Treasury Practice

Problem Solved: Suresh Chettiar, Lupin

Published: Jul 2016
Suresh Chettiar, Vice President – Treasury, Lupin

Citi

Indian pharmaceutical company Lupin conducts various conferences and market events in India and overseas every year. With the sums spent on such events growing in tandem with the business, Lupin wanted a solution to help them make payments to vendors in a more efficient manner.

Suresh Chettiar

Vice President – Treasury

Lupin logo

Headquartered in Mumbai, India Lupin is an innovation led transnational pharmaceutical company producing and developing a wide range of branded and generic formulations, biotechnology products and APIs globally. The Company is a significant player in the Cardiovascular, Diabetology, Asthma, Pediatric, CNS, GI, Anti-Infective and NSAID space and holds global leadership positions in the Anti-TB and Cephalosporin segment. Lupin is the fifth largest and fastest growing top ten generics player in the US (IMS Health) and the third largest Indian-pharmaceutical company through sales globally. The Company is also the fastest growing top ten generic pharmaceutical players in Japan (ranked ninth) and South Africa (ranked fourth – IMS Health).

Problem…

With the business growing very rapidly, Indian pharmaceutical giant Lupin was finding the administration around marketing spend for the various promotional events it hosts increasingly complex and time consuming. Traditionally, administration around such payments was conducted manually. Marketing personnel across various departments and regions would reach out to the central administration team for payment of the required hotel arrangements, which would then be paid in advance or with a credit card number belonging, more often than not, to a senior representative of the admin team.

The process created a heavy workload across the company. Treasury had to ensure that the account for making these payments was funded on a regular basis. Reconciling transactions, managing vendors and attempting to gain visibility and control over spend for promotional events was also proving increasingly time consuming for admin staff.

“Our traditional methodology worked while the company was still relatively small,” says Suresh Chettiar, Vice President – Treasury, Lupin Limited. But with the company averaging 20 to 22% CAGR in revenue over the past ten years, marketing spends were also growing. A new way of working was evidently required. “As the company grew over a period of time, handling our marketing spend in this way became quite tedious and difficult,” Chettiar explains. “And that is why we started looking for a solution.”

…Solved

A solution was required that would meet the demands of each of the three main internal stakeholders: marketing, administration and treasury. The company’s marketing executives wished for a solution allowing staff to simply make a telephone call to colleagues in the admin team with details of the booking required to get a budget assigned. The admin team, on the other hand, wanted something offering simpler reconciliation and greater visibility and control over payments. Finally, given the very large value of the sums being spent on events, treasury required a solution that would allow it to extend payment terms to improve working capital metrics.

After carefully considering the problem, Citi suggested a virtual card solution to be integrated into Lupin’s internal workflow. Using Citi’s Virtual Card Platform, a unique 16 digit card number is generated every time there is a request for payment. These card numbers can be generated for specific values, validity dates, merchant categories or even suppliers – thereby eliminating risk of misuse or fraud. The vendor, having received the card, then accepts the payment and the bookings are confirmed.

A company-designed authorisation matrix is accessed on the platform providing controls on the issuance of credit card number. Citi’s solution gives Lupin’s team capability to input up to 30 fields of enhanced data at the time of card generation including department information and invoice details, amongst others. A consolidated management information system (MIS), including the enhanced data and payment information, is shared back with the designated administrators within Lupin.

The whole process around event payments is running much more smoothly now. Marketing executives can select a venue for an event without any time constraints, coordinate payment for the event with the admin team, and have a wider choice of event hotels and venues to the dealing teams, thanks to Citi’s Virtual Card Platform. In essence, they have all the information they need to process the transaction at their fingertips. Working capital blockages have also been removed since payments for events no longer need to be made upfront. Finally, reconciliation is greatly simplified thanks to the additional data elements captured with each payment request and offers convenience to marketing, administration and accounts teams.

Of all the solutions on the market, Lupin felt Citi’s Virtual Card solution was the best fit. The strength of the company’s relationship with Citi and its confidence in the bank’s support staff were identified by Chettiar as important factors in that decision. “We have a lot of experience working with Citi and that provides great trust and comfort,” he says. “Because of that we know if something does go wrong, Citi has a very strong backup team”. Chettiar says, “the solution represents a landmark shift for Lupin, and the company is now looking to increase the coverage. We are extremely satisfied with the solution,” he says, “and that is why we wish to expand it into new areas.”

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