In all, 38 out of 100 companies, which are part of the Nifty100 index, incurred combined additional expenditure or provisions amounting to ₹12,971 crore in Q3FY26.
Companies such as Tata Consultancy Services (TCS) and Infosys made one-time provisions for the additional expenses related to NLC and showed them as exceptional expenses in their quarterly profit & loss (P&L) accounts.
HDFC Bank included the additional expenses from NLC provisions in its quarterly P&L account. It led to a sharp rise in its employee expenses during the quarter.
However, most companies made no additional provisions for NLC-related expenses in their Q3FY26 results and said that they are still studying its financial impact.
This includes companies with relatively large salary & wage expenses, such as Reliance Industries, Punjab National Bank, Canara Bank and Persistent Systems, among others.
Only 47 of these Nifty100 companies had declared their Q3 results as of Thursday. However, the trend is unlikely to be majorly different for India's topmost companies once the remaining results are out.
The additional provisions/expenses on account of NLC was 7.7 per cent of these companies combined employee expenses and around 2.1 per cent of their overall variable expenses (including raw material & energy expenses) in Q3.
For comparison, these 38 companies in the Business Standard sample reported combined employee expenses of ₹1.66 trillion in Q3FY26. Their overall non-fixed expenses (including raw material and energy expenditure) were around ₹6 trillion in the quarter.
Additional provisions/expenses from NLC adversely impacted companies’ margins and profitability in Q3FY26.
A back-of-the-envelope calculation suggests that without NLC provisions, these companies’ combined earnings before interest, taxes, depreciation and amortisation (Ebitda) would have been higher by 4.2 per cent in Q3FY26.
Their profit before tax (PBT) would have been higher by 8.5 per cent in the quarter.
As a result, without NLC provisions, these companies' Ebitda would have grown by 6.3 per cent Y-o-Y in Q3FY26 instead of the reported 2.1 per cent.
Similarly, their PBT in Q3FY26 would have grown by 9.4 per cent Y-o-Y instead of 0.8 per cent reported in the quarter. (See the adjoining table).
The companies in the sample reported combined Ebitda and PBT of ₹3.04 trillion and ₹1.5 trillion, respectively, in Q3FY26.
Among individual companies, the biggest impact of the NLC provisions was reported by TCS at ₹ 2,128 crore.
It was followed by Larsen & Toubro (₹1,344 crore), Infosys (₹1,289 crore), HDFC Bank (₹1,037 crore), Interglobe Aviation (operator of IndiGo) (₹969 crore) and HCL Technologies (₹956 crore).
However, Interglobe Aviation topped the charts in terms of NLC provisions' impact on the bottom line. The NLC provisions were nearly half of its salary & wage expenses in Q3FY26 and 172 per cent of its PBT in the quarter.
Similarly, NLC provisions amounted to 45.2 per cent of LTIMindtree PBT in Q3FY26 and it was 36.3 per cent of JSW Steel PBT in the quarter. Other companies which saw a big negative impact on their PBT include Cipla (30.9 per cent of PBT in Q3FY26), HDFC Life Insurance (23.8 per cent), Larsen & Toubro (23.1 per cent) and SBI Life Insurance (21.1 per cent) among others.
According to the NLC provisions, companies’ share of basic pay in an employee's overall cost to company (CTC) salary will rise.
This means that companies will have to set aside higher amounts for separation and retirement benefits, such as provident funds, gratuity and pensions.
Many companies chose to make additional one-time provisions for the projected higher payouts.
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