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    Every 1% depreciation in rupee will increase margin by 15-20 bps, says Tech Mahindra

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    Every 1% depreciation in rupee will increase margin by 15-20 bps, says Tech Mahindra

    Tech Mahindra CFO Manoj Bhat says every 1 percent depreciation in rupee will increase the company's margin by 15-20 basis points.
    One basis point is a hundredth of a percentage point.
    The Indian currency collapsed to hit a new all-time low of 72.67 against the dollar on Monday.
    Bank of America Merrill Lynch said that most IT companies can keep the first 10 percent of rupee depreciation "because renegotiation of billing is not done at frequent intervals".
    Bhat said that initial 5-10 percent of rupee depreciation was retained based on the past.
    “For new business over a longer period of time, the benefit starts getting passed on in the form of bids which we are making for newer business but for existing businesses there is a benefit which we can keep is what we believe,” said Bhat.
    Talking about net cash, Bhat said, “We follow two year hedging policy and as per that we have hedged most of it; about 75 percent of net exposure for the next 12 months is hedged already and its hedged at around Rs 71.50/USD.”
    According to him, FY19 will not see the hedging gains we saw in FY18.
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