India Inc?s forex earnings growth declines in ?08-09

The slowdown in the global economy seems to have taken its toll on the growth rate of exports, especially the large industrial houses.

Written by PK Dey

January 9, 2010 21:49 IST

The slowdown in the global economy seems to have taken its toll on the growth rate of exports, especially the large industrial houses. An analysis of the export and foreign exchange earnings performance of the top 25 (according to sales) industrial houses during last three financial years has seen a sharp decline in the rate of export growth.

The growth of foreign exchange earnings of the top 25 industrial houses has decreased from 24.9% during 2007-08 to 9.7% during 2008-09. Incidentally, these houses accounted for roughly 20% of the total export earnings by the Indian economy in 2008-09.

In actual terms, however, the foreign exchange earnings of this group increased to Rs 1.85 lakh crore during 2008-09 from the level of Rs 1.69 lakh crore during 2007-08. The FOB value of exports also increased from Rs 1.07 lakh crore to Rs 1.46 lakh crore during the study period. The foreign exchange earnings to net sales ratio which was pegged at 32.9% during 2007-08 and decreased to 30.1% during 2008-09.

On the other hand, the total foreign exchange expenditure, including imports, was Rs 1.69 lakh crore during 2006-07 increased to Rs 2.84 lakh crore during 2008-09.

The net foreign exchange earnings figures were negative during 2008-09 at Rs 98,665 crore, nearly double compared with Rs 57,626 crore achieved in the fiscal 2007-08.

Six houses namely Reliance Industries led by Mukesh Ambani, Tata, Essar, Sterlite, Om Prakash Jindal and Aditya Birla recorded more than Rs 5000 crore value of exports (FOB value) during 2008-09. Among these houses, the maximum growth in exports can be seen in the case of the Tata group followed by Reliance Industries led by Mukesh Ambani. Among the 25 industrial houses, foreign exchange earnings growth decreased in the case of six houses. Mention may be made of Reliance Industries, Essar, Mahindra and Welspun.

The growth of foreign exchange earnings of RP Goenka group increased from 11.7% to 21.3% during the above period. The top five positive net foreign exchange earners during 2008-09 can be seen in the case of Mahindra, Shiv Nadar, Tata, Sterlite and Avantha.