Your working capital is hiding in your warehouse

I walked into a client's warehouse in Bengaluru last year. The business was doing ₹12Cr a year. The founder was telling me they needed a working capital loan from the bank.

We spent 45 minutes in that warehouse. We found ₹1.4Cr of inventory that had not moved in more than 90 days. Some of it had been there for over a year.

They didn't need a bank loan. They needed to sell what was already paid for and sitting in a rack.

This is one of the most common things I see in Indian businesses between ₹5Cr and ₹30Cr. The founder is worried about cash. And the cash is literally sitting 20 feet away from them, in boxes.

Why this happens

Buying in bulk feels safe. "If I order 3 months of stock, I'll never run out." That logic makes sense. But it has a hidden cost: you've paid for 3 months of stock upfront, and you won't get that money back until the stock is sold.

In a growing business, this compounds quickly. Each quarter, you buy more than the last quarter. The fast-moving products sell fine. The slow-moving ones pile up. Over two years, you end up with a warehouse full of things that sell — and a corner full of things that really don't.

The fast-movers are fine. It's the slow-movers killing your cash flow.

How to calculate how bad your problem is

One simple number: Days of Inventory Outstanding (DIO).

Formula: (Average Inventory Value ÷ Cost of Goods Sold) × 365

If your DIO is below 45 days, you're in good shape. Between 45–75 days, you have room to improve. Above 75 days, you have a real working capital problem and your warehouse is where cash goes to sleep.

For context: a well-run retail or D2C business in India should target 30–45 DIO. Manufacturing businesses can go up to 60 days because of longer lead times. Above that, for most product businesses, is too high.

The "dead stock" audit

Do this today. Pull a report from your inventory system — or count manually if you don't have one — and sort every SKU by last sale date.

Anything not sold in 90 days is slow-moving stock. Anything not sold in 180 days is dead stock.

Add up the value of your dead stock. That number will be uncomfortable. It is supposed to be. That money is real. You paid for it. It is not growing your business right now.

What to do with slow and dead stock

Four options, in order of preference:

• Discount and push it through your existing channels. Even 30% margin is better than a stock-write-off. Run a sale, push it through your sales team, offer it to your B2B clients as a bundle deal.
• Return it to the vendor. Many vendors in India will take back slow-moving stock — especially if you have a good relationship and the goods are still new. You may get credit note instead of cash, but that's still better than dead inventory.
• Sell it to a liquidator or secondary market. Even 40–50 paise on the rupee is better than zero. And you free up space and cash.
• Write it off and move on. Painful, but sometimes the right call. Don't let dead stock occupy your head and your warehouse rent for another 12 months while you hope it sells.

How to stop it building up again

Three simple rules that work across every business I've consulted for:

Rule 1: Never buy more than 45 days of stock on any single SKU without checking last 90-day sales velocity first. This alone cuts over-buying by 40%.

Rule 2: Any SKU that hasn't sold in 60 days goes on a watch list. Someone reviews it weekly. At 90 days, it gets an action plan — discount, return, or write-off decision. It does not just sit there.

Rule 3: Your top buyer or sales team sees the slow-mover list every month. Often the reason something isn't selling is simple — nobody is selling it. It's in the warehouse but not in any sales pitch.

Cash is not a problem to be solved by borrowing. Most of the time, it is a problem to be solved by looking at what you already own and making it work harder.

The bigger picture

Working capital is the fuel of a growing business. When your inventory is lean and turning fast, you have cash to invest in the next order, the next hire, the next market. When your inventory is bloated, everything slows down — and the bank becomes the only answer.

You can fix this without a single rupee of new financing. You just have to start with a Wednesday afternoon in your warehouse and a brutally honest count.