Firms could lose over Rs 100 billion due to rupee fall: CARE Ratings

Firms could be incurring an additional interest outflow between Rs 106 billion and Rs 128 billion on account of rupee depreciation this financial year, according to a study by CARE Ratings.

“This is the additional burden for the corporates having borrowed funds via the ECBs (external commercial borrowing) route and is purely based on the assumption of no hedging. This could be unfavourable for corporates as the profitability of such companies will be adversely impacted,” the study, done by Madan Sabnavis, chief economist, and Sushant Hede, associate economist at the rating agency, said.

The additional interest outflow on account of the local currency, which has fallen 13.6 per cent so far this financial year, would be 1-1.3 per cent of the total interest expenses of Rs 9.3 trillion, reported by a sample of 2,700 companies for FY18, including banks