Rata Samudra Emergency Pharma, Metal and Fabric. Companies in the sector will have a general impact

New Delhi: The impact of the ongoing crisis around the Rata Samura waterway will vary depending on different industries. According to a report, 50 percent of the country's exports and 30 percent of its imports were through this route in the last financial year. CRISIL Ratings has prepared a report on the impact of the Rata Samudra crisis on various business segments of the country.

Local companies use the Red Sea route through the Suez Canal to trade with Europe, North America, North Africa and parts of Western Asia. In the last financial year, the country spent Rs. 18 lakh crore (50 percent) exports and Rs. 17 lakh crore (30 percent) was imported.

According to the report, the total trade of the country in the last financial year was 94 lakh crore rupees. Of this, 68 percent of the value and 95 percent of the quantity was transported by sea. The country imports 30 percent of DAP from Saudi Arabia, 60 percent of rock phosphate from Jordan and Egypt and 30 percent of phosphoric acid from Jordan.

Companies operating in sectors such as agricultural commodities and seafood may see a significant impact due to the perishable nature of their goods and/or low margins, which limit their ability to offset the risk from rising freight costs.

On the other hand, companies operating in sectors such as textiles, chemicals and capital goods may not be affected immediately, as they have a better capacity to absorb higher costs. But a prolonged crisis could also make these sectors vulnerable as declining orders would affect their working capital cycle. However, some sectors such as shipping may benefit from an increase in freight rates. Finally, companies in the pharma, metals and fertilizers sectors will not be affected much.