How AM/NS India is redefining the future with smarter steel solutions
ArcelorMittal Nippon Steel India (AM/NS India) is a leading steel manufacturer in India with a goal to create smarter and more sustainable solutions for its customers. As a key exporter of steel to the rest of the world, trade finance transactions are a crucial but challenging part of the process in delivering its products to buyers.
Recognising the need to transform
Like many other importers and exporters around the world, the Letter of Credit (LC) is an important document to help companies buy and sell raw materials outside their home countries.
AM/NS India recognised that the conventional way of processing LCs needed to be transformed. Through the recommendation of its bank, HSBC, the company decided to take the digital leap forward.
Watch the video to learn more.
Taking the digital leap
In October 2021, AM/NS India completed a live trade finance transaction with the UAE’s Universal Tube & Plastic Industries over Contour’s blockchain-based network.
AM/NS India (exporter) was the seller of steel goods to Universal Tube & Plastics Industries (importer). The Letter of Credit was issued by HSBC UAE for the importer, with HSBC India acting as the advising and negotiating bank for the exporter.
As an early leader in adopting blockchain technology, here are three takeaways from AM/NS India’s digital transformation.
1. Transact with all counterparties on one network
On Contour, the underlying LC trade transaction is fully digital and allows all parties to collaborate on one platform. From the LC issuance to the final presentation of documents, the transacting parties were also able to transfer, manage and present electronic Bills of Lading and supporting documents seamlessly through the essDOCS’ CargoDocs platform.
"When the LC transaction is done on a digital platform, the information is shared digitally and transparently with each counterparty. This helps to document and discount the LC in a very efficient matter," said Amit Harlalka, Deputy CFO of AM/NS India.
2. Tremendous time and cost savings
AM/NS India described that using Contour’s network, opening an LC took two to three hours, instead of the two to three days it typically took when they did it manually. The next steps of drafting, issuance and amendment took one day on Contour, versus the four to five days it used to take. And finally, the shipping and discounting was completed in one day, when it used to require four to five days to wrap up.
Overall, the time and cost savings were tremendous. AM/NS India was able to complete the transaction within three days, compared to the 10 to 12 days it takes when the process is manual. This helped the company save working capital for six to seven days, which represented 50 to 60 percent of the total cost – a significant improvement for any international trade.
3. Unlocking more opportunities for growth
AM/NS India is a leader in its digital transformation, and it continues to explore ways to strengthen their capabilities to automate and digitise processes.
“Adopting digitised LCs shows our commitment to providing smarter steel solutions for a better world. It has helped streamline and simplify the trade finance process by eliminating the need for paper-based processed. After this seamless experience, I foresee more players following our footsteps in adopting digitised LCs,” said Takahiro Nagayoshi, CFO of AM/NS India.
HSBC, which was both the issuing and advising bank on the transaction, is also confident that more corporates will adopt blockchain technology soon. The world’s largest trade bank has partnered many large corporates in leveraging blockchain technology in trade finance.
"The use of blockchain technology in trade finance, enhances transparency and
security for all parties," said Runa Baksi, Country Head of Global Trade and Receivables Finance at HSBC India.
“Digitisation of trade is undoubtedly the future of trade finance. It brings significant advantages, including the streamlining of operations, cost reduction, and increased efficiency in international trade. This will enable corporates and banks to be more competitive and have a transformational impact,”Baksi added .
Removing the roadblocks will unlock further benefits of bilateral trade with India’s closest trading partners in ASEAN and MENA, which have relatively close-proximity shipping routes.
AM/NS India remains at the forefront of digitisation as it casts an eye on a sustainable future. It continues to drive digital adoption of LCs to find new efficiencies for its customers as well as to increase its business by having better working capital management.
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