The rupee's depreciation against most major currencies in the July-September quarter (it fell 10 per cent against the dollar) has taken a toll on the results of many companies.

Roughly one in seven of the 280-odd companies among the basket that constitute the CNX 500 index which have declared results so far, have reported forex losses.

But for the forex losses, the profit after tax of the affected companies would have been higher by nearly 150 per cent.

Oil refiners, steel, non-ferrous metals and mining companies have taken the biggest hit from the sharp depreciation in the rupee. While importers have incurred foreign exchange related losses on raw materials imported, companies with large foreign currency debt on their books have been affected by having to provision more for liabilities.

Profits dented

Steel majors JSW Steel and SAIL are at the top of the list of affected companies so far this quarter, posting forex related losses of Rs 513 crore and Rs 509 crore respectively. In the case of JSW Steel, exchange losses were nearly four times the reported profits of Rs 127 crore and for SAIL it was almost equal to the profits of Rs 495 crore.

Refiners Essar Oil, MRPL and Chennai Petroleum, and metal and steel companies Sesa Goa, JSL Stainless, and Usha Martin have also posted substantial foreign exchange related losses in the range of Rs 120 crore to Rs 400 crore. It was forex losses that led to Essar Oil posting a net loss of Rs 166 crore, despite good operational metrics.

What caused the losses

In the case of refiners, losses due to the higher costs of importing crude oil contributed to exchange losses.

For instance, Chennai Petroleum reported a foreign exchange loss of Rs 292 crore; of which Rs 120 crore was from mark-to-market losses on inventory and Rs 82 crore on the crude used during the quarter.

It is, however, not clear as to the exact nature of transactions that contributed to these losses. One possibility is that the sum in question represents increased liability on unpaid dues for supplies received.

Also, steel companies such as JSW Steel and SAIL rely significantly on import of coking coal. SAIL's reported forex related loss of Rs 509 crore pertains to short-term foreign borrowings. The company has also incurred losses of Rs 164 crore on long-term foreign currency loans, which it has adjusted in its carrying cost of fixed assets.

Exporters hit too

Interestingly, there have also been cases of exporters reporting exchange related losses due to the rupee's weakness. For instance, software majors Infosys and TCS reported net exchange related losses of Rs 33 crore and Rs 80 crore respectively in the September quarter. This is attributable to losses incurred on forward contracts and currency option contracts.

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