The Hindu Business Line : Weak rupee may help Infy post Rs 730-cr earnings

Mr Nandan Nilekani, CEO, Infosys, and Mr S. Gopalakrishnan, COO, at a news conference to announce the first-quarter results in Bangalore on Tuesday. - G.R.N. Somashekar

Bangalore , July 13

A WEAK rupee against the dollar and robust demand in its business has prompted software bellwether Infosys Technologies Ltd to factor gains of Rs 730 crore in the current fiscal earnings guidance that was revised upwards.

While the weak rupee is likely to contribute Rs 330 crore, the company expects additional Rs 400 crore from its operations, thereby boosting its revenue in the current financial year.

Both these components are likely to contribute close to Rs 261 crore to the company's net profit for the year.

Infosys derives over 65 per cent of its revenues from North America.

The rupee shed 5.6 per cent against the dollar in the June quarter, its first loss in the last eight quarters.

Since Infosys bills its clients in dollars and its costs are in rupees, the company gains in the range of 1.5-2 per cent in its earnings with the rupee depreciating by one per cent.

In the June quarter, the company said that its profit was boosted by close to Rs 8 crore on exchange gains, wherein it had started the quarter with $220 million receivables hedged at Rs 44.40 to a dollar.

The rupee closed at Rs 45.40 to a dollar by the end of the quarter, resulting in a Rs 35.54-crore translation cost.

The forex gains contributed Rs 61 crore additionally to the company's topline for the June quarter, the Chief Financial Officer, Mr T.V. Mohandas Pai, said.

The company has hedged $228 million in the current quarter at Rs 44.95 to a dollar.

This opening hedge position has been fully marked to market.

Earlier, the company had forward-sale positions of close to $220 million at Rs 44.60 to a dollar till March-end to cushion forex impact on its earnings tracking a then strong rupee.

It had assumed a conversion rate of Rs 43.40 to a dollar when it forecast its initial earnings guidance for the current year.

Meanwhile, Infosys has said that it plans to invest $21 million in its different verticals over the next nine months of the current fiscal.

The banking business unit will get $5 million of the earmarked fund, the Chief Executive Officer, Mr Nandan Nilekani, said.

Despite an outgo of close to Rs 800 crore towards dividend payout for 2003-04, Infosys has cash and equivalents totalling Rs 1,077.38 crore as on June-end.