The increase in petrol and diesel prices could impact the bottom line of India Inc in the coming months. According to an FE study, the aggregate expenditure of 539 major companies (including power and airline companies) on energy decreased by 3.5% year-on-year to Rs 23,760 crore during October-December 2009.
On the other hand, the total expenditure of the sample companies increased by 1% to Rs 94,282 crore while the ratio of energy costs to total expenditure decreased from 26.38% to 25.20%.The decreasing share of energy cost in total expenditure helps increases the operating margins of the firms. 261 companies have witnessed a fall in their energy cost-total expenditure ratio in the December 2009 quarter while 278 companies have shown a higher ratio.
A significant fall in the ratio was witnessed in the case of Andhra Cements, Sanghi Industries, Ultra Tech Cements, Binani Cements, GMDC and National Aluminium. An opposite trend was witnessed in the case of Cimmco Birla , Gujarat Fluorochem, Nava Bharat Venture, FACT, Balasore Alloys and Ispat Industries. Among those who reduced their energy cost during third quarter were SPIC, Andhra Sugars and Tata Chemicals while a significant increase in energy cost was observed in the case of Sunflag Iron, Deccan Cement and FACT.
Among the industries studied, significant increase in power and fuel cost was observed in the case of steel, diversified, glass products, aluminium, petrochemicals, chemicals and textiles.
The power and fuel cost of steel companies increased by 27.2% year-on-year to Rs 2,396 crore during October-December 2009. A significant decline in the ratio of power & fuel cost to total cost was seen in aluminium, cement, paper, textiles, airlines and diversified. An opposite trend was witnessed in fertilisers, petrochemicals, steel, glass, chemicals and autoancilleries.