Falling rupee lifts bottomline by Rs 61 cr

Infosys Technologies witnessed a Rs 61 crore increase in revenues during the second quarter ended June 30, 2004, due to the falling rupee.

This, coupled with the fact that there was an increased business of Rs 89 crore during the quarter, resulted in a total increase in revenues to the tune of Rs 150 crore during the quarter.

Stating that this was one of the key reason for the company to revise its guidance for the full year, the company's chief financial officer, Mohandas Pai, said, "There was an impact of the rupee depreciation. We had factored in a rupee rate of 43.4 to a dollar into our guidance. However, the actual rate was 45.4 for the quarter. Therefore there was an increase of Rs 61 crore in our revenue. From our actual guidance, there has been an overall increase of Rs 150 crore. Both the factors had to be taken into account for the revision of the guidance for the full year. Therefore, for the full year, we assumed an average rupee rate of 45.6 as the conversion rate because the average rupee rate for the first quarter was lover."

While the impact of the dollar appreciation in the first quarter was Rs 61 crore, its impact on the bottomline was Rs 8 crore.

The key reasons include a negative impact of the exchange differences of Rs 3.64 crore, translation gain of Rs 35.52 crore and forward contract-related losses of Rs 47.79 crore.

The company had $ 220 million of forex at a rupee rate of 44.4 in the beginning of the first quarter of the current fiscal. However, the rupee average for the entire quarter was 45.4. Though the forward cover was lower and the rupee depreciated, its impact was positive in the operating profit.

Explaining the company's approach to the rupee volatility, Pai said, "Currently, Infosys has a forward cover of $ 228 million at 44.95 which is less than the current rate of 45.69 used for the guidance. But we have marked-to-market the entire $ 228 million at 45.99. So the entire forward cover has been marked-to-market as the quarter ends. So, there is no loss from forward cover."