coperative bank1

7/29/2019 Coperative Bank1

1/64

1


2/64

2


3/64

Profile of the Organisation

Mission:- Promotion and sustenance of economic interest & providing easy finance, cost

effective and quality banking services to customer

Punjab Cooperatives resolve for Greater self-reliance, Administrative efficiency and

structural reforms.

Values & Principles:-

"Cooperatives" A cooperative is an system voluntarily to meet

their common economic, social and cultural needs and aspirations through a jointly-owned

and democratically controlled enterprise.

Principles

Voluntary and open membership

Cooperatives and voluntary organisation, open to all persons able to use their services and

willing to accept the responsibilities of membership, without social , racial , political and

religious discrimination

Democratic member Control

Cooperatives are democratic organizations controlled by their members , who actively

participate in setting their policies and making decisions . Men and women serving as

elected representatives are accountable to the membership

3


4/64

Members' Economic Participation

Members contribute equitably to, and democratically control, the capital of their cooperative.

At least partially that capital is usually the common property of the cooperatives. Members

usually receive limited compensation, if any, on Capital Subscribed as a condition of

membership. Members allocate surpluses for any or all of the following purposes

1) Developing their cooperatives possibly by setting up reserves, part of which at

least would be indivisible

2) Benefiting the members in proportion to their transaction with the cooperative

and supporting other activities approved by the membership

Autonomy and Independence:

Cooperatives are autonomous, self-help organizations controlled by their members . If

they enter into agreements with other organizations, including governments, or

raise capital from external sources, they do so on terms that ensure democratic

control by their members and maintain their cooperatives autonomy.

Education, Training and Information

Cooperatives provide Education and Training for their members, Managers and employees

so they can contribute effectively to the development of their cooperatives.

Cooperation among Cooperatives

Cooperatives serve their members most effectively and strengthen the cooperatives

movement by working together through Local, National, Regional and International

structures

4


5/64

Concern for Community

Cooperatives work for the sustainable development of their communities through policies

approved by their members. There motto is to make the progress line go higher and

higher.

History Of \Punjab State Cooperative Bank

The Punjab State Cooperative Bank was established on 31st August, 1949 at Shimla vide

registration No. 720 has a principle financing institution of the cooperative movement in

Punjab. In 1951 its Head Office was shifted to Jalandhar from where it moved in 1963 to its

present building at Chandigarh. In the cooperative Banking structure, the position of the

Punjab State Cooperative Bank is extremely important as the whole credit system revolves

around it. It has 18 branches and 3 extension counter in Chandigarh. There are 19 District

Central Cooperative Banks having 813 branches all over Punjab, mostly in rural areas of the

State. One new Central Cooperative Bank and 110 new bank branches have been opened

during the last four years, 1997-2001.

Experience a whole new Era of Banking Technology where banking is made easier and

convenient for our customers. The Punjab State Cooperative Bank provides you with the

New Generation banking architecture to progress in the future in an evolutionary manner.

Punjab State Cooperative Bank (PSCB) is customer centric. Therefore it is designed to

encompass all the constituents of the banking space- the management of the bank, the

employees of the bank and the customers of the bank.110 new branches of Cooperative

Banks have been opened during the last four years as against 35 opened during 1992-1997.

At present, 822 branches of Cooperative Banks are working. The Branch opening policy of

the Cooperative Banks is being revamped. It is proposed to consolidate and strengthen

existing branches and open new branches only in those areas where it is economically viable

to do so.

With a view to provide uniform identity to all Central Cooperative Banks and their branches,

sign boards of all the branches, their building designs i.e. exterior as well as interior, have

5
http://pbcooperatives.gov.in/DCCB.htm#local%20brancheshttp://pbcooperatives.gov.in/DCCB.htm#dccbshttp://pbcooperatives.gov.in/DCCB.htm#dccbshttp://pbcooperatives.gov.in/DCCB.htm#local%20brancheshttp://pbcooperatives.gov.in/DCCB.htm#dccbshttp://pbcooperatives.gov.in/DCCB.htm#dccbs


6/64

been designed on the same pattern. The branches of the bank are being renovated and de-

signed to update and modernize their facilities.

74 branches have been shifted to new suitable places up to 31.1.2001 and 3 branches have

constructed their own buildings. Telephone facility has been provided in 623

branches. The Punjab State Cooperative Bank has constructed a new building at

Sector 34 at a cost of Rs. 8.96 crore. This building is spread over 13 bays and has 5

storey. It is centrally air-conditioned. All the modern amenities have been provided

in the building. Cooperatives have played a vital role in improving the economic

conditions of farmers and accelerating the pace of development in Punjab

Development through Cooperatives was a dream cherished by freedom fighters of

India ever since Independence. Cooperative principles ensure harmonious

development, through democratic management and governance.

Cooperatives have brought both the services and resources at the doorsteps of villagers in

Punjab. These have been enthusiastically serving the people of Punjab in area such as

agriculture, housing, spinning, sugar production, weaving and dairy etc. The performance of

Cooperative Movement in Punjab, is very impressive. Cooperatives constitute the major

source of institutional credit for agriculture. Cooperatives are playing a pivotal role in socio-

economic development of the State. These are key instruments of the State to develop and

sustain its rural economy, which is primarily agrarian.

6


7/64

Branches of Cooperative Bank in Punjab

S.No.NAME OF THE CENTRAL

COOPERATIVE BANKLOCATION PHONE NO.

1.AMRITSAR CENTRAL

COOPERATIVE BANKAMRITSAR

0183-2543351,2543076-

5099101

2.BHATINDA CENTRALCOOPERATIVE BANK

BHATINDA 0164-5004336,2212104

3. FARIDKOT CENTRALCOOPEATIVE BANK

FARIDKOT 01639-250144,500527

4.FAZILKA CENTRAL

COOPERATIVE BANKFAZILKA 01634-222245,500199

5.FEROZEPUR CENTRAL

COOPERATIVE BANKFEROZEPUR 01632-227082,227315

6.GURDASPUR CENTRAL

COOPERATIVE BANKGURDASPUR 01874-246239,500146

7.HOSHIARPUR CENTRALCOOPERATIVE BANK

HOSHIARPUR 01882-224100,502243

8.JALANDHAR CENTRAL

COOPERATIVE BANKJALANDHAR 0181-2224571,5054695

9.KAPURTHALA CENTRAL

COOPERATIVE BANKKAPURTHALA 01822-500725,509072

10.LUDHIANA CENTRAL

COOPERATIVE BANKLUDHIANA 0161-2442412,5053568

11.MANSA CENTRAL

COOPERATIVE BANKMANSA

01652-25907,92572-

25317

12.MOGA CENTRAL

COOPERATIVE BANK

MOGA 01636-223629,501593

13.MUKTSAR CENTRAL

COOPERATIVE BANKMUKTSAR 01633-264457,501102

14.NAWANSHAR CENTRAL

COOPERATIVE BANKNAWANSHAR 01823-223977,503712

15.PATIALA CENTRAL

COOPERATIVE BANKPATIALA 0175-5000271,5000272

16. ROPAR CENTRAL ROPAR 01881-226543,220379

7


8/64

COOPERATIVE BANK

17.SANGRUR CENTRAL

COOPERATIVE BANKSANGRUR 01672-234336,501328

18.TARANTARAN CENTRAL

COOPERATIVE BANKTARANTARAN 01852-226239,50251819

19.

FATEHGARH SAHIB

CENTRAL COOPERATIVE

BANK

FATEHGARH

SAHIB01763-220093,500593

20.SAS NAGAR CENTRALCOOPERATIVE BANK

SAS NAGAR 0172-5091661,5091639

8


9/64

Branches of Cooperative Bank in Punjab

9


10/64

Organisation Structure Of Punjab State Cooperative Bank

Chairman

Board of Directors

Managing Director

Additional Managing Director (Administration) Additional Managing Director (Banking)

Deputy

Vigilance

Officer

Establishment

Officer

Liaison

Officer

ACFA

Deputy

General

Manager

(System)

General

Manager

(O&A)

General

Manager

(Development)

General

Managers

(Division

Officers at

Jalandhar,

Bhatinda &

Amritsar)Deputy

General

Managers

Deputy

General

Managers

AssistantGeneral

Manager

AssistantGeneral

Managers

AssistantGeneral

Managers

Assistant GeneralManagers

Deputy

Managers

Deputy Managers Deputy Managers

10


11/64

ORGANIZATION-STRUCTURE

11

Sh. Jasjit Singh, Chairman

BOARD OF DIRECTORS

Sh. G.S. Mangat, Managing Director

Smt. Nisha Rana, Additional Managing Director

(Administration)

Sh. Udham Singh, Additional

Managing Director (Banking)

DeputyVigilance

Officer

Establishment

Officer

Liaison

OfficerACFA

Deputy

GeneralManager

(System)

Sh.Jeevan

Kr.

Bansal,General

Manager

(O&A)

GeneralManager

(Development)

GeneralManagers

(Division

Officers atJalandhar,

Bhatinda &

Amritsar)DeputyGeneral

Managers

Deputy General

Managers

Assistant

General

Manager

Assistant

GeneralManagers

Assistant

GeneralManagers

Assistant

GeneralManagers

Deputy

Managers

Deputy

Managers

Deputy

Managers


12/64

Services Provide By Cooperative Bank

A new scheme namely Kisan Credit Card Scheme has been implemented by the bank for

the benefit of farmers. The Scheme improves upon existing scheme of Crop Loans by

allowing the farmers flexibility and freedom of choice to avail and repay loans as per their

requirements. Under the scheme, Total Limits worth Rs. 5997.50 crore have been sanctioned

to 887173 KCC holders in the state.

1) Non Farm Sector Loan

With a view to diversify and benefit the small industrialists & businessman, the cooperative

bank has started non-farm sector loan depending upon the requirements of the projects. These

loans are given to the rural youth for self-employment. The Central Cooperative Banks have

advanced Rs.4950.81 lacs from 1-4-2007 to 31-3-2008 to 8013 beneficiaries. During 2008-

09(up to Jan.) Rs. 3498.00 Lacs have been disbursed under this scheme.

2) Cash Credit to Traders & Businessmen

With a view to provide the cash credit facility to traders and others for meeting the working

capital requirements of the business, a cash credit limit upto Rs.25.00 Lacs can be sanctioned

to small businessman and traders depending upon their business turnover on easy terms at a

normal rate of interest. During the year 2007-08, the central cooperative banks have

sanctioned Rs.29091.28 lacs under the scheme upto Jan. 2009, limits worth Rs. 30426.00

lacs have been sanctioned under this scheme since inception.

3) Personal Loan

12


13/64

A specially designed personal loan scheme has been framed which aims at providing credit

facility for meeting out social needs of employees, such as children education, furnishing

home, buying a computer, sons/ daughter marriage, holiday tour with family or any other

basic requirement without giving any purpose for the loan. Under the scheme, every govt /

semi govt employees is provided loan upto Rs.2.00 Lac repayable in 5 years in easy monthly

installment. During the year 2007-08, the Central Coop.Banks have advanced Rs.12164.46

Lacs under the scheme. During 2008-09 (upto Jan), Rs.10227.00 Lac have been disbursed in

the state.

4) Consumer Durable Loan

With a view to provide credit facility to their customers, the cooperative banks have

introduced a scheme of loan for purchase of consumer durable. Under the scheme, every

employee is provided loan upto Rs.1.00 lac and non-salary person is provided loan upto

Rs.50000 repayable in 5 years in easy monthly installments. The loan can be utilized for

purchase of T.V., refrigerator, scooter, furniture etc. A significant section of the salary class

has benefited from the scheme. During the year 2007-08, the Central Coop. Banks have

advanced Rs.7695.31 lacs under the scheme. During 2008-09(upto Jan.) Rs. 6031.00 Lacshave been disbursed under this scheme.

5) Urban Housing Loan Scheme

With a view to provide the housing loan to individual and members of house building society

the Bank can advance a loan upto Rs.25.00 Lacs for the purchase of plot, purchase of built up

house, construction of house, repair, addition, alteration etc. in the existing house. Loan

shall also be given for acquiring a plot, flat, house in an exixting cooperative house building

society and approved scheme of PUDA, HOUSEFED, Improvement Trust or any other govt.

agency. . During the year 2007-08, the Central Coop.Banks have advanced Rs.3961.62 Lacs

under the scheme. During 2008-09(upto Jan.) Rs. 3176.97 Lacs have been disbursed under

this scheme.

6) Rural Housing Loan Scheme

13


14/64

With a view to provide housing facility to the masses which is a basic need of human need

the Central Coop. Banks has designed a scheme particularly for rural people, where other

financial institutions are reluctant to advance. Under the scheme, maximum loan upto

Rs.15.00 Lacs can be advanced for purchase of built up house, construction of a new house

or repair/ renovation / addition/ alteration of existing house in rural areas. During the year

2007-08, the Central Coop. Banks have advanced Rs.5959.08 Lacs under the scheme.

During 2008-09, Rs. 4133.25 lac have been disbursed under this scheme upto Jan. 2009.

7)Mini Dairy Loan Scheme

The Central Coop. Banks through its branches are extending loan facility to the farmers for

dairy development/ mini dairy for purchasing 25 cattle. Under the scheme, a maximum loan

upto 5 Lacs can be advanced with a ceiling of Rs.25000 for each animal. During 2007-08 Rs.

275.54 Lacs have disbursed by CCBs in the state. During 2008-09(upto Jan.) Rs. 217.78

Lacs have since been disbursed.

8) Vehicle Loan Scheme

With a view to provide the vehicle loan to individuals, firms, HUF, companies, trust and

cooperative societies etc. a financial assistance upto Rs.10 Lacs is provided for the purchaseof new vehicle. During the year 2007-08, the Central Coop. Banks have advanced

Rs.6128.29 under the scheme. During 2008-09(upto Jan.) Rs. 6809.00 Lacs have been

disbursed under this scheme.

9) Two Wheeler Loan to farmers

Under the scheme the bank can grant loan to the farmers for purchase of two wheeler upto

Rs.50000/-. During the year 2007-08, the Central Coop.Banks have advanced Rs.3962.62Lacs under the scheme. Similarly, during 2008-09 (upto Jan.) Rs. 1885.59 Lac have been

disbursed under this scheme.

10) Second hand vehicle loan scheme

14


15/64

In the modern era there is a heavy demand of second hand vehicles and the banks have

surplus loan-able funds to diversify the loan portfolio and to provide financial assistance to

the borrowers for purchase of second hand vehicle, this scheme has been devised. Under the

scheme loan upto Rs 5 Lacs can be sanctioned for purchase of second hand vehicle. .

11) Education loan scheme

With a view to provide the education facility to the children of the employees a loan upto Rs.

10 Lacs can be sanctioned under the scheme. . During the year 2007-08, the Central

Coop.Banks have advanced Rs.234.73 Lacs under the scheme. Similarly, during 2008-

09(upto Jan.) Rs.399.51 Lac have been disbursed under this scheme.

New schemes launched by the Bank

1) Loan against property

The scheme is for providing finance against mortgage of immoveable property & is designed

to offer instant solutions relating to socio economic and business needs such as children

higher education travel / daughter marriage, medical emergencies etc. Under the scheme

maximum loan upto Rs.25 Lacs can be advanced. During 2007-08, CCBs have disbursed Rs.

325.14 Lacs in the state. During 2008-09(upto Jan.) Rs.1459.68 Lac have been disbursed.

2) Loan scheme for earnest money

In order to meet the requirements of the public the bank has launched a loan scheme known

as Loan scheme for earnest money to meet the financial requirements towards the earnest

money deposit to book residential plot/ built up house, flats being sold by govt. housing

agency, urban development authority like; PUDA, HUDA and Housing Board etc.

3) Loan against rental income scheme

For meeting business/ personal needs a new scheme for property owners having their

property situated it the area of operation of the bank and who have let out or proposal to let

15


16/64

out such property to PSUs, reputed govt/ semi govt/ corporates, banks, financial institutions,

cooperative societies, insurance companies etc. is launched. The minimum amount under the

scheme is Rs.1 lac, there is no upper limit but it must be within prudential exposure norms.

During 2008-09(upto Jan.) Rs.77.50 Lac have been sanctioned under this scheme.

4) Commercial Dairy Development scheme

To increase the income of milk producers by helping them to purchase high yielding milch

cattle and to purchase necessary equipments for the purpose, a new scheme known ascommercial dairy development scheme has been launched for the central cooperative banks.

Under the scheme the bank can provide maximum loan upto Rs. 25 Lacs. During 2007-08,

CCBs have disbursed Rs. 21.64 Lacs in the state. During 2008-09(upto Jan) Rs.64.49 Lacs

have since been disbursed.

5) Dairy Loan Scheme for purchase of a cow

Under the scheme a member of the Milk Producers Society can be advanced upto Rs.0.50

Lacs for the purchase of a cow. During 2007-08, CCBs have disbursed Rs. 27.84 Lacs in the

state. During the year 2008-09(upto Jan.) Rs. 225.75 Lac have since been disbursed by CCBS

in the state.

16


17/64

Future Prospective

Cooperatives are not unaffected by structural adjustments and globalization of commodity

market. As a result, Cooperative Banks are required to redesign their strategies for

sustainability and growth. The economic reforms initiated by the government of

India in 1991 have affected the Financial Institutions including the Cooperative

Financial Institutions. These reforms aim at liberalization and deregulation of Indian

economy.

The Cooperative Banks of Punjab have accepted the reforms in Indian economy, especially,

the financial reforms in right spirit. Since these Banks have mainly been providing

credit to agriculture sector, changes in agricultural economy affect them more

closely. The Banks envisage following scenario as a result of liberalized agricultural

policy :

Liberalization of agricultural policy would result in greater capital intensity

and borrowed capital requirements of agriculturists. In order to induce

diversification and produce quality products for international market. For this

purpose, Punjab farmers would need greater credit support for improved

technology, seeds and agro-inputs.

Liberalized agricultural policy would reverse the process of fragmentation of

land holdings and would result in exodus of employment opportunities from

agricultural sector to other sectors of economy. Such as small business

enterprises, services and industrial sector.

Liberalization of agriculture would professionalize and modernize agriculture,

thereby earning a status of industry attracting high skilled professionals in

agriculture sector.

17


18/64

Liberalized agricultural economy would lead to a greater role of private

research and development institutions in improving the productivity and

quality of agricultural operations.

The liberalized agricultural policy would result in greater thrust on value

addition in agriculture. Therefore, a great deal of thrust would be on agro-

processing units.

The liberalized agricultural policy would lead to contract forming for ensuring

marketing of agricultural produce at better prices.

The liberalized agricultural policy would bring greater thrust on export of raw

and value added agro-products.

The liberalized agricultural economy would lead to sowing/planting of new

crops. Leading to a great deal of crop diversification.

COOPERATIVE CREDIT POLICY FOR 2001-2008

18


19/64

The Cooperative would continue to sustain agricultural production in changing scenario of

agriculture in the State. They would endeavor to provide for short-term and long

term requirements of the farmers, through specifically targeted schemes and

projects, which do not encourage and increase indebtedness amongst the farmers.

The Cooperative Banks would act as catalyst to bring about and sustain diversification in

agricultural sector in keeping with the liberalized economy. Credit provisioning and

interest rates would be restructured induce diversification of agriculture. Greater

thrust would be given on short-term loans for cultivation of sugarcane, sunflower,

vegetables and fruits and long term loans for warehousing, commercial dairies,

cattle breeding and marketing infrastructure. Cash Credit Scheme would be pursued

for Primary Milk Producers Cooperative Societies to encourage quality milk

production in the State.

The Cooperative Banks would continue to be farmer driven, ensuring to make agriculture a

multi-functional occupation. They would finance and support agri-business, agro-

processing and farm equipments industry to supplement and complement farmers

sources of income.

The Cooperative Banks would give greater thrust on processes and initiatives aimed at

improvement in quality of agricultural produce and products by giving liberal

finance for technology introduction and up-gradation and for procuring high

quality agro-inputs.

The Cooperative Banks would encourage creation of common assets like storage facilities,

farm machinery like tractors and other agricultural implements at the level of

Cooperative Marketing-cum-Processing Societies and PACS so as to reduce debt

burden and input costs of the farmers.

The Cooperative Banks would pursue with renewed vigor lending in non-farm sector of

economy, especially for those rendered surplus in rural and semi-urban areas due

to liberalized agriculture policy Gainful self employment activities and small

businesses would be promoted by providing cheap, easy and adequate credit.

Special schemes and products would be launched for low income groups including

small and marginal farmers.

19


20/64

AWARDS & ACHIEVEMENTS

DEPOSITS:- The deposits of Central Cooperative Banks have touched Rs.6434.32 crore as

on Jan. 2009. The deposits of the State Coop. Bank have increased from Rs.1565.64 crore as

on 31.3.2008 to Rs.1801.30 crore upto Jan. 2009.

ADVANCES:-

Agricultural advances

1) Short Term Agricultural advances:-During the year 2007-2008, the Punjab

State Cooperative Bank has advanced loans of Rs.5828.28 crore. During the

year 2008-09 the bank plans to disburse Rs. 6740.00 crores against which Rs.

3581.90 crores have since been disbursed upto 20-02-2009.

2) Medium Term Agricultural advances:-The Central Cooperative Banks have

advanced Rs.210.31 crore as Medium-term Agricultural advances in the State

upto March, 2008. This loan is given to farmers for undertaking activities

allied to agriculture

Revolving Cash Credit

Under the scheme, the Central Cooperative Banks have sanctioned credit limits of

Rs.2060.43 crore to 147793 farmers upto Jan. 2009. The rate of interest is 11%.

Non-Farm Sector loans

The Punjab State Cooperative Bank is providing non-agricultural loans to Sugar Mills,The most important feature of the cooperative banks in the State is that they started advances

of Non-Farm Sector during the year 1993. The Central Cooperative Banks have advanced

Rs.49.50 crore to 8013 beneficiaries during 2007-08. These loans are mainly given to rural

youth for self-employment. The rate of interest is 13.25%- 13.75%.

20


21/64

Loans for consumer durables to salary earners:-

With a view to provide credit facilities to their customers, the Cooperative Banks introduced

a scheme of loans for purchase of consumer durables. Under the scheme, every

Government/semi-Government employee is provided loan upto Rs.1.00 lac repayable in 3-5

years in easy monthly installments. The loan can be utilized for purchase of TV, Refrigerator,

Scooter, Furniture etc. A significant section of the salaried class has benefited from the

scheme. More than Rs.79.71 crore have been advanced under the scheme during the years

2007-08.

21


22/64

INTEREST RATES PROVIDED BY BANK

Savings: 3.50% A minimum amount of Rs.500/- is required without cheque booksand Rs.1000/- with cheque book.

Fixed Deposits A minimum amount of Rs.1000/- is required to open the account.

Duration Interest rate ( in percent)

7 days to 14 days 3.75%




180 days < 1 year 7.75%1 year < 2 years 8.50%

2 years < 3 years 8.25%

3 years above 8.00%

Interest rate @ 0.50% above these rates to the Senior citizen will be admissible on

single Fixed deposit Receipt of Rs. 5000/- and above . All other terms and conditions

will be remain the same.

Financial Analysis

22


23/64

Financial Analysis is the process of identifying the financial strength and weaknesses of the

entity by properly established relationships between the variables of balance sheet and Profit

and loss account .The purpose of Financial Analysis is to diagnose the information the

information given in the financial statement in such a manner so as to judge the liquidity,

profitability and financial soundness of the entity .

Financial analysis is a study of relationship among various financial factors in a business as

disclosed by a single setoff statement and a study of trend of these factors as shown in a

series of statements.

Analysis financial statement is a process of evaluating relations between components parts

of financial statements to obtain a better understanding of firms position and performance.

Types of Analysis

Financial analysis may be classified either

On the basis of Material used

On the basis of Objective of Analysis

According to Material Used it may be as

1) External analysis

2) Internal analysis

External Analysis:- It is made by those who do not have access to the detailed records of

the company .Such Analysis depends entirely upon published financial statements.

Internal Analysis:- It is conducted by those who have access to the books of accounts and

other related information from records of the company. Such analysis is conducted by the

executives themselves or by the government and court agencies who assume special power

by virtue of some enactments.

23


24/64

According to Objective the analysis may be

1) Long Term Analysis

2) Short Term Analysis

Long Term Analysis:- This analysis is made in order to study the long term Financial

stability ,solvency and liquidity as well as profitability earning capacity of the business

concern. The purpose of making such type of analysis is to know whether in long term

the concern will able to earn a minimum amount which will be sufficient to maintain a

reasonable rate on investment.

Short term Analysis:-This is made to determine the short term solvency ,stability and

liquidity as well as earning capacity of the business. the purpose of this analysis to

know whether in the short run a business concern will have adequate funds to meet

short term requirements.

Techniques used in Financial Analysis

The most commonly used methods or devices for analysis are:-

1) Comparative Statements

2) Statements of changes i.e Flow Statements

3) Trend analysis

4) Common Size Statements

5) Ratio Analysis

1. Comparative Statements:- are the statements showing the figures of two

periods as well as the relationship between balance sheet and income statement.

Statement prepared in a comparative form enables as in depth study of financial

position and operative results.

24


25/64

2. Statements of changes (Flow Statements):- Balance Sheet reflects the positions

at point of time. when two Balance Sheet are compared then position as on two

different dates is known. What happen in between is not reflected by the balance sheet

3. Trend analysis:-Financial Statements may be analyzed by computing trends

.method involves computation of percentage relationship at each statement item bears

to the same item in the base year. Usually the first year is taken as a base year .figures

of base year are taken as 100 and trend ratio for other years is calculated.

4. Common Size Statements:-Show analytical percentages. Common size income

statement shows sales at 100 and remaining items as a percentage of 100.similarly total

balance sheet is presented as 100 and items of balance sheet as components of 100.

5. Ratio analysis :- Ratio is the arithmetical relationship between two accounting

variables but they assume significance if these variables have cause and effect

relationship. Ratios are simply a means of high lighting in arithmetical terms the

relationship between figures drawn from financial statements.

RATIO ANALYSIS

25


26/64

Ratios are simply a means of high lighting in arithmetical terms the relationship between

figures drawn from financial statements.The Balance Sheet and the Statement of Income are

essential, but they are only the starting point for successful financial management. Apply

Ratio Analysis to Financial Statements to analyze the success, failure, and progress of your

business.

Ratio Analysis enables the business owner/manager to spot trends in a business and to

compare its performance and condition with the average performance of similar businesses in

the same industry. To do this compare your ratios with the average of businesses similar to

yours and compare your own ratios for several successive years, watching especially for any

unfavorable trends that may be starting. Ratio analysis may provide the all-important early

warning indications that allow you to solve your business problems before your business is

destroyed by them.Ratios are classifed into following types:-

Liquidity Ratios

Activity Ratios

Solvency Ratios

Profitability Ratios

Liquidity ratios measure the ability of a business to meet short term obligations. This ratio

shows short term financial soundness of the business. Higher Ratio means better capacity to

meet its current obligations . Following are the type of liquidity ratios:

1) Current Ratio:- Measures the company's ability to pay its short-term liabilities from

short-term assets. The formula used to calculated current Ratio is

Current Ratio =Current Assets / Current Liabilities

2) Quick Ratio :- Also known as Acid Test, measures the company's ability to pay off its

short-term obligations from current assets, excluding inventories. The formula to used

calculated quick Ratio is

26


27/64

Quick Ratio = (current assets - inventory) / current liabilities

or

Quick Assets Ratio = Liquid Assets/ Current Liabilities

3) Absolute Liquid Ratio :- Measures the extent to which current obligations can be paid

from cash or near cash assets. The formula used to calculated Absolute Liquid Ratio is

Absolute Liquid Ratio = (absolute liquid ratio) / current

liabilities

Activity Ratios:- This Ratio shows the number of times the capital has been rotated in the

process of carrying on of business. Higher the ratio better the efficiency in the

utilization of capital. Activity ratios help assess the efficiency of managers' actions.

1) Stock Turnover Ratio: indicate the velocity with which stock of finished goods is

sold. It is expressed as the number of times the average stock has been turned over or

rotated during year. The Formula used to calculated Stock Turnover Ratio is

Stock Turnover Ratio = net sales /Average inventory at cost

2) Debtors /Receivables Turnover Ratio:- Account receivable is term which includes

trade debtors and bills receivables. These are the components of the current assets. This

ratio shows how quickly debts are collected. formula to calculated Debtors Turnover

Ratio is

Debtor Turnover Ratio = Annual credit sales/ Average account Receivables

Where account receivable = Trade Debtor + Bill receivables

27


28/64

3) Creditor /Payable Turnover Ratio:- It indicates the speed with which the payments

are to be made to the trade creditors. It established the relationship between net credit

annual purchases and average accounts receivables. The formula used to calculated

Creditor Turnover Ratio is

Creditor Turnover Ratio = Annual Net Credit Purchases / Average

Account Payables.

4) Fixed Assets Turnover Ratio:- It established the relationship between sales and fixed

assets. The purpose is to judge whether the firm is generating adequate sales for

investment in fixed assets of the firm. The formula used to calculated Fixed Assets

Turnover Ratio is

.

Fixed Asset turnover ratio = sales or cost of goods sold / total fixed

assets

Profitability Ratio :- These Ratios are calculated to measure the efficiency of the

business. Profitability Ratio are the indicator whether or not the firm earns substantially

more than its pays interest for the use of the borrowed funds. Following are the type of

Profitability ratios :-

1) Gross Profit Ratio:- Gross Profit Ratio is the ratio of gross profit to net sales i.e sales

less sales returns. It is the most commonly calculated ratio.it is calculated as follows

Gross Profit Ratio = ( Gross profit / net sales )* 100

Where Gross Profit = Net Sales - Cost of Goods Sold

Net sales = sales returns inwards

2) Net Profit Ratio:- It established the relationship between net profit after taxes andsales. The ratio is a measure of the overall profitability.net profit is arrived at after

28


29/64

taking into account both the operating and non-operating items of incomes and

expenses. The Ratio is calculated as

Net Profit ratio = (Net Profit after taxes / Net sales) * 100

29


30/64

OBJECTIVES OF THE STUDY

Every study is conducted with key objectives and aims kept in the fore. Without

aims and objectives the study is like a ship without radar. My research covers the

Ratio Analysis vis Liquidity, Solvency, Activity and Overall Profitability Ratios.

Also it comprises the study of the trends of the various variables relevant to

Working Capital Management assess the future requirements of working capital in

the bank

.

.

To assess the liquidity position of THE KAPURTHALA COOPERATIVE BANK

by the analysis of ratios.

To analyze the trends of the various components of the working capital of THE

KAPURTHALA COOPERATIVE BANK

SCOPE OF STUDY

To know the financial position of the THE KAPURTHALA COOPERATIVE

BANK

The study gives an idea about emerging trends and technologies in THE

KAPURTHALA COOPERATIVE BANK.

30


31/64

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. The research

methodology included various methods and techniques for conducting a research. Marketing

Research is a systematic design, collection, analysis, and reporting of data and finding

relevant solution to a specific marketing situation or problem. Sciences define research as

the manipulation of things, concepts or symbols for the purpose of generalizing to extend,

correct or verify knowledge, whether that knowledge aids in construction of theory or in

practice of an art.

Research is thus, an original contribution to the existing stock of knowledge marketing for its

advancement, the purpose of research is to discover answers to the questions through the

application of scientific procedure.

My research project has a specified framework for collecting the data in an effective manner.

Such framework is called Research Design. The research process which was followed by

me consisted following steps.

4.1) Defining the problem & Research Objectives

It is said, A problem well defined is half solved. The step is to define the project under

study and deciding the research objective. The definition of problem includes Financial

Analysis Of Kapurthala Central Cooperative Bank

Developing the Research Plan:

The second stage of research calls for developing the efficient plan for gathering the needed

information. Designing a research plan calls for decision on the data sources, researchapproach, research instruments, sampling plan and contacts methods.

31


32/64

The development of Research plan has the following Steps:

a.) Data Sources

Two types of data were taken into consideration i.e. Secondary data and Primary data.

My major emphasis was on gathering the primary data. The secondary data has been used

to make things more clear.

Primary Data: Direct collection of data from the source of information, including personal

interviewing, survey etc.

Methods: There are several methods of collecting primary data particularly in surveys and

descriptive researches. Important ones are:-

1. Observation method

2. Interview method

3. Through questionnaires

4. Through schedules

5. Other methods are:

Warranty cards.

Distribution audits

Pantry audits

Consumer panel

Using mechanical devices

Through projective techniques

Depth interviews and,

Content analysis.

32


33/64

Secondary Data: Indirect collection of data from sources containing past or recent

information like, Annual Publications, Books, Newspaper and Magazines etc.

Usually published data are available in:-

i. Various publications of the Central, State or Local Governments.

ii. Various publications of Foreign Governments or of International Bodies and their

subsidiary organizations.

iii. Technical and trade generals.

iv. Books, magazines and newspapers.

v. Report and publications of various associations connected with Business and

Industry, banks, stock exchanges etc.

vi. Reports prepared by research scholars, universities, economists, etc. in different

fields.

vii. Public records and statistics, historical document, and other sources of published

information.

4.3.) Research Approach

Research approach of my project is Secondary data

4.4.) Research instrument

4.5.) Collecting the information

The collection of data is a tedious task. For conducting any sort of research data was

needed. So for my research, there was plenty of primary data and for increasing the

33


34/64

validity of information collected, some books, journals, pamphlets, information about

the company were studied and taken into considerations.

Collection of Secondary Data: Secondary Data is the one which has already been

collected by someone else and some other person is using that information. The

source of secondary data was, some related books and websites related to the

company. The competent staff of the company helped me a lot in providing

information about the company.

4.6) Analyze the Information

The next step is to extract the pertinent findings from the collected data. I have

Tabulated the collected data and developed frequency distributions. Thus the whole data was

grouped aspect wise and was presented in tabular form. .

4.7.) Presentation of findings:

This is the last and important step in the research process. The findings are presented in the

form of graphs, pie charts, conclusions, suggestions and recommendations after data analysis.

SOURCES OF DATA

Main sources of collection of my data are

SECONDARY DATA:-

Secondary data has been collected from the following sources

Annual report.

Balance Sheets of the Bank

34


35/64

Published reports of Bank.

Data from various department

Relevant diagrams and charts like bar charts to give pictorial presentation of

data collected for better understanding.

PRIMARY DATA

The primary source of data includes personal interviews from various accounts officer in the

enterprise or other employees of the Kapurthala Cooperative Bank.

Steps of methodology:

Collection of data

Organization of data

Presentation of data

Analysis of data

Interpretation of data

1. Collection of data: Both the primary data and secondary data has been collected

from the bank. The secondary data was provided through the annual report; balance

sheet etc. of the bank and the primary data was collected through the medium of face

to face interactions/ interviews with the employees of the bank.

2. Organization of data: Data once collected needed to be organized for further

processing.

35


36/64

3. Presentation of data: The data collected is of no use unless and until it is given in a

presentable form. Thus, after proper organization, the data is given in a presentable

form with complete details with the help of Ratios, Trends, bar diagrams, pie charts

etc.

4. Analysis of the data: The data is carefully analyzed keeping in consideration both

the pros and cons for the purpose of arriving at concrete solutions.

5. Interpretation of data: After carefully analyzing the data, it has been aptly

interpreted in order to give concrete solutions and proper recommendations.

Techniques used in analysis

Financial AnalysisFinancial Analysis is the process of identifying the financial strength & weakness of the firm

by establishing relationship between the items of Balance Sheet & Profit & Loss Account.

The purpose of Financial Analysis is to diagnose the information contained in financial

statement so as to judge the profitability & financial soundness of the firm. The term analysis

includes interpretation also. Financial statement analysis is an attempt to determine the

significance and meaning of the data contained in the financial statements so that prediction

may be made regarding the future earnings, ability to meet its liabilities and profitability of

the business.

Analysis involves re-grouping and re-arranging the data in a useful manner whereas

Interpretation means explaining the meaning and significance of the data so processed.

However both analysis and interpretation is complimentary to each other Analysis is useless

without interpretation and Interpretation without analysis is difficult or even impossible.

Financial Analysis involves:-

Study of Financial Statements.

Analysis of data given in Financial Statement.

36


37/64

After analyzing the financial Statement, Interpretation has to be made so that

the interested party can easily understand the statement.

Interpretation of Financial Statement

Financial Analysis of Kapurthala Cooperative Bank is as follows:-

Financial Analysis is done on the basis of published Financial Statement like

Balance Sheet & Profit & Loss Account.

Ratio Analysis & Trend Analysis is done to know the financial position of the

Company.

1. RATIO ANALYSIS

One of the most widely used forms of financial analysis is the uses of ratios. A ratio is a

simple arithmetical expression of the relationship of one number to another. It may be

defined as the indicated quotient of two mathematical expressions.

According to Kell and Bedford, a ratio is an expression of the quantitative relationship

between two numbers.

A Financial ratio is the relationship between two accounting figures expressed

mathematically. A ratio can also be expressed as percentage by simply multiplying the ratio

by 100.

Ratio analysis is a technique of analysis and interpretation of financial statements. It is

process of establishing and interpreting various ratio for helping in making certain decisions.

Ratio analysis is an accounting tool, which can be used to measure the solvency, the

profitability and the overall financial strength of a firm by analysing its financial accounts.

Ratio enable us to discover favourable or unfavourable trends that are developing gradually

37


38/64

over time, as well as pointing up any numbers that have changed sharply in the space of time

of just one year-

The following are the four steps involved in the ratio analysis are :

The selection of relevant data from the financial statements depending upon the

objective of the analysis.

Calculation of appropriate ratios from the above data.

Comparison of the calculated ratios with the ratios of the same firm in the past.

Interpretation of the ratios.

CLASSIFICATION OF RATIOS

The use of ratio analysis is not confined to financial manager only. There are different parties

interested in the ratio analysis for knowing the financial position of the firm for different

purposes. In view of various users of ratios, there are many types of ratios which can be

calculated from the information given in the financial analysis.

Liquidity Ratio

Efficiency Ratio

Solvency Ratio

Profitability Ratio

For better understanding of position of Kapurthala Cooperative Bank various ratios have

been calculated

38


39/64

1) Liquidity Ratios:-

Liquidity Ratios are the ratio, which have been used to judge the current position of the

company. Current position of the company refers to the capacity of the company to pay off

its liability in time. Liquidity refers to the ability of a concern to meet its current obligations

as and when these become due. The short term obligations are met by realising in amounts

from current, floating or circulating assets.

If the current assets can pay off current liabilities, then liquidity position will be satisfactory.

On the other hand, if current liabilities may not be easily met out of current assets the

liquidity position will be bad. These ratios have been classified into three categories. Those

are:-

Current Ratio

Liquid Asset Ratio

Absolute Ratio

CURRENT RATIO

Current Ratio is the ratio, which establishes the relationship between Current Asset andCurrent Liabilities. This ratio indicates the position of the company to pay off its current

obligation. Current obligation means the liabilities, which the company has to pay with

in year.

An Asset is any 'thing' a business can own. Buildings, equipment, and vehicles are

examples of assets that can be depreciated, while cash, bonds, and inventories are assets

that are not depreciated.

Current Assets are most easily converted into cash in less than a year.

Current Liabilities are obligations that must be met within a year.

Inventory is the amount of finished product available for sale. It can be found on the

balance sheet in the current assets section.

39


40/64

Liquid Assets are the most current of current assets. Liquid assets can be

immediately spent. For example, cash and checks are liquid assets; inventory is a current

asset but is not liquid.

Current Asset: Current assets are those assets, which can be converted into cash with

in the period of one year. The items included under current assets are :

Cash in Hand

Cash at Bank

Inventory

Debtor

Prepaid Expenses

Bills Receivables

Other Loan & Advances

Current Liabilities: - Current Liabilities are those liabilities, which the

company has to pay with in the period of one year. The items included under it are :-

Sundry Creditors

Bills Payable

Bank Loan, which have to be paid with in a year

Unclaimed Dividend

Provision of Taxation

Other Outstanding Liabilities

40


41/64

QUICK RATIO

It is also known as liquid ratio or acid test. It is a more rigorous test of liquidity than the

current ratio. Quick ratio indicates the relationship between quick/liquid assets andcurrent/liquid liabilities. An asset is said to be liquid if it can be converted into cash within a

short period without loss of value.

Absolute Liquid Ratios:

Although receivables, debtors, and bill receivables are generally more liquid than inventories,

yet there may be doubts regarding their realisation into cash immediately or in time. Hence,

some authorities are of a opinion that the absolute liquid ratio should also be calculated

together with current ratio and acid test ratio so as to exclude even receivables from the

current assets and find out the absolute liquid assets. This ratio indicates the availability of

proper cash to meet our Liabilities. For this purpose we include both Cash at Bank & Cash in

Hand and Marketable securities in Absolute Liquid Asset.

2) Efficiency Ratio:

This ratio indicates that how efficiently the assets available with the firm have been utilized

to create the sales. In other words, it means how many times the asset has been turned over to

create the sales. The better the management of assets, the larger is the amount of sales and the

profits. There are various assets, which can be utilized to generate the sales. Those are Stock,

Debtor, Working Capital, Fixed Asset, etc. these ratios are also called turnover ratio because

they indicate the speed with which the assets are converted or turned over into sales. These

ratios are classified into different categories on the basis of assets:

41


42/64

Inventory Turnover Ratio:

It is also known as stock turnover ratio. Every firm has to maintain a certain level of

inventory of finished goods so as to be able to meet the requirements of the business. But the

level of inventory should neither be too high nor too low. Stock Turnover Ratio shows that in

a year how many times a stock can generate the sales. So sale can be materialized after a time

period, for that time period a company requires the fund to carry out its activity. This

requirement of funds can be met through working capital.

Debtor Turnover Ratio:

A concern may sell goods on cash as well as on credit. Credit is one of the important

elements of sales promotion. This ratio indicates that how efficiently the debtor has been

used to materialize the sale. It means how many times the debtor has been turned around to

generate the sale.

In the same way that stock is a vital aspect of working capital management, so too is debtors

control. Many businesses need to sell their goods on credit, otherwise they might find it

difficult to survive if their competitors provide such credit facilities; this could mean losing

customers to the opposition.

Creditor Turnover Ratio:

This ratio indicates that how many times in the year the payment has been made to the party.

In the course of business operations, a firm has to make credit purchases and incur short term

liabilities. A supplier of goods i.e. creditors is naturally interested in finding out how much

42


43/64

time the firm is likely to take in repaying its trade credit. If credit purchases is not available,

the figure of total purchase may be taken as the numerator and the trade creditors include

sundry creditors and bills payable

Working Capital Turnover Ratio:

This ratio indicates that how efficiently the working capital has been utilized to create the

sales. Working capital turnover ratio indicates the velocity of the utilisation of net working

capital. This ratio indicates the number of times the working capital is turned over in course

of a year. This ratio measures the efficiency with which the working capital is being used by

a firm. A higher ratio indicates efficient utililization of working capital and vice-versa. But a

very high working capital turnover ratio is not good situation for any firm and hence care

must be taken while interpreting the ratio.

LIMITATIONS OF PROJECT

1) The research was to be conducted in a limited span of time which also posed a limiting

factor.

2) Limited access to secondary data or any other information was another problem in

finding a correct response.

43


44/64

ANALYSIS OF DATA AND INTERPRETATION

Keeping in mind the objectives of the study, the following interpretation were

being drawn.

CURRENT RATIO:- This represents the excess of current assets over current liabilities.

The ratio is calculated as:

Higher the current ratio, larger the amount of rupee available per rupee of current liability.

Current ratio of Kapurthala Cooperative Bank For last five years can be interpreted as:

Table:-1 Current Ratio

Years 2004 2005 2006 2007 2008

Current

Assets

642018198.2

1

868424784.0

8

1438368486.2

9

1974679761.1

2

1720818825.07

Current

Liabilities

251720599.3

2

245597115.5 677503208.33 693040847.72 953994457.91

CurrentRatio

2.5 3.5 2.1 2.8 1.8

44

CURRENT RATIO=

CURRENT ASSESTS

------------------------------------

CURRENT LIABILITIES


45/64

Graph 1:- Current Ratio

20082006

2004

2005

2007

0

0.5

1

1.5

2

2.5

3

3.5

4

1 2 3 4 5 6

Years 2004 - 2008

CurrentRati

Interpretation It means in the year 2004 for every rupee of liability, current assets of Rs.2.5

was available to meet them but in 2005 it increased to 3.5 which again reduced to 2.1 in the

year 2006 and rose to 2.8 in the year 2007which decreased to 1.8 in year 2008. Thus oncomparing the ratios of last five years it can be observed that the highest ratio is in 2005.

.

45


46/64

QUICK RATIO

The Quick ratio is the ratio between quick current assets and current liabilities and is

calculated as follows:

The term quick Assets refer to the current assets which can be converted into cash

immediately. Generally a quick ratio of 1:1 is considered satisfactory as a firm can easily

meet all current claims. Quick Ratio in Kapurthala Cooperative Bank for last five years

can be interpreted as:

Table 2:- Quick Ratio

Years 2004 2005 2006 2007 2008

Liquid

Assets

608089586.6

4

830616383.2

1

1389936683.6

1

1932244331.7

5

1673632813.7

Current

Liabilities

251720599.3

2

245597115.5 677503208.33 693040847.72 953994457.91

Quick Ratio 2.4 3.3 2.0 2.7 1.7

QUICK RATIO:

QUICK ASSETS

-------------------------------

CURRENT LIABILITIES

46


47/64

Graph 2:- Quick Ratio

2008

2007

2006

2005

2004

0

0.5

1

1.5

2

2.5

3

3.5

1 2 3 4 5

Years 2004-2008

QuickRatio

Interpretation In case of Kapurthala Cooperative Bank the quick ratio was 2.4 in the

year 2004 but it increased to 3.3 in the year 2005. Again reduced to 2.0 in the year 2006

but in 2007 it increased to 2.7.In year 2008 the ratio is decreased to 1.75

47


48/64

ABSOLUTE LIQUID RATIO

The absolute liquid ratio measures the extent to which current obligations can be paid

from cash or near cash assets. The formula used to calculated Absolute Liquid Ratio is

Absolute Liquid assets refer to only cash, cash at bank and marketable securities.

Absolute Liquid Ratio in Kapurthala Cooperative Bank for last five years can be

interpreted as:

Table 3:- Absolute Liquid Ratio

Years 2004 2005 2006 2007 2008

Absolute

Liquid

Assets

591760432.2

0

807802594.8 1355226736.2

8

1852357042.1 1501688363.12

CurrentLiabilities

251720599.32

245597115.5 677503208.33 693040847.72 953994457.91

Absolute

Liquid Ratio

2.3 3.2 2.0 2.6 1.5

ABSOLUTE LIQUID RATIO:

ABSOLUTE LIQUID ASSETS

-------------------------------

CURRENT LIABILITIES

48


49/64

Graph 3:- Absolute Liquid Ratio

2007

2008

2006

2005

2004

0

0.5

1

1.5

2

2.5

3

3.5

1 2 3 4 5

Years 2004-2008

Absolute

Liquid

Rati

Interpretation The absolute liquid ratio in the year 2004 2.3 but in 2005 it increased to

3.2 which again reduced to 2.0 in the year 2006 and rose to 2.6 in the year 2007 which

decreased to 1.5 in year 2008. Thus on comparing the ratios of last five years it can be

observed that the highest ratio is in 2005.

49


50/64

CREDITORS/PAYABLE TURNOVER RATIO

This ratio can be calculated by dividing Net Credit Sales by average debtors outstanding

during the year.

Table 4:- Creditor Turnover Ratio

Years 2004 2005 2006 2007 2008

Net Creditpurchases

30126700 22755800 440616207.04 8401100.00 55223843

Accounts

Payables

32700900.24 16124542.89 306818854.04 61809624.63 66167012.79

CreditorTurnover

Ratio

0.92 1.41 0.40 0.83 0.84

CREDITORS TURNOVER RATIO:

ANNUAL NETCREDIT PURCHASES

-------------------------------------------------------

AVERAGE ACCOUNTS PAYABLES

50


51/64

Graph 4: Creditor Turnover Ratio

20082007

2006

2005

2004

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1 2 3 4 5

years 2004-2008

CreditorTurnoverRatio

Interpretation In case of Creditors Turnover Ratio it was 0.92 in the year 2004 but it

increased to 1.41 in the year 2005. Again reduced to 0.40 in the year 2006 but in 2007 it

increased to 0.83 .In year 2008 the ratio is decreased to 0.84.

51


52/64

Debtor /receivable Turnover Ratio:-This ratio can be calculated by dividing Net

Credit Sales by average debtors outstanding during the year.

A high ratio is indicative of shorter time lag between credit sales and cash collections.

This ratio measures how rapidly the debts are collected.

Table 5:- Debtors Turnover Ratio

Years 2004 2005 2006 2007 2008

Annual

Credit

Sales

1564093547.6

8

144103100.2

3

1812822762.1

4

1832983542.7

1

2562381888.03

AccountsReceivables

50257765.71 60622189.94 83146749.2 122322719.02 219130461.95

DebtorTurnoverRatio

31.12 23.7 21.8 14.9 11.6

DEBTORS TURNOVER RATIO:

ANNUAL CREDIT SALES

---------------------------------------------------

AVERAGE ACCOUNT RECIEVABLE

Account Receivable= Trade Creditor + Bill Receivable

52


53/64

Graph 5: Debtors Turnover Ratio

20082007

20062005

2004

0

5

10

15

20

25

30

35

1 2 3 4 5

years 2004-2008

De

btorTurnoverRatio

Interpretation In case Debtors turn over ratio shows wide fluctuations. It was 31.12 in

the year 2004 but decrease to 23.7 in the year 2005. In the year 2006 it again reduced to

21.8. But was recorded 14.9 in 2007. In 2008 the ratio is 11.6 A low ratio shows that

debts are not being collected rapidly.

53


54/64

WORKING CAPITAL TURNS OVER RATIO:

Working capital turn over ratio is computed by dividing sales by net working capital.

Table 6:- Working Capital Turnover Ratio

WORKING CAPITAL TURNS OVER

RATIO:

SALES

------------------------------------------

NET WORKING CAPITAL

= SALES

C.ASSETS C. LIABILITIES

Years 2004 2005 2006 2007 2008

Annual

CreditSales

1564093547.6

8

144103100.2

3

1812822762.1

4

1832983542.7

1

2562381888.03

NetWorking

Capital

390297598.89 622827668.58

760865277.96 1281638913.4 766824367.16

Working

Capital

TurnoverRatio

4.00 2.30 2.30 1.43 3.30

54


55/64

Graph 6: Working Capital Turnover Ratio

2008

2007

20062005

2004

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

1 2 3 4 5

years 2004-2008

WorkingCapitalT

urnoverRatio

Interpretation In case Working Capital turn over ratio shows wide fluctuations. It was

4.00 in the year 2004 but decrease to 2.30in the year 2005. In the year 2006 it again was

2.30. But was recorded 1.43 in 2007. In 2008 the ratio of working capital turnover ratio is

3.30.

55


56/64

ASSETS TURN OVER RATIO

Assets are used to generate sales. The firm can compute net assets turn over ratioby dividing sales by net assets.Net Assets include Net fixed assets and net current assets.

Table 7:- Assets Turnover Ratio

Graph 7:- Assets Turnover Ratio

ASSETS TURN OVER RATIO:

SALES

--------------------------------------

NET ASSETS

Years 2004 2005 2006 2007 2008

Sales 1564093547.68

144103100.23 1812822762.14

1832983542.71

2562381888.03

NetAssets

3793206491.05

4212548796.80

5081227553.65

5857963262.52

6527503584.35

AssetsTurnover

Ratio

0.41 0.34 0.35 0.31 0.39

56


57/64

2008

200720062005

2004

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

1 2 3 4 5

Years 2004-2008

AssetsTurnoverRatio

Interpretation In case Assets turn over ratio it 0.41 in the year 2004 but decrease to

0.34 in the year 2005. In the year 2006 it was 0.35. But it was recorded 0.31 in 2007. In

2008 the ratio of assets turnover ratio is 0.39.

57


58/64

RETURN ON INVESTMENTS

The term investments may refer to total assets or net assets. The funds employed in net

assets are known as Capital employed. Here investments refer to pool of funds supplied

by shareholders and lenders while Pat represents residue income of the shareholders.

Years 2004 2005 2006 2007 2008

EBIT 83836798.75 74892275.92 62160253.76 25883078.55 32918000.20

Net Assets 3793206491.05

4212548796.80

5081227553.65

5857963262.52

6527503584.35

Return on

Investment

0.05 0.05 0.03 0.01 0.01

RETURN ON INVESTMENTS:

EARNINGS BEFORE INTEREST AND TAX

NET ASSETS

Earnings before Interest and Tax

Return on Investments == ----------------------------------------------

Net Assets

58


59/64

20082007

2006

20052004

0

0.01

0.02

0.03

0.04

0.05

0.06

1 2 3 4 5

Years 2004-2008

ReturnOnInvestment

Since ROI is also used for comparing the operating efficiencies of the firm we can easily

make out from the figures above that the return on investments is increasing year by year

which is a very good sign for SJVNL. It indicates the projects are making lot of profit

every year.

59


60/64

GROSS MARGIN

The Gross margin reflects the efficiency with which management produces each unit of

product. This ratio indicates the average spread between the cost of goods sold and the

sales revenue.

Generally a high gross profit margin ratio is a sign of good management.

GROSS MARGIN=

EARNINGS BEFORE INTEREST&

TAX SALES

Years 2004 2005 2006 2007 2008

EBIT 83836798.75 74892275.92 62160253.76 25883078.55 32918000.20

Net

Sales

1564093547.6

8

1441031000.2

3

1812822762.1

4

1832983542.7

1

256238.1888.03

GrossMargin

0.05 0.05 0.03 0.01 0.01

60


61/64

20082007

2006

20052004

0

0.01

0.02

0.03

0.04

0.05

0.06

1 2 3 4 5

Year 2004-2008

EBI

Comparing the figures of last four years its found that gross margin is lowest in the year

2005 i.e. 0.28 which indicates inefficient utilization of Plant and machinery or

overinvestment in plant and machinery resulting in higher cost of production.

61


62/64

62


63/64

Observations & Conclusions

During the analysis of Finiacal position , it was observed that net working capital

requirement is continuously increasing year by year from Rs.1740.77 lacs in 2003-04. to

30673.02 lacs in 2004-05.In 2005-06 it further increased to 36408.51 lacs and in 2006-07

it went upto 46026.00 lacs in the year 2006-07. This increase in requirement is due to the

blockage of funds in the sales and debtors. Sales increased from Rs.21693.50 lacs in

2003-04 to 161823.00 lacs in 2006-07. The debtors which were at the level 4755.02 lacs

in the year 2003-04 rose to 14082.00 in the year 2006-07.

The working capital requirements is being financed by banker and by funds generated

from the operations and by the promoters.

Except organizations own sources i.e. profit generated from operations, all other sources

carry interest cost which leads to the increase in cost of production.

To make the optimum utilization of funds and better management of working capital,

organization may adopt the following systems:-

63


64/64

ANNEXURE

BIBLIOGRAPHY

Cherunilam Francis, Business Environment, Himalaya Publishing House,

Millennium Edition 2001.

Gupta K Shashi, R.K Sharma, Financial Management, Kalyani Publishers,

Fifth Edition 2007.

Bhalla V.K, Working Capital Management, Anmol Publications, Sixth

Edition.

Kothari C.R, Research Methodology, New Age International Publisher,

Second Edition.

Balance sheets of the bank from 2004 to 2008.

coperative bank1

Documents