'India's top corporates unprepared for managing forex risks'
Top corporates in the country are not prepared for managing foreign exchange risks with more that 50% of them highly sensitive to rupee depreciation, says a report.
A report by India Ratings and Research on Tuesday said in case of a 10 per cent rupee depreciation in the financial year 2017-18, the aggregate net leverage of top 100 non-financial foreign exchange borrowers will increase to 5.6x from 5.1x in the financial year 2015-16, while interest coverage will reduce to 2.6x from 2.8x.
"Based on the shift in net leverage and interest coverage of these corporates, we estimate 54 of the 100 corporates are highly sensitive to rupee depreciation; while 19 and 27 corporates exhibit moderate and low sensitivity, respectively," the report said.
The rating agency categorises borrowers as 'high sensitive', 'moderate sensitive' and 'low sensitive' based on the extent of impact on their net leverage and interest coverage arising from unhedged foreign exchange exposure.