Electronics Importer Optimises FX and Treasury Operations, Saving 36 Lakhs in 3 Months

Client Profile

A Greater Noida-based electronics company specialising in importing electronic components from China, with significant exposure to USD. The company imports goods worth Rs. 175–200 crores annually and faces substantial foreign exchange risks due to fluctuations in USDINR rates, high interest costs on financing, and reliance on a suboptimal banking partner.

 

The Challenge

The client encountered multiple challenges with their operations:

 

1. High interest costs: The company was financing its operations with high-cost credit, eroding profit margins. The existing banks were not providing efficient non-fund-based lines.

 

2. Excessive bank margins: All forex remittances were routed through a private bank, which charged extremely high margins on forex transactions — 40 paisa on USD and 20 paisa on CNY.

 

3. Exposure to currency fluctuations: The company was vulnerable to exchange rate volatility of USDINR as well as USDCNY. Payments were made on due dates without considering potential exchange rate fluctuations, exposing them to large unhedged forex risks.

 

4. Dependence on a partner company: Nearly 50% of imports were through a partner company using borrowed banking limits, with the client paying fixed fees based on the value of goods imported. The partner company also faced forex overcharges from their bank on these imports.

 

The Myforexeye Solution

Myforexeye implemented a comprehensive strategy to optimise the client’s treasury and forex operations:

 

1. Bank and treasury access

Challenged the high margins set by the client’s bank and negotiated to reduce forex transaction costs from 40 paisa per foreign currency to 5 paisa in the last three transactions. New exchange margin fixed at 5 paisa on USD and 1 paisa on CNYINR. Introduced a new bank for term loans and working capital transactions, resulting in savings of Rs. 15.5 lakhs in just over 3 months.

 

2. Strategic hedging

Recommended hedging 30% of the client’s six-month exposures at an average USDINR spot rate of 84.50/USD. This hedging strategy saved the client Rs. 15 lakhs on realised payments during the first 3 months. 

 

3. Optimising banking products

The client was using a cash credit (CC) limit at 9% interest on 20 crores. Introduced buyers’ credit as a more cost-effective alternative, saving the client 1.5% on financing costs over three months.

 

4. Proactive Forex management

Provided real-time forex insights and dynamic hedging strategies to manage foreign exchange exposure more effectively.

 

5. New bank introduction

Introduced a large private-sector bank to address financing requirements. The debt syndication desk worked closely with the client to raise Rs. 15 crores in funding, securing term loans for machinery and working capital. Work is ongoing to secure additional limits from a mid-sized private sector bank to help the company achieve its FY26 revenue targets.

 

Results and Impact

 

1. Savings on Forex transactions: Rs. 15.5 lakhs saved in 3 months by reducing bank Forex margins.

 

2. Savings from hedging: Rs. 15 lakhs saved on realised payments in 3 months.

 

3. Interest cost optimisation: Rs. 5 lakhs saved by shifting from CC limit to buyers’ credit.

 

4. Total savings: Rs. 36 lakhs in just 3 months through optimised Forex and treasury operations.

 

5. Bank limit enhancement: Successfully secured financing for factory capital outlay and enhanced working capital limits.

 

Conclusion

Through expert advisory and tailored solutions, Myforexeye helped the client overcome significant financial challenges, reducing foreign exchange costs and optimising treasury operations. These strategic adjustments in Forex rate benchmarking, hedging, and financing not only saved the client Rs. 36 lakhs over 3 months, but also strengthened their financial resilience — positioning them for future growth and improved profitability in a highly competitive and volatile market.