H1 Interest Cost Of 500 Major Pvt Sector Cos Down 1.2%

Updated: Nov 27 2002, 05:30am hrs
Interest expenses accounted for more than 3 per cent of net sales of 500 major private sector companies (sales above Rs 10 crore) during April-September 2002 (H1). The aggregate interest cost of these companies was Rs 6,062 crore, a 1.19 per cent decrease over the April-September 2001 level of Rs 6,135 crore.

The present study attempts to determine the trend of interest expense-net sales for 25 industries comprising 500 companies during April-September 2002 and April-September 2001. Of these 500 companies, the top 10 according to interest-sales ratio during April-September 2002 are Lloyds Steel Inds (83.91 per cent), Ganesh Benzoplast (46.96 per cent), Royal Cushion Vinyl (44.36 per cent), Gujarat Borosil (40.25 per cent), IFB Industries (33.65 per cent), Hotel Leela Venture (33.37 per cent), Ferro Alloys Corpn (30.11 per cent), Lyka Labs (28.13 per cent), TN Newsprint (26.61 per cent) and GKW (25.04 per cent).

Three hundred ten companies have witnessed a fall in interest expense-sales ratio,while 187 companies have shown a higher ratio, against April-September 2001. Three companies maintained the same ratio in both the six months. A significant fall in the ratio was witnessed in the case of Arvind Mills (22.94 per cent during April-September 2002 to 11.26 per cent during April-September 2001), JK Paper (10.42 per cent to 6.83 per cent), Aban Loyd Chiles (30.92 per cent to 15.66 per cent), Hotel Leela Venture (48.60 per cent to 33.37 per cent), Kirloskar Ferrous (16.60 per cent to 7.98 per cent), Bombay Burmah Trading (31.56 per cent to 17.56 per cent), Nelco (26.44 per cent to 12.46 per cent), Navneet Publications (10.90 per cent to 1.28 per cent), Vickers Systems (15.67 per cent to 6.29 per cent) and Cummins India (10.61 per cent to 0.17 per cent).

A significant improvement in the ratio was observed in the case of Lloyds Steel Inds (48.70 per cent in April-September 2001 to 83.91 per cent in April-September 2002), Nirma (5.67 per cent to 20.06 per cent), Bharti Tele-Ventures (3.40 per cent to 11.61 per cent), TN Newsprint (6.05 per cent to 26.61 per cent), Himachal Futuristic Comm (7.08 per cent to 13.44 per cent), IFB Industries (17.57 per cent to 33.65 per cent), National Organic Chemical (3.08 per cent to 14.28 per cent) Ferro Alloys Corpn (6.23 per cent to 30.11 per cent) and Cerebra Integrated Techno (1.08 per cent to 8.08 per cent).

The top 10 companies that shelled out the most in finance charges (interest expense only) were Reliance Industries, Jindal Vijayanagar Steel, CESC, Lloyds Steel Inds, Nirma, Tisco, Telco, Bharti Tele-Ventures, L&T and Videocon International. For these companies, interest as a percentage of net sales ranged between 2 per cent and 84 per cent. Although, most of the above companies figured among the top 10 in the previous half year also, there was a substantial difference in their position, especially where interest as a percentage of net sales was considered. The interest-sales ratio of 500 companies decreased from 4.39 per cent in April-September 2001 to 3.96 per cent in April-September 2002, which were indicative of the fact that the interest burden on private corporate sector witnessed a declining trend in the first half of the current year.

A similar trend in the industry wise ratio was seen in the case of diversified (3.36 per cent in April-September 2001 to 2.62 per cent in April-September 2002), steel (10.34 per cent to 10.10 per cent), cement&products (6.50 per cent to 6.44 per cent), textiles (5.97 per cent to 4.41 per cent), automobiles (2.43 per cent to 1.66 per cent), fertilisers (6.76 per cent to 6.05 per cent), pharmaceuticals (3.09 per cent to 2.13 per cent), tyres (5.65 per cent to 3.80 per cent), sugar (5.27 per cent to 3.88 per cent), engineering others (4.81 per cent to 2.54 per cent), hotels (9.66 per cent to 9.45 per cent), food products (0.83 per cent to 0.74 per cent), gems&jewellery (3.68 per cent to 2.85 per cent), tea (5.24 per cent to 4.63 per cent), aluminium&products (2.35 per cent to 1.63 per cent), cigarettes (1.35 per cent to 0.50 per cent) and trading (1.07 per cent to 0.90 per cent). A reverse trend can be seen in the case of chemicals others (3.95 per cent to 4.72 per cent), misc. (5.11 per cent to 5.23 per cent), computers (3.02 per cent to 3.46 per cent), electricity (10.80 per cent to 12.81 per cent), paper (7.25 per cent to 8.63 per cent), construction (5.93 per cent to 6.07 per cent) and shipping (4.98 per cent to 6.00 per cent). A significant decline in interest cost during April-September 2002 was seen in cigarettes (-56.75 per cent), engineering others (-43.84 per cent), aluminium&products (-25.31 per cent) and textiles (-20.56 per cent).