Corporate Indias interest outgo surges 44% in Q4

Written by Pradip Kumar Dey | Mumbai | Updated: May 18 2011, 07:55am hrs
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.