RISK MANAGEMENT SURVEY 2010

Name:
Company:
Email:

A. GENERAL INFORMATION

1. Last year's sales (cr)
less than or equal to 250 251-500 500-1000 greater than 1000

2. Last year's forex gain/ loss as per Annual accounts (Rs lakhs)

B. IMPORTANCE OF TREASURY

1. Exports as a percentage of top line
less than 25% less than 50% less than 75% less than or equal to 100%

2. Imports as a percentage of costs
less than 10% less than 25% less than 50% greater than or equal to 50%

3. Interest cost as a percentage of total costs
less than 2% less than 5% greater than 5%

4. Market risk (forex, interest rates, commodities) as a percentage of PBDT
less than 2% less than 5% greater than 5% don't know a percentage of PBDT

C. PROCESS

1. What risks are managed by treasury
forex interest rates, liabilities interest rates, investments commodity

2. Does the company have a doucumented risk management policy?
Yes No

    Is it approved by the Board?
    Yes     No

When was it last reviewed and revised?
less than 1 yr less than 2 yr greater than 2 yrs

3. Does Treasury have formally defined goals and objectives?
Yes, objectives are quantifiable Yes, but objectives are not quantifiable No, treasury objectives are not well defined

4. Is Opportunity Capture Important?
Not very Important Fairly Important Very Important N/a

5. Is there a quantitative target decided for each exposure (whether on basis of day 1 forward rate, costing / budgeted rate or any other benchmark)?
Yes No

6. What is the base for evaluating the treasury performance?
Accounting FX Gain/loss Cash Fx Gain/Loss Gain/loss v/s budgeted rate No process

Interface with business divisions

7. Does Treasury provide any input to business division for deciding the invoicing currency?
Yes, and the treasury has to approve invoicing currency for each new customer/contract Yes, but treasury only provides informal decision support. No, treasury does not provide any significant inputs. Such decisions need to be taken very rarely in our company.

8. Which of the following options is given priority while deciding the time horizon for which the risks are identified?
Market Trend Inputs from business divisions and general transaction cycle

9. Does treasury provide budget rates for export pricing / import costing?
Yes No

10. Are these (budget rates) used as transfer prices for business division
Yes No

11. Is treasury performance measured with respect to these budget rates?
Yes No

12. If there are changes in amounts or due dates of budgeted exposures, are gains/losses on cancellation or rollover of forward positions charged to the business division?
Yes No

Treasury operations

13. When are exposures identified as risks to be managed by the treasury?
before formal sale purchase contract (on estimated basis) date of formal contract date of invoice when it is reported to Treasury other, please specify

14. Are different types of exposures (e.g., regular exports, project-related imports, liabilities, etc.) identified as risks differently
Yes No

15. If you have both inflows and outflows, does Treasury manage
net book inflows and outflows separately

    Is the naturally hedge part managed through
    EEFC account      covering an equal import/export on any actual realization/ payment     not managed actively

16. Does Treasury have a mandatory hedging requirement?
no yes, less than 50% yes, greater than or equal to 50%

17. Which of the following instruments may the treasury use
forwards options (vanilla) zero cost options leveraged options swaps swaps with embedded options more complex structured products all available instruments

18. What is the management/ treasury perception about paid options?
Generally too expensive for practical use. We use them provided the costs are low. We use them regularly like any other insurance.

19. Is the treasury permitted to pay upfront premium to buy options to hedge exposures?
Yes No

20. Is there an articulated cap on how much the treasury can spend on options?
Yes No

21. Which information sources does treasury use?
Reuters Bloomberg other, please specify

22. Does treasury use any decision-support tools
MTM-based VaR-based other, please specifyno

Reporting and control

23. Is there a regular mark-to-market (MTM) of

a. Entire Portfolio of exposures and positions
Yes No

b. Only open positions
Yes No

c. Covered positions
Yes No

d. Derivatives (options, swaps, structured products)
Yes No

    How often does the CFO see the MTM
    daily      weekly      fortnightly      less often

24. Is the CFO involved with hedging decisions

for liabilities / loans?
daily weekly fortnightly less often

for regular import/export exposures ?
daily weekly fortnightly less often

25. Do you have independent confirmation of transactions (back office)
Yes No

26. Is forex performance reported to the Board
Yes No

       Is there a clear distinction made between cash gain/loss and accounting gain/loss
       Yes      No

       Is an MTM-based report provided to the Board?
       Yes      No

D. STRUCTURE

1. Is there a separate, independent treasury?
Yes No

      Is treasury performance measured on objective quantifiable parameters?
      Yes      No

    Does the performance feed directly into compensation?
      Yes      No

2. How many people staff the treasury on a full-time basis?
no full-time person upto 2 upto 4 >4

3. Who heads the function
Head of Finance/ Accounts Head of Treasury CFO

4. How many training days per year are budgeted per person in treasury
less than 2 less than or equal to 5 greater than 5

E. SYSTEMS

1. Does the company have an ERP?
Operational In implementation No

Please specify

2. Is there a seperate Treasury Software
Yes No

Please specify

Is it

Internally developed (in Excel)
Yes No

Internally developed (in a higher platform)
Yes No

F. COMMODITY RISK

1. Does the company actively manage commodity ?
Yes No

2. Is the company a user or producer of commodities?
User Producer Both

3. Who Manages the Commodity Risk?
Treasury Purchase CEO Other

4. How is the risk Managed?
Natural Hedge Futures Transactions Back-to-back transactions with customers and suppliers Long-term contracts

5. Is commodity risk quantified and measured in any way:
Yes No

G. CREDIT CRUNCH AND LIQUIDITY MANAGEMENT

1. Does the treasury prepare a cash forecast?
Yes No

2. How far out is the cash forecast prepared?
3M 6M 12M >12M

3. Is a scenario analysis done on the cash forecast to identify potential liquidity gaps
Yes No

4. Are all cash collections and expenditures controlled by the treasury
Yes No

5. Does the treasury approve major capex plans before they are committed
Yes No

6. Does the treasury identify asset/liability mismatches (funding long-term assets by short-term funding):
Yes No

7. Does the treasury have contingent funding lines in place in case of a liquidity shortfall
Yes No

8. How many days worth of average cash spend is this line
0-15 15-30 greater than 30 days

H. COMMENTS