Having worked in credit on banking side, I think we need to understand few details on how bank lines work. From plain logic, a company which has short term and long term debt, wouldnt keep much of cash on its books and try using the cash generated from operations to repay debt.
Let’s work out some number for Laurus. Laurus has working capital facility of Rs.840 crore as per the credit rating report (source: https://www.careratings.com/upload/CompanyFiles/PR/Laurus%20Labs%20Limited-06-30-2020.pdf) :
Working capital facilities are given against debtors and inventory (adjusted for payables) and a company can utilize it for it day to day needs (including paying salaries). Let’s look at the current borrowing figure for Laurus as on September 30, 2020. The company had short term borrowing of Rs.752.81 crore as on September 30, 2020 which gives it a space of around 85 crore from it working capital limits for utilization. Furthermore, the company has already approached bankers to further enhance its working capital limits by Rs.200 crore (as per CARE rating report):
Any growing company which has moderately high working capital requirements, would need incremental bank lines to fund its growth (Laurus has grown its topline by 67% in H1FY21) especially when it is also increasing its capacities. Dont think there is anything wrong with it. Laurus has historically had working capital cycle of around 140 - 160 days.
Don’t know why there is too much noise being made about the company not keeping much cash on its balance sheet whereas its unutilized working capital limits can be utilized for its any day to day requirements.
(Disclosure: Not invested and not biased. Wouldn’t like to engage in any further debate on this)