A STUDY ON WORKING CAPITAL MANAGEMENT AT SCCS

A STUDY ON WORKING CAPITAL MANAGEMENT AT SCCS LTD.

1.1 INTRODUCTION ABOUT THE INTERNSHIP:

An internship is a great way to develop specific skills and knowledge, as well as make contacts and build confidence. More and more, employers assess the skills and abilities of prospective employees by evaluating their previous experiences. If you pursue career-related opportunities prior to graduation, you may have an edge over other candidates in a competitive job market.

The internship program is designed to provide students engaged in a field experience with an opportunity to share their insights, to explore the links between students' academic preparation and their field work, and to assist participants in developing and carrying out the major research project which will serve to culminate their internship experience.

Internships are individualized and tailored to the needs and interests of each student in the program. As part of the internship experience, students are expected to take an active role in finding an appropriate internship for themselves.

The project mainly focuses on working capital management analysis at at saptharishi credit co-operative society co-operative refers to the relationship The working capital is the life-blood and nerve centre of a business firm. The importance of working capital in any industry needs no special emphasis. No business can run effectively without a sufficient quantity of working capital. It is crucial to retain right level of working capital.This project report contains five chapters, which begins with Need for the study, objectives & Scope of the study, Research methodology used etc.

The second Chapter it covers Industry Profile and company profile which includes Promoters information, Vision, Mission & Quality policy of the at credit co-operative society, Competitors information, SWOT analysis financial statements etc.

The third chapter Theoretical background of the study it includes elaborative information on the subject chosen for better understanding and usage in the analysis.

The fourth chapter comprehensive coverage of Analysis and interpretation of the data Collected with relevant tables and graphs. Results obtained by using statistical tools must be included.

The fifth chapter deals with the Summary of Findings, Conclusion and Suggestions / recommendations.

Saptharishi Credit Co-Operative Society Ltd.is a community-based financial Institution registered under co-operative societies act by Deputy Registrar of cooperative societies and its register No./Date :No.DRM/SS/RGN/323/2003-04,Date:30-12-2003 founded in December of 1997. Our offices are located at 2nd main, Jayanagar in Mysore , Karnataka. It has 4 sub-branches at Mysore city and in M Saptharishi Credit Co-Operative Society Ltd.is a community-based financial Institution registered under co-operative societies act by Deputy Registrar of cooperative societies and its register No./Date :No.DRM/SS/RGN/323/2003-04,Date:30-12-2003 founded in December of 1997. Our offices are located at 2nd main, Jayanagar in Mysore , Karnataka. It has 4 sub-branches at Mysore city and taluk

The mission of Saptharishi Credit Co-Operative Society Limited is to eradicate poverty by building a secure and transparent microfinance institution to provide financial assistance to the underprivileged, especially senior citizens, women, handicapped, and those living below the poverty line.The organization has adopted a co-operative approach in order to involve every member in our mission with a spirit of cooperation and mutual confidence. The credit society has instituted a working culture, which revolves around efficiency, transparency, professionalism, teamwork and flexibility. It is having 3000 plus members.

1.2. TOPIC CHOOSEN FOR THE STUDY:

The topic chosen for the project was A Study on Working capital Management. The topic mainly states the importance of working capital management in credit co-operative society. Working capital management is an important aspect of financial management in business, money is required for fixed assets and working capital Fixed asset land and building plant and machinery furniture fittings etc, fixed asset are acquire to be retained in the business long period and yield returns over the life of such asset. The main working capital management is to determine the optimum amount of working capital required

1.3 NEED FOR THE STUDYThe study is conducted with respect to working capital management. The main purpose of the study is to study the trend of working capital management over the past 3 years and its impact on bank profitability. Working capital management is getting increasingly complex and credit co-operative society is facing the tough time in managing working capital management.

1.4 OBJECTIVES OF THE STUDY To study the trend of working capital at Saptharishi credit co-operative society

To analyze the various ratios and its impact on bank at Saptharishi credit co-operative To make suitable recommendations for the management with respect to working capital management at Saptharishi credit co-operative

1.5 SCOPE OF STUDY

The scope of the study includes study of working capital management and ratios and its impact of Working capital management on profitability of the at credit co-operative. The scope is limited to analysis on working capital management at Saptharishi credit co-operative

The scope of the study is confined to the data that is available to me with respect to various working capital ratios.

1.6 RESEARCH METHODOLOGY

In this chapter I will discuss about the research methodology which is followed to carry out this project i.e. the universe, locale of our study, Sample selection, Data Collection, data analysis and field experience. As in organizations like at Saptharishi credit co-operative, working capital constitute a major portion of its resources, a thorough study of its working capital management has been done broadly covering: Receivables Management, Cash Management, and Inventory Management

a. Primary data:

Information is collected from discussions with the respected finance department heads and managers.

b. Secondary data:

Annual report of financial year which has details about balance sheet and profit and loss account

The secondary data is collected from the articles on WCM

Bank journals.

1.7 Literature Review

R. Sivarama and Prasad (2001).A research study on working capital management of paper industries in India was conducted by R. Sivarama and Prasad. They reported that the chief executives properly recognized the role of efficient use of working capital in liquidity and profitability, but in practice they could not achieve it. Again they reported a clear reveal of a suboptimum utilization of working capital in paper industry

According to Richard pike and Bill Neale (April P, 2006):

The purpose of this chapter is to present a review of literature of relating to the working capital management. Although working capital is an important ingredient in the smooth working of business entities, it has not attracted much attention of scholars. Whatever studies have conducted those has exercised profound influence on the understanding of working capital management good number of these studies which pioneered in this area have been conducted.

The size and composition of working capital can vary between industries. For some types of business, the investment in working capital can be substantial. For example, a manufacturer will invest heavily in raw materials, work-in-progress and finished good and it will often sell its goods on credit, thereby generating trade debtors. A retailer, on the other hand, will hold only one form of stock (finished goods) and will usually sell goods for cash. Working capital represents a net investment in short-term assets. These assets are continually flowing into and out of a business and are essential for day-to-day operation. Further April P, 2006 believe that the various elements of working capital are interrelated and can be seen as part of a short-term cycle.

Atson D and Head A, 2007 argued that "maintaining adequate working capital is not just important in the short term. Adequate liquidity is needed to ensure the survival of the business in the long term". Even a profitable company may fail without adequate cash flow to meet its liabilities. It can be argue as according to ACCA paper 2.4, 2005, "an excessively conservative

Approach to working capital management resulting in high-level of cash holdings will harm profits because the opportunity makes a return on the assets tied up as cash will have been missed".Therefore, in short, working capital is money used to pay short-term obligations such as creditors, to purchase stock, for paying wages etc - costs that are used to make and sell your product or deliver your service and will ultimately be recovered from sales. Basically working capital represents the funds that are required to operate a business on a day to day basis.

The management of working capital is an essential part of a business's short-term planning process. It is necessary for managers to decide how much of each element should be held.

Watson D and Head A, 2007 have noted that there are costs associated with holding both too much and too little of each element. Managers must be aware of these costs in order to manage effectively. They must also be aware that there may be other, more profitable uses for the funds of the business. Hence the potential benefits must be weighed against the likely costs in order to achieve the optimum investment.Krishna murthy (2014)

This study is a modest attempt to examine whether empirical results on the relationship between working capital management practices and profitability of non financial firms are applicable to financial firms like Banks. The study included all commercial banks from a developing economy, Ghana, over a ten-year period (1999-2008). The study used data from Bank of Ghana and World Bank. Using panel data methodology, within the framework of the random effects model the study concludes that while cash operating cycle has a significantly positive relationship with bank profitability, just like debtors collection period, creditors payment period exhibits a significantly opposite relationship with profitability.

Strategies for improving working capital management by Dorothy Rule, Director and Global Head of Liquidity and Investments, Citigroup Global Transaction Services: The article explains the importance of information integration and the need for liquidity management. It also discusses contrasting approaches to maximizing Liquidity like concentrating funds worldwide, Asian subsidiaries funding each other And global treasury or moving excess balances directly to global treasury

Kesseven Padachi (2007):

The paper examines the trend in working capital needs and Profitability of firms to identify the causes for any significant differences between the Industries. The dependent variable, return on total assets is used as a measure of Profitability and the relation between working capital management and corporate Profitability is investigated for a sample of 58 small manufacturing firms.

Liberating cash- Reducing working capital levels by Laura Greenberg:

The paper discusses that well-capitalized companies are positioned not only to survive the financial crisis today, but also to emerge victorious and thrive when skies turn blue Again. Establishing and adhering to tight working capital standards enables a firm to continue its operations with sufficient funds to both satisfy maturing short-term debt and meet upcoming operational expenses.

The new liquidity paradigm: Focus on working capital:

The article focuses on the Efforts of corporate treasurers to improve working capital management in line with the Emergence of the new liquidity paradigm brought about by the recent economic crisis. It outlines some of the common misperceptions about working capital optimization Initiatives. It presents the findings of an in-depth analysis of working capital-intensive industries conducted by Cities Financial Strategy Group. It discusses the components

Of working capital such as procure to pay and order to cash.

1.8 LIMITATIONS OF THE STUDY

Like any other project work in the field of social science, the present project A STUDY ON WORKING CAPITAL MANAGEMENT AT SAPTHARISHI CREDIT CO-OPERATIVE LTD is also not free from limitations, the major limitation are,

1. The analysis and interpretations based on the interaction of The top managers , staffs & details given by them in at Saptharishi credit co-operative This study is restricted to at Saptharishi credit co-operative main branch.

2. The study is restricted for a period of 3 years financial details.

2.1. INDUSTRY PROFILE INTRODUCTION

Banking in Indiain the modern sense originated in the last decades of the 18th century. The first banks were Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 and since defunct.The largest bank, and the oldest still in existence, is theState Bank of India, which originated in theBank of Calcuttain June 1806, which almost immediately became theBank of Bengal. This was one of the three presidency banks, the other two being theBank of Bombayand theBank of Madras, all three of which were established under charters from theBritish East India Company. The three banks merged in 1921 to form theImperial Bank of India, which, upon India's independence, became the State Bank of Indiain 1955. For many years the presidency banks acted as quasi-central banks, as did their successors, until theReserve Bank of Indiawas established in 1935.

In 1969 theIndian governmentnationalizedall the major banks that it did not already own and these have remained under government ownership. They are run under a structure know as 'profit-making public sector undertaking' (PSU) and are allowed to compete and operate ascommercial banks. The Indian banking sector is made up of four types of banks, as well as the PSUs and the state banks; they have been joined since the 1990s by new private commercial banks and a number of foreign banks.

Banking in India was generally fairly mature in terms of supply, product range and reach-even though reach in rural India and to the poor still remains a challenge. The government has Developed initiatives to address this through the State Bank of India expanding its branch network and through theNational Bank for Agriculture and Rural Developmentwith things like microfinance.

Indian Banking Industry currently employees 1,175,149, employees and has a total of 109,811 branches in India and 171 branches abroad and manages an aggregate deposit of67504.54 billion(US$1.1trillion or 840billion) andbank creditof 52604.59 billion(US$890billion or 650billion). The net profit of the banks operating in India was1027.51 billion (US$17billion or 13billion) against a turnover of9148.59 billion(US$160billion or 110billion) for thefiscal year2012-13.

The Co-operative bank has a history of almost 100years. The Co-operative bank is an important constituent of the Indian financial system, judging by the role assigned to them, the expectations they are supposed to fulfill, their number and the number of offices they operate. The Co-operative movement originated in the West, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. The role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary Co-operative banks.

While Co-operative banks in rural areas mainly finance agriculture based activities including forming, cattle, milk, hatchery, personal finance etc. along with small scale industries and self-employment driven activities, the Co-operative banks in urban areas mainly finance various categories of people for self-employment, industries, small scale units, home finance, personal finance, etc.

The Co-operative institutions play an important role in providing credit to agricultural sector since 1904 in India. The district central Co-operative bank occupies a key position in the Co-operative credit structure. The success of the Co-operative credit movement largely depends as their financial strength.

Co-operative movement in our country shall not only stay but also grow in times to come. In spite of the drawbacks experienced in the working and administration of the co-operative societies, they have positively contributed to the growth and development of the national economy. Promotion of thrift, self-help and mutual aid are the fundamental principles of co-operation. The orientations of commercial organization and co-operative organizations are basically different. In a commercial organization, earning and maximizing the profits is the sole motive; whereas in a co-operative organization profit cannot be the sole motive. The prime objectives, in addition to the three fundamentals of co-operation mentioned above are to make available the goods and services in required quantity, of better quality and at a reasonable price to its members. It does not mean that a Co-operative Society is a charitable organization. It should, therefore, conduct itself in a business like manner in attaining its objectives efficiently.

Broadly speaking there are three sectors operating in the Union of India.

1. PUBLIC SECTOR wherein the State i.e. The Union of India and the respective State Government undertake developments projects which are wholly owned by either the Central Government or the State Government.

2. PRIVATE SECTOR which is a sector where private enterprises are permitted in certain fields of economic activities.

3. CO-OPERATIVE SECTOR which is beautifully blended in between a public sector and the private sector. It has benefits of both the sectors and disadvantages of neither of them.

PRINCIPLES OF CO-OPERATIVE SECTOR

1. LEGAL STATUS : A co-operative Society is a body corporate registered under the applicable state Act with perpetual succession having a common seal. It can acquire, hold and dispose of properties, enter into contracts and it can sue and it can be sued.

2. VOLUNTARY ASSOCIATION : Co-operative Society is essentially an organization or an association of persons who have come together for the common purpose of economic development or for mutual help.

3. SELF HELP AND MUTUAL HELP : The Co-operative societies office bearers/executive committee is elected as per democratic election procedure. The Co-operative Society function under the principle of self help and mutual help which means each will help for themselves and all will help others.

4. DEMOCRATIC CONTROLS : The Control of a Co-operative enterprise in not in the hands of capitalists who can corner the share capital and control the interest in any undertaking which would be a private undertaking.

5. EQUALITY : In co-operative Sector, the principle of One man one Vote is provided in the statute so as to ensure that the capital does not dominate the administration of co-operative Society.

6. OPEN MEMBERSHIP : Any person can apply for the membership of the Society without any discrimination. The membership is open for all.

7. SOCIAL APPROACH / NO PROFIT MOTIVE : As the Society is working on democratic principle and the office bearers of the Society will be functioning like a trustees for the better management of the society and there is no separate benefits to the executive committee members. Service is the main motto and the profit is not the main concern in co-operative societies.

8. PROFITS AND RETURNS TO THE MEMBERS :

Co-operative Society is an association of members and certain percentage profits earned by the society, as decided in the meeting of the General body will be distributed in the form of dividend to the members.

9. LIMITED INTEREST ON SHARES : Irrespective of the shareholding, each member has only one vote in the decision-making in the General body meeting or at the time of election of the committee for management. The shares are not traded in the stock exchange. The State Co-op. Act also prescribes the maximum amount, which a member can hold as a share capital in any society.

Under M.C.S. Act, 1960 as per Section 28 other than Government or other society, shall not hold more than 1/5 of the total capital or interest in shares or exceeding Rs. 20,000/- which the State Government power to change by way of notification.

10. PERSONAL PARTICIPATION : The shareholders have to personally attend the meeting or for voting. They are not allowed to appoint proxies for attending the general body or for voting in the resolution to be passed.

11. EDUCATIONS AND CO-OPERATION : Every society has to contribute towards the education fund maintained and looked after by the district co-operative education Board as per the notification issued from time to time for educating the members or the office bearers of the Society.

12. CO-OPERATION AMONGST CO-OP. INSTITUTIONS : The funds generated or mobilized through the co-operative societies have to be deposited/ invested in the Co-operative Sector only. ACT & RULES APPLICABLE

A Co-operative Society functions as per the provisions of

1. Co-operative Societies Act under which the same is registered.

2. Co-operative Societies rules made there under

3. Bye-laws approved by the registrar at the time of registration and amendments made from time to time and approved by the registrar.

4. Notification and Orders

1. Co-operative Societies Act

We have a number of Co-operative Societies Acts functional in different states like

- Maharastra Co-operative Societies Act, 1960,

- Pondicherry Co-operative Societies Act, 1972,

- Karnataka Co-operative Societies Act, 1959,

- Delhi Co-operative Societies Act, 1972,

- Kerala Co-operative Societies Act etc.

When the area of operation is restricted to one state, the State Co-operative Act & Rules, under which the society is registered will be applicable.

In a particular state, if Co-operative Act and Rules is not enacted, the Central Act which is known as The Co-operative Act, 1912 and its rules will be applicable. When the area of operation of Society is spread in two or more states. The Multi-State Co-operative Societies Act, 2002 and its rules shall be applicable.

2. Co-operative Societies Rules

A set of rules is also framed under the respective State Co-operative Act for procedural aspects.

3. Bye-laws

Each society also registered with the bye-laws for internal management of the societies duly approved by the registrar at the time of registration of the society. The bye-laws of a society constitute a contract

2.2 COMPANY PROFILE

Saptharishi Credit Co-Operative Society Ltd. is a community-based financial Institution registered under co-operative societies act by Deputy Registrar of cooperative societies and its register No./Date :No.DRM/SS/RGN/323/2003-04,Date:30-12-2003 founded in December of 1997. Our offices are located at 2nd main, Jayanagar in Mysore , Karnataka. It has 4 sub-branches at Mysore city and taluk

The mission of Saptharishi Credit Co-Operative Society Limited is to eradicate poverty by building a secure and transparent microfinance institution to provide financial assistance to the underprivileged, especially senior citizens, women, handicapped, and those living below the poverty line.

The organization has adopted a co-operative approach in order to involve every member in our mission with a spirit of cooperation and mutual confidence. The credit society has instituted a working culture, which revolves around efficiency, transparency, professionalism, teamwork and flexibility. It is having 15272 members.2.3 Promoters of Saptharishi Credit Co-operative society

Sl.NoNameDesignation

1Sri. M.S Chandrashekharpresident

2Sri. Na. NagachandraVice-president

3Sri. H.V SubbannaHonourable Treasurer

4Sri. K.V NagendranDirector

5Mrs. Krishnaveni prasadhDirector

6Mrs. S. ShyamalaDirector

7Sri. HrushikeshDirector

8Sri. R.L Satish sharmaDirector

9Sri. K.V NagendraDirector

10Sri. EshwarDirector

11Sri.T.S SheshadriDirector

12Sri. M.S GururajDirector

13Sri R RamadasDirector

14Sri K.S SadashivaAuditor

15Sri S AdisheshaCEO

2.4 Vision and mission

To encourage the sense of economic, self-help and co-operation the minds of co-operative society members.

Co-operative society is formed in that way it is wholly controlled and owned by its co-operative society members.

To encourage the life style of the members on the ground work and direction of co-operative principle like members co-operation, self help, mutual help etc.

To encourage and develop this co-operative society in to responsible and self reliant and competitive economic industry.

To encourage the needed programs that will create the savings attitude in the members.

Create the needed programs and corresponding needs to that program for self reliance of members and the public.

Satisfy the different investment needs of members and provide different services to their members for that it will make agreement/contract with institution which provide those facilities.

Inform the members and to the publics about savings scheme which are encouraged by the Income tax department and government and provide the services to get those benefits.

To provide loans to their members for buying motor vehicle or machineries on instalment or hypothecation under described in motor act.

To have and to ensure that the land acquisition for the need of the business or functioning of co-operative society and build and shift office to the new building and undertake needed programs.

Creating funds from net profit for the benefits and aid of members or employees which is created by board and it is approved by general meeting.

Funds created by board and limit prescribed by general meeting for encouraging the children education of the members or members.

Provide financial and technical assistance to the establishment of small scale industry, cottage industry, transportation industry and self employment to the members of co-operative society.

Provide various financial services, cultural, social, educational benefits to their members except cheque transactions.

Make arrangement for loans and advances to the various needs of their members

On behalf of their members society purchases government securities, selling of the government securities, and holding the same on behalf of their members.

For the convenience of the transaction in co-operative society make contract with those institutions which provide financial assistance to society.

On behalf of their members collect money and security paper and transfer the same.

On the directions of composite co-operatives and co-operative principles the co-operative societies having same purpose can transfer money with other and refinance also.

For the fulfilment of purpose of co-operative and doing specific business for this having partnership with other co-operatives or inception with similar kind of business institution and establishing supplementary institution2.5 Products and services Fixed Deposits:

Eligibility: Only a member is eligible to open fixed deposit A/c.

Facility: Computerised deposit certificate issued instantly.Time PeriodInterest RateSpecial Interest Rate

3 months6.00 %7.00 %

3 months7.00 %8.00 %

9 months8.00 %9.00 %

1 year10.05 %11.05 %

2 years10.75%11.75%

3 years11.00%12.00%

4 years11.25%12.25%

5 years11.50%12.50%

These special rates are designed to benefit disadvantaged community members. In order to qualify for the interest rates listed in this category a member must meet at least one of the following criteria:

1.At least 50 years of age

2.Woman

3.Physically Handicapped

4.Below Poverty Line

5.Member (Active or Retired) of the Indian Army.

6.Government Employee.

7.Resident Of Mysore

8.Five Lakh Maximum Deposit

Recurring Deposit (R.D.)

Eligibility: Only a member is eligible to open fixed deposit A/c.

Facility: Computerized deposit certificate issued instantly.

Time Period

Yearly Interest Rate

Maturity Payment (When giving Rs. 100 Monthly)

12 months

6.00 %

Rs 1239.00

24 months

9.00 %

Rs. 2630.00

60 months

10.00 %

Rs. 7723.00

72 year

11.00 %

Rs. 10061.00

Daily Depositing SchemeThe cooperative has engaged daily collection motivators for collection of daily deposits from door to door. Only a member is eligible to open fixed deposit A/c. Time PeriodGeneral Interest*Special Interest

6 months1.75 %2.00 %

12 months2.00 %3.00 %

18 months3.00 %4.00 %

24 months3.50 %4.05 %

30 months5.00%6.00%

36 months6.00%7.00%

42 months6.50%7.05%

48 months7.00%8.00%

Saving Deposit

Saptharishi credit co-operative society allows you to deposit or withdraw money from your account at any time. In return for keeping your money at Credit, it pays you money, also known as interest.An individual residing in India, above 18 years of age is eligible become a member with Saptharishi Credit co-operative society

Requirements:

1. Two copies of latest photographs

2. Proof of residence to the satisfaction of the Bank (Passport, Driving License, Ration Card, Voters Card, Electricity Bill, Aadhar Card etc.)

3. Photo Identity Proof

4. Initial deposit of Rs 100 in cash

Terms and conditions

1. An individual has to be a member of Saptharishi Credit co-operative to have a Saving Account.

2. All transactions related to deposit and withdrawal will be routed through Saving Account.

3. Interest will be credited in account annually

4. Nomination facility is available.Bonds

BOND is a written and signed promise to pay a certain sum of money on a certain date, or on fulfilment of a specified condition by credit co-operative society. It is a certificate of debt (usually interest-bearing or discounted) that is issued in order to raise money. It will pay a fixed or variable amount of interest at regular interval over a certain period of time. The nominal amount is intended to be reimbursed totally (or partially) at the end of the period. Partially or earlier redemption is possible depending on derivatives (call/put) that can be added.

Two features of a bond credit and duration are the principal determinants of a bonds interest rateSaptharishi have five type of BOND PLANS:

Saptharishi Silver BondDeposit Money Doubles in Six Years

Saptharishi Golden BondDeposit Money Triples in 10 Years

Saptharishi Platinum BondDeposit Money Become Four Times in Twelve Years

Saptharishi Diamond BondDeposit Money Become Five Times in Fourteen Years

Saptharishi DhanLaxmi BondDeposit Money Become Six Times in Sixteen Year

Monthly Income Schemes (M.I.S)General Interest RatesTime PeriodInterest Rate(Monthly Compound)To Receive Monthly Income of Rs .100, Investment AmountMonthly Income On Investment Of Rs. 10000

1-2 Years10.00 %Rs. 12000Rs. 83.33

3-4 Years10.25 %RS. 11707Rs. 85.41

5-6 Years10.50 %Rs. 11429RS. 87.50

*Special Interest RatesTime PeriodInterest Rate(Monthly Compound)To Receive Monthly Income Of Rs 100,Investment AmountMonthly Income on Investment of RS 10000

1-2 Years11.00 %Rs.10910Rs. 91.66

3-4 Years11.25 %Rs. 10667Rs. 93.75

5-6 Years11.50 %Rs. 10440Rs. 95.83

*special interest rate are subject to terms & conditions

Payment Table On a Deposite of Rs.10000General Interest RatesTime PeriodInterest Rate(Monthly Compound)Monthly AmountQuarterly IncomeSemi Annual IncomeYearly Income

1-2 Years10.00 %Rs. 83.33Rs. 252.08Rs. 510.53Rs. 1047.13

3-4 Years10.25 %Rs. 85.41Rs. 258.44Rs. 523.57Rs. 1074.55

5-6 Years10.50 %Rs. 87.50Rs. 264.80Rs. 536.61Rs. 1102.03

*Special Interest RatesTime Period

Interest Rate(Monthly Compound)

Monthly Amount

Quarterly Income

Semi Annual Income

Yearly Income

1-2 Years

11.00 %

Rs. 91.66

Rs. 277.52

Rs. 562.75

Rs. 1157.18

3-4 Years

11.25 %

Rs. 93.75

Rs. 283.89

Rs. 875.85

Rs. 1184.86

5-6 Years

11.50 %

Rs. 95.83

Rs. 290.26

Rs. 588.95

Rs. 1212.59

Special interest rate are subject to terms & conditions.

LoansThe livelihood loan schemes at saptharishi Credit are characterized by relatively small loans, a few thousand rupees at most. The repayment period is relatively short, about a year or so. Women are a major beneficiary of their activities, and the destination of the funds primarily includes agriculture, distribution, trading, small craft and processing industries. The administrative structure is generally light and the entire process is participatory in nature. The impact of credit lending is as widespread as in the rural areas and urban areas.

Saptharishi extends livelihood loans between 10000- 50000 for various purposes, like Manufacturing, Servicing, Small Business, Agriculture & Allied Activities, etc. The loan schemes also simultaneously undertake a social development agenda. This helps to:

1.Raise the social and political consciousness of members

2.Focus increasingly on women, whose urge for survival has a far greater bearing on the development of the family

3.Encourage their monitoring of social and physical infrastructure projects - housing, sanitation, drinking water, education, entrepreneurship, business development, agriculture, etc.

The lending practices are characterized by an unusually high degree of fairness, flexibility and service. Program loans are provided for any reasonable purpose. The interest rates charged to borrowers are below or at market levels, and repayment terms are arranged to accommodate the needs of the borrowing organization.

The terms and conditions of the loan agreement entered into with borrowers are significantly less restrictive and obtrusive than most commercial loan contracts. The agreement is nevertheless a detailed and comprehensive one that is fully protective of the legal rights and financial solvency of Saptharishi Credit. Reporting requirements are quite strict in requiring borrowers to submit substantial information on a regular and timely basis. Saptharishi is thus able to closely monitor the financial performance and organizational development of its borrowers. Saptharishi provides technical assistance services to its borrowers in connection with the loan application process and subsequently as circumstances warrant. The education and experience of staff and Trustees allow it to provide a wide range of quality services, particularly in the areas of organizational development, financial management, and training in consensus process.Different kind of loans in our bank

We provide all kind of loans for the common people from automobile loans to home loans...HOUSING LOAN

Home Loan is a secured loan with the property pledged as collateral with the bank/ housing finance company. Most often, a home loan is taken to buy a residential apartment whether ready to move or under construction. Increasingly, people take a new home loan to transfer the balance outstanding on their existing loan because they are getting a better deal. Home Loans are also taken to repair and renovate one's existing house. Occasionally, a home loan is taken to construct a house. A related loan is a plot loan where the proceeds are towards the purchase of a plot.GOLD LOAN

As the name suggests this is the loan given against gold. Many nationalized banks, private banks and other financial companies offer this loan at attractive rates. Many go for this loan for short period to meet the requirement of their childrens education, marriage and other financial problems in the family. And others think that instead of keeping the gold idle at home or locker, loan against gold is the best option. Moreover with the rise in gold rates the demand from companies and banks offering such loans has raised. For instance, Muthoot Finance, one of the leading gold loan companies has seen 24 percent rises in gold loan against 17 percent raise in the market value of gold.

BUSINESS LOAN

Businesses require an adequate amount of capital to fund start-up expenses or pay for expansions. As such, companies take out business loans to gain the financial assistance they need. A business loan is debt that the company is obligated to repay according to the loans terms and conditions. According to the U.S. Small Business Administration, before approaching a lender for a loan, it is imperative for the business owners to understand how loans work and what the lender will want to see from the owner.

Function: A business loan is borrowed capital that companies apply toward expenses that they are unable to pay for themselves. Some business owners use business loans to pay for salaries and wages until their new company gets off the ground, while other companies put borrowed funds toward office supplies, inventory or business projects. Lenders want to know how the business intends to use the borrowed monies, so business owners must make sure to have a clear outline for how the money will be spent. According to an October 2010 article by David Bangs in Entrepreneur.com, it is important to impress the lenders by being professional, or they may decline the loan application.

Payday Loans

Payday loans are short-term, high-interest loans designed to bridge the gap from one pay check to the next. They are predominantly used by repeat borrowers living pay check to pay check. Because of the loans high costs, the government strongly discourages their use.

Utility Loan Program

Loan programs provide financing for the purchase of renewable energy or energy efficiency systems or equipment. Low-interest or zero-interest loans for energy efficiency projects are a common demand-side management (DSM) strategy for electric utilities. State governments also offer low-interest loans for a broad range of renewable energy and energy efficiency measures. These programs are commonly available to the residential, commercial, industrial, transportation, public and nonprofit sectors. Loan rates and terms vary by program; in some cases, they are determined on an individual project basis. Loan terms are generally 10 years or less. In recent years, the federal government has offered loans for renewable and energy efficiency projects.

2.6 Area of operation

This saptharishi credit co-operative society carrying its operation like accepting and lending money etc. at mysore city and Taluk. 2.7 Infrastructure facilities

Society having its own building, well operating computers, good water facility, telephone and internet facility, good transportation, and good electricity facility.

2.8 Competitors information

Some other credit co-operative societies, banks, and some micro-financial companies are the competitors of saptharishi credit co-operative society. they mainly playing with the interest rate on loans and as well as deposit.

2.9 SWOT analysis of Saptharishi credit co-operative society A SWOT analysis (alternatively SWOT matrix) is a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieve that objective

S-STRENGTH

Loyal membership

Ready market for product and services offered

Favourable interest rates

Credit facilities are accessible and conditions not stringent

Management is accessible and approachable Member recruitment and marketing

Board and member confidence

Strong , transparent and Informed leadership

Established team and team work

Competent, committed and hardworking staff

Experienced management and skilled staff -Good reputation, positive image and brand.

W-WEAKNESSES

Most members are net borrowers and not savers

Savings are not realized out of personal decision but as a result of the minimum set by the general meeting

Leadership through democratic practice and often leaders would want to be loyal to the electorate

Leaders lack entrepreneurship/business skills

Disregard of policies (i.e. credit policy) by management

Pressure and demand from members because of promise during the election period

Increasing poverty levels and inflation forcing members to seek cheap financial support

perpetual borrowers

Members not able to do self-appraisal of projected investments.

O-OPPORTUNITIES

Unsatisfied demand from the members/customers

Amendments to the Co-operative Societies Act, Rules and By-Laws i.e. open up membership, diversity in other products (Front Office Services)

A sound representation in the Apex bodies (corporate image, synergies)

Open agency banking

Advancement and Growth in Technology e.g. mobile banking .

Aggressive marketing and publicity campaign of products and services

Potential to attract more membership because of its financial stability and good customer service

T-THREATS

Competition from micro-finance institutions and banks

Change of policies and legal framework

Increasing poverty levels and inflation

Retrenchments and redundancies affect the capital base and membership

Technological changes in the financial and business sector

Ageing membership -High rate of member withdrawal

Lack of awareness, ignorance and poor patronage among some members2.9 Future growth and prospectus To provide a better service co-operative sector by facing all types of competition reducing customer risk through providing services like paying insurance premium

Bills payments like telephone bill, electricity bill, water bill etc.

Also get in to the market of sales by selling product through our co-operative society

Establishing new branches

Develop the society as more stable financial institution and convert it in to bank

Provide insurance facilities to their members and employees

All the above process are done on the commission basis of co-operative society by reducing customer risk and provide better services in the competitive world.profit and loss account for the year ended 31-3-2014

31-03-2013Expenses details31-03-201431-03-2013Income details31-03-2014

26066956Interest3293698847480232interest57362788

1886892Commission20838162554956other income 2272184

4383904employees salary46215601855196e-stamp commission1830724

394068e-Stamping employees salary659796

350760rent and taxes89312

124296Electricity134328

33760travelling & conveyance87492

167780post and telephone186492

353937.2printing and stationary416014

102400law fee154600

296960Insurance332756

3621403.32other expenses5385496.56

349244Meeting allowance & expenses514440

3509020Remittance2623340

479672e-stamp expenses594988

1741192Depreciation1887344.2

43862244.5252708762.76

8028139.488756933.24

51890384614656965189038461465696

Balance sheet as on year ended 31-3-2014

31-03-2013Liabilities31-03-201431-03-2013Assets31-03-2014

40000000Authorised share capital400000001543940Cash balance2433676

38478800Paid up share capital3906160015854163.88Bank balance13611563.88

146800Nominated members100000114967080Investment150967080

1480400Even members1427600301938732Loans & Advances322169056

65767816.6Reserve funds71290250.8432580312Fixed Assets34575524

340191134Deposits3883822043253888Other Assets5271130

8297825.8Other liabilities10266469.8

7747200To pay9742972

8028139.5Profit8756933.3

470138115.9529028029.9470138115.9529028029.9

Details%Amount 31-3-2013Amount 31-3-2014

Net profit8028139.58756933.24

Reserve fund25%2007039.52189232

Reserve working Capital20%16056281751384

composite co-operative education fund2%160564175140

General welfare fund5%401408437848

General welfare fund (additional)0200000

Dividend8%31713163206760

Bonus472168355768

Draft suspicious fund0200000

Building fund 210016200000

Dividend compensation fund040801.24

total8028139.58756933.24

Sl. NoDetails2010-112011-122012-132011-12

1.members1485615512

1580815272

2.SHARE CAPITAL35470800380348003847880039061600

3.RESERVES19707920217391362359856425605604

4.DEPOSITS199405968259009284340231132388382204

5.BORROWINGS17438352264535740301938732322169056

ANALYSIS OF FINANCIAL STATEMENTS

From the above financial statements from year 2013-2014, we can interpret that, paid up share capital has been increased from Rs. 38478800 in 2012-2013 to Rs. 39061600 in 2013-2014. This shows that company is growing at a good rate over a period of time.

Deposits have been increased from Rs. 340231132 in 2012-2013 to Rs. 388382204 in 2013-2014. This is because bank is attracting the customers over a period of time.

Borrowings have been increased from Rs. 301938732 in 2012-2013 to Rs322169056 in 2012-2013. This interprets that bank is using its borrowings to serve its customers in better way.

Coming to assets side of the bank, cash and bank balance has been decreased from Rs. 17398103.88 in 2012-2013 to Rs.16045239.88 in 2013-2014. From this we can say that bank has decreased its cash and bank balances due to invested in various securities and provided loans to the needed persons and also to safe guard the interest of the depositors.

Investment has been increased from Rs.114967080 in 2012-2013 to Rs.150967080 in 2013-2014. Investments are the key to increase the profits of any organization. From the above statement we can clearly say that bank has taken effective steps to increase the profits by choosing the best investment avenues.

Fixed assets have been increased from Rs.32580312 in 2012-2013 to Rs.34575524 in 2013-2014. This shows that bank has investing more on fixed assets to cope up with modern and sophisticated technology.

PROFIT AND LOSS ACCOUNT ANALYSIS

Gross income has been increased to Rs.61465696 in the year 2014 as against 51890384in the year 2013.

Net profit has been increased to Rs.8028139.48 in the year 2013 as against Rs.8028139.48 in the year 2014

Gross expenditure has increased to Rs.52708762.76 in the year 2014 as against Rs.43862244.52in the year 2013

3.1 Introduction to working capitalWorking Capital is the Life-Blood and Controlling Nerve Center of a business

The working capital management precisely refers to management of current assets. A firms working capital consists of its investment in current assets, which include short-term assets such as: Cash and bank balance, Inventories, Receivables (including debtors and bills), Marketable securities. Working capital is commonly defined as the difference between current assets and current liabilities.

Working Capital = Current Assets-Current LiabilitiesThere are two major concepts of working capital: Gross working capital

Net working capital Gross working capital:

It refers to firm's investment in current assets. Current assets are the assets, which can be converted into cash with in a financial year. The gross working capital points to the need of arranging funds to finance current assets. Net working capital:

It refers to the difference between current assets and current liabilities. Net working capital can be positive or negative. A positive net working capital will arise when current assets exceed current liabilities & vice-versa for negative net working capital. Net working capital is a qualitative concept. It indicates the liquidity position of the firm and suggests the extent to which working capital needs may be financed by permanent sources of funds. Net working capital also

Covers the question of judicious mix of long-term and short-term funds for financing current assets.

Significance of Working Capital Management

The management of working capital is important for several reasons:

For one thing, the current assets of a typical manufacturing firm account for half of its total assets.

For a distribution company, they account for even more. Working capital requires continuous day to day supervision.

Working capital has the effect on company's risk, return and share prices,

There is an inevitable relationship between sales growth and the level of current assets. The target sales level can be achieved only if supported by adequate working capital Inefficient working capital management may lead to insolvency of the firm if it is not in a position to meet its liabilities and commitments.

Liquidity Vs Profitability: Risk - Return trade off

Another important aspect of a working capital policy is to maintain and provide sufficient liquidity to the firm. Like the most corporate financial decisions, the decision on how much working capital is maintained involves a trade off- having a large net working capital may reduce the liquidity risk faced by a firm, but it can have a negative effect on the cash flows. Therefore, the net effect on the value of the firm should be used to determine the optimal amount of working capital. Sound working capital involves two fundamental decisions for the firm. They are the determination of:

The optimal level of investments in current assets.

The appropriate mix of short-term and long-term financing used to support this investment in current assets, a firm should decide whether or not it should use short-term financing. If short-term financing has to be used, the firm must determine its portion in total financing. Short-term financing may be preferred over long-term financing for two reasons:

The cost advantage

Flexibility

But short-term financing is more risky than long-term financing.

CLASSIFICATION OF WORKING CAPITAL

Working capital can be classified as follows:

On the basis of time

On the basis of concept

Types of Working Capital Needs

Another important aspect of working capital management is to analyze the total working capital needs of the firm in order to find out the permanent and temporary working capital. Working capital is required because of existence of operating cycle. The lengthier the operating cycle, greater would be the need for working capital. The operating cycle is a continuous process and therefore, the working capital is needed constantly and regularly. However, the magnitude and quantum of working capital required will not be same all the times, rather it will fluctuate.

The need for current assets tends to shift over time. Some of these changes reflect permanent changes in the firm as is the case when the inventory and receivables increases as the firm grows and the sales become higher and higher. Other changes are seasonal, as is the case with increased inventory required for a particular festival season. Still others are random reflecting the uncertainty associated with growth in sales due to firm's specific or general economic factors.

The working capital needs can be bifurcated as:

Permanent working capital

Temporary working capital

Permanent working capital:

There is always a minimum level of working capital, which is continuously required by a firm in order to maintain its activities. Every firm must have a minimum of cash, stock and other current assets, this minimum level of current assets, which must be maintained by any firm all the times, is known as permanent working capital for that firm. This amount of working capital is

Constantly and regularly required in the same way as fixed assets are required. So, it may also be called fixed working capital.

Temporary working capital:

Any amount over and above the permanent level of working capital is temporary, fluctuating or variable working capital. The position of the required working capital is needed to meet fluctuations in demand consequent upon changes in production and sales as a result of seasonal

Changes.

The permanent level is constant while the temporary working capital is fluctuating increasing and decreasing in accordance with seasonal demands as shown in the figure. In the case of an expanding firm, the permanent working capital line may not be horizontal. This is because the demand for permanent current assets might be increasing (or decreasing) to support a rising level of activity. In that case line would be rising.

FACTORS OF DETERMINING WORKING CAPITAL

There are many factors that determine working capital needs of an enterprise. Some of these factors are explained below:

NATURE OR CHARACTER OF BUSINESS

The requirements of working is very limited in public utility undertakings such as electricity, water supply and railways because they offer cash sale only and supply services not products, and no funds are tied up in inventories and receivables. On the other hand the trading and financial firms requires less investment in fixed assets but have to invest large amt. of working capital along with fixed investments.

SIZE OF THE BUSINESS:

Greater the size of the business, greater is the requirement of working capital.

PRODUCTION POLICY:

If the policy is to keep production steady by accumulating inventories it will require higher working capital.

LENGTH OF PRDUCTION CYCLE:

The longer the manufacturing time the raw material and other supplies have to be carried for a longer in the process with progressive increment of labor and service costs before the final product is obtained. So working capital is directly proportional to the length of the manufacturing process.

SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger working capital than in slack season.

WORKING CAPITAL CYCLE:

The speed with which the working cycle completes one cycle determines the requirements of working capital. Longer the cycle larger is the requirement of working capital.

RATE OF STOCK TURNOVER:

There is an inverse co-relationship between the question of working capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock turn over will needs lower amt. of working capital as compared to a firm having allowed rate of turnover.

CREDIT POLICY:

A concern that purchases its requirements on credit and sales its product / services on cash requires lesser amt. of working capital and vice-versa.

PRAKASH

WORKING CAPITAL CYCLE

The upper portion of the diagram below shows in a simplified form the chain of events in a manufacturing firm. Each of the boxes in the upper part of the diagram can be seen as a tank through which funds flow. These tanks, which are concerned with day-to-day activities, have funds constantly flowing into and out of them.

The chain starts with the firm buying raw materials on credit. In due course this stock will be used in production, work will be carried out on the stock, and it will become part of the firms work-in-progress. Work will continue on the WIP until it eventually emerges as the finished

EXCESS OR INADEQUATE WORKING CAPITAL:

Every business concern should have adequate amount of working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate nor shortages of working capital. Both excess as well as short working capital positions are bad for any business. However, it is the inadequate working capital which is more dangerous from the point of view of the firm

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL:- 1. Business cannot earn the required rate of return on its investments.

2. Redundant working capital leads to unnecessary purchasing and accumulation of inventories.

3. Excessive working capital implies excessive debtors and defective credit policy which causes higher incidence of bad debts.

4. It may reduce the overall efficiency of the business.

5. If a firm is having excessive working capital then the relations with banks and other financial institution may not be maintained.

6. Due to lower rate of return n investments, the values of shares may also fall.

7. The redundant working capital gives rise to speculative transactions

DISADVANTAGES OF INADEQUATE WORKING CAPITAL:-Every business needs some amounts of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. There is an operating cycle involved in sales and realization of cash. There are time gaps in purchase of raw material and production; production and sales; and realization of cash.

Thus working capital is needed for the following purposes:

For the purpose of raw material, components and spares.

To pay wages and salaries

To incur day-to-day expenses and overload costs such as office expenses.

To meet the selling costs as packing, advertising, etc.

To provide credit facilities to the customer.

To maintain the inventories of the raw material, work-in-progress, stores and spares and finished stock.

For studying the need of working capital in a business, one has to study the business under varying circumstances such as a new concern requires a lot of funds to meet its initial requirements such as promotion and formation etc. These expenses are called preliminary expenses and are capitalized. The amount needed for working capital

Depends upon the size of the company and ambitions of its promoters. Greater the business unit, generally larger will be the requirements of the Working capital. The requirement of the working capital goes on increasing with the Growth and expensing of the business till it gains maturity. At maturity the Amount of working capital required is called normal working capital. There are others factors also influence the need of working capital in a business.

Management of working capital

It is concerned with the problem that arises in attempting to manage the current assets, current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such a way that a satisfactory level of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations are bad for any firm. There should be no shortage of funds and also no working capital should be ideal.

WORKING CAPITAL MANAGEMENT POLICIES

Of a firm has a great on its probability, liquidity and structural health of the organization. So

Working capital management is three dimensional in nature as

1. It concerned with the formulation of policies with regard to profitability, liquidity and risk.

2. It is concerned with the decision about the composition and level of current assets.

3. It is concerned with the decision about the composition and level of current liabilities.

RATIOS THEORY WITH FORMULA

Working capital Ratio

The working capital ratio, also called the current ratio, is a liquidity ratio that measures a firm's ability to pay off its current liabilities with current assets. The working capital ratio is important to creditors because it shows the liquidity of the company

Working capital Ratio = Current assets

Current liabilities Quick ratioThe quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to pay its current liabilities when they come due with only quick assets. Quick assets are current assets that can be converted to cash within 90 days or in the short-term. Cash, cash equivalents, short-term investments or marketable securities, and current accounts receivable are considered quick assets. Quick assets Quick ratio = Quick assets Quick liabilities Quick assets = cash + cash equivalents +short term investments + current receivable

Current Ratio

The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its short-term liabilities with its current assets. The current ratio is an important measure of liquidity because short-term liabilities are due within the next year.

Current Ratio = Current assets Current liabilities

Net profit ratio (NP ratio)Is a popular profitability ratio that shows relationship between net profit after tax and net sales. It is computed by dividing the net profit (after tax) by net sales.

Net profit ratio =Net profit after tax

Net income Debtors turnover ratioReceivables turnover ratio (also known as debtors turnover ratio) is computed by dividing the net credit sales during a period by average receivables

'Working Capital Turnover'A measurement comparing the depletion of working capital to the generation of sales over a given period. This provides some useful information as to how effectively a company is using its working capital to generate sales

Working capital turnover = sales

Working capital

OPERATING CYCLE

BGS INSTITUTE OF TECHNOLOGY, BGNAGARPage 30