In the last quarter of fiscal 2005-06, following were the the interest cost recorded by various companies across textiles sector in the Indian economy, says Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Textile sector saw a reduction of 11 per cent during the fourth quarter of 2005-06.
Among major textile companies, Aditya Birla Nuvo Ltd recorded an exceptional rise of 177 per cent in its interest cost in Q4, 2005-06. Rajasthan Spinning and Weaving Mills reported an increase of 36 per cent in the amount of interest paid, while Shri Laxmi Cotsyn Ltd (12 per cent) in the last quarter of fiscal 2005-06.
However, Grasim and Indo Rama Textiles Ltd were two exceptions that posted a decline of 33 per cent and 28 per cent respectively in the interest cost.
Main reason attributable to the rise in the interest cost is the sector has significant capital blocked as working capital, for which, short-term funds are required, that increase overall cost of funds.
Reduction in interest cost can be attributed to effective cost cutting, by reducing the number of employees, adopting technology to lessen cycle times and most important retiring high cost debt.
Associated Chambers of Commerce and Industry of India (ASSOCHAM), India's premier apex chamber covers a membership of over 100,000 companies and professionals across the country. It was established in 1920 by promoter chambers, representing all regions of India.
The Associated Chamber of Commerce & Industry of India
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