Financial Daily from THE HINDU group of publications
Tuesday, Apr 09, 2002
Industry & Economy - Industry Associations
Corporate `treasurers' wake up, get cracking
MUMBAI, April 8
IT'S a treasurers' club. The members are large corporates including Reliance, Grasim, Telco, Gujarat Ambuja, L&T, HDFC, ACC, BSES, M&M, Asian Paints, RPG Enterprises, Piramal Enterprises, Cadbury, Castrol and Thomas Cook. They have come together to sharpen the skills of their financial heads and share treasury ideas.
The collapse of Enron, securities scams, downfall of UTI's US-64 and other such events have woken up corporate treasurers. Risk management has become a challenging task. Sharing of market information, common strategy and joint efforts to ensure best practices have become crucial for them.
It is in this background that the Indian corporates have come together to form a new forum - the Indian Association of Corporate Treasurers (InAct) - in line with the UK Association of Corporate Treasurers. The association will have only corporate members and that too, only those with a net worth of above Rs 50 crore. Besides corporates, the association will have four or five major banks as members. ICICI Bank is already a member.
"With the rapid changes taking place in the financial sector, treasury is expected to play a crucial role in the overall performance of a corporate," says Mr Anil Singhvi, Director (Finance), Ambuja Cement Ltd,and executive member of the association.
One of the immediate tasks of the association is to create a benchmark index of corporate bonds. "Right now, there is no index of corporate bonds to look at as benchmark," said Mr Singhvi.
Talking to newspersons, after the first meeting of the association here on Monday, Mr Singhvi said InAct planned to create an index in association with rating agency Crisil. As corporates are increasingly looking to debt market for resources, a benchmark rate to price the issue is important.
In the case of equity, the company's performance is usually taken as the criteria for pricing the issue. In the case of debt, this is not the case. Issuers normally compare with similar bonds in the market.
Another plan is a study on cash management. The infrastructure for cash movement is still not adequately developed in the country. As a result, transactions took longer time to materialise, said another member of InAct.
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