Q.Sriram Textiles Ltd. needs Rs 50 lakh for just 90 days to bridge a temporary gap in working capital caused by a delay in customer payments, and does not want to disturb its long-term capital structure for such a short need. Would Sriram Textiles Ltd. approach the money market or the capital market for this requirement, and which instrument would best suit a company of established creditworthiness in this situation?

A 90-day working-capital need, without disturbing long-term capital, is exactly the money market's job — and a creditworthy company's own unsecured note here is Commercial Paper.

Match the fact pattern (short period, working-capital purpose, company's own creditworthiness) against the money-market instrument built for exactly this need.

Step 1 — Identify the key facts. The need is for Rs 50 lakh, for only 90 days (well under one year), to bridge a temporary working-capital gap — not to fund any long-term fixed asset.

Step 2 — Match the time period to the right market. A need of 90 days squarely falls within the money market's domain (short-term funds, up to one year), not the capital market, which deals in medium- to long-term funds beyond one year.

Step 3 — Identify the suitable instrument. Within the money market, a Treasury Bill is issued only by the government, and a Certificate of Deposit is issued by a bank against a deposit — neither fits a company raising funds for itself. Commercial Paper, however, is precisely the instrument built for this situation: an unsecured, short-term promissory note that a large, financially strong, highly rated company issues directly to the money market, at a discount, to meet exactly this kind of short-term working-capital need, as a cheaper alternative to bank borrowing.

Step 4 — Conclusion. Sriram Textiles Ltd. should approach the money market, and, being a company of established creditworthiness, is well placed to raise the Rs 50 lakh by issuing Commercial Paper for a tenure matching its 90-day requirement.