Effectiveness of Working Capital Management in Maximizing Profitability of Construction Companies in Bangalore.

Effectiveness of Working Capital Management in Maximizing Profitability of Construction Companies in Bangalore.

Working capital in any organizations has a significant role in driving the business forward.Hence,there is an imminent need for the management of the working capital.The efficiency with which working capital is managed in a business or organization determines the health of the business or the organization.On having an effective working capital management firms tend to be successful and while ineffective working management leads to the failure of the business. Hence, the management of working capital is of great importance. The research study is to evaluate the effectiveness of working capital management in maximizing the profitability of construction companies in Bangalore. The research will analyze the construction companies to establish an understanding of the significance of effective WCM for maximizing the profitability. The working capital is the life blood of a business and an important function of finance that defines and deals with the liquidity of the firm. Also, profitability of firms is another major aspect of business. The research explores the correlation between the working capital and profitability to understand the effectiveness of working capital management in maximizing the profitability. The construction industry is the second largest industry of the country after agriculture. Construction activity is an integral part of a countrys infrastructure and industrial development. It includes hospitals, schools, townships, offices, houses and other buildings; urban infrastructure (including water supply, sewerage, drainage); highways, roads, ports, railways, airports; power systems; irrigation and agriculture systems; telecommunications etc. Covering as it does such a wide spectrum, construction becomes the basic input for socio-economic development.The construction industry generates substantial employment and provides a growth impetus to other sectors through backward and forward linkages. It is, essential therefore, that, this vital activity is nurtured for the healthy growth of the economy. With the present emphasis on creating physical infrastructure, massive investment is planned during the Tenth Plan. The construction industry would play a crucial role in this regard and has to gear itself to meet the challenges.In order to meet the intended investment targets in time, the current capacity of the domestic construction industry would need considerable strengthening. The construction sector has major linkages with the building material industry since construction material accounts for sizeable share of the construction costs these include cement,steel,bricks/tiles,sand/aggregates,fixtures/ fittings, paints and chemicals, construction equipment, petro-products, timber, mineral products, aluminum, glass and plastics. The construction sector is one of the largest employers in the country. In '99-2000, it employed 17.62 million workers, a rise of 6 million over 1993-94. The sector also recorded the highest growth rate in generation of jobs in the last two decades, doubling its share in total employment.

Vadakkedam Revathi

Commerce