Dabur India—Working Capital and Cost Management

Narender L. Ahuja and Sweta Gupta
Additional contact information
Narender L. Ahuja: Narender L. Ahuja is Professor, International Management Institute, New Delhi. E-mail: nlahuja@imi.edu
Sweta Gupta: Sweta Gupta is Fellow, Institute for Integrated Learning in Management, New Delhi.

Global Business Review, 2007, vol. 8, issue 2, 335-350

Abstract: After running as a family business for over 100 years, when in late 1990s, the management of the Dabur was handed over to a team of professional managers, the new management faced a gigantic task of improving performance in several critical areas. In particular, working capital and cost management required urgent attention as the company's performance in these areas had been far from satisfactory. The then prevailing current ratio of 3:2 and quick ratio of 2:4 were considered too high and indicative of heavy unnecessary investments in working capital that would have a negative effect on company's profitability. Efforts to improve the working capital efficiency were met with stiff resistance from various quarters, but finally yielded results. The case study discusses the measures taken to improve the working capital and cost management performance, and how with concerted efforts the management turned around a highly inefficient working capital management into one of the most efficient in the FMCG sector of the Indian industry. In fact, the company seemed to have taken the matter to the other extreme of negative working capital, with the current ratio declining to 0:8 and the quick ratio to just 0.4 in 2004–05. In 2005–06 as the company was ready to launch itself into the next phase of fast growth, several critical issues related to the liquidity and solvency of the company confronted the management which are also discussed in the case study.

Date: 2007
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/097215090700800210 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:globus:v:8:y:2007:i:2:p:335-350

DOI: 10.1177/097215090700800210

Access Statistics for this article

More articles in Global Business Review from International Management Institute
Bibliographic data for series maintained by SAGE Publications ().