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Downturn is an opportunity to improve investment yields at lowest risk Print E-mail
Written by Arjun   
Friday, 19 June 2009
Bangalore : The need for co-operation between companies, bankers, dealers & suppliers in addition to a need for innovative ideas and fresh thought were highlighted at a seminar on Working Capital Management for manufacturing companies, organised by the Confederation of Indian Industry (CII) here today.

The current economic situation presents the opportunity to improve investment yields at lowest risk. A discussion panel on strategies and challenges in managing working capital in the current economic situation unanimously agreed that companies should ensure that cash within the organisation is utilized in a much better manner.

"Demand fluctuations and uncertainty, current economic situation and challenges of slow or no sales leading to asset build-up makes it imperative for companies to focus more closely on working capital. The typical challenges are balancing profitability and cash flow. The companies should strike a golden balance between market share vs credit terms, shorter Time To Market (TTM) vs inventory holding cost and decide between short term vs long term funding, profit loss statement vs balance sheet etc. Waste capital management should be an ongoing effort. Its not a finance only subject, so its best addressed by a cross-functional team and should be subject to monitoring and review," said Sanjay Handu, Global Director – International Purchasing & Asia-Pacific Procurement, Tyco Electronics indicating that it is very important to take a holistic view while deciding on a working capital management plan.

The deliberations by the panel revealed that innovative ideas, leveraging IT and creating a robust and strong supply chain is extremely helpful in managing working capital as well as reducing complexity to eliminate hidden costs and shedding of obsolete inventory.

The panel consisted of speakers like S.G. Murali, Executive VP, TVS Motor Co and CFO, Sundaram Clayton Group of Companies, B. Jayaraman, Convenor CII Karnataka Economic Affairs Panel & VP and Finance Controller, Ingersoll Rand (I) Ltd, K.B. Vijayakumar, Convenor CII Karnataka SME Panel & MD, Fowler Westrup (I) Ltd, Rakesh Mishra, Associate Director, PricewaterhouseCoopers India, Narasimha Rao, GM, SBI and Prof Rishikesh Krishnan, IIM Bangalore.

Harish Bhatt, COO – Time Product Division, Titan Industries while giving a presentation on case studies of innovative working capital management stated that,  "Identifying the right technology, customising it your needs and utilization are of utmost importance in this subject. Titan’s watches division implemented and Advanced Forecasting and Planning Optimisation Tool (APO) that enabled it to forecast the demand for each month depending on consumer trends & upcoming seasons. This has significantly reduced the working capital for the division."

The seminar was aimed at deliberations on the various aspects of working capital management in inventory management, cash management, receivable and payable accounts etc as an important aspect of business operations.

Mr. T. Parabrahman, Chairman CII Karnataka and MD, Toyoda Kirloskar Textile Machinery Ltd said, "It is a general consensus of the industry that working capital management is of great importance not only during a crisis, but also in normal times. Keeping this in mind CII has decided to conduct a wide range of activities focusing on waste elimination and reducing manufacturing costs. CII is also going to start a cluster to share the best practices and ideas among industries in a particular geographical area."

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