The decline in value of the yen against the dollar seems to have benefited most of the Japanese companies operating in India.

Some of the Japanese companies listed on the Indian bourses include Ranbaxy, Maruti-Suzuki, Ricoh, Motherson Sumi Systems, Asahi India, Honda Siel Power, Sharp India and Lumax Industries. They gained between 5.5 per cent and 0.2 per cent. However, Hitachi Home Appliances and Sona Koyo Steering finished marginally lower.

“The impact on Indian companies’ balance sheets varies depending on the sourcing of raw material from the parent company,” said an analyst.

25% exposure For instance, he added, Maruti Suzuki’s exposure to the yen is nearly 20-25 per cent of its revenues. Around 1 per cent weakness in the yen against the dollar helps Maruti Suzuki’s earnings by about 4 per cent, he added.

Maruti Suzuki India ended 3 per cent higher at Rs 1,781 on Thursday after hitting a 52-week high of Rs 1,796.45. The Japanese yen touched a five-year low against the dollar after the US Federal Reserve decided to reduce the stimulus for the US economy. The dollar jumped to 104.37 a yen, a level not seen since October 2008.

However, the movement of the rupee against the dollar will also have an impact on Japanese companies operating in India. Almost 25 per cent of Maruti Suzuki India’s costs are in yen. Thus, if the Indian rupee depreciates against the Japanese yen, it would be a negative for the company, said Morgan Stanley.

The shares of Maruti have outperformed the market over the past one month till December 18, rising 6.13 per cent compared with the Sensex's gain of 0.04 per cent.

> suresh.i@thehindu.co.in

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