working capital mgmt of consumer goods companies

INTRODUCTION:-
Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets such a cash marketable securities, debtors and inventories. Funds thus, invested in current assets keep revolving fast and are constantly converted into cash and this cash flow out again in exchange for other current assets.
Every running business needs working capital. Even a business which is fully equipped with all types of fixed assets required is bound to collapse without (i) adequate supply of raw materials for processing; (ii) cash to pay for wages, power and other costs; (iii) creating a stock of finished goods to feed the market demand regularly; and, (iv) the ability to grant credit to its customers. All these require working capital. Working capital is thus like the lifeblood of a business. The business will not be able to carry on day-to-day activities without the availability of adequate working capital.

Disadvantages of Redundant or Excess Working Capital Idle funds, non-profitable for business, poor ROI.
Unnecessary purchasing & accumulation of inventories over required level.
Excessive debtors and defective credit policy, higher incidence of B/D.
Overall inefficiency in the organization.
When there is excessive working capital, Credit worthiness suffers. Due to low rate of return on investments, the market value of shares may fall.
Disadvantages or Dangers of Inadequate or Short Working Capital Can’t pay off its short-term liabilities in time.
Economies of scale are not possible. Difficult for the firm to exploit favorable market situations. Day-to-day liquidity worsens.
Improper utilization the fixed assets and ROA/ROI falls sharply.

COMPANIES UNDER STUDY:-
COMPANY
INDUSTRY
Asian Star Company Limited

Diamond Cutting/Jewellery

Bata India Limited

Leather/Leather Products

Bajaj Electricals Limited

Domestic Appliances

C Mahindra Exports Limited