Olam International Limited, SingaporeJayant Parande, President & Global Head – Treasury, IR and TSF, Group TreasurerAditya Renjen, Senior Vice President – Treasury & Investor RelationsIrene Chan, Vice President – Treasury
Overall WinnerTreasury Today Asia’s Top Treasury Team 2020
Olam’s treasury team plays key role in executing the strategic planUnder Olam’s five-year strategic business plan (2019-2024), the firm aims to be a global food and agri-business supporting its customers’ growing need for sustainable and transparent supply chains, with a clear focus on tomorrow’s consumer. Through its purpose to ‘Re-imagine Global Agriculture and Food Systems’, Olam aims to address the many challenges involved in meeting the food, feed and fibre needs of a growing global population, while achieving positive impact for farming communities, the planet and its key stakeholders. Olam’s treasury department plays a key role in enabling and supporting the execution of the strategy.
Treasury as an enabler of strategyOlam has identified four key enablers for the successful execution of its strategic plan (1) Operational Excellence, (2) Sustainability, (3) Digital and (4) Leadership and Talent. Olam’s treasury team has fully aligned its priorities and deliverables with the key enablers thereby supporting the company’s strategic plan.
Key enabler – Operational Excellence: payment process automationThe treasury operations team, led by Irene Chan, Vice President – Treasury and her global five member team, noted that as the company expanded its business, it had accumulated over 300 accounts with more than 40 banks that had incompatible formats on its multiple legacy ERP (SAP, JDE) systems. This created significant challenges for Olam, particularly around payment processing, reconciliation, cash visibility and its ability to effectively deploy funding.
In partnership with J.P. Morgan, Olam implemented initiatives to achieve its strategic objectives of establishing a robust treasury platform for its banking services. This was achieved in three phases:
Phase 1 – ISO XML payment standardisationOlam implemented a global ISO XML payment file format by adopting the bank’s ERP adaptor across Singapore, the US, and key markets across its business divisions, within a short time frame of 12 months. The ERP adapter consolidated Olam’s various legacy platforms, migrating and integrating them into the firm’s new global SAP system. Through the unified ISO XML payment file, Olam has achieved standardisation and enhanced straight through processing (STP) efficiencies. Additionally, the XML file can be used across multiple banks, thereby eliminating the need for the company’s IT to support different proprietary bank formats.
Phase 2 – Embracing open bankingTo future-proof Olam’s treasury operations, the firm adopted J.P. Morgan’s real-time treasury app for SAP, which incorporates an industry-first ‘plug-and-play’ solution that leverages application programming interface (API) technology. This has provided:
• Real-time treasury, where the firm is able to receive cash balances and transaction details in real-time via SAP, empowering Olam with instant cash visibility and further enhancing the overall efficiency of the group treasury and finance teams and meeting their cash flow forecasting needs.
• End-to-end payment track and trace, where Olam’s payments can be automatically tracked across the various intermediary banks throughout the transaction chain from initiation to when funds are credited into the beneficiary bank.
• Ease of implementation, where the app is integrated into the firm’s unique ERP environment with minimal IT resource.
Phase 3 – Shift to SWIFTTo move further towards industry standardisation, Olam is embarking on the shift to SWIFT gpi which will centralise its connectivity with banks, giving the company improved operational and cost efficiencies instead of having to maintain different host-to-host (H2H) set-ups with different banks.
This solution is a large-scale, multi-phased project implemented by Olam’s treasury globally to achieve payment file standardisation (XML), deploying open banking APIs in support of real-time treasury and its shift towards SWIFT gpi industry connectivity.
The solution also future-proofs its treasury with its shift towards SWIFT gpi and standardisation positions the firm for greater operational and cost efficiencies as it expands its relationship with various banks going forward.
Based on Olam’s own assessment, the solution will translate into annual cost savings of approximately US$750,000 for group treasury, finance and SAP IT teams.
Key enabler – Digital: Asia’s first digital bond issuanceSingapore Exchange (SGX), working with HSBC and Temasek, completed its first digital bond issuance for Olam. The transaction focused on creating a distributed ledger technology (DLT) and smart-enabled financial market infrastructure for Olam.
The pilot transaction successfully replicated a US$400m 5.5-year public bond issue and a follow-on US$100m tap of the same issue. This digital bond is a first in Asia for a syndicated public corporate bond, marking another milestone in SGX’s use of digital asset technology and its journey to streamline processes for issuers, underwriters, investors and other participants across primary issuance and asset servicing.
“As a result of the review, we knew we needed a comprehensive cash management solution to overhaul and standardise our global ERP systems. We were also keen to explore the use of technology to upgrade our treasury processes to further bolster efficiencies and support the company’s strategic business initiatives.”
Irene Chan, Vice President, Treasury
“In line with our strategic treasury transformation objectives, J.P. Morgan has clearly demonstrated through our partnership its exceptional advisory expertise, innovation and technology capabilities. During our implementation of the SAP solutions highlighted, the bank has successfully executed against the very high and exacting standards that both our brands represent in our respective industries.”
Jayant Parande, President & Global Head – Treasury, IR and TSF, Group Treasurer
“Going digital will make the entire bond issuance process more efficient and transparent for all parties – issuers like us receive our funds more speedily, investors get their bonds more quickly while the arrangers, custodian and banks benefit from the reduced probability of error and speed. This is in line with Olam’s focused push into digitalisation as part of our refreshed strategy, to grow sustainably and live our purpose of re-imagining global agriculture and food systems.”
“The reason we place sustainability at the heart of our business is not just because it is the right thing to do, but because there are clear business benefits in doing so.”
Jayant Parande, President & Global Head – Treasury, IR and TSF, Group Treasurer
Overall WinnerTreasury Today Asia’s Top Treasury Team 2020
Key enabler – Sustainability: Olam has sustainability at the heart of the businessSustainability is one of four key enablers to deliver the strategic plan. The firm therefore reports against its sustainability goals in the annual reports and takes a capitals approach, reporting under manufactured, human, social, natural, intangible and intellectual capital measures. It uses the global reporting initiative as a guidance framework, and endeavours to incorporate stakeholder focus areas. Olam is a signatory to the ten Principles of the UN Global Compact.
With a direct procurement strategy that has a link with over five million farmers, Olam recognises the strategic role and value of pursuing sustainable business practices. As part of the strategy refresh announced in January 2019, Olam identified sustainability as a key enabler for the successful execution of its strategy. The three outcomes to be achieved under the ethos of growing responsibly are:
1. Prosperous farmers and food systems.
2. Thriving communities.
3. Regeneration of the living world.
Three key questions underpin this; is it right for the consumer, right for the planet and right for the producer? A key pillar of this is continuing to keep sustainability at the heart of the business and to help Olam remain the sustainability leader it is today.
Treasury takes a seat on the board’s Corporate Responsibility and Sustainability (CR&S) Committee established to oversee its twin pillar strategy of finance-led sustainability and business-led sustainability. The treasury pillar has four areas of focus:
Sustainability-linked financing – over the past three years Olam has successfully completed three sustainability rating/key performance indicator (KPI)-linked financing facilities, demonstrating its continued access to this relatively new area of financing. The interest margins on the facilities are linked to achievement of pre-set sustainability KPIs, thereby providing a clear financial benefit to achieving the company’s sustainability goals.
In 2019 and 2020, Olam raised two new medium-term revolving credit facilities for US$525m and US$250m respectively, which are linked to meeting sustainability KPIs that are aligned with its sustainability outcomes.
The interest margin on the facilities is linked to the achievement of the KPIs which will be tracked and reported by the CR&S team. Ernst & Young independently assess the achievement scores. Rabobank was the sustainability co-ordinator for the 2019 facility and ANZ, DBS and Standard Chartered were joint sustainability co-ordinators for the 2020 facility.
Olam also executed Asia’s first FX derivative linked to environmental, social and governance (ESG) KPIs. This innovative facility provided the company with a hedge on its currency risk exposure while also providing a discount on meeting certain pre-set ESG targets that are aligned with the company’s sustainability strategy and the United Nations Sustainable Development Goals. This transaction was executed with Deutsche Bank.
Partnerships with Developmental Financial Institutions (DFIs) – given the company’s diversified footprint across over 60 countries and a ‘farm-gate’ origination model that reaches over five million farmers, it is in a unique position to partner with DFIs to implement such programmes on a large scale.
In April 2020, Olam secured a loan of US$176m from the International Finance Corporation (IFC) and Japan International Cooperation Agency (JICA). The facilities comprise two tranches, a five-year term loan of US$120m and a seven-year term loan of US$56m.
In August, the company agreed a dual-tranche financing facility aggregating US$200m from the European Bank for Reconstruction and Development (EBRD) to support working capital requirements across its businesses in the eastern Mediterranean, Eastern Europe, and Black Sea regions.
In addition to DFI financing, Olam also partnered with Citi and ING to provide supply chain financing solutions for its suppliers in countries such as Singapore, India, Indonesia and Thailand.
Accounting for sustainability (A4S) – Olam took the lead in establishing the first Circle of Practice (CoP) in Asia of Accounting for Sustainability, the initiative set up by HRH The Prince of Wales to drive greater adoption of sustainable decision-making.
Integrated impact statement (IIS) – the firm set up an Integrated Reporting Task Force, a cross-functional team, to evaluate its approach to multi-capital accounting. The team was tasked with establishing a numerical link to sustainability using multi-capital accounting methodologies and came up with the IIS. The idea is to use this methodology in the holistic evaluation of any project/investment and measure its total economic value created by including parameters beyond just financial capital, such as social, human, manufactured, natural, intangible and intellectual.
Doing good and doing wellOlam’s relatively lean global treasury leadership team based in Singapore has been able to lead and collaborate on multiple projects from sustainable financing, cash management and foreign exchange to a first digital bond issuance, technology transformation and much more.
Their efforts clearly demonstrate that organisations can ‘do good’ and ‘do well’ at the same time and the team is a most deserved winner of the Adam Smith Awards Asia 2020 Top Treasury Team accolade.
Overall WinnerTreasury Today Asia’s Top Treasury Team 2020
Headquartered in Singapore, Olam International Ltd (Olam) is a global leader in food and agri-business, supplying a broad portfolio of products to over 25,000 customers worldwide. It operates in over 60 countries with more than 180 manufacturing processing facilities and 14 innovation centres worldwide and employs 87,000 staff.
Jayant and the Olam team are a prime example of a forward-thinking treasury team. This award is a testament to the collaborative way in which they work and their desire to embrace technology. We are thrilled for them and all of us at Standard Chartered Bank Transaction Banking congratulate the team for this prestigious award. We look forward to our continuing partnership with Jayant and his team.
Ricky Kaura, Head of Transaction Banking, Asia-Pacific, Africa and the Middle East, Standard Chartered Bank, Hong Kong
in partnership with
DBS established our relationship with Olam in 1996. Given our deep roots in Asia, DBS has supported Olam as it has expanded its operations not just in Singapore, but also regionally in China, India, Indonesia and Vietnam. We partner Olam on all working capital solutions spanning across Cash and Trade facilities and support their activities from end-to-end for their food supply chain, from importing raw materials for primary production, to manufacturing and exporting their finished products for distribution.
Gina Ai Ching Lim, Head of Asian Corporates, Sales, DBS Bank Ltd
in partnership with
Olam and Citi share a close partnership based on common goals of centralisation, improved visibility and increased automation. A well-coordinated approach between Olam and Citi enabled timely execution of pre-identified projects to enable improved visibility of supplier payments and more efficient use of capital in multiple markets across the globe. The solution was further enhanced by the high degree of overlap between Citi’s exhaustive global network and Olam’s deep presence around the world leading to a seamless platform-based scalable solution to achieve higher efficiencies and improved business outcomes for Olam.
Parag Bidarkar, Regional Solution Sales, APAC, Treasury and Trade Solutions, Citi
in partnership with
In June 2020, Deutsche Bank and Olam International successfully executed Asia’s first FX derivative linked to environmental, social and governance (ESG) key performance indicators (KPIs).
The ESG-linked foreign exchange (Thai Baht/US dollar) forward enables Olam to lock-in a discount when it meets pre-defined ESG targets which supports the United Nations Sustainable Development Goals (SDGs).
There is little precedent, regulation or established market standards for a sustainability-linked derivative. This innovative FX risk management solution successfully marries the requirement to hedge the FX risk arising from sourcing a crop in one country and selling it to another country, and also supports Olam’s sustainability program.
Kelvin Choon, Director, Head of CBC Singapore, Corporate Coverage APAC, Deutsche Bankin partnership with
Overall WinnerTreasury Today Asia’s Top Treasury Team 2020
