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Every business needs adequate liquid resources in order to

maintain day to day cash flows. It needs enough cash to pay wages

and salaries as they fall due and to pay creditors if it is to keep its

workforce and ensure its supplies. Maintaining adequate working

capital; is not just important in the short term. Sufficient liquidity

must be maintained in order to ensure the survival of business in

the long term as well. Even a profitable business may fail if

it does not have adequate cash flows to meet its liabilities as they

fall a due. Therefore when business make investment decisions

they must not only consider the financial outlay involved with

acquiring the new machine or the new building etc, but must also

take account of the additional current assets that are usually

involved with any expansion of activity .


Working capital is the life blood and controlling nerve center of a

business. Various aspects of working capital determine the health

and growth of an organization. The need for working capital cannot

be overemphasized. The need of working capital arises due to the

time gap between production and realization of cash from sales. So

the working capital or investment in current assets becomes

necessary need for working capital. The organization has to make

available of funds to pay their day to day bills, wages, and so on.

The working capital is made up of the net current assets net of the

current liabilities. It is very important for a company to manage the

working capital carefully.

The management of the working capital is an integral part of

management analysis due to risk involved with it and return on

investment of the concern is based on how will the working capital

is properly managed.

Working capital refers to the cash a business requires for day-to-

day operations, or, more specifically, for financing the conversion

of raw materials into finished goods, which the company sells for

payment. Working capital management involves the relationship

between a firm’s short term asset and its long term liabilities. The

goal of working capital management is to ensure that the firm is

able to continue its operations and that it has the ability to both

maturing short term debt and upcoming operations expenses. The

management of working capital involves managing inventories,

accounts receivables and payable and cash. Analysts look at these

items for signs of a company's efficiency and financial strength.

Understanding a company's cash flow health is essential to making

investment decisions. A good way to judge a company's cash flow

prospects is to look at its working capital management (WCM).

The better the company manage its working capital, the less the

company needs to borrow. Even companies with cash surpluses

need to manage working capital to ensure that those surpluses are

invested in ways that will generate suitable return for investors.

Kalindee is a construction company dedicated to building

infrastructure for Rail Transport under one roof on turnkey basis. It

has been active in fields of Signaling, Telecommunications, Track

and Information Systems. It has plans to further diversify in the

fields of Electric Traction system, Traffic Management Systems,

Traffic Surveys and Project Evaluation as well as annual

maintenance contracts for Railways fixed assets.



Cash is the lifeline of a company. If this lifeline deteriorates, so

does the company's ability to fund operations, reinvest and meet

capital requirements and payments. Understanding a company's

cash flow health is essential to making investment decisions. A

good way to judge a company's cash flow prospects is to look at its

working capital management (WCM).

Unless the working capital is managed effectively, monitored

efficiently planed properly and reviewed periodically at regular

intervals to remove bottlenecks if any the company cannot earn

profits and increase its turnover. It is very necessary to maintain

an appropriate level of working capital that is enough current assets

to pay off current liabilities neither excess nor less because

excessive working capital leads to interruption in the smooth

functioning of the business concern. The amount of working

capital should neither be excessive nor adequate. If the working

capital is excess of its requirements it means idle funds adding to

the cost of capital is short of its requirements, it will result in

production interruptions and reduction of sales and, in turn, will

affect the profitability of the business adversely. There are


numerous instances in the history of business world where

inadequacy of working capital has led to business failures when a

firm finds it difficult to meetings day to day.

I have undertaken the project to study the concept of working

capital, need for working capital, its management and financing

with reference to special focus on Kalindi Rail Nirman Ltd.


1. To study the working capital management of Kalindee Rail

Nirman Ltd.

2. To study the optimum level of current assets and current

liabilities of the company.

3. To study the liquidity position through various working

capital related ratios.

4. To study the working capital components such as receivables

accounts, cash management, Inventory position

5. To study the way and means of working capital finance of

the company.

6. To study the cash cycle and operating cycle period of the



• Research Design

A research design is the arrangement of the condition for

collection and analysis of data. Actually it is the blueprint of the

research project.

Research design used will be Exploratory type.


 Primary Data : Interview of finance manager will be

conducted to understand the working capital management

of the company.

 Secondary Data: The secondary data comprises of

various Books, Annual Reports and balancesheet,

Journals, various MIS, magazines and website of the



Here the sample I have taken is Kalindee Rail Nirman ltd.



Data analysis will be done with the help of different ratios.

Simple percentage, Bar chart and line chart will also be used.


 The analysis will be made with the help of the secondary

data collected from the company.

 The study is academic in nature.

 The study will be limited to 3 financial years’ performance

of the company i.e 2007-08, 2008-09, 2009-10.


I hope with this project it will be helpful in knowing the Kalindee

Rail’s position of funds maintenance and setting the standards for

working capital inventory levels, current ratio level, quick ratio, net

profit and gross profit ratio. This project is also useful as it

compares the present year data with the previous year data and

thereby it shows the trend analysis, i.e. increasing fund or


decreasing fund. It will also be helpful in knowing how company

deals with the problem of working capital management.