Treasury Today Country Profiles in association with Citi

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InterGlobe Aviation Limited, Winner, Best Cash Flow Forecasting Solution

Photo of Morgan McKenney, Citi, collects the award on behalf of InterGlobe Aviation Limited, with Sophie Jackson.

InterGlobe Aviation Limited identified liquidity management as a critical facilitator of continued sales growth and future cost reductions. The company worked with its bank to improve cash flow forecasting accuracy through enhanced analytics and improved visibility which has delivered some impressive benefits.

Photo of Morgan McKenney, Citi, collects the award on behalf of InterGlobe Aviation Limited, with Sophie Jackson.

Shveta Kapur

Associate Director, Treasury, Finance

IndiGo is a low-cost airline headquartered at Gurugram, Haryana, India. It is the largest airline in India by passengers carried and fleet size, with a 38.20% market share as of September 2017.

in partnership with

Solution automates the entire cash forecasting mechanism

The challenge

IndiGo identified liquidity management as a critical facilitator of continued growth and future cost reductions. With over 20 banking relationships and more than 40 accounts, its treasury team was facing cash management, risk management and other challenges regarding management of banking operations.

The team lacked full visibility into many of their accounts. From analysis to execution, and reporting, IndiGo’s liquidity management model was fraught with manual administrative exercises and was highly susceptible to various financial and operational risks. Inefficiencies due to the manual execution were compounding the efforts required to manage their daily growing fund volumes.

Shveta Kapur, Associate Director, Treasury, Finance recalls, “Our treasury model lacked much needed scalability. Thus, the existing processes needed an immediate re-engineering to manage our treasury operations more effectively.”

The solution

IndiGo partnered with Citi to perform an end-to-end review of its liquidity management processes and looked to revamp its liquidity management model. IndiGo’s primary objectives included:

  1. Increase visibility:

    Real-time actionable visibility on cash positions and flows for accurate cash positioning and risk mitigation.

  2. Easy mobilisation:

    Automated, advanced rules-based movements to facilitate centralised access and control.

  3. Interest optimisation:

    Automation of the process of daily investments which would enable IndiGo to utilise a major portion of its daily collections and as a result bring about interest optimisation with more funds being deployed in investment instruments.

Best practice and innovation

IndiGo and its banking partner undertook this challenging treasury re-engineering project by means of implementing a multi-bank cash pooling solution. In partnership, they designed a unique operational workflow to eliminate manual intervention in IndiGo’s liquidity analysis and interbank fund management by automating the entire cash forecasting mechanism.

“Winning an Adam Smith Asia Award is a great honour and an excellent validation of the efforts put in by the whole team in implementing the solution!”

This included delegation of access to this tool to operational level members to get information as accurately as possible from each of the relevant AP/AR teams, resulting in cash forecasting and fund planning by the treasury. Post-implementation, IndiGo is realising benefits across liquidity management planning, transaction execution and reporting, and has earned significant financial savings, resource allocation efficiencies and risk mitigation. Through this pioneering solution, where cash flow and bottom line visibility and profitability are key parameters, IndiGo was able to truly overhaul their liquidity management model, making it more agile and robust.

IndiGo was able to set a new benchmark in treasury management which aligns with the ongoing government and central bank’s efforts to digitise banking solutions.

This was a particularly impressive project given the tough deadlines for implementation. Through this pioneering solution, IndiGo has become the first large corporation in India’s airline industry to automate interbank liquidity management end-to-end. All in all, IndiGo has established a new benchmark in treasury management and championed key national efforts to digitise and streamline banking operations in India.

“The solution that we have implemented is an excellent way of making the daily fund and liquidity management activity more effective, efficient and less prone to human error as it automates the process. It provides an excellent visibility of our existing cash across various banks in a single window and helps us to streamline the forecasting mechanism, resulting in overall higher efficiencies within the team.”

Kapur concludes, “Given exceptional internal requirements, we had a complex situation of managing our entire liquidity management process manually and this was the basis on which decisions for cash forecasting and fund planning were made daily. We are the biggest airline company in India and growing at an even faster pace, which makes the fund management exercise cumbersome for our treasury and finance teams.”

Key benefits

  • Reduction in manpower and improvement in productivity. Annual savings of 2,000 man hours.

  • Enhanced analytics and cash forecasting. Improved accuracy of cash forecasting.

  • Improved visibility and liquidity yield. Single consolidated view.

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