It was a somber mood at the boardrooms of Indian companies, which have huge exposure in Britain and in the European Union. Companies like Tata Motors (JLR), Tata Steel Europe and Motherson Sumi are expected to face falling sales, increased costs of operations and immigration barriers for its employees.
Though the actual exit of Britain will take a couple of years, companies like JLR and Tata Steel will have to make alternate arrangements to sell their products in the European Union.
The good news
While it may be bad news for Indian companies, which have exposure in the region, local companies which have taken loans in British currency will get a bonanza as Pound fell by almost 10% today. ”This immediately shaves off 10% from the cost of funds as companies will now have to pay less when they are repaying loans,” said Prabal Banerjee, CFO of Bajaj Group. The investments from UK to India will also be expensive as it would get 10% less in Indian currency.
Rupee crashed by 96 paise to breach the 68-level against the US dollar in the early trade as leads show ‘Leave’ camp ahead in the UK referendum vote.