Interest burden as a percentage of gross profits in the first half of the current fiscal was the highest for the iron & steel and allied products sector at 138.9 per cent and the lowest for information technology at 4.4 per cent. This was revealed by a Reserve Bank of India (RBI) study on the financial performance of 1209 non financial, non-government, public listed companies.
Interest burden in the case of rubber & rubber products was 117.7 per cent, textiles (105.9 per cent), electrical machinery (56.3 per cent), basic industrial chemicals (54.7 per cent), cement (69.3 per cent), electricity generation & supply (61.5 per cent) and sugar (69.3 per cent).
In the case of industries like food processing, tea, pharmaceuticals and hotels, the interest burden was in the range of 20 to 30 per cent.
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Interest costs as a proportion of sales of the chemical industry was relatively low at 3.7 per cent in the first half of 2001-02 (3.9 per cent in H1 of 2000-01), but it was slightly higher for the engineering industry at 5.4 per cent. Industries which reported high interest costs to sales were: iron & steel and allied products sector (8.7 per cent), cement (7.8 per cent), electricity generation & supply (10.5 per cent), plastic products (7.3 per cent) and hotels (7.9 per cent).
On the other hand, industries like automobiles & ancillaries (2.6 per cent), drugs & pharmaceuticals (3.7 per cent), petroleum refining (3.9 per cent), food processing (1.7 per cent) and IT (1.2 per cent) showed lower interest cost as a proportion of sales in H1 of 2001-02.
Profit margin on sales of engineering companies declined to 8.5 per cent during H1 of 2001-02 (9.9 per cent in H1 of 2000-01) whereas, for chemical companies, it was slightly higher at 13 per cent (12.4 per cent in H1 of 2000-01). For IT companies, this margin declined to 26.2 per cent during the reporting period from 30.8 per cent in the year ago period.
Industries for which the margin on sales declined by over 2 percentage points during the half year ended September 2001 were: iron & steel and allied products sector (6.3 per cent), electrical machinery (9.6 per cent) and rubber & rubber products (4.3 per cent).
A marginal decline in the profit margin on sales was observed in industries like pharmaceuticals & drugs (15.2 per cent), sugar (9.1 per cent), construction (8.9 per cent) and trading (5.5 per cent). Automobiles and ancillaries (6.9 per cent), petroleum refining (8 per cent), textiles (5.9 per cent) and tea (21.2 per cent) industries operated with slightly higher profit margin on sales during the first half of 2001-02.
Petroleum refining companies have recorded the maximum growth in sales (of 24 per cent) in the first half of fiscal 2002, outperforming the information technology (IT) sector's sales growth of 23.9 per cent.
The other industries which showed strong sales growth were food processing (11.9 per cent), sugar (9.2 per cent), paper & paper products (8.8 per cent) and rubber & rubber products (8.1 per cent).
During the reporting half year, sales of diversified companies slid by 8.8 per cent, both textiles and hotels slipped by 8.2 per cent while those of engineering companies fell by 0.3 per cent. Within the engineering industry, iron & steel and allied product companies registered a 3.1 per cent decline in sales, whereas automobile and ancillary companies reported a 3.9 per cent rise in sales.
The post tax profits of petroleum refining companies and electricity generation & supply firms rose by 34 per cent and 30.5 per cent, respectively. However profits of IT companies rose by only 3.5 per cent in the period in spite of an impressive growth in sales, the RBI study said.
Construction and tea industries reported a fall in post-tax profits of 2.1 per cent and 5.7 per cent, respectively, during first half of 2001-02.