Volatile rupee: Garment exporters take forward cover.

After the earlier debacle in 2007, when the currency appreciated by nearly 11 per cent, exporters do not want to go uncovered even if it means taking some risks against an uncertain rupee.

Garment exporters are caught in a volatile market where it is hard to point out which way the rupee will sway. It is a daily gamble, say exporters.

“In 2007, we had not hedged. Last year we had hedged, but the rupee depreciated. So we got hammered. But thankfully, the hedge cover this year has come in handy,” says Mr Nitin Mandhana, Managing Director, Indus Fila, which has a 50 per cent cover till June.

Irrespective of how the currency fluctuates, hedging will go on, says Mr Rajendra Hinduja, Director, Gokaldas Exports. The apparel exporter has hedged a major portion of its exposure at the Rs 48/dollar levels (currently, the exchange rate is around Rs 46).

The company, which is covered till January next year, has in fact increased its risk cover from 50 per cent a year ago to 70 per cent now. “We periodically hedge our risks once in 2-3 months. That way, we are well covered. We have orders worth Rs 500 crore till March,” said which has shipped out most of its Christmas orders.

The Bangalore-based exporter, which closed the last financial year at a turnover of Rs 1,095.76 crore, has already started work for the spring season.

Improving efficiencies

Hedging strategy apart, the long-term solution for garment exporters lies in improving efficiencies.

Tirupur-based Royal Classic Mills, which has also hedged its exposure, has firmed up orders till January. The company is also looking to gain by pruning costs at various levels.

Austerity measures include automating most of its cutting processes, reducing fabric wastage and efficient use of machinery.

“For example, the job that was done using three sewing machines earlier is now done using just two machines – just by adding more needles or extra clamps to the machine,” says R. Sivaram, Executive Director of the company.