Client Name

Matco Foods Limited

Faculty Advisor

Dr. Aitzaz Ahsan Alias Sarang

SBS Thought Leadership Areas

Investment Decision Making

SBS Thought Leadership Area Justification

Our Experiential Learning Project (ELP) aligns closely with the Investment Decision Making thought leadership area, as it involves strategic analysis and recommendations aimed at enhancing working capital efficiency at Matco Foods Limited. The project examines critical financial metrics such as Days Payables Outstanding (DPO), Days Sales Outstanding (DSO), and Days Inventory Outstanding (DIO)—all of which play a vital role in short-term investment decisions and liquidity management. For example, through regression-based forecasting and scenario planning, we recommended actionable strategies for reducing DSO and DIO, such as tightening credit terms and implementing just-in-time inventory practices. These measures directly influence the company’s cash conversion cycle, impacting how quickly resources can be reinvested into operations or growth initiatives. Moreover, our roadmap for increasing DPO from 34 to 62 days by 2028 includes strategic supplier negotiations and AP automation. This frees up substantial working capital (up to PKR 3.8 billion), which can be allocated to debt reduction or reinvestment, improving return on capital employed (ROCE)—a key investment metric. Overall, the insights and recommendations from our project are designed to guide informed financial decisions at the organizational level, making our work a strong example of applied research in the Investment Decision Making domain.

Aligned SDGs

GOAL 8: Decent Work and Economic Growth

Aligned SDGs Justification

SDG 8 – Decent Work and Economic Growth The project provides actionable financial strategies—such as optimizing Days Payables Outstanding (DPO) and Days Sales Outstanding (DSO)—that enhance Matco’s liquidity and reduce financing costs. This enables the company to reinvest more efficiently, supporting business stability, expansion, and job creation, especially in Pakistan’s agri-based export sector. Efficient resource mobilization and improved cash flow directly contribute to sustainable economic growth. SDG 9 – Industry, Innovation, and Infrastructure Our recommendations include the use of ERP systems for payment scheduling, AP automation, and demand forecasting tools, which promote digital transformation and operational innovation. These innovations strengthen financial infrastructure, reduce inefficiencies, and improve Matco’s competitive edge in the global market. SDG 12 – Responsible Consumption and Production By analyzing inventory composition and recommending practices like Just-in-Time procurement, vendor-managed inventory, and ABC classification, the project supports waste reduction, lean inventory, and more sustainable supply chain practices. This fosters responsible use of raw materials, especially in a resource-intensive industry like food processing. SDG 17 – Partnerships for the Goals The project exemplifies a strategic partnership between academia and industry, where IBA students collaborate with Matco Foods Limited to address real business challenges. Through shared data access, stakeholder interviews, and joint problem-solving, the initiative promotes knowledge exchange, institutional capacity-building, and practical learning. By aligning academic insight with corporate needs, the project strengthens multi-stakeholder collaboration, supports innovation in financial practices, and contributes to sustainable development through long-term value creation—core objectives of SDG 17.

NDA

Yes

Abstract

This report presents a strategic analysis of Matco Foods Limited's (MFL) working capital efficiency, with an emphasis on finding inefficiencies in the company's Cash Conversion Cycle (CCC) and suggesting data-driven improvements to increase liquidity, lower financing costs, and boost operational agility. The primary objectives of the Experiential Learning Project (ELP) was to assess and optimise the Days Inventory Outstanding (DIO), Days Sales Outstanding (DSO), and Days Payables Outstanding (DPO) components of the CCC between FY2019 and FY2024. The project identified significant inefficiencies by using trend analysis, goal-based projections, linear regression, and comparative benchmarking against Rafhan Maize. In FY2024, MFL's DIO was 161 days, while Rafhan's was 147 days, indicating that MFL held an excessive amount of inventory. Compared to Rafhan's 122 days, DPO was only 34 days, indicating missed opportunities in supplier negotiations. Additionally, local DSO rose to 22 days, adding to the strained liquidity, even though export DSO improved to 35.5 days. These disparities are linked to a 90% increase in financing costs in FY2024 compared to the previous year, which threatens MFL's competitiveness and financial flexibility. Key findings include the Corn Starch Division's best practices, which reduced its DIO to 85 days, and a reduction in raw material DIO to 91 days, which could be replicated in other divisions. Reducing local DSO to 15 days could release PKR 1.17 billion in cash flow, according to scenario analysis. According to a supplier analysis, packaging vendors currently accept 68-day terms. This suggests that raw material contracts could be renegotiated with the goal of a 62-day DPO by 2029, which would save PKR 1.24 billion annually. Just-in-Time (JIT) procurement, demand forecasting, ABC inventory classification, supplier consolidation, and AP automation are all suggested in the report as ways to accomplish these goals. By combining these interventions, Matco's CCC could be reduced from 161+ days to 30.4 days, surpassing Rafhan's 40.68 days. Overall, this project highlights the importance of stakeholder engagement, technology adoption, and crossfunctional coordination in attaining sustainable liquidity, decreased debt dependency, and enhanced global competitiveness. The ramifications go beyond Matco and show how 4 strategic working capital reforms can strengthen Pakistan's agri-based export sector's resilience and long-term value creation.

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

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