What steps were taken to by Shree Cement to counter recessionary pressures?
In an economic slowdown, the first casualty is receivables. As cash trickles in slowly, the natural tendency is to meet the liquidity crunch through increased working capital from banks. Term loans from financial institutions are generally raised to meet working capital expenses. Shree Cement went against this trend during the fiscal 2000-01. We reduced our working capital exposure from Rs 138.77 crore in 1999-2000 to Rs 99.42 crore in 2000-01. We maximised our realisation and accelerated receivables and reduced inventories. The incremental float was used to strengthen the company’s debt-equity ratio. So it dropped from 1.28 in 1999-2000 to 1.07 in 2000-01. Cash and bank balances were almost doubled to Rs 18.91 crore. For the year ended June 30, 2001, Shree Cement reduced its total debt burden by over five-and-a-half per cent to Rs 318.82 crore from Rs 337.84 crore. How do you plan to meet your debt obligations now? During the year 2000-01, the company’s retained cash flow in addition
