|
| Marginal impact of rupee fall on India Inc: Fitch | |
| BS Reporter / Mumbai January 12, 2012, 0:06 IST | |
Indian companies, which are rated on international scale do not risk a major drop in their operating margins, says Fitch. The rating agency in its report said that the profitability of the 19 firms, taken as sample has not been impacted as the negative effects of rupee depreciation have been offset by multiple factors.
Equalising the domestic prices with the international prices of the imported goods is one of the reasons for the stability in the profit margins of the firms. "The surge in the cost of production for oil and steel companies, solely attributable to rupee depreciation against the US dollar, is mitigated by import parity pricing," said the report.
Fitch also said that since majority of the imports are also exported after processing which offsets the adverse impact of falling rupee. "Thus, a degree of natural hedge is provided by the export activity of these heavy raw material importers," said Fitch.
While the coverage ratio or the indicator of an organisation's debt repayment ability of some companies are expected to fall marginally, most of the companies are in the safe region as their debt matures only over the next couple of years. "However, the extent of the impact on most of these corporates is lower on account of limited maturities in the next one to two years, save one corporate whose foreign currency loan is expected to be refinanced in H1 FY12," said the report. The ratings of these firms do not face immediate downward risk, the report added.
However, Fitch said if rupee depreciates by another 15 per cent then some firms, especially in BB category and below would face downward risks to their ratings.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
