Interest cover for India Inc improving

Mumbai: The credit rating agency CARE has revealed in its report that the interest cover for the corporate houses in the country has improved. The agency, which had surveyed around 3,452 companies across the country, excluding banks and NBFCs for the report, says that for March 2020, only 7 of the 31 sectors considered here witnessed an improvement in the interest cover ratio.

For the June ending quarter 12 sectors witnessed an improvement in the ratio and included IT, FMCG, healthcare, construction material, trading, non-ferrous metals, logistics, power, agri, media and entertainment and realty. For realty, the ratio was less than 1, says the report.

For five industries interest cover was negative and included textiles, alcohol, diamonds and jewellery, telecom (for other reasons) and hospitality.

For the September ending quarter there was an improvement for all sectors barring non-ferrous metals. But here too the interest cover ratio was still high at 4.9 compared with 6.7 in June.Interest cover was negative for hospitality at -0.4 which was however an improvement over June when it was -1.5. For retailing and infrastructure, the interest cover was less than 1 while for telecom and realty it was at 1.4, the report says.

The ratio was 3 and above for all other sectors. The general improvement in profits in Q2 of FY21 did provide a fillip to the interest cover numbers.

There has been a big push to bring down interest rates over this period which has helped to ease the interest cost of companies.

Interest cover for companies