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DECLARATION
I hereby declare that this project titled Assessment of Working Capital of JK bank "
is submitted as a requirement for the partial fulfillment of BBA Degree fromBeehive
college of Advance Studies selaquidehradun (U.K)
The empirical finding in the project are based on the data collected by myself while
preparing this project.
I hereby declare that this project work is not submitted to any other institution for the
award of any degree.
ACKNOWLEDGEMENT
Building project is endlessly fascinating for anyone because what begins as just a few
thoughts end up as a physical, tangible thing that gets sent out (hopefully) to the far
flung corner of the world. Of course, the trip from thought to the thing is a long and lots
of people get their fingers in a project before it is ready to sail.
It is a matter of great pleasure for me to submit a Project Report. First of all, I would
like to thank the supreme power, the almighty ALLAH who is really responsible for
satisfactory completion of my task. After that my parents who have always inspired and
encouraged me.I am sincerely thankful to J&K BANK Ltd. for giving me the
opportunity to work as summer trainee in their esteemed organization
especially to Mr. GhMohiud Din(Deputy Cluster Head,Kupwara) my project guide
for Hisable guidance, continuous support and cooperation throughout my project,
without whom the present work would not have been possible.
Hilal
PREFACE
Research word in management is extremely important as it gives a close and depth view
of real life business issue. For the student pursuing any professional course like
business studies who is trying to perform outstanding it is paramount importance that
apart from theoretical knowledge one must also gain practical knowledge.
The main objective of project report is familiarization with the necessary theoretical
inputs and to gain sufficient practical exposure to establish a distant linkage between
conceptual knowledge acquired at the college and practicing those concepts.
CONTENTS
Declaration
Acknowledgement
Preface
Chapter-1
REVIEW OF LITERATURE
Chapter-2
RESERCH METHODOLOGY
RESEARCH DESIGN
DATA COLLECTION
DATA ANALYSIS
TYPES OF WORKING CAPITAL
AVERANGE LENDING RATES OF WORKING CAPITAL LOAN
BETWEEN JK BANK & SBI
EARNING UPDATES
Chapter-4
FINDINGS
Chapter-5
CONCLUSION
Chapter-6
CHAPTER _1
INTRODUCTION
(a)
The level of current assets required to be held by any unit including the
composition of current assets for efficient functioning.
(b)
WORKING CAPITAL
CURRENT LIABILITIES
CURRENT ASSETS
Outstanding Expenses
Bills Payable
Short-term Loans
Proposed Dividends
Provision for Taxation, etc.
Current Assets
Cash and Bank Balance
Inventories:
Raw-Materials
Work-in-progress
Finished Goods
Spare Parts
Accounts Receivables
Bills Receivables
Accrued Income
Prepaid Expenses
Short-term Investments
in various
given below:
Conceptual
classification
There are
capital viz.,
quantitative and
qualitative. The quantitative concept takes into account as the current assets
while the qualitative concept takes into account the excess of current assets over
current liabilities. Deficit of working capital exists where the amount of current
liabilities exceeds the amount of current assets. The above can be summarized
as follows:
(i)
(ii)
(iii)
ii.
capacity of the business but the excess working capital causes more inventories,
increases the possibility of delay in realization of debts. On the other hand,
absence of adequate working capital leads to decrease in return on investment.
The goodwill of the firm is also adversely affected due to the inability to pay
current liabilities in time. Hence, the management of working capital helps to
manage all the factors affecting the working capital in the most profitable
manner.
CASH
RECIEVABLES
RAW MATERIAL
STOCK-IN-PROGRESS
XX
XX
XXX
XX
XX
= XX
=XXX = XX
XX
1) Financial Statements (Balance Sheet & profit & loss A/c Should
be obtained for the last 3 years as well as estimates for current
year and projections for next year.
2) The sales figure is the focal point for consideration since the
requirement of working capital will depend on the level of sales the
borrower expects to achieve, in the next year.To make a realistic
assessment of sales projected for the next year; the trend in sales
during previous years, the potential for growth, the production
capacity, demand for product, expertise of entrepreneur in locating
markets, export potential, type of product, quality of product etc. will
have to be taken into account. But, ultimately it is the judgment of
the credit appraiser which is vital for making a reasonable estimate
of sales.
3) Once the projected figure is assessed, the next step is to find out the
requirement of W.C. that is to ascertain as to what should be the
optimum level of holding current assets so that the projected sales
are achieved.The levels of holding of inventory (Raw material, semi
Finished Goods and Finished Foods) and receivables will depend on
the period of holding inventory and receivables. Hence thorough
appraisal will have to be made to find out as to what should be the
reasonable period of holding of inventory and receivables.Once the
period of holdings is scientifically ascertained, the investment in CA.
(i.e. W.C) can be calculated on the basis of the following:
a) R.M holding calculated on the basis of so many months of R.M consumed.
b) SFG holding calculated on the basis of so many months of cost of sales,
Of the gap, Bank Finance will be 75% to 80% depending upon margin
requirements which will have to come from long term sources (in the form of
NWC).
POINTS TO NOTE
1. Sales and period of holding of inventory and receivables are the areas
where slight misjudgment will result in unrealistic assessment. Hence,
these two are the most important areas requiring closer analysis and
scrutiny.
2. The MPBF reflects the maximum limit up to which the bank can finance but
is not an entitlement to borrow. If the NWC available is more than the
stipulated margin, the limit of bank finance will be corresponding reduced.
Nature of Facility
Purpose
Eligibility
Quantum of finance
Margin on Bank
Guarantee
Security
CONTRATOR FINANCE
Industry profile
OVERVIEW OF THE INDUSTRY AS A WHOLE
Banking in India
The economic reforms undertaken in the last 15 years have brought about a considerable improvement
in the health of banks and financial institutions in India. The banking sector is a very important sector
of the Indian economy. The sector has made marked improvements in the liberalization period. There
has been extraordinary progress in the financial health of thecommercial banks with respect to capital
adequacy, profitability assets quality and risk management. Deregulation has opened new doors for
banks to increase revenues by entering into to investment banking, insurance, credit cards, depository
services, mortgage, securitization etc. Currently, banking in India is generally fairly mature in terms of
supply, product range and reach even through reach in rural India still remains a challenge for the
private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are
considered to have clean, strong and transparent balance sheet relative to other banks in comparable
economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure
from the government. The stated policy of the bank of Indian Rupee is to manage volatility but
without any fixed exchange rate and this has mostly been true. With the growth in the Indian economy
expected to be strong for quite some time especially in its services sector the demand for banking
services are expected to be strong. In March 2006, the Reserve Bank of India allowed Warburg Pincus
to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an
investor has been allowed to hold more than 5% in a private sector bank since the RBI announced
norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by
them.
Currently, India has 96 scheduled commercial banks (SCBs) 31 private sector banks and 27 are public
sector banks and 38 foreign banks. They have a combined network of over 53000 branches and 49000
ATMs. According to a report by ICRA Limited, a rating agency, the Downloaded from
mbahotspot.com 20 Project Made on Analysis of Working Capital in Banking (J&K) by
ShameemAhamad
public sector banks hold over 75 percent of total assets of the banking industry with the private and
foreign banks holding 18.2% and 6.5% is just say. Liberalization and globalization have created a
more challenging environment in banking sector as well as the other segments of the financial sector
such as mutual funds, non-banking finance companies, post offices, capital market, venture capitalist
etc. Now the challenge faced by the sector would be gaining profitability, reinforcing technology,
maintaining global standards, corporate governance, risk management and the most important of all,
to establish customer intimacy.
COMPANY PROFILE
Company Profile
HISTORY
Traditional money lenders till 1920-30 performed entire banking in the state of
Jammu and Kashmir at exorbitant interest rates. At the same time some banks
functional but at a very limited scale, such as Punjab national bank, grind lays
bank and imperial bank of India.The role of these banks was reduced to the
acceptance of the deposits, as they could not grant loans and advances to the
people of the state owing to the statutory limitations. Under this scenario banks
could not ameliorate the financial and the social position of people of the state.
To overcome this critical situation then the maharaja of this state convinced an
idea of setting up of a state bank in the state. After prolonged exercises and
deliberations of the assignment for establishment of Jammu and Kashmir Bank
Ltdwas given to the late sir Sorabji N.Pochkkanwala, then managing director of
the central bank of India. Mr. S N Pochkkhanwala formulated a scheme on
24:09:1930, suggesting establishment of a semi state bank with participation in
capital by state and public under the control of state government. Thus the bank
was formally incorporated on 1st of October 1938 and commenced business from
4th July 1939 at its registered office, residency road Srinagar Kashmir.
In its formative years, the bank had to encounter several serious problems,
particularly around the time of independence, when out of it total 10 branches,
two branches of Muzafarabad and Mirpure fell to the other side of the line of
control (now Pakistan administrated Kashmir) along with cash and other assets in
1947.However state government came to its rescue with the assistance
6.00
Lakh to meet the claim. The bank steadfastly overcome its difficulties and kept
growing. Following the extensions of central laws to the state of Jammu &
Kashmir, the bank was defined as a government company as per the provisions
of the Indian companies Act 1956. The bank had its first full time chairman in
1971, following the social control measure in banks. The year in 1971 was the
turning point for the bank on conferment of scheduled bank status and witnessed
remarkable progress in all the vital fields of operations. Reserve Bank of India
declared the bank as A class bank in 1976.
PRELUDE
The Jammu & Kashmir Bank is today one of the fastest growing banks in India
with a network of more than 750 branches/offices spread across the country
offering world class banking products/services to its customers. The dip in the
profits is in line with overall industry trend which witnessed diminishing yields in
the securities portfolio held by banks and consequential booking of losses
Type
Private
Traded as
Industry
Founded
October 1, 1938
Headquarters
Key people
Products
Revenue
Net income
Total assets
Employees
Website
VISION
To catalyses economic transformation and capitalize on growth.
MISSION
Our mission is two-fold:
To provide the people of J&K international quality financial service and solutions;
and
To be a super-specialist bank in the rest of the country. The two together will
make us the most profitable Bank in the country.
STABILITY
The J&K Bank is rated P1+, indicating the highest degree of safety by Standard &
Poor and CRISIL.
4. Banking Facilities:
Financing is the act of providing funds for business activities, making purchases
or investing. Financial institutions and banks are in the business of financing as
they provide capital to business, consumers and investors to help them achieve
their respective goals. There are two ways of providing funds i.e. financing to the
borrowers used by banks or financial institutions as given.
BANK FINANCE
1. Term loans
A term loan is usually a single loan for a stated period of time or a series of loans
on specified dates. They are used for specific purposes such as acquiring
machinery, renovating a building, refinancing debt, entering into new business
and so on and so forth. Term loans are of maturity of 1 year and above and are
repaid on an amortized basis. Term loans are mostly given to the borrowers who
propose to set up a unit (project) for example a manufacturing unit, or it may be
to set up a power plant or constructions of complexes, buildings, roads etc.
The maturity of term loans called tenor of the loan comprises of following below
mentioned components: They are:i. Construction period
Time taken for completion of construction activity by the unit holder.
ii. Moratorium period
Holiday period given to repay the term loan.
iii. Repayment period
Period in which the term loan is repaid.
2. Cash Credit
Cash credit facility is the most popular method of bank finance to the borrowers
adopted by the lenders. Under cash credit facility, the borrower is allowed to
withdraw funds from the bank up to the sanctioned credit limit. He is not required
to borrow the entire credit sanctioned once, rather he can withdraw periodically
to the extent of his requirements and repay by depositing surplus funds in his
cash credit account.
3. Overdraft
Under the overdraft facility, the borrower is allowed to withdraw funds in excess
of balance in his current account up to a certain specified limit during a
stipulated period. Overdrawn amount is repaid on demand. Over draft generally
continue for a long period by annual renewals of the limits.
B.
Non fund based financing are essentially in nature of promises made by banks in
favors of a third party to provide monetary compensation on behalf of their
clients if certain situations emerge. These non-fund based facilities may be in
nature of banks guarantee or letter of credit.
1. Letter of credit
Suppliers particularly the foreign suppliers insist that the buyer should ensure
that his bank will make the payment if he fails to honor his obligations. This is
ensured through a letter of credit (L/C) arrangement. A bank opens a L/C in
favors of a customer to facilitate his purchase of goods. If the customer does not
pay to the supplier within the credit period, the bank makes the payment under
the L/C arrangement. Bank charges the customer for opening the L/C. Banks
extends such facility to financially sound customers.
2. Line Of Credit
The line of credit is the maximum amount that can be borrowed under the term
of loan. The loans are made for the period of one year or less; and they should be
used to finance the seasonal increase in inventory and accounts receivables.
When the inventory is sold, receivables are collected and the funds are used to
reduce the loan. The loans are usually payable on demand by the banks or within
ninety days.
EPS OF JK BANK
2011-2015
250
200
150
100
50
0
2011
2012
2013
2014
2015
IN REST OF INDIA
WITHIN JK STATE
SANCTIONING
APPRA
&
RECOMME
ASSESSMENT
to another bank.
Government regulation / legislation impact on the industry.
patterns.
Assess MPBF determine facilities required
Management quality, competence, track records
Companys structure and system
Market shares of the units under comparison.
FOLLOW UP
MONITORING & CO
SUPERVISION
Pledge:The goods which are offered as security are transferred to the physical
possession of the lender. An essential prerequisite of pledge is that the goods are
in thecustody of the bank. Pledge creates some kind of liability for the bank in
the sense that Reasonable care means care, which a prudent person would take
to protect his property.
In case of non-payment by the borrower, the bank has the right to sell the goods.
Lien:The term lien refers to the right of a party to retained goods belonging to
other party until a debt due to him is paid. Lien can be of two types viz.
Particular lieni.e. A right to retain goods until a claim pertaining to these goods
are fully paid, and
General lien, which is applied till all dues of the claimant are paid. Banks
usually enjoyed generallien.
REVIEW OF LITERATURE
Literature review is indispensable part of a thesis because it
represents the whole range of research in the past on the topic
selected by the researcher on the basis of which research design of a
study is formulated. Literature review gives better insight and helps
bridge gap for the research to be undertaken.
Indian iron and steel company (IISCO) during the period from 1978-79
to 1985-86 by using the financial tools and statistical techniques. The
study revealed that TATA IRON AND STELL COMPANY LTD had better
Working Capital Management in comparison to SAIL and IISCO.
Results also revealed that all the three firms under study had made
excessive use of bank borrowings to finance the working capital
requirements.
CHAPTER_2
Research methodology
RESEARCH METHODOLOGY
Research Methodology is a systematic method of finding solutions to problems. It
is essentially an investigation, a recording and an analysis of evidence for the
purpose of gaining knowledge.
Success or failure of any project entirely depends upon methodology adopted by
the researcher. Methodologies basically use different methods of research
systematically and scientifically. Objectives of the study, its research design, its
sampling design, coding and editing methods, presentations and analysis of the
data together with interpretation of the data are essential part of research
methodology.
Research Type
Sample Unit
Analytical
Quantitative
Primary
Secondary
Business units applying for loan
Financial Statements
Source of Data
TYPES OF RESEARCH:
Research purpose can be divided into four categories:
Exploratory research
Descriptive research
Diagnostic research
Hypothesis research
Exploratory research:
It is also termed as formulate research the main purpose of such research is to gain
familiarity with a phenomenon or to achieve new insights.
Descriptive research:
This portrays the particular characteristics of a particular individual situation or a group.
Diagnostic research:
To determine the frequency something occurred or which associated with something
else.
Hypothesis:
To test hypothesis of a casual relationship between variables
My research design is descriptive because the problem statement is based on the
present situation of liberty shoes financial statements
RESEARCH DESIGN
Analytical
This is analytical research area where we analyses information with cause and its
effects relationship. This analysis leads to the study of the assessment of working
capital and drawing conclusions of whether to lend money to the institution for
working capital requirement based on the various parameters which I try to make
it easy to understand with the help of case studies at the end.
Also if the money is lend then there is reality the norms are not always perfect
and hence it is essential to priorities stringent parameters and secondary
parameters.
Quantitative
This is Quantitative research type of research also, relates to aspects that can be
quantified or can be expressed in terms of quantity. It involves the measurement
of quantity or amount. The various available statistical and econometric methods
are adopted for analysis in such research.
DATA COLLECTION
Data collection is an essential part of every project. Success or failure of any
project entirely depends on the way of collection of data. The data in this
research were collected from the following two ways.
Primary Data
Secondary Data
Secondary data relating to the procedure of assessment of working capital
finance, old sanction proposals, RBI guidelines, JK Bank norms etc. have been
sourced from reference books.
DATA REPRESENTATION
Tabular form
Pie Chart
Graph
RESEARCH SAMPLE
Different types of cases representing different situations which a bank generally
faces while financing the working capital to those who require these funds.
Time limit of 45 days was not enough to study the financial statement of the
bank
Annexures were not provided to me of financial statements.
Financial data was provided to me of the year 2014 which was not the recent
data.
Chapter_3
DATA ANALYSIS
RATIO ANALYSIS
Ratio Analysis is a very important tool of financial analysis. It is the process of
establishing the significant relationship between the items of financial
statements to provide meaningful understanding of the performance and
financial position of a firm. Ratios are classified as under:-
Liquidity Ratios
Activity Ratios
Leverage Ratios
Profitability Ratios
Financial ratio analysis is a useful tool for users of financial statement. It has
following advantages:
Advantages
1. It simplifies the financial statements.
2. It helps in comparing companies of different size with each other.
3. It helps in trend analysis which involves comparing a single
company over a period.
4. It highlights important information in simple form quickly. A user can
judge a company by just looking at few numbers instead of reading
the whole financial statements.
Limitations
Despite usefulness, financial ratio analysis has some disadvantages. Some key
demerits of financial ratio analysis are:
1. Different companies operate in different industries each having
different environmental conditions such as regulation, market
structure, etc. Such factors are so significant that a comparison of
two companies from different industries might be misleading.
2. Financial accounting information is affected by estimates and
assumptions. Accounting standards allow different accounting
policies, which impairs comparability and hence ratio analysis is less
useful in such situations.
3. Ratio analysis explains relationships between past information while
users are more concerned about current and future information.
Calculation of Ratios
Year
2013
2014
2015
Current Assets
37371.65
42343.9
50116.52
Current Liabilities36623.6
41347.8
49259.3
Current Ratio
1.02
1.01
1.02
Significance: - An ideal current ratio is 2:1. This ratio is used for short term paying ability of the firm.
Approximate of 1 of current ratio the creditors will be able to get their payment in full.
2. Quick Ratio: - This ratio is also known as liquid ratio. It measures short
term paying ability by measuring short term liquidity.
Year
2013
2014
2015
Liquid Assets
37371.65
42343.9
50116.52
Current Assets
36623.6
41347.8
49259.3
Liquid Ratio
1.024
1.02
1.01
Significance: - This ratio is able to payment for its creditors. This ideal figure is 1.
3.
Gross profit ratio: - Gross profit ratio indicates the efficiency of the
production or operation of trading. It expresses relation between gross
profit and net sales.
Year
2013
2014
2015
Gross Profit
774.45
958.21
1149.49
Net Sales
53934.51
60294.39
70869.57
G.P.R
14.3%
15.8%
16.2%
Significance:- This ratio indicates the degree to which the selling price of goods per unit may decline
without resulting in losses from operations to the firm. If there is continuous increment in gross profit
ratio then it means the selling price of goods is increasing day by day.
4. Net Profit Ratio: - Net profit ratio indicates efficiency of P&L A/C of the firm. It
intends relation between net profit and net sales.
Year
2013
2014
2015
Net Profit
409.84
512.38
615.2
Net Sales
53934.51
60294.39
70869.57
N.P.R
7.5%
8.4%
8.6%
\\Significance: - Net profit ratio indicates net margin on sales. This margin is continuously increasing
year to year.
Year
2013
2014
2015
Net Sales
53934.51
60294.39
70869.57
3,937,7.02
1,920,0.15
FATOR
1.53 Times
3.69 Times
2.7 Times
6.
Year
2013
2014
2015
Net Sales
53934.51
60294.39
70869.57
Working Capital37371.65
42343.9
50116.52
WCTOR
1.42 Times
1.41 Times
1.44 Times
Significance: - Working capital turnover ratios express the relation between net sales and
working capital. The ratio of the bank is decreasing year after year
7.
Year
2013
2014
2015
376,932,318
327,559,871
425,467,948
Turnover
53934.51
60294.39
70869.57
TATOR
69%
54%
60%
Total assets
The above parameters are used for critical analysis of financial position. With the
evaluation of each component, the financial position from different angles is tried
to be presented in well and systematic manner. By critical analysis with the help
of different tools, it becomes clear how the financial manager handles the
finance matters in profitable manner in the critical challenging atmosphere, there
commendation are made which would suggest the organization in formulation of
a healthy and strong position financially with proper management system. I
sincerely hope, through the evaluation of various percentage, ratios and
comparative analysis, the organization would be able to conquer its in
efficiencies and makes the desired changes.
NATURE
LOANS
COST OF FINANCE
13.75%-14.75%
13.25% - 14.25%
14.75%
10.75%
KHATAMBAND CRAFTSMEN
13.25%-13.75%
CASH CREDIT/FINANCE
OVERDRAFT MORTGAGE LOAN FOR TRADE &14.75-16.25
SERVICE SECTOR
LETTER OF CREDIT
BILLS DISCOUNT
10.25%-10.75%
WORKING
CAPITAL FACILITY
TERM LOAN
CASH CREDIT
LETTER OF CREDIT
JK BANK
13.33%
SBI
15%
14.375%
14.5%
10.50%
14%
18%
11%
% DIFFERENCE
-1.67%
+0.375%
-3.50%
0.50%
10
8
6
4
2
0
WCF
LC
2014.
Gross and Net NPAs as percentages to Gross and Net Advances as on Dec, 2015
at 1.65 % and 0.22 % respectively compared to 1.61 % and 0.14 % a year ago.
NPA Coverage Ratio as on Dec, 2015 at 90.24 % well above RBI stipulated norm
of 70 %.
Cost to Income Ratio stood at 39.94 % for the quarter ended Dec, 2015 as
compared to 36.50 % for the quarter ended Dec, 2014.
Capital Adequacy Ratio (Basel III) stood at 13.01 % as on Dec, 2015 wellabove
RBI stipulated norm of 9 %.
compared to 805.02crore earned during the nine months ended Dec, 2014.
EPS for the nine months ended Dec, 2015 at 192.23 up 15.76 % from
166.06 earned during the corresponding nine months of previous financial year.
NIMs (Net Interest Margins) Ratio for the nine months ended Dec, 2015 at 4.18
% (annualized) vis--vis 3.93 % for the corresponding nine months of previous
financial year.
Post tax Return on Assets at 1.88 % (annualized) for the nine months ended Dec,
2015 compared to 1.78 % for the corresponding period of the previous financial
year.
Post Tax Return on Average Net-Worth (annualized) for the nine months ended
Dec, 2015 at 23.31 % compared to 23.88 % recorded for the corresponding
nine months a year ago.
The Cost of Deposits (Annualized) for the nine months ended Dec, 2015 at 6.70
% compared to 6.92 % recorded for the corresponding nine months of last
financial year.
The Yield on Advances (annualized) for the nine months ended Dec, 2015 stood
at 12.25 % as compared to 12.61 % for the nine months ended Dec, 2014.
Business per Employee and Net profit per Employee (annualized) were at 11.36
crore and 13.25 Lakh respectively for the nine months ended Dec, 2015
compared to
Chapter_4
FINDINGS
Findings
An ideal current ratio is 2:1. This ratio is used for short term paying ability of
the firm. Approximate of 1 of current ratio the creditors will be able to get
their payment in full.
This ratio indicates the degree to which the selling price of goods per unit may decline
without resulting in losses from operations to the firm. If there is continuous increment
in gross profit ratio then it means the selling price of goods is increasing day by day
Net profit ratio indicates net margin on sales. This margin is continuously increasing
year to year.
The Banks aggregate business crossed yet another psychological
mark and stood at ` 70,869.57 Crores at the end of the financial year
2013-14. The Banks total business increased by ` 10,575.18 Crores
from the previous years figure of ` 60,294.39 Crores, registering a
growth of 17.54%
The above parameters are used for critical analysis of financial
position. With the evaluation of each component, the financial
position from different angles is tried to be presented in well and
Other Findings
26%
25%
31%
18%
CRISIL:One of the leading credit rating agency re-affirmedP1+ ratingto the banks
certificate of Deposit program indicating the highest degree of safety for timely
payment of principle & Interest. Launching JK Bank Global Access Debit Card
shortly, which shall be cirrus & Maestro enabled. Agreement signed with
MasterCard International.
Chapter_5
CONCLUSIONS
CONCLUSIONS
The requirement of working capital finance is ever increasing.
Loans and advances formed a major portion of the current
assets of the firmbecause of which the working capital gap is
large.
The bank prefers to use the second method of lending working
capital under theMPBF rather than evolving their own method.
In most of the cases, hypothecation and/or mortgage are used
to create securitiesfor the banks.
After doing the assessment of the financial indicators it is up to
the judgment of the top management of the bank to sanction
such loan. The very decision could beagainst the assessment
result.
Bank has their own internal credit rating procedure to rate the
clients (Borrowers).
If the company is with bank from inception stage then they are
given preference,as credible and loyal party over their financial
indicators.
There is a stiff competition to the nationalized banks from the
foreign investors astheir lending rates are much lower than
nationalized banks.
Today the foreign investors are very big threat to business and
its existence.
Chapter_6
SUGGESTIONS
SUGGESTIONS
Closely monitoring and inspecting the activities and stocks of
the borrowers from time to time can avoid the misuse of
working capital.
While working out the working capital limits, banks must
exclude the loans and advances from the current assets. The
assessment should be done mainly stock and the inventory
level of borrower.
Bank must extend working capital finance through non-fund
based facilities.
Another ideal method would be to use LC as the primary source
of extending, working capital clubbed with bill discounting. This
would ensure that the credit is put to the right use by the
borrower and repayment is guaranteed to the bank.
The bank must further secure themselves by holding a second
charge on all the fixed assets of the borrower.
The time period taken by the banks to sanction the limits
should be significantly reduced to allow the borrowers to make
use of the credit when the need is most felt.
Chapter_7
ANNEXURES
Cr.
Mar '15
12 mths
Mar '14
12 mths
Mar '13
12 mths
Mar '12
12 mths
Mar '11
12 mths
5,675.12
4,816.20
4,044.69
3,430.19
2,961.97
5,723.61
69,335.86
1,765.00
76,824.47
1,795.26
78,619.73
4,864.69
64,220.62
1,075.00
65,295.62
1,583.00
71,743.31
4,093.18
53,346.90
1,240.96
54,587.86
1,588.18
60,269.22
3,478.68
44,675.94
1,104.65
45,780.59
1,248.88
50,508.15
3,010.46
37,237.16
1,100.21
38,337.37
1,198.97
42,546.80
Mar '15
12 mths
Mar '14
12 mths
Mar '13
12 mths
Mar '12
12 mths
Mar '11
12 mths
2,695.15
2,709.18
39,200.41
25,741.07
456.18
2,783.65
1,670.21
33,077.42
21,624.32
855.52
440.42
415.10
2,974.96
573.85
26,193.64
19,695.77
788.10
396.47
391.63
2,744.73
1,869.51
23,057.23
13,956.25
561.35
358.54
202.81
Assets
Cash & Balances with RBI
3,045.59
Balance with Banks, Money at Call
1,168.31
Advances
46,384.60
Investments
26,195.07
Gross Block
533.81
Accumulated Depreciation
Net Block
533.81
Capital Work In Progress
Other Assets
1,295.35
Total Assets
78,619.73
Contingent Liabilities
Bills for collection
Book Value (Rs)
in
456.18
941.33
693.34
676.17 714.95
71,743.32 60,269.22 50,508.15 42,546.80
18,189.26 8,291.77
8,790.08
3,799.74
717.58
621.00
Mar '15
12 mths
Income
Interest Earned
Other Income
Total Income
Expenditure
Interest expended
Employee Cost
Selling and Admin Expenses
Depreciation
Miscellaneous Expenses
Preoperative Exp Capitalized
Operating Expenses
Provisions & Contingencies
Total Expenses
CR
Mar '14
12 mths
Mar '13
12 mths
Mar '12
12 mths
Mar '11
12 mths
6767.00 6,136.80
390.26 483.73
7157.26 6,620.53
4,835.58
334.12
5,169.70
3,713.13
364.76
4,077.89
3,056.88
416.24
3,473.12
4082.52 3,820.76
743.91 652.26
2,997.22
521.41
198.48
2,169.47
523.61
221.12
1,937.54
366.36
233.39
605.38
510.56
386.51
550.20 1,042.68
450.28
147.88
5974.79
Mar '15
989.01
755.66
5,565.43
Mar '14
892.14
477.08
4,366.44
Mar '13
888.93
404.29
3,462.69
Mar '12
727.36
295.83
2,960.73
Mar '11
12 mths
12 mths
12 mths
12 mths
12 mths
1182.47
1,055.10
803.25
615.20
512.38
1182.47
1,055.10
803.25
615.20
512.38
242.39
162.40
126.04
106.65
165.69
335.00
844.34
126.90
260.00
717.58
105.69
220.00
621.00
243.93 217.65
500.00
1,003.49
Appropriations
Transfer to Statutory Reserves 343.15
Transfer to Other Reserves
428.37
Proposed Dividend/Transfer to Govt
283.58
Balance c/f to Balance Sheet 0.00
Total
1,055.10
200.81
413.68
188.76
0.00
803.25
153.80
314.42
146.98
0.00
615.20
128.89
258.71
124.78
0.00
512.38
102.34
211.60
95.90
0.00
409.84
Chapter_8
BIBLIOGRAPHY