Short-term Financing Strategies Adopted By Tata Steel vs SAIL Implication On Liquidity

Dhruva Chandra

doi:10.36948/ijfmr.2025.v07i06.59972

Short-term Financing Strategies Adopted By Tata Steel vs SAIL Implication On Liquidity

Author(s)	Dhruva Chandra
Country	India
Abstract	The short-term financing methods that Tata Steel Limited and the Steel Authority of India Limited (SAIL) have chosen to implement are investigated in this paper, along with the consequences such policies have for the management of liquidity. Both of these businesses are active in the very capital-intensive steel industry in India, which is a sector in which effective management of working capital and liquidity is essential for ensuring continued operational stability and competitiveness. The research is centered on examining short-term sources of financing, such as trade credit, commercial paper, short-term loans, and bank overdrafts, as well as the influence that these sources have on key liquidity indicators, such as the current ratio, the quick ratio, and the cash conversion cycle. According to the findings, Tata Steel employs a strategy for short-term financing that is more market-driven and varied. In order to keep its liquidity in a healthy state, the company makes use of commercial papers and manages its receivables in an effective manner. SAIL, on the other hand, is more dependent on bank borrowings and trade payables, which is indicative of a conservative financing structure that can sometimes limit the flexibility of liquidity. Tata Steel has superior liquidity resilience and quicker cash flow turnover due to better alignment between financing choices and operational cycles, as shown by the comparison research. This is despite the fact that both companies retain acceptable short-term solvency. According to the findings of the study, the implementation of proactive short-term financing solutions, which include dynamic cash flow forecasting and a balanced mix of internal and external funding sources, considerably improves the management of liquidity in companies that rely heavily on capital. The policymakers, financial managers, and investors who are interested in evaluating the liquidity sustainability of the Indian steel business will find these findings extremely useful.
Keywords	Short-term financing, liquidity management, Tata Steel, SAIL, working capital, financial performance, steel industry.
Published In	Volume 7, Issue 6, November-December 2025
Published On	2025-11-09
DOI	https://doi.org/10.36948/ijfmr.2025.v07i06.59972

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Short-term Financing Strategies Adopted By Tata Steel vs SAIL Implication On Liquidity

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