Sustainable Working Capital Management and Profitability: Evidence from India’s Cement Sector

This study examines whether efficient working capital management (WCM) enhances profitability in India’s cement sector, an industry characterised by long operating cycles and high capital intensity. Using panel data from 30 listed firms over 2010–2025, the analysis evaluates the impact of receivables (ACP), inventories (ITP), payables (APP), and the composite cash conversion cycle (CCC) on firm performance measured by return on assets (ROA) and return on equity (ROE). Employing two-way fixed effects, quantile regressions, and dynamic panel GMM, the results demonstrate that shorter cash cycles, faster collections, and leaner inventories significantly improve profitability, while prudent reliance on supplier credit strengthens liquidity. Economically, a 10-day reduction in CCC translates into an improvement of about 50–70 basis points in ROA. Distributional evidence shows that benefits are strongest for liquidity-constrained and smaller firms, confirming heterogeneity in WCM effects. Beyond financial outcomes, the study conceptually highlights how liquidity gains from tighter WCM could support decarbonisation initiatives such as waste-heat recovery and alternative fuels. While this sustainability channel is not directly measured, the findings validate the negative CCC-profitability relationship and establish WCM as a dual lever for competitiveness and green transition.