Nikhila Ramesh is a Chartered Accountant with over 10 years of industry experience. She is an expert in Solar, Fintech & Treasury Management with skills like Audit, Treasury and Strategy. With a focus on driving financial growth and results, she joined Swelect Energy Systems in 2020. Nikhila has since been handling the company’s finance and accounting. she has worked with numerous organisations including CreditMantri and M. S. Krishnaswami & Rajan among others.
In a recent conversation with Women Entrepreneurs Review Magazine, Nikhila speaks about her extensive journey in the industry, highlighting various funding sources in the global market. She underscored AI-driven tools with emphasis on streamlined day-to-day operations involving purchase-to-procure and order-to-cash processes. Considering her current role, Nikhila highlights rise of female CFOs in the industry as well.
Read out the entire article to know more.
Considering the current volatility in global markets, what financial strategies can mitigate risks while sustaining growth? How should CFOs balance liquidity needs with the longer-term capital demands of high-growth sectors like solar and fintech?
It is a combination of various funding sources. Given the volatility, we use a mix of equity, debt, and project financing to reduce reliance on a single stream. Instruments like green bonds and sustainability-linked loans are emerging specifically for renewable energy projects. Additionally, hedging options offered by banks help manage risks. Traditional loans are typically market-linked, with rates changing every three months, while renewable energy projects follow a fixed model for up to 25 years. To mitigate these risks, tools like interest rate swaps and currency swaps provide stability.
It’s a juggling act because we must invest in long-term projects that offer better ROI. ROI is crucial since these are 25-year projects that require significant commitment. At the same time, we need funds for working capital and regular operations. AI can help forecast cash flows, ensuring a balanced approach between long-term and short-term assets. We also explore alternative investments, placing short-term funds in higher-yield options to generate extra income for long-term projects.
What innovations in treasury management do you foresee becoming critical for maintaining financial stability and agility?
AI-driven tools have significantly streamlined day-to-day operations, including purchase-to-procure and order-to-cash processes, enabling stringent timeline monitoring. Previously, manual processes made it challenging to track data days, credit days, and cash flows effectively. However, AI-powered solutions, such as the TReDS platform, have improved MSME payment timelines, preventing cash flow disruptions and minimizing interest costs from delayed payouts. Additionally, digital invoicing and payment solutions have reduced manual errors and shortened processing cycles, enhancing overall efficiency. These tools help reduce timelines by integrating APIs with various platforms, minimizing processing time and manual errors, and improving working capital management.
How will treasury management evolve to align with the unique needs of sectors that rely on complex funding models, such as solar and renewable energy?
Industries like renewable energy require longer-term loans due to extended ROIs and high capital intensity. Traditional term loan models no longer suffice. Instead, purchase agreements with 25-year tenors can be leveraged for specialized funding. The INVIT model allows crowd-sourced funding, reducing the burden on a single bank. Borrowing strategies from real estate and infrastructure, such as modular financing, enable phased capital infusion aligned with project milestones. This approach avoids locking in full cash flow upfront and minimizes unnecessary interest payments, supporting project completion within the usual six to seven months.
What’s your perspective on the convergence of fintech and renewable energy financing?
We have seen various models, such as crowdfunding platforms that help raise small-scale capital for immediate needs. AI-based credit scoring is being used to assess underserved green projects struggling for funds, enabling better access to financing. Fintech partnerships have strengthened compliance and data security, driving industry evolution. Another development is energy credit trading, where fintechs facilitate efficient trading through digital platforms. Previously, this process was manual, requiring certificate exchanges for cash. Today, fintechs streamline transactions, similar to NSE or BSE, enabling online trading with cash settlements on a T+1 basis.
What is your perspective on balancing innovation with risk management in the existing convergence of technology and sustainability?
In the convergence of technology and sustainability, one of the primary risks is the implementation of new technology itself. Change management poses a significant challenge for companies, as integrating a tech-driven structure across an organization requires extensive effort. Another major concern is cybersecurity vulnerabilities. With the rise of sophisticated cyber threats, ensuring data security remains a critical risk. Additionally, the rapid pace of technological advancements leads to the issue of obsolescence. By the time a company successfully implements a technology aligned with its sustainability practices, a more advanced solution may already be available, making the previous investment less effective.
What steps should CFOs take to future-proof tax strategies in cross-border financing, particularly for businesses heavily invested in emerging tech like fintech and renewable energy?
The government plays a key role in tax strategies through its policies. With existing policies in place, companies must stay updated and fully leverage available incentives. For instance, in the solar sector, accelerated depreciation and subsidies for green projects should be optimized.
Since many companies operate across multiple countries, a robust transfer pricing policy is essential to prevent cross-border regulatory issues. Ensuring that each country stays informed about the latest tax strategies helps optimize taxation across regions.
Carbon credit trading is expanding globally and offers significant tax benefits, as most carbon credits are either tax-free or taxed at a lower rate. Leveraging these opportunities ensures maximum tax benefits.
Being aware of the market scenario on a daily basis and working closely with CEOs is essential for CFOs. Without a clear understanding of market trends, it becomes difficult to take immediate and effective action. Navigating a dynamic and volatile environment requires ensuring sufficient reserves to anticipate potential fluctuations.
A recent example is the COVID-19 crisis, where having adequate reserves allowed us to withstand the impact without major business disruptions. CFOs today need the same forward-looking perspective as CEOs and must work in tandem with them to ensure business continuity and strategic planning.
LAST WORD
Today, more women are stepping into CFO positions, which is encouraging. Given the lower representation of women in the C-suite, we should support and accelerate the next generation’s rise to leadership.
