B4U India: Hexaware sees unauthorised deals impacting profit

Hexaware sees unauthorised deals impacting profit
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reuters india on 27 November, 2007 09:39:00
 
MUMBAI (Reuters) - Hexaware Technologies Ltd sees unauthorised forex deals by an
official impacting profit in the current quarter, its chief said on Monday.
Earlier in the day the company said an official had conducted unauthorised, and
potentially fraudulent, foreign exchange hedge deals involving options. The firm
has made provisions between $20-25 million to cover any exposure from these
deals
"Yes I believe we would book some loss this quarter itself, but from an
accounting angle even if we don't book the loss, provisioning will still be
there," Executive Chairman Nishar told a conference call.
"We will unwind some of these transactions. We are not comfortable keeping
these transactions open and we will look at the earliest opportunities to
unwind these transactions."
He said that the amount would be determined by the currencies and the rate at
which the hedges were done.
So far the company has found 11 unauthorised deals done by the official,
related to the US dollar, euro, pound sterling, yen and swiss francs.
"The need for provisioning is because of the direct actions of one individual,
which were actively concealed," Vice Chairman and Chief Executive Officer Rusi
Brij said. The company did not name the official though.
Hexaware has appointed a 3-member panel to investigate the transactions and has
given itself up to 30 days to assess the full financial impact of the deals.
The transactions came to light last Thursday, when the official involved
confessed to a forex deal leading to a potential loss in the future, the
company said.
"We are in conversations with the banks with whom the deals were done," Nishar
said. The deals were done with four banks, of which two private banks have the
largest share.
Brij said that the transactions would not have any bearing on Hexaware's
ordinary course of business.
It has also embargoed all options deals. Normally Hexaware used swap deals to
hedge its foreign exchange exposures, he said.
Shares in Hexaware were trading down 13.4 percent at 76.90 rupees in a strong
Mumbai market.