| SERVICES |
We have active relationships with over 1,000 companies, ranging from the SME sector to some of the largest and well-managed companies in India. We provide a wide array of services, including
We provide a comprehensive forex information service, which includes
a) Four daily information feeds (by fax or email)
b) Intra-day SMS updates
c) Subscriber access to our web-site,
www.mecklai.com, which includes
(i) Downloadable price ticker
(ii) Forward rate calculator
(iii) FRA calculator
(iv) Option premium calculato
(v) Hedging programs
d) A weekly analysis, Mecklai Market View, which provides excellent graphics and views on the Indian Rupee, the majors (EUR/USD, USD/JPY, GBP/USD and USD/CHF), plus AUD and CAD (via email)
e) A fortnightly analysis, Dr Risk's Prescription, written in inimitable style and with great depth by Pramod Maskeri (via email)
f) Access to our e-mail help desk
Markets are continuously changing, particularly in emerging economies like India. Companies' businesses are always in flux, more so as technology drives margins to the ground and brings newer challenges virtually every week. Change creates risk and to be truly effective, risk management has to itself be a live function - in other words, risk management is always a work in progress.
Recognizing this, our risk management advisory service is designed to provide long term value to clients by assisting them to most effectively run the "front office" of their treasury, covering forex, interest rate and derivative markets. Our services involve helping companies understand the need for benchmarking, separating hedging from trading, taking risk-balanced decisions in the market, and, increasingly, building internal skills for all of the above.
Please contact info@mecklai.com for further information.
Few companies in India (and, indeed, globally) have well structured market risk management processes, as a result of which, risk management is often subject to intervention from the highest reaches of the company, which, in turn, most often leads to sub-optimal performance. Again, evolving regulations and accounting rules often require companies to reassess their compliance and valuation processes.
Our effort is to assist companies to understand the lacunae in their processes and assist them to build sustainable risk management frameworks, so that market decision-making is treated as most other corporate functions - viz., executed by experts and overseen by senior management.
To this end, we provide an array of middle and back office services to clients, including
a) Treasury audit - for large companies with reasonably well-run treasuries, this can be a very valuable exercise, since it enables management to take a fresh look at the function to bring it up to current best practices.
b) Risk management policies - that can provide management with a high degree of certainty of the rupee value of their forex flows - i.e., eliminate the likelihood of negative surprises, and enable treasury to try and capture some opportunity in markets
We have designed policies for companies in a wide array of industries from IT to textiles to heavy manufacturing to commodity manufacturing to commodity trading; the underlying approach to risk stays the same, although the overall framework does need to take into account the microstructure of the particular business.
c) Clause 49 compliance audit - for all listed companies; management has to sign off on their risk management practices, encompassing both market and operational risk; while many companies have signed off, the implementation of compliance processes needs to be vetted from time to time
d) Derivative valuations and FAS 133 effectiveness tests - prudent processes require independent valuations of complex structured products and our services in both these areas have been accepted by international accounting firms
e) Advisory on structured finance - with more and more companies accessing international capital markets, we offer an advisory service to enable managements to (a) assess the true - i.e., risk-adjusted - benefit of borrowing overseas, and (b) minimize fees on the borrowing program, while ensuring success of the operation
We syndicate credit lines for importers to enable them to avail extended periods of credit, with or without L/C cover, as allowed under exchange control regulations. Deferred payments under medium term L/Cs / guarantees can also be considered. We have arrangements with banks in all major overseas centres for providing the most competitive quotes for financing of large as well as small value transactions, for periods ranging from 30 to 360 days and beyond.
Companies can use this facility to reduce interest cost on their imports and / or to benefit from any subsequent appreciation in the value of the rupee. Financing rates vary according to the value of the transaction and range from 25 to 50 basis points over relevant LIBOR rates.
We would generally be able to arrange deals without attracting withholding tax, or minimize the tax burden through cross-currency deals.
For other details and a cost analysis of specific transactions please forward details to tradefinance@mecklai.com
Few companies have clearly defined processes to link currency risk management to their business plan. As a result, currency risk management remains outside the ring of best management practices, certainly in terms of predictability and accountability.
TRAKSIS is a software solution that we have developed to address these lacunae. The design process has drawn upon over 25 years of experience we have in advising hundreds of companies on currency risk management. As a result, TRAKSIS is flexible enough to provide value to companies with a wide range of different approaches to treasury operations.
Companies with large, pro-active treasuries often suffer from a lack of clarity on how much value is being added by treasury, and, of course, the broader nervousness at senior management level about controls. TRAKSIS addresses these concerns by providing an objective process for transfer pricing to divisions, an analytic method for setting benchmarks for treasury performance, and, of course, a highly sensitive trigger system to signal any threat to the overall target set by the CFO. For skilled treasury personnel, TRAKSIS provides decision-support in terms of showing the 'risk available' (which assists position-taking) and, importantly, keeps management comfort high, which in turn prevents frequent intervention.
For companies with modestly active treasuries, TRAKSIS provides the opportunity to safely increase activity to where treasury can, indeed, begin to add measurable value to the company's bottom line.
And for companies who are just getting to grips with the market, TRAKSIS can provide a baseline performance to enable management to understand what can be achieved by using the market pro-actively.
The design of TRAKSIS is built around a structured risk management process which
enables the CFO to "see" the analytically-calculated risk that exists in the company's forex exposures on a 3, 6 or 12-month basis, and to set a target value (in the company's base currency) for the risk profile
enables the Front Office of the Treasury to ensure that this target value is never breached, through a series of analytically generated signals from the Middle Office if/when the target value is threatened;
provides strong controls by separation of the Front, Middle and Back Offices, as well as streamlined though comprehensive reporting to all nodes of the risk management process.
Effective use of TRAKSIS requires the company to have a well-defined treasury framework, with specific, different individuals operating the Front, Middle and Back Offices. This often requires some process changes and so, as a pre-implementation exercise, we usually conduct a diagnostic of the company's treasury and its operating guidelines.
While TRAKSIS is a stand-alone software, it can readily be integrated with most ERP implementations, to enable it to receive portfolio data. Market data will be provided by a daily electronic feed, and transaction data - viz., forward covers, cancellations, realizations, etc. - can be inputted directly into TRAKSIS.
As part of our overall service effort, we assist clients in minimizing their funding costs, by arranging
a) Supplier Credit for imports for upto 365 days at extremely fine spreads over LIBOR, inclusive of all statutory dues
b) Buyers' Credits for imports for upto 365 days
c) Credit Lines
d) Ad hoc credit limits
e) Structured Finance for foreign currency borrowings
f) Factoring and forfeiting of export receivables
