The rupee appreciated by 8.65% to 39.82 against the US dollar on September 24 from the 43.59 level on March 30. The Financial Express analysed the effect of this rally on India?s 916 major companies. The corporate sector would, hypothetically, gain Rs 14,485 crore thanks to the Indian currency’s appreciation, if export and import figures of 2006-07 are converted at the current market rate of the rupee, and then compared with actual earnings and expenses. A stronger rupee would reduce the outflow in terms of imports, and lead to lower export realisations. Since India is a net importer, the benefit of a stronger rupee would be substantial. If oil companies, which form the majority of the importers, are not taken into account, India Inc would suffer a Rs 444-crore hit on its earnings.
Refineries, trading, steel, oil exploration and allied services, fertilisers, electric equipment and telecommunications benefited the most while IT, pharmaceuticals, textiles, hotels, cigarettes, food processing, automobiles and diamond cutting and jewellery were adversely affected. Most importers are happy with the appreciation of rupee. Here goes the list of top 10 beneficiaries: Indian Oil Corp (Rs 7,922 crore), BPCL (Rs 2,053 crore), Reliance Industries (Rs 2,000 crore), HPCL (Rs 1,981 crore), MMTC (Rs 1,309 crore), Mangalore Refineries (Rs 607 crore), Sail (Rs 537 crore), ONGC (Rs 535 crore), Essar Oil (Rs 359 crore) and Sterlite Industries (Rs 341 crore).
In 2006-07, Indian Oil Corp shelled out Rs 99,373 crore by way of foreign exchange and earned Rs 7,780 crore. Taking into account the exchange rate of Rs 43.59 as on March 30, 2007, the foreign exchange expenditure and earnings of Indian Oil Corp stood at $2279.72 crore and $178.48 crore respectively. With the latest rate of Rs 39.82, the company?s foreign exchange expenditure and earnings stood at Rs 90,779 crore and Rs 7,107 crore respectively. Indian Oil Corp will gain Rs 7,922 crore if the company?s foreign expenditure and earnings figures are the same as on September 24, 2007.
The top 10 losers are: TCS (Rs 628.90 crore), Wipro (Rs 568.37 crore), Infosys Technologies (Rs 562.43 crore), Hindustan Zinc (Rs 338.05 crore), Dr Reddy?s Laboratories (Rs 202.58 crore), National Aluminium (Rs 193.74 crore), Ranbaxy Lab (Rs 144.83 crore), Essar Steel (Rs 133.99 crore), Satyam Computer (Rs 133.42 crore) and Bajaj Auto (Rs 100.94 crore).
In the wake of the appreciation of the rupee, companies may rush to deal in many currencies instead of dollar alone, and also go in for cover in the futures market.