FDI companies have witnessed broad-based recovery as COVID impact diminishes: RBI

New Delhi [India], March 31 : Reserve Bank of India (RBI) on Friday released the data related to the financial performance of Foreign Direct Investment (FDI) compes in India during the 2021-22.

The data released was based on audited annual accounts of 2,206 compes, which reported in the Indian Accounting Standards (IndAS) format for three accounting years from 2019-20 to 2021-22.

RBI stated in the release, "The paid-up capital (PUC) of these compes amounted to Rs 5,04,271 crore, which accounted for 54.5 per cent of the total PUC of FDI compes that had reported in the 2021-22 round of the Reserve Bank's annual census of foreign liabilities and assets of Indian direct investment compes".

"Their economic sector classification is based on their principal business activity reported in MGT-7 form (web-link: https://www.mca.gov.in/MinistryV2/companyformsdownload.html) of the Ministry of Corporate Affairs, Government of India, which is the primary source of these data," RBI added in the release.

The central bank said that a major chunk of compes among the sample compes belonged to the manufacturing, information and communication sectors

"Compes with direct investment from Mauritius, Singapore and USA accounted for nearly half of the sample compes; Netherlands, Japan, the United Kingdom and Germany were other major direct investment sources," the release added.

RBI stated that the FDI compes had witnessed broad-based recovery in 2021-22, as the impact of VCOVID-19 diminished.

"FDI compes witnessed broad-based recovery in 2021-22 as the COVID-19 pandemic's impact diminished and economic activity rebounded. The sales of the sample compes expanded by 29.7 per cent (2.0 per cent growth in the previous year)

The Central Bank further stated that the operating expenses increased to meet the surge in sales, and the ratio of raw material cost to total expenditure increased to 51.1 per cent, as compared to 47 per cent in the previous year.

"Royalty payment by FDI compes, with a 1.35 per cent share in their total expenditure, increased by 33.4 per cent in 2021-22 (19.7 per cent in the previous year); the share of research and development in total expenditure stood at 0.11 per cent. The Operating profit of the sample compes increased by 21.4 per cent during 202122; manufacturing compes maintained their operating profit margin, which slipped marginally for the services sector," RBI stated in the release.

The release further added, "At the aggregate level, leverage (measured in terms of debt-to-equity ratio) improved marginally. The sample compes utilised around 36 per cent of fresh funds in fixed capital formation. Non-current investments, inventories, and receivables were other major uses of funds during 2021-22".