A

SYNOPSIS REPORT
ON

“A STUDY ON WORKING CAPITAL MANAGEMENT WITH

REFERENCE TO KOTAK MAHINDRA BANK”
Submitted for the partial Fulfillment of the requirement for the award of the
degree of
MASTER OF BUSINESS ADMINISTRATION
Submitted by:
M.KEERTHI KUMARI
Hall Ticket No:
094205010502
Under the guidance of
DR. R. SAMPATH KUMAR
Assistant Professor

PROF G.RAM REDDY CENTER FOR DISTANCE EDUCATION

(Affiliated to Osmania University)
BARKATPURA,HYDERABAD
2020-2022
INTRODUCTION

WORKING CAPITAL:

Cash is the lifeline of a company. If this lifeline deteriorates, the company's ability to fund

operations, reinvest and meet capital requirements and payments also deteriorate.

Understanding a company's cash flow health is essential for making investment decisions. A

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

management (WCM).

Working capital of a company reveals more about the financial condition of a business than

almost any other calculation. It tells you what would be left if a company raised all of its

short term resources, and used them to pay off its short term liabilities. The more working

capital, the less financial strain a company experiences.

Working capital also gives investors an idea of the company's underlying operational

efficiency. Money that is tied up in inventory or money that customers still owe to the

company can't be used to pay off any of its obligations. So, if a company is not operating in

the most efficient manner (slow collection) it will show up in the working capital. This can

be seen by comparing the working capital from one period of time to another; slow

collection may signal an underlying problem in the company's operations.

DEFINITION:

The definition of working capital is that it is the difference between an organization’s

current assets and its current liabilities. Of more importance is its function which is

primarily to support the day-to-day financial operations of an organization, including the

purchase of stock, the

payment of salaries, wages and other business expenses, and the financing of credit sales.

It’s a measure of both a company's efficiency and its short-term financial health.

The better a company manages 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 returns for investors. There are two

concepts of working capital. They are

→ Gross working capital and

→ Net working capital.

The term gross working capital, also referred to as working capital means the total current

assets.

The term net working capital can be defined in two ways:

 The most common definition of net working capital is the difference between the

current assets and the current liabilities.

 The alternate definition of NWC is that portion of current assets which is financed

with long term funds. Since the current liabilities represent the sources of short term
funds, as long as current assets exceed current liabilities, the excess must be financed

with long term funds.

The net working capital, as a measure of liquidity is quite useful for internal control. The net

working capital helps in comparing the liquidity of the same firm over time. Therefore:

Current Assets - Current Liabilities = Working Capital

A positive working capital means that the company is able to pay off its short-term

liabilities. A negative working capital means that a company currently is unable to meet its

short-term liabilities with its current assets (cash, accounts receivable, inventory).

Management must ensure that a business has sufficient working capital. Too little of the

working capital will result in cash flow problems highlighted by an organization exceeding

its agreed overdraft limit, failing to pay suppliers on time, and being unable to claim

discounts for prompt payment. In the long run, a business with insufficient working capital

will be unable to meet its current obligations and will be forced to cease trading even if it

remains profitable on paper.

On the other hand, if an organization ties up too much of its resources in working capital it

will earn a lower than expected rate of return on capital employed. Again this is not a

desirable situation.

As it is said that working capital is the difference between the current assets and the current

liabilities, the management of the company has to manage their current assets and current

liabilities.
Need for the study

Working capital management is one of the key areas of financial decision-making. It is

significant because, the management must see that an excessive investment in current assets

should protect the company from the problems of stock-out. Current assets will also

determine the liquidity position of the firm.

The goal of working capital management is to manage the firm current assets and current

liabilities in such a way that a satisfactory level of working capital is maintained. If the firm

cannot maintain a satisfactory level of working capital, it is likely to become insolvent and

may be even forced into bankruptcy.

SCOPE OF THE STUDY:

A study of the Working capital involves an examination of long term as well as

short term sources that a company taps in order to meet its requirements of finance. The

scope of the study is confined to the sources that Kotak Mahindra Group tapped over the

years under study i.e. 2011-15.

OBJECTIVES OF THE STUDY

 To study the existing working capital management system of Kotak

Mahindra Group. (Formerly KOTAK MAHINDRA BANK Ltd.).

 To find the liquidity position of the current assets and current liabilities of
the company.

 To understand how the company finances its working capital

 To analyze the financial performance of the company with

reference to working capital.
 RESEARCH METHODOLOGY

 The study of Working Capital management is based on primary as well as secondary

data.

Data relating to. Has been collected through

SECONDARY SOURCES:

Published annual reports of the company for the year 2011-15.

PRIMARY SOURCES:

Detailed discussions with Vice-President.

Discussions with the Finance manager and other members of the Finance department.

DATA ANALYSIS

The collected data has been processed using the tools of

 Ratio analysis

 Graphical analysis

 Year-year analysis

These tools access in the interpretation and understanding of the Existing scenario of the

Capital Structure.

 The primary data was gathered through personal interaction with the director of the

company.

 The secondary data was collected from company’s annual reports from 2011-2012

to 2018-2019, various books and Internet.

 LIMITATIONS

 Due to the busy schedule of the executives in the company, all the required
primary data could not be collected, which might affect the results of the study.

 Recommendations of the study are only personal opinions. Hence the judgments
may be biased and could not be considered as ultimate and standard solutions.

 Short period of time is one of the limitations, due to which a detailed study could
not be conducted on the topic
 CHAPTERIZATIONS

CHAPTER-2 REVIEW OF LITERATURE

CHAPTER-3 COMPANY PROFILE

CHAPTER- 4 DATA ANALYSIS AND INTERPRETION

CHAPTER-5 FINDINGS, CONCULSIONS &

SUGGESTIONS

BIBILOGRAPHY