Weak rupee benefits Infosys despite uncertainty

A 10 per cent rupee depreciation against US dollar during the second quarter (July-Sep) has benefitted Indian IT bellwether Infosys, helping it in revising its revenue guidance for the entire fiscal (2011-12) once again.

"Guidance for this fiscal (FY 2012) has been revised upwards to Rs 33,795 crore from earlier estimates of Rs 31,999 crore due to rupee depreciating 10 per cent to Rs 48.98 during the second quarter from Rs 44.55 in the first quarter (April-June)," Infosys chief financial officer V Balakrishnan told IANS Wednesday.

Though mark-to-market, the global software major lost Rs 246 crore due to hedging the dollar at Rs 44.55, a weakening rupee helped it to reduce the loss to Rs 108 crore on currency conversion from dollar to rupee.

"If rupee appreciates again during this (third) or next (fourth) quarter, we will revise the outlook accordingly," Balakrishnan said on the margins of the company's briefing on its financial performance for the quarter ( Q2) under review.

Admitting that uncertainty remained at the macro-economic level due to sovereign debt crisis in Europe and slow recovery in the US, the financial executive said the company had still headroom to grow business in key verticals such as BFSI (banking, financial services and insurance), retail, energy, utilities and manufacturing in the developed markets, which account for over 80 per cent of its exports.

"If the US economy goes into double dip, it will be a challenge for pricing though it has been stable during the first two quarters of this fiscal. If the recovery is slow, we have to wait and watch to see how IT budgets and spending in 2012 will fare," Balakrishnan, who has also become a board member, pointed out.

Noting that uncertainty in the macro-economic environment could impact the Indian IT industry though not to the extent the global recession had in 2008-10, Infosys chief executive S.D. Shibulal said high unemployment rate and slow recovery in the US were a cause for concern, while the situation in Europe was getting worse due to sovereign debt crisis and turbulence in its financial markets.

"We remain cautious due to worries arising out of the prevailing situation in Europe and the US. Our clients are very cautious, taking only short-term decisions while holding up or hesitant in taking decisions for the long term," Shibulal told.

Referring to the double-digit topline growth in the first two quarters (April-Sep) of this fiscal, the chief executive said the company was focusing on implementing its 'Infosys 3.0' strategy to sustain and drive business by taking up transformational process and innovation.

"We are bracing up for any eventuality, be it downturn, upturn or going sideways by strengthening strategic relations with our global clients, who demand greater efficiency, higher productivity and creating differentiation to remain competitive" Shibulal asserted.

Denying media reports on acquiring the Thomson Reuters' healthcare unit in the US, Shibulal said there was no acquisition for the time being though the company was always on the lookout for strategic buy-out.

"We are only dating and not engaged yet. As of now, no acquisitions on the table though we continue to explore for strategic take-overs," he quipped.

The company is on course to hire 45,000 people during this fiscal and made 23,000 campus offers for next fiscal (2012-13).