A weakening rupee against a strong US dollar benefited Indian software export major Infosys in the second quarter of fiscal 2018-19, said its Chief Financial Officer (CFO) M.D. Ranganath on Tuesday.
“We benefited 80 basis points (0.8 per cent) due to depreciating rupee during the quarter. We also got benefit of another 70 basis points (0.7 per cent) owing to higher pricing and onsite moderation. The overall benefit was 150 basis points or 1.5 per cent,” Ranganath told IANS here.
Currency volatility due to global and regional factors impacted the Indian rupee, which weakened 5.5 per cent in the quarter under review (Q2) to Rs 72.49 by September 30 from Rs 68.91 on July 1 per dollar.
“The benefit was, however, neutralised by 100 basis points (1 per cent) due to compensation, attrition, investments and sub-contractor expenses in dollars,” noted Ranganath.
Admitting that the company was also impacted by cross-currency fluctuations, the outgoing CFO said differece between the reported growth and the constant currency growth was 1 per cent on its non-operating income.
“About 70 per cent of our revenues are in US dollar and the remaining 30 per cent is a combination of Australian dollar, Euro and British pound,” said Ranganath.
A veteran Infoscion, Ranganath, who resigned from the executive post on August 18, will leave the iconic company on November 16.
Noting that a volatile rupee had a plus and minus impact during the quarter, Ranganath said the company made certain assumptions on the rupee based on which it hedges.
“We do not disclose the hedging rate, as it’s a competitive number,” he quipped.
Recalling that currency volatility was not new to Infosys, Ranganath said the company had navigated through extreme currency movements due to Brexit, the US election and global events.
“Over the last 13 quarters we have effectively navigated the volatility through our hedging policies, which have worked for us keeping the effects minimal,” added Ranganath.
“But we do not renegotiate the contracts for billing on quarterly basis,” he clarified.
Nearly 98 per cent of the company’s revenue is generated through the export of software services and products, with 60 per cent of it in US dollars.