Indian companies recorded a decelerating sales growth rate in the first half of current

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fiscal, while it was 'other income' helping them post a decent growth in net profits, an analysis of Reserve Bank says.

According to the analysis, published in latest monthly bulletin of RBI, the sales of non-financial private sector companies grew by 12.3 per cent in the first half of 2012-13, down from 17.3 per cent in the preceding six-month period.

Besides, the companies' operating growth posted only a modest growth, but their 'other income' helped them register a significant growth in net profits.

"While there was a modest growth in operating profits, more significantly net profits went up partly contributed by 'other income', reversing the declining trend observed in the previous two half years," a report in RBI's January 2013 monthly bulletin said.

The report, which is part of a series of articles putting forth views of RBI's research staff on varied issues, analysed the performance of private corporate business sector during the first half of 2012-13 based on financial results of 2,832 listed non-government and non-financial companies.

The deceleration in sales growth was broad-based across manufacturing, IT and non-IT services sectors.

"Sales growth (Y-o-Y) of the corporate sector decelerated further to 12.3 per cent during H1, 2012-13 (April-September) from 17.2 per cent in H2, 2011-12 (October-March)," it said.

In line with the sales, the expenditure on major heads such as consumption of raw materials (CRM) also grew at slower rates, resulting in a modest growth in operating profits during the April-September period of the current fiscal.

The report also observed that large companies (annualised sales higher than Rs 1,000 crore) recorded relatively higher growth in sales and operating profits as well as higher profit margins than their smaller counterparts.

However, sales of large companies also moderated over time and recorded the lowest growth in post-crisis period during first half of 2012-13.

With moderation in the growth of interest expenses and continued support from 'non-core' other income, net profits also went up, reversing the declining trend observed in the previous two half years.

While the net profit margin of the IT sector could be maintained, the non-IT services registered a fall in margin. Performance of smaller companies was relatively weak as compared with larger companies.

The report covered performance of companies from sectors like textiles, pharmaceuticals and medicines, cement and cement products, iron and steel, motor vehicles and other transport equipment, construction and machinery.