Weakening Rupee Will Help Gokaldas Exports Cut Manufacturing Costs: MD
Sivaramakrishnan Ganapathi said that this decline of the rupee is also margin accretive for the company.
A weakening rupee over the past few days is a positive development for export-oriented manufacturers like Gokaldas Exports, according to the company’s Vice-Chairman and Managing Director Sivaramakrishnan Ganapathi. Speaking to NDTV Profit, Ganapathi said the weakening rupee would help the company cut costs on manufacturing and it would also offset past hikes.
The rupee on Tuesday gained 6 paise, opening at 86.52 against the dollar, amid a days-long downward run. On Monday, it experienced its sharpest intraday drop against the dollar since Feb. 6, 2023, falling by 62 paise to a record low of 86.60 per dollar. It eventually closed at an all-time low of 86.58 per dollar, as per Bloomberg data.
“For an export-oriented manufacturer, a weaker rupee always helps. It reduces our cost of manufacturing vis-a-vis dollars. Our cost inflation, which is all rupee-denominated, has been ongoing for the last few years. For the last two years, we have seen the rupee fairly stagnant around 83 odd rupees, to a dollar. So the rupee's weakening now allows us to offset some of our cost increase,” he said.
The Gokaldas Exports MD mentioned this situation was also margin accretive for the company.
“It's margin accretive from that standpoint. A weakening rupee does indeed help. Moreover, it also helps in being competitive in the market,” he said.
Ganapathi, however, mentioned that the effect of this decline in the rupee would not be seen immediately in the company’s profit and loss statement.
“We hedge our receivables into the future. For almost the next two quarters, we have already hedged much earlier when we booked the business. This prevents us from any currency volatility. So, an immediate benefit from a weakening rupee will not be felt in our PNL for a couple of quarters,” he said.
The top executive highlighted that from a long-term perspective a weakening rupee was advantageous for Gokaldas Exports.
“The direction is helpful from a longer-term standpoint as a weakening rupee allows us to build. Since we build our business in US dollars, a weakening rupee always helps us from a business standpoint,” he said.
Shares of Gokaldas Exports plunged 3.6% during intraday trade on Tuesday to touch a low of Rs 984.60 apiece on the NSE. The shares were trading in red at Rs 1,004.25 apiece at 1:40 p.m., while benchmark Nifty 50 was up 0.31% at 23,157.20.
