Sip Foreign Exchange and Risk Management

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Summer project


Foreign Exchange Risk Management

Paresh S. Mahajan

Atharva Institute of Management Studies
Marve Road, Malad (W), Mumbai – 4000 95.

July 2005

Summer project


Foreign Exchange Risk Management

Paresh S. Mahajan

Submitted to:
Mr. Satish Kamat
Finance Manager
Mahindra Intertrade Limited

TopicPage No.

Introduction 4-5

Forex Fisk Management Policy 6-7

Key Terms in policy
-Foreign Exchange Exposure 8-11
-Types of Exposure12-13
-Management of Exposure14-18
-Open position, Stop loss limit19

MIL and Forex Risk Management20-23

Mahindra Intertrade is part of the Mahindra Group, a global manufacturing conglomerate with annual revenues in excess of US $1 billion. The Mahindra Group has a significant presence in key sectors of the Indian economy. A consistently high performer, M&M has been ranked among the top ten private-sector companies in the country for several years.

A corporate history spanning from 1945, the group expanded its operations from automobiles and tractors to secure a significant presence in many more important sectors - hospitality, trade and financial services, automotive components, information technology, telecom and infrastructure development. The group employs more than 12,600 people and has six state-of-the-art manufacturing facilities spread over 500,000 square meters. It has 33 sales offices that are supported by a network of over 500 dealers across the country. This network is connected to the company's plants by an extensive IT infrastructure. The M&M philosophy of growth is centered on a belief in people. As a result, the company has put in place initiatives that seek to reward and retain the best talent in the industry.

Mahindra Intertrade is a wholly owned subsidiary of the Mahindra & Mahindra group, one of the 10 largest industrial houses in India. MIL undertakes imports, exports, third country business, domestic trading & marketing & distribution activities. The product portfolio is wide and diversified and includes steel, steel raw material, technical and application-engineering products, metals (non-ferrous), commodities, consumer products and engineering products. Mahindra Intertrade was incorporated from a division into a separate company in 1999 to pursue unhindered & fast growth leveraging our skills & competencies.

Mission Statement
"Build a Global trading Organization based on the Mahindra brand promises of reliability and credibility towards delivering a distinct value proposition to our business affiliates, customers, employees and shareholders. We seek to achieve this through continuously enhancing and leveraging our human and knowledge capital across products and services"

Our Competencies
Straddled across a wide range of products & services, Intertrade has efficiently leveraged its competencies in - Business Understanding
Transaction Management
Risk Management
Relationship Management
Financial Supporting Capabilities
Trading Skills

MIL have grown across products & services leveraging our skills & business acumen, supported by our rich parentage whenever we have needed it. And today, we deal in -
Steel & Steel raw materials
Non Destructive testing equipment
Application Engineering products
Consumer Goods
Engineering Exports

We have over 300 customers and principals across 4 continents in over 15 countries. Intertrade enjoys a strong presence in India with offices in all regions. We have robust business process integrated in SAP- capable of managing the complexities of international trade. We...
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