Opportunities & challenges: The jury is out on what, how India Inc achieves

In many ways, FY22 was a milestone year for BS1000 companies. The fiscal year ended a decade-long growth drought that had bedevilled the country’s top firms in the manufacturing and industrial sectors.

The combined revenues of BS1000 companies rose 33.9 per cent year on year in FY22 to Rs 98.8 trillion, while net profit was up 72.5 per cent YoY to Rs 7.7 trillion. Growth was visible across the board, with a surge in India’s merchandise exports and in domestic consumer demand. 

This was the best showing by the country’s non-financial corporate sector in more than a decade. BS1000 is a listing of India’s top 1000 non-bank, finance and insurance (BFSI) companies, and thus is a good barometer of the operational and financial health of mainline companies.

Thanks to the sharp increase in volumes and earnings, BS1000 companies added more to their revenues and profits in FY22 than in the preceding nine years (FY12 to FY21). BS1000 companies’ combined revenues rose by Rs 24.5 trillion in FY22, while their net profit was up by Rs 3.24 trillion. The figures for revenues and net profits, respectively, for the period FY12-FY21 were Rs 20.4 trillion and Rs 1.39 trillion.

BS1000 companies’ revenues clocked a paltry compound annual growth rate (CAGR) of 3.8 per cent between FY12 and FY21, while net profit CAGR was 4.2 per cent — not even keeping pace with consumer price inflation or GDP growth at current prices. However, after the surge in FY22, BS1000 companies’ CAGR in revenue between FY12 and FY22 improved to 6.4 per cent. CAGR in net profit advanced to 9.6 per cent.

This growth bounty cheered the equity markets and corporate shareholders, and created an expectation that India Inc might be on the cusp of a new super cycle of growth in revenues and earnings, driven by investment and productivity growth underpinned by higher exports and domestic consumer demand.

However, as our cover story for this year’s edition shows, it would be quite a challenge for India Inc to maintain its growth momentum, given the earnings slowdown in FY23 and the global and domestic macroeconomic headwinds that lie ahead.

Similarly, India’s technology and start-up sector faces a growth challenge from a decline in inflows of venture and risk capital from global investors, owing to monetary tightening by the world’s major central banks in FY23. The jury is out on what and how India Inc achieves.