Hyderabad, Jan. 21 Drug exporters are concerned about the adverse impact of the appreciation of the rupee and are planning to seek some intervention from the Centre.
Last Monday, the rupee had touched Rs 45.34 against the dollar, a record level touched during the past 15 months. Despite the hope that it was a temporary rise on the back of increased dollar buys, the rupee remained over Rs 45.76 on Tuesday.
“Most of the drugs exporters are concerned about the current appreciation of the rupee and are fearing a repeat of the 2007 scenario,'' Dr P.V. Appaji, Executive Director, Pharmaceutical Exports Promotion Council, told Business Line.
“They are also planning to seek Government intervention in the form of a package to limit the adverse impact,'' Dr Appaji said.
Rupee appreciation is alarming for many as it comes at a time when pharma exports are doing well after weathering the impact of the recession.
“Though we are yet to get the final export figures for the quarter ended December 31, 2009, the indications are good,'' he said.
Exports of pharmaceuticals and fine chemicals increased 29 per cent at Rs 39,538 crore up to September 2009 compared with the year-ago period.
Price hike
The industry is also keeping its fingers crossed on the option of raising prices. “If the rupee appreciation continues, we will be forced to seek more dollars (hike prices). But this might work against us as the buyers may go to our competitors in the global market such as China,'' said Mr M. Narayana Reddy, immediate past president of the Bulk Drug Manufacturers' Association and Managing Director of Virchow Labs Ltd.
At current levels, exporters could lose about Rs 1.50 per dollar, according to Mr Bhaskara Narayana, Chief Finance Officer, Natco Pharma Ltd. “But we need to see at what level the rupee will stabilise finally,'' he added.
The pharma industry, including majors such as Dr Reddy's, has on earlier occasions adopted various strategies to tackle rupee appreciation including expanding foreign currency baskets and a greater dependence on euro.
“Major companies will wait and watch the rupee levels for now, but the SMEs (small and medium enterprises) will be hard-pressed to tackle the impact,'' said the CFO of a major pharma company.
Source : Business Line