How to Develop Your Treasury Knowledge and Always Add Value with Pratik Mohta

Foreign.

Welcome to this week's Treasury Career Corner podcast where I interview treasury professionals.

About their treasury careers.

Each and every week I talk to them about how they build their careers, where they are now, where they see both themselves and the treasury profession going to next.

Let's get on with the show. In this week's show I'm joined by by Pratek Motor, the treasurer, Emir and Asia at Bungay. Now I know the group very well, I know some of the people there, and I'm delighted to be joined by Pratec Bunge itself. So founded in 1818, Bungay is a world leader in sourcing, processing and supplying oilseed and grain products and ingredients. Now 70,000 farmers globally, big numbers as well in grain facilities around the world. But what I'm going to do, as always, I'll get Pratic to explain that a lot better about the company. He's been there a few years, he can tell you more than me, but he'll tell us about later on in the show. So Patrick, you know, as I say each week on the show, if you maybe take us back to the beginning of your career because you had an unusual start. So it wasn't finance and treasury, first of all, it was engineering in India all the way through to now, treasury in Emir and Asia and things like that. So take us back to the beginning if you would and, well, India and things.

So yeah, I started my career back in India where I did my engineering as my undergrad education. It at that time, I mean, I really did not know what I was doing. I just did it, to be honest, because everyone in India who was bright in academics ended up pursuing a career in engineering or medical science. By default. I came to engineering, but when I spent time there, I mean, one of the things which it helped develop, and this is what most people will tell you, is it really helps you develop that analytical thinking, the critical thinking, asking the questions, trying to go into the bottom of how things work and how things are linked. So that training was fundamental and it is still fundamental in everything which, which I do. But once I did my engineering, I knew that I don't think that was something long term for me. I mean, I really loved the field but as I said, I just ended there by accident. My passion was something else and I was still looking, I did not know at that time. So I then decided to do MBA to kind of just broaden my, my horizons and perspectives a little bit more. And I decided to do it in the US because just to get that extra exposure Working and studying outside of, of my home country and outside of my comfort zone, which is where I had been for 20 plus years of my life.

And you said, you said also before when we had our pre, pre show that your, your mother had a sort of recommendation for you to sort of push you out into the world, maybe, you know, expand on that if you would.

Growing up, my mom used to always tell me one thing, you should not be a frog in a well. And what she really meant by that was, you need to, basically the world is a lot bigger, so you need to expand your horizons. And the second message, which was a little bit more nuanced and which I kind of even look back to now as I always think about that learning which I got from her, is to keep your mind open in terms of never be satisfied from what you have learned. So that has stayed with me. And that was one of the things actually which inspired me to get out of my comfort zone, come to us, do an MBA there.

And with that you then sort of made the move. So you made this big move to the US and then you sort of, naturally enough, you sort of did your academic project and then started to move more towards financing. And then quite quickly you discovered Treasury. Talk about those moves, if you would, and how you. We went from there.

In terms of post mba, I was looking for opportunities while I was in school and there were a couple of things which came to me. And then the one which I really liked was the opportunity with Bungi, where I am still there after 11 years. And what they came up with was a very interesting thing. They came up to me and said that we will hire you and we will straightaway put you in a rotational role, which was pretty common and is pretty common still. But the unique feature of that was that given that we are such a global company, we will not even not only give you exposure to different areas of finance, but also actually let you work in different parts of the world. So the first two years of my career at Bunge, I spent time in Russia, in Brazil and in the US working on different projects, starting with fpa, sometime with business development, and then a little bit with Treasury. And once I was done through those rotations and I was looking at what to do, I was basically very confused between a different area of finance, mostly fp, and a kind of roles versus Treasury. So the best advice I got when I had completed the program was from someone who we looked up at the company, but I had really no personal relationship with the person. I had not really spoken with him many times before, but over the cup of coffee, we were just chatting and he told me that at this stage in your career, focus on building hard finance skills. And that's why he recommended me to. To take a role in treasury rather than at that time, FP&A was considered to be the more, and excuse my language, like the sexy job because it had more exposure to the senior management at that time. But he said that you can always get that right and it's important to have that. But the more important piece when you're starting off is to build hard skills and that you would get in Treasury. And so his opinion was I should choose that. And that's something which basically resonated with me. And then I started with treasury. So it was kind of a little bit, little bit by accident, little bit by some very good advice where I ended with treasury once I entered. It's been eight, nine years since I have been in treasury and still going strong.

And it hooked you in sort of thing. So you started, yeah, you started your role. So you came in as Treasury Manager within capital and then you made the moves and you sort of. It's quite a natural path, I would say, you know, looking at it from resumes I see and from people and then they start. But maybe you could just give us a. Give us a sort of a meander through your background from. So you start Treasury Manager, Capital Planning, then move to FX and Risk and then. And we'll get a bit more up to date with, you know, some of the investor relations stuff and banking liquidity because it's fabulous experience. So anyone will definitely want to be connecting with you after the show, I can tell. But, you know, give us a walkthrough on what each of those gave you, if you would.

When I started with Treasury, I started in a role which was very, very heavy analytics. So we have presence in 40 plus countries and in all the countries, of course, the tax rules are different. How you fund those countries can be very, very different. To optimize the capital structure, there can be a real challenge. So my role was to basically look at all the countries, how we are funded and try to find ways to optimize our funding. We raise all our capital centrally and then fund all of local companies through intercompany mechanisms. So that was my role. It was heavy analytical. I remember I had spreadsheets, multiple tabs, hundreds of lines of spreadsheets designed to help me keep track. And that kind of was a little bit natural introduction for me as well, because it was Something which I felt very comfortable doing. But once I had done that, it became natural to me that, okay, this, the way I'm looking at it is one dimensional. I need to expand my dimensions on how I'm looking at things. So the FXP came naturally because as you fund a company in a different geography, you are obviously taking currency risk also, and you're changing the currency risk profile for the shareholders depending on how you fund it. So that is a piece which I picked naturally. And in a company like us, a commodity industry, it's very critical that we manage that very, very precisely. I mean, our margins are 2, 3%. I mean, you can't afford to lose even a basis point because of inappropriate risk management. So that, to me, was a huge learning curve and something which I felt was very critical to our company.

And also that was quite an early stage in your career, really, and a lot of people listening today will be in that similar situation with that. Was it very much a case of knuckling down, but then also trying to manage your relationships around, or how did you feel in that? You know, I know it's a while ago, but thinking back to that, I know it provided a springboard for some of the other roles you've done and things like that. What was it like working within that? You know. You know, it's a grind and stuff, but this is important. Is that the way you felt?

Yeah, no, it was. I mean, I felt that. I know nothing felt a little bit like, okay, I. I don't know what I'm doing. I mean, I need to really understand things. And that's where it really helped me, that I had good people around. So I asked people to just help me think. Yeah, A simple thing like, okay, how do you think about this? That was the question which I focused on, okay, how do I think about currency risk in this context rather than what should I do? I mean, that's the question which I focused on. And that, I think really helped me learn more and in a much more deeper way develop the understanding of what it means for us in our context, in the company and our business. And that was kind of the launching pad. Then, once I had done that for a few years, it gave me enough confidence that I, I can do this, I can understand things, more complicated things, and I can have an impact within the company and within treasury, to be honest. So from that point on, it became more of, what more can I do? How more can I get interesting things to do, how more I can add value? So then I started basically just Asking that question to everyone who I knew in the company. What else can I do? What more can I do? How can I help you? So that's where a lot of the interesting thing came to me. One was a switch to capital markets in terms of developing that part of treasury, but also a lot of things which were not directly related to Treasury. But treasury job is a high finance job. You need to have a very good corporate finance knowledge to do that. And you develop that as you spend time in the role. So it's not that you need to know everything, but you learn as you are doing it. And that's where I developed a lot of relations with people outside the treasury group, going back to the FPA Group, going back to business development groups. Whenever there was something they were looking at, I volunteered, hey, I can help. I know my spreadsheets, I can help you build models, simple thing like that. And then sooner you realize you are kind of part of their group, they see you as one of them, a person who's willing to help and the person who they can trust and work with. And that's how a lot of the opportunities came to me outside of the core treasury job, which of course was the foundation of everything. And without being good at that, I wouldn't have gotten that because no one would have trusted me.

And you're saying you put your hand up for all this and sort of, I can help, I can help. But you still had your day job and everything else because your role has grown, because you then became, and again for the listeners, you, you then focus on FX risk management and then more recently, sort of, you take on banking liquidity and now capital markets. Talk us through those and the balance. And then how did you do that? Because again, people say, well, this is all very well, Patrick, but I've got a day job to do as well. But how did you balance that?

If you like, certainly. And it's always a balance. And that's why I think one of the things that you have to do is push, be comfortable and have the confidence in yourself that you can do your day job well. And keep asking the question, why am I doing this? What does it mean for me if I'm in a bank relations job? What does it mean for the company to have adequate capital? What next? Once you have that kind of thinking, then you'll obviously look for more places where it's adjacent. It doesn't have to be that you're spending half of your time doing things which are not treasury related. I would argue rather that a Lot of the things which I did outside of treasury had a direct implication on my job because no matter what we decided to do with capital allocation, ultimately it did come to treasury to explain it to the rating agencies, to explain it to our lenders on what we are doing, why we are doing. So if you are in the stage from a very early on, I see it as part of your job rather than something which you are doing just as on the side for fun. And I think that's where, if you think of it that way you will see it as a part of your job. And ultimately you have to find the best way. How do you manage your time? Right? I mean there is no secret formula or a silver bullet that okay, you do this and it works. I mean everyone's situation is different and from time to time your own situation will change. You have to just go with the flow, keeping the eye on the end goal on okay, why I'm doing this and how does it link, how does everything link together to create more value for the shareholders ultimately?

We talked about that earlier actually that we were going to get you to describe Bunge a bit more and I feel we should actually. It's a 200 year old business with 32,000 employees, 40 plus countries, amazing, huge multinational. We haven't really touched on that. We deep dove into how then you got into treasury and then I think if we talk about the business a little bit more, maybe for the listeners just to explain who you guys are and then we can sort of re dive back into some of the areas because we're, we're going to go into, you know, talk about ratings, why that's so important and also sustainability. But before we do that, I think people need to understand the business. So that's my fault. So explain what the business, who the business is, what it does and things like that, if you would.

So as you said, it's a 200 year old company. There are not many companies who can say that they have that long of a history. And the reason why we have been there for so long is we have evolved and adapted to the changing world. What we do is very, very basic and fundamental to humanity. It's basically we are feeding the world, we are connecting producers to consumers and in between we have the logistics, assets, we have other risk management capabilities to do that.

And where does treasury then come in? You talked about the business there and de risking it. But how do you guys make that big an impact? I know you do. And treasury is complete. How are you organized? Maybe globally, you Know again for the people listening so that they know, they understand how global your role is and.

How you are really in our business you need to turn over a lot of revenues to generate a small amount of profit. Our revenues are around 45 billion and to generate say a billion dollars of net income. And if you have that kind of scale and in this business, the working capital swings are also very, very large. You can easily double your debt in six months. And that actually might be the best thing because when the commodity prices are rising, that's probably the time when you are making a lot of money as a business. So the number one risk for the business is liquidity risk. And then treasury sitting at the top of that, managing that risk. It makes Treasury a very, very core partner to the business. I feel a little bit fortunate of being in the industry because that has given us the opportunity to have a very close dialogue with the commercial organizations on what they are thinking, how is the market evolving and what is their forecast and hence what does it mean for us in terms of treasury to do to support the business in terms of the organization. We are a smallish treasury organization for the size of the business, around 30 people, 35 people across the globe. More than half of them are on the operations and technology side and the other pieces on various business treasury kind of roles. The capital markets team actually in treasury is only four people outside of the group treasurer. And we raise, I mean in four years where I spend in capital markets, we raised close to 13 or to $15 billion of capital. So in that sense it's action heavy team. There's lots to do always and things where you need to be agile. I mean as I said, we have had multiple years where from Jan to June that has doubled.

And when you talk about that connection and being that linkage if you like with the business, that's also segues nicely into the. One of the key topics and I know you're passionate about is ratings and talking and divesting of different things and a lot of the, the energy that you give to it as well about the different investments you guys get in. And you're particularly focused on that strategic financing piece if you like. Why are you so passionate about that? Why is that such a key thing? Because again for some guys listening there'll be more cash management focus and say, oh, you know, why, why do those guys get so excited by that? You know, I know that that that's a key energy thing for you. So why is that so important to you? Would you say?

We always say that finance and treasury should be a strategic partner to the business. And that's where a lot of the work which I have done and which I've got the good fortune of doing is being around that. To give you a couple of examples, we had a business in Brazil, the sugar. We entered into a sugar and bioenergy business. It was something which we invested in 2008. 9 We realized that it's not a good fit for us. And in around 2013 or 14, we decided that we want to divest out of it or de risk ourselves from that business. And that's what we stated publicly. Our CEO actually went on and publicly stated that Fast forward to 2018. We were still in that business because we were not able to find the right solution for how do we de risk ourselves. And as we think about that, we realized that one of the key challenges is a business which is capital heavy. And given the state of the industry, there were not many people who had deep pockets or deep access to liquidity. So we thought maybe if we solve that problem for the players in the industry, maybe we might have a good solution to de risk ourselves. So what we did was we. We put a financing in place not knowing what it will lead to. But this financing was quite unique. It had a change of control fee feature. So initially the financing was apparent guaranteed financing which had the interest rates which Bunge would get normally. But Bunge had an option, a free option, so to say where if we click switch, it could turn into a financing which is secured by the assets of our sugar business. The pricing would of course go up and reflect the risks of that business. After we put the facility in place in a year or so, we were in talks with various players. But the oil major, BP was one of the companies who we were speaking with. They wanted to grow their ethanol business in Brazil. Energy neutrality or carbon neutrality being one of the themes for them. And they said, hey, we have some sugar mills in Brazil and you guys are looking to de Risk, why don't we partner? And what they had to do was basically pay bungi only $75 million and this facility was $700 million, which basically became debt for this joint venture which we formed with them. But the beauty of it was by paying $75 million to Bungi, they became one of the largest sugar and ethanol players in Brazil.

Just to highlight for people, that's enabling you as a business, not only de Risk, you know, part of that business, but also monetize it and give value back. So it's Sort of that, that perfect triangle, isn't it? And that, that's what your, your focus on. That's one of the key things that I know that when we spoke on our pre podcast, I, you know, in fact I said before depressing. I couldn't find my notes. I've actually found them whilst we were talking earlier and I was like, ah, this great. And I remember writing that down sort of. And you've got that idea. Then it seems like you and treasury at the center of that, that perfect triangle of the de Risk monetize, you know, and then the business sort of thing, it's actually, that's what you're about, isn't it? And then from this, you know, let's move, you know, maybe answer that, if you would. I'll shut my mouth now. So is that the way you feel?

Yeah, no, absolutely. I think capital allocation is as fundamental and as code to treasury as is capital raising. Right. I mean it's, it's ultimately all linked. And that's why I. Something which I keep telling myself and people who work with me is we have to always ask the question, what does it mean in the bigger picture? What does it mean ultimately for Bunge as a whole, as a company, what does it mean to the shareholders of the company? Keep focus on, keep an eye on that. Because once you have that and you're asking that question, that's when these kind of strategic opportunities are which the ideas will come in and you will have discussions and it will lead to something which you would look back and then be very happy or proud about. So that to be is fundamental no matter what job you're doing in Treasury. And maybe I might want to go back, you touched a little bit upon the operations fees. I don't want to kind of not address that because that's something which is also equally critical in Treasury. I mean, in my experience, in my first 10 years of treasury experience, it was more on the hard finance piece, on capital markets, on currency risk management or interest rate risk management. I didn't have the opportunity to focus much on the operations side, but what I did was last year I put my hand up and said, hey, this is something which I have never done, but I'm still interested in learning. It's one area of treasury which I want to do. I had a conversation with the group treasurer of the company and he said that that's great. And I ended up actually moving from US to Rotterdam where I am based now. And the team which I have is basically the team which looks at the global treasury operations and technology in addition to having the regional responsibility of Treasury. And that to me is also critical. Where again here, what I have been focusing on is just making sure everyone asks the question what are we doing? What does it mean? And then the natural next question is how can we make it better? So it's a simple thing of how technology is changing the day to day wiring of the company where cash moves.

And how do you keep that eye to efficiency without just forgetting about the people. How do you, you know, you talked, you touched on it there. But again, a lot of people come and say, oh, we've got to make our operations more efficient and you know, that drive to efficiency and efficiency and you know, you're like, oh God, yeah, but how do you do that? You know, with people and you can use systems and things which are going to help you, but how do you, you know, sort of help those people get that, get along that curve?

So I think the one thing which has, it's a very simple idea or concept which has helped me in driving that is working with the team to set up KPIs, you would think at all. It's, it's basic but, but it helps a lot. It is as simple as, okay, we are working on various things. What is the impact and how do we measure ourselves? So we set three or four KPIs at the start of the year and say, okay, we are going to measure that and monitor ourselves against that. And it can be as simple as, okay, I want to reduce the number of bank accounts, for example, as simple or as basic as that. But once you have it and you are talking about it on your weekly monthly calls with the team, it helps you and the team, all of you to focus on it. And it's the precursor for innovation.

And there's lots of goal setting as well. That's one of the key things that comes through to me. It's like just setting those, you know, mini goals, those waypoints, if you like, just saying, right, this is our efficiency goal at the end. But as you say, you know, can we, you know, not just the, you talked about the different number of bank accounts, but also, okay, how can we reduce the number of payments? Do we need, you know, can we get that down? Can we do this? Can we simplify things as well? Because then it gives visibility, doesn't it as well? That's one of the things you talked about.

Reduce number of payments, reduce the change the type of payments. It's, it's very, very basic things. And someone who's spent a lot of time in treasury operation Will. Yeah, that's what we do every day or that's what we want to do. But at times when you are doing the day jobs, it kind of gets the bigger picture, gets lost. So that's why I feel this setting mini goals or KPIs or whatever you want to call it, it helps refocus and put things into perspective of why we are doing it. I think that's the key to me.

I don't want to run out of time today because we deep dove in there. I really loved it also. Another passionate area for you is sustainability. New financing and this new sort of embracing of that if you like. And it's obviously the front of it, forefront of it, lots of treasury professionals minds and things like that. And you did, you know, green loan, your green loan and things. Can you just talk us through? You know, it's important to everyone. But why and how did you actually do that sort of thing?

Sustainability is for bungay. For our company. It's been something which has been on the forefront for us for many years. I mean, we started our journey back in 2006 when sustainability was not really a buzzword as it is now because of the geographies we are in and because of the nature of our industry. It was something which was always important to us. We committed to the soy moratorium where we are not going to source anything from the Amazon region which has been deforested back in 2008. So that's been core to our business. And as in tragedy, we think about things and we thought that that's something which is important it's going to continue to be for businesses. So we have always been thinking of how do we link the financing or the capital structure to do that goal. And because that's the story which not just the shareholders want to learn, but that's also the story which the debt holders want to learn about and it's getting more and more important to them. We know speaking with our banks that within the banks, that's a topic which is always being discussed more and more and more. So we thought that okay, if we link some of our financing to the sustainability goals, it will help in two things. First is it will help us in communication externally with our debt holding holders community. And second by treasury working together with sustainability, which set a great example for the people within the company that hey, these are two departments who are working together and we elevate the conversation of sustainability or help drive a little bit more discussion towards that. And we looked at various options. I mean we looked at green bonds at that time, but it didn't fit in terms of the use of proceeds needs to be tied to certain projects or investments. And in a company like us, we can't afford to just have cash sitting till we are able to invest. And that's where we ended up doing a sustainability linked loan or a green loan back in 2018.

Well, I think also as well as the green loan and just, you know, this is one of the things we spoke about before, but it sort of makes you more attractive, you know, and you're not doing it for that reason. You're doing it because it's the right thing to do and everything else, but far more. And I've seen quite a lot on LinkedIn and various other places, but I'm starting to be asked about it so much by candidates. You know, we joke about the first three questions that people I think is probably question number four. Now question one is what's the job? Number two, how much does it pay? Number three, what's the working from home flexibility policy? That's fine. But the, the next, you know, and the next question there and actually got a number of candidates are asking us and we put it now links to it as well is what is, you know, the approach of the company on sustainability? What's the ESG policy And people and that that's actually 20 years ago people, the ESG didn't exist. You know, really, you know at the end of the day that now it does and it's forefront of people's minds which is, which is very different as well.

Yeah, no, absolutely. I think we are soon getting to a place where it is not no longer differentiating factor for a company, but it's kind of a must have. And I am very firm believer that in a few years when you are and whenever you're doing financing it should will be. Not that you have an option of having some sustainability dialogue around it, but it is something which you will have to have. Without it, nothing will happen.

Yes, fundamental. As you've listened to the podcast a few times, you hear me ask this question. What else do you think is important out there in treasury or people listening today? What should they be thinking about, would you say?

I think there are a couple of things we talked about sustainability as being one of it. If I go back to the operations piece, I think it's transforming completely. I think in terms of the advent of digitization, treasury has always been there in terms of adapting to it. But it's relatively slower. I would say the overall finance organization is a little bit slower. But now we are at the doorstep of completely transforming things. In the past I would say a lot of the focus was how do you get the data and then you analyze it. Now I think the time you spent on getting data is reducing drastically. I mean it's by click of a button, you can guide all the data as you want and then it will continue to improve all of us, including us. We are not there yet in terms of having that strong data culture within the company. But it continues to evolve and improve and now the more focus on it will be on the analytics and how do you do things differently. So part of treasury organization is going to be even more closely linked to technology than it was in the past. And then the basic risk management piece, the strategic piece, the capital piece, I mean that remains more of the same but the links to the strategy are even getting more and more stronger.

So Pratik, if you were to look back over and we'll put your LinkedIn details in the show notes but as you look back over your career, you've made some great moves. We have the listeners who earlier stage of the career, mid stages or some of the guys today wanting to your war stories and just some thoughts. What are your thoughts? You know what, what recommendations would you make to those guys listening today?

The first thing is obviously be open minded, say yes to opportunities, look for opportunities yourselves, how you can add value, how you can contribute, how you can learn. The second thing which to me is equally important is when you are doing something not to lose the sight of.

The big picture, be open minded about your career, be goal focused and set those team goals. I think that we'll draw that out from the earlier on of the show as well and be a great question asker, you know, ask ask the insightful questions to get the decent answers. So as always we'll put Pratex LinkedIn details in the show notes, you can connect him. It'll be great to have in your network. He's a wonderful guy as you can see and I'm sure we'll one day we'll meet in person. But you know, I hope to see you at a conference soon and maybe interview you or do something because this has been great stuff and you know, thank you for your time today and I'm listeners will be very grateful as well. Thank you sir.

Thank you Mike and thanks everyone for listening.

Thank you.

Hello, it's Mike here again. I hope you enjoyed this week's show. If you did, then maybe you want to follow the show or subscribe, depending.

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