Treasury Today Country Profiles in association with Citi

Marico

Marico, Highly Commended, Best Risk Management Solution

Ravin Mody, Marico

This case study shows how Marico addressed the issue of critical data being maintained in Excel files. They have combined a foreign remittance portal and a third-party risk manager tool to automate their foreign exchange management with some impressive benefits.

Photo of Ravin Mody, Marico.

Ravin Mody

Head of Treasury, IR and M&A

Marico is an Indian consumer goods company based in Mumbai, providing consumer products and services in the areas of health and beauty.

The challenge

The key challenges at Marico can be summarised as follows:

  • Records of all foreign exchange realisations/remittances, derivative transactions, communication with the banks regarding utilisation of derivatives for foreign exchange remittances and realisations and the respective underlying documents were maintained in Excel files.

  • Foreign exchange payment requests from user departments along with related documents and tax clearances were handled over email, leading to confusion regarding the status of payment at all stages.

  • Statutory Compliances, MIS reports and Accounting entries were prepared manually in Excel files.

  • The process was completely manual, time consuming, lacked standardisation in the upkeep of the database, involved a high risk of missing compliance deadlines and had a strong potential to cause significant monetary and non-monetary losses to the organisation.

Opportunity

Digital forces have brought about a lot of changes in the business environment. Marico recognised the opportunities presented by such forces and have developed a strategy to harness them in order to become a digital savvy company. The company follow a cycle of Listen→Reach→Engage→Innovate→SELL→Analyse→Automate. They identified automation as a theme to develop a solution in order to mitigate risks involved in foreign exchange payments and derivative contracts.

The solution

After putting the above process through the digital strategy, Marico has developed and implemented the following solution for the efficient management of the company’s foreign exchange processes:

Foreign remittance interface
  • It streamlined the process of making foreign exchange payments for goods and services incorporating the work flow required in making these payments.

  • Facilitates creation of digital repository of documents together with robust internal control framework.

  • Real-time status and easy access of payment requests to all the details/documents related to the payment request in one place.

  • Email alerts at all stages of the request to ensure statutory compliance.

Foreign exchange derivatives lifecycle management

A holistic approach to track and automate the entire lifecycle of currency contracts and compliances.

It has the following features:

  • Real-time database, tracking, reminders of all derivative transactions.

  • An escalation matrix built-in, for ensuring statutory compliance such as timely submission of underlying and deal confirmations to the bank.

  • Alerts for rollovers and exposure-wide tracking of derivatives booked.

  • Generation of derivative accounting entries, audit documentation, statutory, conforming to applicable accounting standards and other MIS reports.

Best practice and innovation

The solution enables Marico to meet its key strategic objective of best in class governance and risk management framework. It enables a superior risk management framework for foreign exchange contracts automating the operational and accounting aspect.

Key benefits

Foreign remittance interface
  • Automated internal controls.

  • Statutory compliance.

  • Reduces manual effort.

  • Facilitates error-free automated accounting in SAP.

Foreign exchange derivatives lifecycle management
  • Automated controls by replacing all Excel files.

  • Robust system-driven statutory compliance framework.

  • Generates a report showing daily outstanding open exposures and open derivatives which is audited and certified by the statutory auditors as a part of compliance to RBI Guidelines.

  • One-click generation of accounting entries, audit documentation and other MIS reports.

  • Automation has resulted in improved accuracy and a saving of at least 12 to 15 man days annually.

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