With rising litigations and mergers and acquisitions (M&As) activities, the professional and legal fees of India Inc has crossed Rs 73,000 crore in FY23, an increase of 23.4 percent over the previous financial year.
Between FY19-23, the aggregate legal expenses of BSE500 companies have surged at a compounded rate of 14.7 percent, against 12.9 percent growth clocked in revenues during the same period, data sourced from Ace Equity revealed.
Additionally, as many as 29 companies from the BSE500 index saw their professional and legal fees more than doubling in FY23 with companies like Hindustan Aeronautics, Adani Enterprises, Aditya Birla Capital topping the chart.
In absolute terms, nations’ largest companies - Reliance Industries and Tata Consultancy Services - spent the most. While TCS spent as much as Rs 21,337 crore in FY23 towards fees to external consultants, against Rs 17,409 crore in FY22, RIL witnessed an 80 percent increase in its professional fees to Rs 2,916 crore in FY23.
Other companies with higher legal spend include Larsen & Toubro, Sun Pharmaceutical Industries, Infosys, Kotak Mahindra Bank and among others.
| Year | Professional and legal fees (Rs Crore) |
| FY19 | 44,560 |
| FY20 | 47,423 |
| FY21 | 46,780 |
| FY22 | 59,210 |
| FY23 | 73,058 |
| Sample of BSE500 companies | |
| Source: Ace Equity | |
The legal and professional fees of GMR Airports Infrastructure almost doubled to Rs 373 crore in FY23. The company in its FY23 annual reported said, the legal spent was one the factors which caused higher other expenses during the year.
In its FY23 analyst call, the company reiterated that it has incurred significant expenditures related to legal and professional charges across all airports, particularly in cases involving monthly annual fees (MAF) and issues related to cargo, ground handling, and fuel farm (CGF).
As far as companies in information technology and financial services are concerned, data security poses major risk as they handle large volumes of sensitive data. Lack of robust data privacy systems can result in financial penalties and increased legal fees arising from lawsuits.
However, legal expenses which include spending on litigation and arbitration, professional fees, regulatory filings, penalties, and general stamp duty has remained less than one percent of the aggregate revenue in each year snice FY18.
First Published: Sept 13, 2023 10:28 AM IST
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