Interest costs of India?s top 25 industrial houses, ranked by sales, decreased 7.2% to Rs 5,310 crore during the October-December 2009 period from the level of Rs 5,722 crore during October-December 2008. The ratio of interest to sales declined from 3.98% to 2.74% during the same period.

Kishor P Ostwal, CMD, CNI Research, said that in 2009-10, corporate India managed to raise as much as $15 billion through equity, with the stockmarkets recovering after the elections in May. That money has been used to repay debt and brought down expenses on interest. That apart, Indian corporates were successful in swapping high-cost debt with overseas borrowings which were cheaper. The aggregate sales of 25 houses increased 34.9% to Rs 1.93 lakh crore during October-December 2009.

The present study attempts to determine the trend of interest expense-sales for 25 industrial houses during October-December 2009 and October-December 2008.The top five houses among the 25 that shelled out the most in finance charges (interest expense only) were Tata, Reliance Industries led by Mukesh Ambani, Hinduja, Om Prakash Jindal and Essar.

For these houses, interest as a percentage of net sales ranged between 0.97% and 17.38 %.

Although, most of the above houses figured among the top five in the previous year also, there was a substantial difference in their position, especially where interest as a percentage of sales was considered. As we have said earlier, the interest-sales ratio of 25 houses decreased during October-December 2009 from the level of October-December 2008, which were indicative of the fact that the interest burden on corporates witnessed a declining trend during October-December 2009.

Seventeen houses have witnessed a fall in interest expense-sales ratio, while eight houses have shown a higher ratio, against October-December 2008. A significant fall in the ratio was witnessed in the case of Reliance Industries led by Mukesh Ambani, Aditya Birla, Essar, Omprakash Jindal, ADAG, Bajaj, BK Birla, Hindujas and R P Goenka.

On the other hand, a significant improvement in the ratio was observed in the case of Tata, Ruchi, Shiv Nadar, Jaiprakash Gaur, Ispat-MPK and Torrent. Out of 25 houses , 11 have witnessed a fall in interest cost, while 14 have shown an increase, against October-December 2009. Significant increase in interest cost was seen in the case of Ispat-MPK (150.5%) , Shiv Nadar (142.8%), Torrent (134.3%) and Jaiprakash Gaur (128%). Among the houses studied,significant decrease in interest cost in Oct-Dec.?09 was seen in the case of ADAG (-92%), BK Birla (-41.7%), KK Birla (-35%), Hari S Singhania (-26.4%) and Welspun (-26.3%).