Double-digit inflation will hit our bottomlines: India Inc

Corporate India, while admitting that inflation was a global phenomenon and that they had to live with double-digit inflation for some time to come, felt that their bottomlines were in for a hit. They wanted the Government to bring under control some of the hidden subsidies. Industry sees cost of funds going up and liquidity tightening, and consequently some impact on capital expenditure plans.

Mr Amar Lulla, Chief Executive Officer, Cipla Ltd: We have been feeling this for the last few months and it is getting out of hand. For the pharmaceutical sector, the prices of imports from China have gone up because of the Olympics. Inflation and rising input prices, coupled with the inflexibility on the industry to increase prices will have its impact. With such high inflation numbers, companies need to be able to adjust prices or they should be compensated. Otherwise, drugs will not be in the market or worse, spurious drugs will increase . Companies need more elbow room to operate. Bottom-line is set to take a five to seven percentage point hit.

Mr N Chandrasekaran, Chief Operating Officer & Executive Director, TCS: Our expansion plans depend on our deal pipeline and ramp up plans. We do not expect any impact on expansion due to inflation worries. Any rise in rates(reverse or reverse repo) will not impact us as we are a cash positive company and do not borrow from banks or the market. In a scenario of double digit inflation, we continue to focus on controlling costs in all aspects of operations.

Mr Ajay Piramal, Chairman, Piramal Healthcare Ltd: This year companies would meet their topline expectations, but the bottomline will see an impact.

Mr Venugopal Dhoot, Chairman & Managing Director, Videocon Group: Growth is possible along with inflation. Even today the lower middle class has not curbed spending.

Mr Pramod Chaudhuri, Chairman, Praj Industries: Rising inflation could lead to recession and even worse, ‘stagflation’.

Mr Seshagiri Rao, Director (Finance), JSW Steel Ltd: The immediate concern of industry is availability of capital. In the current scenario, interest rates are bound to go up and the growth in credit curtailed.

Mr Sonjoy Anand, Chief Financial Officer, Tech Mahindra: For IT companies , high inflation will not impact the demand size of business, as a majority of firms generate revenues from software exports to overseas clients. It will put additional pressure on cost heads related to infrastructure, travel, people and communication. We expect our travel expenses to increase.

Mr J K Gupta, CFO, CMC: Inflation can have some negative impact on growth momentum. From a client perspective, it could result in inflated wage bills and also impact the availability of surplus money (for discretionary expenses) for them. As clients might cut back on budgets, the demand environment for companies like ours will be impacted. Most companies will have to go slow on their capex investments.

Mr Surendra Hiranandani, Managing Director, Hiranandani Group: Double-digit inflation is not unique to India and has hit all the countries in the region, but India is better positioned to ride over this temporary phenomenon. The Government needs to expedite the reform process to sustain growth.

Mr Akhil Gupta, Joint Managing Director, Bharti Enterprises: Double-digit inflation is a temporary phase and in the long run it should settle at 8 per cent.

Mr Pramod Bhasin, Genpact President and CEO: The high numbers will make companies more conscious about efficiency and belt tightening measures in terms of what to do about pricing. We are more worried about the impact on our customers and how they will behave.

Mr Ajay S. Shriram, Chairman and Managing Director, DCM Shriram Consolidated Ltd: Input costs have gone up by 25-30 per cent in the last two years.

Mr A. Ramasubramanian, Chief Executive, Eicher Motors: What we are grappling with is the increase in steel prices which would impact vehicle prices

Mr B. Hariharan, CFO, Ballarpur Industries Ltd: As far as BILT is concerned, we have closed all capex till 2009 and would not be making any fresh borrowings.

Full article -Business Line

I unerstand that the cost of money goes up in an inflationary inviornment.But I want to know that if the cost of all the goods and services are going up the problem of facing inflation lies with people who have a fixed income.Now I will come to the farmers.