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Finances of Foreign Direct Investment Companies, 2015-16
Date : Jul 10, 2017

The performance of non-government non-financial foreign direct investment (FDI) companies deteriorated in 2015-16, with the pace of sales, gross value added and operating profit decelerating and significantly lower return on equity. Net earnings in foreign currencies turned positive on account of a substantial contraction in imports. Funds raised by these companies were predominantly used for fixed capital formation.

This article presents an analysis of the financial performance of non-government non-financial (NGNF) foreign direct investment (FDI)1 companies for the financial year 2015-16, based on the audited annual accounts of 6,433 FDI companies which closed their accounts on March 31, 20162. Of these companies, 593 were public limited companies and the other 5,840 were private limited companies. These companies were classified into various industry groups on the basis of the information available on activity in the corporate identity number (CIN) of the company. FDI was mostly received in 4,070 services sector companies, of which 1,292 were engaged in computer and related activities. In the manufacturing sector, the bulk of FDI was received in machinery and machine tools. Data on FDI companies for 2015-16 were released in April 2017 as a press release on the Reserve Bank’s website along with explanatory notes.

The article is organised into seven sections. In section 1, the performance of FDI companies is assessed in terms of sales and output (gross value added – GVA). Section 2 deals with exports and imports of these companies. Profit generating capacity as well as returns are presented in section 3. Section 4 discusses the capital structure and debt serviceability, while the composition of assets in the financial structure of FDI companies is set out in section 5. Funds raised from various sources and utilisation of these funds in various assets is addressed in section 6. Concluding observations are given in section 7.

1. Income and Expenditure

1.1 Sales growth of FDI companies decelerated in 2015-16, consistent with the pattern of sales in non-FDI companies, but was comparatively better than the latter at the aggregate level (Chart 1A and Statement 1).

1.2 The slow down in sales growth was observed across manufacturing and services sectors companies. In the manufacturing sector, sales lost pace across industry groups except motor vehicles and other transport equipment and electrical machinery and apparatus (Statement 1).

1.3 On the expenditure side, operating expenses decelerated mainly due to softening of raw materials costs and easing power and fuel prices. Expenditure on research and development (R&D), which plays an important role in sustaining the business of a company, accelerated and as a result, royalty paid by FDI companies also rose marginally (Chart 1B and Statement 1).

1.4 Output as measured in terms of gross value added (GVA) moderated, reflecting the decline in sales growth and this pattern was also observed in non-FDI companies. Moderation in the growth of GVA occurred in the manufacturing and the services sectors of FDI companies though they outperformed non-FDI companies at the aggregate level as well as at the sectoral level (Statement 1).

2. Earnings and Expenditure in Foreign Currencies

2.1 Export intensity measured as the ratio of exports to sales weakened gradually over the three-year period 2013-14 to 2015-16. This led to deceleration in growth of total earnings in foreign currencies. However, there was a net inflow of foreign currencies due to a substantial contraction in imports. The situation was exactly the opposite for non-FDI companies in the manufacturing sector, where exports contracted but imports expanded in 2015-16 (Chart 2A, Chart 2B and Statement 1).

2.2 The improvement in export performance of FDI companies in the manufacturing sector was largely contributed by entities producing chemical and chemical products and motor vehicles and other transport equipment. In the services sector, export intensity and export growth softened mainly for services related to wholesale and retail trade across FDI and non-FDI companies (Statement 1).

3. Profitability

3.1 Operating profit and gross profit recorded subdued growth, with persistently high interest expenses pulling down the growth of profit after tax (PAT) significantly. Profit parameters for non-FDI companies also decelerated significantly in 2015-16 (Chart 3A and Statement 1).

3.2 The operating profit margin of FDI companies was maintained in 2015-16, but their return on equity (RoE), measured as ratio of PAT to net worth, declined, gradually over the three-year period 2013-14 to 2015-16. Operating profit improved in the manufacturing sector in most of the industry groups except for food products and beverages and machinery and machine tools. In the services sector, however, the operating profit margin decelerated in all the major industry groups. Similarly, operating profit margin of non-FDI companies in the manufacturing sector improved marginally but declined in the services sectors (Chart 3B, Statement 1 and Statement 2).

4. Capital Structure and Debt Serviceability

4.1 The balance sheets of FDI companies expanded, but at a slower pace than in the preceding year. The composition of liabilities showed that the shares of shareholders’ funds and the long-term borrowings in total liabilities increased marginally in 2015-16 with a corresponding reduction in the share of short-term borrowings (Chart 4 and Statement 2).

4.2 The leverage ratio (ratio of total borrowings to equity) for FDI companies came down gradually, indicating deleveraging. While the leverage ratio declined marginally in the services sector mainly for companies involved in transport, storage and communication, the leverage ratio had moved up marginally in the manufacturing sector especially for companies in food products and beverages and chemical and chemical products. In contrast with the FDI companies, the leverage ratio of non-FDI companies rose steadily over the same period. Debt serviceability of FDI companies measured by the interest coverage ratio (ratio of earnings before interest and tax to interest expenses) did not show any improvement in 2015-16. In the manufacturing sector, it inched up mainly on account of the companies in motor vehicles and other transport equipments sand rubber and rubber products industries. On the contrary, the debt serviceability of companies in the services sector declined (Chart 4 and Statement 2).

5. Assets Pattern

5.1 The share of gross fixed assets in total assets of FDI companies went up in 2015-16 after a slip in the preceding year. Moreover, the share of non-current investments also improved. By contrast, the share of current investments fell and so did the share of inventories (Chart 5 and Statement 3).

6. Sources and Uses of Funds

6.1 In the sources of funds generated by FDI companies, there was an increase in the shares of borrowings and accrual to provisions, with a significant reduction in the trade payables. Liquidation of non-current investments and other current assets also added to the sources of funds. For non-FDI companies, larger accrual to provisions was the change factor (Statement 4).

6.2 FDI companies utilised about 37 per cent of fresh funds in gross fixed capital formation. Non-current investments and cash and cash equivalents were other major uses of funds. Non-FDI companies also used around one-third of fresh funds in gross fixed capital formation in 2015-16, but close to 45 per cent of funds were used in non-current investments (Statement 4).

7. Concluding Observations

Select FDI companies continued to perform relatively better than non-FDI companies in 2015-16 although the performance of both FDI and non-FDI companies deteriorated during the year in terms of growth in sales, GVA and profit. The operating profit margin of FDI companies was maintained on account of the fall in the cost of raw materials. They undertook deleveraging in their capital structure during 2013-16. Nonetheless, debt serviceability as measured by the interest coverage ratio did not improve. The share of funds used for capital formation increased significantly for both FDI and non-FDI companies.

Statement 1: Growth Rates of Select Parameters of FDI and non-FDI Companies
(Per cent)
FDI Companies
Year No. of Cos. Sales Operating Expenses Operating profit Profit After Tax (PAT)
2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16
Aggregate (All Companies) 6,433 13.8 6.9 14.0 6.0 13.8 7.1 12.2 2.6
FDI-share-wise
10 per cent-25 per cent 394 10.8 2.4 10.4 0.7 14.8 1.6 27.9 -10.8
25 per cent-50 per cent 728 -0.3 3.5 -2.9 2.6 2.7 12.8 -19.3 23.0
50 per cent and above 5,311 19.0 9.3 19.9 8.5 20.9 11.4 21.3 2.0
Industry-wise
Manufacturing 1,820 9.0 5.0 7.1 3.0 21.1 15.0 36.5 -2.1
Food products and beverages 101 14.3 4.2 12.6 5.6 30.1 -1.1 34.3 -24.9
Chemicals and chemical products 283 7.0 3.8 5.3 2.2 18.0 18.2 8.4 67.4
Rubber and plastic products 88 19.1 6.4 19.4 3.3 2.1 64.4 -109.0 #
Motor vehicles and other transport equipment 88 9.1 12.1 7.3 9.7 34.0 27.4 55.0 11.0
Machinery and machine tools 425 16.3 14.0 13.8 12.1 41.6 12.8 77.5 1.0
Electrical machinery and apparatus 162 13.7 14.2 9.9 15.2 45.3 17.7 140.3 47.3
Services 4,070 22.0 11.4 25.6 11.7 13.5 7.0 9.7 9.1
Wholesale and retail trade 433 61.3 4.1 79.3 3.5 -122.2 # # #
Computer and related activities 1,292 18.8 18.3 21.1 20.9 12.5 6.4 8.2 2.9
Transport, storage and communication 183 13.9 12.4 14.8 16.1 8.4 -8.2 1.0 -21.9
Non-FDI companies
Aggregate (All Companies) 3,04,978 8.5 4.2 8.3 3.6 14.1 4.8 19.5 1.9
Industry-wise
Manufacturing 78,337 7.1 2.3 7.1 1.7 9.1 4.4 18.6 0.3
Food products and beverages 7,630 6.4 5.9 6.6 5.5 3.2 9.5 -3.9 9.3
Chemicals and chemical products 11,647 9.8 5.6 10.1 5.0 5.0 10.8 20.2 2.7
Rubber and plastic products 4,637 8.1 6.2 7.1 5.8 10.5 12.2 1.9 10.4
Motor vehicles and other transport equipment 1,507 12.0 14.2 11.5 14.3 23.0 16.1 47.4 19.9
Machinery and machine tools 8,366 7.8 4.9 8.0 4.5 11.6 1.3 37.1 0.6
Electrical machinery and apparatus 3,926 8.4 7.6 7.3 7.7 14.7 12.1 26.9 18.9
Services 1,75,926 10.6 6.3 10.0 5.9 18.0 5.3 19.9 7.2
Wholesale and retail trade 50,361 13.1 5.2 12.7 4.8 26.5 4.4 30.5 8.5
Computer and related activities 18,040 14.2 10.8 12.6 11.6 19.0 8.0 18.0 13.5
Transport, storage and communication 8,352 12.3 5.4 12.6 6.0 14.6 5.1 41.9 0.4
# Denominator is negative, nil or negligible.

Statement 1: Growth Rates of Select Parameters of FDI and non-FDI Companies (Concld.)
(Per cent)
FDI Companies
Year GVA Total borrowings Exports Imports
2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16
Aggregate (All Companies) 14.7 11.5 1.0 9.2 12.1 1.5 -14.7 -13.3
FDI-share-wise
10 per cent-25 per cent 11.9 6.1 2.3 26.8 38.8 -20.1 # -16.7
25 per cent-50 per cent 5.7 13.1 -0.2 -6.8 -23.0 6.0 -86.3 50.2
50 per cent and above 18.5 13.7 0.7 3.0 14.7 7.5 10.4 -17.6
Industry-wise
Manufacturing 19.1 13.4 -5.5 10.5 -2.4 22.3 -31.6 -7.3
Food products and beverages 26.0 1.0 -23.2 22.0 -55.0 -59.3 -63.4 -46.3
Chemicals and chemical products 15.8 15.5 17.4 11.7 -8.4 15.2 -1.6 -9.7
Rubber and plastic products 14.7 33.0 3.0 -14.0 -48.7 -14.9 -14.8 -0.8
Motor vehicles and other transport equipment 29.5 21.0 -21.3 -15.0 -50.8 75.0 -12.3 11.7
Machinery and machine tools 30.3 13.6 -0.7 -4.0 10.2 9.4 68.8 -36.5
Electrical machinery and apparatus 28.8 13.1 -1.4 -32.0 10.1 -27.4 -16.0 -5.2
Services 13.9 13.0 6.6 8.4 43.5 -24.1 69.9 -23.3
Wholesale and retail trade 0.3 27.5 13.6 32.2 # -88.6 135.4 -49.7
Computer and related activities 14.1 13.4 14.9 23.0 -6.4 28.3 204.1 -59.3
Transport, storage and communication 16.4 10.1 9.9 4.0 -24.7 88.4 120.3 158.5
Non-FDI companies
Aggregate (All Companies) 12.5 8.9 9.5 8.1 5.8 1.9 7.0 -2.7
Industry-wise
Manufacturing 9.6 7.4 5.1 5.7 5.8 -2.3 0.4 1.7
Food products and beverages 6.1 12.0 3.3 10.0 -7.8 11.1 9.9 -8.5
Chemicals and chemical products 7.4 11.8 3.5 10.6 -10.8 -6.7 -16.2 18.1
Rubber and plastic products 11.0 14.5 6.5 5.0 6.1 1.2 7.9 9.5
Motor vehicles and other transport equipment 18.0 15.2 -1.8 5.9 54.0 15.2 22.5 -18.2
Machinery and machine tools 9.1 4.4 9.4 7.1 12.2 -5.2 14.5 -10.7
Electrical machinery and apparatus 12.5 13.2 6.5 3.1 0.8 -14.5 4.6 -6.5
Services 14.2 10.6 11.2 7.9 7.1 3.7 23.4 -6.4
Wholesale and retail trade 15.2 11.0 5.3 9.9 -4.7 -6.9 59.5 -14.4
Computer and related activities 16.3 13.4 34.6 0.4 104.3 -21.0 -27.2 -29.9
Transport, storage and communication 14.3 9.3 2.4 9.4 195.7 -49.4 15.2 -3.3
# Denominator is negative, nil or negligible.

Statement 2: Ratios of Select Parameters of FDI and non-FDI Companies
(Per cent)
FDI Companies
Year Operating profit to sales Return on equity (RoE)
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Aggregate (All Companies) 14.6 14.7 15.0 14.9 14.6 13.6
FDI-share-wise
10 per cent-25 per cent 18.7 19.4 19.2 14.0 15.3 12.9
25 per cent-50 per cent 18.8 19.4 21.1 16.9 12.7 14.0
50 per cent and above 11.8 12.0 12.2 14.5 15.1 13.7
Industry-wise
Manufacturing 12.0 13.3 14.5 12.5 14.9 13.4
Food products and beverages 8.8 10.1 9.6 36.6 42.3 30.3
Chemicals and chemical products 10.9 12.0 13.6 10.4 9.4 14.3
Rubber and plastic products 5.7 4.9 7.6 3.1 -0.2 -0.3
Motor vehicles and other transport equipment 8.5 10.5 11.9 9.6 13.1 12.8
Machinery and machine tools 12.1 14.8 14.6 12.9 20.3 18.4
Electrical machinery and apparatus 8.4 10.7 11.0 4.8 10.4 14.2
Services 16.4 15.2 14.6 17.5 16.4 15.7
Wholesale and retail trade 1.6 -0.2 -0.7 -2.1 -8.6 -8.4
Computer and related activities 21.7 20.6 18.5 30.0 30.3 26.0
Transport, storage and communication 16.5 15.7 12.8 20.9 19.8 13.9
Non-FDI companies
Aggregate (All Companies) 9.5 10.0 10.0 9.7 10.8 10.4
Industry-wise
Manufacturing 8.2 8.3 8.5 11.6 12.8 12.0
Food products and beverages 6.0 5.8 6.0 11.1 9.8 9.9
Chemicals and chemical products 10.9 10.4 10.9 13.2 14.6 13.7
Rubber and plastic products 8.9 9.1 9.6 18.1 16.5 16.5
Motor vehicles and other transport equipment 6.1 6.7 6.8 12.2 16.1 17.3
Machinery and machine tools 12.3 12.7 12.3 15.4 19.4 18.0
Electrical machinery and apparatus 8.4 8.9 9.3 12.4 14.3 15.9
Services 10.5 11.2 11.1 10.4 11.7 11.9
Wholesale and retail trade 3.7 4.1 4.1 3.1 4.0 4.1
Computer and related activities 19.2 20.0 19.5 31.3 33.1 34.2
Transport, storage and communication 11.1 11.3 11.3 12.4 16.3 15.3

Statement 2: Ratios of Select Parameters of FDI and non-FDI Companies (Concld.)
(Per cent)
FDI Companies
Year Total borrowings to equity Export intensity of sales Interest coverage ratio*
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
Aggregate (All Companies) 55.8 49.3 48.8 7.6 7.5 7.1 5.2 5.4 5.2
FDI-share-wise
10 per cent-25 per cent 79.6 69.6 83.6 5.5 6.9 5.4 3.9 4.1 3.7
25 per cent-50 per cent 57.8 53.8 45.1 7.8 6.0 6.1 5.7 4.9 5.2
50 per cent and above 43.7 37.8 34.8 8.4 8.0 7.9 6.0 6.8 6.8
Industry-wise
Manufacturing 68.7 56.7 57.6 8.4 7.6 8.8 4.0 4.7 5.0
Food products and beverages 78.6 52.0 60.4 4.6 1.8 0.7 6.6 8.3 7.1
Chemicals and chemical products 39.8 38.7 39.4 15.1 12.9 14.3 4.9 6.0 7.4
Rubber and plastic products 57.2 51.6 39.6 16.7 7.2 5.7 2.7 1.4 2.8
Motor vehicles and other transport equipment 26.8 18.6 13.9 1.5 0.7 1.0 5.9 7.5 10.9
Machinery and machine tools 39.3 34.5 29.8 15.7 14.8 14.2 6.5 9.7 9.3
Electrical machinery and apparatus 72.8 65.3 41.0 16.7 16.2 10.3 1.7 2.8 4.2
Services 38.3 34.7 33.2 6.6 7.7 5.3 7.6 7.6 7.2
Wholesale and retail trade 50.4 31.9 41.0 6.0 17.2 1.9 0.7 -1.2 -0.8
Computer and related activities 14.2 15.2 15.6 4.2 3.3 3.6 32.3 31.9 27.2
Transport, storage and communication 79.9 82.4 76.7 0.7 0.5 0.8 3.6 3.7 3.2
Non-FDI companies
Aggregate (All Companies) 87.9 89.9 91.8 6.5 6.4 6.2 2.6 2.7 2.8
Industry-wise
Manufacturing 95.2 92.8 91.9 7.7 7.7 7.3 2.5 2.5 2.6
Food products and beverages 116.4 110.5 112.6 6.4 5.5 5.8 2.2 2.1 2.3
Chemicals and chemical products 69.0 65.7 66.3 14.9 12.1 10.7 3.3 3.4 3.8
Rubber and plastic products 102.6 97.9 93.2 7.2 7.0 6.7 2.9 2.9 3.1
Motor vehicles and other transport equipment 80.1 70.3 66.7 2.3 3.2 3.2 2.3 2.9 3.7
Machinery and machine tools 60.8 61.5 60.7 10.7 11.2 10.1 4.1 4.6 4.6
Electrical machinery and apparatus 83.9 81.6 78.4 5.1 4.8 3.8 3.0 3.2 3.4
Services 67.3 70.5 71.8 5.0 4.8 4.7 3.4 3.7 3.7
Wholesale and retail trade 46.8 48.1 50.7 6.2 5.2 4.6 2.1 2.2 2.3
Computer and related activities 38.1 45.9 41.9 3.6 6.5 4.6 12.4 13.6 15.2
Transport, storage and communication 115.9 110.2 112.6 0.4 1.0 0.5 2.6 3.0 2.8
*Actual ratio

Statement 3: Composition of Liabilities and Assets of FDI and non-FDI Companies
(Per cent)
Year FDI companies Non-FDI companies
2013-14 2014-15 2015-16 2013-14 2014-15 2015-16
CAPITAL AND LIABILITIES
A. Shareholders' Funds 44.9 45.6 46.1 37.9 37.6 37.1
Of which, (i) Share Capital 11.7 12.1 12.3 9.1 9.4 9.3
(ii) Reserves and Surplus 33.2 33.5 33.8 28.8 28.2 27.8
Of which, Capital reserve 16.9 17.9 18.2 15.4 15.2 15.0
B. Non-current liabilities 19.2 19.0 19.5 22.4 23.0 23.3
Of which, Long-term borrowings 16.9 16.6 16.8 19.7 20.1 20.5
Of which, Term loans 9.5 8.3 7.2 10.4 10.5 10.2
Of which, Term loans from banks 9.5 8.3 7.2 10.4 10.5 10.2
C. Current liabilities 35.6 35.1 34.4 39.3 39.2 39.4
Of which, (i) Short-term borrowings 8.3 6.0 5.8 14.0 13.8 13.8
Of which, Loans repayable on demand 4.1 3.6 3.6 5.8 6.3 6.4
Of which, from banks 4.1 3.6 3.6 5.8 6.3 6.4
(ii) Trade payables 12.9 13.7 12.9 11.7 11.7 11.5
Assets
D. Non-current assets 53.5 52.4 54.0 50.7 49.9 49.7
Of which, (i) Gross Fixed Assets 66.7 63.0 63.8 41.8 39.3 42.9
Of which, Tangible assets 44.1 41.7 43.0 31.4 29.7 32.5
(ii) Non-current investments 4.6 4.8 5.4 12.1 11.7 11.4
Of which, Equity instruments/shares 3.8 1.0 4.6 9.0 1.3 8.2
(iii) Long term loans and advances 6.4 6.4 6.1 6.7 6.2 5.9
E. Current assets 46.5 47.6 46.0 49.3 50.1 50.3
Of which, (i) Current investments 4.1 4.5 3.5 2.7 2.7 2.6
(ii) Inventories 11.3 11.3 10.6 16.1 16.4 16.3
(iii) Trade receivables 13.1 13.4 13.3 14.2 14.3 14.4
(iv) Short-term loans and advances 5.9 5.6 5.5 8.6 8.9 8.9
(v) Cash and cash equivalents 3.8 7.5 10.7 3.5 4.6 4.7

Statement 4: Composition of Sources and Uses of Funds of Select FDI and non-FDI Companies*
(Per cent)
Year FDI companies Non-FDI companies
2014-15 2015-16 2014-15 2015-16
SOURCES OF FUNDS
Increase in Liabilities
1. Paid-up Capital 9.1 7.4 5.2 3.2
2. Reserves and Surplus 6.7 8.1 4.0 3.5
3. Provisions 6.5 12.1 0.9 20.3
4. Share Capital and premium 14.3 10.7 4.7 4.5
5. Long-term borrowings 9.8 12.2 11.1 9.1
6. Short-term borrowings 1.0 2.2 11.9 5.1
7. Trade payables 11.8 2.2 5.0 3.2
8. Other liabilities 13.2 9.1 7.2 7.2
9. Total increase in liabilities 72.4 64.1 50.0 56.3
Decrease in Assets
10. Gross Assets 3.0 - 3.4 -
(i) Tangible assets - - 2.3 -
Of which, Plant and machinery - - 1.5 -
(ii) Capital Work-in-progress 3.0 - - -
(iii) Intangible assets - - 1.1 -
11. Non-Current Investment 13.9 17.8 43.1 43.7
Of which, (i) Equity instruments / shares 12.6 - 36.6 -
(ii) Others - 17.8 - 43.7
12. Current investments - 3.5 - -
13. Inventory of raw materials, components etc. 0.3 - - -
14. Other current assets 10.4 14.6 3.4 -
15. Total decrease in assets 27.6 35.9 50.0 43.7
16. Total sources of funds 100.0 100.0 100.0 100.0
*To comprehend the analysis of sources and uses of funds, the sources of funds were represented either as an increase in liabilities or decrease in the assets, while uses of funds was presented as either increase in assets or decrease in liabilities.
- Nil or negligible

Statement 4: Composition of Sources and Uses of Funds of Select FDI and non-FDI Companies* (Concld.)
(Per cent)
USES OF FUNDS
Increase in Assets
17. Non-Current assets 46.1 63.6 55.7 80.3
Of which, (i) Gross Fixed Assets 23.4 36.9 7.7 33.7
Of which, Tangible assets 13.8 28.4 6.5 26.0
Of which, Plant and machinery 6.7 16.3 - 13.4
(ii) Non-current investments 17.5 23.8 46.5 45.8
(iii) Long-term loans and advances 3.9 1.7 0.1 0.4
18. Current assets 44.1 32.3 27.6 19.6
Of which, (i) Current investments 4.3 - 1.1 0.5
(ii) Inventories 6.8 1.8 8.2 5.2
(iii) Trade receivables 9.6 5.9 6.2 6.0
(iv) Short-term loans and advances 2.2 1.7 4.9 3.4
(v) Cash and cash equivalents 21.2 22.9 7.2 2.2
19. Total increase in assets 90.3 95.9 83.4 99.9
Decrease in Liabilities
20. Share application money pending allotment 0.1 1.0 0.9 -
21. Depreciation - - 8.0 -
22. Long Term Borrowings 1.3 2.7 0.5 -
Of which, (i) Term loans from banks 0.7 2.3 - -
(ii) Deposits - - 0.3 -
(iii) Loans and advances from related parties - - 0.2 -
23. Short-term borrowings 8.2 0.4 7.2 -
Of which, (i) Deposits - 0.3 - -
(ii) Other loans and advances 8.0 - 7.2 -
24. Total decrease in liabilities 9.7 4.1 16.6 0.1
25. Total uses of funds 100.0 100.0 100.0 100.0
*To comprehend the analysis of sources and uses of funds, the sources of funds were represented either as an increase in liabilities or decrease in the assets, while uses of funds was presented as either increase in assets or decrease in liabilities.
- Nil or negligible

* Prepared in the Company Finances Division of the Department of Statistics and Information Management, Reserve Bank of India. The previous article was published in the June 2016 issue of the RBI Bulletin.

1 As per the Balance of Payments and International Investment Position Manual, Sixth Edition (BPM6), of the International Monetary Fund (IMF), Foreign Direct Investment (FDI) is a ‘category of cross-border investment associated with a resident in one economy having control or a signifi cant degree of infl uence on the management of an enterprise that is resident in another economy.’ The BPM6 suggests that ‘immediate direct investment relationships arise when a direct investor directly owns equity that entitles it to 10 per cent or more of the voting power in the direct investment enterprise.’

2 The paid-up capital (PUC) of these 6,433 NGNF FDI companies accounted for 40.4 per cent of total PUC of Non-Financial FDI companies reported in the Reserve Bank’s Census on Foreign Liabilities and Assets of Indian Direct Investment Companies, 2015-16.


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