RBI releases its monthly Bulletin for March 2013

The Reserve Bank of India today released the March 2013 issue of its monthly Bulletin. The Bulletin includes three special articles: (i) Developments in India’s Balance of Payments during Second Quarter (July-September) of 2012-13; (ii) Position of Order Books, Inventories and Capacity Utilisation for the Quarters during October 2011 to September 2012; and (iii) Finances of Non-Government Non-Financial Large Public Limited Companies: 2011-12.

1. Developments in India’s Balance of Payments during Second Quarter (July-September) of 2012-13

This article provides details on developments in India’s balance of payments during July-September 2012 (Q2 of 2012-13) and during April-September 2012 (H1 of 2012-13).

Main Findings

India™s CAD as a percentage of GDP deteriorated to an all time high of 5.4 per cent in Q2 of 2012-13 on account of widening of trade deficit and slower growth in invisibles.

Rise in CAD to GDP ratio was also partly due to slower growth in GDP and rupee depreciation.

A steeper decline in exports growth (12.2 per cent – YoY) as compared with imports growth (4.8 per cent YoY) led to widening of trade deficit. Trade deficit widened to US$ 48.3 billion during Q2 from 44.5 billion during the corresponding quarter of the previous year.

While net services receipts registered reasonable increase, net invisibles earnings during the quarter could finance only a lower proportion of trade deficit as net ˜primary and secondary™ income flows were relatively smaller. Consequently, the CAD worsened to US$ 22.3 billion in Q2 of 2012-13 as compared to US$ 16.4 billion in the preceding quarter and US$ 18.9 billion in Q2 of 2011-12.

Although net capital inflows surged during the quarter led by foreign direct investment (FDI) and portfolio investment, they were barely sufficient to meet the financing needs and there was a marginal drawdown of reserves by US $ 0.2 billion during the quarter.

During H1 of 2012-13, India™s BoP deteriorated as trade deficit widened and invisibles remained sluggish. On the other hand, capital flows remained lower than that in the preceding year and were just sufficient to meet the gap of current account leading to small accretion to foreign exchange reserves

2. Position of Order Books, Inventories and Capacity Utilisation for the Quarters during October 2011 to September 2012

The Reserve Bank™s quarterly Order Books, Inventories and Capacity Utilisation Survey (OBICUS) gathers information on the movements in business indicators of manufacturing companies in India. This article analyses the changes in their order books, inventories and capacity utilisation in the recent times, especially focusing on the 4-quarter period of Q3: 2011-12 to Q2: 2012-13. The analysis of survey parameters is based on responses of the companies that reported in the latest survey round and were common for the last 13 quarters. This approach of analysis enables dynamic comparison in a voluntary survey based on data of acommon set of companies.

Main Findings

Demand conditions in the manufacturing sector weakened in the latest period, as reflected in the weak new orders growth, lower level of capacity utilisation and higher ratio of finished goods (FG) inventory to sales on y-o-y basis.

New orders growth (y-o-y) moderated in the recent period barring an upturn in Q1:2012-13.

Capacity Utilisation level of Indian manufacturing companies depicted a seasonal behaviour with an upturn in the third quarter coinciding with festival season and peak in the last quarter of financial year, in line with the peaks seen in other major output indicators like real GDP and Index of Industrial Production (IIP).

During the period Q3:2011-12 to Q2:2012-13, CU levels remained lower than that in the corresponding quarter a year ago. However, sequentially CU increased marginally in the latest quarter. CU levels for larger companies were higher than for other companies in all the quarters.

The FG-inventory-to-sales ratio increased during the latest two quarters under reference, confirming lower off-take

3. Finances of Non-Government Non-Financial Large Public Limited Companies: 2011-12

The article analyses the financial performance of select 1,843 non-government non-financial large public limited companies during the financial year 2011-12, based on their audited annual accounts. It also draws a comparative picture over the five year period from 2007-08 to 2011-12 based on the previous studies on public limited companies published earlier.

Main Findings

Sales growth moderated during 2011-12. However, as growth in operating expenses continued to be higher than that in sales, it led to fall in earnings before interest, taxes, depreciation and amortisation (EBITDA) and net profit (PAT) as also the lowest EBITDA margin in the last five years. Consequently, gross saving by the select companies also declined in 2011-12.

The moderation in growth of sales was steeper in services sector than in manufacturing sector.

Total net assets, at the aggregate level, have also grown at the lowest rate in 2011-12 in the last five years.

Debt to equity ratio (debt as percentage of net worth) increased in 2011-12 reversing a four year declining trend since 2007-08

Sangeeta Das

Press Release : 2012-2013/1521

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