"Russia is an important trading partner and any devaluation of their currency is bound to have an impact," Sinha, who broke the news at a meeting with businessmen here, said after addressing businessmen in Bangalore.

Sinha said he had been told by his ministry officials in Delhi that the rouble had been devalued and added "we are also living under the threat of a Chinese devaluation."

He, however, hastened to add that he would have to study the (rouble devaluation) issue in depth and had asked his ministry officials to obtain more details.

Earlier, Russia announced drastic changes in monetary policy on Monday that will allow the battered rouble to float freely, and declared a 90-day moratorium on foreign debt repayments. The dramatic changes, which prime minister Sergei Kiriyenko denied amounted to a devaluation or adefault, come in response to overwhelming negative market sentiment that have sent Russian shares plunging in recent weeks.

EEB adds: Indian industry was well aware of the uncertain economic situation in Russia, and most companies having exposure to Russia had covered themselves by dollar-denominated letter of credit (L/Cs). Pharma companies insist on cash sales or dollar-denominated L/Cs. Dr Reddy's Labs, Hoechst Marion Roussel, Sun Pharma, Torrent Pharma, and Ranbaxy have significant sales coming from Russia and other CIS countries. Dr Reddy's and Ranbaxy, in particular, enjoy margins several times higher than those obtainable in India. For these companies, the drop in rouble rates would result in lower margins.

Analysts believe that the drop in purchasing power could also result in lower volume sales. Dr Reddy's had seen an 84 per cent increase in sales in the first quarter. With the second quarter coming to an end, even if sales do drop in the third and fourth quarters by 30 per cent, on anoverall basis, the company would be able to achieve its stated target.

Sun Pharma believes that since it caters to the cardiovascular, psychiatry and other niche segments, there would not be much volume erosion. Torrent and Hoechst Marion Roussel have around 80 per cent of export sales to Russia. Exports contribute approximately 40 per cent of total sales. Hence for these companies, there would be drop in both topline as well as bottomline in the current year. Tata Tea would also see lesser volume sales to Russia, and with reduced consumption of tea in that country, overall tea prices could further be dampened.

The rouble drop can also indirectly hurt the Indian steel industry. Russia is one of the bigger players in the industry. With a 33 per cent drop in rouble rate, we can witness a dumping of steel products in India. At the very least, world prices of steel and aluminium will be hit.

"This would hurt the domestic manufacturers. In addition, new entrants like Ispat have an export obligation to meet.Drop in prices will lead to further export losses," said an exporter.

AGENCIES ADD:

"The measures are tough and fairly radical," Kiriyenko told a news conference. "They are tough but adequate." In a statement, Anatoly Chubais, Russia's chief foreign debt negotiator and leading economic policymaker, said Russia could keep the value of the rouble in the six to 9-1/2 range per dollar until the end of the year.