Growth in net sales of FDI cos moderated to 9.3 pc in FY24: RBI

The RBI on Tuesday said with the normalisation of post-pandemic pent-up demand conditions, the growth in net sales of select FDI companies moderated to 9.3 per cent during 2023-24 from the high of 20.3 per cent in the previous year. The Reserve Bank released the data relating to financial performance of non-government non-financial (NGNF) FDI companies in India during 2023-24 based on audited annual accounts of 2,418 companies, which reported in the Indian Accounting Standards (Ind-AS) format for three accounting years from 2021-22 to 2023-24.

Manufacturing and services sectors recorded lower sales growth of 6.4 per cent and 12.7 per cent, respectively, during 2023-24.

Moderation in sales growth was broad-based across the major industries within the manufacturing and services sectors, except ‘Wholesale and retail trade’ and ‘Electricity, gas, steam and air condition supply’ industries.

The paid-up capital (PUC) of these companies amounted to Rs 5,30,160 crore, which accounted for 51.1 per cent of the total PUC of FDI companies that had reported in the 2023-24 round of the RBI’s annual census of foreign liabilities and assets of Indian direct investment companies.

“Nearly half of the sample companies received direct investment from Singapore, Mauritius and the US, while Japan, the Netherlands, UK and Germany were other major countries which made direct investment in India,” RBI said.

A major chunk of the sample companies belonged to manufacturing and services sectors, with about one-third of companies belonging to information and communication industries within services sector. On expenditure, RBI said that with moderation in growth of manufacturing expenses and renumeration to employees, operating expenses recorded rise of 7.8 per cent during 2023-24, in tandem with the slowdown in sales growth. “Despite lower growth in sales, cost rationalisation helped operating profits grow by 20.4 per cent during 2023-24 from 15.3 per cent growth during the previous year, at aggregate level; operating profit of manufacturing and services sectors increased by 20.4 per cent and 19.0 per cent, respectively,” RBI added.

Private limited Foreign Direct Investment (FDI) companies recorded higher profit growth as compared to public limited FDI companies.

With higher growth in profit, share of internal sources of funds in total sources of funds increased to 52.1 per cent during 2023-24 from 48.1 per cent in the previous year; consequently, share of external sources of funds moderated to 47.9 per cent during 2023-24, mainly due to significantly lower increase in trade payables.

During 2023-24, share of funds utilised for gross fixed capital formation in total sources of funds moderated to 38.8 per cent (48.3 per cent in 2022-23), while share of ‘investment in equity instruments’, ‘bank balances other than cash and cash equivalents’ increased during 2023-24.