It was seven-time major winner Arnold Palmer who said: ‘golf is deceptively simple and endlessly complicated; it satisfies the soul and frustrates the intellect. It is at the same time rewarding and maddening.’ Although, he (probably) did not know it, Palmer was not only describing golf in this phrase, but also summing up the role of the corporate treasurer.
At the most fundamental level, the role of treasury is simple – to ensure the company has sufficient cash, and in the right place to meet its ongoing financial obligations. The ways and means to achieve this however are endless and, at times, infinitely complex. Therefore, comparable to golf, being a successful treasurer is both hard work, and at times frustrating, when you are at the mercy of external forces. But, with perseverance and commitment the results can be extremely satisfying and rewarding.
This is something that Harjeet Kohli, Group Head – Funding, Risk, Markets & Investors (GFRM) at Bharti Airtel – an avid golfer himself – and his team know well. In 2014, Bharti Airtel were widely recognised in the industry for their achievements; including being named the inaugural Treasury Today Asia Adam Smith Awards Top Treasury Team of the Year. It was a recognition that came after years of hard work on multiple projects that have not only reshaped the treasury department but also the company.
Award winning treasury
Prior to Kohli’s arrival, the Bharti Airtel treasury operation, like that of many companies, was more or less a siloed function. Yet, rapid growth and expansion into new markets was placing increasing and unfamiliar pressures onto the company financially. “The changing and fast-expanding needs of the company resulted in an increasingly strategic objective and placement of the treasury unit, thus guiding our transformation from treasury to Group Funding, Risk and Markets (GFRM) in its present form,” says Kohli.
To achieve this, Kohli and his treasury re-organised and structurally rebuilt treasury as GFRM, clearly aligning and expanding the scope, strategic priorities and mission of the unit to encompass the new challenges. A foundation of seven key pillars of GFRM were defined as a starting point, namely: debt management; risk management; working capital management; ratings management; capital structure management; controls and compliance; and policy and governance. Kohli acts as on overseer of all these seven pillars with four (debt management, risk management, working capital management and controls and compliance) each having their own dedicated sector heads, reporting into Kohli.
Despite not managing these four directly day-to-day, ultimately responsibility still rests with Kohli. “I would not say I have a heavy or light touch in regard to managing these verticals,” explains Kohli. “We have routine review based engagement every 30 days incorporating all priorities, status and steering of help required – apart from this I don’t like to interfere with what they are doing. My job’s existence and thereby my focus is to be a strong business partner. Working capital management and investor relations are the operational and strategic entry gates respectively for this partnership and the other pillars enable/foster business growth. This combined approach of ‘optimal-touch’ within the team and “business partner” ensures we remain one to two years ahead at all times in all aspects of treasury business.
Opening up on his management philosophy, Kohli describes how he has always looked to provide his staff with adequate room to stretch themselves and find out what they can and can’t do independently. “I believe this gives them the opportunity to develop organically,” he says. “But it is equally important to coach, align, direct and steer your team. This allows them the required directional focus and yet adequate headroom/latitude and confidence to design new and innovative solutions.” Overhauling the treasury department in such a dramatic fashion has brought a host of operational and financial benefits including allowing treasury to partner with the business more effectively, capture the benefits of a global, centralised treasury and also harness the synergies of each pillar by making them a specialist and yet co-exist. The transformation has not only paid testament to vision of the treasury team, but also the entrepreneurial spirit of the company, something which Kohli encapsulates. “When you receive awards for work such as this it really reinforces the belief of the whole group on the system and the way that it is working across the verticals, especially the belief in the entrepreneurial spirit that allowed, in the first place, for the treasury to dream of this transformation. It also raises the bar and forces people to push a little further, each day.”
Within the GFRM structure there are three verticals which Kohli retains full management over. “The ratings management, capital structure management and policy and governance verticals I directly manage because they are heavily strategic in a franchise sense and strengthen my business partnership objective – which is probably why at Airtel all equity and hybrids (if any) also get dealt by treasury,” he says. Notably, Kohli had led the IPO of Airtel’s subsidiary Bharti Infratel to create a $10bn+ market cap company, two years ago. As part of his role, Kohli also engages with the board every quarter, allowing him to understand their thoughts and concerns and then marry these with his thoughts to develop an actionable plan. “These are not typical functions of the corporate treasury but they are areas I feel at home in given my previous experience in the banking industry. It also highlights the faith the board has in GFRM to deliver.”
Having qualified from the University in Delhi with a degree in mechanical engineering and an MBA in finance Kohli began his banking career with Citi in India. “Initially I worked in core banking,” he says. “This was very much banking in the trenches and it allowed me to learn the ropes.” Following this Kohli found himself seeking exposure in other areas of the bank, working in sales, relationship and market management roles across the corporate and investment bank.
Incidentally, during his time at Citi, Kohli worked extensively with Bharti Airtel on a number of deals. Then in 2008 the opportunity to work for a corporate manifested itself and this was something Kohli was keen to explore. “It was a good conversation and I was excited by the opportunities the company could offer.” While Kohli admits that he could have pursued his goals either in the banking industry or on the corporate side. As he explains: “banking is an amazing breeding ground for talent and I could have stayed in the industry and exposed myself to different areas of finance and in different countries.” But moving into the corporate side, and especially for a company of the size and complexity of Bharti Airtel, posed a unique challenge. “I saw an excellent opportunity at Bharti, the company offers a job scope which is complex and diversified and telecoms is an intense and ever-changing exciting industry. Joining the group has also given me the ability to gain competencies across multiple industries as part of group’s non-telecom businesses, utilising the cumulative learnings from my banking experience to build strategies for the group not just for treasury but also the wider finance function. As I reflect back these seven years, it was clearly the correct decision,” says Kohli.
Ahead of the competition
Bharti Airtel is a company with big ambitions and are looking to aggressively expand, not only in India but also in other markets. To achieve this, the company needs financial support and it is here that the role of treasury has increased exponentially and become deeply integrated with the business. Since joining the company, understanding the direction of the business and how it works has been a key focus for Kohli and something he believes is now vital for the modern corporate treasurer. “Treasury cannot operate in a silo and treasurers need to engage with business leaders and understand the direction it is heading in and prepare financing well in advance to support this. At Airtel our objective is to allow the business to assume that financing is always available for their next move. If it is not then it is a failure.” That’s what drove Kohli and team to enter capital markets three years ago, and running a large, deep and successful Bond programme.
Its expansion into new markets, in both Asia and Africa, has also presented a host of new challenges to the treasury department. “We are present in 20 markets overall and the vast majority of these are emerging. As we have seen in recent months the currencies in these markets are extremely volatile and it is vital that we manage these effectively and endeavour that our operational performance isn’t impacted through the volatility,” he says.
The challenge for the Bharti Airtel treasury is emphasised because of the nuances in each of these markets. “Many of the countries we operate in have different legal restrictions, financial infrastructure, and also currency pairs, all of which are evolving at different speeds,” says Kohli. A universal approach to managing these therefore cannot be taken and Kohli and his team have worked extensively to ensure that efficient and scalable architectures are in place that allow treasury to operate effectively. “To achieve this, first we created a global treasury product architecture and vertical and then rely heavily on our field treasury managers in each country. Their input and understanding of the local market is crucial to ensure we get the right solutions.”
Utilising these field managers and other internal tax and regulatory specialists also plays an important role in helping Bharti Airtel to effectively manage the regulatory objectives. “We first have to be compliant with all local regulations in each market we operate in, this we can’t sacrifice,” he explains. Yet, for Kohli managing regulation extends beyond compliance. Intimately understanding the regulations also provides the opportunity to maximise treasury efficiency. As he explains: “within these regulatory confines we look to build structures that allows us to effectively manage our liquidity. This falls under the remit of the working capital vertical and the team spends its time managing and re-routing the surpluses, ensuring these can be used to plug deficits where needed and in the most efficient and cost effective way. There may also be times when it is cheaper to borrow, but only an intimate understanding of the legal and regulatory environment can provide the answer.”
“As a bottom line, my measure of success can only be if GFRM has enabled accelerated growth for business, anticipated and carved out the path well ahead of time, including any equity or monetisations, provided strategic “outside-in view” through investor engagement, used technology efficiently and owned below – EBITDA financials of the P&L”.
It is not only internal partners that have helped Kohli and his team build an award-winning treasury, but also the group’s external partners, in particular the banks. “To date the banks we work with have been very effective and willing to stretch to meet our demands,” says Kohli. Of course, being one of India’s largest companies makes Bharti Airtel an attractive client for the banks, but the assistance the company has received with its global expansion demonstrates to Kohli that these relationships are both mutual and extremely valuable.
“The complexity of the regions we operate in and the intensity of our needs is always increasing,” he says. “As a result we are constantly requesting new services and solutions from our banks and for the most part they are proving agile enough to match these.” Kohli provides an example of a recent RFP the company issued in Africa. “We were looking to install a host-to-host payments process and our needs were uniquely complex because of the scope of the project. The banks proved themselves once again, and the solution is currently being implemented.” Kohli believes pushing the banks in this fashion is important to ensure that the bar is constantly being raised for the overall benefit of the industry.
Interestingly, Bharti Airtel themselves have recently been awarded a limited banking licence from the Reserve Bank of India. This has allowed the company to upgrade its existing pre-paid payments service, Airtel Money into a payments bank which can take small deposits and offer remittances.
There will of course be an impact on treasury. “There will be some new regulatory requirements that we will have to comply with,” says Kohli. “We have also had to build a structure that will allow us to manage the deposits, money transfers, cash in and cash out. Cash will also have to be well segregated because we don’t want there to be a co-mingling of funds from telecoms business and the bank business.”
Overall however he sees this as a positive step for the Group and one that will ultimately boost the profitability of Bharti Airtel across all of its businesses lines. “Offering these financial services is just another way that we can become deeply integrated into the lives of our customers and will increase engagement.” Kohli also believes the move can offer a social benefit and drive further financial inclusion in India. “We are not competing with the banks in this respect, we want to complement their infrastructure and drive greater engagement with the financial industry in India.”
Despite the work done already, given the much wider remit GFRM has at Airtel, significant priorities are still at work, as Kohli says. “We have a full few months and quarters ahead. On one hand, we are creating first of its kind global integrated Treasury policy and on the other, managing all seven pillars of Organisation Design of treasury across all our global operations as an engaged and integrated product vertical. Then there is, on one side, the secondary sale and asset monetisations related projects – both to enable business and its strategies as well as for leverage management and on the other side implementation of a new treasury management system. All this, while keeping our capital markets, debt and equity investors engagement on an ongoing basis – so, exciting times ahead!”
A full round
When Kohli gets time to be away from the office (something he admits he probably doesn’t get enough of) he can often be found on the golf course with his family. “This helps me loosen up and de-stress. It is also a great way to get the family together in the fresh air and away from the technological distractions of modern day life.”
Kohli also draws inspiration from the game and its greatest players over the years. “I believe that achieving something once, as much toil as it involves, is still the easy part, for instance we have seen countless players win a tournament, but the true test of success is maintaining such a high-standard, No. 1 ranking, and the only way to achieve this is to keep pushing and raising the bar – this is something I look to apply to everything I do, both professionally and personally.”