The Reserve Bank of India released the performance report of the private corporate sector during the second quarter of 2018-19 which is created by taking into account 2,700 listed non-government non-financial (NGNF) companies. Here are the highlights of the report:

Sales:

Demand conditions in the manufacturing sector maintained its pace in Q2:2018-19 as reflected in strong sales growth (y-o-y).

The manufacturing sector sales growth was mainly supported by robust demand conditions in chemical and chemical products; iron and steel; and petroleum products industries coupled with significant improvement recorded by the textile industry.

On the other hand, heavy moderation was seen in the sales growth of motor vehicles and other transport equipment, driven in part by a large adverse base effect, and pharmaceuticals and medicines industries.

The information technology (IT) sector recorded further improvement in sales growth over the preceding quarter. Despite the continuous contraction in the telecommunication, the services (non-IT) sector posted a turnaround riding on the support from wholesale and retail trade.

Expenditure:

Manufacturing companies continued to face rising input cost (cost of raw materials; staff cost) pressures. Staff costs accelerated in the IT sector in tandem with the improvement in sales growth.

Operating profit:

Operating profit in the manufacturing sector remained healthy in spite of the increase in input costs. Operating profits of the services (non-IT) sector plummeted further in Q2:2018-19.

Interest:

Interest expenses incurred by the manufacturing sector witnessed a dip from its level a year ago, reflecting ongoing deleveraging in the corporate sector. The interest coverage ratio (ICR) of the manufacturing sector hovered around five, as in the preceding quarter. The ICR for the services (non-IT) sector remained below one, primarily on account of telecommunication; and transport and storage services companies.

Net profit:

The manufacturing sector continued to record strong growth in net profits, which received support from other income.

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