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The Manufacturing Industry is a vast and diversified sector covering consumer, automotive, medical machinery, and construction. Manufacturing Industry is so vast and diversified that the impact of the pandemic is mixed The medical machinery industry has broadly been doing well during the pandemic while others have struggled to survive. A skilled labor shortage may pose a bigger problem as the younger generations choose white-collar jobs more. There is an opportunity for wider implementation of machine intelligence and data analytics. There is a question mark on whether the Trade war impact can be felt on supply chains.

As the industry is diversified the exposures are also very diversified. Some companies have exports more than the imports while others who have large domestic customer bases, have significant imports.Imports are primarily in USD .Exports are primarily in USD and EUR with a few companies having some level of JPY exports also. The challenges are to align the exposures with business objectives and devise optimum hedge strategies.Companies may have term loans in foreign currency and some capex in FC as well.Risk management in a net or gross manner remains to be the deciding factor given the objectives of a specific company.

Foreign Exchange Services That We Provide

Cost reduction on import payments through import hedge strategy

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We will monitor your payments bill by bill date by date and will advise at the right time to hedge along with specific advice on hedge instruments, price and tenor. Objective will be to minimise your payment Fx rate compared to either an unhedged position or against forwarding premium.

Rate improvement in Exports through Export hedge strategy

 

 

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We will be monitoring your order book, invoice book, and also projected annual exports on a daily basis. We will advise you on when to hedge, how much to hedge, hedge instrument, right rate, hedge tenor, etc. We will help in the execution of the hedge and in any setup with the bank if required. The objective here is to achieve a high annual budget rate and also a higher realization rate compared to an unhedged position or forward rate. The inflows which come, whether to early utilize or convert at the market will also be advised.

Loan interest rate reduction

 

 

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We will be evaluating your working capital and term loan portfolio. On the working capital, we will advise you when to go for PCFC, PCRE, EPC, FCTL, CC, CP, etc, and what rate you should get. On the term loan side, we will advise you on ECB, FCTL, RTL, and how you can manage Foreign currency risk or fixed floating risk so that overall you achieve cost savings.

Risk Reduction - Limit P&L volatility

 

 

 

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We do not focus on savings alone but on risk-adjusted savings. Hence our strategies are conservative and limit risks both economically and on an accounting basis

Ensure stability even if currency crisis happens or sharp move happens

 

 

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There are times when your functional currency INR has moved sharply. Our strategies ensure that in such a scenario, you will never be caught off guard.

Implement discipline in forex management

 

 

 

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We proactively reach out and ensure that there is required discipline in your forex management, and it is not put into the backburner during stable times.

Educate and introduce options and swaps for hedging where required.

 

 

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Using options help at times. However, option-based hedging should not be done without deep understanding. We educate and handhold companies in understanding vols surface, Greeks like delta, gamma, and how to use the Greeks for decision making and monitoring.

Analysis and Evaluation of alternative strategies on following parameters

 

 

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IRR or net effective interest cost with hedging, Break-even analysis, Cost & Risk optimization, Regulation, Accounting impact, Cash impact, value at risk impact.

Advising on specific hedging and risk management decisions of the company on regular basis

 

 

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Review every-day morning and afternoon by Senior advisors, Morning Customised advise Interim advice during the day if required Follow up during the day to ensure advice is implemented timely and not missed out

Strategizing and implementation of hedge execution leading to cost reduction

 

 

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This will include getting the right price on hedge execution, Reduction of credit charge, Avoid trending mark-ups, Narrowing Bid-Offer spread, Using nuances of hedging to improve price, Unwind value calculation, and negotiation strategy

Providing regular market research, updates, data analysis, webinars, etc

 

 

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This will include- Daily morning and evening update,Market Research Reports,Exclusive Reports,Webinars on Currency and related areas, Global markets, Industry movements etc ,Analysis and assisting in presentations for Board and Investor meetings if any

Training and capability building

 

 

 

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This includes- Regular query resolution and explanation of practical concepts,Structured Training to senior management on specific areas/complexities as required ,Annual workshop with IIM Calcutta

Assisting companies in evaluation of documents

 

 

 

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Hedge term sheets, Hedge covenants, Hedge deal confirmation, ISDA etc

Help in arranging hedge bank if needed

 

 

 

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Support in counterparty selection, Arranging hedge lines in favorable terms ,Selection of right bank based on hedge type

Implementation of sophisticated methodologies of risk management

 

 

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Live real time MTM, Value at Risk, Risk control, MIS & Control set up

MTM Valuation, Quarter End Valuation Certificate, CVA & DVA.

 

 

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We provide a third-party valuation certificate of hedge instruments which is well accepted in the market and CVA, DVA calculations as well if required. Besides we add value to corporates by negotiating well for unwinding values if required

Performance Reviews Weekly Performance reviews

 

 

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Meeting and Calls on regular basis for “day to day” operations,Performance review weekly on strategy and plan with the Managing Director/Director ,Interim Assessment of performance based on the “objective to be achieved “for Your Company ,Quarterly Assessment of performance based on the “objective to be achieved for Your Company

Global Best Practices in Treasury

 

 

 

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Updates to the client on Global best practices and assessment of the clients “Best practices and opportunities” Support in working out the Risk Management Policy

INTEREST RATE SOLUTION THAT WE PROVIDE

Loan interest rate reduction

 

 

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We will be evaluating your working capital and term loan portfolio. On the working capital, we will advise you when to go for PCFC, PCRE, EPC, FCTL, CC, CP, etc, and what rate you should get. On the term loan side, we will advise you on ECB, FCTL, RTL, and how you can manage Foreign currency risk or fixed floating risk so that overall you achieve cost savings.

Loan hedging and strategy evaluation

 

 

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We support the evaluation of various hedge strategies like swaps, option-based hedging, short-term hedging with rollover, tranche hedging, partial amount hedging, etc. Within swaps also there are multiple variants and IRR calculation for each of the choices will be evaluated. Within option structures, we will be evaluating plain calls, out-of-the-money calls, spreads, staggered call spreads, etc. Optimum hedge structure reduces interest cost

Pricing of loan strategies and IRR scenario analysis

 

 

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We will be involved in the pricing of strategies and the computation of IRR under various scenarios. There is a deep understanding of credit charges and bank models which helps in the reduction of cost.

Pricing, Negotiation and cost savings

 

 

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We will set up the system for Negotiation of the pricing, strategy for getting effective pricing, and support in negotiations if required. This will be an extremely important aspect as the possibility of leakages can be significant. Often banks charge the high prices on deal execution and considering we have worked in senior management positions in both Indian and Foreign banks we understand the psychology and the tricks of the trade. We help the companies in appropriate strategizing to get the right rate while dealing with the banks

Educate and introduce options and swaps for hedging where required.

 

 

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Using options help at times. However, option-based hedging should not be done without deep understanding. We educate and handhold companies in understanding vols surface, Greeks like delta, gamma and how to use the Greeks for decision making and monitoring.

Structured financing

 

 

 

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We bring structured financing ideas and execution to corporates. Structuring involves tweaking of securities, the composition of loans, fixed-floating switching, international borrowing, etc.

COMMODITY SOLUTION THAT WE PROVIDE

Commodity hedge set up

 

 

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To hedge commodity risk, the set for hedging is needed. We do end-to-end set up of commodity risk management and hedging desk. Once the set-up is done, you can hedge your risks in appropriate exchange or in the OTC market

Should you hedge your commodity risk

 

 

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Followed by Service and Sub Service Block which is relevant for Auto ( In each service pointers of what we do as subsurface). These blocks with the same image will be in other Industry pages where they may be relevant

Below a short write up on the benefits of this service

Commodity Risk management Policy

 

 

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Followed by Service and Sub Service Block which is relevant for Auto ( In each service pointers of what we do as subservice). These blocks with same image will be in other Industry pages where they may be relevant

Below a short write up on this services benefits

Commodity Hedge Strategy making

 

 

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Followed by Service and Sub Service Block which is relevant for Auto ( In each service pointers of what we do as subsurface). These blocks with the same image will be in other Industry pages where they may be relevant

Below a short write up on the benefits of this service

Training and Capability building related to commodity hedging

 

 

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We do conduct commodity hedging and risk management training for our clients and executives. It involves an explanation of how hedging helps, how pricing is done, option structures, and many more details on commodity hedging.

Using option based commodity hedging

 

 

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Options help you to mitigate risk while allowing you to benefit from the favorable moves. Often in commodity risk management, options are extremely useful. We provide calculators, structures, pricing, strategy, and monitoring of option-based hedging. Option structures are also used to reduce the cost of options.

Daily review and recommendations

 

 

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We review your exposures and hedges every day and evaluate alternative strategies which would be useful. We select the right strategy and recommend the same in a timely manner. During market hours our team will come back to you promptly whenever there is a market movement.

Hedge Execution support

 

 

 

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We support in hedge execution as well. We help you strategize for getting the right price and for the smooth execution of hedges. We use calculators, our understanding of bid-offer, and other nuances of the market to extract the right price for you.

Monitoring and Performance Management

 

 

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We monitor your overall exposure, past deals, settlement details, etc to ensure that policy adheres, and strategy is aligned for achieving the objective. We remain focused on objectives like achieving cost reduction, profitability enhancement, or volatility elimination.

When you chose an advisor, you should chose the best.

 EVENTS

Our Events are spread across the year. We focus on having webinars and training on updated, current, relevant market movements and practices, regulations, knowledge, and technology. All our sessions are free for our advisory clients. We love sharing knowledge. Few of our webinars and training sessions are complimentary. To know more Explore what we have for you in April 2021 and May 2021.

Up Comming Event

Fx – Regular Deals

Session Content 

  • Making sense of terminologies – direct/indirect quotes, cash/tom/spot, etc
  • FX forwards – Sell/Buy, Buy/Sell FX swaps and outright forwards.
  • Fx forwards in the Indian market. Booking, Early utilization, Rollover, and cancellation

Date:- 15th April 2021

Where:- Google Meet

April

Events

Managing LIBOR Transition

Fx Options – Basics

Fx Options – Use for hedging import, export, and loans

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May

Events

Dollar-Rupee – Outlook and Driving Factors

ECB and Fx Loan Hedging

Commodity Hedging

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Fx Risk Management Policy and Best Practices 

Hedge Accounting for Fx and Rates
Interest rate swap pricing – I

Interest rate swap – pricing II

Client Scenario

One of our clients is a leader in their area of Manufacturing. They were facing challenges in developing a Risk Management Policy. We worked with them to understand the import and export cycles, what factors should be included so as to develop a correct benchmark set. Based on their risk appetite, the cycle and the vision on how they wanted to see their exposures -we developed a plan on Hedging which has yielded very good results for them.

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