Non-govt, non-financial larger public ltd companies post declining profit margins
Updated: Mar 12, 2014 01:18:44pm
New Delhi, Mar 12 (KNN) As per RBI's latest data, larger public ltd companies, many of which have vendor development programme with the MSME sector, posted declining profit margins during 2012-13.
The data have been compiled based on audited annual accounts of 2,657 large companies with paid-up capital of Rs 1 crore and above.
Sales growth of these companies decelerated steeply during 2012-13 and the profit margins of the select companies displayed a downward trend during the three-year period 2010-11 to 2012-13.
Barring super large companies in sales size of Rs 100 crore to Rs 500 crore and above Rs 1000 crore, sales declined in 2012-13 from that in 2011-12 in all the other groups.
Companies in these sales size groups also recorded net losses in 2012-13. Smallest companies in the sales-size group 'below Rs 25 crore' recorded operating (EBITDA) as well as net losses in all the three years 2010-11 to 2012-13.
Both interest payment and staff cost, as percentage of total expenditure, increased more in case of lower sale size groups.
Companies in the services sector performed relatively better than the manufacturing sector in terms of growth in sales and EBITDA. The profit margin declined in both manufacturing and services sector.
In the manufacturing sector, companies in the 'Food products and beverages', 'Textiles', Chemical and chemical products' industries recorded higher growth in profits and improved profit margin in 2012-13 while those in the 'Iron and Steel', 'Machinery and equipment', 'Electrical equipment' and 'Motor vehicles' industries performed poorly.
In the services sector, companies in 'Computer and related activities' industries performed relatively better.
Growth in total borrowings during 2012-13 was lower than that in 2011-12 but long term borrowings grew at a higher rate. The borrowings from banks also grew at a slightly lower rate in 2012-13. For companies in 'Cement and cement products', 'Iron and steel', 'Motor vehicles' industries, borrowings grew at higher rates in 2012-13 than in 2011-12.
Leverage, measured by both total borrowings to equity ratio and debt (long-term borrowings) to equity ratio, displayed an upward trend during 2010-11 to 2012-13 together with gradual fall in interest coverage ratio. The 'Transportation' and 'Textiles' industries continued to be very highly leveraged with low interest coverage ratio. In the 'Iron and steel' industry, interest coverage ratio fell steeply during the period with rise in leverage. (KNN/DB)
The data have been compiled based on audited annual accounts of 2,657 large companies with paid-up capital of Rs 1 crore and above.
Sales growth of these companies decelerated steeply during 2012-13 and the profit margins of the select companies displayed a downward trend during the three-year period 2010-11 to 2012-13.
Barring super large companies in sales size of Rs 100 crore to Rs 500 crore and above Rs 1000 crore, sales declined in 2012-13 from that in 2011-12 in all the other groups.
Companies in these sales size groups also recorded net losses in 2012-13. Smallest companies in the sales-size group 'below Rs 25 crore' recorded operating (EBITDA) as well as net losses in all the three years 2010-11 to 2012-13.
Both interest payment and staff cost, as percentage of total expenditure, increased more in case of lower sale size groups.
Companies in the services sector performed relatively better than the manufacturing sector in terms of growth in sales and EBITDA. The profit margin declined in both manufacturing and services sector.
In the manufacturing sector, companies in the 'Food products and beverages', 'Textiles', Chemical and chemical products' industries recorded higher growth in profits and improved profit margin in 2012-13 while those in the 'Iron and Steel', 'Machinery and equipment', 'Electrical equipment' and 'Motor vehicles' industries performed poorly.
In the services sector, companies in 'Computer and related activities' industries performed relatively better.
Growth in total borrowings during 2012-13 was lower than that in 2011-12 but long term borrowings grew at a higher rate. The borrowings from banks also grew at a slightly lower rate in 2012-13. For companies in 'Cement and cement products', 'Iron and steel', 'Motor vehicles' industries, borrowings grew at higher rates in 2012-13 than in 2011-12.
Leverage, measured by both total borrowings to equity ratio and debt (long-term borrowings) to equity ratio, displayed an upward trend during 2010-11 to 2012-13 together with gradual fall in interest coverage ratio. The 'Transportation' and 'Textiles' industries continued to be very highly leveraged with low interest coverage ratio. In the 'Iron and steel' industry, interest coverage ratio fell steeply during the period with rise in leverage. (KNN/DB)
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