The effects of the steady decline in the interest rates have been sharply divergent for frontline companies (large and mid cap) in India. Large companies have benefited from the decline in interest rates over the last five years.
However, the proportion of decline in interest burden has been relatively higher for mid-size companies than larger companies. In the case of companies with sales values between Rs100 crore and Rs1,000 crore, interest as a proportion of sales has declined from 11.8 per cent in 1998-1999 to 4.9 per cent in 2002-2003. In contrast, interest burden of companies with sales of more than Rs5,000 crore have declined to 2.2 per cent from 4.5 per cent over the corresponding period.
