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Streamlining treasury functions to support business growth
THAI UNION Treasury team of the year Led by Yongyut Setthawiwat
Chito Santiago 4 May 2017
Before 2015, the overseas subsidiaries of Thai Union, a global leader in the seafood industry, were being managed by either the local or regional management teams. Thai Union managed and monitored these subsidiaries through the board of directors, who set up the key performance indices and now review their performance regularly.
 
Then the group started to implement a series of changes toward an integrated global enterprise in 2015, setting up a global treasury centre in June and an international headquarters in August in Thailand. A regional treasury centre was in place in France to cover all of the group’s European subsidiaries, while the regional treasury team in the US begun working closely with the global treasury team in Bangkok.
 
The streamlining of the treasury function is designed to manage all hedging, funding, liquidity, investing and financial risks for the group – supporting the growth of the business in a sustainable manner. It is a key driver to support Thai Union’s vision to be the world’s most trusted seafood company and to generate US$8 billion in sales by 2020.
 
At present, the treasury operations are organized into  three groups covering major regional markets. The Thai Union Group PCL oversees all key Thai companies and is the parent company of all subsidiaries. In Europe, Thai Union EU Seafood 1 S.A. handles all investments in the region, including international seafood brand King Oscar and smoked salmon producer MerAlliance. Thai Union North America, Inc covers subsidiaries in the US and Canada.
 
Before setting up the global treasury centre, Thai Union unveiled in May 2015 the group’s financial risk management and treasury policy for all its subsidiaries to follow. The policy will be reviewed and approved annually during the budget period by both the group treasury committee and the board of Thai Union. If there is any change, this will be communicated to all subsidiaries.
 
With the global treasury centre, centralization of major financing activities and decisions are key to bringing financial and tax benefits to the group. The centre has a clear view on which options would be the most optimal financing sources for Thai Union that are within levels of risk acceptable to the board.
 
The license to operate as an international headquarters – a government tax administration policy to promote Thailand as an investment hub – offers a number of tax benefits to qualified companies setting up their headquarters, treasury centre or an international trade centre in Thailand. These include exemption from paying corporate income tax on revenue from managing and technique services. The exemption also applies to supporting services or fund management by associated affiliates, as well as royalties and dividends earned from affiliates incorporated under foreign law.
 
Thai Union has started linking up regional cash pooling in the EU and the US back to Thailand in 2015 and 2016, respectively, by using HSBC’s banking infrastructure on global cash pools. In late 2016, Thai Union agreed to implement local cash pooling services provided by Kasikornbank. Such product mainly facilitated the company’s liquidity management by pooling in and out from authorized Kasikornbank accounts. The system helps shorten the process and optimize the company’s idle cash on a daily basis.
 
“The process is very efficient and flexible for us to move the funds to a number of banks, which we now do only once a day, unlike many times in the past,” says Yongyut Setthawiwat, general manager, group corporate finance and tax at Thai Union. “Previously, we write the cheques manually and bring them to a bank, which will then deposit the cheques to different other banks.”
 
Setthawiwat joined Thai Union in 2007 and has since expanded his role from local corporate finance to one with a global finance scope under the global treasury centre. His responsibility covers all key financing and treasury activities, as well as decisions for the companies in Thailand, Europe and the US. In addition, he covers international tax planning and strategy and the global insurance programme at a group level perspective. He is one of the key people behind the establishment of the international headquarters in Thailand.
 
In 2016, Thai Union also started to explore with Kasikornbank on structuring value chain solutions for the company’s local suppliers, enhancing efficiency of the entire process of the company’s cash management. “Before, we need to pay our farmer suppliers within three days, and we need to borrow to meet our obligations,” notes Setthawiwat. “Kasikornbank has again come up with a solution. We were able to extend our accounts payable.”
 
With an electronic system, Kasikornbank can also directly synchronize with Thai Union’s data flow to generate real time visibility and accurate reconciliation.
 
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