Essay on Hedging Currency Risk at TT Textiles

7012 Words Nov 25th, 2014 29 Pages
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Indian School of Business

ISB009

February 15, 2013

Rajesh Chakrabarti

op yo Hedging Currency Risk at TT Textiles

It was a hot March morning in Kolkata in the year 2009. Sanjay K. Jain, —Joint Managing Director of TT Textiles, watched the sunlight stream in through his office windowpane. But his mind was elsewhere, tracking the movements of the Swiss franc (CHF) in the last few months and the world events that had caused them. The Swiss franc had touched 1.17 CHF/US$ from the previous year’s record of 0.96CHF/US$. That was good news for him. Or was it? The irony of the situation was not lost on him. Once, the Swiss had franc barely figured among all the different currencies that vied for his attention in the normal course of
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It had manufacturing facilities in all the major garment centers Tirupur,
Kolkata, Delhi, Varanasi, Saharanpur and Kanpur. It had ginning units in Gondal, Gujarat and branches for cotton in Jalna, Maharashtra. The company’s core businesses were agrocommodity, cotton, yarn, fabric and garments, and its markets were spread all over the world, as shown below
(also see Exhibit 1):
Raw Cotton: India, Bangladesh, Pakistan, China, Korea, Taiwan, Vietnam, Thailand, Indonesia,
Malaysia, Turkey and Hong Kong.



Yarn: India, Korea, Taiwan, China, Hong Kong, Malaysia, Indonesia, Singapore, Bangladesh,
Mauritius, Egypt, Turkey, Israel, Italy, Colombia, Vietnam, Brazil, USA, Peru, Argentina, Slovenia,
Spain, Portugal, Italy, Germany, South Africa, Honduras, Guatemala, Tunisia, Morocco and
Tanzania.



Fabric: India, Bangladesh, Europe and USA.



Inner and Casual Wear (Garments): India, USA, Europe and the Middle East.



Agro-commodity: Vietnam, Serbia, Malaysia, Bangladesh, Korea, India and Turkey.

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Sanjay Jain, an MBA gold medalist from IIM, Ahmedabad and an Associate Member of the
Institute of Company Secretaries of India (ACS) and Institute of Cost Accountants of India (AICWA), began his career at ICICI Bank before starting his own brokerage firm, which he later sold. He joined
TT Textiles in 2001 and was instrumental in

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