Treasury

Treasury Management

The investment environment is highly volatile in the current market scenario. As the company conducts its regular business, it is equally important to efficiently manage the regular operating funds. The fund flows planned, forecasted and invested strategically can be a significant source of income for the company.

An investment strategy is typically based on the following parameters:

Credit Analysis

Risk of loss of principal or loss of a financial reward stemming from failure of the banker or the security issuer, mitigated by investing only with AAA rated banks/institutions.

Market Factors

The probable trends of interest rates and other macro economic factors impact the fund’s portfolio and its returns, thereby demanding focus and regular update of these market trends.

Interest Rate

Ensuring investment in the most viable portfolio which is line with the organizational investment policy and derives the highest returns.

Liquidity

The portfolio should remain sufficiently liquid to meet all operating requirements and contingencies.

GET IN TOUCH AND LET US HELP!

Management Structure

Our team focusses on a regular monitoring of the funds so as to generate returns on any idle funds of the company. This is achieved by an aggressive daily treasury management process involving the following broad activities:

Preparation of Daily Fund Statement

The identification of investible idle funds is done on a daily basis. The actual balance as per the bank is adjusted for the following:

  • Vendor Payments forecasted over the next 2 working days
  • Cheques Issued but not presented as on date
  • Stale Cheques as on date
  • Cancelled Cheques or payments reversed for the period

The above gives the gross investible funds available as on any particular day.

Maintenance of Contingency Fund

In order to mitigate liquidity risk and to ensure complete adequacy of funds, a cash reserve is maintained to meet any contingent payments and developments which had not been forecasted or planned earlier. This reserve is based on management’s estimate of general fund estimated to be maintained as a contingency reserve. This reserve is maintained in the form of actual cash in the bank at all times and is provided for in the preparation of the Daily Fund Statement as prepared above.

Identification of the Most Viable Investment Alternative

The identified investible funds are invested with the bank/institution offering the highest return on investment. The suggested investment options have been explained comprehensively below. The target is to ensure the following parameters are fully complied with:

  • Investment in fully secure and AAA rated institutions/banks
  • Availability of fund as and when required

Regular Monitoring and Overview

The investment portfolio is monitored on a regular basis to ascertain the performance of the fund. This is supported by weekly reporting platforms and accounting updates. All the regular fund requirements which exceed the actual cash available with the bank is met out of the maturity proceeds of the investment portfolio.

Investment Alternatives – Short Term

In compliance to the organizations investment objectives of maximum safety while deriving the highest returns, the following investment portfolio are recommended by us:

Liquid funds come under the category of debt schemes offered by Mutual Funds. The basic objective of a liquid fund is to manage the short term cash surplus of investors and provide optimal returns with low risk and high liquidity.

Liquid Funds generate income primarily through interest accrual by investing in money market instruments like Commercial Papers, Certificate of Deposits, CBLO/ Repos and in short term debt instruments of corporates and NBFCs.

  • The liquidity is very high – redemptions can be available on a next day (T+1 business day) basis.
  • Liquid funds can deliver better yields than savings and fixed deposits.
  • These retain the liquidity of savings accounts i.e. they operate like a bank savings A/c without a cheque facility.

Bank Fixed Deposits are the most stable and risk-free fixed return instruments available in the market.

The operation of these deposits is highly convenient and the instructions are generally effected buy the bank on the same day if instructed within the normal banking hours.

Investment Alternatives – Medium & Long Term

In compliance to the organizations investment objectives of maximum safety while deriving the highest returns, the following investment portfolio are recommended by us:

Tax free bonds have emerged as highly popular investment options among investors due to the taxation benefit that they offer. These bonds, generally issued by Government backed PSU’s, are exempt from taxation on the interest income received from such instruments under the Income Tax Act, 1961. The key features of these bonds are as highlighted below:

  • The income from these bonds is exempt from tax.
  • These bonds generally come with long tenures of 10, 15 and/or 20 years, however, these bonds can be traded on the listed exchange if applied in demat mode.
  • There is no Cap on investment made in these bonds.
  • The interest offered is benchmarked to the Government security of similar maturity, subject to conditions laid down by CBDT.

We recommend investing in AAA tax free issues by entities such as REC, NHAI, NHB, IRFC, IIFCL, etc. which are currently yielding 6.20% indicatively post tax.

Banks raise the money to meet their tier-1 capital needs as per Basel-3 norms. Banks with lower capital adequacy ratio have been issuing perpetual bonds at rates as high as 11% and more.

These are closed ended debt schemes with a fixed maturity date and they invest in debt & money market instruments maturing on or before the date of the maturity of the scheme. The key features of FMP’s are as highlighted below:

  • They are considered low risk as FMPs choose instruments in such a way that the tenure of the underlying investment coincides with that of the FMP.
  • FMPs held for over one year can deliver superior post-tax returns as a result of indexation benefit.

We select funds on the basis of their AUM, credit worthiness, underlying instruments and the historic returns. We operate with the top rated AMC’s of India including HDFC Mutual Fund, ICICI Prudential, Reliance Mutual Fund, SBI Mutual Fund, UTI Mutual Fund, Axis Mutual Fund and Franklin Templeton.

Bank Fixed Deposits are the most stable and risk-free fixed return instruments available in the market.

The operation of these deposits is highly convenient and the instructions are generally effected buy the bank on the same day if instructed within the normal banking hours.

The deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest is called Company Fixed Deposit. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilized are governed by the Companies Act under Section 58A.

Company FDs are preferred over bank FDs for their higher interest rates. Corporate FDs are instruments used by companies to borrow money from small investors.

Bank/Institution Rate of Interest
1 Year 15/18 Months
HDFC 8.55% 8.55%
Bajaj Finance 8.75% 8.85%
Mahindra Financial Services 8.45% 8.45%
LIC Housing Finance 8.25% 8.25%
PNB Housing Finance 8.00% 8.05%

What we offer

We have our tie-ups with all the leading banks and corporates enabling us to negotiate preferential interest rates and services for our clients.

We have a network across the leading Asset Management Companies and dedicated teams working on a regular review and monitoring of the various fund options.
All our investments are focused and directed towards funds with the highest credit ratings, stable and risk-free.

  • Regular monitoring of working capital.
  • Identifying/creating Investment opportunities.
  • Reporting and MIS.
  • Identifying the most suitable investment alternatives
  • Regular monitoring, review and structuring of portfolio
  • Documentation, management and support

Competence, Confidentiality and Independence

The team at Brivan Consultants focuses on ensuring complete satisfaction to its clients. We understand that the treasury operations of any company are highly sensitive and we ensure complete confidentiality of the information we have access to, restricting its use to the purpose intended for.

Our present treasury management operations include management of a portfolio of INR 300 crores wherein we have generated significant returns given the preferences and the investment guidelines of the clients.

Our clients include companies in the manufacturing industry, publishing industry, public enterprises, trading industry, not for profit organizations, chambers of commerce. We also cater to MSMEs and HNIs, building an efficient treasury management function while earning significant returns on their restricted capital.

This has been a result of the core objective at Brivan – commitment to deliver quality services and add value to the client’s business.

Interested? Learn about our Treasury Services.