Hindustan Unilever Limited (HUL) wanted to re-engineer its trade processes. The advent of digitisation and automation has moved the treasury world forward in leaps and bounds. HUL and its bank have jointly created a project (Trade Digitisation project) which leverages technology and has automated most of the processes, making reconciliation an automatic activity.
Photo of Thomas Aubry, Citi, collects the award on behalf of Hindustan Unilever Limited.
Senior Finance Manager – Treasury & Insurance
Hindustan Unilever Limited is India’s largest FMCG company with an annual turnover of over INR340bn (about US$5bn). A subsidiary of Unilever, it is listed on the BSE Limited and National Stock Exchange and has a market capitalisation of INR2.3trn (US$36bn), as of June 2017.
in partnership with
Removing the burden of reconciliation
Hindustan Unilever Limited (HUL) and its group entities have significant cross-border trade flows. In 2016-17, roughly INR13bn (US$189m) each of inward and outward trade flows were made, imports primarily being in HUL and exports largely out of a wholly owned subsidiary, Unilever India Exports Limited (UIEL).
With a large number of cross-border flows, it was of utmost importance for HUL to simplify trade transactions and digitise processes where possible. Furthermore, with the number of stakeholders partaking in a single transaction (ie counterparties based out of countries with varied regulations and documentation, freight forwarders, carriers, customs, government agencies and banks, besides internal partners) it was essential that the processes adhered to the required regulatory regime of complex cross-border trade.
Thus, HUL embarked on a trade process re-engineering exercise with the key objectives of:
Simplifying operations and reducing manual activities through the extensive use of technology and outsourcing.
Deploying robust controls across the system in general and specifically to ensure all associated regulatory compliances.
Reduction of associated banking costs.
Integration with its accounting systems.
HUL and Citi evaluated each sub-process across HUL’s imports, exports and cross-service payments and its associated entities in great detail. The evaluation ranged from identifying various parties involved in each transaction, and the type of activities facilitated by the said parties. Based on the type of activities and the total time spent on each activity, these were further segregated into core and non-core.
HUL and Citi then decided if these activities should be automated or outsourced. Given HUL’s preference to connect via SWIFT, Citi supported that set-up via its global connectivity to Unilever Netherlands such that every instruction and reverse feedback to HUL is sent through the SWIFT network.
Best practice and innovation
Trade transactions in most countries require a high level of due diligence and manual intervention due to the regulatory framework. Handling these transactions, reconciliation with remittances, accounting in line with accounting standards, compliance with regulatory requirements are some of the cumbersome processes which are integral to import/export transactions.
The advent of digitisation and automation has taken the treasury world in leaps and bounds and HUL and Citi have jointly created a product which leverages technology and has automated most of the processes making reconciliation an automatic activity.
Through the implementation of the HUL – Citi Trade Digitisation project, compliance-related to import/export has been fully digitised. This helped HUL to ensure all regulatory filings are completed in a timely and accurate manner. It also enables the outsourcing of non-core activities resulting in significant costs savings.
All requisite information is available through Citi’s portal, thereby guaranteeing a reconciliation rate of 100% as accounting entries are updated in SAP via SWIFT without any manual intervention. This is a one-of-a-kind project implemented for a corporate in India that conducts more than 4,000 transactions amounting to INR25bn a year.