The aggregate interest cost of 967 major corporates increased by 10.2% to Rs 9,980 crore during April-June 2009 from the level of Rs 9,055 crore during April-June 2008. The ratio of interest to sales also increased from 1.81% to 2.27% during the same period.

However, the sales of 967 companies decreased by 12.1% to Rs 4.39 lakh crore during April-June 2009 from the level of Rs 4.99 lakh crore during April-June 2008. But the total net profit of these companies increased by 18.9% to Rs 41,089 crore during April-June 2009.

Kishor P Ostwal, CMD, CNI Research said, ? Though interest rates have fallen sharply post October 2008 crash, there was a huge liquidity problem in Q1 and Q2 and availability of funds was scarce. As a result Corporate India had to borrow at higher rates irrespective of low bank rates and, hence, interest burden went up.?

?Another reason for higher interest is locking of funds in debtors and inventory. Companies leveraged on lower pieces to build higher inventory, as the raw material prices softened by 40-50% across the world. This has reflected in lower topline and higher bottomline. Thus the bottomline growth is purely on account of lower inventory cost,? he added.

The top 5 companies that shelled out the most in finance charges (interest expense only) were NTPC, Power Grid Corp, Reliance Industries, Tata Steel and Indian Oil. For these companies, interest as a percentage of net sales ranged between 0.57% and 23.62%.

Although, most of the above companies figured among the top 5 in the previous years quarter 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 967 companies decreased during April-June 2009 from the level of April-June 2008, which indicate the fact that the interest burden on corporates witnessed an increasing trend in the first quarter of 2009-10. 401 companies have witnessed a fall in interest expense-sales ratio, while 555 companies have shown a higher ratio, against April-June 2008. Eleven companies maintained the same ratio in both the quarters. A significant fall in the ratio was witnessed in the case of ITI, Bajaj Hind Sugar, Power Grid Corporation, Mcleod Russel, Dhampur Sugar, Spice Communications and Sundram Fasteners.

On the other hand, a significant improvement in the ratio was observed in the case of Ispat Industries, Jet Airways, KF Airlines, Varun Shipping, EIH,S Kumar National, Emami and Chemplast Sanmar.

Out of 967 companies, 397 companies have witnessed a fall in interest cost, while 537 companies have shown an increase, against April-June 2008. 33 companies maintained the same figure in the both the time period.

Significant increase in interest cost was seen in the case of Bajaj Auto, Tech Mahindra and Sesa Goa. A reverse trend was seen in the case of Exide Inds , Zuari Inds and Blue Star.

Among the industries studied, significant increase in the ratio of interest to sales was seen in the case of automobiles, IT, construction, engineering, hotels, petrochemicals, shipping, textiles and transport (including airlines).

An opposite trend was seen in the case of fertilizers, electricity, solvent extractions, sugar, tea, telecommunicatios and tyres. Significant increase in interest spend was seen in the case of IT, petrochemicals, jems & jewellery and construction.