Overall, among the 19 companies with international ratings, nine companies would have a negligible direct impact of forex fluctuation on either their operating margin or leverage ratios. The impact of the falling rupee on the ability to service debt would be limited as the proportion of debt which matures in next one to two years is limited. Irrespective of the accounting treatment that may be accorded to the increased forex liability, Fitch would continue to focus on the economic impact of such forex fluctuations. Of these, seven corporates are expected to face a marginal deterioration in coverage ratios to the extent these foreign currency loans are unhedged. There are two companies whose exports outweigh imports and therefore are expected to benefit from rupee depreciation.ġ2 corporates have foreign currency debt (mostly USD), ranging from 10% to 90% of total debt (with an average of 40%). Of the remaining, seven companies, belonging mostly to the commodity/natural resources sector, import raw materials typically in the range of 40% to 100% of their requirements, and thus are expected to experience a reduction in their operating profit in the range of 5% to 10%.
These companies also have negligible exports and are unlikely to face an operating margin squeeze. 10 companies import very negligible raw materials for production as such their costs are neutral to forex fluctuation.
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