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Mr V Balakrishnan

Our Bureau

Bangalore, Oct. 9 Concerned over the rise of rupee against the dollar, Infosys Technologies said it would stick to its short-term hedging policy covering net receivables for the next two quarters.

“The global currency markets continue to be extremely volatile, even though we have seen some stability in the rupee against the dollar this quarter. However, in the short-term we expect the rupee could appreciate,” said Mr V. Balakrishnan, Chief Financial Officer, Infosys Technologies.

While stating that it would be difficult to take a long-term view on rupee due to the volatility, Mr Balakrishnan said the company would stick to its short-term hedging policy.

The rupee has gained by about 3 per cent against the dollar since October 1. The company has taken hedges to the tune of $699 million. The volatile movement of rupee against dollar would impact the company’s operating profit margins (OPM), Mr Balakrishnan said. However, the company expects the impact to be offset by the favourable cross currency movements, wherein dollar has weakened against several other currencies.

Further, Mr Balakrishnan said the company has given an 8 per cent wage increase for employees in India and two per cent for the overseas staff effective October 1.

The wage hike would impact the OPM by 200 basis points over the next two quarters. For the September quarter, OPM improved marginally 34.6 per cent due to lower sales and marketing costs.

The impact on the OPM for fiscal 2010 would be in the range of 50 to 100 basis points as the company has seen incremental benefit due to lesser than projected sales and marketing costs in the first two quarters, Mr Balakrishnan said.

Infosys added about $360 million in cash that increased its cash and cash equivalent to $2.8 billion (Rs 13,796 crore) at the end of September quarter.

More Stories on : Forex | Software | Infosys Technologies Ltd

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