India Inc generated strong cash flows in FY24, with cash and bank balances shooting up 18% to nearly Rs 10 trillion, the fastest pace in four years. A universe of 1,350 large companies for which comparative data is available, generated operating cash flows of nearly Rs 15 trillion.
This is in sync with the strong increase in corporate profits last year, driven partly by a jump in other income. For a sample of 2,345 companies (excluding banks and financials) net profits were up a sharp 32%. Among the sectors that generated high operating cash flows last year were refineries, power generation and distribution, software services and telecom services.
However, the high cash levels has not translated into any meaningful pick-up in capital investment by the companies. Data suggests there was, in fact, a marginal slowdown in the growth in gross fixed assets (including capital work –in-progress) last year. A study by Bank of Baroda reveals that for a set of 2,165 companies GFA went up by 5.6% last year to Rs 34 .09 trillion, a slower pace than the 5.9% seen in the previous year.
The lull in capital formation activity continued into the current year. New project announcements nationwide, in the first quarter, came in at Rs 59,931 crore, down 92% year-on-year and the smallest levels in over a decade, provisional data from the Centre for Monitoring Indian Economy (CMIE), showed.