Working capital management; SEARLE India Ltd.

Abstract

An efficient use of its working capital can provide a company a distinct advantage vis-a-vis its competitors. The management of Searle(I) has devoted considerable thought and attention to working capital management. This is reflected by a “Working Capital Management Committee” comprising three members and many senior executives of the company being its coopted members. The management aims to achieve one of the best working capital standards in the industry in the present financial year and the way the Company is progressing in its drive of utilising its current assets efficiently there is no doubt it would achieve its objective. However, there are a few areas where the company is not operating at its optimum or the monitoring tools are detective. The researcher has gone into depth of these areas and has made the following recommendations. 1. There is a large variation in the sales forecasting of the ago-chemicals division leading to increased levels of inventory or opportunity lost. The company is advised to use scientific methods of forecasting sales along with the intuitive methods presently used. 2. The company is using traditional methods like the Daily Sales Outstanding (DSO) method and Ageing Schedule Method for monitoring its accounts receivables. The Payment Pattern Approach (discussed in detail later) should be used for it focuses on payment behaviour, the key issue in monitoring accounts receivables.