India’s private sector companies made more profit and reduced debt during 2023-24. The operating profit margin as well as net profit margin improved across major sectors while their debt burden declined during the year. According to the Reserve Bank of India, operating profits grew by 15.3 per cent up from 4.2 per cent the previous year. Manufacturing profits rose by 13.2 per cent. Post-tax profits went up by 16.3 per cent with the services sector growing faster at 38.1 per cent compared to 7.6 per cent in manufacturing.
The RBI report said that public companies’ ability to cover interest payments has also improved, with the interest coverage ratio rising to 4.1. Companies mainly used internal funds, with reserves and surplus increasing. Their fixed assets grew by 10 per cent with strong growth in the chemicals, pharmaceuticals, electrical equipment, and vehicle sectors.
Private limited companies, which are not listed on the stock market, also saw faster profit growth. Their debt levels remained steady, with the construction and energy sectors still highly leveraged but showing some improvement.
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