Published on December 10, 2024
The Tata Treasury and Investment Management Forum is a congregation of treasury experts from over 40 Tata companies. Instituted formally by Tata Business Excellence Group (TBExG) in 2023, the forum has been a platform for knowledge-sharing and best practices. These collaborative sessions have enabled group companies to leverage collective treasury expertise. In the past 18 months, Tata Technologies and Tata Starbucks have implemented several learnings from the forum, achieving tangible business outcomes.
Learnings implemented at Tata Technologies
Treasury dashboards
Ruchira Phanesar and Vishal Tandel, Corporate Finance & Treasury, Tata International, shared their journey in treasury analytics, in the meet hosted by Tata Motors on December 8, 2023. They walked the participants through their web-based platform, detailing project steps emphasising centralised borrowing reporting, analytical report generation for improved decision-making, and central-level monitoring of covenant compliance. The session concluded with a live demonstration of the system, featuring visual representation of the tool’s interface.
Motivated by the session, Tata Technologies has designed and implemented a comprehensive treasury dashboard tailored to its organisational needs. This dashboard provides real-time insights into global cash flows, investment performance, and risk management, empowering its team to make data-driven decisions swiftly and accurately.
Additionally, by consolidating accounts, Tata Technologies could improve cash visibility, enhanced returns and reduced costs (BG costs reduced from 50 bps to 25 bps, factoring costs reduced by 18 bps for the UK entity), further aligning its financial practices with industry best standards. These initiatives have strengthened the company’s financial infrastructure and enhanced its decision-making capabilities.
GIFT city structure
Discussions on GIFT city structure have strengthened Tata Technologies’ commitment to exploring investment opportunities and diversifying its global portfolio. The GIFT city structure provides a platform to enhance global cash yields, while strategically diversifying investments. Tata Technologies has effectively leveraged this platform, optimising returns and broadening its investment strategy.
By implementing well-planned investment strategies and leveraging GIFT city’s unique regulatory and tax advantages, Tata Technologies improved its global yield by 50-70 basis points. Additionally, the company has diversified Investments within India to align with cashflow requirements and achieve higher yields. These cumulative changes have led to an additional interest income impact exceeding $2.0 million (over INR 15 crore), with the global yield improving by 150 basis points compared to the previous financial year (FY24 vs. FY23).
Tata Technologies shared the successful implementation of best practices in GIFT city investments at the Tata Treasury & Investment Management Forum in FY24.
Learnings implemented at Tata Starbucks
As a growing company, it is essential to choose vendors and partners who provides excellent services at the best possible rates. In this respect, learnings from the quarterly best practices sharing sessions have helped Tata Starbucks to engage with group-level expertise on different facets of the treasury function. In the past 18 months the company could take back and implement learnings from these sessions, tailored to its needs.
Finer pricing for FX outward remittance from banks
Tata Starbucks sought better pricing for its FX outward remittance from banks, but faced challenges due to inflated margins, as no benchmarking data was available from other group companies. Through the Tata Treasury Forum, the Tata Starbucks treasury team could reach out to Tata Consumer Products, Infiniti Retail and Tata Motors to understand their arrangements with banking partners and the said volumes. Using this benchmarking data, Tata Starbucks could re-negotiate rates with existing and new banks. As a result, the margin was reduced from 30 paisa to 5 paisa and now to quarter paisa (all over a period of one year). Overall cost saving from this exercise is likely to be approximately 7 lakhs per annum. Furthermore, robust service levels help the company approach FX transactions with confidence.
Cash handling
Tata Starbucks explored moving its cash pick-up services from a bank to an independent agency, but faced challenges with pricing for new store opening. By learning from Bigbasket’s experience of transitioning to an independent agency, Tata Starbucks was able to negotiate better terms for its cash pick-up services. From Bigbasket, the company learnt how they had partially moved their business to an agency and their associated experience and outcomes. The learnings helped Tata Starbucks to close the deal with confidence. Earlier the rate was Rs 7450 per store per month which has been reduced to Rs 2360 per store. This has increased store profitability to the tune of 40 to 50 lakhs in FY 2023-24. In FY 2024-25, the savings are expected to reach Rs. 1.7 crore. The move also provided real-time visibility of cash pick-up processes, enhancing transparency and confidence.
Dynamic Currency Conversion
Dynamic Currency Conversion (DCC) is a tool that helps save merchant discount rates on international card swipes at retail outlets. Tata Starbucks benefitted from insights shared by Titan on the implementation of DCC, further enhancing its treasury practices.
Participants speak
Participating in the Tata Treasury Forum has been a transformative experience for Tata Technologies. Quarterly best practices sharing of treasury experts has been extremely helpful in enhancing knowledge of critical treasury operations such as governance & controls, liquidity & investment management, working capital management, risk management, systems & technology and economy. By leveraging GIFT city’s offerings, the company has expanded its portfolio's profitability and optimised its asset performance. This achievement reflects the company’s commitment to innovation and efficiency in treasury and investment management.
— Sushil Burnwal, Global Head - Treasury, Tata TechnologiesThe Tata Treasury forum organised by TBExG has been an outstanding effort to connect the various treasury teams across the group. Everyone can exchange notes openly and share candid feedback on the various challenges faced by their particular industry. Apart from it being a platform for exchange of knowledge, the forum provides deep insights on the critical areas inherent to an organisation in their growth journey. Collaboration, trust and support are hallmarks of such forums which has a multiplier effect on the group’s operations. Benchmarking of rates is a very important activity considering the financial impact it has on an organisation’s health and we were able to achieve considerable savings through fair negotiations. We intend to leverage such learnings and contribute positively in the coming years to the group’s vision of ‘One Tata’.
— Rahul Gattani, GM - Finance Excellence, Tax & Treasury, Tata Starbucks