India Inc?s energy spend marginally decreased during 2009-10 as compared to a significant increase during 2008-09. An FE analysis shows that the aggregate expenditure of the 526 major companies (including power and airline companies) on energy increased by 28.5% to Rs 97,031 crore in 2008-09 from the level of Rs 75,491 crore in 2007-08 and decreased thereafter by 1.5% to Rs 95,618 crore in 2009-10.
On the other hand, the total expenditure of the sample companies decreased by 0.9% in 2009-10 as against an increase of 24.5% in 2008-09. The power and fuel cost to total expenditure ratio increased from 25.09% in 2007-08 to 25.90% in 2008-09 and decreased thereafter to 25.75% in 2009-10.
The decreasing share of energy cost in total expenditure in 2009-10 not only increases margins, but also helps cost control measures of corporates. The net profit growth turned out to be positive of 29.8% in 2009-10 from a negative of 24% in 2008-09.
As many as 250 companies have witnessed a fall in energy cost-total expenditure ratio, while 272 have shown a higher ratio against that in 2008-09. Four companies saw the same ratios for both years. A significant fall in the ratio was witnessed in the case of Prism Cements, Borosil Glass, Ultra Tech Cements, Binani Cements, Gujarat Alkalies, KCP and Bell Ceramics. An opposite trend was witnessed in the case of CESC , Rain Commodities, Nava Bharat Venture, FACT, Usha Martin and Kanoria Chemicals.
Kalyanpur Cement, Andhra Cement, Facor Alloys and Jet Airways reduced their energy cost in 2009-10. On the other hand, significant increase in energy cost was observed in the case of Maharashtra Electrosmelt, Deccan Cements, Aditya Birla Chemicals and Titagarh Wagons.
The top five companies regarding energy cost in 2009-10 are NTPC, Reliance Infrastructure, Tata Power, SAIL and Torrent Power. Among these, a steady increase in energy cost during last three years was observed in the case of NTPC, SAIL and Torrent Power .The energy cost to total expenditure ratio of NTPC steadily increased from 85.26% in 2007-08 to 86.91% in 2009-10.
Among industries studied, significant increase in power and fuel cost in 2009-10 from the level of 2008-09 was observed in the case of aluminium, auto ancillaries, ferro alloys, plastics, pharmaceuticals and steel. The power and fuel cost of steel companies increased by 15.9% to Rs 8,384 crore in 2009-10 from the level of Rs 7,237 crore in 2008-09.
An opposite trend was seen in the case of diversified, metal, paper, fertilisers and Airlines. A significant decline in the ratio of power and fuel cost to total cost was seen in the case of cement, chemicals, diversified, glass, metal, packaging, paper, electricity, sugar, tea, textiles and airlines.
An upward trend was seen in the case of aluminium, auto ancillaries, ceramics, ferro alloys, fertilisers, petrochemicals, plastics and steel.