Textile Industry - Optimised Treasury Performance using our Treasury 360 audit

• ABC was a mid-sized Textile company engaged in export garment business with a portfolio of $20 million.
• ABC had a long sturdy relationship with a public sector bank to fulfil its financing, cash management & investing needs.
• Since ABC had a long term relationship, they trusted the bank with the charges, spreads and margins.

Challenge and Observation

• Limited Flexibility: ABC made it clear that any improvements would be limited to existing banks and that alternative banks would not be considered.
• Minimal Support from ABC’s team: ABC’s treasury team was too occupied with day to day operations to share the required data with the IFA team.
• Long Standing Relationship:  Difficulty in overcoming ABC’s faith on its banks since it regarded alternative suggestions with scepticism.

Observation: IFA Global observed scope for potential gains to the company by optimizing overall treasury operations.

Process

• A thorough assessment of the ABC’s treasury function was conducted, including banking relationships, systems, and business processes.
• Using our Treasury Check 360⁰ process we were able to provide a comprehensive analysis, enabling ABC to see a true comparison of its Interest Rates, Exchange Margins, Style of Booking, Banking Charges, Sanctioning Fee and Processing Fees across its existing and alternative banks.
• Despite minimal engagement from ABC’s Treasury Team, IFA prepared the Treasury Audit Report (TAR) as per ABC’s authorization. Relevant discussions, bank transitions, and services adjustments were led by both the team’s personnel.
• IFA helped ABC lead negotiations with the existing and alternative banks.
• Over a period of 4-5 months, ABC systematically calibrated its overall banking relationship in accordance with IFA’s recommendations.

Outcome

By following IFA Global’s recommendations , A Ltd.:

• Enhanced interest rates
• Savings on banking charges & transaction costs
• Structured hedging mechanism
• ABC established relationships with alternative banks that offered yield and services at rates far more competitive than the revised rates of the legacy bank.
• Today, ABC is saving substantially on its Interest Cost. As a growing company, ABC requires funds to propel its growth ambitions. Thus, exploring all funding options to choose the most lucrative one was crucial for ABC to be cost effective.