BANGALORE: Unlike its rival IT services firm
Infosys, whose results were impacted by the swinging movements of the rupee,
Wipro
Technologies seems unscathed by the appreciating rupee.
“We plan forward hedging for four to six quarters and so we were able to
reduce the foreign exchange volatility. So there is some sanity with respect to
impact of the rupee on our margins,” said Suresh Senapathy, CFO, Wipro, while
announcing the company's financial
results here today.
The rupee swung between Rs 44.60 and Rs 45.40 against the dollar last year.
The company has designated forward contracts and options to hedge highly
probable forecasted transactions. Wipro has provisioned zero cost collars to
hedge the exposure to variability in expected future foreign currency inflows
due to exchange movements beyond a defined range.
Last year, the company had forward/option contracts to sell $438 million of
highly probable forecasted transactions. For the year 2005-06, Wipro had hedged
$226 million as a protection against the volatile rupee-dollar fluctuations. The
company said that due to this hedging it has not witnessed any loss due to the
rupee-dollar fluctuations.
For the year 2006-'07 the company has hedged $600 million, taking dollar rate
between Rs 44.50 and 45.50.
The exchange difference measured by the change in the exchange rate between the
inception of forward contract and the date of the balance sheet is applied on
the foreign currency amount of the forward contract and recognized in the profit
and loss account, the company said.
Infosys was not so lucky. Rupee fluctuations put pressure on Infy's annual as
well as quarterly revenues. The company's operating margins took a 3.25
percent beating due to a mix of factors like appreciating rupee, capex of Rs
1000 crore and salary hikes in Q4.
The rupee shot to Rs 45.30 in Q4 compared to Rs 44.22 in the previous quarter.
For FY 06, the impact to operating margins due to currency movements stood at
1.95 percent.
This translated into a loss of Rs 176 crore or $40 million to the company's
annual revenues.
TCS,
which reported its earnings recently, also said that its hedging funds helped in
stemming the currency impact.
Wipro averts rupee fluctuation impact
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