Working Capital Management and Profitability in India’s Cement Sector: Evidence and Sustainability Implications

This study investigates the impact of working capital management (WCM) on profitability in the Indian cement industry, an energy-intensive sector central to the country’s infrastructure growth. Using a balanced panel of listed firms over 2010–2024, we employ pooled OLS, two-way fixed effects, quantile regressions, and dynamic system GMM to address heterogeneity and endogeneity concerns. The results demonstrate that reductions in the cash conversion cycle (CCC), accelerated receivables collection, leaner inventories, and prudent use of payables significantly improve profitability. Quantile regressions reveal that highly profitable firms capture larger absolute gains from CCC reductions, while size-split analysis indicates that smaller and liquidity-constrained firms achieve proportionally greater marginal relief. These findings represent complementary perspectives rather than unified statistical relationship, a limitation we acknowledge. Dynamic estimates confirm the robustness of results after accounting for persistence and reverse causality. Beyond firm-level outcomes, the study contributes conceptually by linking WCM efficiency to sustainability financing: liquidity released from shorter operating cycles can be redeployed into green and energy-efficient investments, offering a potential channel for ESG alignment in carbon-intensive industries. Policy implications highlight the role of digital reforms such as TReDS and e-invoicing in strengthening liquidity efficiency, particularly for mid-sized firms. The findings extend the international WCM profitability literature, provide sector-specific evidence for India, and suggest new avenues for integrating financial and sustainability strategies.