Weak rupee stumps BSNL bidders | india | Hindustan Times
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Weak rupee stumps BSNL bidders

The depreciating rupee has become a falling knife for leading telecom equipment vendors who participated in a tender by BSNL to set up 9.3 crore lines in the largest single purchase of mobile telephony equipment in the world, reports Manoj Gairola.

india Updated: Oct 26, 2008 20:38 IST
Manoj Gairola

The depreciating rupee has become a falling knife for leading telecom equipment vendors who participated in a tender by Bharat Sanchar Nigam Ltd to set up 9.3 crore lines in the largest single purchase of mobile telephony equipment in the world.

The rupee has lost 25 per cent against the US $ over the past six months, and upset the economics of electronic items that constitute 30 to 40 per cent of the value of the equipment supplied. One vendor calls it a “financial tsunami” that needs special treatment.

The bids were invited in the second week of May and accepted in early September when the dollar was around Rs. 44.

However, much of the calculations took place earlier, when the rupee was even stronger. This has put the vendors that include a who’s who of global technology in a spot. The dollar touched Rs. 50 last week.

The order is worth Rs 40,000 crore, if one goes by the lowest bid submitted by Ericsson in the previous tender.

“We asked for quotes in rupees and our purchases are in rupee. Therefore, dollar parity is not a major issue as far as BSNL is concerned,” said SD Saxena, director (finance) of BSNL. “We are currently evaluating bids and it will take another month or so to place orders.”

Ericsson, Nokia Siemens Network, Alcatel Lucent, ZTE, Huawei and Nortel participated in the tender.

At least one major vendor has approached BSNL authorities and said that the currency dip was an unprecedented situation which no vendor had thought and hence a force-majeure clause should be invoked. The clause is invoked in the case of unforeseen events beyond the control of a party.