Impact To Be Marginal, Maintains Reliance

Reliance Petroleum, which had pegged the exchange rate for its Jamnagar refinery project at Rs 35 to a dollar in 1996 when it had started work on the project, revised it upwards to Rs 40 for cost and investment estimations when its capacity was increased from 15 million tonnes to 18.5 million tonnes early this year.

With the rupee depreciating further against the dollar, the company expects the project cost to increase further. The company, which is currently calculating the actual impact of the rupee depreciation on its project, expects the rise in costs to be marginal as it has completed over 70 per cent of its required project imports.

Honda Siel Cars (India), the domestic subsidiary of Japanese automobile major Honda Motor, has decided to adopt a wait-and-watch approach towards the depreciating rupee before calculating the exact impact on its project which involves an over 50 per cent import content.

The company had worked out its investment costs on the basis of an exchange rate of about Rs 40-41 to a dollar. Anticipating a further fall in the rupee by the end of the current fiscal, the company will work out the exact impact based on the weighted average of the entire year.

However, some of the adverse effect of a depreciating rupee on its import costs would be offset by the simultaneous depreciating value of the Japanese Yen to the dollar, disclosed a company executive.

LG Electronics, the Korean electronics giant, has decided to increase prices of all its products - including CTVs, washing machines and airconditioners - by about eight to 10 per cent from June 16. The decision has been taken keeping in mind the total impact of a depreciating rupee, and that of the special additional customs duty of eight per cent announced in the budget.

The company, which has started production of colour televisions, airconditioners and washing machines in the country, has planned domestic production of microwave ovens from next year.