared to
the corresponding operating profits (EBITDA) in 2013-14 due to lowering of inventory levels and higher
trade payables.
Table 7 : Important Performance Parameters of Select Industries |
Industry |
Period |
Large |
Medium |
Small |
All Companies |
Sales Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Margin
(Per cent) |
Sales Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Margin
(Per cent) |
Sales Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Margin
(Per cent) |
Sales Growth
(Y-o-Y) |
EBITDA Margin
(Per cent) |
Net Margin
(Per cent) |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
Cement and cement products |
2012-13 |
9.3 |
11.5 |
5.9 |
-5.4 |
11.1 |
-5.3 |
10.6 |
19.4 |
10.2 |
10.8 |
20.3 |
10.7 |
2013-14 |
-6.3 |
6.4 |
-0.5 |
-14.8 |
5.6 |
1.2 |
-0.1 |
14.4 |
6.9 |
0.6 |
15.3 |
7.7 |
Construction |
2012-13 |
-3.0 |
12.9 |
2.1 |
-16.1 |
13.3 |
5.0 |
4.3 |
12.5 |
4.1 |
5.1 |
12.5 |
4.3 |
2013-14 |
-12.1 |
11.4 |
1.1 |
-23.6 |
16.4 |
6.6 |
0.1 |
11.6 |
2.7 |
1.9 |
11.5 |
2.8 |
Iron and steel |
2012-13 |
-1.7 |
5.9 |
-0.6 |
-11.9 |
3.6 |
-4.1 |
9.0 |
15.2 |
4.3 |
10.9 |
16.7 |
5.1 |
2013-14 |
-14.4 |
2.9 |
-3.7 |
-31.5 |
-0.9 |
-39.6 |
-1.3 |
15.5 |
2.7 |
2.0 |
17.9 |
4.2 |
Motor vehicles and other transport equipments |
2012-13 |
-4.9 |
9.2 |
3.1 |
-0.1 |
4.0 |
3.9 |
-0.4 |
10.1 |
5.4 |
0.2 |
10.3 |
5.7 |
2013-14 |
-4.4 |
8.3 |
2.6 |
-8.9 |
1.0 |
-5.9 |
-4.5 |
9.9 |
5.6 |
-4.4 |
10.2 |
6.0 |
Pharmaceuticals and medicines |
2012-13 |
9.2 |
13.3 |
5.7 |
-2.7 |
5.9 |
-1.9 |
7.8 |
17.0 |
10.1 |
7.7 |
18.5 |
11.8 |
2013-14 |
8.0 |
13.8 |
4.4 |
-8.4 |
5.3 |
-0.6 |
12.4 |
18.8 |
11.2 |
14.2 |
20.4 |
13.3 |
Textiles |
2012-13 |
4.6 |
8.8 |
-0.1 |
-8.9 |
2.5 |
-9.5 |
11.2 |
12.4 |
2.1 |
15.7 |
14.5 |
3.7 |
2013-14 |
11.5 |
8.8 |
0.3 |
-3.9 |
0.7 |
-14.8 |
8.1 |
11.7 |
1.8 |
7.1 |
13.7 |
3.3 |
Machinery^ |
2012-13 |
-3.9 |
9.1 |
5.1 |
-2.1 |
4.4 |
-6.8 |
3.6 |
8.4 |
3.4 |
5.7 |
8.3 |
3.2 |
2013-14 |
-2.4 |
7.4 |
0.1 |
-14.1 |
7.2 |
0.6 |
0.5 |
9.1 |
4.8 |
1.5 |
9.6 |
6.0 |
^: includes Machinery & Machine Tools and Electrical Machinery and Apparatus.
Sales is less than `1bn for small companies; between `1 bn to `10 bn for medium companies and more than `10 bn for large companies. |
4.4. In capital goods sector, which is considered
a vehicle of growth, the two major industries viz., construction and machinery recorded three years
of decelerating sales growth. A marginal growth in
EBITDA and net profit margins was witnessed by
machinery industry in the year 2013-14 (Chart 8 & 9 ).
Construction industry has not yet come out of crisis
since the year 2011-12 except that the small companies
of this industry showed a recovery in EBITDA and
net profit margins in the year 2013-14 in spite of sharp contraction in sales (Table 7). Investments
declined steadily with rising inventory levels in the
construction industry and cash flow from operations
also was the lowest among all major industries,
although it recovered to some extent in 2013-14.
5. On a quarterly basis, decline in sales growth
remained unabated, profit margins steadied.
5.1. An analysis over the quarters, of the performance
of a common sample of 2,291 listed private non-financial companies revealed a steady decline in
sales growth till Q1: 2013-14, followed by an upward
movement in Q2:2013-14. Subsequently, sales growth
declined in Q3, remaining flat in Q4 (Table 8). EBITDA
contracted in Q2:2013-14 after a marginal recovery in
Q1:2013-14 following a successive decline in growth
rates for three consecutive quarters. The situation
improved in Q3, followed again by a decline in Q4.
5.2. Growth rates in interest expenses declined
gradually until it showed an upturn in Q2:2013-14.
However, it declined once again in subsequent Q3
and then showed an increase in Q4. Other income
exhibited a fluctuating pattern of rise and fall of
varying magnitudes in alternate quarters.
5.3. Net profit contracted during Q4:2012-13 to
Q2:2013-14, recovered to a positive growth of 9.9 per cent in Q3:2013-14 and improved to 19.5 per cent in
Q4. Lesser tax provisions in Q4 helped to improve net
profit growth further in Q4, despite lower growth rates
of EBITDA (operating profits) and EBIT (gross profits).
Interest coverage ratio has improved during the recent
quarters. EBITDA margins in Q4:2013-14 remained at
a level similar to that in Q1:2012-13, with range-bound fluctuations during the eight quarter period. Net profit
margins have shown improvement during the last two
quarters.
Table 8: Performance of the Select companies over the Quarters - 2012-13 and 2013-14 |
Item |
2012-13 |
2013-14 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
No. of companies |
2,291 |
Year-on-year Growth rate in Per cent |
Sales |
14.3 |
12.3 |
10.0 |
4.8 |
3.3 |
7.8 |
5.5 |
5.5 |
Expenditure |
16.7 |
13.2 |
8.6 |
5.6 |
2.8 |
8.0 |
3.8 |
5.7 |
Operating Profits (EBITDA) |
-2.4 |
11.7 |
8.9 |
0.2 |
2.6 |
-0.4 |
7.5 |
6.6 |
Other Income |
32.9 |
51.9 |
1.0 |
3.3 |
26.7 |
-2.9 |
25.5 |
17.3 |
Depreciation |
10.4 |
10.3 |
10.4 |
8.6 |
9.1 |
12.0 |
7.9 |
8.4 |
Gross Profits (EBIT) |
-1.0 |
19.4 |
7.0 |
-1.3 |
5.2 |
-4.3 |
10.5 |
8.3 |
Interest |
40.1 |
12.3 |
18.0 |
11.3 |
11.5 |
22.2 |
10.2 |
11.9 |
Net Profits |
-11.1 |
22.7 |
20.5 |
-13.4 |
-9.2 |
-22.4 |
9.9 |
19.5 |
Ratios in Per cent |
Operating Profits to Sales |
13.0 |
13.3 |
12.8 |
12.8 |
12.9 |
12.4 |
13.2 |
13.0 |
Gross Profits to Sales |
11.6 |
12.8 |
11.3 |
11.9 |
11.9 |
11.4 |
12.0 |
12.3 |
Net Profits to Sales |
6.1 |
7.2 |
5.6 |
6.0 |
5.3 |
5.2 |
5.9 |
6.8 |
Interest to Sales |
3.7 |
3.4 |
3.6 |
3.5 |
4.0 |
3.8 |
3.8 |
3.7 |
Interest to Gross profits |
31.7 |
26.3 |
32.1 |
29.0 |
33.5 |
33.7 |
31.7 |
30.0 |
Interest Coverage (Times) |
3.2 |
3.8 |
3.1 |
3.4 |
3.0 |
3.0 |
3.2 |
3.3 |
5.4. Limited results available so far for Q1:2014-15
(April-June 2014) indicated an improvement in sales
growth, with higher EBITDA and net profits and better
profitability.
Annex
Explanatory Notes
1. To compute the growth rates in any period, a
common set of companies for the current and
previous period is considered.
2. The classification of industries and sectors
broadly follows the National Industrial
Classification (NIC).
3. The manufacturing sector consists of industries
like Iron & Steel, Cement & Cement products,
Machinery & Machine Tools, Motor Vehicles,
Rubber, Paper, Food products etc. This does
not include ‘Tea Plantations’ and ‘Mining &
Quarrying’ industries. The services (other than
IT) sector includes Real Estate, Wholesale &
Retail Trade, Hotel & Restaurants, Transport,
Storage and Communication industries. This
does not include Construction and Electricity
Generation & Supply Industries.
4. FOREX gain and loss are reported on net basis
by companies and included in the net profit calculation. While net FOREX loss is considered
as a part of the expenditure and thus included
in EBITDA, net FOREX gain is considered as a
part of other income and included in EBIT.
5. Other income includes various regular incomes
like rents, dividends, royalties etc. and does
not include extra-ordinary income/expenses.
6. Extra-ordinary income/expenses are included
in EBT and net profit. As the name suggests,
these income/ expenses can be very large for
some of the companies in a particular quarter.
7. Some companies report interest on net basis.
However, some companies include the interest
expenses on gross basis, where, interest
received is reported in other income.
8. The ratio / growth rate for which denominator
is negative or negligible is not calculated, and is
indicated as ‘$’.
Glossary of Terms |
EBITDA |
- |
Operating Profits / Earnings before
Interest, Tax, Depreciation &
Amortization |
- |
Sales + Change in Stock –
Expenditure |
EBIT |
- |
Gross Profits/Earnings before Interest
& Tax |
- |
EBITDA+ Other Income –
Depreciation & Amortisation |
EBT |
- |
Earnings before Tax |
- |
EBIT – Interest Payment + Extra-ordinary income/expenses |
Net Profit |
- |
|
- |
EBT – Tax |
Interest Burden |
- |
|
- |
Interest Payment / EBIT*100 |
Interest Coverage |
- |
|
- |
EBIT/Interest Payment |
|