Supply Chain Finance

and Trade Finance

Experience Sharing Workshops

Aug ’2021
Know your trainer

Engineer with quest

for Finance
Abhishek Anand
Manager, EY
Corporate Treasurer
Handled USD 1 billion annual FX exposure
- Led Trade finance desk and Dealer financing
program
INR 10,000 Cr Debt Issuance

Manager

https://www.linkedin.com/in/abh TCO, LIBOR transition, Treasury process reviews

among others
ishek-anand-398a5514/

~ 9 Years of multidisciplinary experience across treasury and

business consulting

Page 2 24 August 2021

 Sources of financing:

Discussion Products

Introduction to supply chain

areas
Domestic versus international
trade

Risk exposure in international

2.1 trade

Buyer led Key Participants

Methods of payments in
international trade

Payment risk

SWIFT and its importance

Page 3 24 August 2021 Presentation title

Learning Objective

Learning objectives:

Gain in-depth understanding of supply chain finance programs, its participants, advantages and
disadvantages

Understand the components of working capital requirements and financing needs of a corporate,
aspects such as cash conversion cycle, days payable outstanding, days sales outstanding

Page 4
Domestic versus international trades

International trade is the exchange of

goods and services across the
geographical boundaries of different
countries.
The benefits of international trade
Exporter Importer are:
✓ Greater global integration
✓ Increased economic growth as
Limited contact due to geographical import of goods and services
constraints prevents shortage and export of
surpluses expand production
capability
✓ Larger availability of a wide variety
Trade Credit of products

Page 5
Risk exposure in international trade

Country risk

Foreign
Default risk
exchange risk

Risk exposure
in international
trade

Performance
Bank risk
risk

Fraud risk

Page 6
Key participants

Figure 3: Key participants

The supplier or buyer may agree the terms independently with or without an in-built measure of
protection into the agreement.

The bank becomes an intermediary to facilitate the exchange of payment against the documents.

Page 7
Methods of payment in trade transaction

Cash in Advance Open account

Payment is made to the seller upfront before the Payment is made to the seller post a specified date after
shipment takes place. This secures the process for the shipment. This secures the process for the buyer.
suppliers

Documentary Collection

Document against payment

Banks restrict the flow of documents to exporter and

importer until payment/goods are received by
counterparty

Document against acceptance

Importer makes the payment on future date. Documents

sent by exporter bank are released against a promise by
importer to pay later

Figure 4: Key Steps in Documentary Collection

Page 8
SWIFT and its importance

• Society For Worldwide

Interbank Financial
Telecommunications

• The broader SWIFT community

also encompasses corporates
as well as market
infrastructures in payments,
securities, treasury and trade.

• SWIFT is neither a Financial

Institution nor a payment
system: SWIFT is solely a
carrier of messages

• SWIFT does not hold assets nor

manage accounts

• Information in messages
transmitted through SWIFT is
controlled exclusively by the
sending and receiving financial
institutions

Page 9
Key documents in international trade

Commercial Documents
✓ Commercial Invoice
✓ Certificate of Origin
✓ Bill of Lading/ Airway bill/Shipping bill
✓ Bill of Exchange
✓ Certificate of Issuance
✓ Certificate of Insurance
✓ Certificate of Inspection/Quality control Certificate

Regulatory Documents

✓ AR4 Form
✓ GR Form

Key policies
✓ ISBP 745
✓ ISP 98
✓ USP 600

Page 10
Cash Conversion Cycle : Automation Opportunities

Page 11
Understanding cash conversion cycle (‘CCC’)

Investment management:
Page 12
Draft: For discussion purposes only
Understanding cash conversion cycle

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑟𝑎𝑑𝑒 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

DSO 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
DII 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑 𝑝𝑒𝑟 𝑑𝑎𝑦

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑟𝑎𝑑𝑒 𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠

DPO 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑 𝑝𝑒𝑟 𝑑𝑎𝑦

Page 13
Industry Trends - Highlights

Page 14
Industry Trends

Page 15
Working capital challenges in COVID -19

Page 16
Recommended Checklist – Accounts receivables

Page 17
Recommended Checklist – Accounts payable

Page 18
Recommended Checklist – Inventory management

Page 19
Understand Cash conversion cycle

Page 20
 1

WC case Study

Investment management:
Page 21
Draft: For discussion purposes only
 Numbers from Consolidated Financial Statements of
Cipla Ltd.

Page 22
Cipla Ltd
Cipla Ltd

• Assume all revenue from operations and purchases are on credit basis, for
the purpose of calculations.
•
Inventories outstanding as on 31st March 2017 was INR 3485.28 crores.

• Trade Receivables outstanding as on 31st March 2017 was INR 2563.05

crores.

• Trade Payables outstanding as on 31st March 2017 was INR 1571.41

crores.

Page 23
Working Sheet for Cipla Ltd

Particulars Formula 2019 2018

(4,150.72 + 3,102.45)/2 (3,102.45+2,563.05)/2
= 15,970.97 = 14,750.86
365 365
Days Sales 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑟𝑎𝑑𝑒 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠
3,626.58 2,832.75
Outstanding (DSO) 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦 = 43.75
= 40.41

≈ 83 days ≈ 70 days
(3,964.83 +4,044.70)/2 (4,044.70+3,485.28)
= (4,285.04 +1,452.41+47.04) = (4,497.16 +1,174.20−232.94)
365 365
Days in Inventory 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
4,004.76 3,764.99
(DII) 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑 𝑝𝑒𝑟 𝑑𝑎𝑦 = 15.85
=
14.90

≈ 253 days ≈ 253 days

(1,947.99 + 2,119.12) (2,119.12 + 1,571.41)
= (4,285.04 +1,452.41+47.04) = (4,497.16 +1,174.20−232.94)
365 365
Days Payable 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑟𝑎𝑑𝑒 𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠
2,033.55 1,845.26
Outstanding (DPO) 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑 𝑝𝑒𝑟 𝑑𝑎𝑦 = 15.85
= 14.90

≈ 128 days ≈ 124 days

Cash Conversion 𝐷𝑆𝑂 + 𝐷𝐼𝐼 − 𝐷𝑃𝑂 83 + 253 – 128 = 208 70 + 253 – 124 = 199
Cycle (CCC) days days

Page 24
 Numbers from Consolidated Financial Statements of

Page 25
Maruti Suzuki India Ltd
Maruti Suzuki India Ltd
Maruti Suzuki India Ltd

• Assume all revenue from operations and purchases are on credit basis,
for the purpose of calculations.
• Inventories outstanding as on 31st March 2017 was INR 32,637 million.
• Trade Receivables outstanding as on 31st March 2017 was INR 12,026
million.
• Trade Payables outstanding as on 31st March 2017 was INR 83,692
million.

Page 26
Working Sheet for Maruti Suzuki India Ltd

Particulars Formula 2019 2018

(23,128 + 14,654)/2 (14,654 +12,026)/2
= 8,60,685 = 8,20,411
365 365

Days Sales 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑟𝑎𝑑𝑒 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

18,891 13,340
Outstanding (DSO) 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 𝑝𝑒𝑟 𝑑𝑎𝑦 = = 2,247.70
2,358.04

≈ 8 days ≈ 6 days
(33,226 + 31,602)/2 (31,602 + 32,637)
= (450257+150266 +2116) = (449432+100021+408)
365 365
Days in Inventory 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
32,414 32,119.50
(DII) 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑 𝑝𝑒𝑟 𝑑𝑎𝑦 = 1,651.06 =
1,506.47

≈ 20 days ≈ 21 days
(96,377 + 104,993) (104,993 + 83,692)
= (450257+150266 +2116) = (449432+100021+408)
365 365

Days Payable 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑟𝑎𝑑𝑒 𝑃𝑎𝑦𝑎𝑏𝑙𝑒𝑠

1,00,685 94,342.5
Outstanding (DPO) 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑 𝑠𝑜𝑙𝑑 𝑝𝑒𝑟 𝑑𝑎𝑦 = 1,651.06 = 1,506.47

≈ 61 days ≈ 63 days

Cash Conversion 𝐷𝑆𝑂 + 𝐷𝐼𝐼 − 𝐷𝑃𝑂 8 + 20 – 61 = (33) days 6 + 21 – 63 = (36) days

Cycle (CCC)

Page 27
 Sources of financing:

Supply chain
financing
2.1

Buyer led

Page 28 24 August 2021 Presentation title

Ecosystem of Supply chain financing

Page 29
 Vendor financing-EBIDTA Improvement /DPO extension/Hybrid
Example transaction : Buyer corporate enjoys a 60 day credit period from his vendor. Invoice value of Rs. 100
EBITDA Improvement
1 (Buyer Treasury Funding)
• Invoice value; Rs. 100; Credit period; 60
days
• Vendor discount willingness; 15% p.a
• Day 1 : Effective payment made to vendor
by Financier: Rs. 97.5
• Opportunity cost of treasury fund : 6% p.a.
on Rs. 97.5 for 60 days ~ Rs. 1
• Net cost collection =100 -98.5 = Rs. 1.5
Benefit : Risk free return of 15%
on treasury capital
Page 30
EBITDA Improvement
2 (External Financing)
• Invoice value; Rs. 100; Credit period; 60
days
• Vendor discount willingness; 15% p.a
• Invoice payable adjusted downwards by
Financier to Rs. 97.5 and shared with
financier : Rs. 97.5
• Bank interest rate to buyer: 7.5% p.a. on
Rs. 97.5 for 60 days ~ 1.25
• Day 60 : payment mad by buyer to bank
after 60 days : Rs. 98.75
• Net cost collection =100 -98.75 = Rs.
1.25
Benefit : 1.25% of cost reduction
without any reduction in payables
Increase in credit period @ 0% interest
3 (External Financing)
• Invoice value; Rs. 100; Credit period;
60 days
• Vendor discount willingness; 15% p.a
• Invoice payable adjusted downwards
by Financier to Rs. 97.5 and shared
with financier
• Day 1 : Effective payment made to
vendor by Financier: Rs. 97.5
• Financier calculates new due date
based on financier's rate to buyer
(7.5%) and discount offered by vendor
(15%)
• Day 120 : Payment made by Buyer to
bank after 120 days Rs. 100
• )
Benefit : Additional 60 days of
credit period at 0% interest
 Payable optimisation methods

B2B Commercial SCF Technology

Supplier Finance Dynamic Discounting
Cards Platforms

► Bank buys buyer- ► Supplier can select to ► Elimination of cheques ► Buyer submits approved
approved invoices at pre- receive early payment for by migrating to card invoices electronically to
determined rate to specific invoices at a based payments the SCF platform
Overview accelerate payment to sliding discount based on ► Suppliers and Bank
participating suppliers time to invoice due date having access to the
and hurdle rate required platform, can take best
► Buyer makes payments to by buyer
banker based on extended operating decisions, as
terms required

► Strategic suppliers of ► Suppliers seeking early ► Suppliers of indirectly ► All suppliers

Target direct materials and payment materials
services
Audience ► Usually paid via cheque
► Usually involving a large
spend

► Working capital reduction ► Cost of goods sold ► Rebate opportunity ► Same as in ‘Supplier
via term extension reduction via discounts Finance
Benefits to ► Working capital
Buyer ► Leveraging the bank’s ► Ease of supplier on
balance sheet ► Process improvement boarding
► Analyse spend & WC

► Reduction in days sales ► Reduction in days sales ► Reduction in days sales ► Reduction in days sales
Benefits to outstanding outstanding outstanding outstanding
Supplier ► Ease of reporting

Page 31
Payable side- Reverse factoring and dynamic discounting

Reverse factoring involves the-

➢ Buyer giving its payable invoices to a

third-party funder, which then pays some
of the supplier earlier than the buyer
otherwise would have.

➢ The supplier receives a discounted

payment instead of the full payment,
while the buyer pays the full amount to
the funder when it eventually clears its
payables.

What is dynamic discounting?

Page 32
Evaluation and deciding the benefits

Key questions to evaluate

1 2
What are the company’s
goals and objectives in
establishing a supply
chain finance program?
3 4
▪ Does the company
have key suppliers
Are treasury and
Does the company have that may have
procurement’s objectives
excess cash to invest in a working capital
aligned to promote the
supply chain finance challenges?
success of the supply
solution? ▪ What is the
chain finance program?
company’s appetite
for supplier risk?

Key benefits to target

Risk-free yield Optimized DPOs Optimized

Enhanced Yield All Suppliers
Payment
terms
Improves yield Early settlement Risk free investment
for treasury by using Buyers can capture Can be used to
received on surplus offered to all
arbitrage discounts without extend payment
cash by 3-4%. suppliers – including
opportunity. shortening DPO terms or capture
long tail
discounts.

Page 33
Receivable side- Channel financing

Factoring

Basis for
Factoring Forfaiting
difference

It involves account
Maturity of It involves account receivables of
receivables of medium and
Receivables short term maturities
long term maturities.

Extent of Usually 80-90 percent of the value 100 percent of value of

Finance of invoice. invoice.

Recourse Factoring and Non

Type Non Recourse
Recourse Factoring
Forfaiting

Credit Factor does the credit rating (if no Relies on the creditability
Worthiness recourse factoring) of the Avalling Bank.

Day to Day administration of sales

Services
and other allied services are No Services are provided
Provided
provided

Forfaiting is evidenced by
Negoatiable No dealing with Negotiable bills of exchange,
Instruments Instruments promissory note, a letter of
credit.

Page 34
Use Case-Dealer financing for Agri business
Push Model
• Invoices raised by the
seller shall be presented
to the bank on due/ few
days before the due date
of payments.
• Financing Bank pulls the
money from Dealer’s
Account maintained with
Financing Bank by giving
loan & credit our account
on due date.
• Extend additional Credit
Period to Dealer and
charge interest on
additional credit period.
• As per Bank’s experience,
dealers generally
reluctant to accept this
model
Pull Model How do banks safeguard
their capital??
• Unlike Push model, in case
model, invoices raised by Stop Supply, FLDG(First Loss
Deficiency Guarantee), Assistance
the seller is presented by in recovery and resale
the Dealer to the bank on
due/ few days before the
due date of payments
• Rest of the procedure is
similar to the Push Model
• As per Bank’s experience,
dealers generally more
receptive of this model
Benefits of Dealer Finance
• Lesser Credit Exposure on Dealer.
• On Time Payment.
• Better Liquidity & collection
Predictability.
• Discipline within Organisation w.r.t. to
credit limits to Dealer.
• No Recourse on company except disputes
related to forced sale, Quality & Quantity
Issues.
 1
Technology trends in
Supply chain finance
Page 36 24 August 2021 Presentation title
Automating the SCF Program and driving savings

Existing Invoice
Supplier
Supplier
Supplier
SME Suppliers
Supplier

Supplier Supplier
FINTECH
Client
PLATFORM
Vendor ERP
Onboarding

Analytics Platform
• Trend analysis of discounts by vendor type and by
Banks and sector
Alternate Lenders • Cost of capital analytics
SCF Platform • Simulation of hurdle rates
• Predictive analysis and simulation on discount
income
• Working capital metrics and
• Payments terms benchmarking.

Page 37
Automating the SCF Program and driving savings

“Hit-or-Miss Discount”
3.0
Arranger and %
2.5
Paying Agent %
2.0
6. Buyer 5. Pays
pays on supplier %
1.5
due date %
1.0
%
0.5
4.
0%%
Presents 0 20 40 60
Days Days Days
Antiquated Discounting
2. Makes Sliding Scale Discount
available for 3.0
early payment %
1.
Approved Technol 3.
2.5
%
$
invoice Requests 2.0
ogy discount %
1.5
Partner %
Buyer Supplie 1.0
5b. Bank
account in
5a.
Notified
r %
0.5
$
SAP updated %
0%
0 20 40 60
Days Days Days
Dynamic Discounting

Page 38
Technology platforms

➢ In addition to below levels, analytics tools such

as performance scoreboard, metrics
comparison, end-to-end supply chain costing
details are available
Level 4:
➢ Eg: SAP Ariba, Prima Revenue, Dun &
Bradstreet (only analytics tools) End-to-end supply chain
finance decision
➢ Provide ability to access third-party financing
including payables, receivables, pre-shipment
and inventory financing
➢ Eg: Orbian, Platform Black, GT Nexus Level 3:
On demand access to 3rd party
supply chain financing
➢ Automate process of offering, accepting and
managing early payment invoice discounts
➢ Eg: Taulia Level 2:
➢ Streamline and facilitate parts or complete Automated management of early payment
order-to-invoice-to-payment process invoice discounts
➢ Provide enhanced invoice & payment status
visibility
➢ Eg: Demica Level 1:
Electronic document presentment, exchange,
matching/reconciliation, and payment

Page 39
RBI thrust in digitisation of Supply chain solution

Page 40
 Video Illustration

Investment management:
Page 41
Draft: For discussion purposes only
 Case Study-1

Investment management:
Page 42
Draft: For discussion purposes only
 Supply chain finance (‘SCF’): Key objectives and benefits

Key Objectives
Align your
current SCF
solution with the
latest practices
❑ Build better vendor relationships ❑ Reduced COGS achieved by
❑ Reduced risk of supply chain discounting invoices
disruptions ❑ Increasing returns on cash
❑ Adoption of reliable & secure Leveraging technology available for short term
SCF investments Maximise
practices to on-board a larger pool ❑ Enhanced margins through risk- discount earned
of vendors free arbitrage. through Dynamic
❑ Leverage technology for faster discounting.
payment
❑ Monitor the progress of the
program using a common platform
❑ Leverage technology to scale up
the program.
Scalable
Sustainable & healthy supply program that
chain Enhanced yield & reduced cost focuses on long
tail of vendors

Key Benefits
Enhanced Yield All Suppliers Risk-free yield Optimized DPOs Optimized
In-house cash
Payment terms optimisation
Improves yield Early settlement Risk free Buyers can capture Can be used to opportunity by
received on surplus offered to all investment for discounts without extend payment analytics
cash by 3-4% suppliers treasury by using shortening DPO terms or capture embedded
– including long tail Arbitrage discounts. platform
opportunity.

Page 43
Market analysis

Kyriba Product Set: Ariba Product Set: Taulia Product Set: CRX Markets Product
Set:
• Reverse Factoring • Supply Chain Finance • Traditional SCF
• Dynamic Discounting • Discount Management (Cloud Based) • Payables Finance
• Onboarding Solution • Payments • Dynamic Discounting • Receivable Finance
and Supplier Portal (Cloud Based) • ERP Integration
Complimentary Solutions • Data/Process
Complimentary Treasury like Supplier and Supply Security
Solutions Chain Management

Page 44
Steps involved to build a technology solution

STEP I STEP III STEP IV

Assessment of Implementation & Predictive data
opportunity technology Analytics
Enablement
Company wise Draw insights by harnessing
assessment of Strategic implementation the
opportunity and the of the power of databases and
potential ROI expected STEP II program through predictive algorithms
to be achieved at group Designing of the technology
level Solution enablement to ensure
realisation
Solution design, alignment of of benefits
the teams involved and
strategizing on the execution
plan

Page 45
 Step 1: Assessment of opportunity

The three key steps enable us to understand the landscape of current SCF activities and the
scope of available opportunity
ILLUSTRATIVE
Enablers/Pre-requisites:
(1) Spend details in the shared template:
• Vendor name
• Item purchased
• Item type
• Currency of purchase
• Purchase value excluding taxes and agreed
credit
terms
• Frequency of payments and payment dates

(2) Liquidity Assessment

• Return on existing cash and equivalents
• Other investments and debt profile
including WACC
and available bank credit lines
• Returns on treasury cash

(2) Details of ongoing SCF practices and

current
coverage of vendors including vendors with
enhanced
DPOs

(3) Historical discounts rates and patterns

Page 46
 Step 2: Designing of the solution

Recommendation of the solution design will be customised to the current needs of

the organisation in order to maximise potential gains
ILLUSTRATIVE

Enablers/Pre-requisites: Different elements

For overall solution design

• Payment pattern with different vendors

• Vendor financial details/profiles (available in
company records)
• Vendor due diligence reports

For better collaboration

• Organisation design and authority matrix.

• Current roles of cross functional teams-
procurement/finance, treasury, IT, AP,
• Existing KPI

For Communication strategy

• Existing team for vendor negotiation

• Current liquidity channels

Page 47
 Step 3: Implementation and technology enablement

The technology platform must be proven, easy to deploy and able to target the
selected population of vendors
ILLUSTRATIVE

Enablers/Pre-requisites: Different elements

• Institute steering committee ( including

members of different teams) to drive the
engagement strategically.

• Explore the option to partner with a reliable

and secure technology platforms like
Kyriba, Taulia – Able to link seamlessly to
ERP invoicing data with minimal IT
integration so as to facilitate the rapid
presentation and processing of dynamic
discount offerings .

Page 48
 Step 4: Predictive data analytics

Enhance the performance of your program through our analytical

tools and ensure healthier supply chain
ILLUSTRATIVE

Enablers/Pre-requisites: Different elements

• Data on vendor discounts being offered

• Data on the current investments of cash
and cash equivalents
• Payment terms data of different vendors
• Free cash surplus, expected cash flow
numbers

Enablers/Pre-requisites:

• Trend analysis of vendor discount rates (1)

Vendor-entity wise (2) Industry wise
• Predict expected discount rates/discount
income
• Predict and benchmark expected payment
terms
• Report working capital metrics
• Predict expected cash availability entity
wise.

Page 49
High level solution architecture

Page 50
 Case Study-2

Investment management:
Page 51
Draft: For discussion purposes only
INDEX

S.No Particulars

1 Cost of Capital calculator

2 Next steps for Strategy

3 Cost of Capital table

4 Vendor Summary

Page 52
Cost of Capital Calculator

Page 53
Next steps for Strategy

For Wave-1- Discount Strategy For Wave-2- Discount Strategy

1. Selection of vendors from the assessment profiling done by 1. Selection of vendors from the assessment profiling
EY with help of procurement dept. done by EY with help of procurement dept.

2. Assessment of current position of vendors in terms of

2. Procurement dept. to provide financial information of
Outstanding balances pending orders to be delivered or new
the selected vendors to increase the programme size.
purchases planned.

3. Decide on the size of the programme and no. of Vendors to 3. No repetition of vendors from the wave-1 of the
be included, first cut of assessment is done by EY. programme.

4. Set up meeting with vendors to discuss the benefits of the

programme.

5. Negotiate Discount rate with vendors on the basis of making

early payment either in 15 or 30 days.

6. Finalisation of Discount rate with vendors on the basis of

making early payment either in 15 or 30 days.

7. Finalization of vendors list for discount programme on the

basis of discount rate negotiated.

Page 54
Cost of Capital table

Annualised spreads Corporate bond spreads Cost of Capital

AAA 0.75% 7.27%
AA+ 0.95% 7.48%
AA 1.25% 7.77%
AA- 1.57% 8.10%
A+ 2.07% 8.60%
A 3.07% 9.60%
A- 3.57% 10.10%
BBB+ 4.57% 11.10%
BBB 4.82% 11.35%
BBB- 5.07% 11.60%
BB+ 5.32% 11.85%
BB 5.57% 12.10%
BB- 5.82% 12.35%
B+ 6.07% 12.60%
B 6.32% 12.85%
B- 6.57% 13.10%
C 6.82% 13.35%
D 7.07% 13.60%
CARE SME 1 7.32% 13.85%
CARE SME 2 7.57% 14.10%
CARE SME 3 7.82% 14.35%
CARE SME 4 8.07% 14.60%
SMERA MSE 1 8.32% 14.85%
SMERA MSE 2 8.57% 15.10%
SMERA MSE 3 8.82% 15.35%
SMERA MSE 4 9.07% 15.60%
SMERA MSE 5 9.32% 15.85%
SMERA MSE 6 9.57% 16.10%

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Vendor Summary

Page 56
Vendor Summary

Page 57
 Market Footprints

Investment management:
Page 58
Draft: For discussion purposes only
Emerging trends

Page 59
Trends emerging after post covid

Due to its fragmented nature, road transportation in India suffers from poor price realisation, higher costs and poor service levels

Multilevel Diversification Increased Greater reliance Cold supply

outsourcing to on rail and sea chain demand
inventory of sourcing received a
management arrangements 3PL players by transportation as
boost
manufacturing alternative to
leading to and focus on companies road
increased greater
demand for localisation
warehousing
space

1 2 3 4 5

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Supply chain finance in the COVID era

After years of decline, banks set for trade finance revenue growth in 2021

► As a result of pandemic-driven lockdowns and travel

restrictions, world merchandise trade is expected to have
declined 9.2% in 2020.

► Those interruptions have taken a "heavy toll" on traditional

trade finance activities

► Yet, some of the overall trade finance revenue drop was

offset by the growth of supply chain finance, which in the
first half of 2020 grew 4% year over year, according to
Coalition (an S&P Global-owned research company).

► Coalition expects the total trade finance revenue pool for

banks globally to have dropped to $49 billion in 2020, from
$53 billion in 2019. But in 2021 this is set to rebound to
$52 billion, according to the forecast. By 2022 it will reach
$54 billion, above the pre-COVID-19 level.

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MSME

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