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Best in Class Treasury Solution in India Winner: Sanofi India Limited

Published: Apr 2021

 

Photo of Somak Ghosh, Sanofi India Limited.

Somak Ghosh

Treasury Head

Sanofi India is an entity of Sanofi Group, a Paris-based global health care leader that provides speciality care, vaccines, and general medicine solutions in more than 170 countries, and operates over 70 manufacturing sites across 32 markets.

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Phased cash management solution delivers for Sanofi in India during pandemic

The challenge

As Sanofi India expanded its business, its cash management processes became increasingly complex. It had grown its legal entities to four across Mumbai and Hyderabad and had eight banking partners and up to 45 bank accounts across the country serving varying purposes, creating immense inefficiencies.

The company also faced manual, paper-based payment processes, especially with its cross-border payments that typically required physical supporting documentation under the existing regulations of the Central Bank.

In addition, Sanofi India also had to contend with the non-optimal process of reconciling its cheques collections, a preferred mode of payment by distributors in India which dominated approximately 70% of its collections. With the abrupt onset of the COVID-19 crisis this year that triggered a country-wide lockdown in India and shuttered courier services, Sanofi India also had to find an alternative solution to collect and bank its paper cheques from its distributors.

Sanofi India’s goals were to:

  • Rationalise, harmonise and standardise its banking partnerships, to gain better bargaining power through higher concentration of business to fewer banks.
  • Leverage technology to automate the highly manual process of cross-border payments.
  • Adopt solutions to improve cheques collection process as well as move away from paper-intensive to electronic collections.

The solution

J.P. Morgan was one of two banks selected at a regional and global level to support all of Sanofi India’s banking needs. Sanofi India worked closely with J.P. Morgan to deliver a comprehensive cash management solution in phases.

To digitise its cross-border payments and processes, the company adopted the bank’s virtual branch end-to-end solutions for paperless imports as well as the exports. Through the paperless import solution, payment instructions can now be transmitted digitally to the bank via host-to-host integration with Sanofi India’s ERP. The solution also seamlessly integrates J.P. Morgan’s online banking platform with the Reserve Bank of India’s import data processing and monitoring system (IDPMS), where the bank can now validate and process Sanofi India’s cross-border transactions electronically. Sanofi India also has real-time visibility of outstanding import transactions through the IDPMS for better control of its regulatory obligations. The end-to-end exports solution provides Sanofi with full visibility, control and tracking of the entire lifecycle of goods and services export payments.

To optimise its cheques collections process, Sanofi India tapped into J.P. Morgan’s extensive network of partner banks and third-party logistic providers in India to expedite cheque collections.

The extensive network of partner banks proved critical for both Sanofi and its distributors during the height of the pandemic, when couriers were not able to pick up cheques from distributors, causing potential cash flow problems for Sanofi if collections were not being realised and possibly impacting the credit limits of its distributors who were not able to clear their payments.

Best practice and innovation

From design to implementation of the solution, both parties committed to frequent, deep-dive discussions between entire operating teams at Sanofi and J.P. Morgan of up to more than 20 people, across different lines of business and functions in multiple jurisdictions including France, Singapore and India, as well as third-party consulting teams.

“Technology was a critical element in the RFP and the bank had the systems to meet our automation expectations. We have resolved some key pain points unique to operating in India by implementing a comprehensive and holistic solution,” says Somak Ghosh, Treasury Head.

Key benefits

  • Decreased number of banking partners by 75%.
  • Reduced bank accounts by 80%.
  • Significantly enhanced treasury efficiencies.
  • Projected resource savings of 500 significant working hours a year.
  • Processed large volumes of cheque collections that would otherwise have been trapped working capital during the lockdown.

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Rohit Khatri

Head of India Multinational Corporate Sales for Corporate Banking
J.P. Morgan

The combination of the Virtual Branch, paperless imports and end-to-end exports solutions is a powerful mix that provides Sanofi with not just fully automated and digitised payments, but also complete transparency of the entire journey of exports and import payments, resolving multiple pain points that are characteristic of operating in India.

From the design to implementation of the solution, the partnership between Sanofi and J.P. Morgan had been first-class, with frequent deep-dive discussions held across different lines of business and functions in multiple jurisdictions, to ensure the solution was seamlessly executed.

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