Perspectives

Corporate View: Nitin Jain, Agrocorp

Published: Mar 2020

Nitin Jain, Head of Treasury and Capital Markets, Agrocorp International Pte Ltd

Leading the technological charge

While treasurers may not always be the first to adopt new technologies, today’s technology landscape has plenty of innovation to pique the interest of forward-looking treasury professionals. So with a Bachelor’s degree in Engineering and Computer Science, it’s no surprise that Nitin Jain, Head of Treasury and Capital Markets at Agrocorp, is working to make sure that his treasury department is up-to-date with the latest developments.

Nitin Jain

Head of Treasury and Capital Markets

Founded in 1990, and headquartered in Singapore, Agrocorp International is one of the leading integrated agricultural commodity and food solution providers in the world. Nitin Jain, Head of Treasury and Capital Markets and blockchain enthusiast, is responsible for ensuring everything runs smoothly for millions of dollars’ worth of transactions every year.

Jain has quite some experience when it comes to digitising manual processes. His first roles were in banks in India which were specifically hiring for someone to streamline paper-based processes within areas including treasury and trade. Following those roles, Jain moved to global conglomerate Cargill as Treasury Manager – the first time that the company had hired a technology expert in treasury.

“The idea was to see how we could deploy systems which would enhance the working capital cycle,” says Jain. “Most of the finance people who work in treasuries look at negotiating interest rates with banks and seeing how cheaply they can access funding. But my focus was on reducing our cycle time by using technology.”

Joining Agrocorp

After six years at Cargill, and five years as Treasurer of Xangbo Global Markets, Jain joined Agrocorp last year as Head of Treasury and Capital Markets – a role in which he has focused closely on optimising working capital.

“If you look at any commodity business, it has three basic pillars: credit, transferring payment, and the logistics business – which basically means supplying goods from one place to another,” he explains. “At Agrocorp, we cover 22 countries and shift around 11 million metric tonnes of commodities globally throughout the year, which in value terms is about US$3-4bn across the continent.”

Jain explains that the key challenges in any commodity business include reducing the working capital cycle and the cost of transactions. As such, one of Jain’s key focuses has been finding a way to use technology to allow for optimal interactions with banks, clients and shipping companies. “We’re trying to unlock the value in the supply chain,” explains Jain. He adds that this isn’t being achieved by reducing interest rates from banks, or by giving suppliers more credit, but by unlocking the working capital cycle.

The power of DLT

This has been achieved by the adoption of a distributed ledger technology (DLT) platform, developed by Agrocorp in partnership with DBS Bank and blockchain technology provider Distributed Ledger Technologies (DLT.SG) – a solution which was recognised as Best Fintech Solution in the 2019 Adam Smith Awards Asia. Using the solution, Agrocorp enables farmers to receive payments for their goods sooner, with a number of banks providing funding.

“We cater to about 4,000-5,000 farmers in Canada and Australia,” explains Jain, noting that individual contracts can range from thousands to millions of dollars. “The idea is that every contract is signed digitally, and that information goes on to the banks, then to the shipping agency, then to the insurer, and so on. Everybody gets the same view of the information, and at any point in time we have a clear view of what the status is.”

This platform saves a lot of paperwork – not only on the trade side, but also for interactions with the banks, which are now largely digital. “Most supply chain finance programmes are actually not bank agnostic,” comments Jain, adding that under the previous process, the business had not been able to serve smaller customers or high transaction volumes. “When we use technology right, we can now plug in a US$1,000 farmer financing programme, which was previously impossible,” he says.

According to Jain, implementing these processes has enabled the treasury team to reduce working capital by 15-20%. He emphasises that by adopting this solution, Agrocorp hasn’t just unlocked working capital, but has also reduced time spent on the physical movement of contracts and sending multiple applications to banks, as well as achieving savings on courier and documentation charges.

Agrocorp’s focus on helping the entire supply chain has produced other benefits as well. “We have become the partner of choice to every farmer,” explains Jain. “They get to see when they’re going to get paid, what is the status of the contacts, where the shipment is happening, whether the request has been sent to the bank or not.” In addition, the company is now able to track where goods have come from – and as Jain points out, end users are increasingly willing to pay a premium for being able to identify the origin of goods.

Sustainability at Agrocorp

Agrocorp is a strong believer in sustainability, and the adoption of eco-friendly work practices is central in the execution of all work streams across its business. “The partnership with DLT.SG supports our sustainability initiative, as it allows us to bring the entire supply chain in an ecosystem using a blockchain technology and application programme interfaces (APIs) together, to fill the gap in supply chain networks, eg traceability and transparency,” Jain explains.

With the blockchain functionality comes a seamless ability to identify, track and trace movements along the supply chain. At the same time, disclosure of data and information is enhanced. As sustainability becomes an increasingly popular area of interest for end customers, the sourcing of where products originate from has become a priority. This includes who we source from, when we source, and what is actually sourced.

The blockchain platform addresses these concerns and provides visibility on how the end products (from plantation to finished product) to the end customers are actually traceable and proven to be sustainable. Blockchain provides a network for all people involved in the supply chain to be digitally connected.

A smooth-operating treasury

Turning to the evolution of the commodities space, Jain observes that while companies themselves may be growing in size, the number of people trading commodities for those companies is shrinking. “We don’t have very big teams in the commodity sector any more – for us, the number of people in the entire process globally is 10-20,” Jain points out. “What that means is that you get to be involved in structuring processes and getting processes implemented across various geographies.”

But as in other sectors, soft skills are also important for treasury professionals. When it comes to his team, Jain has one specific quality he looks for in employees: empathy. “You are acting like an internal bank to the business providers, and you have to empathise with the business,” he explains.

A close second quality is innovation. The leaps and bounds made with technology in just the last decade mean that Jain is on the lookout for people that can offer the freshest ideas. “From a treasury perspective, I look for people who can think outside the box and look for solutions that can provide a competitive edge to the business,” he says.

Risk management

Naturally, risk management is a major consideration for treasurers in the commodity space. Agrocorp deals in commodities that are traded on exchanges which have deep liquidity, such as wheat, corn and soya beans, explains Jain. The company also deals in some commodities that do not have any hedging mechanisms, especially pulses, oilseeds and nuts. “The risk management for each set of commodities is very different,” he says.

Jain notes that in previous organisations, he encountered the view that the only commodities worth getting into were the ones for which exposures could be hedged on the market. “Some trading companies have strong guidelines on dealing in commodities that only have a hedging mechanism – whereas some other companies look at this as a positive, and want to work in places which don’t have an exchange-driven market,” he explains.

Modernising bank relationships

During his career, Jain has noted a significant shift where bank relationships are concerned. In the past, he says, “for every transaction, we used to approach the bank via phone or email.” Communications with banks could be difficult, owing to the fact there was no dedicated communication system.

Since implementing the blockchain platform, however, Jain says that the company’s bank relationships have become “very contextual”. For example, if a transaction involves obtaining a code for a particular letter of credit from 30 banks, it’s no longer necessary to write emails to those 30 banks. “Every time I input the details into the system, the entire request for code goes out to all the banks,” he explains.

When it comes to competing for transactions, Jain says that when a bank isn’t approved, it will receive feedback. “We are making banks compete for every transaction on a real-time basis, and every bank gets to know if they are losing business because they aren’t competitive enough,” says Jain.

The main benefits of this, according to Jain, are the ability to free up resources and access any number of banks with a single click. All interactions go into one system, stopping the cumbersome need for multiple systems interactions, and that system offers such in-depth information that it can benefit the banks too.

“When banks come for a review, we can tell them, ‘these are 50,000 transactions that we have sent to your system – you were able to do this; you took this much time to respond on certain transactions,’” says Jain. “We can also tell a particular bank, ‘you are good at handling some of the emerging markets risks, but you’re not good in terms of pricing when it comes to developed market bank risks.’” By being able to offer such detailed analysis, Agrocorp is able to eliminate a lot of inefficiencies and effectively handle relationships with multiple banks.

Technological treasury

Given Jain’s technology background, it’s no surprise that he has a history of embracing opportunities for efficiency whenever they arise. “About three years back, most of our processes were Excel-based. I saw this as an opportunity,” says Jain. Learning from his experience in other roles – not least how costly it can be to implement new systems – Jain is now looking to set up a “new-age ERP system” which can offer real-time tracking of every shipment.

“The legacy system can only talk about if an invoice has been created – it won’t talk about whether it has been signed by the counterparty, or whether we have taken insurance on that commodity, or what is the status of the goods,” he explains. He adds that where commodity trading is concerned, ERPs only handle information once a trade is completed – meaning there is a distinct lack of insight on all the processes in-between.

Agrocorp is currently in the process of implementing a new TMS, and Jain hopes that the new system will be able to extract more information from the DLT platform, as well as providing a more real-time view of the company’s cash flows.

Alongside this, Jain notes, the new system will have much more accurate cash flow forecasting. “There is a lot of ‘garbage in and garbage out’, because treasury takes information from the ERP, which talks about contract dates, but doesn’t have visibility over shipments and cannot project the cash flow correctly,” he explains. “The system we’re trying to implement involves real time tracking on shipments and payment to improve cash flow projection. When the information goes into our TMS, we need to be quite certain that whatever we have projected, we are going to get.”

A key question to ask for the success of any ERP or TMS is ‘how enriched is your information?’, says Jain. “We are spending a lot of time getting the processes right, and trying to loop in all that information from the DLT blockchain platform into our legacy system – from FX, risk, cash flow, and funding standpoints – to get our TMS to give us a holistic picture.”

Predicting the future

Looking forward, Jain says that innovation will be key to the future of capital markets. “One of the key things we’re looking at for the next couple of years is that once digital bonds and the digital issuance of commercial papers become a reality, we may be able to attract global investors, reduce our cost of capital and have an ordered base of investors.”

Where liquidity management is concerned, Jain believes the complexity involved in dealing with multiple banks will be a key challenge to overcome in the future. “When we deal with multiple banks – especially placing surplus funds in fixed deposits – there is no platform from which you can seek information from multiple banks on a real-time basis.” He’s hoping that either the regulators or a consortium of banks will get together to change this. “I want to see banks able to provide us with a deposit quote or an investment quote, on a platform, so that we can pick and choose.”

When it comes to predicting the future for trade finance, Jain believes paperless processes are on the horizon. “A lot of processes have been digitised already, but we haven’t seen some of the key players – such as the shipping agencies and the ports – becoming digital,” he says. But with pilots currently being conducted in various geographies, he’s hoping that it won’t be long before the entire industry becomes paperless.

A finance and family man

Away from the office, Jain says he is a blockchain enthusiast who enjoys trading crypto-assets. The crypto-market is 24/7, he explains, and as a result he can always find time to do that as well as spending time with his family.

Achieving the right balance isn’t always easy. When Jain’s career started taking off, his children were much younger, and he acknowledges that finding a healthy work-life balance was something of a challenge initially. “Not every day is the same – you will always have month-ends, quarter-ends and year-ends, which can mean you are getting home late at night,” he remarks.

By having the right processes in place, and by setting up people to be accountable for specific processes, Jain says it is possible to achieve and can maintain a better work-life balance. “But it took me many years to get that process right,” he concludes.

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