Executive Summary

As a partial requirement of Internship program, the report “Development of an Efficient Treasury

Management Model for Unilever Bangladesh “has been prepared. During the internship period

operation, process, policies and activities of Treasury Function of Unilever Bangladesh Limited have

been studied. In order to benchmark practices, different aspects related to Treasury management of

Marico Bangladesh Limited and Berger Paints Bd Ltd has been studied.

Unilever Bangladesh Limited is one of the largest FMCG operating in Bangladesh whose primary

activities is manufacturing and marketing of fast moving consumer goods. The Company has a heritage

of over 48 years. Unilever started its onshore operations in Bangladesh in 1964 when its soap factory

was set up at Chittagong. . It is a leading company in home, personal care and food products,

continuously introducing new and world-class products for the Bangladeshi consumers.

Treasury is a sub function of finance under Controllers Department – the function is broadly aimed in

managing risk and providing service to other functions. The department works closely with global and

regional counterparts for broad framework like adhering to policies as well as day to day transactional

activities. At global level, capital structure of each Unilever entity, funding decision, risk exposure with

each bank, risk management, liquidity management etc is handled. Thus the local treasury team has to

follow numerous global mandates and recommendations. Exceptions need to be approved by the global

team, since due to local reality numerous global mandates may not allow workable solution.

As mentioned earlier, Treasury in Unilever operates as a service delivery function and not as a profit

centre. Its primary task is to minimize risk. From global treasury bank relationships are defined – in term

of what kind of service/products that can be availed and in which banks Unilever will do business with.

This is a part of risk management. From local level banks exposure is monitored and it is actively

maintained that any point in time exposure does not exceed the limit set for each of the respective

banks. Other than this, local treasury team actively monitors risk exposure coming from foreign

exchange and accordingly hedging is done. Additionally team performs cash

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Unilever has 126 distributors located across the country. The cash collection process is unique and is

quite different from peer companies. Unilever sells on zero credit and only dispatches on cash

realization. The system integration is high level, which connects distributor to Unilever and to bank. The

flow of data minimizes risk and possibility of manual error. The data flow is real time. There is minimum

cost to Unilever. In terms addition to this the collection bank is offering credit facility for Unilever

purchase to distributors at a cost which is lower than the market interest rate. IT integration and

distributor financing product is putting UBL way ahead than peer companies. It has been observed that

for all the 3 companies, the cash realization from instruments like Demand Draft /Pay order takes a long

time (2 to 8 days). In order to minimize UBL can start greater leverage on direct debit.

UBL has few hundreds of vendors - some are regular whereas others are infrequent or one times.

Payment process can be categorized under foreign payment and local payment. Foreign payments are

largely for import of raw material, capital machineries, semi finished goods etc. These are pai through

normal letter of credit process and it is quite comparable to peer companies.

In case of local payments, again there is integration with the payment bank. From UBL’s ERP system

payment files are generated, approved by signatories and data file flows to the payment bank. Payment

bank prints the instruments and delivers to UBL premises, which is later on delivered to the vendors.

UBL is running a little short on electronic transfer to suppliers account. It is thus recommended that is

least for recurring vendors’ electronic transfers to be used.

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Acknowledgement

In order to complete this internship program, I have received immense help and support from officials of

Unilever Bangladesh Limited, Marico Bangladesh Limited & Berger Paints Bangladesh Limited. I have

been thoroughly guided by my internship supervisor – Dr. Jawadur Rahim Zahid, Professor at Institute of

Business Administration.

i) Finance Controller: Mr. Ahsan Habib, Finance Controller have been interviewed on several

occasions, to understand Treasury Operations and overall finance overview

ii) Finance Shared Services: Mr. Shahadat Ullah, FSS Manager, have been interviewed to

understand the payment process and to understand the requirements of suppliers

iii) CD Finance: Mr. AKM Amdadullah Bhuiyan, Financce Executive, CD Finance, has been

interviewed to understand the collection process and how it is related stock dispatch

iv) Marico Bangladesh Limited: Mr. Faisal Siddiquee, Sr. Executive, Treasury, has been

interviewed to understand the end to end treasury operations and thus benchmark with

UBL.

v) Berger Paints Bd Ltd: Mr. Masud Nomani, Assistant Manager of Berger Paints Bd Ltd has

been interviewed to understand the end to end treasury operations of the Berger BD

vi) Dr. Jawadur Rahim Zahid, has helped in selecting the topic, and helping in building the

framework. Due to his help I have been able to complete the report.

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List of Acronyms

BEFTN Bangladesh Electronic Fund Transfer NetworkBPBL Berger Paints Bangladesh LimitedBRAC Bangladesh Rural Advancement Committee CD Customer DevelopmentCRS Continuous Replenishment SystemCTG ChittagongDD Demand DraftDHK DhakaDMS Distributor Management systemERP Enterprise Resource PlanningFMCG Fast Moving Consumer GoodsFSS Finance Shared ServicesFX Foreign ExchangeG1 Group 1G2 Group 2GTO Global treasury operationsHSBC Hong Kong Shanghai Banking CorporationIFG International Funding GroupIT Information TechnologyLC Letter of CreditMBL Marico Bangladesh LimitedMICR Magnetic ink character recognitionMIS Management Information SystemNon CRS Non Continuous Replenishment SystemOpCo Operational CompanyPO Pay OrderRM Relationship ManagerSCB Standard Chartered BankUBL Unilever Bangladesh Limited

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Appendix: List of Tables & Charts

1. Chart 1: Organogram of Treasury Sub Function

2. Chart 2: Global Treasury Structure

3. Chart 3: Data Flow in Collection Banking Structure

4. Chart 4: Collection Bank A/C Infrastructure

5. Table 1: Location wise Clearance Time for MBL

6. Table 2: Average Clearance Time for Berger Paints Bangladesh Limited

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