working capital j k bank
TRANSCRIPT
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Training Report on
Working capital management
In
JAMMU AND KASHMIR BANK LIMITED
SRINAGAR
S!mitte" in partial #l#ilment o# Re$irement #or t%e "egree o# Ma&ter& o# B&ine&&
A"mini&tration in 'inance to
(UNJAB TE)HNI)AL UNI*ERSIT+
,-./0,-.1
S!mitte" to2 S!mitte" !3
Mi&&4 Di53a (reet 6H7D8 Mamin M&%ta$
Mi&&4 Harpreet Kar 6Inc%arge8 M4B4A09r" Sem
./1:;:-
1
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AR+ANS GR7U( 7' )7LLEGES
STUDENT
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A)KN7WLEDGEMENT
This report wo&ld not ha)e been possible witho&t the help of certain people &nstinting
s&pport of 8pressed keen interest
and gi)en contin&ed enco&rage%ent thro&gh the st&dy enabled the s&ccessf&l co%pletion of
%y pro?ect=
!ractical training in 8a%%& and Kash%ir @onal Office; #== road 1rinagar was )ery )al&able
to &s and o&r special thanks are d&e to o&r pro?ect coAordinator
#r= #oha%%ad shraf ($>ec&ti)e Officer0 for his inspiring g&idance; )al&able help and
angelic s&pport for the co%pletion of %y pro?ect in “”WORKING C!IT"””=
In the 8tend %y gratit&de to the %anage%ent and staff of 8
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(RE'A)E
On the ?ob training in b&siness organisation inf&ses a%ong st&dents a sense of critical
analysis to apply of real %anagerial sit&ation to which they are e>posed= It gi)es the% an
opport&nity to apply their concept&al; theoretical and i%aginati)e skills to the real life
sit&ation and to e)al&ate the res<s thereafter=
I was l&cky to ha)e got an opport&nity to work at 8 weeks and prepared %y pro?ect “Working capital %anage%ent”= I
also got the practical e>perience in the field of %anage%ent=
This report is written acco&nt of what I learnt; e>perienced and e>plored d&ring %y s&%%er
training=
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)7NTENTS
)%apter 0. 10..
.4. INTR7DU)TI7N
.4, HIST7R+ 7' BANKS
)%apter0, .,0,.
,4. J=k BANK (R7'ILE
,4, SW7T ANAL+SIS
,49 HIST7R+ 7' J=K BANK
,4/ MISSI7N AND *ISSI7N
,4: A)HIE*EMENTS
,4: 7RGANISATI7NAL STRU)TURE
)%apter09 ,,0,>
94. RE*IEW 7' LITERATURE
94, W7RKING )A(ITAL MANAGEMENT
)%apter0/ 9-0//
/4. 7BJE)TI*ES? S)7(E? LIMITATI7NS
/4 , RESEAR)H METH7L7G+
)%apter0: /:0:.
'INAN)IAL ANAL+SIS
)%apter01 :,0:/
14. RE)7MMENDATI7NS AND SUGGESTI7NS
14, )7N)LUSI7N
BALAN)E SHEET ::0:1
(R7'IT AND L7SS STATEMENT :@0:;
RE'EREN)E :>
5
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)HA(TER0I
6
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.4. INTR7DU)TI7N T7 BANKING SE)T7R
The banking syste% in India is significantly different fro% that of other sian nations
beca&se of the co&ntry2s &ni'&e geographic; social; and econo%ic characteristics= India has a
large pop&lation and land siBe; a di)erse c<&re; and e>tre%e disparities in inco%e; which are
%arked a%ong its regions= There are high le)els of illiteracy a%ong a large percentage of its
pop&lation b&t; at the sa%e ti%e; the co&ntry has a large reser)oir of %anagerial and
technologically ad)anced talents= 4etween abo&t / and - percent of the pop&lation resides
in %etro and &rban cities and the rest is spread in se)eral se%iA&rban and r&ral centers= The
co&ntry2s econo%ic policy fra%ework co%bines socialistic and capitalistic feat&res with a
hea)y bias towards p&blic sector in)est%ent= India has followed the path of growthAled
e>ports rather than the “e>portled growth” of other sian econo%ies; with e%phasis on selfA
reliance thro&gh i%port s&bstit&tion= These feat&res are reflected in the str&ct&re; siBe; and
di)ersity of the co&ntry2s banking and financial sector= The banking syste% has had to ser)e
the goals of econo%ic policies en&nciated in s&ccessi)e fi)eyear de)elop%ent plans;
partic&larly concerning e'&itable inco%e distrib&tion; balanced regional econo%ic growth;
and the red&ction and eli%ination of pri)ate sector %onopolies in trade and ind&stry= I order for the banking ind&stry to ser)e as an instr&%ent of state policy; it was s&b?ected to )ario&s
nationaliBation sche%es in different phases (*D--; *D,D;and *D./0= s a res< banking
re%ained internationally isolated (few Indian banks had presence abroad in international
financial centers0 beca&se of preocc&pations with do%estic priorities; especially %assi)e
branch e>pansion and attracting %ore people to the syste%= #oreo)er; the sector has been
assigned the role of pro)iding s&pport to other econo%ic sectors s&ch as agric<&re; s%allA
scale ind&s tries; e>ports; and banking acti)ities in the de)eloped co%%ercial centers (i=e=;
%etro; &rban; and a li%ited n&%ber of se%iA&rban centers0=
7
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The banking syste%2s international isolation was also d&e to strict branch licensing controls
on foreign banks already operating in the co&ntry as well as entry restrictions facing new
foreign banks= criterion of reciprocity is re'&ired for any Indian bank to open an office
abroad= These feat&res ha)e left the Indian banking sector with weaknesses and strengths=
big challenge facing Indian banks is how; &nder the c&rrent ownership str&ct&re; to attain
operational efficiency s&itable for %odern financial inter%ediation= On the other hand; it has
been relati)ely easy for the p&blic sector banks to recapitalise; gi)en the increase in
nonperfor%ing assets (N!s0; as their Go)ern%ent do%inated ownership str&ct&re has
red&ced the conflicts of interest that pri)ate banks wo&ld face=
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.4, HIST7R+ 7' BANKS IN INDIA
Indian %erchants in Calc&tta established the 5nion 4ank in *.D; b&t it failed in *.+. as a
conse'&ence of the econo%ic crisis of *.+.A+D= The llahabad 4ank ; established in *.,- and
still f&nctioning today; is the oldest 8oint 1tock bank in India=(Joint Stock Bank E co%pany
that iss&es stock and re'&ires shareholders to be held liable for the co%panyFs debt0 It was not
the first tho&gh= That hono&r belongs to the 4ank of 5pper India; which was established in
*.,; and which s&r)i)ed &ntil *D*; when it failed; with so%e of its assets and liabilities
being transferred to the lliance 4ank of 1i%la=
When the %erican Ci)il War stopped the s&pply of cotton to "ancashire fro%
the Confederate 1tates; pro%oters opened banks to finance trading in Indian cotton= With
large e>pos&re to spec&lati)e )ent&res; %ost of the banks opened in India d&ring that periodfailed= The depositors lost %oney and lost interest in keeping deposits with banks=
1&bse'&ently; banking in India re%ained the e>cl&si)e do%ain of $&ropeans for ne>t se)eral
decades &ntil the beginning of the /th cent&ry=
3oreign banks too started to arri)e; partic&larly in Calc&tta; in the *.,/s= The Co%ptoire
dF$sco%pte de !aris opened a branch in Calc&tta in *.,/; and another in 4o%bay in *.,H
branches in #adras and !ondicherry; then a 3rench colony; followed= 914C established itself
9
http://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Allahabad_Bank
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in 4engal in *.,D= Calc&tta was the %ost acti)e trading port in India; %ainly d&e to the trade
of the 4ritish $%pire; and so beca%e a banking centre=
The first entirely Indian ?oint stock bank was the O&dh Co%%ercial 4ank; established in
*..* in 3aiBabad= It failed in *D-.= The ne>t was the !&n?ab National 4ank ; established
in "ahore in *.D-; which has s&r)i)ed to the present and is now one of the largest banks in
India=
ro&nd the t&rn of the /th Cent&ry; the Indian econo%y was passing thro&gh a relati)e
period of stability= ro&nd fi)e decades had elapsed since the Indian #&tiny; and the social;
ind&strial and other infrastr&ct&re had i%pro)ed= Indians had established s%all banks; %ost of
which ser)ed partic&lar ethnic and religio&s co%%&nities=
The presidency banks do%inated banking in India b&t there were also so%e e>change banks
and a n&%ber of Indian ?oint stock banks= ll these banks operated in different seg%ents of
the econo%y= The e>change banks; %ostly owned by $&ropeans; concentrated on financing
foreign trade= Indian ?oint stock banks were generally &ndercapitaliBed and lacked the
e>perience and %at&rity to co%pete with the presidency and e>change banks= This
seg%entation let "ord C&rBon to obser)e; In respect of banking it see%s we are behind the
ti%es= We are like so%e old fashioned sailing ship; di)ided by solid wooden b&lkheads into
separate and c&%berso%e co%part%ents=
The period between *D/, and *D**; saw the establish%ent of banks inspired by
the 1wadeshi %o)e%ent= The 1wadeshi %o)e%ent inspired local b&siness%en and political
fig&res to fo&nd banks of and for the Indian co%%&nity= n&%ber of banks established then
ha)e s&r)i)ed to the present s&ch as 4ank of India; Corporation 4ank ; Indian 4ank; 4ank of
4aroda; Canara 4ank and Central 4ank of India=
The fer)o&r of 1wadeshi %o)e%ent lead to establishing of %any pri)ate banks in 6akshina
Kannada and 5d&pi district which were &nified earlier and known by the na%e Sot%
)anara ( 1o&th Kanara 0 district= 3o&r nationalised banks started in this district and also a
leading pri)ate sector bank= 9ence &ndi)ided 6akshina Kannada district is known as Cradle
of Indian 4anking=
10
http://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_district
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6&ring the 3irst World War (*D*+A*D*.0 thro&gh the end of the 1econd World War (*DDA
*D+-0; and two years thereafter &ntil the independence of India were challenging for Indian
banking= The years of the 3irst World War were t&rb&lent; and it took its toll with banks
si%ply collapsing despite the Indian econo%y gaining indirect boost d&e to warArelated
econo%ic acti)ities= t least D+ banks in India failed between *D* and *D*.=
11
http://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Economy_of_India
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)HA(TER0II
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,4. BRIE' (R7'ILE 7' JAMMU AND KASHMIR BANK
NAMES
DESIGNATI7N
MUSHTA AHMAD
)HAIRMAN
Mo%amma" I!ra%im S%a%"a"
EE)UTI*E DIRE)T7R
Arna! Ro3
DIRE)T7R
13
http://www.reuters.com/finance/stocks/officerProfile?symbol=JKBK.BO&officerId=1416730http://www.reuters.com/finance/stocks/officerProfile?symbol=JKBK.BO&officerId=1416730
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S"%an&% (an"e3
DIRE)T7R
NISAR ALI
DIRE)T7R
A!"l MaCi" Matto
N7N0EE)UTI*E DIRE)T7R
14
http://www.reuters.com/finance/stocks/officerProfile?symbol=JKBK.BO&officerId=1414256http://www.reuters.com/finance/stocks/officerProfile?symbol=JKBK.BO&officerId=1501295http://www.reuters.com/finance/stocks/officerProfile?symbol=JKBK.BO&officerId=1414256http://www.reuters.com/finance/stocks/officerProfile?symbol=JKBK.BO&officerId=1501295
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,4, HIST7R+ 7' J=K BANK
The origin of 8a%%& and Kash%ir 4ank "i%ited; %ore co%%only referred to as 8tended Central laws of the state; 8change (N1$0 and 4o%bay 1tock $>change (41$0 as well=
Uni$e )%aracteri&tic& = Ser5ice&
• 8
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• 8 re)en&es are ro&ted thro&gh the 8
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• Other 1er)ices
T%ir" (art3 Ser5ice&
• #&t&al 3&nds
• Ins&rance 1er)ices A "ife < Non "ife
• Re%ittance 1er)ices
)a&% Management Ser5ice&
•
Real Ti%e Gross 1ettle%ent (RTG10
• National $lectronic 3&nd Transfer (N$3T0
,49 SW7T ANAL+SIS
Strengt%
*= Reso&rces and capabilities=
= 1trong brand na%e== Good rep&tation a%ong c&sto%ers=
+= Good '&ality sche%es=
-= "atest %achines and ad)anced technology=
Weakne&&
*= "ack of stress on research and de)elop%ent=
= "ack of inno)ation=
= "ack of co%%ercial sche%es=
7pportnitie&
*= rri)al of new technology=
= New %arket=
= 8
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,4/ MISSI7N AND *ISI7N 7' J=K BANK
“To catalyse econo%ic transfor%ation and capitalise on growth=” O&r )ision is to engender
and catalyse econo%ic transfor%ation of 8a%%& and Kash%ir and capitalise fro% the growth
ind&ced financial prosperity th&s engineered= 4ank aspires to %ake 8a%%& and Kash%ir the
%ost prospero&s state in the co&ntry; by helping create a new financial architect&re for the
8
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s a corporate process; the &ni'&eness and distinct c<&re of the 8a%%& Central CoA
operati)e 4ank is o&r e>perience specialisation in the field of agric<&ral credit and )ast
clientele base= Therefore; as a corporate %ission; o&r foc&s wo&ld be agric<&ral finance and
needs of the r&ral people= In light of abo)e; the corporate %ission wo&ld be to do&ble the
flow of gric<&re Credit d&ring the ne>t three years=
The organisational %ission wo&ld be to inc&lcate sense of belongingness by
bringing professionaliBation in tr&e sense to introd&ce and &pgrade technology based skill
with h&%an face and strengthen its reso&rce base by broadening its c&sto%er base=
,4: A)HIE*EMENTS
$%erging as topper; the 8tended by the banks operating in 8
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held at ITC #aratha in ndheri ($0 #&%bai that also %arked the la&nch of the fifth edition
of 6
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,41 7RGANIATI7NAL STRU)TURE 7' J=K BANK
21
Chairman & CEO
Executive Director
(Chief inancia!
Executive Director
(Chief O$eratin%
re'ient()u'*
re'ient(Com$*+ec*#
re'ient(.v*& a''et
re'ient(in*
re'ient(+trate%/ &)u' *+u *
+r*re'ient
re'ient(C-C#
umane'ourc
a &
e%u!ator -rea'ur/
+u$ervi'ion
& Contro!'
inancia!
+ervice'
Com$an/
+ecretar/
.vanc
e' &
De$o'it
' &
+trate%/
&
inance &
i')u'ine''
+u$$ort
-echno!o%/
&
De$artmen
De$artme
De$artme
De$artme
De$artme
De$artme
De$artme
De$artme
De$artme
De$artme
De$artme
De$artme
nt'
Concurrent
.uit
Creit
.uit
De$o'itor/
+ervice'
Di'triutio
n
Em$ane!m
ent Of
a!uer'
+ .uit
n'urance
)
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)HA(TER0III
22
.''etonitor
in% &
nform :ation
Cor$orat
e Creit
inancia!
nc!u'ion
icro
Creit &
riorit/
'ector
etai!
Creit
+ma!! &
eiu
m
De$o'ito
r/
+ervice'
Di'triuti
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.-
+itch
Ca!!
Centre
Connectivit
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Dataa'e
E
)anin%
inac!e
arare
nformatio
n
-echno!o%/
ana%eme
nt &
Car
''uin%
&
.c;uirin
%
Cor$orate
commun
ication
Data
inin%
inancia!
rouct'
acro
Economic
Cor$or
ate
De$o'it
etai!
De$o'it
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94. RE*IEW 7' LITERATURE
*A The research done by !ass C="=; !ike R=9=; “n o)er)iew of working capital
%anage%ent and corporate financing”;(*D.+0 describes that o)er the past +/ years %a?or
theoretical de)elop%ents ha)e occ&rred in the areas of longerAter% in)est%ent and
financial decision %aking= #any of these new concepts and the related techni'&es are
now being e%ployed s&ccessf&lly in ind&strial practice= 4y contrast; far less attention has
been paid to the area of shortAter% finance; in partic&lar that of working capital
%anage%ent= 1&ch neglect %ight be acceptable were working capital considerations of
relati)ely little i%portance to the fir%; b&t effecti)e working capital %anage%ent has a
cr&cial role to play in enhancing the profitability and growth of the fir%= Indeed;
e>perience shows that inade'&ate planning and control of working capital is one of the
%ore co%%on ca&ses of b&siness fail&re=
A The research done by 9errfeldt 4=; “9ow to 5nderstand Working Capital #anage%ent”
describes that“Cash is king”AAso say the %oney %anagers who share the responsibility of
r&nning this co&ntryFs b&sinesses= nd with banks de%anding %ore fro% their prospecti)e
borrowers; greater e%phasis has been placed on those acco&ntable for soAcalled working
capital %anage%ent= Working capital %anage%ent refers to the %anage%ent of c&rrent or
shortAter% assets and shortAter% liabilities= In essence; the p&rpose of that f&nction is to
%ake certain that the co%pany has eno&gh assets to operate its b&siness= 9ere are things
yo& sho&ld know abo&t working capital %anage%ent=
23
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A The research done by; 1a%ilogl& '4 an" 6e%irg&nes K4? FThe $ffect of Working Capital
#anage%ent on 3ir% !rofitabilityE $)idence fro% T&rkey” (//.0 describes that the
effect of working capital %anage%ent on fir% profitability= In accordance with this ai%;
to consider statistically significant relationships between fir% profitability and the
co%ponents of cash con)ersion cycle at length; a sa%ple consisting of Istanb&l 1tock
$>change (I1$0 listed %an&fact&ring fir%s for the period of *DD.A// has been analysed
&nder a %<iple regression %odel= $%pirical findings of the st&dy show that acco&nts
recei)ables period; in)entory period and le)erage affect fir% profitability negati)elyH
while growth (in sales0 affects fir% profitability positi)ely=
+A The research done by; pp&ha%i; Ran?ith 4 ; “The I%pact of 3ir%sF Capital $>pendit&re
on Working Capital #anage%entE n $%pirical 1t&dy across Ind&stries in Thailand” ;
International #anage%ent Re)iew;(//.0; The p&rpose of this research is to in)estigate
the i%pact of fir%sF capital e>pendit&re on their working capital %anage%ent= The a&thor
&sed the data colleted fro% listed co%panies in the Thailand 1tock $>change= The st&dy
&sed 1h&l%an and Co>Fs (*D.-0 Net "i'&idity 4alance and Working Capital Re'&ire%ent
as a pro>y for working capital %eas&re%ent and de)eloped %<iple regression %odels=
The e%pirical research fo&nd that fir%sF capital e>pendit&re has a significant i%pact on
working capital %anage%ent= The st&dy also fo&nd that the fir%sF operating cash flow;
which was recogniBed as a control )ariable; has a significant relationship with working
capital %anage%ent=
-A The research done by; 9ardcastle 8=; “Working Capital #anage%ent”;(//0 describes
that Working capital; so%eti%es called gross working capital; si%ply refers to the fir%Fs
total c&rrent assets (the shortAter% ones0; cash; %arketable sec&rities; acco&nts recei)able;
and in)entory= While longAter% financial analysis pri%arily concerns strategic planning;
working capital %anage%ent deals with dayAtoAday operations= 4y %aking s&re that
prod&ction lines do not stop d&e to lack of raw %aterials; that in)entories do not b&ild &p
beca&se prod&ction contin&es &nchanged when sales dip; that c&sto%ers pay on ti%e and
that eno&gh cash is on hand to %ake pay%ents when they are d&e= Ob)io&sly witho&t
good working capital %anage%ent; no fir% can be efficient and profitable=
24
http://scialert.net/asci/author.php?author=F.&last=Samilogluhttp://scialert.net/asci/author.php?author=K.&last=Demirguneshttp://scialert.net/asci/author.php?author=F.&last=Samilogluhttp://scialert.net/asci/author.php?author=K.&last=Demirgunes
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,A The research done by; Thachappilly G=; “Working Capital #anage%ent #anages 3low of
3&nds”;(//D0 describes that Working capital is the cash needed to carry on operations
d&ring the cash con)ersion cycle; i=e= the days fro% paying for raw %aterials to collecting
cash fro% c&sto%ers= Raw %aterials and operating s&pplies %&st be bo&ght and stored to
ens&re &ninterr&pted prod&ction= Wages; salaries; &tility charges and other incidentals
%&st be paid for con)erting the %aterials into finished prod&cts= C&sto%ers %&st be
allowed a credit period that is standard in the b&siness= Only at the end of this cycle does
cash flow in again=The research done by; 4eneda; NancyH @hang; 7ilei; “Working Capital
#anage%ent; Growth and !erfor%ance of New !&blic Co%panies”=
A The research done by; 6&bey R=;“Working Capital #anage%entAan $ffecti)e Tool for
Organisational 1&ccess” (//.0 describes that The working capital in a fir% generallyarises o&t of fo&r basic factors like sales )ol&%e;technological changes;seasonal ; cyclical
changes and policies of the fir%=The strenghth of the fir% is dependent on the working
capital as disc&ssed earlier b&t this working capital is inteslf dependent on the le)el of
sales )ol&%e of the fir%=The fir% re'&ires c&rrent assets to s&pport and %aintain
operational or f&nctional acti)ities=4y c&rrent assets we %ean the assets which can be
con)erted readily into cash say within a year s&ch as recei)ables;in)entories and li'&id
cash=If the le)el of sales is stable and towards growth the le)el of cash;recei)ables and
stock will also be on the high=
.A The research done by; Mc)lre B4? FWorking Capital Works” describes that Cash is the
lifeline of a co%pany= If this lifeline deteriorates; so does the co%panyFs ability to f&nd
operations; rein)est and %eet capital re'&ire%ents and pay%ents= 5nderstanding a
co%panyFs cash flow health is essential to %aking in)est%ent decisions= good way to
?&dge a co%panyFs cash flow prospects is to look at its working capital %anage%ent
(WC#0= Cash is king; especially at a ti%e when f&nd raising is harder than e)er= "etting itslip away is an o)ersight that in)estors sho&ld not forgi)e= nalyBing a co%panyFs
working capital can pro)ide e>cellent insight into how well a co%pany handles its cash;
and whether it is likely to ha)e any on hand to f&nd growth and contrib&te to shareholder
)al&e=
DA The research done by; Gass 6=; “9ow To I%pro)e Working Capital #anage%ent” (//,0
Cash is the lifeblood of b&siness is an often repeated %a>i% a%ongst financial
%anagers= Working capital %anage%ent refers to the %anage%ent of c&rrent or shortAter%
assets and shortAter% liabilities= Co%ponents of shortAter% assets incl&de in)entories;
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loans and ad)ances; debtors; in)est%ents and cash and bank balances= 1hortAter%
liabilities incl&de creditors; trade ad)ances; borrowings and pro)isions= The %a?or
e%phasis is; howe)er; on shortAter% assets; since shortAter% liabilities arise in the conte>t
of shortAter% assets= It is i%portant that co%panies %ini%iBe risk by pr&dent working
capital %anage%ent=
94, W7RKING )A(ITAL MANAGEMENT
$)ery b&siness needs finance for two p&rposes for its establish%ent and to carry o&t its day
to day operations= "ong ter% f&nds are re'&ired to create prod&ction facilities thro&gh p&rchase of fi>ed assets s&ch as plant and %achinery; land < b&ilding; f&rnit&re etc= f&nds
are also needed for short ter% p&rposes E for p&rchase of raw %aterial ; pay%ent of wages
and other day to day e>penses etc= These f&nds are known as working capital= In si%ple
ter%s working capital refers to that part of fir%2s capital which is re'&ired for financing short
ter% or c&rrent assets s&ch as s&ch as cash; %arketable sec&rities; debtors and in)entories
etc= 3&nds th&s in)ested in c&rrent assets keep re)ol)ing fast and are being constantly
con)erted into cash and these cash flows o&t again in e>change for other assets= 9ence it is
also known as re)ol)ing or circ&lating capital or short ter% capital=
KINDS 7' W7RKING )A(ITAL
Working capital %ay be classified into two waysE
• On the basis of concept=
• On the basis of ti%e=
On the basis of concept; working capital is classified as Gross Working capital and Net
Working capital= On the basis of ti%e; working capital is classified as per%anent or fi>ed
working capital and te%porary and )ariable working capital=
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• Gro&& orkingE It represents the a%o&nt of f&nds in)ested in c&rrent assets= Th&s the
Gross working capital is the capital in)ested in the total c&rrent assets of the
enterprise= C&rrent assets are those assets which in the ordinary co&rse of b&siness
can be con)erted into cash within a short period of nor%ally one acco&nting year=
$>a%ples of c&rrent assets areE
*= Cash in hand and bank balance== 4ills recei)ables
= 1&ndry debtors(less pro)ision for bad debts0=
+= 1hort ter% loans and ad)ances=
-= In)entories of stock=
,= Te%porary in)est%ent in s&rpl&s goods=
= !repaid e>penses=
.= ccr&ed inco%es=
Net orking capital2 It is the e>cess of c&rrent assets o)er c&rrent liabilities= Net working
capital %ay positi)e or negati)e= When the c&rrent assets e>ceed the c&rrent liabilities; the
working capital is positi)e and the negati)e working capital res<s when the c&rrent
liabilities are then the c&rrent assets= C&rrent liabilities are those liabilities which are intended
to paid in the ordinary co&rse of b&siness within a short period of nor%ally one acco&nting
year o&t of the c&rrent assets or the inco%e of the b&siness=
$>a%ples of c&rrent liabilities areE
D= 4ills payables
*/= 1&ndry creditors=
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**= ccr&ed or o&tstanding e>penses=
*= 6i)idend payable=
*= 4ank o)erdraft=
*+= !ro)ision for ta>ation; if it does not a%o&nt to appropriate to profits=
Net working capital J c&rrent assets c&rrent liabilities=
(ermanent orking capitalE It is the %ini%&% a%o&nt which is re'&ired to ens&re effecti)e
&tilisation of fi>ed facilities and for %aintaining the circ&lation of c&rrent assets= There is
always a %ini%&% le)el of c&rrent assets which is contin&o&sly re'&ired by the enterprise to
carry o&t its nor%al b&siness operations= 3or e>a%ple; e)ery fir% has to %aintain a %ini%&%
le)el of raw %aterial; work in progress; finished goods and cash balance= The %ini%&% le)el
of c&rrent assets is called fi>ed or per%anent working capital as this part of working capital is
per%anently blocked in c&rrent assets= s the b&siness grows; the re'&ire%ent of per%anent
working capital also increases de to the increase in c&rrent assets= The per%anent working
capital can f&rther be classified as reg&lar working capital and reser)e working capital=
Temporar3 or *aria!le orking capital2 it is that a%o&nt of working capital which is
re'&ired to %eet the seasonal de%and and so%e special e>igencies= :ariable working capital
can f&rther be classified as seasonal working capital and special working capital= #ost of the
enterprise ha)e to pro)ide additional working capital to %eet seasonal and special needs= Thecapital re'&ire%ent to %eet the seasonal needs of the enterprise is called seasonal working
capital= 1pecial working capital is that part o working capital which is re'&ired to %eet the
special e>igencies s&ch as la&nching of e>tensi)e %arketing ca%paigns for cond&cting
research=
IM(7RTAN)E 7' W7RKING )A(ITAL
The working capital is the lifeAblood and ner)e centre of a b&siness fir%= The s&fficiency of
working capital assists in raising credit standing of a b&siness beca&se of better ter%s on
goods bo&ght; lesser cost of %an&fact&ring d&e to the acceptance of cash disco&nts; fa)orable
rates of interest etc=
No b&siness can r&n effecti)ely witho&t a s&fficient '&antity of working capital= It is cr&cial
to retain right le)el of working capital= 3inance %anager is re'&ired to decide the a%o&nt of
acc&rate working capital=
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b&siness enterprise with a%ple working capital is always in a position to a)ail ad)antages
of any fa)orable opport&nity either to b&y raw %aterials or to i%ple%ent a special order or to
wait for enhanced %arket stat&s=
Cash is needed to carry o&t dayAtoAday workings and b&y in)entories etc= The shortage of
cash %ay badly affect the position of a b&siness concern= The recei)ables %anage%ent is
related to the )ol&%e of prod&ction and sales= 3or escalating sales there %ay be a need to
offer additional credit facilities= While sales %ay ascend b&t the danger of bad debts and cost
in)ol)ed in it %ay ha)e to be considered against the benefits=
In)entory control is also a significant constit&ent in working capital %anage%ent= The
deficiency of in)entory %ay ca&se work stoppage= On the other hand; s&rpl&s in)entory %ayres< in blocking of %oney in stocks=
The o)erall s&ccess of the co%pany depends &pon its working capital position= 1o; it sho&ld
be handled properly beca&se it shows the efficiency and financial strength of co%pany=
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)HA(TER0I*
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/4. 7BJE)TI*ES 7' THE STUD+
To analyBe the trend in )ario&s co%ponents of working capital=
$)al&ation of working capital %anage%ent=
To st&dy the operating cycle of 8
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*= The analysis of this st&dy is %ainly based on secondary data=
= The st&dy co)ers for +- 671=
= The financial state%ents are generally based on historical or original cost= The c&rrent
econo%ical condition is ignored=
/4, RESEAR)H METH7D7L7G+
In order to learn and obser)e the practical applicability and feasibility of )ario&s theories and
concepts; the following so&rces are being &sedE
(rimar3 Sorce& o# In#ormation
6isc&ssions with the pro?ect g&ide and staff %e%bers=
6isc&ssions with )ario&s other depart%ent head=
Secon"ar3 Sorce& o# In#ormation
R4I g&idelines reg&lating the acti)ities of the banks
4anks Credit policy and related circ&lars and g&idelines iss&ed by the bank=
Research papers; power point presentations and !63 files prepared by the bank and
its related officials=
1t&dy of proposals and %an&als
Website of 8a%%& and Kash%ir bank and other net so&rces
Anal3&i& o# "ata
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The infor%ation gathered are the policies and practices regarding %anage%ent of the
working capital= nalysis is done in ter%s of the theoretical concepts= nalysis of the
working capital perfor%ance is done with the help of percentages by showing graphs;
ratios and operating cycles etc=
)7M(7SITI7N AND LE*EL 7' )URRENT ASSETS
The le)el of c&rrent assets is %eas&red with the help of ratio i=e=; c&rrent assets as a
percentage of total assets=
IN:$NTOR7
(Rs in M2///220
7$R1 IN:$NTOR7
(IN R10
TOT"
11$T1
IN:$NTOR7
IN G$
/* -D*-. *-.*++/+ =-
/*+ +,+,-D, *,-+/, .=/D
/*- +-,D, *.*-,- =/
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Inventory of total assets
2013
2014
2015
2013 2014 2015
0
5
10
15
20
25
30
35
Inventory in %age
nventor/ in Ba%e
ANAL+SIS
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The percentage of in)entory is clearly depicted in the table fro% the year /* to
/*-= 3ro% /* to /*+ the percentage of the total in)entory to total assets has increased
fro% = to .=/D and this has been f&rther increased to /=/=
INTER(RETATI7N20
The le)el of in)entory is contin&o&sly increasing in the 8
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5*56
6*78
8*84
DEBTORS IN %AGE
2013
2014
2015
2013 2014 2015
02000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
DEBTORS TO TOTAL SSETS
DE)-O+ -O -O-. ++E-+
ANAL+SIS20
3ro% the abo)e table it is )ery e)ident that the debtors are increasing fro%
/* to /*-= In /* debtors are -=-. and in /*+ it is ,=. and in /*+ age of debtors
to total assets has increased to .=.+=
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INTRE(RETATI7N20
In the year /*-; debtors ha)e increased fro% **-,+ tho&sand to **+* tho&sand
indicating an increase fro% ,=. to .=.+ of total assets= 1&ch increase has been gained by
bank d&e to increase in sales followed by e>pansion acti)ities in spinning; wea)ing and
processing &nits respecti)ely=
)ASH BALAN)E
7$R1 C19 TOT"
11$T1
C19 4"NC$
G$
/* *+-+* *-.*++/+ *=+
/*+ **,*- *,-+/, =**
/*- **D/ *.*-,- */=D-
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13*43
7*11
10*95
CASH BALANCE %AGE
2013
2014
2015
2013 2014 2015
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
20000000
C.+ )..CE -O-. .++E-+
L7ANS AND AD*AN)ES
7$R "ON1 N6
6:NC$1
TOT"
11$T1
"ON1 N6
6:NC$1 G$
/* +/;+=, .;+=* /=
/*+ -,,=D, */;+*.=+ D=+
/*- /;D/=*D *,,=D ++=-
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2013 22B
2014 31B
2015 47B
LOANS AND ADVANCES %AGE
2013 2014 20150
5000
10000
15000
20000
25000
30000
35000
40000
45000
LOANS AND ADVANCES TO TOTAL ASSETS
O.+ .D .D.CE+
-O-. .++E-+
ANAL+SIS
3ro% the abo)e table it is clear that the loans and ad)ances are contin&o&sly decreasing b&t
consec&ti)ely its total assets are increasing= It is d&e to the reason that bank is &sing
conser)ati)e %ode of iss&ing loans and ad)ances and is reco)ery the loans and ad)ances by
the effecti)e %eans=
INTER(RETATI7N
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3ro% the table since loans and ad)ance to total assets is consec&ti)ely increasing fro% /=
in /*; D=+ in /*+ and +=- in /*-; it %eans bank2s are opti%ally &sing their
assets to gain the %a>i%&% profits and is relati)ely trying to attracting the %ore c&sto%ers=
)7M(7SITI7N AND LE*EL 7' )URRENT LIABILITIES20
!RTIC5"R1 /* /*+ /*-
C&rrent liabilities %t= %t= %t=
1&ndry creditors /,* *=D- +,D,/ =/, .*. =
1ec&rity deposits D =/*- +*,/ =/ +DDD =+
Int= accr&ed -D, =/+- /D =/*./ +, =//+-
d)= 3ro%
c&sto%ers
*.. =*+ -****+ +=,// **,D =*-
1tat liabilities D/*-- =.- +,*D =,-. -/ =,-
Other liabilities *++-+ =/ -DD* =* ++. =
5nclai%ed
di)idend
*++-+ =/D -D,D* =* ++. =
!ro)isions +,.. =++ +,.. =+*- +,.. =-*-
Total :;/1;1 :4:99 .9>;-., .,49/ ;/@9.; >49,>
Total lia!ilitie& .-:1@-,9 ..9,1@,9 >-;,,.1
ANAL+SIS20
The abo)e table shows the co%position and le)el of c&rrent liabilities= The position of
creditors of 8
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)7M(UTATI7N 7' GR7SS W7RKING )A(ITAL20
(ARTI)ULARS ,-.9 ,-./ ,-.:
In)entory -D*-. +,+,-D, -+-,D,
(P0 s&ndry debtors .D,,/ **-,+ **+*=
(P0 cash balance *+-+* **,*- *D/
(P0 loans and
ad)ances
*+,+D/ */., *.*+DD/
GR7SS
W7RKING
)A(ITAL
;-19;/> ;.:/:/; .->.@:;@
INTER(RETATI7N20
3ro% the table it is e)ident that the gross working capital is constantly
increasing in 8
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to ,//,, in /*+ and again increased to .*D* in /*-= The reason for this increase is
the bank2s inter)ention in different financial fields (%&t&al f&nds; ins&rance; etc0 and the
profo&nd c&sto%er base infraAstr&ct&re=
7(ERATING )+)LE AND )ASH )+)LE
ll b&siness fir%s ai% at %a>i%iBing the wealth of the shareholder for which they need to
earn s&fficient ret&rn on their operations= To earn s&fficient profits they need to do eno&gh
sales; which f&rther necessitates in)est%ent in c&rrent assets like raw %ateriel etc= There is
always an operating cycle in)ol)ed in the con)ersion of sales into cash=
The d&ration of ti%e re'&ired to co%plete the following se'&ences of e)ents in case of a
%an&fact&ring fir% is called the operating cycleEA
.4 )on5er&ion o# ca&% into ra material
,4 )on5er&ion o# ra material into WI(
94 )on5er&ion o# WI( into 'G
/4 )on5er&ion o# 'G into "e!tor& an" !ill& recei5a!le t%rog% &ale&
:4 )on5er&ion o# "e!tor& an" !ill& recei5a!le into ca&%
$ach co%ponent of working capital na%ely in)entory; recei)ables and payables has
two di%ensions ti%e and %oney= When it co%es to %anaging working capital A Time I&
Mone3= Therefore; if cash is tight; consider other ways of financing capital in)est%ent A
loans; e'&ity; leasing etc= 1i%ilarly; if yo& pay di)idends or increase drawings; these are cash
o&tflows re%o)e li'&idity fro% the b&siness=
42
I# 3o 4444444 T%en 444444
• )ollect recei5a!le& 6"e!tor&8 #a&ter
+o relea&e ca&% #rom t%e c3cle
• )ollect recei5a!le& 6"e!tor&8 &loer
+or recei5a!le& &oak p ca&%
• Get !etter cre"it #rom &pplier&
+o increa&e 3or ca&% re&orce&
• S%i#t in5entor3 6&tock&8 #a&ter
+o #ree p ca&%
• Mo5e in5entor3 6&tock&8 &loer
+o con&me more ca&%
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7perating )3cle 7# Non Man#actring 'irm& 7perating )3cle 7# Ser5ice An"
'inancial 'irm&
Operating cycle of nonA%an&fact&ring fir% like the wholesaler and retail incl&des con)ersion
of cash into stock of finished goods; stock of finished goods into debtors and debtors into
cash= lso the operating cycle of financial and ser)ice fir%s in)ol)es con)ersion of cash into
debtors and debtors into cash=
T%& e can &a3 t%at t%e time t%at elap&e& !eteen t%e prc%a&e o# ra material an"
collection o# ca&% #or &ale& i& calle" operating c3cle %erea& time lengt% !eteen t%e
pa3ment #or ra material prc%a&e& an" t%e collection o# ca&% #or &ale& i& re#erre" to a&
ca&% c3cle4 The operating cycle is the s&% of the in)entory period and the acco&nts
recei)ables period; whereas the cash cycle is e'&al to the operating cycle less the acco&nts
payable period=
43
DE)-O+
DE)-O+C.+C.+
+-OC= O
+ED
>OOD+
C.+ ECD*+-OC= .E+
.,C+ EC* EODODE .CED * EOD
.,C+ a/*
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DEBT7RS )7LLE)TI7N (ERI7D20
,-.9 ,-./ ,-.:
SALES D/-, .D*. *//*,-
SALES (ER DA+ -*- ++ .,,
B77K DEBTS .D,,/ **-,+ **+*
D)( - 671 +, 671 + 671
ANAL+SIS2
In the year /* the 6C! is - days which increases to +- days in /*+= In /*+
there has been slight increase in 6C! and it rises to + days=
INTER(RETATI7NE
In the year /* bank is able to %aintain its satisfactory debtor2s
collection period b&t in the year /*+ and /*-; debtor2s collection period has been increased
to +, days and f&rther to + days in /*-= This shows the bank is not able to %aintain its debt
collection policy= 9owe)er bank en?oys its good debtor stat&s=
44
C.+ * O .-E.+ EC* OCE
OE.-> CACE
C.+ CACE
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)HA(TER0*
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'INAN)IAL ANAL+SIS
3inancial analysis is the process of identifying the financial strength < weakness of
the fir% by establishing relationship between the ite%s of the balance sheet < profit < loss
acco&nt= The p&rpose of financial analysis is to diagnose the infor%ation contained in
financial state%ents so as to ?&dge the profitability and financial so&ndness of the fir%=
3inancial state%ents in)ol)eE
• 1t&dy of financial state%ents
• nalysis of data gi)en in the financial state%ents=
• Interpretation of financial state%ents=
3inancial analysis of 8
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)7M(ARATI*E BALAN)E SHEET
'or t%e perio" o# ,-./0,-.:
(ARTI)ULARS ,-./ ,-.: )HANGE )HANGE
LIABILITIES
1hare capital +.=+D +.=+D/ AA AA
Reser)e ;-+= ;D,*=D .=, *-=-
"ong ter%
"iabilities
--=+ *+=D- *,=,* D=++
C&rrent
liabilities
*;/,D=, *;*D.=D *D= *=/-
T7TAL /,/:4., />,/49; 1@>4,1 .14-.
ASSETS
C&rrent assets --=+ *+=D- *,=,* D=++
3i>ed assets -*=D+ -,*=- +=+* .=.
In)est%ent */;,= *;D-,=- *D=*D D=D.
#isc= e>penses */;/./=D, *;/D*=-* /*-=-- *D=D
T7TAL ,.;;@4:@ ,@9,/4-1 :/914/> ,/49;
RATI7 ANAL+SIS2
ratio is the si%ple arith%etic e>pression of the relationship of one
n&%ber to another= Ratio analysis is a techni'&e of analysis and interpretation of financial
state%ents= It is the process of establishing and interpreting )ario&s ratios for the helping in
%aking certain decisions=
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3ollowing ratios are calc&lated for the /*+A/*-=
"i'&idity ratiosE
These ratios are &sed to %eas&re the fir%2s ability to %eet its short ter% obligations=
"IL5I6IT7 RTIO1E
*= C&rrent ratio J c&rrent assets Q c&rrent liabilities=
!RTIC5"R1 /* /*+ /*-
TOT" C5RR$NT
11$T1
+.,=+ --=+ *+=D-
TOT" C5RR$NT
"I4"ITI$1
*;*/=/ *;/,D=, *;*D.=D
C5RR$NT RTIO /=++ E * /=- E * /=-D E *
N"71I1E
The c&rrent ratio is consec&ti)ely increasing fro% the year /* to /*-= In /*
it was /=++ E* ; in /*+ it went &p to /=- E * and in /*- it reached to /=-D E *=
INT$R!R$TTIONE
s a r&le E* ratio is referred to as banker2s th&%b r&le= 1ince the c&rrent ratio of the fir%
for the past years is %ore than E*; therefore the fir% has been in good li'&id position= 1o;
this i%plies that the f&nds of the co%pany since last years ha)e been decreased to pay off
liabilities=
"IL5I6 11$T1 RTIO J "IL5I6 11$T1 Q C5RR$NT "I4I"ITI$1=
!RTIC5"R1 /* /*+ /*-
Total li'&id assets +*/ /.+,-+ +/.
Total c&rrent assets -.+,.D *D./* .+*.
"i'&id Ratio =/E* =/E* +=/E*
N"71I1E
In the year /* the li'&idity ratio is =/E* which has decreased in the /*+=
nd in the year /*- the ratio is increased to +=/E*
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INT$R!R$TTIONE
s a con)ention ratio of *E* is considered satisfactory; hence
co%pany is en?oying satisfactory li'&idity position= In the year /*+ ratio has been decreased
to =/E* fro% =/E*= This is d&e to the decreasing cash balance and increasing debtors
!RTIC5"R1 /* /*+ /*-
1ales D/-, .D*. *//*,-
OC ,-, D++**/ D+D*/
7R ;/49- >-49: >/41-
O!$RTING RTIO1 J Operating cost Q Net sales*//
N"71I1E
3ro% the abo)e table it shows that in /* the OR was .+=/ and in
/*+ OR has been increased to D/=-= in year /*- it reached to D+=,/
INT$R!R$TTIONE
s the abo)e table shows that the operating cost of the bank increased o)er
three years; this is %ainly d&e to increasing sales of sche%es and ter% loans=
(ro#ita!ilit3 ratio20
Gross profit ratioEA Gross profit Q net sales *//
(articlar& ,-.9 ,-./ ,-.:
1ales D/-, .D*. *//*,-
(A0COG1 ,D+. /,-., .-.D*+*
G! *D+ **-, *++,+G(R ,94:- .>4:. ./49;
N"71I1EA
3ro% the abo)e table it shows that the G! ratio was =-/ in /* and it
decreases to *D=-* in /*+= In /*- G!R has been f&rther decreased to *+=.=
Net profit ratioJ Net profit Q net sales *//
(articlar& ,-.9 ,-./ ,-.:
1"$1 D/-, .D*. *//*,-
N! ,., ,,+ +.-
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N(R . .4-9 .4-/
N"71I1EA
In the year /* the N! ratio of the co%pany is * b&t in the year /*+ the
co%pany2s N! has increased i%%ensely to *=/ and in /*- it reached to *=/+
INT$R!R$TTIONEA
The co%pany2s increasing N! ratio is d&e to its strong s&pport and
easy pro)idence of ter% loans to the different class of c&sto%ers=
TREND ANAL+SIS20
The financial state%ents %ay be analysed by co%p&ting trend series
infor%ation= The %ethod deter%ines the direction &pward and downward and in)ol)es the
co%p&tation of the percentage relationship that each state%ent ite% bears to the sa%e in the
base year= The infor%ation for the n&%ber of years has been taken &p and one year generally
*st year is taken as the base year= The fig&res of the base year ha)e been taken as *// and
trend ratios for the other years are calc&lated on the basis of the base year= The analysis is
able to see the trend of fig&res; whether &pward or downward=
SALES TREND
+EARS SALES IN RS TREND IN AGE
/* D/D/*, *//
/*+ ...- D
/*- *//,.+D **/=
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)HA(TER0*I
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14. RE)7MMENDATI7NS AND SUGGESTI7NS
The following are the reco%%endations and s&ggestions for the efficient working of
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14 , )7N)LUSI7N
#ost of the banking co%panies %ake s&bstantial in)est%ents in c&rrent assets so proper
%anage%ent of working capital in a large concern ass&%es i%portance as it reflects the so&nd
financial health of the corporation= chie)ing b&dgeted growth rate and e>celling past
perfor%ance n sales t&rno)er do not necessarily indicate the proper %anage%ent of working
capital as e)en a highly working capital as e)en a highly profitable co%pany %ay be ha)ing a
poor cash position= thoro&gh analysis of the working capital position; drawing of
appropriate action plans for i%pro)e%ent; thoro&gh re)a%ping of e>isting syste%=
3ro% the st&dy of working capital %anage%ent of 8cess of opening stock in
/*- and bank try to sell to the %a>i%&%=
• In the year /*- debtors ha)e been increased fro% **-,+ tho&sands to **+*
tho&sands indicating an increase fro% ,=. to .=.+ of total assets; s&ch increase
has been gained by bank d&e to increase in sales followed by e>pansion acti)ities in
%&t&al f&nds; ter% loans; etc=
• Net working capital is the e>cess of c&rrent assets o)er the c&rrent liabilities= It
indicates the financial strength of the co%pany= In /* net working capital of the
bank decreased beca&se of increase in the c&rrent liabilities of the bank= 4&t in year
/*- the net working capital of the bank decreased d&e to s&bstantial decrease in the
in)entory of the bank which res<ed in decrease in the o)erall c&rrent assets of the
bank=
Balance Sheet of Jammu and Kashmir Bank ------------------- in Rs. Cr. -------------------
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Mar '15 Mar '14 Mar '13 Mar '1 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
Ca!ital and "ia#ilities$
Total Share Capital 48.49 48.49 48.49 48.49 48.49
Equity Share Capital 48.49 48.49 48.49 48.49 48.49
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preerence Share Capital 0.00 0.00 0.00 0.00 0.00
!eser"es #$0#1.%# %$#&%.12 4$81#.20 4$044.#9 '$4'0.19
%et &orth (11).)5 5(*3.1 4(+4., 4(),3.1+ 3(4*+.+
(eposits #%$&%#.1
9 #9$''%.8# #4$220.#2 %'$'4#.90 44$#&%.94
)orro*in+s 2$''9.#& 1$%.00 1$0&%.00 1$240.9# 1$104.#%
otal e#t+(),5.+
*1(1)).+ 5(,5. 54(5+*.+ 45(*+).5,
,ther -iailities / Pro"isions 1$8&9.%4 1$&9%.2% 1$%8'.00 1$%88.18 1$248.88
otal "ia#ilities*()+5.4
5*+(1,.* *1(*43.31 )(,. 5)(5)+.15
Mar '15 Mar '14 Mar '13 Mar '1 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
/ssets
Cash / )alances *ith !) 2$'&'.0# '$04%.%9 2$#9%.1% 2$&8'.#% 2$9&4.9#
)alance *ith )ans$ Money at
Call 1$'#0.&1 1$1#8.'1 2$&09.18 1$#&0.21 %&'.8%
/d0ances44(5+5.+
4(3+4.) 3,()).41 33()**.4 (1,3.4
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n0estments5(14.3
)(1,5.)* 5(*41.)* 1(4.3 1,(,5.**
ross )loc #%4.&% %0#.%2 44'.%0 41%.09 '91.#4
!e"aluation !eser"es 0.00 0.00 0.00 0.00 0.00
Accumulate3 (epreciation 0.00 0.00 0.00 0.00 0.00
%et Block 54.*5 5).5 443.5) 415.), 3,1.4
Capital or n Pro+ress '4.1# 2&.29 12.#8 %.18 2.1'
,ther Assets 1$9%2.## 1$292.'% 941.'' #9'.'4 #.1&
otal /ssets*()+5.4
*+(1,.*3 *1(*43.3 )(,.1 5)(5)+.1
Contin+ent -iailities 22$8&0.'
' 1&$'.#1 ''$1&8.&9 1%$98#.41 2#$9&9.'4
)ills or collection 0.00 0.00 0.00 0.00 0.00
)oo 5alue 6!s7 12#.04 1$180.#& 1$00'.49 844.'4 &1&.%8
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amm an!
"as#mir
Ban$
2re0ious ears
Standalone 2rofit "oss
account------------------- in Rs. Cr. -------------------
Mar '15 Mar '14 Mar '13 Mar '1 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
ncome
nterest Earne3 &$0#1.1' #$&.00 #$1'#.80 4$8'%.%8 '$&1'.1'
,ther ncome %9'.9& '90.2# 48'.&' ''4.12 '#4.
otal ncome *(55.1) *(15*. ().53 5(1,.*) 4()**.+,
67!enditure
nterest epen3e3 4$410.22 4$082.%2 '$820. 2$99&.22 2$1#9.4&
Employee Cost 894.0' &4'.91 #%2.2# %21.41 %2'.#1
Sellin+$ A3min / Misc Epenses 1$&4&.&% 1$0&0.%2 1$042.#8 80'.8# &'1.#8
(epreciation 94.%0 &&.8# 49.&' 4'.9% '&.9'
Preoperati"e Ep Capitalise3 0.00 0.00 0.00 0.00 0.00
,peratin+ Epenses 1$409.0% 1$1&%.00 989.01 802.14 &%8.9'
Pro"isions / Contin+encies 1$'2&.2' &1&.29 &%%.## %#&.08 %'4.29
otal 67!enses *(14.5) 5(,*4.+1 5(55.43 4(3.44 3(4.,
Mar '15 Mar '14 Mar '13 Mar '1 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
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%et 2rofit for the ear 5)+.) 1(1+.4* 1()55.1) +)3.5 15.)
Etraor3inary tems 0.00 0.00 0.00 0.00 0.00
Proit rou+ht or*ar3 0.00 0.00 0.00 0.00 0.00
otal 5)+.) 1(1+.4* 1()55.1) +)3.5 15.)
Preerence (i"i3en3 0.00 0.00 0.00 0.00 0.00
Equity (i"i3en3 101.80 242.'9 242.'9 1#2.40 12#.04
Corporate (i"i3en3 Ta 20.'% 41.19 41.19 2#.'# 20.94
2er share data 8annualised9
6arnin: 2er Share 8Rs9 1).4, 43., 1*.5 15., 1.,)
Equity (i"i3en3 67 210.00 %00.00 %00.00 ''%.00 2#0.00
)oo 5alue 6!s7 12#.04 1$180.#& 1$00'.49 844.'4 &1&.%8
/!!ro!riations
Transer to Statutory !eser"es '8#.44 898.89 &&1.%2 #14.49 4#8.22
Transer to ,ther !eser"es 0.01 0.00 0.00 0.00 0.00
Propose3 (i"i3en3:Transer to
o"t 122.1% 28'.%8 28'.%8 188. 14#.98
)alance c: to )alance Sheet 0.00 0.00 0.00 0.00 0.00
otal 5)+.) 1(1+.4* 1()55.1) +)3.5 15.)
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RE'EREN)E
B77KS
K9N; #=7= 8IN; !=K; 3inancial %anage%ent; TT #CGRW 9I"" !54"I19$R1; IQe;
////
1hashi k g&pta; Neeti g&pta; 3inancial %anage%ent; Kalyani p&blishers Q lyall bk depot /*
#ir Geelani and fsal khan financial o&tlook; ##T !54"I19$R1=
1howkat Rah and bd&l Rahi%; banking; ##T !54"I19$R1=
)7M(AN+ ANNUAL RE(7RTS
• 4alance sheet
• !rofit and "oss cco&nt
• Notes and cco&nts=
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