There are multiple challenges operating a complex centralised treasury with a lean team for the scale of our operations. Alongside operating across multiple time zones, we also face challenges navigating and keeping abreast of the changing regulatory environment in the jurisdictions that we operate.
Much of the recent innovation at Tata has come via automation. It spans the adoption of cross border cash concentration and pooling structures which enable a single view of liquidity and efficient cash utilisation to implementing treasury management software which has enabled the automation of our day-to-day operations so that the team can focus on more strategic aspects of treasury rather than transaction management. For example, we have automated cash forecasting, the recording of banking and loan transactions, and FX derivative management.
Treasury now plays a critical role in driving the company’s overall financial strategy and decision-making as a key advisor to the C-suite. Last year we adopted a sustainability linked borrowing framework to align all future long-term debt financing with our environmental commitments. The cost of borrowing in this facility is now tied to specific carbon emission reduction targets and continuous improvement in our sustainability performance. I would like to see a big increase in adoption of sustainability linked borrowings amongst Indian corporates.
We have launched a RFP for a Global Cash Management Solution that will take a fresh look at the way we manage our cash, including integrating new technology in blockchain and cash applications.
For example, we want to establish a single sign-on for multiple banking platforms and payment processing through secure API connectivity and implement a notional cash pool to effectively manage and utilise our cash and banking limits. We are also exploring how to optimise our costs and ease the pain of complex KYC requirements by leveraging virtual bank accounts for various entities, and other technology solutions.
On the strategic front, we are working to ensure the company’s holding structures give treasury the optimum operating leverage and are fit for future growth.
Today, the most obvious treasury trend in India is technology adoption. There is a great deal of buzz around modernisation through adoption and implementation of treasury management software. As an increasing number of Indian companies “go global” and harbour global ambitions, this is becoming a high priority for treasurers.
In a trend that is driven by softer regulation and the increasing availability of global capital for Indian issuers, more Indian names are debuting in the US dollar bond market. Borrowers are also tapping funding from Export Credit Agencies which is giving Indian corporates access to competitive and long-term financing.
India’s corporates face volatile financial markets and geopolitical uncertainties. Given Tata’s ambitious growth plan, my job is to provide certainty and insulate the P&L from financial market volatilities. Uncertainty and volatility are already changing the way our customers contract with us, visible in customers demanding local currency billing and challenging pricing, for example.
Moreover, we find some of the countries we operate in are facing increasing foreign exchange shortages, amplified by the challenge of getting money out of certain jurisdictions. Furthermore, supply chain disruptions linked to geopolitical events threaten to delay the overall delivery revenue realisation cycle. We are partnering with the business and working with our customers to find solutions to work around these risks. It involves taking a hard stand on some decisions, and this is one of the biggest challenges we face.
Treasury at Tata Communications is focused on scenario planning and constantly enhancing risk management frameworks. We are focused on insulating the business from disruptions like cyber threats or any restricted access to our assets given geopolitical scenarios. We have also prioritised working with our insurers. Treasury at Tata Communications will continue to evolve every day in response to macroeconomic shifts, technological advancements and increasing strategic demands. Creating an agile strategy that can foresee these changes and adapt ahead is key to staying relevant. Our treasury function will evolve to ensure that we maintain the role of key strategic advisor and enabler for the business.
