The progressive interest rate hikes in the lending rates of banks are showing on expenses of corporate India. An FE research study of 690 companies (excluding banks and non-banking financial companies) that have declared their results for the quarter ended March 31, 2011, shows that interest expenses have gone up 44% to R6,633 crore in the quarter as compared with 4,605 crore during the same quarter last year. The ratio of interest to sales also increased from 1.66% to 1.95% during the same period. The study shows that the aggregate sales of 690 companies increased 22.6% to R3.39 lakh crore during January to March 2011 quarter as compared with R2.76 lakh crore during the same quarter last year. Net profit of these companies also increased by 11% to R34,146 crore during the the quarter ended March 2011.
Leading the pack in interest outgo were Reliance Industries, NTPC, Essar Oil, SAIL and Alok Industries. For these companies, interest as a percentage of net sales ranged between 0.96% and 7.22%.
Although, most of the companies figured among the top five last year, there was a substantial difference in interest as a percentage of sales. Interestingly, 317 have witnessed a fall in interest expense-sales ratio, while 347 have shown a higher ratio. The rest 32 showed no change in their ratio.