Nestlé India pioneers cross border supply chain finance solution
Published: Feb 2025
Best Funding Solution
Highly Commended Winner
Nestlé India
Photo of Felicia Foong, Svetlana Boldina and Rahul Jagga, Nestlé India.
Rahul Jagga
Treasury Head
Nestlé India is a subsidiary of Nestlé S.A. of Switzerland. With eight factories and many co-packers, Nestlé India is a leading player in the Indian fast-moving consumer goods (FMCG) industry, with a strong position as one of the top two players in most of its product categories, including milk products and nutrition, beverages, chocolate and confectionary.
The challenge
Nestlé India was looking for a way to support its offshore suppliers by extending early payments and help their working capital. In a win-win, the consumer goods giant also wanted to build its ecosystem of suppliers to support growth by rolling out a new funding solution.
It required innovation and a deep understanding of the local market to traverse multiple regulatory requirements, including:
Deutsche Bank India could not onboard offshore suppliers and offer such a solution as per local regulations.
Nestlé India could not directly enter a supply chain finance (SCF) arrangement with offshore bank according to local regulations.
Nestlé India could not open an account with offshore banks for settlement on due date. All payments from India on due date could only be made through Deutsche Bank India after performing due diligence as per local regulations.
Nestlé India was required to submit documents/information to Deutsche Bank India as per local regulations.
Nestlé India was required to share two separate instructions to enable the solution and promote complex digital integration:
To Deutsche Bank India (local bank for payment on due date).
Deutsche Bank Frankfurt (supplier finance bank).
The solution
Deutsche Bank successfully delivered a first of its kind end-to-end digital cross-border SCF solution. Amidst stringent timelines, the bank was able to leverage its automation capabilities, demonstrate deep product knowledge, construct superior structuring, display regulatory expertise and uphold quick execution standards.
Best practice and innovation
The bank developed a machine-enabled auto-matching of invoices with regulatory data on Trade Pay to enable automated payments. Such checks are mandatory for banks to comply with local regulations. The data is called a bill of entry and is available on the Reserve Bank of India (RBI) platform, an import data processing and monitoring system, eliminating the manual reconciliation requirement for Nestlé and Deutsche Bank India.
Key benefits
Cost savings.
Process efficiencies.
Improved key performance indicator (KPI) metrics.
Increased automation.
Errors reduced.
Manual intervention reduced.
Increased system connectivity.
Future-proof solution.
This is the first structure in India providing a single end-to-end automated SCF solution for cross-border suppliers that adheres to regulatory compliance with respect to payments considering India is a regulated market.
“This solution allows our treasury to efficiently manage our working capital requirements, while optimising and automating our entire process flow,” explains Rahul Jagga, Treasury Head.
The Adam Smith Awards Asia are the industry benchmark for best practice and innovation in corporate treasury. The 2024 awards attracted 406 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia
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