CIOL:Rupee swing costs Wipro Infosys celebrates

BANGALORE: While the rupee depreciation brought good news to Infosys in Q1, it was not the case for Wipro, which suffered a revenue loss of Rs 27.2 crore.

“We had a disadvantage on our operating profit which saw a loss of 40 basis points because of the rupee depreciation. Though we have hedging on place, when the rupee depreciates, we don't get the benefit in the quarter,” explained Suresh Senapathy, executive vice-president and chief financial officer, Wipro.

Analysts expect this to be a short-term loss, which would even out during this fiscal. The company has hedged $410 million for foreign exchange volatility in the range of Rs 44.90 and Rs 46 against the dollar.

“As of June 30, 2006, forward contracts and options to the extent of $144 million have been assigned to the foreign currency assets. Additionally the company has designated forward contracts and options to hedge highly probable forecasted transactions,” a Wipro statement said.

In the previous quarter ended March 31st 2006, when the rupee value appreciated against the dollar, there was a positive impact of one per cent on Wipro's margins. The company made a forex gain of Rs 36 crore due to its hedging policy.

Senapathy said that the company intends to go for a “restrictive stock option” by allotting 6.8 million shares to 3200 employees of Wipro. In addition, starting September 1, employee compensation for offshore staff will see a staggered increase. This would account for 1.5-1.6 per cent of revenues, he added.

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