Highlights of the performance of the Indian companies with FDI in 2021-22
The Reserve Bank of India issued information about the FDI companies' financial performance in India during the years 2021–2022. Based on the annual audited financial statements of 2,206 FDI companies in India, the information about financial performance is provided.
Here are some of the data's salient features:
- The majority of investments in 2206 enterprises fell into one of two categories: manufacturing or services. Out of the 2206 companies, 847 were in the manufacturing sector, and the remaining 982 were in the services sector.
- Japan was the biggest investor in the manufacturing sector, investing in over 157 companies across several sub-industries. Singapore and the USA were the next-largest investors, each investing in 92 and 91 companies, respectively. Singapore was regarded as the main investor in the services industry, investing in 246 firms, followed by the USA and Mauritius, which each made investments in 156 and 194 companies, respectively.
- Among the 2206 companies 576 (~26.1 per cent) companies were public and 1630 (~73.9 per cent) companies were private. The investments in the private company performed better as the Gross Profit (EBIT) in private companies increased from 2.7 per cent in 2020-21 to 24.0 per cent in 2021-22 whereas in public companies the EBIT grew from 22.3 per cent in 2020-21 to 27.4 per cent in 2021-22.
- As the COVID-19 pandemic's effects faded and economic activity picked up in 2021–2022 for FDI enterprises, sales of the sample companies increased by 29.7 per cent from growth of 2.0 per cent the previous year. Consequently, from 2.4 per cent the year before to 30.9 per cent in 2021–2022, the value of production has also increased.
- In order to keep up with the jump in sales, operating costs rose; the proportion of raw material costs to total spending went up from 47.0 per cent to 51.1 per cent. Furthermore, the ratio of gross savings to gross capital formation rose from 55.6 per cent in 2020–21 to 81.2 per cent in 2021–22, demonstrating better money management.
- Royalty payment by FDI companies increased by 33.4 per cent from 19.7 per cent to 1.35 per cent of their total spending in 2021–2022; research and development accounted for 0.11 per cent of total expenditure. From 3,46,282 crores in 2020–21 to 3,91,545 crores in 2021–22, operating profit increased by 13.1 per cent.
- The sample companies' operating profit climbed by 21.4 per cent in 2021–2022; manufacturing firms kept their operating profit margin, which fell somewhat for the services sector.
- Around 36 per cent of the new funds were used in fixed capital formation by the sample enterprises. During 2021–2022, non–current investments, inventory, and receivables were also significant uses of cash.
- The Profit After Tax (PAT) in companies seeing investment across all industries from Japan increased from -14.5 per cent in 2020-21 to 138.2 per cent in 2021-22. Whereas the PAT in companies from Mauritius across all industries decreased from -62.6 per cent in 2020-21 to -167.9 per cent in 2021-22, thereby making investment from Mauritius loss making on average.
In summary, the manufacturing and services sectors received the most investments, with Japan, Singapore, and the USA being the major investors. Private companies performed better than public ones, and sales and production values increased as the pandemic's effects subsided. However, operating costs increased, and better money management practices were implemented. Manufacturing firms maintained their operating profit margins, while the services sector saw a slight decline. New funds were primarily allocated towards fixed capital formation, non-current investments, inventory, and receivables. Finally, there were variations in the Profit After Tax (PAT) across investing countries, with Japan seeing a significant increase and Mauritius experiencing a decrease, making their investments less profitable on average.