The present study attempts to determine the trend of interest expense-net sales for 25 industries during 1999-00 and 1998-99. The industries selected are aluminium (3 units), auto & auto ancillaries (25), cement & products (11), computers (15), diamonds (3), other chemicals (32), electricity (5), electrical goods (27), engineering (29), fertilisers (13), food & products (9), hotel (2), paper & products (6), pharmaceuticals (21), paints (5), shipping (3), iron & steel (18), sugar & breweries (10), tea & plantation (4), cotton textiles (29), man made fibre (7), tobacco (3), tyres & tubes (5), diversified (16) and miscellaneous (49).

Of these, the top 10 according to the interest-sales ratio during 1999-00 are DLF Universal (48.70 per cent), SIV Industries (43.34 per cent), Lloyds Steel Indus (39.87 per cent), Viraj Alloys (38.88 per cent), Essar Steel (31.73 per cent), IFB Industries (29.55 per cent), Godrej Soap (27.24 per cent), Unichem Lab (25.46 per cent), CESC (22.48 per cent) and Arvind Mills (21.74 per cent).

Two hundred and sixteen companies have witnessed a fall in interest expense-sales ratio, while 133 companies have shown a higher ratio, against 1998-99. One company namely Ingersoll-Rand maintained the same ratio in both the years.

A significant fall in the ratio was witnessed in the case of ITC Bhadrachalam (21.92 per cent in 1998-99 to 15.13 per cent in 1999-00), Flex Industries (22.80 per cent to 8.89 per cent), OCL India (9.38 per cent to 5.87 per cent), Deepak Fertilisers (8.01 per cent to 5.55 per cent), Moser Baer India (8.39 per cent to 4.19 per cent), FCL Technologies (18.31 per cent to 3.27 per cent), Uniworth Ltd (28.86 per cent to 3.18 per cent), Pentamedia Graphics (4.41 per cent to 1.55 per cent) and PCS Industries (2.74 per cent to 0.31 per cent).

A significant improvement was noticed in the case of SIV Industries (30.12 per cent in 1998-99 to 43.34 per cent in 1999-00), Lloyds Steel Indus (20.28 per cent to 39.87 per cent), Viraj Alloys (8.25 per cent to 38.88 per cent), Essar Steel (18.29 per cent to 31.73 per cent), Godrej Soap (6.59 per cent to 27.24 per cent), Arvind Mills (4.54 per cent to 21.74 per cent), Ferro Alloys Corp (9.08 per cent to 15.56 per cent), Standard Industries (4.77 per cent to 8.06 per cent) and Laynard Foods (0.74 per cent to 1.35 per cent).

The top 10 companies that shelled out the most in finance charges (interest expense only) were Reliance Industries, Essar Steel, Tata Engineering, CESC, Tata Steel, Larsen & Toubro, Arvind Mills, Grasim Industries, Lloyds Steel and Jindal Vijayanagar Steel. For these companies, interest as a percentage of net sales ranged between 5 per cent and 40 per cent.

Although, most of the above companies figured among the top 10 in the previous year also, there was a substantial difference in their ranking, especially where interest as a percentage of net sales was considered. The interest-sales ratio decreased from 5.44 per cent in 1998-99 to 5.35 per cent in 1999-00, which were indicative of the fact that the interest burden on private corporate sector witnessed a declining trend in that year.

A similar trend in the industry wise ratio was witnessed in the case of food & products (1.79 per cent in 1998-99 to 1.60 per cent in 1999-00), pharmaceuticals (3.38 per cent to 3.17 per cent), other chemicals (3.71 per cent to 3.58 per cent), tobacco (3.81 per cent to 2.84 per cent), cement & products (10.70 per cent to 9.84 per cent), tyres & tubes (5.52 per cent to 4.45 per cent), electrical goods (3.86 per cent to 3.7 per cent), computers (3.84 per cent to 2.05 per cent), manmade fibres (13.65 per cent to 11.26 per cent), engineering (4.34 per cent to 3.94 per cent), auto & auto ancillaries (3.21 per cent to 3.10 per cent), shipping (10.60 per cent to 9.47 per cent), paper & products (10.22 per cent to 10.11 per cent), miscellaneous (6.6 per cent to 5.01 per cent), paints (2.82 per cent to 2.31 per cent) and aluminium (5.73 per cent to 4.18 per cent).

A reverse trend can be seen in the case of tea & plantation (3.40 per cent in 1998-99 to 3.59 per cent in 1999-00), cotton textiles (6.23 per cent to 7.38 per cent), hotel (1.71 per cent to 3.25 per cent), fertilisers (6.21 per cent to 6.30 per cent), sugar & breweries (7.20 per cent to 7.41 per cent), electricity (9.8 per cent to 10.03 per cent), iron & steel (9 per cent to 12.06 per cent) and diamonds (2.75 per cent to 3.73 per cent). And the ratio was same in both the years in the case of diversified (5.48 per cent).

-- FE Research Bureau