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Marico aligns expenses to budget allocation with financial planning software

Anup Varier and Sunil Shah | July 10, 2013
The solution covers eight global subsidiaries and supports between 25 and 30 key number crunchers. By running operations based on up-to-date monthly numbers the company spent 8 percent less than it estimated.

The company also wanted an easier way to manage detailed calculations and comparisons of the cost effectiveness of individual plants at the subcontractor level. "As we grew in scale, the number of subsidiaries increased and subsequently the data load became unmanageable," recalls Rao.

That's a feeling that Ravin Mody, headtreasury and direct taxes, International Business Group, Marico, echoes. "Trying to consolidate the financials of 11 companies across six countries in three different ERP systems is nothing short of a nightmare on spreadsheets."

Oiling the Wheels
This is when Rao and his IT team launched Project Edge, their bid to redefine Marico's financial performance management. If they could get a more frequent and more accurate picture of monthly production costs, it could course correct and stay within a yearly budget. They set off by trying to understand the company's budgeting and reporting process in a three-day, in-house workshop. That confirmed a hunch they had: Marico's budgeting process was structured, but it was largely manual.

That made no sense to them, especially because IT solutions for financial planning management (FPM) had evolved over the years and were well-tuned to fit the needs of most organizations. So they got a core user team to evaluate four leading products in the space and select one that best suited their needs and had a reasonable TCO.

Post-selection they implemented the solution in an incremental manner, which took about five months, says Rao. He says that they did not face any issues in integrating the tool with their ERP system. Between December 2008 to March 2009, Marico's yearly budgeting period, Rao ran the legacy budgeting process and the new reporting tool in parallel. By the start of the next financial year, in March 2010, budgeting was performed entirely on the new tool, Rao says. Quicker data turnaround time from using the tool meant that various departments spent less time on mundane tasks like data entry and ensured that information was more consistent.

The solution covers eight global subsidiaries and supports between 25 and 30 key number crunchers. "All decision-makers will not use it but they certainly depend on the analysis brought out by people who do," says Rao. The bill of materials was also configured into the planning system. This removed the need to move out of the reporting system for a COGS calculation.

Raw material and packing material costs were also integrated into the reporting system. These features ensured that they were running operations based on up-to-date monthly numbers. As a result, the company spent 8 percent less than it estimated it would in 2009-2010. In comparison, in the previous financial year, it overshot its budget by about three percent. "This would not have been possible without an efficient enabling tool like Cognos," says Rao.


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