Corporates express concern over currency volatility

(from left) S. Mahalingam, CFO and Executive Director, TCS, Vinita Bali, MD, Britannia Industries, and T. V. Mohandas Pai, Chairman, Manipal Universal Learning, at a conference in Bangalore on Friday. Photo: K. Murali Kumar

Currency volatility and inflation have been an issue for the corporate world, and concerns over these issues were expressed during the annual chief financial officers' (CFOs) conference here on Friday.

Terming the Indian foreign exchange market as “extremely shallow”, former CFO of Infosys Technologies T. V. Mohandas Pai sought intervention of the Reserve Bank of India (RBI) in the market. “There are four to five players, who take positions in the market, and market moves on herd mentality,” Mr. Pai, who is now the Chairperson of Manipal Universal Learning, told presspersons on the sidelines of the conference.

“The market could move the other way if a player like the RBI intervenes. I am not for a wholesale intervention. I am for a slightly more activist intervention by the RBI,” Mr. Pai, said and added that the Indian CFOs were also not managing currency risk well.

He also felt that the demand for changing accounting standards was also wrong since it could bail out people, who have not done the right thing.

Chief Financial Officer and Executive Director of Tata Consultancy Services (TCS) S. Mahalingam said: “Currency fluctuation has always been an area of concern, and we cannot predict the currency value.”

He said the rupee, which was trading at 44 against the dollar, was now hovering at 51.

He also said that they had not seen any project cancellations from clients or have seen any cuts in budget spending.

Commenting on inflation, Vinita Bali, the Managing Director and Chief Executive Officer of Britannia Industries, said that sustained inflation remains a concern, and food inflation was affecting everyone. Rising inflation, she said was decreasing disposable income and the government should look at supply-side constraint.

The annual CFO conference with a theme on “The changing dynamics of the CFO” had been organised by the Confederation of Indian Industry (CII) and covered various issues on risk management, fund raising strategies, managing business expansion and responsibilities among key stakeholders.