Client Profile
A kitchenware company based in Haryana with an annual export turnover of ₹175 crores and import turnover of ₹50 crores. The company had been converting its receivables (exports) and payables (imports) passively on due dates but was funding its operations inefficiently, leading to avoidable costs.
The Challenge
Bank Overcharging
Levied excess charge of 7 paisa per transaction. Debited cash spot rate on exports but denied cash spot credit on imports.
Currency Risk
Payments for imports and exports were made on maturity dates, leaving the company vulnerable to adverse exchange rate fluctuations.
Operational Gaps
Failed to settle imports with export proceeds (Natural Hedging) and missed assessing optimal financing options.
The Myforexeye Solution
Reducing Bank Charges
Negotiated with the bank to slash margins from 7 paisa to 2 paisa. Ensured the client receives cash for spot-on import payments.
Utilising EEFC Account
Advised depositing inward receivables into the EEFC account to pay for imports directly. This eliminated conversion charges and mitigated risk.
Market Benchmark Hedging
Introduced First Day Forward Rate (FDFR) as a benchmark. This allowed locking in favorable rates systematically.
Optimising Working Capital
Guided on timing for PCFC/EPC and suggested using non-fund limits like LCs and SBLCs for cheaper import financing.
Results & Impact
Total Savings
₹ 39.25 Lakhs
6 Months
₹ 25 Lakhs
Generated via new FDFR Hedging Strategy.
₹ 8.5 Lakhs
Saved via optimised Working Capital Management.
₹ 2.05 Lakhs
Saved by utilizing EEFC Account for import payments.
Bank Margins
Reduced from 7 paisa to 2 paisa per foreign currency transaction.
Conclusion
Through strategic optimisations in treasury and foreign exchange operations, Myforexeye helped the client significantly enhance financial efficiency. By reducing conversion charges, utilizing EEFC accounts, and optimizing working capital, the company built resilience against currency volatility.
Pending Optimization
The client currently has a ₹60 Crore term loan. We plan to convert ₹25 Crore of this into a Foreign Currency Term Loan (FCTL) to reduce borrowing costs by an estimated 2% per annum.