Textile exporters forward book orders to secure profits

Written by Shaheen Mansuri | Mumbai, Jul 9 | Updated: Jul 11 2008, 05:26am hrs
Textile exporters have started forward booking orders from importers across the globe. The move, said exporters, is to protect themselves from currency volatility. Most of the exporters have booked their orders at Rs 43.50 a dollar, which is a move to secure marginal profits in case the rupee appreciates against the dollar in the future.

Explaining how booking forward orders will help the fraternity in securing profits, Amit Goyal, managing director, Sarju International said, "Looking at the current scenario when inflation is high globally, we do not know if the rupee will appreciate or depreciate further against the dollar. The exporters have booked orders at a fixed rate so that in the near future, if in case the rupee appreciates against the greenback, we do not incur losses at the time of delivering the product after 6-9 months."

Second, the exchange rates of various competing countries like Pakistan and Bangladesh have depreciated much faster than that of India. Therefore, securing orders at this time is a smart business proposition for the export fraternity. It may be noted that the rupee has depreciated sharply this fiscal, as opposed to a massive 13% depreciation in the previous fiscal.

Manoj Suchde from Shilpa Creations and joint secretary, Confederation of Indian Apparel Exporters (CIAE) said "We had an export target of $8 billion for the current fiscal and are likely to reach $7.5 billion by way of booking forward orders. " He added that due to the rise in crude oil prices, dyeing and printing cost of garments has gone up and in the future if the rupee appreciates, it will not be a gainful situation. Meanwhile, currency fluctuations continue to be an area of concern for exporters with regard to their near-term performance despite depreciation of rupee since early 2008.