The Hindu Business Line : Re gains make importers a happy lot

`INDIA Shining' may not be lending much sheen to exporters these days, but it is certainly lending a lot of shimmer and gloss to the country's imports, particularly oil and gold, thanks to the surging value of the rupee.

With the domestic currency on an appreciation spree, a number of importers are singing all the way to the bank.

For instance, one of the biggest beneficiaries of the sharp appreciation in the rupee are companies such as Indian Oil Corporation. A source close to the company said, "IOC has been buying around $8 to $9 billion per year from the market, consistently over the past two to three years. You can imagine the kind of benefits that will accrue to the company from the rupee's gain now."

"While part of the dollar that is bought from the market is used to buy oil imports, part of it is also used to retire the existing debt burden of the company," he said.

IOC, like other importers, stand to gain from the phenomenal 8.94 per cent appreciation in the rupee in the financial year 2003-04. In fact, at its current level, the rupee has gained by over 11 per cent over the past couple of years, i.e., from the financial year 2001-02, when the domestic currency was ruling at 48.7950.

Gold importers too are understood to be raking in the moolah, particularly over the past week when there was a sudden surge in the value of the domestic currency.

According to Mr Suresh Hundia, President, Bombay Bullion Association, gold importers with open positions in the forex market are the ones who will gain the most.

Importers of gold may have easily made large sums, say a few crores, on the days when the rupee peaked in its value against the dollar, for instance, on March 23, when it gained 21 paise over its previous close to finish at 44.87, on March 26 when it gained 27 paise to end at 44.46, and on March 29, when it gained 40 paise to close at 44.06.

"India imports around 600 tonnes of gold and 2,000 tonens of silver on an yearly basis. Yearly business in this industry is around Rs 35,000 crore. The perception of gold importers is that the rupee may appreciate to around 42.50 levels, and this will augur well for the business," said Mr Hundia.

The past year and the past few weeks have also been boom time in the business of several small importers. Many of them who import garments and other accessories, and sell them on the pavements and small shops in the metros will also make handsome profits.

Mr Mohan Nihlani, President, All India Association of Importers and Exporters, said, "For importers, a stronger rupee against the dollar means cheaper purchase of goods.

In fact, they are doubly benefited as the customs duty was also reduced recently by 5 per cent across the board along with a relaxation in the special additional duty. Most importers will see their bottomline positively impacted by at least 17 per cent to 18 per cent this year."

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