A

PROJECT REPORT
ON
WORKING CAPITAL MANAGEMENT
At

“ICICI BANK”

SUBMITTED BY

Ms. J. SWARNA
H.T.NO: 3121-19-672-028

Submitted In Partial Fulfillment of the Requirement for the Award

of The

MASTER OF BUSINESS ADMINISTRATION

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 Abstract
Working capital is known as the life blood of the organizations. The Purpose of this study is to
understand efficiency and utilization of working capital. Analyze for 3 years from 2017-18 to
2019-20. This study is based on the secondary data of the firm. The literature reviles that
working capital is directly affects the profitability and liquidity of the firm and this study
concludes that working capital is very much effects to the development of the firm.

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 INDEX

Ch. No. PARTICULARS Page No.

1.1 INTRODUCTION
CHAPTER -1i 1.2 OBJECTIVESOFSTUDY
1.3 NEEDFORTHESTUDY
1.4 SCOPEOFSTUDY
1.5 LIMITATIONSOFSTUDY
2.1RESEARCHMETHODOLOGY
CHAPTER -2i 2.2REVIEW OF LITERATURE
I I

CHAPTER-3 3.1COMPANY PROFILE

I

3.2INDUSTRYPROFILE
CHAPTER -4i 4.1 DATA ANALYSIS AND
INTERPRETATION
CHAPTER-5 5.1FINDINGS
5.2SUGGESTIONS
5.3CONCLUSIONS
CHAPTER-6
BIBILOGRAPHY

List Of Tables
 Table showing Current Ratio

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  Table showing Liquidity Ratio
 Table showing Comparative Balance Sheet: 2017-18 and 2018-19
 Table showing Comparative Balance Sheet: 2018-19 and 2019-20
 Table showing Common size Balance Sheet: 2017-19 and 2019-20
 Table showing Common Size Balance Sheet: 2017-19 and 2019-20

List of Graphs

 Graphs showing Current ratio

 Graphs showing Liquidity ratio

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 INTRODUCTION

1.1 INTRODUCTION

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It has been often observed that the shortage of working capital leads to the failure of a
business. The proper management of working capital may bring about the success of a business
firm. The management of working capital includes the management of current assets and
current liabilities. A few companies for the past few years have been finding it difficult to
solve the increasing problems of adopting seriously the management of working capital.

A firm may exist without making profits but cannot survive without liquidity. The function of
working capital management in an organization is similar that of the heart in a human body.
Also, it is an important function of financial management. The financial manager must
determine the satisfactory level of working capital funds and the optimum mix of current assets
and current liabilities. He must ensure that the appropriate sources of funds are used to finance
working capital and should also see that short term obligation of the business are met well in
time.

DEFINITION OF WORKING CAPITAL

“Working Capital is the excess of C.A. over current liabilities.”

CONCEPT OF WORKING CAPITAL MANAGEMENT

There are two concepts of working capital viz. quantitative and qualitative. Some people also
define the two concepts as gross concept and net concept.
According to quantitative concept, the amount of working capital refers to ‘total of current
assets. Current assets are gross working capital in this concept.
The qualitative concept gives an idea regarding source of financing capital. According to
qualitative concept the amount of working capital refers to “excess of current assets over

current liabilities.” L.J. Guthmann defined working capital as “the portion of a firm’s current
assets which are financed from long–term funds.” The excess of current assets over current
liabilities is termed as ‘Net working capital’. In this concept “Net working capital” represents
the amount of current assets which would remain if all current liabilities were paid.
Both the concepts of working capital have their own points of importance. “If the objectives is
to measure the size and extent to which current assets are being used, ‘Gross concept’ is useful;
whereas in evaluating the liquidity position of an undertaking ‘Net concept’ becomes pertinent
and preferable. It is necessary to understand the meaning of current assets and current liabilities
for learning the meaning of working capital, which is explained below.

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Current assets – It is rightly observed that “Current assets have a short life span. These types
of assets are engaged in current operation of a business and normally used for short– term
operations of the firm during an accounting period i.e., within twelve months. The two
important characteristics of such assets are, (i) short life span, and (ii) swift transformation into
other form of assets. Cash balance may be held idle for a week or two; account receivable may
have a life span of 30 to 60 days, and inventories may be held for 30 to 100 days.

Current liabilities – The firm creates a Current Liability towards creditors (sellers) from
whom it has purchased raw materials on credit. This liability is also known as accounts payable
and shown in the balance sheet till the payment has been made to the creditors. The claims or
obligations which are normally expected to mature for payment within an accounting cycle (1
year) are known as current liabilities. These can be defined as “those liabilities where
liquidation is reasonably expected to require the use of existing resources properly classifiable
as current assets, or the creation of other current assets, or the creation of other current
liabilities.”

TYPES OF WORKING CAPITAL

According to the needs of business, the working capital may be classified into following two
bases:
1) Based on periodicity
2) Based on concept

Based on periodicity:
The requirements of working capital are continuous. More working capital is required in a
particular season or the peck period of business activity. Based on periodicity working capital
can be divided under two categories as under:
1. Permanent working capital
2. Variable working capital

(a) Permanent working capital: This type of working capital is known as Fixed Working
Capital. Permanent working capital means the part of working capital which is
permanently locked up in the current assets to carry out the business smoothly. The
minimum amount of current assets which is required to conduct the business smoothly

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 during the year is called permanent working capital.

For example, investments required to maintain the minimum stock of raw materials or
to cash balance. The amount of permanent working capital depends upon the size and
growth of company. Fixed working capital can further be divided into two categories as
under:

1. Regular Working capital:

Minimum amount of working capital required to keep the primary circulation. Some
amount of cash is necessary for the payment of wages, salaries etc.

2. Reserve Margin Working capital:

Additional working capital may also be required for contingencies that may arise any
time. The reserve working capital is the excess of capital over the needs of the regular
working capital is kept aside as reserve for contingencies, such as strike, business
depression etc.

(a) Variable or Temporary Working Capital:

The term variable working capital refers that the level of working capital is temporary
and fluctuating. Variable working capital may change from one asset to another and
changes with the increase or decrease in the volume of business.

The variable working capital may also be subdivided into following two sub-groups.

1. Seasonal Variable Working capital:

Seasonal working capital is the additional amount which is required during the
active business seasons of the year. Raw materials like raw-cotton or jute or
sugarcane are purchased season. The industry has to borrow funds for short period.
It is particularly suited to a business of a seasonal nature. In short, seasonal working
capital is required to meet the seasonal liquidity of the business.

2. Special variable working capital:

Additional working capital may also be needed to provide additional current assets
to meet the unexpected events or special operations such as extensive marketing
campaigns or carrying of special job etc.

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 Any firm, from time to time, employs its short-term assets as well as short-term financing
sources to carry out its day to day business. It is this management of such assets as well as
liabilities which is described as working capital management. Working capital management
is a quintessential part of financial management as a subject. It can also be compared with
long-term decision-making the process as both of the domains deal with the analysis of risk
and profitability.

DEINITION OF WORKING CAPITAL

Working capital is formally arrived at by subtracting the current liabilities from current
assets of a firm on the day the balance sheet is drawn up. Working capital is also represented
by a firm’s net investment in current assets necessary to support its everyday business.
Working capital frequently changes its form and is sometimes also referred to as circulating
capital. According to Gretsenberg:

objectives of working capital management

The main objectives of working capital management are:

 Maintaining the working capital operating cycle and to ensure its smooth operation.
Maintaining the smooth operation of the operating cycle is essential for the business to
function. The operating cycle here refers to the entire life cycle of a business. From the
acquisition of the raw material to the smooth production and delivery of the end products –
working capital management strives to ensure smoothness, and it is one of the main
objectives of the concept.

 Mitigating the cost of capital. Minimizing the cost of capital is another very important
objective that working capital management strives to achieve. The cost of capital is the
capital that is spent on maintaining the working capital. It needs to be ensured that the costs
involved for maintenance of healthy working capital are carefully monitored, negotiated and
managed.

 Maximising the return on current asset investments. Maximising the return on current
investments is another objective of working capital management. The ROI on currently

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 invested assets should be greater than the weighted average cost of the capital so that wealth
maximization is ensured.

TYPES OF WORKING CAPITAL

Working capital, as mentioned above, can take different forms. For example, it can take the
form of cash and then change to inventories and/or receivables and back to cash.

 Gross and Net Working Capital: The total of current assets is known as gross working
capital whereas the difference between the current assets and current liabilities is known as
the net working capital.

 Permanent Working Capital: This type of working capital is the minimum amount of
working capital that must always remain invested. In all cases, some amount of cash, stock
and/or account receivables are always locked in. These assets are necessary for the firm to
carry out its day to day business. Such funds are drawn from long term sources and are
necessary for running and existence of the business.

 Variable Working Capital: Working capital requirements of a business firm might

increase or decrease from time to time due to various factors. Such variable funds are drawn
from short-term sources and are referred to as variable working capital.

THE WORKING CAPITAL CYCLE

The working capital cycle refers to the minimum amount of time which is required to
convert net current assets and net current liabilities into cash. From a more simplistic
viewpoint, working capital cycle is the amount of time between the payment for goods
supplied and the final receipt of cash accumulated from the sale of the same goods. There
are mainly the following elements of which the working capital cycle is comprised of:

Cash

The cash refers to the funds available for the purchase of goods. Maintaining a healthy level
of liquidity with some buffer is always a best practice. It is extremely important to maintain
a reserve fund which can be utilized when:

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 There is a shortage of cash inflow for some reason. In the absence of reserve cash, the
day to day business will get hampered.

 Some new opportunity springs up. In such a case, the absence of reserve cash will pose a
hindrance.

 In case of any contingency, absence of a reserve fund can cripple the company and poses
a threat to the solvency of the firm.

Creditors and Debtors

 The creditors refer to the accounts payable. It refers to the amount that has to be paid to
suppliers for the purchase of goods and /or services.

 Debtors refer to the accounts receivables. It refers to the amount that is collected for
providing goods and/or services.

Inventory

Inventory refers to the stock in hand. Inventories are an integral component of working
capital and careful planning, and proper investment is necessary to maintain the inventory in
a healthy state of affairs. Management of inventory has two aspects and involves a trade-off
between cost and risk factors. Maintaining a sizable inventory has its accompanying costs
that include locking of funds, increased maintenance and documentation cost and increased
cost of storage. Apart from these things, there is also a chance of damage to the stored
goods. On the other hand, maintaining a small inventory can disrupt the business lifecycle
and can have serious impacts on the delivery schedule. As a result, it is extremely important
to maintain the inventory at optimum levels which can be arrived at after careful analysis
and a bit of experimentation.

Properties of a healthy working capital cycle

It is essential for the business to maintain a healthy working capital cycle. The following
points are necessary for the smooth functioning of the working capital cycle:

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 Sourcing of raw material: Sourcing of raw material is the beginning point for most
businesses. It should be ensured that the raw materials that are necessary for producing the
desired goods are available at all times. In a healthy working capital cycle, production
ideally should never stop because of the shortage of raw materials.

 Production planning: Production planning is another important aspect that needs to be

addressed. It should be ensured that all the conditions that are necessary for the production
to start are met. A carefully constructed plan needs to be present in order to mitigate the
risks and avert unforeseen issues. Proper planning of production is essential for the
production of goods or services and is one of the basic principles that must be followed to
achieve smooth functioning of the entire production lifecycle.

 Selling: Selling the produced goods as soon as possible is another objective that should
be pursued with utmost urgency. Once the goods are produced and are moved into the
inventory, the focus should be on selling the goods as soon as possible.

 Payouts and collections: The accounts receivables need to be collected on time in order
to maintain the flow of cash. It is also extremely important to ensure timely payouts to the
creditors to ensure smooth functioning of the business.

 Liquidity: Maintaining the liquidity along with some room for adjustments is another
important aspect that needs to be kept in mind for the smooth functioning of the working
capital cycle.

APPROACHES TO WORKING CAPITAL MANAGEMENT

The short-term interest rates are, in most cases, cheaper compared to their long-term
counterparts. This is due to the amount of premium which is higher for short term loans. As
a result, financing the working capital from long-term sources means more cost. However,
the risk factor is higher in case of short term finances. In case of short-term sources,
fluctuations in refinancing rates are a major cause for concern, and they pose a major threat
to business.

There are mainly three strategies that can be employed in order to manage the working
capital. Each of these strategies takes into consideration the risk and profitability factors and
has its share of pros and cons. The three strategies are:

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  The Conservative Approach: As the name suggests, the conservative strategy involves
low risk and low profitability. In this strategy, apart from the permanent working capital, the
variable working capital is also financed from the long-term sources. This means an
increased cost capital. However, it also means that the risks of interest rate fluctuations are
significantly lower.

 The Aggressive Approach: The main goal of this strategy is to maximize profits while
taking higher risks. In this approach, the entire variable working capital, some parts or the
entire permanent working capital and sometimes the fixed assets are funded from short-term
sources. This results in significantly higher risks. The cost capital is significantly decreased
in this approach that maximizes the profit.

 The Moderate or the Hedging Approach: This approach involves moderate risks along
with moderate profitability. In this approach, the fixed assets and the permanent working
capital are financed from long-term sources whereas the variable working capital is sourced
from the short-terms sources.
Understanding Working Capital Management
The primary purpose of working capital management is to enable the company to maintain
sufficient cash flow to meet its short-term operating costs and short-term debt obligations. A
company's working capital is made up of its current assets minus its current liabilities.

Current assets include anything that can be easily converted into cash within 12 months. These
are the company's highly liquid assets. Some current assets include cash, accounts receivable,
inventory, and short-term investments. Current liabilities are any obligations due within the
following 12 months. These include operating expenses and long-term debt payments.

Working capital management commonly involves monitoring cash flow, current assets, and
current liabilities through ratio analysis of the key elements of operating expenses, including the
working capital ratio, collection ratio, and inventory turnover ratio.

Working capital management helps maintain the smooth operation of the net operating cycle,
also known as the cash conversion cycle (CCC)—the minimum amount of time required to
convert net current assets and liabilities into cash.

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Working capital management can improve a company's earnings and profitability through
efficient use of its resources. Management of working capital includes inventory management as
well as management of accounts receivables and accounts payables. 

Current Ratio (Working Capital Ratio)

The working capital ratio or current ratio is calculated as current assets divided by current
liabilities. It is a key indicator of a company's financial health as it demonstrates its ability to
meet its short-term financial obligations.

Although numbers vary by industry, a working capital ratio below 1.0 generally indicates that a
company is having trouble meeting its short-term obligations. That is, the company's debts due in
the upcoming year would not be covered by its liquid assets. In this case, the company may have
to resort to selling off assets, securing long-term debt, or using other financing options to cover
its short-term debt obligations.

Working capital ratios of 1.2 to 2.0 are considered desirable, but a ratio higher than 2.0 may
suggest that the company is not effectively using its assets to increase revenues. A high ratio may
indicate that the company is not securing financing appropriately or managing its working capital
efficiently.

Collection Ratio
The collection ratio is a measure of how efficiently a company manages its accounts receivables.
The collection ratio is calculated as the product of the number of days in an accounting period
multiplied by the average amount of outstanding accounts receivables divided by the total
amount of net credit sales during the accounting period.

The collection ratio calculation provides the average number of days it takes a company to
receive payment after a sales transaction on credit. If a company's billing department is effective
at collections attempts and customers pay their bills on time, the collection ratio will be lower.
The lower a company's collection ratio, the more efficient its cash flow.

Inventory Turnover Ratio

The final element of working capital management is inventory management. To operate with
maximum efficiency and maintain a comfortably high level of working capital, a company must

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keep sufficient inventory on hand to meet customers' needs while avoiding unnecessary
inventory that ties up working capital.

Companies typically measure how efficiently that balance is maintained by monitoring the
inventory turnover ratio. The inventory turnover ratio, calculated as revenues divided by
inventory cost, reveals how rapidly a company's inventory is being sold and replenished. A
relatively low ratio compared to industry peers indicates inventory levels are excessively high,
while a relatively high ratio may indicate inadequate inventory levels.

1.2 OBJECTIVES OF THE STUDY

 To analyze the ratios with the help of financial statements.
 To analyze the working capital position of the firm for last 3 years.
 To ascertain if the components of working capital are well managed.
 To examine the adequacy of working capital management in organization.
 To examine the composition of working capital items in organization.

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1.3 NEED FOR THE STUDY

 The prime importance of the study is to analyse the maintenance of working capital.
 To have practical knowledge of asset and liability in the bank.
 The findings of the study can be used as secondary data for the various future study purposes.

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1.4 SCOPE OF THE STUDY

The present study is confined to only India Industrial Credit and Investment Corporation of India
(ICICI), An Indian Financial Institution. The facts of Working Capital management has been
analyzed taking into consideration the information both past and present with respect to
performance of the company.

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 1.6 LIMITATIONS
 This study is purely based on secondary data which is given by the firm.
 Only 3 years data 2017-18 to 2019-21 shall be taken into the consideration.
 This is only limited to the ICICI BANK.
 The project information used in the study may not be accurate and unbiased.
 Financial information is very sensitive in nature unable to provide complete data from
the bank.

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 CHAPTER-II
RESEARCH METHODOLOGY
REVIEW LETERITURE

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 2.1 RESEARCH METHODOLOGY
The present study has been conducted based on secondary data and is descriptive in its nature.
The required secondary data for the study was collected through different websites, annual
reports of ICICI, different journals. The researcher selected ICICI limited for the study. To
make the analysis meaningful advanced statistical tools like – Ratios, Mean and percentages
were applied.

SECONDARY SOURCES

 Textbooks.

 Previous survey reports

 websites, annual reports of ICICI

 Journals.

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 2.2 REVIEW LETERITURE
NCEAR (1966):-
The National council of applied Economic Research (NCEAR) in 1966 first time formal study
was conducted on working capital management in India. The council published a structure of
working capital" which was limited analysis of the creation of working capital with special
attention to the fertilizers, and cement and sugar industries the main objective of this study
was emphasized on come out with findings that working capital management practices were
extremely unplanned and hence need to develop proper accounting policies like inventory
management, debtor’s management as above. And the study suggested developing suitable
working capital policies required in the success of business.

Bhatt V. V. (1972):-
He has given concentration on system to appraise working capital management and its finance
specially for the large scale companies. This tools also helpful to other sectors like agriculture
as well retail trade etc. As bank provide short term finance to operation of business at the same
time need to pay attention on repayment of loan and required finance necessity. If these two
area is to be maintain properly no need to appraise the working capital management concern.

Smith Keith V. (1973):-

Research has been given focused on the short term finance need to be given more attention for
the success of the individual firm. For that finance manager has to give more attention on
current assets and current liability. Many firms do investment of current assets in a basket
while current liability in many different request. This paper consist eight distinct approaches to
working capital management out of it first three gives common guidelines next three regarding
constrain set and cost balancing and last two about probability models and portfolio theory.

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Chakraborthy S. K. (1974) :-
In this research author try to make difference among cash working capital v/s balance sheet
working capital. And research is based on two dimensions.

Fist is operating cycle concept and second calculation of operating cycle period in all the four
cases. Main aim of this research is to exhibit operating cycle concept based on published
annual report of the firm.

Misra (1975):-
Here, in this analysis try to identify the problems of working capital in six public enterprises
for the period of 1960. Importance and findings are here under selected samples of companies
were not able to utilize working capital efficiently. As well excess inventory level which
shows inappropriate management of inventory. In order delay exchange was made to foreign
exchange and issue of import license. Furthermore, account receivable ratio is very law
because liberal credit policy and inappropriate collection policy. In most of the selected firms
were having huge cash amount on account and improper management and control on cash.

NatarajanSundar (1980) has been given views on working capital is having immense
important at both, the national as well business level. To keep control on working capital at the
national level by controlling credit controls. In practice efficient working capital includes to
determine the best suitable level of working cpaital, financing it and control over it. If we
talked about corporate level investment is important in both case short term investment and
fixed assets. And that can be possible many company not surviving as well not incurring profit
because of not efficiently manage the working capital. Thus, cost management with improved
operational efficiency, and that aspect working capital is very important to be manage in
proper way.

Rajeshwar (1985):-
He has done the study on few selected public enterprises in India. He tried to check the
working capital policies adopted by the sample units. He made attempt to examine the
working capita components how efficiently managed. At the last no one company clearly
defined working capital polices and hence most of them could not achieve efficiency in
working capital management. In this study it is found that majority of investment was made in

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 finished goods inventory that was indicate that working capital was not managed in planned
way. Thus, study recommended for careful management of working capital in finance
management.

Rao K.V. and RaoChinta (1991):-

This study observed that strong and weak point of conventional techniques of working capital
analysis. Outcomes of this study shows that some of the conventional techniques which could
realized the working capital behavior well.
And some of them fail to do so. And thus authors suggest proper working capital management
with conventional method i.e. ratio analysis. Study suggests further inclusive factors which are
decisive yardstick in working capital efficiency.

Fazzari Steven M. and Petersen Bruce C. (1993) :-

Research has been put light on financial restrain on investment by giving focus the ignoring
role of working capital in both as use and source of funds. As per the views of author liquidity
can be maintain by maintaining working capital on smooth manner means to be investment in
a manner which does not create cash flow constrain. Through the research found that working
capital investment should be “excessively sensitive” with summing up that controlling on
smoothing working capital create a long-term impact of finance constraints and reported in
many other studies also.

Siddharth and Das (1994):-

Siddharth and Das has been done study on “Working Capital Turnover in Pharmaceutical
companies” tried to determine efficient use of working capital in selected pharmaceutical
firms in India. 10 years data has been concluded that overall turnover ratio was 90.3 time.
the finely analysis of the data shows that the selected companies has done well in terms of
employment of working capital. Furthermore, study discovered the working capital turnover
ratio cried off staidly over the stage from 1981 – 1990.

Vijayakumar and Venkatachalam (1995):-

This study was made on observed analysis in working capital and profitability.
Study was carried with 13 firms belonging sugar industry for the 10 years period from 1982-
1983 to 1991-92. The correlation and regression statistical method has been used to analyze
the impact of working capital ratios on profitability. In this study total four ratios has been
taken in to consideration; Liquidity ratio, inventory turnover ratio, receivable turnover ratio

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 and cash turnover ratio. The discovery of the study said that liquid ratio and cash turnover
ratio have harmful impact on profitability on the other hand inventory turnover ratio and
receivables Have positive impact on profitability.

Rafuse (1996):-
The article stressed on working capital enhancement by halting payment of creditors. That was
clear many UK companied delayed payment for the long period. Very surprisingly the story
reveled in 1994 by the Forum for Private Business, that was a small business association, and
reverse side 50 days before payment of debtors were been paid beyond the due date. This
article stressed to maintain healthy and close relationship among supplier and customer. The
discovery of the study warranted the firms to reduce inventory level as fast as possible in order
to increase the profit of the firms. Another fact of study was that control over working capital
responsibility goes on the head of finance manager.

Swamy (1997):-
Swamy was done research with 19 key agricultural area in the contour of Dakshina Kannada
district in Karnataka. The research exposed that maintenance of liquidity and profitability is a
major problem in the targeted are. To be safe in side of working capital management were
found to be suffered and low profitability due to the interest burden. The effects of this firms
raised the fund for working capital requirement by borrowing fund from depositors. This study
has been given stressed on proper management of working capital so the future of business
would be bright.

HossainSaiyedZabid and Akon Md. HabiburRahman (1997) :-

The main objective of this study is to maintain working capital in proper way. i.e. time of fund
requirement, amount of fund and from where to raise fund to be maintain so can possible to
acquire trade off among liquidity and profitability. The analysis showed that BTMC had
followed aggressive working capital policy by taking the risk of liquidity. The study analyzed
that company continuously raising trend in negative net working capital during the period of
the study. That was suggest to BTMC not to raise only fund from long term source instead by
understating the requirement of fund need to take short term source also.

Ahmed Habib (1998):-

This study is evaluated that the interest rate of fund reducing money power on output. For the

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 study rational expectation model is used to find out relation between production decisions and
debt finance. As working capital having immense important factors and its cost, the rate of
interest, affects the supply of goods, this study revealed that this model helps to identify the
alarming situation when interest rate is used. This model also revealed that effects of monetary
policy on the price level and supply side.

GargPawan Kumar (1999):-

This study was done in selected public sectors firms of Hariyana study relate with working
capital and liquidity analysis. The analysis of the study says that forecasting of working capital
necessity constrained on different factors. After realizing the facts like needs of working
capital in public sectors. According to that, need to analyze production schedule, labor cost,
sales trend etc. furthermore, suggestion is to manage other components of working capital.

Bansal S. P. (1999):-
Review of this study on working capital management refers to the management of current
assets and current liabilities to be maintain the various components to increasing the
profitability of the firm. The author persists on application of various methods and techniques
for the management of working capital and its three main gears cash, receivables, and
inventors.

RaoGovinda D. and Rao P. M. (1999) :-

As per the study management of working capital is constant process. So that proper
observation on various components is needed. At the end relationship between different
components are needed. This provides proper direction.

Hyon – Han Shin an LUC Soemen (1998):-

The study is on the efficiency of the working capital management and business profitability.
There are 58 companies are taken for the research and period for the study is 1975 to 1994,
study found that there is a strong negative relationship if firm having long Net Trade Cycle
and its profitability. In other side short Net Trading cycle created the risk. It has also found
measuring liquidity differently, need to be maintain appropriate current ratio having positive
relation with profitability.

Singh O. N. (1999):-
The research discussed the needs of credit to the farmers or agriculture segment and another

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 need is having proper system of working capital finance in agriculture segment in line and
commerce finance, with some changes. Research advised a system which is quite similar
useful and fulfill the need of both farmers as well as the bankers. Main aim of the study is to
make farmers strong in terms of capital.

RaoGovinda D. and Rao P. M. (1999):-

Study believes that management of working capital is a constant process need of finance
proper observation or monitoring and revising the relationship of all variables and give
conclusion. This is a proper indication to the manager.

Dutta (2000):-
Author Dutta has done study on “Working Capital Management of Horticulture Industry in
Humachal Pradesh” that was a case study of Himachal Pradesh Horticulture Produce
Marketing and Processing Corporation for the stage 1991 to 1998. The study was thrown the
light on financing pattern of working capital management. The study exposed that the working
capital of HRMC was going worse gradually during the study period. Though, huge losses of
the firm holding the huge amount of inventory and that was a main cause of failed trade off
among liquidity and profitability. The conclusion of study like that there was no significant
correlation between gross working capital and sales.
Jain P. K. and YadavSurendra S. (2001):-
That was a study of corporate Working capital management related practices in India,
Singapore and Thailand. This study tried to understand the relationship of working capital
management and current assets and current liabilities. In other hand, authors have revealed the
analysis liquidities ratios like current assets and current liabilities. Every sample of study have
been pertained these ratios for the management of working capital. In a sum up of the paper
the data of samples of three countries confirm that there were wide inter-industry variations in
liquidity ratios. At the end, authors suggest the serious consideration attention to be given by
respective nation as well industry groups of three companies and should develop corrective
measures to take care of areas concern.

Parvathy (2004):-
Observation of study has shown that in increasing in mode, but net profit has in decreasing in
trend because operating cost is high. The others found out and thrown light on the importance
of cost of production. Other side found that the return on network and the return to total assets
were on the decreasing trend. Researcher has found that the return on investment is stable and

26
 the company invested on profitable way. Company’s payout ratio was very conservative and
that shows growth of the company. With sum up of the research is that for the long term
financial stability and formed the debt equity ratio. Opposite side of the research interest
coverage ratio and the proprietary ratio were not satisfactory.

Filbeck Greg and Krueger Thomas M. (2005):-

As per the article, need to study internal working capital management and working capital
performance. That article was published in CFO magazines. As per the findings of this
article macro economic factors, interest rates, competition, etc. having impact on working
capital management. Further finding is that management of working capital goes on stock
prices also.

THEORITICAL FRAME WORK

Concept of Working Capital Management

The ultimate goal of corporate finance is to make the available capital as profitable as possible.
The funds made available appear as equity or borrowings on the liabilities side of the balance
sheet and as investment or current assets on the assets side. Working capital is a term taken from
corporate finance and is often used as a term for short-term balances (Meyer, 2007, p. 23).
Independent studies of the profit and loss accounts and balance sheets of large companies in the
U.S. and Europe have shown that they hold an average of a quarter more cash in working capital
than is required. Such an unnecessarily high level of liquidity is often associated with
particularly high levels of receivables, unnecessary levels of inventory, higher operating costs or
debt, which are often accompanied by inadequate implementation of strategic initiatives. As a
result, there are bigger losses in the generation of potential cash flows, profits or distributions for
shareholders, as well as an increased vulnerability to possible takeovers. Against this
background, the need for an effective and optimized working capital management becomes more
and more obvious, which in the past was at the lower end of the entrepreneurial priorities list.
Not only large, but especially medium-sized companies have recognized the contribution that
working capital optimization can make in this context an integrated and enhanced cost
management.
This has been confirmed by the events on the capital markets in recent years as well as the
regulatory requirements, such as those arising from the Basel II guidelines for banks and their
27
borrowers. These have partly led to a rise in the risk of acquisitions in financial markets by way
of credit downgrades, thus making the generation of cash from their own (operational) power an
increasingly important source of liquidity for a company's continued existence.
Unfortunately, the context of working capital management is still being viewed narrowly by
many companies and is usually defined by a simple economic equation: current assets minus
short-term liabilities. Such a treatment often creates a sort of casuistic problem solving, which is
characterized by the fact that companies temporarily delay payments to suppliers or exert more
pressure on customers for faster payment performance. If these efforts can also reduce the bound
cash in the short term, however, the advantages may soon be as the suppliers usually adjust their
terms and conditions accordingly and often alienate customers.
In the development of the normal business, managers have the task to decide what will be the
perfect capital structure that will better fit in the company’s needs. Managers tend to
underestimate the working capital management and commonly look on long term perspective,
focusing on long-term investments. The short-term financial management had been forgotten or
avoided by managers, but recent studies (Al-Shubiri, 2011; Falope & Ajilore, 2009; Garcia-
Teruel & Martinez-Solano, 2007) have been proving the importance of the management between
current assets and current liabilities. When financial needs arise, claiming for long-term debt is
preferable instead of changing the cash management policies in companies. For several years,
working capital management was neglected because of the excessive efforts required to change
short-term policies comparing with increased profit (Darun, 2008).
There are several authors (Weinraub & Visscher, 1998; Schaeffer, 2002; Meyer, 2007)
supporting the importance of working capital management referring to the importance of the
management of the short-term needs and the importance of the financial slack for companies.
When working capital needs are positive, it is a necessary investment in working capital and the
managers will have to secure funds and cover the increased capital costs. If the working capital
needs are negative, then firms are getting credit from the suppliers.
Since the financial crisis of 2008, firms have witnessed a deteriorating environment where
managers were forced to take rigid measures, cutting costs and delaying investments in order to
respond to the decrease in demand and the consequent reduction in production. At this level,
cash and working capital were under higher monitoring and control. Working capital
management has been changing and common policies and usual trends had to be adapted to the
new economic conditions. Due to rapid changes in economy, firms are reacting and working
capital management is one of the most important issues to be dealt with.

28
Working capital management also became an important topic because firms have been exploring
different ways to finance their activities since in the past years the cost of long-term debt
increased and the new costs levels were difficult to afford. Therefore, “working capital
management is relevant in the way it influences the firm’s profitability and risk” (Smith, 1980).
2.1. Components of Working Capital Management
The main components of working capital management are inventories, receivables, cash and cash
equivalents and current liabilities such as payables and short-term debt. All these components
have a monetary and a temporal aspect to consider. The summary of all temporal components is
referred to as “Working Capital Cycle”. The goal of working capital management is to optimize
the investment volume and investment duration, which usually means a minimization of working
capital and a shortening of the recovery process. Fig. 2 below presents the concept of Working
Capital Cycle:

Source: Retrieved from: http://www.planprojections.com. Copyright 2014 by Plan Projections

The working capital cycle includes three core processes: On the revenue side Receivables
management, also referred to as “Order-to-Cash”. On the output side Debt management,
referred to as “Purchase-to-Pay”, and Inventory management, referred to as “Forecast-to-
Fulfill”.
Accounts Receivable
The delays between sales and the correspondent cash-inflow originate from accounts receivable.
Accounts receivable stands for the amount the consumers have to pay to the firm on a current

29
basis and are related with the operating activities. A higher ratio of accounts receivable means
higher short-term loan given by the firm to the customers.
Companies which facilitate trade credit to customers have more number of days of accounts
receivable, meaning higher investment in working capital, but companies which receive the
payments from the customers close to the moment on which they deliver the product/service,
have less cash invested in working capital. Commonly, the level of investment in working capital
depends on the type of strategy of the firms which is driven by the advantages and disadvantages
of the cash tied up to the receivables.
Inventory
Inventories are goods or materials waiting to be sold and to be converted into cash in short run.
More investment in inventories means more cash tied up waiting to generate returns. Inventory
management deals with a variety of risks which can increase costs and impact on the short-term
management. The relevant costs are commonly classified as physical storage costs and inventory
management costs.
Inventory management costs can also be related to coordination and control, and may include
costs related to theft, depletion and shrinkage of goods, order size, length of the production
process and credit availability from the suppliers.
Inventory increases lead to higher number of days of inventory. Normally, companies try to
mitigate as much as possible the cash tied up in inventories but sometimes, as part of the
business, companies have a lot of cash invested in inventories since the product need to mature
long periods to be finished and ready to be sold.
Accounts Payable
Accounts payable stand for an obligation to pay in a short-term period. Normally, it is referred to
transactions to suppliers in the operational activities which were not already paid. They
correspond to the amount due to suppliers starting from the moment the company receives the
goods/services and ending in the exact moment the company pays for these goods/services.
The number of days of accounts payable (DAP) will increase as debt to suppliers increases.
Since companies can get cheap financing by delaying payments, they can engage in deliberately
delaying the payment to suppliers as much as they can, using this financial opportunity to invest
the cash in other activities and get higher returns.
2.2. Working Capital Management Policies
Working Capital Management policies have direct impact on the supply chain and on the
relations between the firms, suppliers and customers. Therefore, managers have to be aware of

30
the impact of such policies in firm’s profitability. Both strategies are commonly used in order to
satisfy the conditions of the business between the firm, the buyers and suppliers. In what is
related with these policies, Garcia & Martinez (2006) explains two major strategies of working
capital management, “the aggressive and conservative policies differ in the balance between
weight of current assets and short-term liabilities”. Weinraub & Visscher (1998) goes in line
with Garcia & Martinez (2006) defining the strategies by concluding that “an aggressive asset
management results in capital being minimized in current assets versus long-term investments.”
The conservative approach requires cash to be tied up in current assets increasing the
opportunity cost. This approach implies that the company’s financing is going to be done at a
relatively higher cost but at a lower risk. This decrease in profitability is done to avoid the risk of
being faced with liquidity problem, which could result from a payment request from the
suppliers. This method implies a structure of capital where current assets are mainly financed
with long-term liabilities.
The aggressive approach requires a different balance-sheet structure. In this method “the
company finances all of its fixed assets with long-term capital but part of its permanent current
assets with short-term credit” (Van Horne & Wachowicz, 1980). Under this policy, the firm has
low or no long-term capital invested in current assets.
Comparing the two strategies, the aggressive approach requires lower working capital investment
and expects higher profitability with a higher risk implied. “A company that uses more short-
term source of finance and less long-term source of finance will incur less costs but with a
corresponding high risk. This has the effect of increasing its profitability but with a potential risk
of facing liquidity problem, should such short-term source of finance be withdrawn or renewed
on unfavourable terms” (Al-Shubiri, 2011).
An Integrated Approach to Working Capital Management
The solution to the long-term and reduction of the operating capital bound to the company is a
holistic approach and fixes the optimization of working capital management on three basic
business processes running within the company
In addition to the large number of process managers involved (see Fig. 3), the competing
objectives are more difficult for a holistic working capital management. The figure shows that
sales are the main responsibility for the “Order-to-Cash” process. Controlling has a supporting
function by measuring and controlling the performance of receivables. The “Purchase-to-Pay”
process is characterized above all by purchasing, while the controlling function also has a
supporting function. The “Forecast-to-Fulfill” is characterized by a large number of involved

31
process partners. Purchasing and materials management are responsible for the storage of raw
materials and supplies. Through the production/assembly, inventories of work in progress are
affected before the finished products and spare parts are controlled by the sales department as
well as after-sales (Klepzig, 2008).
When taking into account all three components of working capital management, it becomes clear
that the driving forces of working capital performance are more operational than financial. This
is clearly illustrated by the example of a company that has problems with the collection of
claims. Even if this problem could be traced back to unsuccessful staff, a lot of other causes
could be blamed. A supplier might, for example, supply the company with faulty components
that have an impact on the quality of the company's products, which will annoy customers and
cause them to withhold payments. Perhaps the salesperson has promised unpaid longer terms of
payment, without, however, communicating to the responsible finance department. Or the
dispatch department does not keep the dates so that the customers receive the deliveries late. If
these transactions are not recorded in the books accordingly, corrective measure purchases,
which are restricted to the debt collection department, are likely to create the desired remedy.
Another example shows the influence of different departments in the company on the expression
of common control parameters such as Days Sales Outstanding (DSO). Often, the sales figures
measured by the DSO show a significantly higher value than would allow the average payment
periods granted to customers. This is often the responsibility of the finance and accounting
department as a supposedly responsible payment processing center. However, it is not
uncommon that only a fraction of the measured overhang times really have their origin in finance
and accounting department. In addition to this, not infrequent periods of delay outside the area of
responsibility and the scope of finance and accounting are caused by price fixing errors,
unclearly agreed payment periods, product complaints and subsequent discounts, credit notes and
unpaid partial payments or invoices or confirmations not submitted internally, all lead to
retroactive and time-consuming accounting and coordination problems in finance and
accounting.
This is where the integrated working capital management begins, in which it incorporates the
entire value chain of the company into consideration by means of the main processes described
above, thus capturing and integrally optimizing cross-functional relationships and dependencies.
It follows immediately that such an approach generates added value for all stakeholders involved
in the company. An integrated working capital management gives the company the possibility of
higher operating speed in the processes, lower error of the fault and ultimately to higher profit

32
margins and thus to an increased company value. In addition, the balance sheet ratios will
improve, in particular with regard to cash flow and liquidity.
Organizational Principles of an Integrated Working Capital Management
Although some companies complain that the optimization of their working capital management
disrupts or even interrupts customer processes, the opposite is true in practice. By eliminating the
reasons for delayed customer payments, a working capital initiative actually improves customer
service and, in principle, makes the customer more likely to buy more from the company.
Similarly, the timely payment of invoices will make the supplier more likely to do business with
the company. This is ultimately reflected in price fixing, the terms of sale and the services
offered. All this also contributes to the satisfaction of the operations managers.
Although it is possible to achieve benefits by improving any aspect of working capital
management, the main advantage is the measures and initiatives that affect all three of the
previously categorized main processes. This is partly reflected in the fact that the main cause of
all problems is easily outside the area in which it becomes visible. The immediate consequence is
often that improvements in one area contribute to improvements in another.
The measures for optimizing working capital management usually start with the determination of
the potential for improvement by analysing the company's existing balance sheet and profit and
loss account and by measuring its working capital performance. A measurement based on a
comparison of individual subsidiaries or branches can be helpful in larger companies if the
corresponding comparative data are available (Schaeffer, 2002, p. 85). In this way, an
improvement potential for the entire company can be quantified in the internal (benchmarking)
comparison based on the performance of the most powerful company or business unit.
Once the potential for improvement is identified, the manager responsible for the optimization of
the working capital management must work closely with the other managers, customers and
suppliers of the company in order to raise the potential and then develop a reliable
implementation program. This manager is often the CFO. The CFO plays an important role in
this process because it not only traditionally preserves the company’s metrics, but also, as a rule,
the only senior executive who has a complete overview of the company' s processes and not just
the view of a functional area or a business unit. In addition, the CFO is almost always involved
in strategic decisions as it has to provide funding to support this decision and in many cases
articulates the logic of this decision to investors.
3.2. Successful Practices of an Integrated Working Capital Management

33
Although the challenges for optimal working capital management vary according to the
company, the experience shows that there are cross-sector best practices that can be used on the
basis of three key business processes running within the company: Order-to-Cash, Purchase-to-
Pay and Forecast-to-Fulfill.
3.2.1. Order-to-Cash
It is no secret that dissatisfied customers tie up their supplier cash by creating high levels of
receivables that lead to an accumulation of overdue receivables and are finally debited. In order
to prevent this process, credit risk methods must be reviewed in order to ensure that they comply
with the Company's strategic objectives and adequately manage the risk of receivables. It is
necessary to minimize the offered payment periods to the extent strictly necessary from a sales
strategy perspective, whereby the sales department must be brought into the boat and
additionally motivated by incentive mechanisms. In parallel, billing systems must be simplified
as far as possible in order to prevent payment delays. The traditional argument in this context
that costly solutions, if at all only with main customers are economic, is increasingly weakened
by emerging and uncomplicated handling of electronic billing solutions. It should in any case be
ensured that the dispatch of goods or the provision of services automatically trigger the billing
process. Ideally, load-in writing procedures are ideal whenever they are used and enforceable.
An important aspect of optimization also affects the dunning procedure. A standardized and
comprehensive dunning process with strict dunning periods and sanctioning mechanisms is the
prerequisite for a reduction in sales and the associated so-called DSO (Days Sales Outstanding).
Additional systematic methods for resolving disputes are offered by additional optimization
potential, which assigns the competences to certain individuals and which transfers the
responsibility to employees of the company at a higher level whenever the issues of concern
escalate or remain unsolved. This is accompanied by the need for a regular review of reasons for
disputes, as well as a sustained pursuit and continuous elimination of them to prevent repetition.
3.2.2. Purchase-to-Pay
With regard to the ordering and payment processes, it should be noted that the arbitrary holding
of invoices until they are overdue is not a long-term solution for optimizing working capital
management. Suppliers will pay attention to the higher costs to be taken into account in their
pricing and performance, as well. On the other hand, the combination of expenditure among a
few suppliers as well as a differentiation and categorization of the latter in terms of the effect of
their potential business at risk and profit positions offer better solutions. Focusing on optimizing
business relationships with suppliers that are either a high risk or have a significant impact on

34
profit is required. Optimization should be in the form of providing free access to information
between companies and suppliers (for example, automatic, revolving and direct forwarding of
demand forecasts to the supplier), developing joint processes, and sharing efficiencies. At the
same time, automation of procurement processes with suppliers is either a low risk or has a
negligible effect on profit. An adjustment of the supplier portfolio is particularly useful with
regard to those suppliers which are a high risk of fulfilment but have little effect on the profit.
Agreements with regard to more advantageous payment periods in the context of customer-
specific contracts are particularly suitable for suppliers or products with a high turnover, since
both the profit effect as well as the negotiating position are good. A further option concerns the
establishment of internal controls to prevent payments before the agreed payment periods and
thus to fully utilize the payment periods.
3.2.3. Forecast-to-Fulfill
In the context of planning, production, inventory holding and delivery, the supply chain
management, today's technology makes it possible to develop forecasts with the help of
information about the company as a whole, the conflicting objectives of storage costs, customer
service, operating costs and product range. This is particularly difficult in industrial branches
with constantly changing technology, i.e. industries in which overnight aging products have a
massively negative impact on poor management of the supply chain management. The best
practice and methodology is to require companies to check the quantities in time, in order to
avoid the unnecessary purchase or production of additional goods. For the same reason, methods
and procedures have to be developed to ensure that the inventories can be easily located. In
addition, a differentiated inventory strategy is essential for the various goods, depending on how
quickly goods can be replaced and how important they are to the production processes.

35
 CHAPTER – III
INDUSTRY PROFILE
&
COMPANY PROFILE
36
 3.1 INDUSTRY PROFILE
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and
well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks are
generally resilient and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with India’s
Immediate Payment Service (IMPS) being the only system at level five in the Faster Payments
Innovation Index (FPII). *

Market Size
The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46 foreign
banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks
in addition to cooperative credit institutions As of November 2020, the total number of ATMs in
India increased to 209,282.

37
Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20.
During FY16-FY20, bank credit grew at a CAGR of 3.57%. As of FY20, total credit extended
surged to US$ 1,698.97 billion. During FY16-FY20, deposits grew at a CAGR of 13.93% and
reached US$ 1.93 trillion by FY20.
According to the RBI, bank credit and deposits stood at Rs. 108 trillion (US$ 1.5 trillion) and Rs.
149.6 trillion (US$ 2.1 trillion), respectively, as of March 12, 2021.
Credit to non-food industries stood at Rs. 107.3 trillion (US$ 1.5 trillion), as of March 12, 2021.
Non-food industries grew at 5.7% in January 2021 as against an increase of 8.5% in January
2020

Investments/Developments
Key investments and developments in India’s banking industry include:

 In December 2020, in response to the RBI’s cautionary message, the Digital Lenders’
Association issued a revised code of conduct for digital lending.
 As of February 27, 2021, the number of bank accounts opened under the government’s
flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’ reached
41.93 crore and deposits in Jan Dhan bank accounts stood at more than Rs. 1.70 lakh
crore (US$ 23.07 billion).
 On November 6, 2020, WhatsApp started UPI payments service in India on receiving the
National Payments Corporation of India (NPCI) approval to ‘Go Live’ on UPI in a
graded manner.
 In October 2020, HDFC Bank and Apollo Hospitals partnered to launch the ‘HealthyLife
Programme’, a holistic healthcare solution that makes healthy living accessible and
affordable on Apollo’s digital platform.
 In 2019, banking and financial services witnessed 32 M&A (merger and acquisition)
activities worth US$ 1.72 billion.
 In March 2020, State Bank of India (SBI), India’s largest lender, raised US$ 100 million
in green bonds through private placement.
 In February 2020, the Cabinet Committee on Economic Affairs gave its approval for
continuation of the process of recapitalization of Regional Rural Banks (RRBs) by
providing minimum regulatory capital to RRBs for another year beyond 2019-20 - till

38
 2020-21 to those RRBs which are unable to maintain minimum Capital to Risk weighted
Assets Ratio (CRAR) of 9% as per the regulatory norms prescribed by RBI.
 The NPAs (Non-Performing Assets) of commercial banks recorded a recovery of Rs.
400,000 crore (US$ 57.23 billion) in the last four years including record recovery of Rs.
156,746 crore (US$ 22.42 billion) in FY19.

 
Government Initiatives

 As per Union Budget 2021-22, the government will disinvest IDBI Bank and privatise
two public sector banks.
 As per Union Budget 2019-20, the Government proposed fully automated GST refund
module and an electronic invoice system that will eliminate the need for a separate e-way
bill.
 Government smoothly carried out consolidation, reducing the number of Public Sector
Banks by eight.
 As of September 2018, the Government of India made Pradhan Mantri Jan Dhan Yojana
(PMJDY) scheme an open-ended scheme and added more incentives.
 The Government of India planned to inject Rs. 42,000 crore (US$ 5.99 billion) in public
sector banks by March.

Achievements
Following are the achievements of the Government:

 In March 2021, Unified Payments Interface (UPI) recorded 2.73 billion transactions
worth Rs. 5 lakh crore (US$ 68.88 billion).
 According to the RBI, India’s foreign exchange reserve reached US$ 574.82 billion as of
November 27, 2020.
 To improve infrastructure in villages, 204,000 point of sale (PoS) terminals have been
sanctioned from the Financial Inclusion Fund by National Bank for Agriculture & Rural
Development (NABARD).
 The number of transactions through immediate payment service (IMPS) increased to
346.55 million in volume and amounted to Rs. 2.88 trillion (US$ 39.57 billion) in value
in January 2021.

39
Road Ahead
Enhanced spending on infrastructure, speedy implementation of projects and continuation of
reforms are expected to provide further impetus to growth in the banking sector. All these factors
suggest that India’s banking sector is poised for a robust growth as rapidly growing businesses
will turn to banks for their credit needs.
Also, the advancement in technology has brought mobile and internet banking services to the
fore. The banking sector is laying greater emphasis on providing improved services to their
clients and upgrading their technology infrastructure to enhance customer’s overall experience as
well as give banks a competitive edge.
India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1 trillion
by FY23 driven by the five-fold increase in the digital disbursements.

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44 foreign
banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural cooperative
banks in addition to cooperative credit institutions. As of November 2020, the total number of
ATMs in India increased to 209,282.
According to the RBI, India’s foreign exchange reserves reached US$ 580.3 billion, as of March
5, 2021. According to the RBI, bank credit and deposits stood at Rs. 107.75 trillion (US$ 1.46
trillion) and Rs. 149.34 trillion (US$ 2.02 trillion), respectively, as of February 29, 2021.
Credit to non-food industries stood at Rs. 105.53 trillion (US$ 1.44 trillion), as of January 15,
2021.
Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20.
Total assets across the banking sector (including public, private sector and foreign banks)
increased to US$ 2.52 trillion in FY20.
Indian banks are increasingly focusing on adopting integrated approach to risk management. The
NPAs (Non-Performing Assets) of commercial banks has recorded a recovery of Rs. 400,000
crore (US$ 57.23 billion) in FY19, which is highest in the last four years.
RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2017 Bill has been passed and is expected to strengthen the banking sector. Total
equity funding of microfinance sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in
2018-19.

40
As of February 27, 2021, the number of bank accounts opened under the government’s flagship
financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’ reached 41.93 crore and
deposits in Jan Dhan bank accounts stood at more than Rs. 1.70 lakh crore (US$ 23.07 billion).
Rising income is expected to enhance the need for banking services in rural areas, and therefore,
drive the growth of the sector.
The digital payments revolution will trigger massive changes in the way credit is disbursed in
India. Debit cards have radically replaced credit cards as the preferred payment mode in India
after demonetisation. In February 2021, Unified Payments Interface (UPI) recorded 2.29 billion
transactions worth Rs. 4.25 lakh crore (US$ 57.68 billion).

ICICI Bank Limited is a banking sector company. The bank is engaged in providing a range of
banking and financial services, including commercial banking, retail banking, project, and
corporate finance, working capital finance, insurance, venture capital and private equity,
investment banking, broking and treasury products and services. The bank's business segments
are retail banking, wholesale banking, treasury, other banking, life insurance, general insurance,
and others. Its international banking is focused on providing solutions for international banking
requirements of its Indian corporate clients and leveraging economic corridors between India
and the rest of the world. The bank caters to the financial need of women entrepreneurs through
its Self-Help Group (SHG) programme as part of its microfinance initiatives.

ICICI Bank - Promoting Inclusive Growth 

2021 ICICI Bank launched ‘Namma Chennai Smart Card’, a Common Payment
Card System (CPCS) in partnership with Greater Chennai Corporation and
Chennai Smart City Limited

2020 ICICI Bank launched ‘Infinite India’, a comprehensive online platform for
foreign companies setting up operations in the country
ICICI Bank launched ‘iMobile Pay’—India’s first app that offers payments
and banking services for its customers
Introduced mobile ATM vans in the state of Orissa to enable senior citizens
to access key banking facilities at their doorstep
Chinese Central Bank acquired stake in ICICI Bank for Rs. 15,000 crore
(US$ 2127.9 million)

41
 ICICI Bank launched India’s largest API Banking portal with nearly 250
APIs

2019 ICICI Bank has inaugurated its 50th branch in Ahmedabad.

2018 ICICI Bank is India's largest private sector bank with total consolidated
assets of Rs 1124,281 crore (US$ 160.86 billion) at March 31, 2018.

2017 ICICI Bank won the ‘Best Retail Bank in India’ award for the fifth
consecutive year at the Asian Banker Excellence in Retail Financial Services
International Awards 2018.

COMPANY PROFILE

ICICI Bank is a leading private sector bank in India. The Bank’s consolidated total assets stood
at Rs. 14.76 trillion at September 30, 2020.  ICICI Bank currently has a network of 5,288
branches and 15,158 ATMs across India.

History

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution,
and was its wholly-owned subsidiary. ICICI was formed in 1955 at the initiative of the World
Bank, the Government of India and representatives of Indian industry. The principal objective
was to create a development financial institution for providing medium-term and long-term
project financing to Indian businesses. Until the late 1980s, ICICI primarily focused its
activities on project finance, providing long-term funds to a variety of industrial projects. With
the liberalization of the financial sector in India in the 1990s, ICICI transformed its business
from a development financial institution offering only project finance to a diversified financial
services provider that, along with its subsidiaries and other group companies, offered a wide

42
variety of products and services. As India’s economy became more market-oriented and
integrated with the world economy, ICICI capitalized on the new opportunities to provide a
wider range of financial products and services to a broader spectrum of clients. ICICI Bank was
incorporated in 1994 as a part of the ICICI group. In 1999, ICICI became the first Indian
company and the first bank or financial institution from non-Japan Asia to be listed on the New
York Stock Exchange.

 
The issue of universal banking, which in the Indian context meant conversion of long-term
lending institutions such as ICICI into commercial banks, had been discussed at length in the
late 1990s. Conversion into a bank offered ICICI the ability to accept low-cost demand deposits
and offer a wider range of products and services, and greater opportunities for earning non-
fund-based income in the form of banking fees and commissions. After consideration of various
corporate structuring alternatives in the context of the emerging competitive scenario in the
Indian banking industry, and the move towards universal banking, the managements of ICICI
and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the
optimal strategic alternative for both entities and would create the optimal legal structure for
ICICI group's universal banking strategy. The merger would enhance value for ICICI
shareholders through the merged entity's access to low-cost deposits, greater opportunities for
earning fee-based income and the ability to participate in the payments system and provide
transaction-banking services. The merger would enhance value for ICICI Bank shareholders
through a large capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments, higher market share
in various business segments, particularly fee-based services, and access to the vast talent pool
of ICICI and its subsidiaries.
 
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of
ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by
shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at
Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve
Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, were integrated in a single entity.

43
ICICI Group Companies

ICICI Bank offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and through its group companies.

Investor Relations

All the latest, in-depth information about ICICI Bank's financial performance and business
initiatives.
ICICI Bank disseminates information on its operations and initiatives on a regular basis. The
ICICI Bank website serves as a key investor awareness facility, allowing stakeholders to access
information on ICICI Bank at their convenience. ICICI Bank's dedicated investor relations
personnel play a proactive role in disseminating information to both analysts and investors and
respond to specific queries.

Board of Directors

ICICI Bank's Board members include eminent individuals with a wealth of experience in
international business, management consulting, banking and financial services.

Board Members

Mr. Girish Chandra Chaturvedi

Non-Executive (part-time)
Chairman

Mr. Hari L. Mundra

Independent Director

Mr. Lalit Kumar Chandel

Government Nominee Director

Mr. Sandeep Bakhshi,

Mr. S. Madhavan
Managing Director &
Independent Director
CEO

Ms. Neelam Dhawan Mr. Anup Bagchi,

Independent Director Executive Director

44
 Mr. Radhakrishnan Nair Mr. Sandeep Batra,
Independent Director Executive Director

Ms. Rama Bijapurkar Ms. Vishakha Mulye,

Independent Director Executive Director

Mr. B. Sriram
Independent Director

Mr. Uday Chitale

Independent Director

 OUR PRODUCTS

Savings Account

Our Savings Account is designed to fulfil your different needs in every stage of life. Trusted by
millions, you can enjoy an unmatched online banking experience 24x7 and access extensive
branch and ATM network.

Ever imagined an online Savings Account that can do more than just saving? We have one
which will serve your different purposes. Be it saving money to tick items off your bucket list,
splurging on your favourite brands, investing to save tax or retirement planning, the all-new
InstaSave Account can do it all, instantly!

Advantage Woman Savings Account

We believe that our responsibility extends to make opportunities available for women to invest
in themselves. Hence, our Advantage Woman Savings Account includes offers on skill-building
courses like IT certifications, music lessons and personality development. We also have offers

45
 that help women look after themselves and their family better, like discounts on healthcare,
kids’ education and more.
Benefits

Get complimentary personal accident insurance protection and purchase protection cover on
your Savings Account. 
Debit Card benefits:

 Enjoy cashback up to Rs 750 per month on dining, entertainment and jewellery and

offers on usage of Debit Card – now, earn as you spend!
 Free unlimited access to all banks' ATMs – with more than 2 lakh ATMs across the
country, you are never far away from your money
 Daily cash and withdrawal limit as per your account variant.

Current Account

ICICI Bank Business Banking offers comprehensive banking solutions to suit the banking needs
of every MSME.From a wide range of Current Account products to convenient banking
solutions like corporate internet banking, Mobile Banking and Tax Payments we make your
banking easy and hassle free.

Credit Cards

ICICI Bank Credit Cards, to take care of all your expenses

From your everyday commute to international trips, from daily spends to luxury purchases,
from grocery shopping to fine-dining restaurants, there is always an ICICI Bank Credit Card to
take care of all your expenses. Experience an array of benefits, attractive offers and user-
friendly features when you use a credit card from ICICI Bank.

To experience all this and more, click on the button below and discover the offers that you are
eligible for.

ICICI Bank Credit Cards offer a host of benefits and offers to cater to your needs. So get the
credit card of your choice by browsing through the credit card section

46
 Fixed Deposits

5 reasons why FD is the ideal investment option:

1. Safety of your funds with the trust of ICICI Bank 

2. Assured returns on your investment
3. Designed for convenience – Invest anytime, anywhere using our iMobile, Internet
Banking, branches, ATMs or Customer Care
4. Instant liquidity – Need funds for emergencies? Opt for partial withdrawal or get an
Over Draft against your FD. Make premature withdrawals in multiples of Rs. 1,000 subject to
applicable charges, get a Loan or Overdraft up to 90% of your FD amount and choose from
monthly or quarterly payouts.
5. Minimum Balance - You can avail of ICICI Bank Fixed Deposits for a minimum deposit
of Rs 10,000 for General Customers and Rs 2,000 for Fixed Deposits for Minors.
6. Loan against FD - Avail of a loan facility up to 90% of principal and accrued interest,
safe custody of your FD receipts and automatic renewal of Deposit Account on completion of
tenure. Loan against the fixed deposit maybe given to the depositors at the discretion of the
bank
7. Competitive interest rates.

Recurring Deposit
Open a recurring deposit (RD) account online with ICICI Bank and save up consistently and
conveniently from today, so you can reap benefits tomorrow. With our RD facility, you can
keep a track of your recurring transactions, avail a loan against your account and do so much
more.

Life Insurance

Term life insurance plan is a financial safety net for your loved ones in your absence. If you are
the person insured, you pay a specific premium amount at fixed intervals for a policy term of
your choice. In case of your unfortunate demise during this term, your cover amount is paid to
your selected nominee(s) like your spouse, children or parents.

47
 With our affordable and flexible term plan, ensure your family is financially secured at different
stages of life.

General Insurance

Life is full of surprises. There are times when you are caught unprepared and do not know what
to do. Sometimes life takes a turn for the worst when you least expected it to. Your hard-earned
money, which you saved for something special, is then spent in settling hospital bills or
someone else’s dues.

Events such as hospitalization, burglary, natural disasters, car theft, riots etc. can negatively
affect your finances. It is in times like these that you wish for a blanket of protection that
insulates you from the harshness of such events. General insurance is that blanket.

ICICI Bank Limited solicits general insurance products as a Corporate Agent of ICICI Lombard
General Insurance Company Limited, which offers a wide range of general insurance solutions
that are designed to fit every need, every pocket and every situation.

AWARDS
Time and again our innovative banking services has been recognized and rewarded world over.
Awards - 2020

 ICICI Bank has been recognised as 'India's Most Sustainable Company' by BW Business
World magazine in the Banking, Financial Services and Insurance (BFSI) sector. The Bank
ranked 12th in the overall list of 194 companies. ICICI Bank is the only bank to have received
an A+ rating for its sustainable practices and robust environment, social and governance
framework.
 ICICI Bank was declared as 'House of the Year, India' at Asia Risk Awards 2020. Risk,
a London-based magazine, organises these prestigious awards annually for firms and
individuals involved in Asia's derivatives market and risk management.

48
 ICICI Bank emerged as the winner in the 'Best HR Technology Implementation'
category at the Asian Banker Financial Technology Innovation Awards 2020.
 ICICI Bank was recognised as the winner in the ‘Best Innovation Programme’ category
at the Retail Banker International Asia Trailblazer Awards 2020. These awards are organised by
Retail Banker International, an online publication that provides news on banking and finance
from across the globe.

Awards - 2019

 ICICI Bank won the Bronze Medal in the ‘CSR & Not-for-Profit (beyond metro)’
category for the skilling initiatives undertaken through ICICI Foundation for Inclusive Growth
that help the less-privileged youth in rural and urban areas enabling them to earn sustainable
livelihoods.
 ICICI Bank was awarded by the Government of India in the ‘Best Performing Bank –
Overall’ and ‘Best Performing Bank, Statewise – Bihar’ categories for its significant
contribution towards the Pradhan Mantri Awas Yojna Gramin. ICICI Bank was the only bank to
be awarded in both the categories.
 ICICI Bank’s tower in Gachibowli Hyderabad, was awarded a 4-star rating in the
recently concluded CII-SR EHS Excellence Award – 2019. The award programme was
organised by the Confederation of Indian Industry. The Bank was awarded for the various
initiatives undertaken to ensure environmental protection at its tower in Hyderabad and safety of
its employees.
 ICICI Bank was recognised as the ‘Best Consumer Digital Bank – 2019’ for India region
by Global Finance; a publication headquartered in New York.
 ICICI Bank won two awards in the ‘Private Sector Banks’ segment at Digital Payments
Awards 2018-19 organised by the Ministry of Electronics and Information Technology (MeitY),
Government of India. The Bank was awarded for its outstanding performance in two categories
-'BHIM Aadhaar POS Deployment' and 'POS Deployment in rural India'.

Awards - 2018

 ICICI Bank won multiple awards at the 17th edition of the Energy Efficiency Summit
hosted by Confederation of Indian Industry (CII). The Bank won the ‘Excellence in Energy
Management’ award for the fourth consecutive year. ICICI Bank’s corporate office in BKC,

49
 Mumbai was declared as the ‘National Energy Leader’ at the summit. Additionally, the Bank
received the ‘Excellent Energy Efficient Unit’ awards for Empire Tower, Chandivali Tower and
Mafatlal Tower offices in Mumbai, NBCC Tower office in Delhi and the Ambattur Tower
office Chennai. The Bank also received the ‘Excellent Energy Efficient Unit’ award for its data
centre in Hyderabad and call centre in Thane.
 ICICI Bank was recognised as the ‘FX House of the Year’ in India at the inaugural
edition of the FX Week Asia Awards 2018. The Bank won the award for the array of Forex
services that it provides in the Indian market. The awards are organised by FX Week, a portal
that covers news from the finance sector across the globe.
 ICICI Bank was recognised as the winner in the ‘Smart Data Centre’ category at the
maiden edition of the DCD 'Best in India' Awards 2018. The Bank was recognised as the winner
for its implementation of Internet of Things (IOT) and smart analytics to improve the efficiency
of its Data Centre operations. The awards were organised by Data Centre Dynamics (DCD), a
global B2B events and media company, delivering insights to help the professionals driving the
data centre scale IT infrastructure sector to make strategic and operational decisions.

Newsroom

Catch up with ICICI Bank's latest business and social initiatives, as well as innovative product
launches.
 
Corporate Social Responsibility

ICICI Bank is deeply engaged in human and economic development at the national level. The
Bank works closely with ICICI Foundation across diverse sectors and programs.
 

50
 CHAPTER - IV
DATA ANALYSIS
AND
INTERPRETATIONS

4.1 DATA ANALYSIS

Working Capital Management

Working capital management is a business tool that helps companies effectively make use of
current assets, helping companies to maintain sufficient cash flow to meet short term goals and
obligations. By effectively managing working capital, companies can free up cash that would

51
otherwise be trapped on their balance sheets. As a result, they may be able to reduce the need
for external borrowing, expand their businesses, fund mergers or acquisitions, or invest in R&D.

Working capital is essential to the health of every business, but managing it effectively is
something of a balancing act. Companies need to have enough cash available to cover both
planned and unexpected costs, while also making the best use of the funds available. 

Working capital = Current assets – current liabilities

Current Ratio

A current ratio that is in line with the industry average or slightly higher is generally considered
acceptable. A current ratio that is lower than the industry average may indicate a higher risk of
distress or default. Similarly, if a company has a very high current ratio compared to its peer
group, it indicates that management may not be using its assets efficiently.

The current ratio is called “current” because, unlike some other liquidity ratios, it incorporates
all current assets and current liabilities. The current ratio is sometimes called the working
capital ratio.

Formulae

Cr =current assets/current liabilities

Current ratio

Years Current assets Current liabilities Current ratio

2017-18 955 605 1.574

2018-19 1191 669 1.870

52
 2019-20 1451 915 1.571

Liquidity ratio
1.35

1.3 1.3
1.3

1.25

1.2

1.15
1.15

1.1

1.05
2017-18 2018-19 2019-20

Interpretation

From the table and the graph showing that the current ratio for past 3year. In 2017-18 the

current ratio is 1.574, In 2018-19 i.e., 1.87, and In 2019-20 i.e.1.571, In the year 2019 the

current liabilities position increased when compared to the remaining year the current ratio

showing highest in the year 2018 1.870.

Liquidity ratio

Liquidity ratios are an important class of financial metrics used to determine a

debtor's ability to pay off current debt obligations without raising external capital.

Liquidity ratios measure a company's ability to pay debt obligations and its

53
margin of safety through the calculation of metrics including the current

ratio, quick ratio, and operating cash flow ratio.

Formulae

LR = liquid assets / current liabilities

Years Liquid assets Current liabilities Liquidity ratio

2017-18 799 605 1.15

2018-19 941 669 1.3

2019-20 1134 915 1.29

Liquidity ratio
1.35

1.3 1.3
1.3

1.25

1.2

1.15
1.15

1.1

1.05
2017-18 2018-19 2019-20

Interpretation

54
From the table and the graph showing about the liquidity ratio. The liquidity ratio value is 1.3

the highest in the year 2018-19 and in 2019-20 value is 1.29. the liquid ratio value in 2017-18 is

1.15. The overall company is satisfactory.

Comparative Balance Sheet

A comparative balance sheet is a statement that shows the financial position of an organization
over different periods for which comparison is made or required. The financial position is
compared with 2 or more periods to depict the trend, direction of change, analyse and take
suitable actions.

Given the usefulness of the comparative balance sheet, most of the business who have different
business vertical, prepare a comparative balance sheet in comparison with other business
vertical.

The comparative balance sheet has two-column of amount against each balance sheet items; one

column shows the current year financial position, whereas another column will show the

previous year’s financial position so that investors or other stakeholders can easily understand

and analyse the company’s financial performance against last year.

55
Interpretation of Comparative Balance Sheet: 2017-19

Particulars 2017-18 2018-19 CHANGE CHANGE %

1.Other Assets        
Bills Receivables 66 78 12 15.38461538
cash at bank 196 231 35 15.15151515
Investments 402 475 73 15.36842105
sundry debtors 135 157 22 14.01273885
stock in trade 156 250 94 37.6
3.Fixed Assets        
Plant & equipment 6356 6419 63 0.981461287
motor car 1654 1986 332 16.71701913
4.Intangible Assets        

56
 good will 201 240 39 16.25
5.Fictiitous Assets        
advertisement 345 409 64 15.64792176
misc. expenses 458 534 76 14.23220974
Total Assets 9969 10779 810 7.514611745
1.current liabilities        
Bills payable 35 45 10 22.22222222
sundry creditors 197 221 24 10.85972851
banks OD 148 156 8 5.128205128
income Received in
225 247 22 8.906882591
Advance
2.long term liabilities        

any other loan 3386 3431 45 1.311570971

fixed liabilities        
equity share capital 4477 4725 248 5.248677249
profit 1501 1727 226 13.08627678

Interpretation:

The above balance sheet is showing higher % in stock in trade i.e., 37.6 and lesser amt is

showing plant & machinery. This is good sign for the company.

In the year 2017-18 to 2018-19 higher amount showing in bills payable i.e., 22.2 & lesser

amount showing in any other loan i.e., 1.311

57
Comparative Balance sheet 2018-20

Particulars 2018-19 2019-20 CHANGE CHANGE %

1. Other Assets        
Bill’s receivables 78 84 6 7.142857143
cash at bank 231 254 23 9.05511811
Investments 475 573 98 17.10296684
sundry debtors 157 223 66 29.59641256
stock in trade 250 317 67 21.13564669
3.Fixed Assets        
Plant & equipment 6419 6756 337 4.988158674

58
 motor car 1986 2160 174 8.055555556
4.Intangible Assets        
good will 240 315 75 23.80952381
5.Fictiitous Assets        
advertisement 409 357 -52 -14.56582633
misc. Expenses 534 456 -78 -17.10526316
Total Assets 10779 11495 716 6.228795128
1.current liabilities        
Bills payable 45 56 11 19.64285714
sundry creditors 221 335 114 34.02985075
banks od 156 198 42 21.21212121
income Received in
247 326 79 24.23312883
Advance
2.long term
       
liabilities
any other loan 3431 3548 117 3.297632469
fixed liabilities        
equity share capital 4725 4979 254 5.101425989
profit 1727 2053 326 15.87920117
Total liabilities 10552 11495 943 8.203566768

Interpretation:

The above balance sheet is showing higher % in sundry debtors i.e., 29.59. The percentage asset
side is increase with 6.22%

In the year 2018-19 highest percentage in liability is sundry i.e.,34.02. The lowest percentage

showing liability side is 3.29% at any other loan.

59
Common size Balance Sheet

A common size balance sheet is a balance sheet that displays both the numeric value and
relative percentage for total assets, total liabilities, and equity accounts. Common size balance
sheets are used by internal and external analysts and are not a reporting requirement of generally
accepted accounting principles (GAAP).

A common size balance sheet allows for the relative percentage of each asset, liability, and
equity account to be quickly analysed. Any single asset line item is compared to the value of
total assets. Likewise, any single liability is compared to the value of total liabilities, and any
equity account is compared to the value of total equity. For this reason, each major classification
of account will equal 100%, as all smaller components will add up to the major account
classification.

60
Common size balance sheets are not required under generally accepted accounting principles,
nor is the percentage information presented in these financial statements required by any
regulatory agency. 

Common size Balance Sheet: 2017-18 to 2018-19

Particulars 2017-18 Percentage 2018-19 Percentage

1.Other Assets        
cash in hand 66 0.662052362 78 0.723629279
cash at bank 196 1.966094894 231 2.143055942
Investments 402 4.032500752 475 4.406716764
sundry debtors 135 1.354198014 157 1.456535857
stock in trade 156 1.564851038 250 2.319324613
3.Fixed Assets        
Plant & equipment 6356 63.75764871 6419 59.55097875
motor car 1654 16.59143344 1986 18.42471472
4.Intangible Assets        

61
 good will 201 2.016250376 240 2.226551628
5.Fictiitous Assets        
advertisement 345 3.460728258 409 3.794415066
misc. expenses 458 4.594242151 534 4.954077373
Total Assets 9969 100 10779 100
1.current liabilities        
Bills payable 35 0.351088374 45 0.41747843
sundry creditors 197 1.976125991 221 2.050282958
banks OD 148 1.484602267 156 1.447258558
income Received in
225 247
Advance 2.25699669 2.291492717
2.long term
   
liabilities    
any other loan 3386 3431
33.96529241 31.83041098

fixed liabilities    
   
equity share capital 4477 44.90921858 4725 43.83523518
profit 1501 15.05667569 1727 16.02189442
Total liabilities 9969 100 10552 97.89405325

Interpretation:

 As per the common size Balance Sheet Analysis of 2017-18, the total assets of the
company are high in Plant & Equipment i.e., 63.73 and, the total Liabilities of the
company are more in capital i.e.,44.90%
 As per the common size Balance Sheet Analysis of 2018-19, the total assets of the
company are high in Plant & Equipment i.e., 59.55 and the total Liabilities of the
company are more in capital i.e., 43.83%

62
Common Size Balance Sheet 2018-19 To 2019-20
Particulars 2018-19 Percentage 2019-20 Percentage
1. Other Assets        
cash in hand 78 0.723629279 84 0.730752501
cash at bank 231 2.143055942 254 2.209656372
Investments 475 4.406716764 573 4.98477599
sundry debtors 157 1.456535857 223 1.939973902
stock in trade 250 2.319324613 317 2.757720748
3.Fixed Assets        
Plant & equipment 6419 59.55097875 6756 58.77337973
motor car 1986 18.42471472 2160 18.7907786
4.Intangible Assets        
good will 240 2.226551628 315 2.740321879

63
5.Fictiitous Assets        
advertisement 409 3.794415066 357 3.10569813
misc. Expenses 534 4.954077373 456 3.966942149
Total Assets 10779 100 11495 100
1.current liabilities        
Bills payable 45 0.41747843 56 0.487168334
sundry creditors 221 2.050282958 335 2.91431057
banks OD 156 1.447258558 198 1.722488038
income Received in
247 2.291492717 326
Advance 2.836015659
2.long term liabilities        
any other loan 3431 31.83041098 3548 30.86559374
fixed liabilities        
equity share capital 4725 43.83523518 4979 43.31448456
profit 1727 16.02189442 2053 17.8599391
Total liabilities 10552 97.89405325 11495 100

INTERPRETATION

 As per the common size Balance Sheet Analysis of 2018-20, the total assets of the
company are high in Plant & Equipment i.e., 59.55 and, the total Liabilities of the
company are more in capital i.e.,43.83%
 As per the common size Balance Sheet Analysis of 2018, the total assets of the company
are high in Plant & Equipment i.e., 58.77 and the total Liabilities of the company are
more in capital i.e., 43.31%

64
CHAPTER – V

FINDINGS

65
 SUGGESTIONS

CONCLUSION

5.1 FINDINGS
 In 2017-18 the current ratio is 1.574, In 2018-19 i.e., 1.87, and In 2019-20 i.e.1.571, In
the year 2019 the current liabilities position increased when compared to the remaining
year the current ratio showing highest in the year 2018 1.870.
 The liquidity ratio value is 1.3 the highest in the year 2018-19 and in 2019-20 value is
1.29. the liquid ratio value in 2017-18 is 1.15. The overall company is satisfactory.
 The balance sheet is showing higher % in stock in trade i.e., 37.6 and lesser amt is
showing plant & machinery. This is good sign for the company.
 In the year 2017-18 to 2018-19 higher amount showing in bills payable i.e., 22.2 &
lesser amount showing in any other loan i.e., 1.311
 The balance sheet is showing higher % in sundry debtors i.e., 29.59. The percentage
asset side is increase with 6.22%
 In the year 2018-19 highest percentage in liability is sundry i.e.,34.02. The lowest
percentage showing liability side is 3.29% at any other loan.

66
 The total assets of the company are high in Plant & Equipment i.e., 63.73 and, the total
Liabilities of the company are more in capital i.e.,44.90%
 As per the common size Balance Sheet Analysis of 2018, the total assets of the company
are high in Plant & Equipment i.e., 58.13 and the total Liabilities of the company are
more in capital i.e., 46.44%
 As per the common size Balance Sheet Analysis of 2017, the total assets of the company
are high in Plant & Equipment i.e., 58.77 and, the total Liabilities of the company are
more in capital i.e.,43.31%
 As per the common size Balance Sheet Analysis of 2018, the total assets of the company
are high in Plant & Equipment i.e., 58.13 and the total Liabilities of the company are
more in capital i.e., 46.44%

5.2 SUGGESTIONS
 The current ratio represent positive and current ratio of the company is satisfactory
 The profits of the company are increasing year by year. It is good for the company, and
it is better to keep the working capital concept to protect the present profits.
 Current ratio of the company is satisfactory, and it must maintain it further
 The working capital of the company is increasing every year this amount to be invested
effectively.

67
 5.3 CONCLUSION
Working capital management of the company plays an important role in the financial position of
the company of the firm. The 3 components of the working capital management are the cash
management, receivables management and inventory management. If the finance manager
maintains these three components of working capital management properly means the priority
can get dramatic improvement in their sales volume and additionally in the business. The
literature reveals that the working capital management shows impact on the profitability and
liquidity of the organisation. Particularly in this organisation current assets are higher than the
current liabilities. Thus, working capital flows into the organisation is incredibly effective,
however the surplus amount invested in the working capital indicates the unskillfulness of the
financial management within the organisation

68
69
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