“Treasury is my passion,” says Zurab Abutidze, Regional Treasury Director ASPAME at Danone. “There has not been a single day in my career when I did not look forward to going to work.”
Although treasury has been an important part of Abutidze’s life for 17 years, in childhood his dream was to become a diplomat. With most of his family involved in teaching foreign languages, it seemed a pragmatic career choice. “However, just as I was preparing for university, the Soviet Union collapsed,” he recalls. “In the countries of the former Soviet Union, the economic situation became very difficult, so my family took the decision to leave our home in Georgia and move to Russia.”
After taking a year to improve his Russian enough to be able to pass exams, Abutidze enrolled at a university in Moscow to study economics. Following further study and gaining a degree in finance, he realised that securing employment was going to be more of a challenge than he had anticipated. “In Russia, people start to work at quite a young age, even when they are still at university. By the time they finish they have already one or two years’ experience,” he reflects. Fortunately, a family friend was able to recommend him to the company where she was working, and although they did not have any available positions, they were able to offer Abutidze work experience in their treasury department.
When the member of staff responsible for banking resigned, Abutidze was able to take over the job. “You cannot imagine how happy I was,” he says, “because now I had a fixed position with a concrete responsibility.” For the next 12 months he gained a good understanding of treasury, being in charge of payments preparation and treasury reporting, as well as helping in cash flow planning and supporting issuance of bank guarantees and letters of credit.”
Although he very much enjoyed his work, the high cost of living in Moscow prompted Abutidze to find another position. At Metro Cash and Carry, as Deputy Head of Treasury Department, he was not only able to broaden his treasury experience but also travel to many of Russia’s cities. After a year and a half in the job, he found himself recommended to the outgoing head of treasury at Danone Russia (a former treasurer of Metro) as someone who might be a suitable replacement for her.
After several rounds of interviews, Abutidze was offered the position of Head of Treasury at the company – an outcome that he says came as something of a shock. “I was 27 at the time, with just three years of limited treasury experience and no managerial experience,” he recalls. “The scope of Danone’s treasury operations was much wider than my experience so far. That’s where the real treasury work started for me.”
On his first day in the office, Abutidze found a pile of old brochures from treasury seminars detailing the responsibilities of various regional treasurers. “I knew from day one what I wanted the next stage in my career to be,” he says. “When you know precisely what you want to do, you are already 80% there. You just have to be patient.” In fact, within a short period of time he was appointed Regional Treasurer of the CIS countries, which included Russia, Ukraine and Belarus. Then, when Danone merged with the much larger Russian dairy company Unimilk, Abutidze became Head of Corporate Finance & Treasury of the new venture.
After six years with Danone in Moscow, he moved to Brussels, where the in-house bank was located, with responsibilities for Central and Eastern Europe, Middle East and Africa. Eventually, when the group needed to fill the position of treasurer for APAC, Abutidze was proposed for the role. “I always wanted to work in Asia, specifically in in Singapore. Although I took time to consider it, I knew that I would say ‘yes’.”
Since January 2019, Abutidze has been based in Singapore, managing a treasury team that covers 22 countries stretching from Turkey to New Zealand.
“We also have local treasury teams in ten countries, some of them managing several jurisdictions,” he explains. “We are responsible for rolling out treasury policies and ensuring that they are respected. In some countries, like in Saudi Arabia, Israel and the Philippines, we have also joint ventures where treasury is managed by the partner, but we’re involved in funding and capital injections, and anything that requires involvement of both parties.”
The Singapore-based team supports local treasury teams in areas such as funding, making sure that there is always sufficient liquidity either through local credit finance or onshore pooling structures. “We use inter-company loans, offshore funding and capital injections,” says Abutidze. “In addition, we help local teams to establish the most efficient cash management structures, especially in the countries where we have many legal entities.”
The team also monitors all investments in the region through deposits or money market funds, ensuring that income yield is acceptable and it is also in charge of the bank relations at regional level. “As well as identifying banking strategy, we are also responsible for optimising the bank account structures and generating ideas as to how processes can be improved,” Abutidze says.
Joining Danone at a time when it had recently acquired the specialised nutrition business of Numico presented Abutidze with certain challenges. “There was no treasury department as such in the Numico Russian entity, with operations being split between accounting and controlling,” he recalls. “We had to move the majority of operations to the Danone treasury where we could start to manage according to our own rules and policies. It was my first experience of merging treasury functions, and it helped greatly when the group acquired Unimilk.”
The merger with Unimillk – which was three times the size of Danone in Russia – also brought new challenges. “It was heavily indebted, with many assets under pledge and a lot of covenants,” Abutidze says. “Removing all the covenants and renegotiating the contracts, as well as being able to reduce interest rates, resulted in savings of ten million euros in just one year.”
With over 30 entities, Unimilk also had more than 300 bank accounts. “We started to rationalise our banking relationships, simplifying account structures by optimising the cash management process, decreasing the number of bank accounts to less than 100 and moving business from local banks to Danone’s core banking partners,” he explains.
But for Abutidze, the most complicated part of the merger – and the most interesting – was the integration of the two treasury teams. “In Danone, we were a team of seven people; after the merger, we became team of 20. That was just in Moscow. In addition, we had seven regional treasurers and their teams in other cities in Russia,” he comments.
And not only was the treasury now very large in numbers – Danone and Unimilk also had very different corporate cultures and styles of management. “We were very careful to give people time to adapt. Our strategy was to keep the best treasury practices developed in Unimilk and integrate Danone’s values and ways of working, to decide what to bring forward as well as what to leave behind. I think it was quite a success.”
The road ahead
A current focus for Abutidze is the implementation of a treasury management system in the region as part of an initiative to centralise parts of the treasury operation, as well as centralising foreign exchange execution – a project that was recognised in the 2020 Adam Smith Awards Asia.
“We now just have a couple of countries left. We split the implementation into phases across the region, with a close coordination with the multiple internal and external stakeholders,” Abutidze explains. “We can already see significant improvement across every targeted parameter that we had on our list. We have increased visibility and transparency of the treasury flows, as well as increased security, which leads to an improved liquidity management strategy and a more effective risk management approach.”
In fact, the removal of repetitive tasks allows time savings of some 10% to 15%, freeing the team to work on more strategic tasks. “In the beginning, we rolled out three modules in TMS, which were cash forecasting, financial transaction position-keeping and bank fee analysis,” says Abutidze, “and now we are implementing the Business Intelligence module and the Bank Access Management module as well.
As part of the process, the team is implementing the payment platform CashPooler. “Instead of, say, having three banks and three different banking tools with CashPooler implementation, we will have just the one,” Abutidze explains. “We are centralising bank access management in Singapore. The objective is to get a standardised process for Bank Access Management across the key banks and geographies with standardised documentation sets, which will help us to increase security and compliance with our internal audit requirements, as well as reducing the treasury team’s workload.”
Abutidze is also working with a fintech in Indonesia to adopt a virtual account solution which will allow the closure of around 50 bank accounts and optimise bank relations in the country. “The solution will also allow us to achieve efficiency in cash management and enable our automatic reconciliation and the settlement of AR,” he says. “It will help us to improve quality, reduce the workload for the AR team, and contribute to a stronger credit control process with a lower credit risk level.”
Last – but not least – is the focus on China, where Abutidze is working with C2FO to adopt a pilot dynamic discounting solution in China in order to utilise local cash more efficiently.
“China is one of the most crucial markets for Danone globally, contributing 10% of the annual global sales, and it is a continually growing market,” he says. “It is also highly regulated, with a strict system of FX controls and additional barriers for cash repatriation, so our focus will be on liquidity and on maximising access through our offshore pooling structures. Improved access to cash in China will contribute to the growth of the business across the region, which is a major strategic goal for everyone.”
Expecting the unexpected
Like treasurers everywhere, Abutidze was faced with challenges upon the arrival of the COVID-19 crisis. Nevertheless, he is proud of the way his team managed the situation. “We did not face any major disruptions in treasury processes,” he reflects. “Fortunately, the replacement of physical signatures by e-signatures had occurred in some of the countries prior to the pandemic, and we could execute our FX hedging remotely using Bloomberg Anywhere.”
Because he felt it was so important to keep up the morale of the team, Abutidze spoke each evening with treasurers to keep abreast of any challenges or disruptions they faced and to find out how the business was doing. “Our industry did not suffer in the way that others did: people continued to consume our dairy products and baby food. We didn’t experience any liquidity issues which helped us to concentrate more on other important topics,” he notes.
Given the impact of the crisis on suppliers, the company adopted various measures which included payment terms adjustments and the allocation of liquidity facilities. “We have 15,000 small companies around us who are our most fragile partners, and the facility is aimed to help them to continue to operate,” Abutidze says.
One of the things that the pandemic has disrupted has been the ability to hold face-to-face meetings with local teams, and regional seminars where treasurers would share experiences and benchmark on different topics. “I would meet the teams and the local banks to discuss what is in the pipeline and thank the teams for a good job done as well as share new ideas,” Abutidze says. “I am hopeful that in 2022 we will be able to meet again.”
Looking ahead, Abutidze sees digital transformation as being on every treasurer’s priority list, not least because of the constant need for innovation. “As treasurers we are always being asked to do more with less resources,” he says. “In the past it was difficult to persuade businesses to spend money on treasury innovations. But COVID-19 has moved the world through a very fast digital transformation. We are at the heart of the company, so we can be involved in almost all areas of the business.”
Likewise, there is a growing shift towards the adoption of real-time data and processes as APIs and instant payments bring new opportunities to monitoring balances and payments on a 24/7 basis. “Even the FX management is starting to shift to real time,” Abutidze explains.
Meanwhile, if the last year has demonstrated anything, it is that times of greater volatility and uncertainty are when the role of the treasurer really rises to the fore. “When are we most visible? It’s during a crisis,” says Abutidze, citing his experiences during the 2008 financial crisis, the 2016 currency crisis in Egypt and Nigeria, and the current pandemic.
As Abutidze explains, it is in these situations that the finance director comes to treasury, to ask about the FX markets and liquidity, the political situation in different countries, and what kind of impact the crisis may have on the business. “So treasury naturally innovates and becomes more proactive than reactive, learning to anticipate negative events and maximise opportunities that come to the business, and becoming more and more of a strategic thinker,” Abutidze concludes.