While most firms in the business of importing goods/products have not hiked prices yet, they will be forced to once the new buying cycle begins next month in October.
And amid the strengthening of US dollar, importers in the small and medium enterprise (SME) segment who are unable to hedge currencies will take the maximum hit.
Sajid A Kazi from PID India says SMEs are left with no choice but to take a beating on their profits: "Large corporations and multinationals who are dependent greatly on imports for their day-to-day business hedge currencies. This is technically not possible for SMEs because of the sheer difference in volumes of currencies the two segments deal with. As a result, SMEs have no choice but to take a beating on their profits. If they increase maximum retail prices (MRPs) in reaction to the rupee drop against the dollar they suffer due to lower sales because increased selling price means lesser consumption."
A weak INR will strongly impact businesses; importers are working on strategies to ensure that their business growth rate is maintained. But sometimes, external factors are beyond anybody's control. It is important to ascertain what the bottom of this current fall will be.
Source: dnaindia.com
