Foreign Firms' Return Ratios at 17-Year High

ROCE Trended Higher in FY25 Amid a Drop in Net FDI

- SACHIN P MAMPATTA

Return ratios for foreign private sector companies were last this high during the boom years of 2006-07 (FY07).

The return on capital employed (ROCE) stood at 13.21 percent for 2023-24 (FY24), according to data from the Centre for Monitoring Indian Economy.

Preliminary data for FY25 shows ROCE at 21.62 percent, though this is based on a limited sample of firms. The FY24 figure was already the highest since FY07.

Return on net fixed assets rose to 32.3 percent in FY24 and touched 102.41 percent so far in FY25, again based on a limited sample. The FY24 figure is also the highest since FY07.

ROCE broadly indicates the profit generated per ₹100 of capital employed, including debt and equity. Return on net fixed assets reflects the profit generated per ₹100 worth of fixed assets after accounting for depreciation. FY25 data was available for only 21 non-financial foreign private sector companies. The FY24 sample, which included 1,668 non-financial firms, is more reliable as an indicator.