TS industries under pressure from rupee

The eight per cent drop in rupee against the US dollar this year so far is creating tremors across all the industry verticals as every one per cent fluctuation in the rupee impacts operating profit margin in the range of 30-40 basis points (100 bsp is equivalent to 1%).

CII Telangana chapter chairman Sanjay Singh said, “Oil prices are on the rise. This coupled with rupee fall will increase input cost for every industrial vertical. Unfortunately, it’s happening when our economy is picking up. I don’t think government will allow free fall of rupee.”

Outflows of FPIs coupled with increased demand from importers and banks is keeping the pressure on the rupee. Pharma and other manufacturing companies that use imported raw materials in production are already feeling the pressure of the rupee fall.

Telangana Association for Pharma and Chemical Industries is urging the Centre and state government to encourage local manufacturers by extending incentives and relaxing banking norms.

N.V. Narender, TAPCI official, says: “We see huge impact on all imports of raw materials. Forward contracts will also be affected. Overseas loans, ECBs will be impacted. Cost of production will rise and this will further reduce margins by one-third.

“We request the Centre to basically discourage imports of raw materials by encouraging local market. For this, NPA norms should be relaxed. So, we can competitively produce raw materials, when compared to China.”