India Inc is set to post one of its worst performances during the October-December quarter on the back of the weakening rupee. Most companies that have debt denominated in foreign currency will have to show forex losses in their profit & loss account when they declare their earnings next month as part of mark-to-market losses (MTM).

Some of the top companies in their respective sectors, such as Reliance Communications, Jaiprakash Associates, Tata Steel and Tata Motors, have foreign currency convertible bonds (FCCBs) due for redemption between February and September 2012.

If one takes the rupee value against the dollar at 53 (it actually closed on Friday at 52.72), the MTM losses of Anil Ambani?s Reliance Communications would be R755.6 crore. The company?s $925.3-million FCCBs are up for maturity in February 2012.

Similarly, Jaiprakash Associates MTM losses would stand at Rs 424.9 crore. The company?s $354.5-million FCCBs are up for maturity in September 2012. Tata Steel?s MTM losses would be Rs 461.8 crore. This is because of the company?s $382-million FCCBs, which are maturing in September 2012. Tata Group?s Tata Motors would have MTM losses of Rs 555.5 crore on account of its $473-million FCCBs, which mature in June 2012.

In the last two quarters, the rupee has declined about 17%. At the end of June quarter, it was 44.58 and declined to 48.9 on September 30. On December 23, it closed at 52.72.

?The October-December quarter would see disastrous results by most of the Indian companies having foreign debt because they will have to show the forex loss in their profit & loss accounts,? said Jagannathan Thunuguntla, equity head at SMC Global.

He cautioned companies against discounting such MTM losses as notional.

?The weakening rupee has become a reality and the ability of the Reserve Bank of India to check its decline is limited. So, the possibility of notional becoming a reality is great,? added Thunuguntla.

The concern was best reflected by the accounting body, the Institute of Chartered Accountants of India (ICAI), which, last week, proposed that companies be allowed to show their MTM losses only in their balance sheets and not profit & loss account.

The ministry of corporate affairs is, however, yet to take a final view on ICAI?s proposal.