Manufacturing companies' net earnings increased by 50.2 percent in FY22: RBI

Despite pressures from rising input costs, manufacturing companies' net earnings increased by 50.2% from 2021 to 2022, the Reserve Bank of India reported on Friday. In contrast to the non-IT services sector, which continued to post overall losses, net profit rose for information technology (IT) enterprises.

The information on the performance of the private corporate sector in 2021–2022 was derived from 3,166 listed NGNF (non-government, non–financial) businesses' abbreviated financial results. All three industries maintained good operating profit margins. While net profit margins for manufacturing and IT companies remained constant, they remained negative for non-IT services companies.

Further analysis of the data revealed that private company sales and profitability had healthy growth in 2021–2022 as the Covid–19 pandemic's impacts faded and economic activity picked up, particularly in the second half of the year. According to the statement, "Sales of 1,865 listed private manufacturing companies experienced broad-based recovery and expanded by 36.7 percent during 2021–22 as compared to a contraction of 2.8 percent in the preceding year; both volume and price components contributed to the higher growth and it was also aided by favourable base effects."

The performance of IT companies also improved, and their sales growth surged from 4.4 percent the year before to 19.8 percent this year. Sales in the non-IT services sector experienced a strong comeback in 2021–2022; they expanded by 27.2% annually, compared to a decline of 14.6% the year before.

The RBI stated the following on spending: "Consistent with the rise in production and sales, manufacturing enterprises' expenditure on raw materials climbed by 48.6% throughout the year and its share in their total sales increased." The manufacturing and non-IT sectors had a reversal in 2021–2022, following a pandemic-driven contraction in sales and staff costs the year before, while the IT sector was able to withstand the pandemic's numerous waves and record consistent growth in both of these metrics.

The performance of IT companies also improved, and their sales growth surged from 4.4 percent the year before to 19.8 percent this year. Sales in the non-IT services sector experienced a strong comeback in 2021–2022; they expanded by 27.2% annually, compared to a decline of 14.6% the year before.

The RBI stated the following on spending: "Consistent with the rise in production and sales, manufacturing enterprises' expenditure on raw materials climbed by 48.6% throughout the year and its share in their total sales increased." The IT sector survived the successive waves of the pandemic and logged sustained growth in both of these parameters, it was added. In contrast to the manufacturing and non-IT sector, which experienced a turnaround during 2021–22 from the pandemic–led contraction in sales and staff costs the previous year.