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Jaguar Land Rover TREASURY MANAGEMENT.pptx for bba and mba students
- 2. INTRODUCTION Jaguar Land Rover (JLR) is a business built around two great British car brands that design, engineer and manufacture in the UK. Jaguar Land Rover is part of Tata Motors, Indias largest automobile company. Jaguar Cars Limited is one of the worlds premier manufacturers of luxury sports saloons and sports cars, whilst Land Rover is a world renowned manufacturer of premium 4x4s based in the United Kingdom. The Land Rover, in particular, over its 60 year long history has been renowned for its relationship with the planet
- 3. OUTLINE Jaguar Land Rovers sustainability governance structure is part of the reason why sustainability is so embedded strategically in the way they do business. It is this framework and structure which enables effective cross functional engagement and optimises the value add from the finance team.
- 4. TIMELINE 1998- Jaguar Land Rover (JLR) became one of the first companies to be fully certified to the international environmental management standard, ISO14001. Since then they have continually increased focus in sustainability and it is now fully embedded as a strategic imperative, at the heart of the business. 2003- In 2003 they first introduced their sustainable development policy and have been measuring progress against a set of key environmental targets ever since. 2007- To further embed sustainability they developed a long- term sustainability strategy with the help of Forum for the Future and sustainability champions across the business. 2008- A board level sustainability committee was formed to increase focus on sustainability initiatives.
- 5. Jaguars commitment to making its range of cars as environmentally efficient as possible has been recognised by key environmental industry groups. Jaguar was the winner of the Environmental Transport Associations guide luxury sector in 2006, 2007 and 2008.
- 6. Jaguar Land Rover is the UKs largest automotive manufacturing business, built around two iconic British car brands: Land Rover, the worlds leading manufacturer of premium all-terrain vehicles and Jaguar, one of the worlds premier luxury sports saloon and sports car marques. Jaguar Land Rover is transforming its business to realise the full potential of its brands and deliver profitable results.
- 7. MARKET SHARE Driving the business is a world-class team of 38,000 people globally. Jaguar Land Rover sold a total of 521,600 vehicles during the year ending 31st March 2016, comprising 427,100 Land Rover vehicles and 94,400 Jaguar vehicles.
- 8. PROBLEM The team managed its hedging programme on legacy systems, including spreadsheets, which was seen to be more susceptible to control risks. The critical terms accounting method has been used to perform effectiveness testing, but the desire was to move to a system with scope to implement a more sophisticated effectiveness testing approach. Consequently, Jaguar Land Rover treasury looked for a more dedicated system to manage and account for its portfolio to be best in class.
- 9. The solution With such a large hedging programme, Jaguar Land Rover wanted to achieve the following objectives: Move to a dedicated derivative system to provide better controls and implement and automate new processes. Implement more sophisticated and flexible effectiveness testing (eg scenario or regression tests). Improve the ability to add new transaction types and support future reporting or regulatory requirements. Enable more sophisticated analysis of the hedging transactions and portfolio together with the exposures.
- 10. clear project structure Clear articulation of the aims of the project and its planned business benefits. Reporting to the steering committee on performance against timescales, testing progress, car park issues and potential project risks. Key accounting decisions relating to the hedge accounting approach were reviewed and challenged with support from technical accountants to ensure decisions taken several years ago remained current.
- 11. Best practice and innovation Jaguar Land Rover treasury is committed to the vision of being a world-class function. With its large FX exposures and hedging programme, having best in class technology is a key priority for its hedging activity. The size of the hedge portfolio meant it was critical to carefully plan the implementation with extensive testing to ensure there were no issues that might compromise prior or future accounting. The project was governed by a cross functional Jaguar Land Rover steering committee led by treasury, which set an ambitious target to complete such a major systems project within five months. The project was completed and the system successfully launched within the scheduled time frame, recalls Karran.