Mumbai: Private Indian companies have posted a 20 percent increase in sales during 2010-11, reflecting sustained demand, according to data from the Reserve Bank of India (RBI).
"Overall performance of 2,763 select non-financial non-government companies showed that the sales grew by about 20 percent during 2010-11 reflecting a sustained demand," the central bank said in its 'Performance of Private Corporate Business Sector: 2010-11'.
According to experts, the good performance was mainly on the back of demand from the domestic economy as well as exports to major emerging countries.
The RBI data, however, said that despite recording growth in sales, corporates on an aggregate could not improve their year-on-year profit growth, largely due to higher input costs and significant increase in interest payments.
"With faster increase in total expenditure in relation to sales, profitability in terms of operating, gross and net margins contracted by 100, 110 and 30 basis points, respectively, in 2010-11," RBI said.
Interest payments formed 2.7 percent of sales and 19.8 percent of gross profits of the firms.
Stubborn inflation made the RBI go for a number of rounds of hike in interest rates, thus increasing the cost of borrowings.
According to RBI, bigger companies recorded higher sales growth and also relatively higher growth in operating profits, whereas the smaller companies, which have sales size less than Rs 50 crore each, recorded a decline in sales in 2010-11.
"Companies engaged in manufacturing activities registered 22.6 percent growth in sales and 12.1 per cent growth in operating profits in 2010-11. Companies engaged in computer and related activities services also performed reasonably well with 16.2 percent growth in sales and 11.5 percent growth in operating profits," RBI said.
Companies engaged in services other than IT registered only 8.9 percent growth in sales and 8.8 percent growth in operating
"Industry-wise analysis revealed that sales growth was broad based covering almost all the industries except wholesale and retail trade, electricity generation and supply and cement industries whereas their profit performance was mixed," RBI said.