Infosys loses Rs 80 cr on Rupee hedging

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Bangalore, Jul 11 (UNI) Hedging to save themselves from a volatile currency can make good the losses incurred by the export-driven IT companies. But it is a two way street as experienced by IT major Infosys, which lost Rs 80 crore in the first quarter of the current fiscal for anticipating that the Rupee would harden further.

Briefing newspersons here after the announcement of the first quarter results Infosys Chief Financial Officer V Balakrishnan said the company had hedged the Dollar at Rs 40.60 anticipating further drop in the green back as the Rupee kept gaining during the last financial year.

However, the Indian currency weakened during the last three months and the company had to calculate the conversion rate of one Dollar at Rs 43.04 during the first quarter.

This was one of the reasons the company suffered a two per cent net effect on the operating margin during the period. ''Our guidance is in Dollar terms and Rupee can be volatile. However, we feel that chances of the Rupee appreciating against the Dollar are slim due to volatile economy in the wake of high inflation rate and rising prices of commodities and the country's high spending on crude oil,'' he said.

The CFO said the operating margin had come down to 30.5 per cent in the first quarter of the current fiscal from 32.5 per cent during the fourth quarter of the previous year. The 1.5 per cent drop was due to lower utilisation and 0.7 per cent due to visa cost, he said.

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