Aug 14, 2013, 12.22 PM IST
In an interview to CNBC-TV18, Vineet Nayyar, executive vice chairman, Tech Mahindra explains that despite gaining from the currency depreciation, it is only a marginal benefit that they accrue. The company gets only a 35-40 paise gain on every depreciated rupee.
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Don't fancy rupee fall, benefits only temporarily: Tech Mah
In an interview to CNBC-TV18, Vineet Nayyar, executive vice chairman, Tech Mahindra explains that despite gaining from the currency depreciation, it is only a marginal benefit that they accrue. The company gets only a 35-40 paise gain on every depreciated rupee.
Like this story, share it with millions of investors on M3
Don't fancy rupee fall, benefits only temporarily: Tech Mah
In an interview to CNBC-TV18, Vineet Nayyar, executive vice chairman, Tech Mahindra explains that despite gaining from the currency depreciation, it is only a marginal benefit that they accrue. The company gets only a 35-40 paise gain on every depreciated rupee.
Nayyar explains that despite gaining from the currency depreciation, it is only a marginal benefit that they accrue. The company gets only a 35-40 paise gain on every depreciated rupee.
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"Even a company like ours which has possibly the highest offshore component, about 80 percent, for every rupee of depreciation our advantage is at best about 40 paise because 20 percent of the people are abroad and their cost is about two-three times higher than what we have in India," explains Nayyar.
Below is the edited transcript of Nayyar's interview to CNBC-TV18.
Q: How big an advantage of the rupee is or does it after a quarter or two get eaten up by your clients because they try to price this in?
A: Yes, there is a tailwind which we get but it is temporary and it is not proportional to the actual depreciation. For example, even a company like ours which has possibly the highest offshore component, about 80 percent, for every rupee of depreciation our advantage is at best about 40 paise because 20 percent of the people are abroad and their cost is about two-three times higher than what we have in India.
Add to that the visa cost, the travel cost, family support. When all that adds up, we gain in the nature of 40 paise to 35 paise for every rupee of expenditure. Then, there is also inflation which occurs within the country. Because of depreciating rupee , that too needs to be factored in and the clients are wise enough to it very quickly and they price it in. So, net-net, though we gain temporarily, it is neither good for the country nor for the economy and can definitely not be good for us in the long run.
More to come.
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