Opportunity To Create Brand During Depreciation Of Rupee

Published by MBA Skool Team, Published on June 26, 2012

Rupee is depreciating day by day even after a lot of steps taken by Reserve Bank of India and the government. The impact of the depreciation of rupee is that imports are being costlier. Whereas there are some companies which are making better profits during this time like IT companies for which have most of the revenues come from outside India.

The question is that can any other company make more profit in such scenario except some export oriented companies? At this time there is also an opportunity for a few companies which can create a Brand. Some automobile companies like Maruti Suzuki India limited, Toyota Kirloskar Motor Private Limited etc import many of their materials from outside India.

Toyota Kirloskar motor Private limited is 35-40% dependent on the imports due to which for depreciation of a single rupee it is losing 90 crores of rupees. The reason is that import is getting costlier because of depreciation of rupee. So now these automobile companies are trying to reduce their imports, rather they are trying to fulfill most of their demand for materials from India so that the cost will be lesser for them as compared to imports.

Here lies an opportunity for the local companies to win the hearts of such companies by providing them quality products. This is the right time for these companies to pitch on because if now these companies will show their commitment and quality in their products and services then definitely the automobile companies will forget to import their necessary items even if rupee will appreciate to 45/$.

These companies were having lesser opportunities due to the dependency of the automobile companies on imports to not to compromise on the quality of the products. These automobile companies don’t want to take risk when they are getting the right product for which these companies even also were not thinking to give a chance to the local vendors to replace the imported products.

But now the situation is different. Depreciation of value of rupee is forcing these companies to be dependent on the local companies to not to increase the cost of production. Because of this at least the local companies have a time of 6-9 months to prove themselves and build a Brand name as the scenario is not in favour of appreciation of value of rupee in near future.

So till that time these companies have to try as hard as possible so as to grab as well as exploit the opportunity. If these companies will perform well then definitely the GDP of our country will improve and even our current account deficit will be reduced because the automobile companies will reduce imports rather it may happen that these companies will prepare the full vehicle without importing anything. So as the local companies will create a Brand, the employment opportunities will also be increased which in turn will be better for our country.

This article has been authored by Anjan Kumar Behera from IIM Lucknow.

Image(s): FreeDigitalPhotos.net

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