The Reserve Bank of India today released the October 2013 issue of its monthly Bulletin. The Bulletin includes five special articles: (1) Performance of Private Corporate Business Sector, 2012-13; (2) Performance of Financial and Investment Companies, 2011-12; (3) Monthly Seasonal Factors of Select Economic Time Series; (4) India™s Foreign Trade: Q1 of 2013-14 (April-June); and (5) House Price Index.
1. Performance of Private Corporate Business Sector, 2012-13
This article analyses the performance of the private corporate business sector during 2012-13. It is based on annual results of 2,931 non-government non-financial listed companies and captures the evolving trend in sales, expenditure and profit margins of the corporate sector over a longer horizon. Besides analysing the aggregate performance, it provides a brief analysis by size and major industry groups.
- The sales growth of the private (non-financial) corporate business sector further moderated during 2012-13 to 9.1 per cent, which was the lowest observed since 2001-02.
- EBITDA (i.e., earnings before interest, taxes, depreciation and amortisation) growth improved and net profit contraction was lower in 2012-13. EBITDA and net profit margins contracted in 2012-13; however, the contraction was lower as compared to 2011-12.
- All three sectors (viz., manufacturing, services other than IT and IT) witnessed lower sales growth. EBITDA margin declined for the manufacturing and services other than IT sectors. Some improvement was noticed for the IT sector.
- Interest expense as percentage of sales has increased across all sectors and size classes in the recent years, although it remained below the levels observed in 2000-01.
- Small companies (sales up to `1 billion) witnessed a persistent contraction of sales since 2008-09 with the rates of contraction worsening over the years. Sales of large companies also moderated sharply in 2012-13.
- Over the four quarters of 2012-13, sales growth moderated during the first three quarters and plummeted sharply in the fourth quarter. Growth in interest expenses declined noticeably. Profitability ratios (margins) declined during the first two quarters and remained almost stable for the last two quarters.
2. Performance of Financial and Investment Companies, 2011-12
This article presents the performance of non-government financial and investment companies during 2011-12 based on the audited annual accounts of 1,342 companies closed during the period April 2011 to March 2012. The study also presents a comparable picture over a five year period i.e., from 2007-08 to 2011-12 based on the data compiled for the relevant financial years and published earlier.
- The financial income of the select 1,342 financial and investment companies grew by 29.5 per cent in 2011-12, the highest in the post-crisis period, due to very high growth in interest income.
- The share of interest income of the financial and investment companies in total income has continuously increased over the 5-year period from 2007-08 to 2011-12.
- Total expenditure grew at a higher rate of 37.9 per cent in 2011-12 as interest expenses recorded a sharp increase (66.2 per cent) together with employees™ remuneration (16.4 per cent).
- Growth in operating profits as well as net profits of the companies moderated during the year.
- Share of borrowings, a major part of liabilities has increased over the 5-year period, whereas on the assets side, loans and advances gained in share.
- Companies continued to rely mainly on external sources of funds for expansion and used them predominantly for growing their loan portfolio.
3. Monthly Seasonal Factors of Select Economic Time Series
This article presents the estimated monthly seasonal factors of select 82 major macroeconomic series for the period 2003-04 to 2012-13, broadly covering four major sectors, namely, monetary and banking indicators (17 series), prices (29 series), industrial production (30 series) and services sector indicators (6 series).
The seasonal factors have been estimated using X-13ARIMA-SEATS software package, developed by the US Bureau of Census, taking care of major festivals/national holidays as well as trading day effects.
- Seasonal variation for Broad Money (M3) and Narrow Money (M1) declined gradually since 2008-09 and that for Reserve Money (RM) declined from 2010-11. For Scheduled Commercial Banks, the seasonal variation in aggregate deposits was lower than variation in non-food credit and investments. Within aggregate deposits, demand deposits exhibited greater seasonal fluctuations than time deposits.
- Among the price related series, seasonal variation for WPI-All commodities remained low and exhibited steady decline since 2008-09 onwards. Seasonal variation for WPI-Primary Articles was much higher than for WPI-Manufacturing. Within the Primary Articles group, seasonal variation of WPI-Food Articles was higher than that of WPI-Non Food Articles. Within Food Articles, the prices of ˜Fruits and Vegetables™ group exhibited high seasonal variation. Seasonal variation of CPI-Industrial Workers was stable in the recent years but consistently higher than in WPI-All Commodities.
- Seasonal variation of IIP-General increased marginally over time. Among the use-based classification of IIP, ˜Consumer Non-durable goods™ and ‘Intermediate Goods’ showed the highest and lowest seasonal variations, respectively.
- During 2012-13, 33 out of 82 select series had registered their seasonal peaks in March. Over the last five years, the top five series to register the highest seasonal variations were ˜IIP-Food products and beverages™, ˜IIP-Fabricated metal products, except machinery & equipment, ˜Sales of Commercial Motor Vehicles™, ˜Coal Production™, and ˜Production of Commercial Motor Vehicles™; and the bottom five series were: ˜WPI-All Commodities™, ˜WPI-Non-Fuel Non Food™, ˜WPI-Manufactured Products™, ˜WPI-Non Food Manufactured Products™ and ˜WPI-Milk™.
4. India™s Foreign Trade: Q1 of 2013-14 (April-June)
Export performance in Q1 of 2013-14 remained subdued, which coupled with an increase in imports primarily on account of gold and crude oil, widened trade deficit to US$ 50.3 billion in Q1 of 2013-14 as compared to US$ 43.0 billion in Q1 of 2012-13.
- India™s merchandise exports stood at US$ 72.4 billion in Q1 of 2013-14, showing a decline of 1.6 per cent as compared to a decline of 3.9 per cent in Q1 of 2012-13 (US$ 73.5 billion).
- Commodity-wise data reveal that the setback in merchandise exports in Q1 of 2013-14 was led by decline in exports of manufacturing items like engineering goods, textiles, gems & jewellery and also primary products like iron ore and minerals.
- While growth in exports to countries like UK and Japan showed considerable improvement in Q1 of 2013-14, exports to major trading partners, viz,. US, China and UAE either moderated or turned negative.
- Imports in Q1 of 2013-14 grew by 5.3 per cent to US$ 122.7 billion as against a decline of 5.0 per cent in Q1 of 2012-13 (US$ 116.5 billion).
- Gold imports increased by 80.5 per cent in Q1 of 2013-14 as against a decline of 43.3 per cent in Q1 of 2012-13 and contributed the most in import growth followed by oil imports which grew by 6.5 per cent in Q1 of 2013-14 over Q1 a year ago. Non-oil non-gold imports, however, declined by 5.5 per cent in Q1 of 2013-14 as compared to a growth of 1.3 per cent in Q1 2012-13.
5. House Price Index
Movement in house prices contains useful information for the pursuit of monetary policy, financial regulation and financial stability. In this context, the Reserve Bank is compiling quarterly house price indices for nine major cites (Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur and Kanpur) as well as an aggregated all-India level index. The data for compiling these indices are collected from the registration authorities of respective state governments. This article presents the trends in price based on HPI in India for the period Q4:2008-09- Q4:2012-13. Also, in order to control for the quality attributes of houses, a hedonic HPI is compiled and its trends are examined. It is observed that the index of house price has increased annually on an average by 21 per cent during the past four years.