Heidelberg Cement Bangladesh Ltd. has large DPO. But it does not create any problem in the relationship with the suppliers. The suppliers of HBCL are mainly the subsidiaries of the Heidelberg group. So they have a good advantage in this area. And that is why the company’s CCC was negative in years 2006 and 2007. Negative CCC means the company doesn’t need any external financing. They were very efficient in managing the cash. Without investing in Inventories and Accounts Receivable they were efficiently running the operation.

Although they had sufficient cash in their hand, from2007 to 2008 the company’s Operating cycle increased significantly and DPO decreased slightly. As a result in 2008 the company’s CCC was 36 days. This increase was a result of a high Days inventory Held (103.14 days).

In 2008 they brought a very high amount of inventory from their sister concern company from Indonesia named Indocement. So the company needed financing from somewhere. They have sufficient amount of cash and from that liquid cash the company was financing their operation. They don’t need any external financing for that time lag. They mostly depend on internal financing. As they are subsidiary of Heidelberg group they get lots of facilities in many areas. This is their competitive advantage.

In 2009, the situation became normal again and their cash conversion period became negative once again. But again in 2010, cash conversion cycle become positive again because of buying a high amount of inventory from their sister concern company from Indonesia named Indocement.


HCBL is doing well in working capital management but they have huge idle money that’s why they are not giving that much of emphasis in managing their capital more efficiently. As they are the subsidiary of Heidelberg group they maintain maximum modern policy of collecting and disbursing cash. They get many competitive advantages as Heidelberg group helps them a lot with technology. They mainly trade with their sister concerns. HCBL is the leading company in the cement industry. But they have to think about managing the idle money to add value to HCBL.


This working capital management related recommendations are based on the statements of year ended 2006, 2007, 2008, 2009 and 2010.

1. Huge Amount of Idle Cash

HCBL have too much idle cash because of their efficiency in working capital management and conservative collection procedure. They were keeping lots of retained earnings in Bangladesh and not investing in new project.

They should invest this huge idle fund in any value added project or if there is no any scope they can remit this money by giving more cash dividends. By giving cash dividend more they can add more value to their parent company. In 2010 they have declared that they are using their own fund of Tk. 1260 million to expand their production by double in Chittagong factory.

2. Conservative Credit Policy

HCBL’s credit policy is not very flexible. They have huge idle fund to finance their A/R but they are not doing this. In this saturated market they have the scope to increase sales but they are not attempting for it. They are not willing to take risk. But in business one has to take risk and high risk means high chance of return. They should make more flexible credit policy to increase their sales and to gain more market share.


1.    Scherr , F. (1989).Modern Working Capital Mangement:Texts and Cases.New Jersey:Prentice-Hall Inc..
2.    HeidelbergCement: Bangladesh. HeidelbergCement global. Retrieved November 27,2011,from http://www.heidelbergcementbd.com
3.    Annual Reports of Heidelberg Cement Bangladesh Limited (HCBL) of years 2006, 2007, 2008, 2009 and 2010.