Weaker rupee makes Infosys poorer by $28 millionOctober 10th, 2008 - 7:51 pm ICT by IANS
Bangalore, Oct 10 (IANS) A sharp depreciation of the Indian rupee against the US greenback during the July-September quarter of the 2008-09 fiscal has made IT bellwether Infosys Technologies Ltd lose $28 million (Rs.1.25 billion) on hedging in the forex market.”We had $28 million loss in non-operating income because of hedging the US dollar at Rs.44.55 during the quarter (Q2) though our conversion rate for guidance was Rs.43.04 for the quarter,” Infosys chief financial officer V. Balakrishnan told IANS Friday.
“With the rupee depreciating by six percent from our average rate (hedging price) to Rs.46.97 at the end of the quarter (Sept 30), we had a 2.5 percent positive impact (benefit) on our operating margin,” Balakrishnan said.
The Bangalore-based global software major has hedged $932 million for the entire fiscal (FY 2009) to minimise the impact of volatility in the forex market. One-third of the amount is earmarked for options and two-thirds for forward cover.
In view of the rupee weakening further to a 10-year record low of Rs.49.05 early Friday, Balakrishnan said,”Though we may take a hit in hedging during the third quarter (October-December), we will benefit in operating income as earnings from software exports means more rupees in the kitty.”
“Our operating margin for the full year is expected to remain at 31.4 percent though it has gone up sequentially by three percent to 33.3 percent from the first quarter (April-June) of this fiscal. We do not see much variation in billing as pricing is expected to remain stable during the second half (October-March) of fiscal year 2009,” Balakrishnan added.
A nine percent depreciation of rupee against the US dollar during the quarter under review (Q2) to Rs.46.97 from its conversion rate of Rs.43.04 has forced Infosys to revise its revenue guidance for the third quarter (October-December) upwards under the Indian accounting system and downwards under the International Financial Reporting Standards (FIRS) from its earlier forecast.
“We have revised our US dollar revenue guidance to reflect the current economic situation and the drastic depreciation of major global currencies against the greenback,” Infosys chief executive S. Gopalakrishnan said in a statement here earlier.