Corporate Indias Expenditure On Power & Fuel Dips 1.81%

Updated: Dec 25 2002, 05:30am hrs
Corporate India succeeded to reduce the power & fuel cost during the year 2001-02. The average cost of power&fuel accounts for slightly more than 6.8 per cent of the total expenditure and even a small decline in its share influences profits significantly.

A sample of 300 major private sector companies (sales above Rs 100 crore) reveals that the share of power&fuel in total expenditure decreased steadily during 2001-02 from the level of 2000-01. The share has decreased from 7.67 per cent in 2000-01 to 6.82 per cent in 2001-02. Significant decrease in the share was noticed in the case of Reliance Industries (4.74 per cent in 2000-01 to 1.88 per cent in 2001-02), Ispat Industries (20.74 per cent to 13.33 per cent), Raymond (11.59 per cent to 8.28 per cent), Nava Bharat Ferro Alloys (32.53 per cent to 21.28 per cent), Jaiprakash Industries (12.83 per cent to 5.21 per cent), Shree Digvijay Cement (19.60 per cent to 15.56 per cent), Maharaja Shree Umaid Mills (22.57 per cent to 12.92 per cent), Gammon India (42.24 per cent to 12.35 per cent) and Jai Corp (7.18 per cent to 5.88 per cent).

An opposite trend can be seen in the case of Arvind Mills (9.55 per cent in 2000-01 to 11.91 per cent in 2001-02), Jindal Vijayanagar Steel (2.07 per cent to 9.85 per cent), Nirma (6.62 per cent to 8.20 per cent), Siel (7.96 per cent to 10.98 per cent), Abhishek Industries (7.94 per cent to 9.80 per cent), JBF Industries (3.91 per cent to 6.22 per cent), Omax Autos (2.86 per cent to 3.06 per cent) and Shree Precoated Steels (3.44 per cent to 4.35 per cent).

In actual figures,the aggregate expenditure of the sample companies on power&fuel decreased by 1.81 per cent to Rs 19,008 crore during 2001-02 from the level of Rs 19,358 crore during 2000-01.On the other hand, the total expenditure of the sample companies increased by 10.39 per cent to Rs 2,78,641 crore during 2001-02 from the level of Rs 2,52,407 crore during 2000-01. The decreasing share of power&fuel in total expenditure not only increases margins,but also encourage cost control measures. At the individual level,many sample companies reduced the power&fuel cost significantly during 2001-02. Mention may be made of Reliance Industries (-25.13 per cent), Ispat Industries (-27.73 per cent), Spic (-31.87 per cent), Madras Fertilizers (-21.91 per cent), Nagarjuna Fertilizers (-33.51 per cent), Raymond (-48.30 per cent), JCT (-51.93 per cent) and Nava Bharat Ferro Alloys(-38.87 per cent).

In the case of Reliance Industries, between 2000-01 and 2001-02, its total expenditure has increased by 88.31 per cent to Rs 39,280 crore from Rs 20,860 crore,the cost of power&fuel has decreased by 25.13 per cent from Rs 988 crore to Rs 740 crore. So the share of power&fuel in total expenditure has declined from 4.74 per cent in 2000-01 to 1.88 per cent in 2001-02. Reliances energy conservation efforts were recognised and awarded by many agencies.Significant among them are National Energy Conservation Award, ICMA award and FGI award.

On the other hand a significant increase in power&fuel cost was noticed in the case of Mangalore Refinery (115.45 per cent), Arvind Mills (89.09 per cent), Jindal Vijayanagar Steel (773.52 per cent), ITC (60.26 per cent), AP Paper (50.83 per cent), Abhishek Industries (75.42 per cent) and Graphite India(218.35 per cent). In the case of Jindal Vijaynagar Steel, between 2000-01 and 2001-02, total expenditure has increased by 83.21 per cent from 1,310 crore to Rs 2,399 crore, the cost of power&fuel has increased by 773.52 per cent from Rs 27.05 crore to Rs 236.30 crore. The share of power & fuel in total expenditure increased from 2.07 per cent to 9.85 per cent.

In the industrywise analysis, the ratio(power & fuel to total cost) for 22 industries was studied. A significant decline was observed in the case of automobiles (1.91 per cent in 2000-01 to 1.85 per cent in 2001-02), construction(10.60 per cent to 5.71 per cent), diversified(7.35 per cent to 5.03 per cent),fertilizers (12.74 per cent to 12.21 per cent), paper&products (22.20 per cent to 21.60 per cent), tyres&tubes(5.09 per cent to 4.85 per cent) and pharmaceuticals (3.65 per cent to 3.18 per cent). A reverse trend is seen in aluminium products (17.54 per cent to 18.62 per cent), cigarettes(0.98 per cent to 1.37 per cent), computers (2.00 per cent to 2.09 per cent),sugar(3.86 per cent to 4.04 per cent) and tea(6.18 per cent to 7.27 per cent). and textiles(9.57 per cent to 10.50 per cent).