Sales growth rate of listed private non-financial companies plunged further to 2.1 per cent in the first quarter (April-June period) of 2023-24 from 8.0 per cent in the previous quarter ended March 2023 and 41.0 per cent a year ago in June 2022.
The growth rate in net profits of these companies fell by 9 per cent to Rs 1.36 lakh crore in June 2023 from 24.6 per cent (Rs 1.18 lakh crore) in June 2022, according to a Reserve Bank of India (RBI) study on the performance of 2,836 companies (excluding financial companies). Sales were at Rs 14.75 lakh crore for the quarter ended June 2023. Raw material costs declined by 7.2 per cent to Rs 5.82 lakh crore in June 2023 as against a rise of 50.6 per cent to Rs 6.20 crore a year ago.
During the April-June quarter of 2023-24, aggregate sales of 1,712 listed private manufacturing companies remained around their level in the first quarter of 2022-23, when it had recorded a high growth of 41.6 per cent (year-on-year). Higher sales in pharmaceuticals, cement, electrical machinery and motor vehicles during the quarter were largely offset by contraction in petroleum, chemicals, non-ferrous metals and textiles sales, the RBI study said.
Sales of the information technology (IT) sector, which witnessed high growth in the range of 19.5-21.4 per cent (y-o-y) during the six quarters of FY2021-22 and first half of 2022-23, has been moderating over the latest three quarters. It recorded 10.9 per cent sales growth during Q1 of 2023-24 as compared with 16.0 per cent growth in the previous quarter.
Non-IT services companies also recorded lower rise in sales at 4.5 per cent (y-o-y) as compared with 20.5 per cent growth (y-o-y) during the fourth quarter of 2022-23. Telecom, transport and communication, hotel and restaurant and hospitality activities mobilized higher revenue, which was, however, muted for the wholesale and retail trade sectors, the RBI study said.
Manufacturing expenses contracted, both on annual and sequential basis, in line with the sales moderation and easing of input cost pressure. Staff cost rose by 10.2 per cent, 13.0 per cent and 16.2 per cent, on y-o-y basis, for manufacturing, IT and non-IT services companies, respectively. Staff cost to sales ratio also inched-up across the broad sectors, the RBI said.
Interest cost rose by 11 per cent to Rs 42,731 crore in the June quarter as against 9.4 per cent rise of Rs 39,202 crore a year ago. With some rise in interest outgo, the interest coverage ratio (ICR) of manufacturing companies declined to 6.8 during Q1 of 2023-24 from 7.4 in the previous quarter and 8.3 a year ago. ICR of non-IT services companies remained above the unity for the third consecutive quarter whereas the ratio remained highly comfortable at 44.5 for the IT sector, the RBI study said.
Operating profit rose by 10.5 per cent and 37.3 per cent (y-o-y) for IT and non-IT services companies, respectively, whereas it declined by 0.9 per cent for manufacturing companies. Operating profit margin of manufacturing, IT and non-IT sectors stood at 14.0 per cent, 21.9 per cent and 23.7 per cent, respectively, in Q1 of 2023-24, it said.
