Googlies in currency

Googlies in currency

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.