The RBI which studied
the results of 2,726 non-government and non-financial companies said
the overall EBIDTA of these corporate showed a 0.2 per cent increase.
However, net profit declined by 6.9 per cent even as sales improved by
7.2 per cent.
Mumbai: Small companies are finding the going tough
with sales and profits taking a big beating in the wake of
demonetisation and implementation of Goods and Services Tax (GST). Small
companies with a turnover of less than Rs 25 crore reported a 57.6 per
cent fall in sales for the quarter ended March 2017, the Reserve Bank of
India said in a study.
The RBI study said 726 small companies
reported a 122.3 per cent plunge in EBIDTA (earnings before interest
depreciation, taxation and amortisation) for the March quarter. While
the RBI did not provide any specific reason for the sharp fall in sales
and profits of small companies, corporate circles estimate that
withdrawal of Rs 500 and Rs 1,000 notes on November 8, 2016 led to
liquidity shortage and impacted the business of small companies the
most.
On the other hand, the RBI study said big corporate with
turnover of Rs 1,000 crore and above reported a 9.5 per cent rise in
sales for the March 2017 quarter. EBIDTA of big companies rose by 2.1
per cent during the period, indicating that big corporates managed to
weather demonetisation woes while small companies floundered.
The
RBI which studied the results of 2,726 non-government and non-financial
companies said the overall EBIDTA of these corporate showed a 0.2 per
cent increase. However, net profit declined by 6.9 per cent even as
sales improved by 7.2 per cent. “Aggregate sales growth (Y-o-Y) improved
in 2016-17, primarily for the manufacturing sector, led by some of the
major industries like iron and steel, petroleum products and cement and
cement products,” the
RBI said.
Sales of services sector
companies (other than IT), however, contracted due to poor performance
of real estate and wholesale and retail trade companies, it said. The
information technology (IT) sector witnessed moderation in sales growth.
Interest expenses decelerated in 2016-17 for the manufacturing sector.
“Within the manufacturing sector, the iron and steel industry
experienced lower growth of interest expenses than in the previous year,
while the motor vehicles industry witnessed a significant increase in
interest expenses,” the RBI said.
The GST implementation from
July has further exacerbated the woes of small companies in the June
quarter. Small companies bore the brunt of the GST regime with profits
plunging as much as 78 per cent in the quarter ended June. This is
largely owing to destocking of goods by companies before execution of
GST regime from July 1, rating agency Care Ratings said.
Overall
industry profits plunged by 15.7 per cent to Rs 87,475 crore in the June
quarter of the current fiscal. “The overall performance has been driven
by the large companies that accounted for over 75 per cent of the share
in terms of total net sales. They recorded lower net profits of about
scales witnessed negative growth in both sales and profit,” Care Ratings
said in a report.
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