New Delhi: India Inc is gearing up for another bolt from the falling value of rupee on their quarterly report card, after forex losses knocked down a significant part of their profits in the second quarter.

 A number of companies, including some blue-chips, suffered huge losses due to the rupee depreciation during the second fiscal quarter ended September 30, 2011, and experts have warned that a similar situation might be repeated in the third quarter ending next month.

Since January, the rupee has plunged by about 18 per cent from near 44-level against the US dollar to a record low of below 52-mark.

A number of companies, including drug-maker Ranbaxy, JSW Energy, JSW Steel, Tata Motors, Bharti Airtel, PFC and Jet Airways felt the heat of forex losses in the second quarter.

Brokerage firm Bonanza Portfolio's Senior Research Analyst Shanu Goel said that the sharp currency moves could adversely affect the companies' third-quarter results as well.

 "The Q3 results are also expected to be adversely affected by the sudden currency movement," Goel said, while noting that many companies saw their profits falling during the second quarter due to forex losses.

To ward off the losses, the companies might have to hedge their forex risks, but that would also put some pressure on their balance sheets, the experts believe.

 Hit by foreign exchange losses, Ranbaxy posted a net loss of Rs 464.58 crore for the quarter ended September 30, 2011. The company's combined foreign exchange loss during the quarter stood at Rs 651 crore.

JSW Energy also reported a Q2 net loss of Rs 110.51 crore due to forex losses among other factors.

 Other companies, whose profits were impacted during the second quarter due to fall in the rupee value, included Sesa Goa, JSL Stainless, SAIL, Sterlite Industries.

Last Tuesday, the rupee hit a record low of 52.73 against the US currency, as investors exited from riskier emerging markets as well as euro-zone assets, and shifted funds to the greenback, -- seen as a "safe heaven" in times of crisis.

 Market observers feel that rupee may even touch 55 per dollar in the near term, but can stabilise near 50-52 level if the Reserve Bank intervenes to contain the depreciation.

Since the Indian economy is dependent on imports of both crude oil and essential commodities from international markets, a depreciating rupee will lead to increased import bills for the nation, they said.

This in return will lead to higher cost of goods produced and higher inflation in the nation which is already facing inflationary pressure, the analysts believe.

However, some segments are in a position to benefit from the current currency market trends.

"Exporters like IT industry, garment industry are the winners as these companies are primarily exporters of services to the western market, while importers like heavy engineering, capital good segment are the direct losers," Goel said.

However, the IT firms may witness muted performance in the quarter ending December, 2011, despite weakness in the rupee, as their order flows have been adversely affected by the persisting economic slowdown in the US and Europe.

Analysts said if the rupee remains near the current levels, the companies with significant foreign loans could witness further forex loss and eventually their profits could be impacted in the coming quarter.

 As per the estimates, the falling value of rupee may make the foreign loans availed by the Indian companies this year costlier by an estimated over Rs 25,000 crore (about USD five billion), if the current currency valuations persist.

The corporates had been increasingly tapping overseas loans, mostly in the US dollar, till a few months ago to save costs arising out of higher interest rates and liquidity constraints within the country, but the subsequent fall in the rupee value has negated the benefits, experts believe.

Indian companies have borrowed close to USD 29 billion in foreign currencies, through ECBs (External Commercial Borrowing) and FCCBs (Foreign Currency Convertible Bonds), since the beginning of this year, as against such loans worth USD 18 billion during the entire 2010.

A sharp fall of about 18 per cent in the value of rupee -- from near Rs 44-level against the US dollar at the start of 2011 to below Rs 52-level currently -- has made the cost of repaying these foreign loans costlier by a similar margin.

Adding to the woes of the companies, the shares of the companies having issued FCCBs have fallen sharply since the time of their issuance, thus making it unattractive for the bondholders to convert their loans into equity.

As per the estimates, FCCBs worth about USD 10 billion are due for redemption in the next 12-18 months and over 80 per cent of these bonds might not be converted into shares, said an official with a private sector bank advising some companies on restructuring on their foreign loans.

The possibility of such a scenario increases the risk of loan default by their issuer companies, he added.

(Agencies)