This sector is dependent on imports and the sliding rupee would increase costs. With demand staying soft, rising costs cannot be entirely passed on. Those deriving a substantial portion of their earnings from exports would benefit.
For the first half of FY13, India's biggest car maker, Maruti Suzuki, has hedged its forex liabilities. According to Sharekhan, the company has hedged its rupee-yen exposure for the first half of FY2013 and hence, the impact would be felt in the second half of FY2013.
According to analysts, Hero MotoCorp faces the risk of earnings erosion due to the rupee's fall. After factoring in exports, raw materials account for 14 per cent of net sales, which are imported by vendors in yen-denominated deals. Sharekhan has estimated an EPS impact of 13 per cent, if the rupee stays at these levels.