India Inc on edge as war in West Asia escalates

CORPORATE INDIA is keeping a close watch over developments in West Asia as the conflict between Iran and Israel escalates.

- VIVEAT SUSAN PINTO/RAGHAVENDRA KAMATH/NITIN KUMAR

While most CEOs that FE spoke to said there was no immediate impact of the conflict on consumer or business sentiment, a prolonged war in the Gulf region would result in a spike in crude inflation, which would force companies to consider price hikes as manufacturing and freight costs are likely to shoot up.

There is a general sense of unease in sectors such as oil & gas, aviation, auto, paints, FMCG, infrastructure and fertilisers, which use crude-linked derivatives as inputs. For paint companies, for instance, as much as 55-60% of their input costs consist of crude-linked derivatives, including solvents and resins.

A surge in crude oil prices will also hurt airlines' finances, as fuel typically accounts for 20-30% of their operating expenses.

"There is certainly a sense of caution among consumer companies with tensions growing in West Asia," Mohit Malhotra, CEO, Dabur India, said.