Depreciation would have positive impact – CL Synergy


By Rajiesh Seetharam

The rupee depreciation would have a positive impact on the balance sheet and P&L of CL Synergy Limited (CLSL), said the management officials.

“We generally quote our customer in terms of US Dollars (USD). Rupee has depreciated by 40% this month. We made our forecasts based on the exchange rate of Rs 203 per USD. Depreciation will result in our turnover and gross profit in terms of rupees to go up further. 

In the balance sheet, we have dollar-denominated assets and liabilities, receivables and payables.  We have a surplus of USD 2.7 million. The depreciation of rupee would have a positive impact which hasn’t been captured in the financial forecasts,” noted CLSL MD Roshan Silva, speaking at CL Synergy IPO investor forum. 

CLSL which has made a profit of Rs 454 million for the first ten months of FY22, which is a significant increase compared to the profit of 64 Million for FY21. The huge increase in profit is attributed to the rise of freight rates. 

Global Container freight rates increased dramatically between July 2019 and February 2022.  2021 saw a steep increase in global freight rates in particular. In September 2021, global freight rate index reached a record price of over USD 10,800.  The index was USD 1340 in July 2019. 

 As per CL Synergy IPO prospectus, its forecasted profit is set to increase gradually to 700 million by FY26. 80% of the revenue from sea freight and 66% of it being from US Dollar denominated.

IPO opens on 7 April with an issue of 91,500,000 (Ninety One Million Five Hundred Thousand) Ordinary Voting Shares via both the Offer for Subscription and Sale at Rs 14.00, to raise Rs 1.28 billion. 

The Company intends to allocate Rs 320 million to enhance working capital within CL Synergy, and Rs 212 million to reduce long-term debt. Rs 200 million will be invested on expanding regional presence in buyer and sourcing markets, and a further Rs 150 million towards strengthening core digital systems.

CL Synergy won the bronze award for large category at the recently held National Logistics Awards 2021.