A STUDY OF FINANCING OF WORKING CAPITAL OF FMCG INDUSTRY

FMCG products plays a crucial role in every aspect of human life. As working capital is defined as current assets over current liabilities, at the time of determination of working capital, quality of current assets especially size of debtors and inventory are important factors. Significance of working capital also increases, as it is directly associated to the liquidity position of the corporate. Negative working capital arises in cash base business, efficient utilization of resources and sound inventory management etc., which leads to minimum stock of inventory etc., and the overall impact is lower level of current assets. On the other hand, due to better contract and negotiations to the creditors and suppliers, they are extending more liberal credit, which enhances the level of current liabilities. An attempt has been made to examine the working capital trends and practices particularity in FMCGs sector in India by selecting top three FMCG companies (named as Dabur India Ltd., Hindustan Unilever Limited, Nestle India Limited). The study is based on secondary data i.e., Annual Reports of the selected companies. The period of study is four years and traditional method of data analysis and ratio analysis as tools of financial statement analysis. Finally, it is found that companies in which negative working capital exist, profitability is more and shareholders are getting more dividend and capital appreciation, which maximizes the shareholders’ value in the long run.