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Informist, Monday, Nov. 24, 2025

 

NEW DELHI – The interest coverage ratio of manufacturing companies moderated to 8.6 times in the September quarter from 9.1 times in the June quarter, the Reserve Bank of India said Monday in a report on the performance of private corporate business sector. The September quarter interest coverage ratio was the lowest in three quarters, data from RBI's earlier quarterly reports showed. Considered to be a measure of debt servicing capacity and financial viability of a company, the interest coverage ratio is calculated as the ratio of earnings before interest and tax to interest expenses, RBI said.

 

The non-information technology companies saw their aggregate interest coverage ratio declining in the September quarter, albeit moderately. The interest coverage for these companies declined to 1.9 times in the latest quarter from 2.1 times in the June quarter, and was the lowest in four quarters, the RBI data showed.

 

The central bank said the year-on-year growth in earnings before interest and taxes of the manufacturing companies was significantly lower at 6% in the September quarter compared with 12.8% in the trailing quarter, even though the sales growth was higher at 8.5% as against 5.3%. The divergence was due to the fact that the on-year rise in total operating expenses was higher at 9.4% in the September quarter compared with 5% in the June quarter, the data showed. The jump in expenses' on-year increase was mainly on account of raw material costs which recorded an on-year rise of 9% in the latest quarter, twice the 4.5% rise in the trailing quarter.

 

The interest coverage ratio decline in the case of manufacturing companies would have been higher but for the fact that the interest expenses metric improved in their favour, the RBI data showed. The interest expenses of these companies registered a 4.1?cline on year in the September quarter, as compared with a decline of 2.4% in the trailing quarter, the data showed. On the bottom-line performance, the manufacturing companies reported a 4.4% on-year growth in the latest quarter, substantially lower than 27.7% in the June quarter.  End

 

Reported by Rajesh Gajra

Edited by Akul Nishant Akhoury

 

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