1

PROJECT REPORT ON

FOREIGN EXCHANGE, WESTERN UNION
NIZAMABAD

Project Report submitted to Jawaharlal Nehru Technological
University, Hyderabad,

In partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by:

Mr./Ms._____________________________

H.T.No._____________________________

Under the esteemed guidance of

Mr./Ms._________________________

Associate/Assistant Professor







DEPARTMENT OF BUSINESS MANAGEMENT
VIJAY RURAL ENGINEERING COLLEGE, NIZAMABAD
(Approved by AICTE, New Delhi and Affiliated to JNTU
Hyderabad)
2012-2014



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DECLARATION


I hereby declare that the work described in this project entitled --------------------------
---------------------------------------- carried out at -----------------------------------. which
is being submitted by me in partial fulfillment for the award of degree of Master of
Business Administration in the Dept. of Business Management ,Vijay Rural
Engineering College , Nizamabad to the Jawaharlal Nehru Technological University
Hyderabad, Kukatpally, Hyderabad (Telanagana.) -500 085, is the result of
investigations carried out by me under the Guidance of Mr./Ms. --------------------------
------------------.

The work is original and has not been submitted in full /partial for any
Degree/Diploma of this or any other university or institution.





Place: Signature
Date:
Name of the Candidate:
Hall Ticket No.:
Email-Id:












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COMPANY CERTIFICATE

































4






CERTIFICATE

This is to certify that the project report entitled FOREIGN EXCHANGE
WESTERN UNION; NIZAMABAD is being submitted by Mr./Ms.--------------------
----------- (H.T.No. ------------------) in partial fulfillment for the award of the Masters
Degree in Business Administration (MBA) during the academic year 2014 to the
JNTUH is a recorded of bonafide work carried out by him/her under the guidance and
supervision.
The results embodies in this project have not been submitted to any other
university or institute for the award of any degree or diploma.

Signature of the Internal guide Signature of the HOD
( ) ( )

Signature of the External Examiner Signature of the Principal
(Dr.B.R.VIKRAM)








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ACKNOWLEDGEMENT

I take this opportunity to thank all who have rendered their full support to my
work. The pleasure, the achievement, the glory, the satisfaction, the reward, the
appreciation and the construction of our project cannot be thought without a few, how
apart from their regular schedule, spared a valuable time for us. This
acknowledgement is not just a position of words but also an account of the
indictment. They have been a guiding light and source of inspiration towards the
completion of the project.
I would like to express my hearted thanks to Mr. K.Narendhar Reddy Garu
Chairman, Mrs. Amrutha Latha Garu, Secretary and Dr. B.R.Vikram Garu,
Principal- Vijay Rural Engineering College for their kind consent to carry out this
project and also providing necessary infrastructure and resources to accomplish my
project work.
I express my profound sense of gratitude to Mr.---------------------------,
Associate Professor & Head of the Department of MBA, who has kindly permitted me
to do major project in any area of my choice and providing me all the facilities for the
project.
I am deeply indebted to my project guide Mr. ----------------------------,
Assistant Professor in Department of MBA for his valuable guidance, meticulous
supervision, support and sincere advice to complete the project successfully.
And I would like to express my sincere thanks to all the staff members of
MBA Department for their kind cooperation in completion of this project.
Finally, I thank to one and all those who have rendered help directly or
indirectly at various stages of the project and also my family members for their care
and moral support in finishing my project.

STUDENT NAME
H.T.NO




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ABSTRACT

















































7

INDEX

















































8


LIST OF TABLES








































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INTRODUCTION
The foreign exchange market is a global, worldwide-decentralized financial
market for trading currencies. Financial centers around the world function as anchors
of trading between a wide range of different types of buyers and sellers around the
clock, with the exception of weekends. The foreign exchange market determines the
relative values of different currencies.
The foreign exchange market assists international trade and investment, by
enabling currency conversion. For example, it permits a business in the United States
to import goods from the United Kingdom and pay pound sterling, even though its
income is in United States dollars. It also supports direct speculation in the value of
currencies, and the carry trade, speculation on the change in interest rates in two
currencies.
An important part of this market comes from the financial activities of
companies seeking foreign exchange to pay for goods or services. Commercial
companies often trade small amounts compared to those of banks or speculators, and
their trades often have little short-term impact on market rates. Nevertheless, trade
flows are an important factor in the long-term direction of a currency's exchange rate.
Some multinational companies can have an unpredictable impact when very large
positions are covered due to exposures that are not widely known by other market
participants
The financial instruments used in the foreign exchange are spot, future,
forward, option, and swap.
Risk aversion is a kind of trading behavior exhibited by the foreign exchange
market when a potentially adverse event happens which may affect market conditions.
This behavior is caused when risk averse traders liquidate their positions in risky
assets and shift the funds to less risky assets due to uncertainty.
The foreign exchange market is unique because of its huge trading volume
representing the largest asset class in the world leading to high liquidity, its
geographical dispersion, its continuous operation: 24 hours a day except weekends,
i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday, the low margins of
relative profit compared with other markets of fixed income, and the use of leverage
to enhance profit and loss margins and with respect to account size.
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OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE
To study the foreign exchange transaction of the future focus InfoTech private
limited.
SECONDARY OBJECTIVES
To identify the use of various hedging tools in reducing risk.
To explore the means and methods to utilize foreign exchange effectively
To trace out the implication of various financial instrument in foreign
exchange


















NEED FOR THE STUDY
To monitor the foreign exchange exposure in the company.
To quantify the value of the foreign exchange flow in company.
To avoid the foreign exchange loss of the company.
11

To find out the benefit out of the hedging.

SCOPE OF THE STUDY
To know about the export portfolio about the company.
Foreign exchange cover operations can be done.
To improve the profitability of the company through foreign exchange
operations.

























INDUSTRY PROFILE
HISTORY
The Indian Government acquired the EVS EM computers from the Soviet
Union, which were used in large companies and research laboratories. In 1968 Tata
Consultancy Servicesestablished in SEEPZ(Santacruz Electronics Export
Processing Zone), Mumbai,by the Tata Groupwere the country's largest software
producers during the 1960s. As an outcome of the various policies of Jawaharlal
Nehru ,the economically beleaguered country was able to build a large scientific
12

workforce, third in numbers only to that of the United States of America and the
Soviet Union. On 18 August 1951 the minister of education Maulana Abul Kalam
Azad, inaugurated the Indian Institute of Technology at Kharagpur in West Bengal.
Possibly modeled after the Massachusetts Institute of Technology these institutions
were conceived by a 22-member committee of scholars and entrepreneurs under the
leadership of N. R. Sarkar.
Relaxed immigration laws in the United States of America (1965) attracted a
number of skilled Indian professionals aiming for research. By 1960 as many as
10,000 Indians were estimated to have settled in the US. By the 1980s a number of
engineers from India were seeking employment in other countries. In response, the
Indian companies realigned wages to retain their experienced staff. In the
Encyclopedia of India, Kamdar (2006) reports on the role of Indian immigrants
(1980 - early 1990s) in promoting technology-driven growth.
The United States technological lead was driven in no small part by the brain
power of brilliant immigrants, many of whom came from India. The inestimable
contributions of thousands of highly trained Indian migrants in every area of
American scientific and technological achievement culminated with the information
technology revolution most associated with Californias Silicon Valley in the 1980s
and 1990s.
The National Informatics Centre was established in March 1975. The
inception of The Computer Maintenance Company (CMC) followed in October 1976.
During 1977-1980 the country's Information Technology companies Tata Infotech,
Patni Computer Systems and Wipro had become visible. The 'microchip revolution' of
the 1980s had convinced both Indira Gandhi and her successor Rajiv Gandhi that
electronics and telecommunications were vital to India's growth and development.
MTNL underwent technological improvements. During 1986-1987, the Indian
government embarked upon the creation of three wide-area computer networking
schemes: INDONET (intended to serve the IBM mainframes in India), NICNET (the
network for India's National Informatics Centre), and the academic research oriented
Education and Research Network (ERNET).
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RECENT DEVELOPMENT
India is now one of the biggest IT capitals in the modern world.
The Indian Information Technology industry accounts for a 5.19% of the
country's GDP and export earnings as of 2009, while providing employment to a
significant number of its tertiary sector workforce. However, only 2.5 million people
are employed in the sector either directly or indirectly. In 2010-11, annual revenues
from IT-BPO sector is estimated to have grown over $54.33 billion compared to
China with $35.76 billion and Philippines with $8.85 billion. It is expected to touch at
US$225 billion by 2020. The most prominent IT hubs are Bangalore and Hyderabad.
The other emerging destinations are Chennai, Coimbatore, Kolkata, Trivandrum,
Pune, Mumbai, Ahmedabad. Technically proficient immigrants from India sought
jobs in the western world from the 1950s onwards as India's education system
produced more workers than its industry could absorb and dearth of opportunities.
India's growing stature in the Information Age enabled it to form close ties with both
the United States of America and the European Union. However, the recent global
financial crises has deeply impacted the Indian IT companies as well as global
companies. As a result hiring has dropped sharply, and employees are looking at
different sectors like the financial service, telecommunications, and manufacturing
industries, which have been growing phenomenally over the last few years. India's IT
Services industry was born in Mumbai in 1967 with the establishment of Tata Group
in partnership with Burroughs The first software export zone SEEPZ was set up here
way back in 1973, the old avatar of the modern day IT park. More than 80 percent of
the country's software exports happened out of SEEPZ, Mumbai in 80s.
The economic effect of the technologically inclined services sector in India
accounting for 40% of the country's GDP and 30% of export earnings as of 2006,
while employing only 25% of its workforceis summarized by Sharma (2006):
The share of IT (mainly software) in total exports increased from 1 percent in
1990 to 18 percent in 2001. IT-enabled services such as back office operations,
remote maintenance, accounting, public call centers, medical transcription, insurance
14

claims, and other bulk processing are rapidly expanding. Indian companies such as
HCL, TCS, Wipro, and Infosys may yet become household names around the world.
Today, Bangalore is known as the Silicon Valley of India and contributes 33%
of Indian IT Exports. India's second and third largest software companies are head-
quartered in Bangalore.
Mumbai too has its share of IT companies that are India's first and largest, like
TCS and well established like Reliance

Patni, LnT Infotech, i-Flex, WNS, Shine,
Naukri, Jobspert etc. are head-quartered in Mumbai. And these IT and dot com
companies are ruling the roost of Mumbai's relatively high octane industry of
Information Technology.
Such is the growth in investment and outsourcing, it was revealed that Cap
Gemini will soon have more staff in India than it does in its home market of France
with 21,000 personnel in India.
On 25 June 2002 India and the European Union agreed to bilateral cooperation
in the field of science and technology. A joint EU-India group of scholars was formed
on 23 November 2001 to further promote joint research and development. India holds
observer status at CERN while a joint India-EU Software Education and Development
Center is due at Bangalore.
IT is the area of managing technology and spans wide variety of areas that
include computer software, information systems, computer hardware, programming
languages but are not limited to things such as processes, and data constructs.
Information technology (IT) is concerned with technology to treat
information. The acquisition, processing, storage and dissemination of vocal,
pictorial, textual and numerical information by a microelectronics-based combination
of computing and telecommunications are its main fields. The term in its modern
sense first appeared in a 1958 article published in the Harvard Business Review, in
which authors Leavitt and Whisler commented that "the new technology does not yet
have a single established name. We shall call it information technology (IT). Some of
the modern and emerging fields of Information technology are next generation web
15

technologies, bioinformatics, cloud computing, global information systems, large
scale knowledge bases, etc. Advancements are mainly driven in the field of computer
science.


Infosys Media Centre in Electronic City, Bangalore.


Tidel Parkone of the largest software parks in Asiawas set up on the July 4,
2000 in Chennai, to aid the growth of Information Technology in Tamil Nadu.


Microsoft India Development Center, Hyderabad


Millenium Tower in Kolkata, Salt Lake Sector-5, a major IT hub in the city.
16



Patni Knowledge Park, Airoli, Navi Mumbai


Cognizant's Delivery Center in Pune.




TECHNOLOGICAL CAPACITY AND GROWTH
Hilbert and Lopez identify the exponential pace of technological change
(a kind of Moore's law) machines application-specific capacity to compute
information per capita has roughly doubled every 14 months between 1986-2007; the
per capita capacity of the worlds general-purpose computers has doubled every 18
months during the same two decades, the global telecommunication capacity per
capita doubled every 34 months; the worlds storage capacity per capita required
roughly 40 months to double (every 3 years); and per capita broadcast information has
doubled roughly every 12.3 years.




17









COMPANY PROFILE
HISTORY OF THE COMPANY
Future Focus Infotech Pvt. Ltd. (FFI) is an IT services organization providing
strategic IT HR and managed solutions. The company was established as Focus
Infotech in Apr 1997; renamed to its present name in Oct of the same year. The
company commenced operations from Chennai where the corporate office of the
company is currently located. FFI initially ventured out as an IT training provider and
gradually transitioned towards consulting in skill requirements for various
technologies such as Web Technologies, ERP, Microsoft Client Server technologies,
Java, Oracle, Mainframe, etc, which now forms its core business offering.
FFI enhanced its services in the subsequent years and established its software
development center (SDC) in Chennai in 1999. FFI offers technical services in
software development and support for their international client through this STPI unit.
The company established its wholly owned subsidiary, Focus America, in the
subsequent year. Focus America addresses business in the North Americas, providing
offshore software development and onsite technical consulting services.
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FFI received its ISO 9001:2001 certification from TUV-SUD for its Chennai
operations in 2005. Since then, all FFI Delivery Centers located at nine locations
across India viz. Mumbai, Delhi, Chennai, Kolkata, Pune, Hyderabad, Bengaluru and
Kochi (its most recent addition), have been successfully certified.
In Jun 2011, FFI enhanced its global foot print through the commencement of
its business in the UAE. Future Focus InfoTech is based out of the Sharjah
International Airport Free Zone, is the wholly owned subsidiary of FFI.
FFI's IT Services encompassing pre-sales through delivery to consultant &
customer process management are managed through FiQMS, an indigenously
designed and developed solution for its consulting services.


MILESTONES ACHIEVED BY THE COMPANY SO FAR FROM THE DATE
OF INCEPTION
Established: April 1997
Registered as Private Limited company: October 1997
Selected as Business Associate by TCS: 1997; providing trained IT
consultants for TCS'Y2K projects
SDC (Software Development Centre) inaugurated: March 1999, Chennai;
servicing domestic as well as US based clients
Focus America, Inc. subsidiary of FIT, incorporated: Atlanta, USA in 2000;
the marketing front end
Ford Technology Services awards first "Managed services" assignment to FFI
- Data analytics for Global Analysis group of FMCC (Ford Motor Credit
Corporation).
Revenue crosses INR 10 crore: 2003-04
IBM and Infosys added to National client list: 2004
ISO 9001:2000 certification for Chennai and Bangalore offices by TUV-Sud:
Feb 2005
Revenue exceeds INR 24 crore: 2006-07
Zinnov Awards for Process Excellence and IT Consulting Services: 2007
ISO 9001:2000 certification extended to Delhi and Mumbai offices: Feb 2008
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Listed in Dun & Bradstreet's "India's Top IT Companies" 2007 & 2008
Deloitte Technology Fast 500 Asia Pacific winner 2008
Revenue INR 50 crores: 2008-09


Primarily, three core functional groups manage the domestic offerings
Business Relations (BR), Business Delivery and Business Maintenance. The BR
group develops and maintains the relationship with prospects and customers for
contracts, requirements, fulfillment and purchase orders. The Delivery team work on
the specifications received from BR to locate right profiles and follow through till the
selection process. Business Continuity Services (BCS) carry forward the relationship
with the consulting employees handling deployment & post deployment, and beyond
also addressing re-deployment/reallocation needs. All regional locations Chennai,
Bangalore, Hyderabad, Delhi, Mumbai and Pune are peopled with these functionaries
headed by a Location Head or a Regional Manager. They are supported by identified

2011 : D&B- Axis Bank BUSINESS GAURAV
AWARD

2011 : Deloitte Technology Fast 50 India 2011

2010 : All World Network India Fast Growth 25
winner -A Michael Porter endorsed Harvard Univ.
initiative

2008, 2009 & 2011 : A Deloitte Technology Fast
500 Asia Pacific Winner

2008 & 2009 : D&B Indias Top IT Cos Listing

2009 : A NASSCOM Emerge 50 Company

2007 : Zinnov Process Excellence Award &
Zinnov Recognition - Best IT Talent Consulting

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Country Managers at the corporate level, who in turn are customer, technology or
vertical aligned.

The FFI offshore (OSS) team consists of qualified Software professionals, viz.
developers, testers, technical leads and Project managers.

The organization's Quality Management system, FiQMS, established and
implemented in 2004 has well defined processes for all the above mentioned services.
The QA system of reviews and audits at all stages ensures delivery conforming to
customer specifications thereby ensuring higher levels of customer & consultant
satisfaction. Over the last 5 years, continual improvement has been achieved by
measurement of performance against objectives, data analysis and review, and
suitable corrective action as required.

FiQMS automated ERP solution developed in house by FFI over the last three
years covers all the critical operational processes and facilitates real time monitoring
of key performance indices. Context sensitive email alerts generated by the intranet
application right through the workflow from the receipt of customer requirement
through fulfillment to billing ensure minimal delays and deviations.
CUSTOMER PREFERENCE
This has several meanings. Sometimes, it means going the extra mile, doing
the impossible. Often it means moving quickly. However, it always means identifying
and meeting customer needs and measuring our performance by the standards they
set. Building lasting relationships and collaborating with our customers, to deliver
clear value for money, sets us apart from our competitors.
INTEGRITY IN ALL ENGAGEMENTS - WITH OUR CUSTOMER AND
WITH EACH OTHER
At Focus, personal and professional integrity is paramount. They trust and
respect their customers and colleagues and actively defend their principles.
PASSION FOR EXCELLENCE IN ALL ACTIVITIES
21

This translates to striving to be the best in whatever they do. This also means
recruiting the best people. Their customers expect work of the highest quality,
delivered on time, on budget with no surprises.
CREATIVITY, INNOVATION AND DIVERSITY OF THOUGHT
They support creativity and innovation. In an evolving industry with so many
look-alikes, they have managed to set themselves apart through creativity, innovation
and diversity of thought. They value thought-leaders, not hierarchy. They welcome
new ideas and help people deliver services with a difference. They roll up our
sleeves and attack problems with all the passion, resources and innovation the
situation demands.
ENVIRONMENT FOR GROWTH AND LEARNING
They learn and grow together. They share knowledge, ideas and solutions and
collaborate with our customers to address the challenges that arise. And, most of all
they enjoy their work and have fun doing it.
Focus specializes in the IT domain, as we believes that the future of HCM
services globally would be domain and knowledge-centric. More over, HCM and
Delivery cannot be kept as separate deliverables for viable, "buy-able" business
solutions! Founded almost a decade ago by a group of young and committed
professionals, we have been growing steadily at a rate of 30% year on year, since
inception. Managed by a board of eminent professionals, Focus is the first company in
the IT Technical and HCM services domain in India, to be certified ISO 9001:2000 by
TUV SUD, Germany.
Pioneers in IT Technical Services and among the top five IT
Technical/Professional Service providers in the Country - over 12 years in IT
Technical/HR services.
Quality Certified Business Processes (ISO 9001-2000) with best in class
services in IT Technical Consulting, Human Capital Management and Career
Management services in the IT technology domain.
True-blue IT domain focus.
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Value-add: The "extended Technical Delivery and HR arm" you can depend
on for effectively addressing you revolving IT resource needs and challenges.
Onsite IT Technical Consulting services- USA: Facilitated through wholly
owned subsidiary, Focus America, Inc.

VISION STATEMENT
To become the most admired & sought-after IT Technical Consulting & Services
organization for clients and employees in the industry.

MISSION STATEMENT
Perseverance & commitment to the highest quality of Customer Service delivered
with sensitivity, awareness, individual pride and Company Spirit.
PRODUCT PROFILE
1) WEB PORTALS


A web portal or links page is a web site that functions as a point of access to
information in the World Wide Web. A portal presents information from diverse
sources in a unified way.
Apart from the standard search engine feature, web portals offer other services
such as e-mail, news, stock prices, information, databases and entertainment. Portals
provide a way for enterprises to provide a consistent look and feel with access control
and procedures for multiple applications and databases, which otherwise would have
been different entities altogether.
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Examples of public web portals are AOL, Excite, iGoogle, MSN, Netvibes,
and Yahoo
HISTORY
In the late 1990s the web portal was a hot commodity. After the proliferation
of web browsers in the late-1990s many companies tried to build or acquire a portal to
have a piece of the Internet market. The web portal gained special attention because it
was, for many users, the starting point of their web browser. The portal craze, with
old media companies racing to outbid each other for Internet properties, died down
with the dot-com bust in 2000 and 2001. Disney pulled the plug on Go.com, Excite
went bankrupt, and its remains were sold to iWon.com. Some portal sites such as
Yahoo! and those others first listed in this article remain active.
2) INTRANET

Introduction
Intranet is the kind of privatize computer network that make use of existing
technologies and internet protocols for sharing and communicating with all the
connected network of same organization. They are fundamentally designed for the
intra networks for collaborating the work activities of all the people involved in one
organization. Regardless of location intra networks are an effective way for
information sharing. In these networks all the internal websites can be fully accessed
by all the workers dealing win an organization. Many educational and governmental
institutes are using intra network framework for communicating at different campuses
24

of same institutions. Memos and circulars can be circulated easily by using the intra
networks.
Historical Background
In the mid of 1990s this networking method was first introduced at California
University and as the time passes it became famous allover the world because se
before the intra networks there was zero existence of any reliable network technology
for collaborating the information staying within the organization. Intra network fame
highly targeted the commerce and business sector. One of the major advantages of
this network is that it can host multiple website to be used by one organization with
no geographical restrictions in small area networks.

REVIEW OF LITERATURE

Robert Dekle from University of Southern California(january 2005)
1
,
conducted a study on Exchange Rate Exposure and Foreign Market Competition:
Evidence from Japanese Firms. The study is based on foreign competition on
exposure, or the responsiveness of profits to fluctuations in exchange rates. He finds
that, out of the 15 fourdigit level Japanese export industries in our sample, 10
industries are better characterized as Cournot competitors in foreign markets, rather
than colluding firms. Depending on the industry, exposure elasticities range from
0.5% to 8.5%, with an average of around 2.5%. These elasticities, on the whole, are
much higher than those found in earlier research. Collusive exporters tend to have
higher elasticities than competitive exporters
The profitsand stock market capitalizationof multinational firms usually
depend significantly on the values of their home currencies. Exchange rate
fluctuations can cause large shifts in relative costs among firms located in different
countries and affects the prices of goods sold in domestic and foreign markets.
Largely because of this responsiveness of profits to fluctuations in exchange rates, or
corporate exposure, countries try to control fluctuations in their currencies. For
25

example, many countries adopt fixed exchange rates to reduce the risk of hurting the
profitability of their firms.
In this paper, he focus on the impact of foreign competition on exposure; it is
widely believed that the exposure of exporting firms is strongly influenced by the
market structure and the type of competition prevailing in foreign markets. In foreign
markets where the foreign good and the export good are easily substitutable, exporters
are reluctant to raise export prices when their home currency appreciates, for fear of
losing their foreign market share. When their currencies appreciate, these exporters
suffer large declines in export earnings, compared to exporters producing goods with
little foreign substitutability.

1
Robert Dekle from University of Southern California Journal of business January ,
2005 volume Vol.78 , No.7, p
p
.57-90
In addition, for a given substitutability, the type of competition among
exporters may affect exposure. Colluding exporters have more control over export
prices. When their currencies appreciate, these exporters can cut their domestic
pricecost margins to preserve their foreign market share, compared to exporters
competing with each other. This effect should especially be strong when the
substitutability with foreign products is high, since in these markets, foreign
consumers can more easily switch to locally produced products.By cutting pricecost
margins, increases in foreign prices can be restrained and market share can be
preserved. In contrast, if foreign consumers cannot switch easily (low
substitutability), the advantages of cutting domestic pricecost margins are small.
Both colluding and competing firms may then choose to raise their export prices. In
sum, colluding exporters have higher exposure than competing exporters, especially
when substitutability is high.
In this paper, he finds a structural model of exchange rate exposure. Unlike
most earlier empirical models of exchange rate exposure, which assume a
representative single exporter, or leave the number of exporters unspecified, we allow
for multiple exporters. Therefore, while earlier studies assume collusion by, say,
26

Japanese exporters, we are able to test whether Japanese exporters collude or compete
in foreign markets.
It is important to test whether exporters collude or compete in foreign markets,
because their market conduct strongly influences their exposure to exchange rates,
especially when foreign and Japanese goods are highly substitutable. In particular,
when exporters collude in foreign markets, they are more exposed than when they
compete.Finally, he finds that the impact of exchange rate fluctuations on the yen
profit margins of studies, we find that the impact of timevarying margins on
profitability is small, although for exporters that collude, margins vary more,thus, a
typical Japanese exporter's exposure elasticity arises almost entirely from the change
in profits at the original profits margin. Simply put, the profits of Japanese firms fall
when the yen appreciates, because foreign sales become smaller in yen terms.

Simi Kedia and Abon Mozumdar from Harvard University(October 2003),
2

conducted a study on Foreign CurrencyDenominated Debt: An Empirical
Examination .They examine the determinants of debt issuance in 10 major currencies
by large U.S. firms. Using the fraction of foreign subsidiaries and tests exploiting the
disaggregated nature of our data, we find strong evidence that firms issue foreign
currency debt to hedge their exposure both at the aggregate and the individual
currency levels. We also find some evidence that firms choose currencies in which
information asymmetry between domestic and foreign investors is low. We find no
evidence that tax arbitrage, liquidity of underlying debt markets, or legal regimes
influence the decision to issue debt in foreign currency.
In recent years, as the global economy has become increasingly integrated,
there has been a dramatic increase in the number of firms that have some business
activity outside their country of incorporation. Such foreign involvement ranges from
simple import or export activity to more complicated decisions including integrated
global sourcing, production, and competition. These multinationals face many
different product and capital markets, a myriad of legal regimes, political risks, and
exchange rate uncertainty. We have little understanding of how this affects the
financing patterns of multinational firms.
27

In this article, they study a sample of large U.S. firms and examine their
decision to issue foreign currencydenominated debt. There has been a dramatic
increase in the amount of debt finance raised in foreign currencies. Firms in the
United States increased foreign currencydenominated debt from around $1 billion in
1983 to $62 billion in 1998. This increase can also be seen at the individual currency
level. Over this period borrowing increased from $0.3 billion to $9.4 billion in
German marks, from $0.6 billion to $22 billion in U.K. pounds, and from $0.2 billion
to $2.5 billion in Japanese yen. Despite this increasing importance, there is little
understanding of why firms issue foreign currencydenominated debt.

2
Simi Kedia and Abon Mozumdar from Harvard University Journal of business.
October, 2003 volume Vol. 76, No. 4, p
p
. 521-546
Choice of currency of debt is also important because it throws light on firms
risk management activities. There has been a surge of interest in the hedging policies
of firms and management of foreign exchange risk. Although most of this attention
has been focused on the derivative usage of firms, issuing debt in a currency in which
the firm has exposure is an alternate form of hedging. Anecdotal evidence from the
testimony of top managers suggests that derivative usage is only one aspect of an
integrated policy of managing foreign exchange risk. For example, in the 1995 Bank
of America RoundTable on Derivatives and Corporate Risk Management, Tom
Jones, vice president and treasurer of Union Carbide, said: Use natural hedges any
place we canfor example, funding in currencies where we produce and sell; or
when possible, locating manufacturing and sourcing in countries where we sell. But
there is still considerable room for financial solutions to risk management after the
natural hedges are in place
Studying the role of foreign currencydenominated debt as a hedging
instrument complements the current literature by developing a comprehensive
understanding of a firms risk management activities. Prior work by Geczy, Minton,
and Schrand (1997) and Allayannis and Ofek (2001) examines foreign currency
denominated debt at the aggregate level. In this article we study the role of foreign
currency debt in hedging exposure at the individual currency level.
28

Result of the study reported that We examine the issuance of debt in 10 major
currencies by a sample of large U.S. firms and study the determinants of choice of
currency of debt. We find strong evidence that debt issuance in foreign currency is
related to foreign activity. This result holds for different proxies of foreign operations
and at both the aggregate and individual currency levels. The significance of foreign
operations in determining the probability of issuing foreign debt is consistent with
both the role of foreign debt as a hedging instrument and the existence of information
barriers. Both sets of tests provide significant evidence in favour of the hedging
motive for issuing foreign debt. Firms issue debt in currencies in which they have
exposure or in currencies that are positively correlated with currencies of exposure.

Stephen E. Christophe from George Mason University(January 2002)
3
,
conducted a study The Value of U.S. MNC Earnings Changes from Foreign and
Domestic Operations . This study examines whether the stock return associated with
changes in domestic and foreign earnings varies depending upon the sign of the
change. Evidence is presented that negative foreign (vs. domestic) earnings changes
are associated with significantly larger stock returns. In contrast, positive foreign and
domestic earnings changes are associated with statistically indistinguishable returns.
The large association coefficient corresponding to negative foreign earnings changes
is especially pronounced for firms with substantial free cash flow and for firms with
high anticipated growth opportunities. No evidence is found that positive foreign
earnings changes result in high returns due to foreign market growth opportunities.
A number of empirical studies examine the value of the U.S. multinational
corporation (MNC) during the 1980s and 1990s and present evidence that investors do
not generally value the foreign operations of the MNC as highly as they value its
domestic operations (see, e.g., Boatsman, Behn, and Patz 1993; Christophe 1997;
Christophe and Pfeiffer 2000; and Denis, Denis, and Yost 2000). In contrast, a study
by Bodnar and Weintrop (1997) of the 198593 time period reports that changes in an
MNCs foreign earnings are associated with a larger abnormal stock return than
changes in its domestic earnings. On its surface, a larger abnormal stock return
associated with changes in foreign earnings seems inconsistent with the studies that
find investors place a lower relative value on the MNCs foreign operations. The
29

purpose of this article is to attempt to reconcile these seemingly divergent results and
to shed additional light on the relationship between firm value and international
operations by examining the association between MNC stock returns and positive
versus negative earnings changes.
Over the past 30 years, there appears to have been a shift in the general relationship
between international operations and the value of the MNC. Studies that focus on the
relationship that obtained during the decade of the 1970s find that during that time
period international operations enhanced firm value.

3.
Stephen E. Christophe from George Mason University Journal of business. January
, 2002 volume Vol. 75, No. 1, p
p
. 67-93.
In contrast, the relationship between international operations and firm value
evolves during the 1980s. For example, I study the 197886 time period using the
MNCs foreign sales percentage to measure international involvement. I find that,
although (similar to Morck and Yeung 1991) there is a positive relationship between
the MNCs Tobins q and its international operations during the late 1970s, during the
early 1980s, as currency exchange rates moved adversely, the relationship shifts such
that international operations result in a negative impact on Tobins q. Further,
Boatsman et al. (1993) study the 198589 time period and employ foreign operating
income disclosures (required by Statement of Financial Accounting Standards [SFAS]
no. 14) to examine how foreign earnings surprises are reflected in abnormal returns.
They report evidence that foreign surprises are associated with negative abnormal
returns, which implies that foreign profits are capitalized into stock returns at lower
multiples than domestic profits. This result is consistent with international operations
not being as highly valued by investors as domestic operations.1 Denis et al. (2000)
study the 198497 time period and find that global diversification (as measured using
foreign sales and a dummy variable approach) by MNCs results in valuation discounts
similar in magnitude to the discounts associated with industrial diversification.
Finally, Christophe and Pfeiffer (2000) use foreign sales as their measure of MNC
international operations and find, in both a Tobins qbased levels empirical
specification and in an excess returnsbased changes empirical specification, that
during the 199094 time period, investors do not value the international operations of
the MNC as highly as they value its domestic operations. Taken collectively, these
studies provide evidence that, though investors during the 1970s valued the
30

international operations of the MNC more highly than they valued its domestic
operations, during more recent years the relationship has reversed. Therefore, the
finding by Bodnar and Weintrop (1997) that foreign earnings changes during the
198593 time period are associated with a larger abnormal stock return (relative to
domestic earnings changes) is surprising and warrants further attention.


The results of this study indicate that the stock return associated with domestic
and foreign earnings changes vary along several dimensions. First, the results show
that investors do not value positive domestic and foreign earnings changes
differently.In contrast, however, strong evidence is presented that negative domestic
and foreign earnings changes have dramatically different associations with stock
returns whereby a negative foreign earnings change results in a significantly larger
negative stock price reaction.
Since a substantial number of MNCs (1,318 out of 3,041 total firm years for
the sample considered in this study) report negative earnings changes from their
foreign operations, these results should be considered consistent with findings
presented in the prior studies by Boatsman et al. (1993), Christophe (1997), and
Christophe and Pfeiffer (2000), that investors do not generally value the foreign
operations of the MNC as highly as they value its domestic operations.
In addition, the results presented herein indicate that the larger earnings
response coefficient associated with negative foreign earnings changes is most
pronounced for MNCs with substantial amounts of free cash flow. This finding is
consistent with Jensens (1986) agency cost of free cash flow theory. The results also
indicate that the larger earnings response coefficient associated with negative foreign
earnings changes is most pronounced for MNCs with high anticipated growth
opportunities. This finding is consistent with investors revising downward their future
growth expectations for the MNC when the firm discloses poor foreign operating
performance. Finally, no evidence is found that positive foreign earnings changes are
31

associated with a large earnings response coefficient due to investor recognition of
foreign market growth opportunities.






RESEARCH METHODOLOGY

The study focuses on the foreign exchange transactions in future focus
InfoTech. The project study mainly focuses with foreign exchange in export
transaction and minimization of risk.

MEANING OF RESEARCH
Research in common parlance refers to a search for knowledge .One can also
define research as a scientific and systematic search for pertinent information on a
specific topic. In fact, research is an art of scientific investigation .Research is an
academic activity and as such, the term should be used in a technical sense.
Systematic and organized effort to investigate a scientific problem
Identify the problem
Gather information
Analyze the data
Take corrective action and solve the problem
DEFINITION OF RESEARCH
Research can be defined as the search for knowledge, or as any systematic
investigation, with an open mind, to establish novel facts, solve new or existing
problems, prove new ideas, or develop new theories. The primary purposes of basic
research (as opposed to applied research) are documentation, discovery,
interpretation, or the research and development of methods and systems for the
advancement of human knowledge. Approaches to research depend on
epistemologies, which vary considerably both within and between humanities and
sciences.
32


RESEARCH DESIGN
Research is an organized activity focused on specific objective with the
support of data collection involving tools for analysis deriving logically sound
inferences. Research design is purely and simply the framework or plan for a study.
RESEARCH METHOD
The research is analytical in nature
ANALYTICAL RESEARCH
The researcher has to use information already available and analyze those
details to make a serious assessment.

DATA COLLECTION METHOD
NATURE OF DATA
The data collected is secondary in nature. This is due to the nature of analysis,
which only identify for secondary data.

SOURCES OF DATA
The sources of data are the various year foreign exchange statements provided
by the Future Focus InfoTech Private Limited .They were used for analysis and for
preparing reports. The records maintained by the company where referred to get the
required information .

SECONDARY DATA
The secondary data are collected from the foreign exchange statements, and
other broachers of the company.

METHOD OF COLLECTION
The data for the analysis are collected from the official files, reports and other
available material

PERIOD OF THE STUDY
33

The period of the study will be carried out from the last five years of foreign
exchange statements. i.e., from 2006-2007 to 2010-2011

TOOLS AND TECHNIQUES FOR ANALYSIS
The tool and technique which is used for the analysis is
STATISTICAL TOOL: Standard Deviation


STANDARD DEVIATION

Standard deviation is a widely used measure of variability or diversity used in
statistics and probability theory. It shows how much variation or "dispersion" exists
from the average (mean, or expected value). A low standard deviation indicates that
the data points tend to be very close to the mean, whereas high standard deviation
indicates that the data points are spread out over a large range of values.
The standard deviation of a random variable, statistical population, data set, or
probability distribution is the square root of its variance. It is algebraically simpler
though practically less robust than the average absolute deviation. A useful property
of standard deviation is that, unlike variance, it is expressed in the same units as the
data.

Standard Deviation:



34




35

DATA ANALYSIS AND INTERPRETATION


The process of evaluating data using analytical and logical reasoning to
examine each component of the data provided .this form of analysis is just one of the
many steps that must be completed when conducting a research experiment. Data
from various sources is gathered ,reviewed and then analyzed to form some sort of
finding or conclusion.

Technically speaking, processing implies editing, coding classification and
tabulation of collected data so that they are amenable to analysis. The term analysis
refers to the computation of certain measures along with the searching for patterns of
relationships that exist among data groups. Thus in the process of analysis
,relationships pr differences supporting or conflicting with the original or new
hypthede should be subjected to statistical tests of significance to determine with what
validity data can be said to indicate any conclusions.












36

METHODOLOGY FOR CALCULATING THE FOREIGN EXCHANGE BY
APLLYING FORWARD CONTRACT
The foreign exchange market assists international trade and investment, by
enabling currency conversion. For example, it permits a business in the United States
to import goods from the United Kingdom and pay pound sterling, even though its
income is in United States dollars. It also supports direct speculation in the value of
currencies, and the carry trade, speculation on the change in interest rates in two
currencies.
This company also applies the same methodology ,hence these are the various
criteria used for the foreign exchange statement.

Invoice Date: Invoice date is where the spot rate is booked.
Invoice Rate : Invoice rate is where the spot rate of the exchange booked.
Received Rate: Received rate is where the spot rate is received; it can be
higher or lower than the spot rate booked.
Invoice Amount :The amount which is multiplied with the invoice rate which
is fixed by the company.
Received Amount: the amount, which is multiplied with received rate, which
is fixed by the company.
Forward Rate: The rate which is calculated on the basis of RBI rates and
which is taken on the basis on received dates of the company.
Amount based On forward Rate :The invoice amount which is multiplied
with the forward rate.
Profit/Loss With Reference To The Exchange Rate Applied: the exchange
profit/ loss which is faced by the company by subtracting received rate from
the invoice rate
Profit/Loss With Reference To The Forward Contract: The forward
profit/loss is the financial instrument which is applied which is calculated by
subtracting the forward rates from the received rates.

37


TABLE NO:4.1
FOREIGN EXCHANGE STATEMENT FOR THE YEAR 2006-2007

PROFIT/LOSS WITH REFERENCE
TO THE EXCHANGE RATE
APPLIED
PROFIT/LOSS WITH
REFERENCE TO THE
FORWARD CONTRACT

16,564.80 -10,648.80
-405.00 3,273.75
2,632.50 236.25
8,032.50 -5,737.50
-4,421.12 6,355.36
-900.90 1,181.18
-2,348.24 2,530.89
-505.44 673.92
-2,165.60 2,598.96
-34.32 74.36
-2,146.12 2,468.03
-836.91 851.59
-2,501.60 2,876.84
71.40 -49.98
972.84 -906.51
-5,096.52 5,250.96
-2,312.64 2,382.72
-2,590.00 2,600.00
-3,744.96 3,783.97
-12,273.80 12,975.16
-4,526.20 4,784.84
-2,072.00 2,113.44
-1,034.00 1,049.04
-9,668.12 9,966.11
-3,340.48 3,443.44
-924.11 952.59
-95.49 100.67
-56,496.00 57,288.00
-5,148.00 5,940.00
-911.68 1,051.94
-2,212.18 2,261.12
-9,724.00 11,220.00
-2,120.60 2,292.50
-9,113.40 9,337.50
-8,801.75 9,635.60
38

-8,732.00 10,207.00
-5,014.24 5,861.24
-7,312.68 8,547.93
-3,256.00 3,806.00
-25,868.00 6,073.76
-20,658.00 26,097.94
-34,830.00 44,118.00
-15,971.54 24,320.30
-16,023.51 23,544.76

2,119.74 -1,462.16
-6,470.85 6,593.71
-10,425.08 10,583.64
-2,141.39 2,188.62
-2,384.91 2,601.72
-985.13 1,779.58
603.46 953.85

-845.63 4,112.82
3,997.51 -730.31
458.35 -83.74
-15,463.87 16,666.62
-14,505.00 14,780.41
-23,384.25 23,474.54
-24,547.96 24,905.02
-19,364.79 19,768.22
-22,942.21 23,952.88
-7,102.57 6,570.67
-14,142.58 13,610.67
-12,265.24 11,733.34
-19,645.35 20,525.17
-37,852.87 40,230.56
-28,206.23 35,062.51
-32,892.80 39,749.09
-33,543.67 40,624.12
-26,109.19 33,189.64
-18,176.81 27,899.29
-28,406.55 38,129.03
-
-5,727.00 17,679.00
-2,095.30 325.74
-11,688.96 2,253.29
-16,171.69 10,693.92
39

-47,426.20 32,569.20
-44,450.24 28,389.12
-6,544.96 4,180.08
-30,337.47 19,375.69
-20,644.28 13,180.06
-46,397.00 32,536.00
-4,402.34 3,720.69
-39,045.81 33,751.46
-38,757.54 31,773.51
-2,744.80 2,175.84
-24,923.09 22,469.52
-4,412.91 3,978.48
-31,300.00 34,800.00
-30,469.80 33,876.96
-1,103.40 1,196.23
-33,600.00 45,100.00
TOTAL -11,04,731.74 11,38,219.15




Inference :in the above table we can find that the company has faced loss during the
year 2006,by applying the forward contract the company has overcome the loss.
While comparing it with the received exchange amount.


40

TABLE NO:4.2
FOREIGN EXCHANGE STATEMENT FOR THE YEAR 2007-2008

PROFIT/LOSS WITH
REFERENCE TO THE
EXCHANGE RATE APPLIED
PROFIT/LOSS WITH REFERENCE TO
THE FORWARD CONTRACT

-11576.84 63617.84
-3805.90 20914.45
4614.89 5094.04
-4358.12 16530.80
2620.34 3116.08
7724.86 1879.02
-16293.73 40883.35
-25874.42 19939.92
1364.35 3609.85
736.61 2102.40
-1911.36 18874.68
-11.60 114.55
175.00 90.00
45.00 220.00
-1476.86 12658.80
-651.00 5580.00
5713.20 856.98
3942.40 591.36
13248.11 -954.56
17887.65 -1288.85
8454.42 2688.65
9242.55 2939.29
10388.77 3303.81
-131.00 844.95
4702.20 -3046.49
126.00 1064.00
900.00 630.00

-35294.00 92294.00
-15294.00 30694.00
-22020.00 38220.00
-20220.00 29420.00
351.13 85.41
-20220.00 40020.00
-220.00 15220.00
-272.16 2540.16
-186.88 1051.20
-220.00 7620.00
41

-200.96 1984.48
-1600.00 15800.00
-18.16 179.33
-1600.00 12600.00
939.20 305.24
8000.00 1200.00
766.00 114.90
18320.00 -1320.00
1598.42 -115.17
16540.00 5260.00
1501.83 477.61
TOTAL -43554.05 516506.07



Inference :In the above table we can find that the company has faced loss during the
year 2007,by applying the forward contract the company has overcome the loss.
While comparing it with the received exchange amount.

42

TABLE NO:4.3
FOREIGN EXCHANGE STATEMENT FOR THE YEAR 2008-2009
PROFIT/LOSS WITH
REFERENCE TO THE
EXCHANGE RATE APPLIED
PROFIT/LOSS WITH REFERENCE
TO THE FORWARD CONTRACT

48318.29 -35118.29
12079.57 -8779.57
49709.72 -39809.72
4541.92 -3301.12
591.39 700.29
6305.87 7494.13
1576.47 1873.53
44284.65 -33934.65
281.24 334.24
-383.98 1798.38
-4343.62 20343.62
-1085.91 5085.91
82623.69 -70623.69
-3920.28 11120.28
6069.91 -2469.91
88623.69 -77823.69
6069.91 -2469.91
76735.65 -65935.65
2233.73 -908.93
8511.55 -5261.55
69873.69 -60123.69
8511.55 -5261.55
57985.65 -48235.65
4026.93 -2489.31
27665.66 -9265.66
6916.42 -2316.42
16735.65 -2935.65
1691.33 -1128.29
12788.46 -8531.21
29017.89 -19357.89
10159.03 -6777.11
17379.41 10220.59
4344.85 2555.15
-17014.35 37714.35
611.76 359.76
-7600.00 28600.00
-7600.00 28600.00
-206.72 777.92
43

22400.00 200.00
26925.56 -4325.56
4786.02 -768.87
7925.56 -41325.56
3962.78 -20662.78
253.62 -1322.42
-1400.00 23600.00
-700.00 11800.00
-261.31 4404.94
-62200.00 79800.00
-31100.00 39900.00
-1990.40 2553.60
0.00 0.00
47361.59 -34422.95
34578.99 -25132.41
381.62 451.90
2199.49 2613.95
1778.25 2113.35
1993.29 2368.89
-70.81 739.61
-2905.02 13605.82
-2700.00 12645.60
-473.02 2215.42
-4176.00 5328.00
72.00 1080.00
13212.97 -5376.49
11035.09 -4490.29
13193.55 -5368.59
23331.86 -14422.96
7064.59 -4367.09
24257.92 -14995.42
6525.92 -5090.20
31979.63 -24944.03
34548.87 -26948.03
3366.83 1979.98
6865.73 4037.65
9845.43 5789.97
-4138.20 5454.90
-929.50 2431.00
-1265.02 4760.47
-2194.88 8259.68
-4332.00 16302.00
10019.52 89.46
7909.44 70.62
44

3296.16 29.43
11439.32 -1837.71
3135.35 -16348.39
3000.62 -15645.86
3368.36 -17563.36
-228.83 3857.42
-627.20 10572.80
-345.10 5817.40
-333.69 5625.06
-8735.99 11207.91
-10972.08 14076.72
-33090.40 42453.60
-21067.14 27028.26
-4245.15 5446.35
TOTAL 845644.89 -259928.19



Inference :In the above table we can find that the company has faced profit during the
year 2008,by applying the forward contract the company has faced the loss, while
comparing it with the received exchange amount.

45


TABLE NO:4.4
FOREIGN EXCHANGE STATEMENT FOR THE YEAR 2009-2010
PROFIT/LOSS WITH REFERENCE
TO THE EXCHANGE RATE
APPLIED
PROFIT/LOSS WITH
REFERENCE TO THE
FORWARD CONTRACT

-47200 64400
-23600 32200
-528.64 721.28
-21893.72 29871.94
-5546 7567
-39062.72 53297.44
2900 -1600
29000 -16000
15200.35 -8386.4
11618.85 -6410.4
9050.9 -4993.6
416 1952
5600 9200
523.32 -259.88
2468.2 4054.9
2496.2 4100.9
3333.68 5476.76
389.2 639.4
24400 -9200
6080 -1216
19612.72 -7394.96
7786.04 -2935.72
6612.4 -2493.2
3843 -1449
-15000 34600
-780 1799.2
-10240 16512
-4188 9660.32
-8790 20275.6
-3281.25 7568.75
-8016.75 18491.97
-8200 25800
-344.4 1083.6
-8448 14080
-4136.9 13016.1
-7011.205 22059.645
-602.7 1896.3
46

-3263.19 10267.11
-526.44 1656.36
618.88 15472
3803.52 905.6
1327.2 316
1876.59 4628.922
30.387 120.101
9303.84 2215.2
12124.56 2886.8
1267.56 301.8
4903.92 1167.6
1457.4 347
9826.56 2456.64
292446.08 3239.52
599.04 149.76
-4096 9856
2953.08 3861.72
6481.02 8475.18
2473.38 3234.42
1215.24 1589.16
-567.45 6241.95
9400 8200
18.1 778.3
-7680 13312
104.16 4478.88
363.16 15615.88
178.06 7656.58
99.2 4265.6
-9200 26600
-374.9 1083.95
-2833.6 8192.8
-9791.1 28309.05
-2982.64 8623.72
-2371.3 6856.15
-5760 11328
-990.64 1672.72
-24400 41200
-6710 11330
-18881.94 31882.62
-5330.18 9000.14
-4011.36 6773.28
-7360 12736
477.87 356.06
10200 7600
47

0 5696
2838.66 2115.08
8581.77 6394.26
2509.71 1869.98
1409.13 1049.94
TOTAL 206217.912 702351.778


Inference :In the above table we can find that the company has faced profit during the
year 2009,by applying the forward contract the company has gained more profit,
while comparing it with the received exchange amount
48

TABLE NO:4.5
FOREIGN EXCHANGE STATEMENT FOR THE YEAR 2010-2011
PROFIT/LOSS WITH
REFERENCE TO THE
EXCHANGE RATE APPLIED
PROFIT/LOSS WITH REFERENCE
TO THE FORWARD CONTRACT

71800 -41800
3213.05 -1870.55
55000 2600
2268.75 107.25
7668.57 6800.43
2599.57 2931.43
482.3 427.7
-511 1241
9400 9000
413.6 396
-1918.4 2833.6
-43600 64400
-151.2 798
-3600 19000
6398 3290.4
14000 7200
-26.92 1426.76
-400 21200
798 -8.4
19000 -200
-268.8 1150.8
-6400 27400
-464 1216
-11600 30400
11983.8 7589.74
552 349.6
0 0
7744 -2944
21877.46 -12736.46
62214.7 -36219.7
27416.83 -15961.33
15480.08 -9012.08
-672 3456
15125 660
38392.75 1675.32
22929.5 1000.56
5554.5 952.2
3420 380
49

3521.32 3122.68
9949.69 8823.31
2014 1786
2864.12 2539.88
-14820 21812
3453.56 3306.6
9122.23 8734.05
1692 1620
-100.74 1511.1
-7667.06 11324.74
-5120 11776
-14388 21252
-38527.14 56907.06
-5450 8050
-244.72 9849.98
4608 320
-962.28 5078.7
-3207.6 16929
-450 2375
1303.72 5629.7
7360 -576
2368 -799.2
2772.84 -786.8868
6358 1570.8
1782.17 1921.953
4096.4 2106.72
13111 6742.8
1750 900
1642.2 844.56
-13685.76 28062.72
-7744 14400
-145.2 7695.6
-196.24 10400.72
-330.44 17513.32
425.85 2076.0012
1408 4608
6646.2 -69.96
14187.3 -149.34
13415.9 -141.22
4910.55 -51.69
-3840 10560
-2126.72 9105.02
-4347.84 18614.19
-7556.8 32352.55
50

-5312 11328
-3915.58 10261.52
-8318.94 21801.36
-4692.78 12298.32
-151.32 14375.4
6720 -448
3862.2 2446.06
12669 8023.7
13459.8 8524.54
765 484.5
1770 1121
358.2 226.86
TOTAL 363186.23 559221.987





Inference :In the above table we can find that the company has faced profit during the
year 2010,by applying the forward contract the company has gained more profit,
while comparing it with the received exchange amount.











51


TABLE NO:4.6

STANDARD DEVIATION OF THE FORWARD RATE FOR THE YEAR
2006-2007
DATE X X-M(45.25) ( X-M)
2
01-MAR-06
44.35
-0.90
0.81
01-APR-06
44.61
-0.64 0.41
01-MAY-06
44.9
-0.35 0.12
01-JUN-06
46.22
0.97 0.94
01-JUL-06 45.98 0.73 0.53
01-AUG-06
46.65
1.40 1.96
01-SEP-06
46.53
1.28 1.64
01-OCT-06
45.84
0.59 0.35
01-NOV-06
44.93
-0.32 0.10
01-DEC-06
44.67
-0.58 0.34
01-JAN-07
44.2
-1.05 1.10
01-FEB-07 44.11 -1.14 1.30
TOTAL 542.99 9.60

Standard deviation= M=542.99/12=45.25 here = summation
(X-M)
2
/n= 9.60/12 M= mean
=0.8
Standard deviation =.89

Inference : Here in this table standard deviation is done for twelve months for the
year 2006-2007 .A low standard deviation indicates data points tend to be very close
to mean. Hence the risk is very low here.

52

TABLE NO:4.7

STANDARD DEVIATION OF THE FORWARD RATE FOR THE YEAR
2007-2008
Date X X-M(40.72) (X-M)
2
01-Mar-07
44.27
3.55 12.60
01-Apr-07 43.13
2.41
5.80
01-May-07
41.18
0.46 0.21
01-Jun-07
40.54
-0.18 0.03
01-Jul-07
40.66
-0.06 0.00
01-Aug-07
40.55
-0.17 0.03
01-Sep-07
40.88
0.16 0.03
01-Oct-07
39.73
-0.99 0.98
01-Nov-07
39.37
-1.35 1.82
01-Dec-07
39.56
-1.16 1.35
01-Jan-08
39.42
-1.30 1.69
01-Feb-08
39.36
-1.36 1.85
TOTAL 488.65 26.40



Standard deviation= M=488.65/12=40.72 here = summation
(X-M)
2
/n= 26.40/12 M= mean
=2.2
Standard deviation =1.48

Inference : Here in this table standard deviation is done for twelve months for the
year 2007-2008 .A low standard deviation indicates data points tend to be very close
to mean. Hence the risk is moderate here.


53

TABLE NO:4.8

STANDARD DEVIATION OF THE FORWARD RATE FOR THE YEAR
2008-2009


Standard deviation= M=536.81/12=44.73 here = summation
(X-M)
2
/n= 159.92/12 M= mean
=13.32
Standard deviation =3.7

Inference : Here in this table standard deviation is done for twelve months for the
year 2007-2008 .A high standard deviation indicates data are spread out over a large
range. Hence the risk is very high here.

X Y X-M(44.73) (X-M)2
01-Mar-08
40.26
-4.47 20.02
01-Apr-08
39.98
-4.75 22.60
01-May-08 40.65 -4.08 16.68
01-Jun-08
42.24
-2.49 6.22
01-Jul-08 43.26 -1.47 2.17
01-Aug-08 42.38 -2.35 5.54
01-Sep-08 44.2 -0.53 0.29
01-Oct-08 46.96 2.23 4.95
01-Nov-08 48.95 4.22 17.77
01-Dec-08 50.06 5.33 28.36
01-Jan-09 48.86 4.13 17.02
01-Feb-09 49.01 4.28 18.28
TOTAL 536.81 159.92
54

TABLE NO:4.9

STANDARD DEVIATION OF THE FORWARD RATE FOR THE YEAR
2009-2010
X Y X-M(48.15) (X-M)2
01-Mar-09
51.75
3.60 12.94201
01-Apr-09 50.28 2.13 4.526256
01-May-09 49.68 1.53 2.333256
01-Jun-09 46.99 -1.16 1.351406
01-Jul-09 48.09 -0.06 0.003906
01-Aug-09 47.86 -0.30 0.088506
01-Sep-09 48.88 0.72 0.522006
01-Oct-09 47.86 -0.29 0.085556
01-Nov-09 47.03 -1.12 1.260006
01-Dec-09 46.45 -1.71 2.915556
01-Jan-10 46.64 -1.52 2.302806
01-Feb-10 46.34 -1.81 3.285156
TOTAL 577.83

31.61643

Standard deviation= M=577.83/12=48.15 here = summation
(X-M)
2
/n= 31.61/12 M= mean
=2.6
Standard deviation =1.62

Inference : Here in this table standard deviation is done for twelve months for the
year 2009-2010 .A low standard deviation indicates data points tend to be very close
to mean. Hence the risk is moderate here.






55

TABLE NO:4.10

STANDARD DEVIATION OF THE FORWARD RATE FOR THE YEAR
2010-2011
X Y X-M(45.56) (X-M)2
01-MAR-10
46.02
0.46 0.21
01-APR-10
44.715
-0.85 0.72
01-MAY-10
44.56
-1.00 1.01
01-JUN-10 46.69 1.13 1.27
01-JUL-10
46.68
1.12 1.25
01-AUG-10
46.195
0.63 0.40
01-SEP-10
46.865
1.30 1.70
01-OCT-10
44.675
-0.89 0.79
01-NOV-10
44.4
-1.16 1.35
01-DEC-10 45.7 0.14 0.02
01-JAN-11 44.665 -0.90 0.81
01-FEB-11 45.585 0.02 0.00
TOTAL 546.75 9.51

Standard deviation= M=546.75/12=45.56 here = summation
(X-M)
2
/n= 9.51/12 M= mean
=0.79
Standard deviation =.89

Inference : Here in this table standard deviation is done for twelve months for the
year 2010-2011 .A low standard deviation indicates data points tend to be very close
to mean. Hence the risk is very low here.





TABLE NO:4.11

56

STANDARD DEVIATION OF THE FOREIGN EXCHANGE RATE FOR THE
PERIOD OF DEC 2011-MAY 2012(CURRENT SIX MONTHS)
DATE X X-M(51.73) (X-M)2
01-Dec-11
51.12
-0.61 0.38
01-Jan-12
53.31
1.58 2.48
01-Feb-12
49.09
-2.64 6.99
01-Mar-12 49.52 -2.21 4.90
01-Apr-12
51.09
-0.64 0.42
01-May-12
52.62
0.89 0.78
15-May-12
55.39
3.99 13.40
TOTAL 362.14

29.35

Standard deviation= M=362.14/7=51.73 here = summation
(X-M)
2
/n= 29.35/7 M= mean
=4.19
Standard deviation =2.05

Inference : Here in this table standard deviation is done for six months.A high
standard deviation indicates data are spread out over a large range. Hence the risk is
very high here

57

SUMMARY AND CONCLUSION
FINDINGS
In foreign exchange transactions ,Future Focus InfoTech company is dealing
with export transactions only.
The company has faced exchange loss in the year 2006-2007, 2007-2008.
In the year 2008-2009 there is a loss even after applying the forward rates, but
the loss has occurred while comparing the exchange received amount, the
reason is in the year 2008 the rate had increased much more higher than
expected compared to the forward rates than in the exchange.
In the standard deviation, the company has more data points tend to be very
close to mean.
In the standard deviation, while comparing the recent six months study it is
found that the data points are very spread out over large range. Here the risk is
very high market can fall at any time. Its better to sell of the shares which is
bought .
There is an increase in the profit from the year 2006-2007,2007-2008 and
2009-2010 and 2010-2011 by applying the forward rates.












SUGGESTIONS
58

It is suggested that the foreign exchange transactions are to be fully covered
through the forward contracts with the banks.
If the company goes for the future contracts, which is derived from the
exchange rates it would be much more beneficial to, the company but high risk
compared to forward.
The researcher suggests that the company should apply financial instruments
such as forward contract to reduce the risk in foreign exchange.
The researcher suggests that the company should apply financial tool such as
standard deviation to reduce the risk in foreign exchange which is helpful in
future contracts
As it has been identified a high risk in the past 6 months currency rate
fluctuation ,it is suggested to hedge the currency position through forward
contracts/future contracts in the exchange.
If the company goes into the import transactions with overseas customers in
future then also the company may resort to risk cover operations for the
foreign exchange transaction by booking the forward contracts or the future
contracts in the designated currencies.
The researcher suggests expanding the business in various currencies to earn
more of foreign exchange profit.










LIMITATIONS OF THE STUDY
59


The company is dealing with only export transactions in their foreign
exchange operations.
The future contract is commenced only from the year 2008. Hence previous
years study could not be studied specifically.
The company is dealing only with USD dollar currency hence there is no
scope to study other currency risk in this project.



















CONCLUSION

The study titled An Analysis of Foreign Exchange Transactions of Software
Company with Special Reference to Future Focus InfoTech Private Limited helps to
60

understand about foreign exchange operations and to understand the foreign currency
risk in the export transactions of the company. The researcher has identified the
reason to control the loss and to avoid the risk in the foreign exchange by applying
forward contracts and also apply standard deviation tool to know the frequent
fluctuations in the currency which can be applied in the future contract.
The company is dealing with export transactions and if the company takes
actions as suggested, company would be able to remain risk free in the currency
fluctuations in future. The company would excel in IT Products by using risk free
financial instruments, which could give excellent corporate results.