How Goldratt Bharat Helps Companies Multiply Cash Flow

Business leaders often attribute liquidity pressure to difficult markets, rising costs, industry practices, or economic uncertainty. When funds become tight, the response is usually predictable: reduce expenses, delay hiring, negotiate harder with suppliers, improve collections, or postpone investments.

At Goldratt Bharat, the problem is viewed differently. Financial stress is rarely an isolated issue. It can be the outcome of bottlenecks elsewhere in an organisation, including production, inventory, sales, procurement, project execution, dispatch, or receivables. When movement across these functions slows, money remains locked within the system instead of returning quickly enough to fund operations and growth.

For almost 28 years, Goldratt Bharat has worked with organisations across steel, aerospace, packaging, mining, printing, retail, and apparel using Dr. Eli Goldratt's Theory of Constraints (TOC). Rather than relying primarily on repeated cost-cutting, the approach concentrates management attention on what is currently limiting overall business performance.

Reducing expenditure can improve short-term numbers, but there is a natural limit to how much an organisation can cut. Excessive reductions may eventually affect service, capabilities, employee morale, or future growth.

TOC approaches improvement from another direction. Instead of trying to optimise every department simultaneously, management identifies the constraint preventing the organisation from achieving more. Depending on the situation, this could involve insufficient orders, supply availability, operational capacity, project delays, or liquidity itself. Resources and leadership attention can then be directed towards improving that limiting factor.

This matters because stronger results do not necessarily require every machine, department, or employee to become more efficient. What matters is whether the entire system is generating greater throughput and converting its resources into money more effectively.

Companies can have significant funds tied up in excess stock, unfinished orders, receivables, delayed projects, or inefficient operating practices. Releasing even part of this amount can strengthen the balance sheet without requiring additional borrowing.

Inventory offers a common example. Businesses sometimes accumulate materials to protect against shortages or produce ahead to maximise equipment utilisation. Yet finished goods may remain unsold while customers wait for other products that are unavailable. Similarly, delays in project businesses can extend billing cycles, while liquidity shortages can further disrupt execution and timely delivery.

Goldratt Bharat's work with Jindal Steel demonstrates the potential impact of addressing such systemic issues. Following the cancellation of coal block allocations and amid a prolonged industry downturn, the company focused on improving cash velocity, reducing working capital, and strengthening execution discipline.

From 2015-2017, Jindal Steel’s working capital was reduced by approximately 56 percent, releasing nearly 3,600 crore. Over subsequent years, the organisation improved profitability, strengthened its balance sheet, reduced debt (from a peak debt of 46,000 crore in 2015  to less than 7,000 crore in 2023), and enhanced operational outcomes. Importantly, the improvement was driven by sharper focus and better management of constraints rather than large-scale layoffs.

Another important element of Goldratt Bharat's methodology is the cadence of management reviews. Many organisations assess financial and operational results monthly. By the time an emerging problem becomes visible in a month-end report, several valuable weeks may already have been lost.

Weekly reviews shorten that decision cycle. Instead of creating additional reporting, the objective is to focus leadership on a small set of critical measurements. Emerging constraints can be identified sooner, corrective decisions taken faster, and responsibility established before delays become larger problems.

This rhythm also encourages different functions to evaluate decisions from the perspective of the organisation as a whole rather than optimising their individual targets.

Improving cash flow ultimately requires improving how the entire organisation operates. Faster order fulfillment can accelerate billing. Shorter projects can release resources sooner. Lower inventory, when achieved without sacrificing availability, can free working capital. Better delivery reliability can support customer relationships and future sales.

The larger principle is simple: exceptional results do not always require additional capacity, aggressive cost reduction, or more borrowing. Businesses first need to understand what is preventing the existing system from generating more.

Once that constraint is identified and systematically improved, hidden capacity can become available, capital can be released, and internal accruals can be used for expansion. This is how liquidity moves from being merely a finance concern to becoming a source of competitive advantage.

The article is based on the work of Goldratt Bharat, India's pioneering Theory of Constraints consulting firm, founded by Ravi Gilani, the only Indian recipient of the TOCICO Lifetime Achievement Award.