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Falling bank interest rate led to higher earnings for private corporates
Mumbai, Mar 14: The falling interest rate on bank credit has bolstered the earnings of the private corporates during the first half of fiscal 2002-03, according to a Reserve Bank study.
Mumbai, Mar 14: The falling interest rate on bank credit has bolstered the earnings of the private corporates during the first half of fiscal 2002-03, according to a Reserve Bank study.
The study conducted by the statistical analysis department of RBI, revealed that companies in chemicals, textiles, rubber and food processing industries witnessed considerable fall in interest payments to the extent of 15.4 per cent, 29.9 per cent, 17 per cent and 16.5 per cent respectively.
However, the interest burden represented by the share of interest outgo in gross profits during the period varied considerably across the industries.
The interest burden for iron and steel products is quite at higher side of around 62 per cent, textiles(57.8 per cent), electrical machinery (52.9 per cent), basic industrial chemicals (70.8 per cent), cement (70.5 per cent), construction(67.5 per cent) sugar (179 per cent) as against 10 to 30 per cent interest burden in case of food processing, tea, pharmaceuticals and drugs industries.
On quarterly performance, the study said, gross profits registered a higher rise of 9.4 per cent in the second quarter of 2002-03 as compared to an increase of 8.5 per cent in the previous quarter.
Similarly, interest payments continued to decline by 9.5 per cent in the July-September quarter after registering a fall of 8.2 per cent in the previous quarter. Post-tax profits also rose at 18.7 per cent as against 17.9 growth in April-June of the year.
Margin on sales moved up from 11.2 per cent to 11.6 per cent as the overall sales of the selected 1214 companies under study rose by 9.6 per cent as compared with the rise of 7.6 per cent recorded by 1236 companies in the previous quarter. Total expenditure rose at a lower rate of 9.2 per cent as against 7.6 per cent in the previous quarter.
Industry-wise, engineering sector posted a steep rise in its post-tax profits at 163 per cent in the second quarter in contrast to a decline of 0.6 per cent in case of chemical industries. Post tax profits of information technology declined by 2.1 per cent and 0.2 per cent in the first and second quarters respectively.
On expenditure side, the study found that raw materials consumption by the companies during the first half of the year rose by 11.3 per cent but the total expenditure were up at a lower rate of 8.1 per cent. There was also a rise of 7.3 per cent in the staff cost and the expenditure towards wages remained stable at 8.1 per cent in the total expenditure growth.
Bureau Report
The study conducted by the statistical analysis department of RBI, revealed that companies in chemicals, textiles, rubber and food processing industries witnessed considerable fall in interest payments to the extent of 15.4 per cent, 29.9 per cent, 17 per cent and 16.5 per cent respectively.
However, the interest burden represented by the share of interest outgo in gross profits during the period varied considerably across the industries.
The interest burden for iron and steel products is quite at higher side of around 62 per cent, textiles(57.8 per cent), electrical machinery (52.9 per cent), basic industrial chemicals (70.8 per cent), cement (70.5 per cent), construction(67.5 per cent) sugar (179 per cent) as against 10 to 30 per cent interest burden in case of food processing, tea, pharmaceuticals and drugs industries.
On quarterly performance, the study said, gross profits registered a higher rise of 9.4 per cent in the second quarter of 2002-03 as compared to an increase of 8.5 per cent in the previous quarter.
Similarly, interest payments continued to decline by 9.5 per cent in the July-September quarter after registering a fall of 8.2 per cent in the previous quarter. Post-tax profits also rose at 18.7 per cent as against 17.9 growth in April-June of the year.
Margin on sales moved up from 11.2 per cent to 11.6 per cent as the overall sales of the selected 1214 companies under study rose by 9.6 per cent as compared with the rise of 7.6 per cent recorded by 1236 companies in the previous quarter. Total expenditure rose at a lower rate of 9.2 per cent as against 7.6 per cent in the previous quarter.
Industry-wise, engineering sector posted a steep rise in its post-tax profits at 163 per cent in the second quarter in contrast to a decline of 0.6 per cent in case of chemical industries. Post tax profits of information technology declined by 2.1 per cent and 0.2 per cent in the first and second quarters respectively.
On expenditure side, the study found that raw materials consumption by the companies during the first half of the year rose by 11.3 per cent but the total expenditure were up at a lower rate of 8.1 per cent. There was also a rise of 7.3 per cent in the staff cost and the expenditure towards wages remained stable at 8.1 per cent in the total expenditure growth.
Bureau Report