RBI releases November issue of RBI Bulletin

The Reserve Bank of India today released its Monthly RBI Bulletin for November 2010 (BS_ViewBulletin.aspx) .

The November issue of the Bulletin carries two special articles: Finances of Non-Government Non-Financial Private Ltd. Companies: 2008-09 and Review of South-West Monsoon 2010. The review is done annually.

Highlights of special articles:

1. Finances of Non-Government Non-Financial Private Ltd. Companies: 2008-09

Performance of Companies affected due to Global Crisis in 2008-09

This article assesses the financial performance of select non-Government non-financial private limited companies during 2008-09 and is based on the analysis of their audited annual accounts. The data are presented at the aggregate level for all the select companies and also for select industries.

Main Findings

The aggregate results of the select companies in 2008-09 revealed that -

• The global financial crisis during the year had a significant impact on the performance of the non-Government, non-financial, private limited companies. The growth rates in sales, value of production and manufacturing expenses had moderated in 2008-09. The profitability ratios, such as, profit margin, return on assets and return on share holders’ equity also declined during 2008-09.

• While the growth in sales and value of production were lower, the growth in profits before and after tax were negative (-9.4 per cent and -21.5 per cent, respectively, in 2008-09), as compared with 2007-08. The profit margin (operating profits to main income) of the select companies decreased marginally to 8.0 per cent in 2008-09 from 8.8 per cent in 2007-08. The return on shareholders’ equity (post-tax profits to net worth) decreased significantly to 8.0 per cent for the year 2008-09 from 12.5 per cent in 2007-08.

• The external sources continued to be the major sources of finance and its share increased significantly during 2008-09 when compared with the previous year. However, the share of ‘borrowings from banks’ in total sources of funds declined to 6.7 per cent from 14.7 per cent in the previous year. Internal sources of funds declined mainly due to lower accretion in reserves and surplus in 2008-09.

2. South-West Monsoon 2010: A Review (June 1 to September 30, 2010)

Good Monsoon augers well for Growth in Agriculture and Allied Activities and Inflation

The Review notes that the South-West Monsoon during June-September 2010 had crossed the India Meteorological Department’s (IMD) long period average (LPA) (average rainfall of 89 cm during 1941-1990) by 2 per cent, the second highest level attained in the last decade, as against a deficient rainfall of 22 per cent during June-September 2009. This augured well for the growth of agriculture and allied activities. The review also notes that this sector has become increasingly resilient and diversified in recent years, though still dependent on the rainfall. Consequently, barring a few varieties of oilseeds, the area sown during kharif 2010-11 has surpassed the area sown during 2009-10 as well as during 2008-09. Improved sowing, in turn, has been reflected in better prospects of kharif harvest as per the First Advance Estimates. It is estimated that an increased production across all crops, namely, foodgrains and its sub-categories of coarse cereals and pulses with growth rates of 10.4 per cent, 19.5 per cent and 39.5 per cent, respectively, would be registered. Kharif oilseeds are estimated to grow by 10.3 per cent over the production of the previous year. These favourable developments are, therefore, expected to ease the pressure on food prices, with respect to kharif pulses, the production of which is expected to increase by around 2 million tonnes during 2010-11.

The Reserve Bank of India Bulletin is issued monthly by the Department of Economic Policy and Research. The content includes recent speeches by top management, special articles, various press releases, a list of regulatory and other measures and foreign exchange developments. It also contains data on economy, banking and financial markets.

Alpana Killawala
Chief General Manager

Press Release : 2010-2011/671