Nearly 40% of US$ 200 bn loan of India Inc unhedged

The sins of the past were to come haunting sooner than later. But for India Inc, the rapid depreciation of the rupee has made the eventual perils look overwhelming. Several large and small companies took advantage of the lower interest rates overseas over past few years. The big ticket borrowings then came very handy for ambitious expansion plans. However, many companies did not bother hedging themselves against forex risks. As a result, they are now to face a double whammy. One the depreciation of the rupee is biting them hard. Two, the possibility of rollover of the loans seems bleak. The companies will have to bear the burden of higher interest rates and marked-to-market losses for rollover of hedged positions. As reported by Business Standard, rating agency CRISIL estimates that nearly 40% of US$ 200 bn of India Inc's foreign currency debt is unhedged. In the absence of foreign currency earnings, the smaller companies in particular could see their profits getting wiped out