R. Rajendran wins in consistent liquidity management mid-size category

His company sits on a pile of cash: Rs 700 crore. Lakshmi Machine Works, or LMW, a Coimbatore-based textile machinery manufacturer, lords it over the segment, and can afford not to sell on credit. In fact, its customers pay an advance of 10 per cent and wait for more than a year for the machinery they ordered.

R. Rajendran 66, Director, Finance My best practice: Never leave money idle What gets my goat: Customer or vendor queries not being immediately addressed How I unwind: By spending time at the school run by LMW Global CFO/CEO I admire: N.R. Narayana Murthy

LMW has an order book worth Rs 4,600 crore, and has been debt-free for the past seven years. Indeed, for most of Rajendran's 41 years at LMW, the challenge has always been one of plenty. A chartered accountant, he joined LMW in 1970 as an internal auditor and rose within the ranks to head finance. In February 2011, he was inducted into the board.

WATCH: R. Rajendran talking about how to manage excess cash

"Managing surplus cash is much more challenging than raising debt, as you have to exert greater self-control and live within your means,'' he says. In 1995-96, LMW diversified unsuccessfully into areas such as steel manufacture and the granite industry. It took the company almost a decade to recover from the mess.

"Today, we are extremely judicious with the funds,'' says Rajendran. "We acquired two loss-making companies in our area of operations and did a Rs 225-crore share buyback in 2010-11.'' If there are no investment opportunities, LMW simply keeps the money in fixed deposits. Rajendran abhors keeping cash idle, and has opted for electronic payments to vendors and others. His focus now is on fixed costs.

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Competition is increasing with the entry of global players such as Rieter, once LMW's partner. "Our cost-plus margin model may come under pressure in the future," he says. If there is one reason why he tracks borrowing costs, it is to study the impact it will have on demand from the textile industry - and his topline. His bottom line is protected against lending costs.