INDEX

Chapter Contents Pages

Declaration of originality by Student i
Certificate by the Project Supervisor ii
Preface iii
Acknowledgement iv
1. Introduction 1-8
1.1 Introduction to Forex & Indian IT Sector
1.2 Research Rationale
1.3 Research Objective
1.4 Research Methodology
1.5 Limitations of the Research
2. Foreign Exchange & International Trade 9 - 14
2.1 Foreign Exchange & Foreign Exchange Market
2.2 International Trade
2.3 Exchange Rate Risk
2.4 Implications of Exchange rate movements
2.5 Impact of Exchange Rate fluctuation on Export
Receivables
3. Indian IT Industry: An Overview 15 – 19
3.1 Indian IT Industry: Size, Structure & Policy
3.2 Future Outlook and Potential
3.3 IT – GDP Ratio
3.4 Export of IT Services
3.5 Major Export Destinations
4. Forex Derivatives & its Market in India 20 - 26
4.1 Introduction to Derivatives
4.2 Uses of Derivatives
4.3 Derivative Products
4.4 Forex Derivatives Market in India
5. Forex Exposure & Risk Management 27 - 39
5.1 Introduction
5.2 Kinds of Exposure
5.3 Necessity of Forex Risk
5.4 Forex Risk Management
5.5 Determinants of Hedging Decisions
6. Forex Exposure and Risk Management – An Indian IT 40 - 52
Industry Perspective
6.1 Introduction
6.2 IT Exports from India
6.3 Forex Risk Exposure Measures
6.4 Impact of Exchange Fluctuation on IT companies
6.5 Risk Management & Hedging Strategies @ Major Indian
IT firms
Suggestions 53

Conclusion 54

References 55
Bibliography
Webliography
 (i)

International Institute of Foreign Trade and Research

Indore (M.P.)

Certificate of Originality by the Student

I, Rushi Narang, hereby certify that the Project Report titled “Currency Derivatives and
its Impact on Export Receivables with Special focus on Indian IT Sector” has been
undertaken under the supervision of Dr. S.M. Anas Iqbal, IIFTR, Indore towards the
partial fulfillment of Degree of Master of Business Administration (Foreign Trade).

It is further certified that the project report compiled by me is my own work to the best of
my knowledge; it does not contain any part of any work, which has been submitted for
the award of degree in this University, or any other University /deemed university
without proper citation.

Date: Rushi Narang

Roll.No. - 62482
Place : MBA (FT) 5 Yrs
VI Semester
 (ii)
International Institute of Foreign Trade and Research
Indore (M.P)

Certificate by the Supervisor

This is to certify that the project titled “Currency Derivatives and its Impact on
Export Receivables with Special focus on Indian IT Sector” is a piece of research
work that has been done by Rushi Narang under my guidance and supervision towards
the partial fulfillment of Degree of Master of Business Administration (Foreign Trade). I
recommend that the project to be submitted to Devi Ahilya University, Indore.

(Dr. S.M. Anas Iqbal) Lt. Col. Dr. V.K. Gautam,

Date: (Director)

(External Examiner)
Date:
 (iii)
Preface

“Uncertainty is the only certainty there is, and knowing how to live with
insecurity is the only security.”

The world of Finance has always captivated me. Although this is just the beginning of my
dream journey into this arena, a goodstart is always important. At International Institute
of Foreign Trade & Research I got the opportunity to enhance my skills in the area of
International Finance which I will be able to leverage throughout my career.

Risk is part and parcel of every business and when it comes to international business the
magnitude of risk is even higher. So managing these risks demand a lot of critical skills
and expertise on part of financial managers.

In these volatile times when exchange rate fluctuation is a its acme it becomes extremely
important for corporates to hedge themselves against such risks and enhance
shareholders’ value because forex losses can eat up profits and intensify pressure on a
firm’s balance sheet.

This research focuses on all the hedging instruments and their relative techniques which
can help export oriented firms, typically Indian IT firms which are broadly export driven,
to hedge their forex exposure. The research also contains the hedging strategies followed
by IT biggies of India.

Rushi Narang
 (iv)

Acknowledgement

The efforts are always supported and blessed by people directly and indirectly related to
you. I would like to express my thankfulness to some of those who have given their
support and blessings during my research work.

I would like to thank Lt. Col (Retd). Dr. V.K. Gautam, Director IIFTR, who has given
me the opportunity to work on this project. It is my privilege and good fortune to have
Dr. S.M. Anas Iqbal, as my project guide in this research work, who has given me all
essential help, which I needed for the successful completion of research project.

I would also like to thank Miss Renu , Library in-charge for providing me books
according to the needs and Mr. Devendra Singh Thakur for allowing and giving
appropriate help for computer operations throughout the research work

Let me give special thanks to my brother, Raja Narang, who always inspired me to
develop a killer instinct in the arena of finance, especially financial markets.

I would be failing in my duty if I don’t thank my Parents, family and friends who have
remained a constant source of inspiration throughout. Last but not the least; I would like
to thank Almighty for always showing me correct path in the time of difficulties.

Rushi Narang Date : …………..

MBA (FT), 5-Yrs.
VI Semester