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Finances of Foreign Direct Investment Companies, 2013-14: Data Release

The Reserve Bank of India released on its website the data related to ‘Finances of Foreign Direct Investment (FDI) Companies, 2013-14’. The data have been compiled based on audited annual accounts of 957 select non-government non-financial (NGNF) foreign direct investment companies which closed their accounts during the period April 2013 to March 2014. The data draw a comparative picture over the three year period 2011-12 to 2013-14 based on a common set of companies. ‘Explanatory notes’ pertaining to statements are given at the end.

Major Findings:

  • Sales growth of select FDI companies along with value of production and operating expenses moderated in 2013-14. Sales growth was lower at 10.2 per cent in 2013-14 as compared with 14.0 per cent recorded in 2012-13.
  • The growth in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and net profits (PAT) improved in 2013-14 mainly due to moderation in manufacturing and interest expenses supported by a decline in import growth and increase in export growth.
  • Merchandise exports grew at higher rate of 22.0 per cent in 2013-14 as against 15.3 per cent in 2012-13. Whereas, imports growth for select FDI companies declined to 10.2 per cent in 2013-14 from 16.2 per cent in 2012-13.
  • Growth in total borrowings of select FDI companies increased to 14.3 per cent in 2013-14 from 11.2 per cent in 2012-13. However, borrowings from banks contracted by 0.2 per cent in 2013-14 as compared to the previous year.
  • Research and Development (R&D) expenditure of select FDI companies contracted by 0.2 per cent in 2013-14 from a growth of 3.2 per cent in 2012-13. The royalty payment of select FDI companies grew at a higher rate of 35.9 per cent in 2013-14 as compared with 8.9 per cent in 2012-13.
  • The growth in total net assets of select FDI companies increased marginally by 13.8 per cent in 2013-14 vis-à-vis 11.3 per cent registered in the previous year. However, the share of gross fixed assets in total assets declined marginally in 2013-14 as compared to the previous year.
  • The share of long-term borrowings in total liabilities increased marginally in 2013-14 while the share of short-term borrowings decreased marginally, resulting in an unchanged leverage ratio of select FDI companies in 2013-14 from that in 2012-13.
  • Profitability ratios of select FDI companies as measured by EBITDA margin increased marginally, whereas RoE (Return on Equity) declined in 2013-14 as compared to the previous year.
  • Profit retained as a percentage of profit after tax for select FDI companies declined to 59.6 per cent in 2013-14 as compared with 62.8 per cent in 2012-13, mainly due to increase in amount of dividends paid to the shareholders.
  • The select FDI companies relied mainly on external sources of funds for expanding their business; these funds were predominantly used for asset formation mainly in capital work-in-progress as well as in intangible assets and long-term investments in equity shares.

An article analysing the finances of select non-government non-financial (NGNF) foreign direct investment (FDI) companies at the aggregate level as well as based on share of FDI, country of origin of FDI and industry is being published in the December 2015 issue of the RBI Bulletin.

Sangeeta Das
Director

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