Published on January 12, 2022
Tata Power is working on upgrading and benchmarking its treasury management process. In this regard it wanted to understand good practices from other Tata companies in debt management and investment management. To support Tata Power in its improvement endeavours, TBExG facilitated best practice sharing sessions on investment management with Tata AIG General Insurance on August 16, 2021, and two separate sessions on debt management with Tata Capital and Tata Motors Finance on August 17 and 18, respectively.
The Tata AIG session was led by Vinay Rao, Chief Investment Officer. He explained the various processes related to investment management starting from a well laid down investment policy ratified by the Board, quarterly meetings of the Investment Committee of the Board, selection of the right set of companies and instruments to generate returns with minimal risks. The entire investment management at Tata AIG has resulted in it becoming a benchmark amongst general insurance companies in terms of generating higher returns with no defaults or rating downgrades in its debt portfolio. The discipline of having a very detailed investment policy, reviewed every quarter and modified as required and implementing it in a systematic manner was highlighted by Mr Rao.
In the following session on Debt Management, Kiran Joshi, Head - Treasury, Tata Capital, explained the approach to active debt management across instruments and how the company has stayed ahead in the industry by having sufficient liquidity at all times to support the business. It also maintains very fine rates for borrowings and also meets the stringent asset liability management guidelines of the Reserve Bank of India. All these processes are part of an integrated approach. The asset liability management focused on both from borrowing tenures across instruments and lending tenure across different products from three months to over 10 years and on varying Interest rates.
The Tata Motors Finance session was led by Amit Mittal, Head - Treasury. He highlighted the multiple approaches to the borrowing programme by continuously scanning the market for liquidity and interest rates to be able to borrow at the right time for both quantum and interest rates. The tie-up with banks for assigning the portfolio was also highlighted indicating deep relationships with various banks that the company has cultivated. This has been a win-win for both Tata Motors Finance and banks as it provides funds to the company and a priority sector portfolio for banks (many vehicle owners are categorised as eligible for priority sector lending) with lower costs of customer acquisition. This is further being enhanced through co-sourcing which has been permitted by the Reserve Bank of India subject to certain regulations.
The post session feedback from the Tata Power team has been very positive. There are learnings from each of the three companies, which the team can potentially implement to improve its cash management approach and reduce borrowing cost.
Participant Speak
We greatly appreciate the prompt support extended by the TBExG team in helping us organise the insightful sessions from multiple Tata companies on corporate treasury best practices. It was indeed a good learning experience and we have identified a few areas for further exploration and adoption based on these sessions.
- Barnita Dasgupta, Group Head - Corporate Treasury, Tata Power