Despite slump, fin sector firms gain; non-financial cos see 12% revenue drop

The economy is on shaky ground and investments and output are dwindling on weak demand. But there are the agile ones, too.

Data by the Centre for Monitoring Indian Economy’s (CMIE) Prowess database says finance companies have been robust but non-financial sector companies have been hit hard.

Non-financial sector companies have a larger impact on the economy with a larger output and employment footprint.

Non-financial companies like healthcare, technology and industrial-related firms like manufacturing and mining have been bearing the brunt of the falling GDP, affecting both their revenue and salary expenses.

A Hindustan Times report said the conclusion was reached after analysis of data from 2,159 companies for which quarterly results are available for the past 10 years up to September 2019.

As many as 1,874 of these are non-financial companies, which can be classified into five sub-sectors – manufacturing, mining, electricity, non-financial services, and construction and real estate.

Also Read: IMF chief calls India’s growth slowdown temporary, expects improvement

Of the 2159 companies, 80% of the total revenues in 2018-19 came from non-financial companies. The employment data is available for 1939 companies.

The data also revealed that out of the accounted companies, non-financial sector companies had a share of 78.5% in employment, while financial sector companies had a share of 21.5%.

Due to the rising inflation, the non-financial sector companies saw adjusted salary expenses to -0.7% suggesting, either job losses or wage cut.

The financial sector firms had an increase in revenue by 8.6% yearly in the September quarter, while the revenue for non-financial sector firms fell by over 12%.

The behaviour of auto companies which saw a dip in both revenue (25.8%) and salary expenses (6.2%) in the September 2019 quarter best substantiate the data.

While the auto industry was reeling under pressure, the banking services sector saw a growth in revenue (8%) salary expenses (12%) in the September 2019 quarter.