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India Inc’s capital expenditure slows despite jump in net profits

June 22, 2022 by www.rediff.com Leave a Comment

The stellar rise in corporate earnings in financial year 2021-22 (FY21) and FY22 did not result in a corresponding boom in capital expenditure (capex), with listed companies' investment in fixed assets rising just 2.3 per cent year-on-year (YoY) in FY22, growing at the slowest pace in the last six years. In comparison, the firms' combined net profit jumped 63.5 per cent YoY in FY22, while net sales increased 31.1 per cent — the fastest pace in over a decade. The 955 non-financial companies in Business Standard 's sample reported combined net profit of Rs 7.18 trillion in FY22, compared with Rs 4.39 trillion in FY21 and Rs 2.59 trillion in FY20. The companies' combined net sales jumped to Rs 87 trillion in FY22 from Rs 66.43 trillion in FY21 and Rs 69.9 trillion in FY20. In all, the annual corporate earnings rose 66 per cent from the pre-Covid level of Rs 4.32 trillion in FY19. However, in the same period, India Inc's fixed assets grew around 22 per cent from around Rs 41 trillion at the end of FY19 to Rs 49.8 trillion at the end of FY22. These numbers suggest that rather than funding capex, companies used the jump… Read full this story

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