Weak rupee to counter fall in metal prices: Uttam Galva

4976 Investors following Uttam Galva. Share this News with them.

0

Like this story, share it with millions of investors on M3

Weak rupee to counter fall in metal prices: Uttam Galva

The sharp cut in most of the metals will help companies like Uttam Galva with costing. "But we wont know the real impact till the market actually stops moving," says deputy managing director of the company Ankit Miglani.

Post your opinion here

 

0

Tweet

Share on Tumblr

ALSO READ See latest News about Uttam Galva See previous management interviews See what other Experts & Brokerages are saying about Uttam Galva Uttam Galva BSE | NSE 30/05/12 Are Mutual Funds betting on Uttam Galva?

The sharp cut in most of the metals will help companies like Uttam Galva with costing. "But we wont know the real impact till the market actually stops moving," says deputy managing director of the company Ankit Miglani. On the flip side, the rupee depreciation will counter that effect, he adds.

On the whole, Miglani believes that the severe crunch in demand due to high inflation, interest costs and the global economic scenario will impact margins going forward.

Below is an edited transcript of his interview with Reema Tendulkar and Ekta Batra. Also watch the accompanying video.

Q: There is a big crunch down seen in most of the base metal prices. Could you tell us the impact that would have on Uttam Galva per se?

A: We won't know the real impact until the market actually stops moving. As you are seeing it is still extremely volatile at this point; there is panic selling in all commodities. We have seen base metals come down which will help costing. On the other hand, we have seen the rupee depreciate sharply which will counter-effect that costing. So we do not really know the net impact until we see actually everything stop moving.

Q: The other big concern would possibly be the demand situation at this point in time. What are you penciling in in terms of the fundamentals of the business with regards to demand?

A: Demand is very slow even in this time of the year. It is not anticipated to be this bad but because of high inflation, high interest rates and the global economic crisis, we are seeing a pressure across all fronts on the demand side.

The rupee depreciation will help us in exports to some extent and we will be able to maintain volumes. Overall margins should be under pressure going forward because of this severe crunch in demand, but it is unlikely that we will be able to raise rupee nominal prices significantly to compensate for the increase in cost. That would put pressure on margins going forward.

Q: You'll had undertaken some price increases in September. Is there any reason for rollback of prices on account of low demand?

A: No. I don't think they can be any rollback. But owing to the change in the currency structure, prices theoretically should be raised by another USD 50 which is about Rs 2000 a tonne in the domestic market, but I do not think that can go through because the demand side is really weak.