The Hindu Business Line : Re depreciation hurts Sundram Fasteners

IT cuts both ways. Sundram Fasteners has always kept the proportion of the cheaper dollar loans (which are partly hedged) in its total stock of debt "high".

In the past, when the rupee appreciated against the dollar, the company has gained. In the third quarter of 2004-05, the company recorded a net gain of Rs 11.76 crore.

In the corresponding quarter of the current year, however, the rupee depreciated against the dollar. Result: an exchange fluctuation loss of Rs 10.33 crore. This element pulled the net profit for the quarter down to Rs 12.02 crore, from Rs 24.75 crore in Q3 2004-05.

The company's net sales for the quarter increased to Rs 265 crore from Rs 247 crore in the corresponding quarter last year. Out of the incremental sales of Rs 18 crore, as much as Rs 13 crore came from rise in exports — but for this natural hedge, the company would have suffered a higher fluctuation loss. Export sales stood at Rs 78 crore compared with Rs 65 crore in Q3 last year.

Interest charges were also higher at Rs 4.48 crore from Rs 2.45 crore previously.

In the first three quarters of the current year, Sundram Fasteners recorded sales of Rs 873 crore compared with Rs 763 crore in the corresponding period last year.

Exports increased 24 per cent to Rs 233 crore from Rs 188 crore . Net profit for the period was down at Rs 43 crore compared with Rs 51 crore .

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