Proactive treasury management

The treasury function at Infosys is driven by three main key pillars: preservation of capital, providing adequate liquidity, and optimization of yield

Examining what it takes to be a sound treasury centre generating value for the overall company

Date

26 Jun 2019

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TREASURY TEAM OF THE YEAR, INDIA – INFOSYS

When Lalith Bukkarayasamudra took over the treasury function for Infosys seven years ago, he wasn’t too sure what to expect. Initially managing a team of three people, they shared a vision that they didn’t want to be just a cost centre but to be an alpha generator for the parent company, one of the largest IT companies in the world, which has always had a commitment to be cash rich. According to Bukkarayasamudra, treasury functions within organizations could either be one of two things – risk eliminators or risk managers.

For Bukkarayasamudra and his team, which eventually grew from three to 15 under his leadership, the plan was simply to contribute to the overall organization in any way possible and not be just a cost centre for the company.

With the large amount of revenue Infosys gets from all over the world in various currencies, especially US dollars, the Infosys treasury team has the key responsibility of handling the company’s foreign exchange exposure particularly when it comes to converting funds to Indian rupees, the company’s functioning currency. Bukkarayasamudra explains that his team uses a series of futures and options to hedge their exposures as much as possible.

Bukkarayasamudra is proud of the fact that his team has been proactive and vigilant to the various FX risks in the market, which has helped the company avoid any FX losses in the last several quarters.

Another area of value add that Bukkarayasamudra and his team do well in is generating higher yields on surplus cash Infosys has on its balance sheet. Rather than leaving these funds in low-interest yield accounts, Bukkarayasamudra’s team has been steadfast in looking for investment opportunities in the Indian market.

He explains that this is often a challenging mandate as low yields are prevalent in the market today. Bukkarayasamudra shares that his investments aren’t long term with the group treasury investments’ duration lasting between 1 and 1.5 years.

Enabling better visibility and control is another area that Bukkarayasamudra takes pride in doing well given the numerous bank accounts the group holds around the world. Having just a handful of individuals looking over multiple accounts, Bukkarayasamudra made it a priority to use digitalization and automation to manage the situation.

A key project for the company’s treasury team last year was creating a receivables purchase program that cuts across multiple sellers, currencies and obligors to significantly lower the days sales outstanding (DSO) of the company. According to Bukkarayasamudra it was a major programme for the company that helped diversify their credit risk.

Overall, the treasury function at Infosys is driven by three main key pillars – preservation of capital; providing adequate liquidity; and optimization of yield. All are vital treasury requirements that the team aims to fulfill as much as possible.

When looking to the future, Bukkarayasamudra and his treasury team are not excessively concerned about external market conditions. That’s just a fact of life, he says. Instead, his treasury team always has its eye on internal matters making sure that the possibility of fraud is reduced as much as possible and ensuring they are complying with the relevant regulations. 

Date

26 Jun 2019

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