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Foreign Direct Investment (FDI) companies' paid-up capital (PUC) in India reached Rs 5,96,425 crore during the 2024-25 fiscal year. According to the Reserve Bank of India (RBI), this amount accounts for 51.9 per cent of the total PUC of FDI companies reported in the central bank's annual census of foreign liabilities and assets of Indian direct investment companies.
The RBI report, which analysed the audited annual accounts of 3,100 non-government non-financial companies, highlighted a significant concentration of foreign investment sources. Investors from Singapore, the USA, and Mauritius together accounted for more than half of the sample companies. Other major contributors to the Indian investment landscape included Japan, the Netherlands, and the United Kingdom. While the capital base remains substantial, the growth of net sales for these select FDI entities saw a slight moderation. The growth rate slowed to 8.7 per cent in 2024-25 from 9.4 per cent in the previous year. This deceleration was particularly evident in the manufacturing sector, where sales growth dropped to 5.1 per cent from 6.8 per cent. In contrast, the services sector showed resilience as its sales growth marginally increased to 12.7 per cent. "The operating profit growth reduced to 10.7 per cent during 2024-25 from 22.1 per cent in the previous year," the Reserve Bank of India stated in its release. This decline in profit growth coincided with a rise in operating expenses, which climbed to 9.1 per cent from 7.7 per cent. The central bank attributed this uptick in costs primarily to higher manufacturing expenses and increased remuneration to employees. Despite the pressure on operating margins, the bottom line for many of these firms improved. Profit after tax saw a 22.2 per cent increase during the period, a jump that was supported by higher non-operating income and lower interest expenses. Within the broader industry trends, services sector companies outperformed their manufacturing counterparts by recording a post-tax profit growth of 29.2 per cent compared to 12.6 per cent in manufacturing. "Leverage (measured in terms of debt-to-equity ratio) of the sample FDI companies stood at 25.0 per cent during 2024-25," the RBI release noted. This metric showed diverging trends across sectors, as leverage in the manufacturing sector moderated to 16.3 per cent while it increased to 23.6 per cent for services. RBI further noted that the Interest Coverage Ratio (ICR) rose to 5.8 during the 2024-25 period. On the funding front, companies relied less on external sources, which fell to 42.6 per cent from 45.5 per cent, largely due to a decline in term loans from banks. Meanwhile, the ratio of gross capital formation to total uses of funds increased to 45.3 per cent, signalling a continued focus on asset creation. (ANI)
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