That the corporate sector had a difficult time in fiscal year 2017 (FY17) is common knowledge. Businesses spent most of the year praying for a revival in domestic demand, a hope dashed by demonetisation in the second half of year.

What an RBI (Reserve Bank of India) analysis of the Performance of the Private Corporate Business Sector in 2016-17 shows is that while big business managed to keep its head above water, small and mid-sized firms were taken to the cleaners.

Cast your eyes on the accompanying chart. It shows the performance of listed non-financial private sector companies. The first thing that strikes one is that firms with annual sales of less than Rs500 crore saw both their sales and Ebitda fall from a year ago. Firms with annual sales between Rs500-1,000 crore managed to increase their sales very slightly, but their Ebitda contracted. It was only the very largest companies, the ones with annual sales of Rs1,000 crore and above, who were able to increase both their sales and Ebitda, albeit not by much.

While the big boys escaped punishment, the smaller ones were taken behind the woodshed and caned. Ebitda, or earnings before interest, tax, depreciation and amortization, is a measure of profitability.

What’s more, the smaller the size of the company, the worse was the performance. The chart shows that for FY17, sales of firms with a turnover of less than Rs25 crore fell by 44%.

Now take a look at the performance of these companies in the fourth quarter (Q4) of FY17, the quarter after demonetisation. Ebitda growth of companies in all the size brackets (except for those in the Rs50-100 crore turnover range, perhaps a statistical anomaly) was worse than for the full year. That’s the demonetisation effect. Sales growth too was worse in Q4 than for the full year for most of the size brackets. In Q4 too, the very biggest companies managed to grow sales and Ebitda.

The problem is, if this is the state of the listed companies, spare a thought for the smaller unlisted firms that are likely to have fared even worse. As for businesses in the vast informal sector, they must have their backs to the wall by now, buffeted first by the demonetisation wave and now by the goods and services tax.

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