How much cash is frozen in old stock?

Stock ageing sorts your inventory by how long it has been sitting: under 90 days, 91–180 days, and over 180 days. The older buckets are where cash is stuck, carrying cost keeps running, and some of the value will never come back. With ₹200 lakh of stock, ₹80 lakh of it older than 90 days and an 18% yearly carrying cost, the old stock alone costs about ₹14.4 lakh a year to hold. This calculator puts rupees on each part of that, including the write-off you are likely to take on the oldest stock and the cash you would free by clearing half the aged stock.

How the calculator works

The calculator takes five inputs, all in ₹ lakh or per cent:

• Stock 0–90 days (₹ lakh). Raw material, work in progress and finished goods that came in or were made in the last 90 days, at book value.
• Stock 91–180 days (₹ lakh). The same, three to six months old.
• Stock over 180 days (₹ lakh). Older than six months: slow movers, cancelled-order goods, leftover raw material from a discontinued product, printed packing material for an old artwork.
• Carrying cost (% a year). What it costs to hold ₹100 of stock for a year: interest on the money, godown space, insurance, handling, shrinkage and obsolescence. 18% is the default; see the typical numbers below.
• Expected write-off on stock over 180 days (%). Your honest estimate of how much of the oldest bucket you will never sell at book value.

Most ERPs and Tally can print a stock ageing report by these buckets. If yours uses different bucket edges (60/120/180, say), group them as close as you can.

The formulas:

Total stock = 0–90 + 91–180 + over 180
Carrying cost per year = total stock × carrying rate
Aged stock (over 90 days) = 91–180 + over 180
Carrying cost on aged stock per year = aged stock × carrying rate
Write-off risk = stock over 180 days × expected write-off %
Cash freed if aged stock is halved = aged stock ÷ 2

The write-off risk is a one-time loss, not a yearly one. The cash freed is also one-time: it is money that comes back into the business once, when the stock is sold, used up or disposed of.

Worked example (India)

A mid-size manufacturer with raw material, WIP and finished goods across one plant and one godown. All figures are assumptions for illustration; they are the calculator's default inputs.

How to read it. 40% of the stock by value (₹80 lakh of ₹200 lakh) is older than three months, and it costs ₹14.4 lakh a year just to keep. If you clear half of it, ₹40 lakh comes back as cash, and the yearly carrying cost on what you cleared, about ₹7.2 lakh (40 × 18%), stops. That last figure is not shown by the calculator, but follows from the same inputs.

The ₹10.5 lakh write-off risk is often the number owners resist most, because the stock is still "on the books". But under Indian accounting standards it may already need to be written down (see below), and every month it waits, the carrying cost runs on top.

Where the 18% comes from in this example (all assumptions, except the lending rate):

What typical numbers look like

• Cost of money. The weighted average lending rate of Indian scheduled commercial banks was 8.97% on outstanding rupee loans and 8.51% on fresh loans in May 2026 (RBI). Your own cash credit rate is the better number to use.
• All-in carrying cost. A rule of thumb quoted by an APICS (now ASCM) chapter is 15% to 25% of inventory value a year, though the same page lists components that add up to 25–55%. Treat any single figure as a starting point, not a standard.
• Indian stock ageing benchmarks. We found no credible public survey of how much stock in Indian factories is older than 90 or 180 days, by sector or overall.

What this number does not tell you

• Whether the aged stock is actually dead. Some old stock is deliberate: safety stock of an imported part, seasonal raw material bought at a good price, spares for a machine you still run. Look item by item before you push for clearance.
• What your accounts already show. Under AS 2 and Ind AS 2, inventory is carried at the lower of cost and net realisable value, defined as "the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale" (ICAI Expert Advisory Committee, quoting AS 2). If stock over 180 days really is worth 30% less, your auditor may expect it written down already. Ask your CA.
• The GST effect of a write-off. Under section 17(5)(h) of the CGST Act, input tax credit is not available on "goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples". Writing off stock can mean reversing credit already taken, so the real loss may be larger than the book value. Your CA will know how this applies to your stock.
• The bank's view. A cash credit limit is drawn against the stock and debtors you declare in your stock statement (how drawing power is calculated). Many sanction letters exclude obsolete, slow-moving or over-age stock from that calculation. If yours does, aged stock shrinks your working capital limit as well as tying up cash. Check the exact terms in your own sanction letter.
• Why the stock aged. A forecast that was too high, an order the customer cancelled, a minimum order quantity from a supplier, a changed artwork, quality holds that were never closed. Each needs a different fix.
• What a camera cannot see. A camera can show pallets that have not moved in weeks, godown aisles blocked by old stock, or WIP piling up between two operations. It cannot read a batch number, a manufacturing date or an expiry, and it cannot value anything. Ageing comes from your stock records; cameras only help find the physical side of it.

Related guides

• Finished Goods That Don't Move: The Cash and Shelf Life Sitting in Your Food Godown
• Obsolete Printed Cartons: What an Artwork Change Writes Off, and How to Size Print Runs
• Parts Waiting Between Operations: WIP Cash in an Indian CNC Machine Shop
• Bundles on the Floor: The Cash Your Sewing-Line WIP Holds
• Moisture-Sensitive Parts Waiting on an Indian SMT Floor: The Floor-Life Bill

FAQ

What is stock ageing analysis? It is a report that sorts your inventory by how long each item has been in stock, usually in buckets such as 0–90, 91–180 and over 180 days. It shows how much of your working capital sits in slow or dead stock. Most ERPs and accounting packages can produce it.

How do you calculate inventory carrying cost? Multiply the value of stock by a yearly carrying cost rate. The rate adds the interest on the money tied up, storage, insurance, handling, shrinkage and obsolescence. At 18% a year, ₹80 lakh of aged stock costs about ₹14.4 lakh a year to hold.

What carrying cost percentage should an Indian factory use? Start from your actual borrowing rate (bank lending rates were around 8.5–9% in mid-2026, per RBI) and add your own storage, handling and loss costs. Published rules of thumb range from about 15% to 25% a year, but your own build-up is more defensible than any rule of thumb.

Should old stock be written off? Under AS 2 and Ind AS 2, stock is carried at the lower of cost and net realisable value, so stock that can only be sold below cost may need to be written down. A write-off can also affect input tax credit under GST. Decide with your CA, item by item.

How do I reduce aged inventory? Sell or use the oldest stock first, stop reordering slow items, return or rework what you can, and dispose of what is truly dead before it costs another year of carrying. On the default inputs, halving the aged stock frees ₹40 lakh of cash once and saves about ₹7.2 lakh a year.

Cameras can't value inventory; that stays with your stores ledger. Mama reads a factory's existing cameras and each morning tells the owner where machine and line hours were lost the day before, including material left waiting on the floor. Mama can draw a camera plan for the stores, WIP and dispatch areas where slow-moving stock piles up. Leave an email or phone in the form below.