Yen Prop For Phil, Jindal Photo

The yen was being traded at around 110 per dollar in November last year, while it is currently traded in the range of 124-125. Experts are of the opinion that the Japanese currency may depreciate further.

In other words, the rupee has appreciated by more than 12 per cent against the yen.

This has given some Indian companies that are importing raw materials from Japan the upper hand. The major beneficiaries are the two photo equipment manufacturers Phil Corporation and Jindal Photo Films.

While Phil Corp sources photo film and colour paper from Konica of Japan, Jindal Photo imports from Fuji Photo Films, Japan. Imports constitute about 86 per cent of the total raw material for Phil Corp and around 92 per cent for Jindal Photo.

 

In 1995-96, the total value of imported raw materials for Phil Corp was Rs 92.56 crore, which accounts for around 55 per cent of the cost of goods sold.

This means that a 12 per cent depreciation should save around Rs 1 crore on raw materials. This can boost the operating margins by half a per cent. For the year ended March 1996, with operating profits of Rs 14.37 crore, the operating profits margins stood at 6.3 per cent.

Similarly, during 1995-96, Jindal Photos import of raw material stood at Rs 191.82 crore. The depreciated yen could save around Rs 2.3 crore, improving operating profit margins by around 0.83 per cent.

Besides, there has been a reduction in import duty for Jumbo rolls in the last budget. Import duty reduced from 68 per cent to 51.8 per cent and that for colour paper dropped from 80 per cent to 51.8 per cent. With this, the bottom line of these two companies should improve in the second half this year.