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November 12, 2010

RBI releases November issue of RBI Bulletin

The Reserve Bank of India today released its Monthly RBI Bulletin for
November 2010.

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.
 2

• 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
Press Release : 2010-2011/671 Chief General Manager