Optimising Working Capital and Cash Flow for an Indian Retail Chain

Objective: To identify key drivers and implement strategies to optimise working capital and improve cash flow for a mid-sized Indian retail chain.

Indian retail chains often face cash-flow challenges due to high inventory levels, supplier credit terms, and fluctuating customer demand, impacting overall profitability and growth. Managing working capital efficiently is crucial for sustaining operations, especially amidst competition and thin margins.

The student team will conduct a comprehensive analysis of a typical mid-sized Indian retail chain's financial statements, cash conversion cycle, inventory management, accounts receivable/payable, and supplier/customer credit policies. The methodology combines financial ratio analysis, benchmarking, process mapping, and scenario modelling.

Deliverables will include a diagnostic report highlighting working capital bottlenecks, a cash-flow forecasting model, actionable recommendations for process improvements, and a data-driven presentation to management. Key analyses will involve DSO/DPO/DIO calculations, trend analysis, and sensitivity testing of proposed changes.

The project informs critical financial decisions such as renegotiating supplier terms, optimising inventory levels, and implementing cash management tools, ultimately enabling the retail chain to improve liquidity, reduce financing costs, and support growth.