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The wait for lower interest rates has finally ended and the rate cut cycle appears to have been kick started. Drawing comfort from the falling consumer price inflation, the RBI has cut rates twice in the last three months reaffirming the downward trajectory in lending rates. With this, it appears to have set the ball rolling for a lower interest rate regime.

So, what does a lower borrowing rate mean to India Inc? Who will benefit from the gradual reduction in interest rates?

Companies sitting on a huge pile of debt and struggling to meet their interest payment "Oxandrolone Powder India" obligation are the obvious beneficiaries. Companies with precariously low interest cover ratio (profit before interest Testosterone Enanthate Walgreens and tax as a proportion of interest outgo) will be the first to see an improvement in their earnings as the rate cycle starts sloping downwards.

Here are five companies with sound fundamentals that can rake in higher profits with a fall in interest rates.

Economic recovery to spur sales

South based cement maker India Cements profit is expected to get a boost from lower lending rates.

Here why. Even as India Cements managed to achieve a modest growth in sales, its profitability took a beating in the last five years thanks to the economic downturn and aggressive capex plans to augment cement capacity and acquire bulk carriers for its shipping division.

India Cements posted a loss of almost crore at the consolidated level in 2013 14, compared with a profit of about crore in 2009 10.

Even as the company debt to equity ratio, which measures the total borrowings as a proportion of its shareholders funds, remained comfortable at less than one time as of March 2014, there was barely any profit available to make interest payment to lenders.

India Cements interest cover ratio slipped from over three times in 2009 10 to 0.7 times in 2013 14 implying that the company operating profits could cover only 70 per cent of the interest that was due to lenders. While weak operating performance also played a role, a ballooning interest burden that has more than doubled from crore in 2009 10 to almost crore by 2013 14 was the principal reason for the weak coverage ratio.

But now, the demand Testosterone Propionate Brands for cement is expected to pick up, given the Winstrol Tabs Cycle Government focus "Buy Cheap Jintropin Online" on increasing investment in infrastructure. This, alongside a steady fall in interest rates, should aid India Cements profitability in the near term.

Likewise, South based commercial vehicle manufacturer Ashok Leyland is well poised to benefit from the downtrend in the rate cycle. The company interest cover ratio, which slipped from a comfortable five times in 2010 into negative territory at 0.01 in 2014, due to a two fold rise in the interest outgo, is expected to improve with a moderation in the lending rates.

Ashok Leyland total loan has almost doubled in the last five years on two counts. First, the company borrowed more to fund its capacity expansion projects such as its greenfield plant at Pant Nagar, which was commissioned in 2010. Second, increased working capital requirement due to a slump in the economy led to an increase in the company borrowings.

Even as the company operating profit remained steady during the 2011 13 period, the sharp jump in interest outgo which has more than doubled in the last five years dragged Ashok Leyland interest coverage ratio. The company did not have any profit in 2013 14, to meet its interest obligation.

But now, with the economy gradually returning to the growth path, the demand for commercial vehicles has also improved in the past year.

For instance, sales of Ashok Leyland medium and heavy commercial vehicles have grown by 29 per cent during the April February 2015 period compared with the same period last year.

Further, the company sold some of its non core assets physical assets such as land and investment in other ventures to pare debt on its books. For instance, the company sold its Chennai property for crore to tyre maker MRF. Likewise, it liquidated its holding in Hinduja Tech to Nissan International Holdings, the investment arm of the Japanese carmaker, in 2014, for an undisclosed amount. The company also plans to monetise its investment in group companies Albonair GmbH, Albonair India and Avia Ashok Leyland Motors in the near future, to reduce debt.

Improvement in the demand for commercial vehicles, fall in interest rates, coupled with the company efforts to prune debt should help Ashok Leyland return to profit.

Civil engineering and construction company Sadbhav Engineering will not only benefit from the government thrust on improving infrastructure but also from a moderation in the interest rate, given its appallingly low interest coverage "4 Chlorodehydromethyltestosterone Side Effects" ratio. The company aggressive project wins not only led to a sharp increase in assets but also its borrowings to fund these projects.

Sadbhav total debt more than tripled from crore in 2010 to crore by 2013 14.

As a result, Sadbhav interest outgo almost trebled from crore in 2009 10 to crore, leading to a sharp fall in the interest cover. From over 1.3 times in 2009 10, the interest cover ratio has almost halved to less than 0.8 times.

However, the diversified nature of the company business it has presence across key segments such as roads and mining should help sustain growth in the medium term. Sadbhav healthy order book and good execution capabilities can give it an edge over competitors.

The company is consolidating its project portfolio by buying out its partner stake in projects that have been stalled due to its partner inability to infuse funds. These should provide a leg up to the company revenues and profitability in the near term. In addition to improving fundamentals, lower interest outgo in the light of a moderation in bank lending rates should boost the company bottom line.

Having started off as a cycle maker, Tube Investments, over the years, has gradually expanded into the engineering and value added steel components space.

The company has invested aggressively over the last five years to scale up presence in new product segments, such as large diameter tubes, to meet growing demand from the auto and infrastructure sectors. Tube Investments has added assets worth about crore in the last five years through greenfield and brownfield expansions. This has led to a multi fold increase in borrowings.

From about crore in 2009 10, Tube Investment total debt has swelled by over nine times to about crore in 2013 14. Of this, the company secured borrowings, which was predominantly used to fund its capex, witnessed a five fold rise. The steep jump in borrowings was primarily due to higher working capital borrowings by the company, following a slowdown in the economy during 2011 13.

The sharp rise in borrowings led to a whopping "Oxandrolone Powder India" increase in the company gearing (debt/equity ratio) from about 2.8 times in 2009 10 to seven times by 2013 14. Despite a strong operating performance, the full benefit did not flow to the bottom line. And this was largely on account of a massive jump in the "4 Chlorodehydromethyltestosterone Side Effects" interest outgo. While the company operating profit rose eight fold during the five year period, its interest expenses saw a faster 10 fold increase in the last five years to crore. Tube Investments pays out almost two thirds of its profit as interest costs and charges, hence, progressive cuts in lending rates by the RBI can benefit the company.

Similarly, investors in the country leading power distributor Tata Power may have some reason to cheer, should the lending rates continue to head down. Reason: The company is sitting on a huge pile of debt its total debt as a proportion of its total equity shareholder funds has swelled from 1.5 times five years back to over three times now. In addition to this, Tata Power operating profits are just about enough to make interest payment to its lenders. Its interest coverage ratio has fallen from about four times to a little over one time, over the last five years. Given that the sharp rise in interest expenses has eaten into the company profits, a moderation in interest rates should augur well for the company.

In addition to these, there are a host of other companies across sectors with leveraged balance sheets and low interest cover ratios that can benefit from the downward movement in interest rates. Of the 418 companies (excluding financials) that constitute the BSE 500 Index, 181 companies had an interest cover ratio of less than four times as of March 2014. The aggregate interest cover for these companies stood at 3.7 times.