ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Foreign Policy- Nervous Neighbours

(before payment of interest) of Rs 806 crores in 1971-72, in contrast with the paltry figure of Rs 5 crores for the 1,114 small companies. Out of these gross profits, the medium and large companies paid 35 per cent as interest on all types of borrowings, while the 1,114 small companies parted with as much as 63 per cent in the form of interest. A more serious disability of the small companies lies in their incapacity to achieve any significant plough-back of funds. While the medium and large companies achieved a plough-back of Rs 126 crores in 1971-72, the 1,114 small companies drew down, instead of adding to, retained earnings to the extent of Rs 53 lakhs. Again, nearly 80 per cent of the total retained earnings of the medium and large companies belonged to the largest two size groups of companies ("forming only about 8 per cent of the total number of such companies), whether classified on the basis of paid-up capital or of total net assets.

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