These are exciting times for the Services industry. On one end, there is increasing competition every day and at the other end, the industry is growing. The challenges of Cyber offenses, security breaches, data breaches, increased clients’ safety looms big. There are regular updates on the regulatory aspects which the industry needs to be aware of and incorporate. The industry is using more and more analytics, AI, data management, technology, processes to streamline their functioning for achieving quality, speed and cost-effectiveness. The need of the hour as always has been in this industry is for Exceeding Customer Expectations.

The services industry is an out and out exchange-earners. They have revenues primarily in USD and Eur with some sizable portions in GBP and JPY. Apart from these currencies, they have exposures in many other currencies and interestingly even in some exotic and highly fluctuating currencies. They also have spendings in the currencies where they earn. Managing the risks in exotic currencies remains a challenge. Fx volatility has a huge impact on their profitability. So making a proper budget and managing the Fx effectively remains the key concern. Its also important to Identify the cycles, risks, effective hedging strategies for success in their business.

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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 Solutions 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 Solutions 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 choose the best.

Workshops

Our Events are spread across the year. Our focus is to have workshops and knowledge sessions that increase the effectiveness both of an individual and an organization. The sessions are structured on practical relevant operations aspects. We also have sessions on updated, current, relevant market movements and practices, regulations, knowledge, and technology. All training sessions are free for our advisory retainer clients. Clients can register by sending us an email to [email protected]. Few of our training sessions are complimentary for everyone. Explore what we have for you.

Upcoming Workshops

USDINR Option Strategies for Export & Import Hedging – Part I

 

Date:- 1st June 2021

Time:- 5pm-6:30pm IST

 Fee:- INR 9,000

 

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Why use options? Understanding basics of options – types, strike, exercise, payoffs, usage, input parameters, settlements, liquidity.

Case studies of the use of options.

+ Fx Outlook

USDINR Option Strategies for Export & Import Hedging – Part II

Date:- 3rd June 2021

Time:– 5pm-6:30pm IST

Fee:- INR 9,000

 

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Option structures for export & import hedging as used on a practical basis. Case studies of using option structures. Option structures like Call Spread, Collar, Seagull, Capped Forward, etc. When to use which kind of options/option structures? How to Monitor and do course correction?
+ Fx Outlook

Libor to SOFR Transition Management for Corporates & Institutions

Date:- 10th June 2021

Time:- 5pm-6:30pm IST

Fee:- INR 9,000

 

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As Libor will be phased out, and SOFR will chip in – what implication the same will have on your loan book. What are implications for the hedges like IRS, Cap, Floors, etc? Should you go with ISDA protocols? How will you manage to fall back clauses?
+ Libor Outlook

Client Scenario

This client in the Services sector is a wholly-owned subsidiary of a major international group with earnings mostly in the USD. They approached us three and a half years back. We understood their exposures, processes and realized the potential they had for saving costs and earning profits as they did not have a framework for risk management and had not been hedging systematically. Since then QuantArt has provided them full support in their forex risk management and capability building of their team. After we came on board their two other main challenges were resolved. Earlier their revenue was not insulated from the adverse market movement and also the banks were charging unreasonable markups in conversion. QuantArt helped streamlined the process, identified the FX risk, made a risk management policy, negotiated with banks so that our client gets the right rate, and developed a system of hedging systemically to manage their risk. We have also helped them get the hedge lines on favorable terms. In the last three and half years, our client has never lost money on the FX front. We every day advise them on how much, when, and at what rates to hedge.In fact they have had considerable savings. Even during the Covid-19 times, they have done well.

The company needed to protect its revenue with a risk management objective at an uncertain time of Covid-19.

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Write to Us:

[email protected]

Call us:

+91 79803 97803