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Vishwanath Kulkarni
Krishnan Thiagarajan

Infosys has taken this cover following the pound's depreciation against rupee since the beginning of April this year.

Bangalore , Sept. 5

SOFTWARE major Infosys Technologies Ltd has recently taken a forward cover for its pound sterling denominated receivables.

Speaking to Business Line, Mr T.V. Mohandas Pai, Chief Financial Officer, Infosys, confirmed that the company had taken this cover in the last couple of months and said that it was "fairly sizeable compared to our exposure in Europe." He, however, declined to go into specifics.

Infosys has taken this cover following the pound's depreciation against rupee since the beginning of April this year. The GBP has depreciated by about two per cent since April this year till date.

The company had left this position open and had consequently taken a hit in the first quarter (April-June) this fiscal after the pound depreciated by over six per cent against the rupee.

Infosys derives close to five per cent of its revenues in Pound Sterling. It could be estimated that the forward cover might be close to this level. However, Infosys is still undecided on hedging its euro-denominated revenues. "We are also looking at it," Mr Pai said.

The rupee has appreciated by three per cent against Euro since April this year till date. Till the first quarter this year, Infosys did not consider hedging its earnings in European currencies as it accounted for a small portion of the overall revenues.

About 78 per cent of Infosys' earnings are billed in dollar terms, about 7 per cent in Australian dollars and about 11 per cent in euro and pound put together.

A stronger rupee impacted negatively to the extent of 5.4 per cent on Infosys' operating profit in Q1.

The total negative impact due to the currency fluctuation was to the extent of Rs 14.94 crore in the quarter However, the loss of revenues due to a weak Euro in Q1 was at Rs 10.94 crore.

For the current quarter, Infosys had taken a forward cover for $261 million.

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