The strong rupee has walloped Indian exporters, from garment makers to software companies. Their revenue growth and profit margins have been under pressure. Should they take a few lessons from the Board of Control for Cricket in India (BCCI)?
That’s not as absurd as it sounds. In an interview with Mint earlier this month, Lalit Modi, vice-president of the cricket board and the architect of its commercial transformation, said that the revenues the board earns from selling broadcasting rights are at Rs45 to a dollar, rather than at Rs40.
The board seems to have got into long-term contracts at a fixed exchange rate, thus protecting itself against long-term rupee appreciation. Is that also the way forward for others who bill in dollars—go in for long-term contracts and lock into a fixed exchange rate?
Of course, such contracts that protect the board’s revenues have meant that the broadcasters at the other end of the deal are losers. It’s been a googly for them.