Photo of Katsumi Kikkawa, Mandy Lim and Ankush Khurana, Hitachi India and Minako Stryer, J.P. Morgan.
Mandy Lim
Chief Treasury Officer
Katsumi Kikkawa
CFO
Rajni Jain
General Manager
Ankush Khurana
Deputy General Manager
Established in 1997, Hitachi India Pvt. Ltd. is the Indian subsidiary of the Japanese multinational conglomerate Hitachi.
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The challenge
The Hitachi Group operates more than 25 legal entities across India, spanning digital solutions, energy, infrastructure and financial technology. This complex corporate ecosystem created significant liquidity management challenges for Hitachi International Treasury. Building on Hitachi’s global treasury transformation project that established a centralised payment hub across nearly 700 group entities worldwide, Hitachi’s Global Treasury Centre (GTC) in Singapore and Hitachi India identified domestic cash pooling as the natural next step in its treasury evolution.
Prior to implementing the solution, Hitachi faced several critical treasury issues:
Sub-optimal capital allocation – some entities maintained surplus cash earning lower interest rates while other group entities borrowed externally at higher interest rates.
Manual bilateral loan processes – treasury staff relied on time-consuming counterparty communications with limited visibility across entities.
Infrequent transactions – the manual nature of transfers meant intercompany loan transactions could only be conducted at certain intervals, limiting flexibility.
Limited visibility and balances – treasury teams lacked consolidated oversight of cash positions across multiple entities, each operating with separate banking arrangements and ERP systems.
Unlike other countries where notional pooling is permitted, India requires actual physical movement of funds, only in Indian Rupee (INR), and cross-border pooling is also not allowed. Transactions between group companies face scrutiny regarding arm’s length pricing and can potentially trigger dividend tax implications. For these reasons, very few multinationals have successfully implemented complex cash pooling in India.
The solution
With a view to consolidating working capital positions in India, Hitachi needed a partner with a deep understanding of the local financial landscape who could overcome regulatory complexities while designing a structure appropriate to their specific shareholding patterns. After a thorough evaluation of the domestic pooling capabilities in India of five major global banking partners, Hitachi’s GTC selected J.P. Morgan. The bank emerged as the ideal choice for this project due to its proven expertise in delivering sophisticated, multi-entity treasury solutions.
Implementation involved navigating a complex stakeholder landscape. Each participating entity had a different local treasury team and reported to different regional headquarters, some to Singapore, others to the US or Europe, necessitating approvals from multiple leadership teams with entity-specific parameters for the pool. Automating liquidity optimisation for enhanced financial performance Hitachi sought to implement an automated cash pooling structure to meet its financial KPIs, efficiently collecting excess cash from cash-positive entities and providing funding to cash-negative entities, all while maintaining full regulatory compliance. Critically, this needed to be managed with existing resources without hiring additional staff. This solution served as the cornerstone of Hitachi’s financial strategy, driving operational efficiency and enhancing financial performance not just in India, but across the region.
“Winning this prestigious award is a powerful testament to our team’s dedication and excellence. It publicly recognises the hard work we’ve invested, energises our morale and inspires us to embrace new challenges with confidence.
For our company, this accolade serves as a mark of distinction in our field. It strengthens our credibility and reputation, making us more attractive to potential clients and partners. Moreover, it positions us as a top destination for exceptional talent – people want to work for a winner and this award proves we are just that.”
Mandy Lim, Chief Treasury Officer
Best practice and innovation
J.P. Morgan’s advisory-led approach to cash concentration in India’s complex regulatory landscape demonstrates innovation. By analysing shareholding patterns across Hitachi entities to determine precise pooling parameters, the bank established entity-specific rules to meet Hitachi’s objectives compliantly.
Cash pooling fosters responsibility among Hitachi’s entities, encouraging cash forecasting. Entities are empowered to optimise the use of internal funds and reduce external dependency, paving Hitachi’s sustainable growth and resilience. The solution automates end-to-end treasury operations, feeding MT940 statements directly into Hitachi’s ERP systems. Despite complexity due to multiple ERPs from acquisitions, the automation provides unprecedented visibility, eliminates manual intervention and enables data-driven decision making.
By the end of 2023, internal approval was secured to build the solution with J.P. Morgan. Implementation followed a phased approach, starting with just two entities in July 2024, expanding to six by year-end, reaching ten by Q125, with plans for 15 in total. This incremental strategy allowed for testing and adaptation, building stakeholder confidence across Hitachi’s complex structure, establishing a blueprint for treasury transformation within India’s regulatory constraints where few have succeeded.
Key benefits
Cost savings.
Process efficiencies.
Return on investment.
Increased automation.
Improved visibility.
Manual intervention reduced.
Future-proof solution.
Rajiv Warrier
Head of Corporate Payments Sales, J.P. Morgan India
J.P. Morgan is proud to collaborate with Hitachi in delivering a pioneering cash pooling solution that sets a new benchmark for treasury excellence in India. By navigating complex regulatory requirements and automating liquidity management across multiple entities, Hitachi has achieved significant efficiencies to support their continued business expansion in this strategic market. This collaboration reflects our commitment to innovative, client-centric solutions that empowers corporates to achieve their strategic treasury transformation objectives and drive sustainable growth.
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The Adam Smith Awards Asia are the industry benchmark for best practice and innovation in corporate treasury. To find out more please visit treasurytoday.com/adam-smith-awards-asia
