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Manufacturing sector posts strong sales growth in Q2: RBI

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Dion Global

27 Dec 2018

Manufacturing sector, particularly textile and iron and steel segments, maintained its pace of sales growth in the second quarter of 2018-19 as compared to the year-ago period, the RBI said Wednesday.

Demand condition in the manufacturing sector "maintained its pace in the September quarter 2018-19 as reflected in strong sales growth (year-on-year)", as per the RBI analysis of 2,700 listed private sector non-financial companies.

"The manufacturing sector sales growth was mainly supported by robust demand conditions in chemical and chemical products, iron and steel, and petroleum products industries coupled with significant improvement recorded by textile industry," the RBI said.

The central bank said heavy moderation was seen in the sales growth of motor vehicles and other transport equipment, driven in part by a large adverse base effect, and pharmaceutical and medicine industries.

The information technology (IT) sector also recorded further improvement in sales growth over the year-ago period.

The manufacturing sector continued to record strong growth in net profits, which received support from other income.

The RBI said companies in manufacturing sector posted a net profit of Rs 47,100 crore in the reported quarter, up 29.4 per cent from the same period last year. The data is based on abridged financial results of 1,734 companies in the manufacturing sector.

"Despite continuous contraction in the telecommunication, the services (non-IT) sector posted a turnaround riding on the support from wholesale and retail trade," the RBI said.

The profit of IT sector, based on data of 172 firms, was Rs 17,700 crore in the second quarter, up 5.8 per cent over the July-September period of 2017-18.

As per the RBI, the combined sales of 2,700 companies was Rs 9,81,800 crore in the September quarter, up 18.2 per cent from the year-ago period.

Their net profit was Rs 71,900 crore, an increase of 41.7 per cent year-on-year.

On expenditure front, manufacturing companies continued to face rising input cost (cost of raw materials, staff cost) pressures. In case of IT sector, staff costs accelerated in tandem with the improvement in sales growth, the RBI said.