Working Capital Trends in Indian Manufacturing Companies

The Cash Behind the Profit

A company must fund its inventory and the credit it gives customers before it collects cash. Some of this is funded by suppliers who give it time to pay. What is left is working capital, and the more of it a company needs, the more cash it must tie up to grow.

A common measure is working capital days: working capital divided by sales, times 365. A negative number means suppliers and customers are effectively funding the business.

This case study looks at five large Indian manufacturers over ten years: Hindustan Unilever, Maruti Suzuki, UltraTech Cement, Asian Paints and Sun Pharmaceutical.

The Data

Source: consolidated ratios as calculated by Screener from company annual reports.

Finding 1: Three Companies Run on Other People's Money

HUL, Maruti and UltraTech all had negative working capital in both years. They collect from customers quickly, often before or soon after delivery, and pay suppliers later. In effect, suppliers and dealers fund part of their operations. As these companies grow, working capital can release cash instead of absorbing it.

This is a sign of bargaining power. A company that can make suppliers wait and customers pay quickly is usually the stronger party in both relationships.

Finding 2: Two Companies Now Need Much More Cash

Asian Paints went from 22 to 38 working capital days, and reached 57 in FY22, when raw material prices were rising and companies built inventory. Sun Pharma moved from about zero to 54 days, peaking at 65 in FY25.

For Sun Pharma, the shift fits a business with a growing global specialty portfolio, where inventory and receivables cycles are longer. For Asian Paints, rising working capital alongside a more competitive market is worth watching, because companies under competitive pressure sometimes offer dealers more credit or carry more stock.

Finding 3: Debtor Days Crept Up Almost Everywhere

Four of the five companies took longer to collect from customers in FY26 than in FY17. The increases were small for HUL and Maruti in absolute terms, but large in proportion: Maruti's debtor days almost doubled, from 6 to 11. Only UltraTech held steady.

Slowly rising debtor days can mean a change in customer mix, such as more institutional or export sales, or more generous credit terms to support sales. Neither is alarming on its own, but the direction is worth noting.

Finding 4: Year-End Numbers Swing

Working capital figures are taken at a single date, the end of the financial year. A large payment made a few days early or late can move them a lot. Maruti's working capital days, for example, moved between about -20 and -50 over the decade without any obvious change in its business. Trends over several years matter more than any single year.

Reading Working Capital Data

• Negative is not always good. It can reflect strength, or a company stretching its suppliers in a way that cannot last.
• Rising is not always bad. Growth into new markets or products can need more working capital.
• Compare with peers in the same industry, since normal levels differ widely.
• Check definitions. Screener and other databases may calculate inventory and payable days on a different basis from the company. Use one source consistently.

Habits for Tracking Working Capital

1. Track working capital days for at least five years.
2. Split it into receivables, inventory and payables to see what is moving.
3. Link changes to the business: new markets, new products or competition.
4. Watch debtor days for slow increases.
5. Compare with operating cash flow to see the effect on cash.

The Reframe

Working capital is where a company's relationships with customers and suppliers show up in numbers. When those numbers drift, the balance of power is often shifting, quietly and before it reaches the profit and loss statement.