Corporate casualties of a weakening rupee and surging crude oil prices


Corporate casualties of a weakening rupee and surging crude oil prices

Despite the government’s recent measures to contain the rupee’s fall, the Indian currency remains on a weak footing. In the last one month, the rupee has depreciated by around 14% against the dollar and is among Asia’s worst-performing currencies.

At the same time, global crude oil prices remain elevated (see chart). Both these factors playing out concurrently mean that India’s current account deficit would be uglier than anticipated. As for corporates, it would impact the financial performance of companies significantly exposed to crude oil prices and currency fluctuation. Listed below are some of them.

Manufacturers of tiles, plywood, paints and adhesives, and oil marketing companies would feel the heat. Power and fuel (largely gas) costs account for around 20-22% of revenues for tile companies, as per analysts’ estimates.

Tile makers based in the Morbi district of Gujarat usually procure gas locally from Gujarat Gas Ltd. Those situated outside the state import it from the Middle East. Read More

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