RBI releases its Monthly Bulletin for October 2012

Date : 11 Oct 2012

The Reserve Bank of India released the October 2012 issue of its monthly Bulletin today. The October 2012 issue carries four special articles:

(i) House Price Index,

(ii) Finances of Non-Government Non-Financial Private Limited Companies: 2010-11,

(iii) Performance of Financial and Investment Companies: 2010-11 and

(iv) Survey on Computer Software & Information Technology Services Exports: 2010-11.

1. House Price Index

Movement in house prices contains useful information in the context of monetary policy, financial regulation and financial stability. Monitoring the overall house price trend is, therefore, important from this perspective. The Reserve Bank has been compiling quarterly house price indices for nine major cites (Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur and Kanpur) as well as their aggregation at the all-India level. The data for compiling these indices are collected from the registration authorities of respective state governments. Overall trends in the house price index are regularly disseminated in the Reserve Bank’s Quarterly Review of Macroeconomic and Monetary Developments. This article presents the methodology and salient features of the Reserve Bank’s house price index and its trends in recent quarters.

2. Finances of Non-Government Non-Financial Private Limited Companies: 2010-11

This article presents the financial performance of select 1,850 non-Government non-financial private limited companies during the financial year 2010-11, based on their audited annual accounts. The major findings of the study are:

• The growth rates in major parameters like sales and value of production increased during 2010-11; the growth of manufacturing expenses, however, was even higher. Thus, the earnings of select companies recorded lower growth in 2010-11 as compared with 2009-10.
• Profitability and profit allocation ratios such as profit margin and return on equity declined in 2010-11 while dividend to net worth ratio was maintained.
• Borrowings grew at a higher level in 2010-11 as compared with the previous year.
• The share of external sources of funds, which have been playing a major role in financing the asset formation and other activities, witnessed further increase in 2010-11. The share of internal sources of funds decreased due to lower provision and lower accretion to reserves and surplus in 2010-11.

3. Performance of Financial and Investment Companies: 2010-11

This article analyses the performance of select 1,340 non-Government financial and investment companies (other than banking, insurance and chit-fund companies) during the year 2010-11, based on their audited annual accounts.

Main Findings:

• Financial income of the select companies increased at a higher rate of 23.8 per cent in 2010-11 as against an increase of 13.1 per cent registered in the previous year.
• Total expenditure grew at lower rate of 2.9 per cent in 2010-11 as against 5.1 per cent in 2009-10, although the interest payments went up steeply by 25.9 per cent in 2010-11.
• Growth in profits after tax at 56.0 per cent in 2010-11 was of similar order as that in the previous year; however, dividend payout ratio declined to 24.5 per cent in 2010-11 from 33.1 per cent in 2009-10. Profit margin (ratio of operating profits to financial income) of the select companies increased for the second consecutive year.
• Return on shareholders' equity (ratio of profits after tax to net worth) also increased to 9.3 per cent in 2010-11 from 7.2 per cent in 2009-10.
• With higher growth in borrowings from banks, debt-equity ratio of select companies increased further in 2010-11. Larger sized companies performed better than the smaller sized companies, but they had a higher debt-equity ratio.

4. Survey on Computer Software & Information Technology Services Exports: 2010-11

This article presents the results of the annual comprehensive survey for 2010-11 on exports of software and IT services. This Survey is conducted by the Reserve Bank to assess various aspects of software services exports. In all 760 companies, including most of the major companies responded to the survey. These companies accounted for nearly 78 per cent of the estimated total software exports during 2010-11.

Major findings:

• India’s exports of software services (computer services and Information Technology Enabled Services (ITES)/Business Process Outsourcing (BPO) services) during 2010-11 were estimated at `2,170.1 billion (US$ 47.6 billion). Computer services exports accounted for 73.7 per cent of the total exports of software services.
• India’s exports of software services increased by 18.1 per cent during 2010-11. While exports of computer services recorded 26.2 per cent growth, growth in exports of ITES/BPO services remained flat during the year.
• Public limited companies accounted for 61.3 per cent of the total exports of software services.
• Delivery of software services exports through off-site mode increased by 19.4 per cent during the year and accounted for 79.3 per cent of the total software exports. On-site mode delivery continued to record relatively lower growth (13.6 per cent in 2010-11) with its share in total software exports coming down to 20.7 per cent.
• US remained the major destination for software exports in 2010-11 with 63.6 per cent share in India’s total exports of software services. The share of European countries was 23.5 per cent, with UK accounting for 15.0 per cent.
• US Dollar remained the major invoice currency for software exports with 75.3 per cent share. Pound Sterling and Euro constituted shares of 9.8 per cent and 7.0 per cent, respectively.
• Total international trade in software services by India, including the services delivered by foreign affiliates established abroad, stood at ` 2,547.8 billion in 2010-11. Of this, over two- thirds share was accounted for by the cross-border supply mode.

Sangeeta Das

Director

Press Release : 2012-2013/609

House Price Index monitoring informs monetary and financial stability assessment, as reported in the RBI Monthly Bulletin. Reserve Bank of India's October 2012 Monthly Bulletin presents four special articles: the methodology and trends of the quarterly House Price Index for nine major cities and all India aggregation; audited-account findings for 1,850 non government non financial private limited companies showing higher sales but faster expense growth, lower profitability and greater reliance on external financing in 2010-11; analysis of 1,340 financial and investment companies evidencing higher financial income, rising interest costs, improved profit margins and increased debt equity; and the annual survey of software and IT services exports reporting strong growth concentrated in computer services, off site delivery, the US market and US dollar invoicing.