Shree Ganesh Jewellery House (SGJHL) is planning to reduce its exposure to overseas markets considering a credit risk involved in exports. It has taken this decision looking at the slowdown in demand. SGJHL’s majority sales in the overseas markets are non letters of credit (LC) backed and therefore involves a huge counter party payment risk.
The company increased a three-month credit period on gold jewellery exported and nearly 100% of its exports are done on a credit basis where the payment is received after the dispatch of the consignment. The entity has witnessed instances where customers have sought for a roll over in credit period, so there is a credit risk involved in the process.
