The Reserve Bank Of India (RBI) released data on the performance of the private corporate sector during the first quarter of 2020-21 drawn from abridged quarterly financial results of 2,5361 listed non-government non-financial (NGNF) companies. The bank noted that aggregate sales of 1,619 manufacturing companies recorded a sharp contraction of 41.1% (Y-o-Y) in Q1:2020-21 following 15.6% decline in Q4:2019-20 reflecting the impact of the pandemic induced lockdown; the contraction was broad based and varied across industries - only pharmaceutical companies recorded higher sales on both annual (Y-o-Y) and sequential (Q-o-Q) basis.
Non-IT services companies also registered sharp contraction of 41% (Y-o-Y) in their nominal sales; the contraction was across services except telecommunication companies. Sales growth of IT sector companies remained in positive terrain but moderated to 3.2% (Y-o-Y) in Q1:2020-21.
Subdued scale of operations resulted in lower raw materials expenditure for the manufacturing sector in Q1:2020-21. Staff cost contracted for manufacturing and non-IT services sectors while its growth decelerated for IT companies in Q1:2020-21.
Lower business operations led to decline in the operating profits of manufacturing and non-IT services companies; while operating profits of IT companies, on the other hand, increased by 9.4% (Y-o-Y) in Q1:2020-21.
With moderation in earnings, interest coverage ratio (ICR) of the manufacturing companies moderated further to 2.4 in Q1:2020-21 from 3.5 in the previous quarter. Operating profit margins remained steady for manufacturing companies and improved for services companies in Q1:2020-21.
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