The client is a reputed Indian tyre manufacturer with a strong position in the global market. It manufactures more than 15 million tyres every year. It produces a wide range of tyres, and some of the radials are widely used internationally in both B2B and B2C industries.
All the treasury processes of the client were handled manually without much use of technology. The business was heavily dependent on integration between the procurement and treasury teams with respect to the letter of credit (LC) issued and presentation received against it, which was handled over email. Cash MIS report preparation took up major efforts. Records of all loans with the sanctioned amount, drawdown, transfer to sub-accounts, interest payments, repayment dates and instalments, etc., were maintained in Excel, resulting in manual controls. There was no integration with financial accounts and all entries were re-entered in SAP-FI/CO, thereby requiring duplication of data entry, reconciliations, etc. Also, there was no limit management for facility obtained from banks. On balance sheet and off-balance sheet exposure was handled manually for both import and export.
We were engaged to understand the challenges faced by the client and provide solutions that could automate the treasury and integrate it with other finance processes. We proposed SAP TRM as the solution, which comprised mainly of money market instruments (like loans, facility), trade finance, hedge management, etc.
Our solution and approach
We supported the client with its vision of streamlining treasury operations and execution through automation of tracking, monitoring, reporting on various debt and LC trade exposures, and calculation of charges levied by banks as per pre-entered rates. The user-friendly Fiori app is used to forecast liquidity, and the MIS for cash planning has been set up. Hundi transactions are possible without manual intervention to clear the vendor's liability. Cost reservation of PO treasury items is automatically possible with the cost item listed in the PO. Hedge accounting and hedge reporting are managed dynamically on balance sheet and off-balance sheet exposures. The month-end closing process is posted real time in the specific general ledger accounts. Documentation of different positions of financial instruments, cash flows and historical accounts are more reliable and up-to-date. The solution meets crucial requirements for auditing and better security of data due to access control.