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INTRODUCTION

Definition Of Bank:

Banking Means "Accepting Deposits for the purpose of lending or Investment of deposits of

money from the public, repayable on demand or otherwise and withdraw by cheque, draft or

otherwise."

-Banking Companies (Regulation) Act,1949

ORIGIN OF THE WORD “BANK”:-

The origin of the word bank is shrouded in mystery. According to one view point the Italian

business house carrying on crude from of banking were called banchi bancheri" According to

another viewpoint banking is derived from German word "Branck" which mean heap or mound.

In England, the issue of paper money by the government was referred to as a raising a bank.

ORIGIN OF BANKING :

Its origin in the simplest form can be traced to the origin of authentic history. After recognizing

the benefit of money as a medium of exchange, the importance of banking was developed as it

provides the safer place to store the money. This safe place ultimately evolved in to financial

institutions that accepts deposits and make loans i.e., modern commercial banks.

Banking system in India

Without a sound and effective banking system in India it cannot have a healthy economy.The

banking system of India should not only be hassle free but it should be able to meet new

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challenges posed by the technology and any other external and internal factors.For the past three

decades India's banking system has several outstanding achievements to its credit. The most

striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in

India. In fact, Indian banking system has reached even to the remote corners of the country. This

is one of the main reasons of India's growth process.

 HISTORY OF BANKING IN INDIA

Banking in India has its origin as early or Vedic period. It is believed that the transitions from

many lending to banking must have occurred even before Manu, the great Hindu furriest, who

has devoted a section of his work to deposit and advances and laid down rules relating to the rate

of interest. During the mogul period, the indigenous banker played a very important role in

lending money and financing foreign trade and commerce.

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 INTRODUCTION TO THE SUBJECT UNDER STUDY

Finance is one of the major elements that activate the overall growth of the economy. Finance is

the life blood of economic activity. A well - knit financial system directly contributes to the

growth of the economy. An efficient financial system calls for the efficient performance of

institution, financial instruments and financial markets.

Finance which acts as the lifeblood in the modern business types is one of the most important

consideration for an entrepreneur-company. While Implementing,expanding,diversifying,

modernizing or rehabilitating any project the meaning of finance is better understood. In this

section we have covered finance related information and the process of managing the same.

Finance is a science of managing money and other assets. It is the process of channelization of

funds in the form of invested capital, credits, or loans to those economic agents who are in need

of funds for productive investments or otherwise. E.g. On one hand, the consumers, business

firms, and governments need funds for making their expenditures, pay their debts, or complete

other transactions. On the other hand, savers accumulate funds in the form of savings deposits,

pensions, insurance claims, and savings or loan shares, etc which becomes a source of

investment funds. Here, finance comes to the fore by channeling these savings into proper

channels of investment. In general, finance is that business activity which is concerned with

acquisition and Conservation of capital funds in meeting financial needs and over all objectives

of a business entrepreneur.

Finance is the common denominator for a vast range of corporate ., projects and the major part of

any corporate plan must be expressed in financial terms”.

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 COMPANY PROFILE

The Nainital Bank Limited (NTB) (known as Nainital Bank) (Hindi: नैनीताल

बैंक) is a scheduled commercial bank founded in 1922. The bank is a subsidiary of Bank of

Baroda. The bank has expanded to Uttar Pradesh and Uttarakhand, and has over 135 branches

in Rajasthan, Delhi and Haryana. It has become TTC (Ten Thousand Crore) Company and aims

to be most preferred bank of india it is listed as a scheduled bank by the Reserve Bank of India.

Overview

Nainital Bank was founded by Govind Ballabh Pant. In 1975, the government-owned Bank of

Baroda (BOB), the second largest bank in India, acquired a 98.6% (around 99%) stake in the

bank and made it a subsidiary.

In April 2004, National Insurance Company (NIC) signed an agreement with Nainital Bank for

distribution of its general insurance products through the bank's branches across Uttarakhand,

Haryana and New Delhi states. The bank had a net worth of around Rs 1.12 billion on as on 31

March 2006. It bank launched its rights issue in September 2009, to expand its capital adequacy

ratio (CAR) to 14 per cent, this came after it previously withdrew its plans for an IPOdue to

adverse market conditions in 2007; by April 2010, the right issue had raised ₹300

million (US$4.7 million).

Nainital bank is associated with Bank of Baroda, HDFC Bank, LIC, National Insurance

Company Limited etc. Currently, NBL has 135 branches in Uttarakhand, Uttar Pradesh, Delhi,

Haryana and Rajasthan. It also provide online facilities, apart from Personal Banking, Business

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Banking, Rural and Agricultural Banking. The Nainital Bank Limited is registered as scheduled

commercial bank with Reserve Bank of India (RBI), the central bank of India.

Branch Locations

The Nainital Bank Limited has 135 branches presently in the following Indian states.

 Uttarakhand

 Uttar Pradesh

 Delhi

 Rajasthan

 Haryana

Ranked among the premier private banks in India, the Nainital Bank Ltd offers customized

banking and financial services to the customers across the country. From personal banking to

short term and long term loans, the bank is a trusted name to avail different kinds of banking

needs. More and more people across India are opting for the Nainital Bank Ltd to get the

facilities and services of high standards.

Growth of the Nainital Bank Ltd

Since its inception, the Nainital Bank Ltd is steadily adding to its customer base and also coming

up with new services for the convenience of the people. The head office of the bank is located at

the Mallita region in Nainital in the state of Uttarakhand. There is also a regional office at New

Delhi. Mr. Animesh Chauhan is the Chairman and CEO of the bank.

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 Today, the bank has around 88 branches in various parts across the country. All the branches

coordinate with each other and work in a very professional manner to take care of the needs and

preferences of the customers. The dedicated and skilled workforce of the bank is cordial and

provides almost types of support that are needed for the assistance of the customers.

Product and services of Nainital Bank Ltd

The products and services offered by the Nainital Bank Ltd cater to the various segments of the

society. The main objective of the bank is to provide the best of services to become a well

preferred name in the high competitive banking industry. The main sectors on which the services

of the bank are mainly concentrated are:

 Personal banking services

 Business banking services

 Rural or agro based banking services

 Technology related services

In case of the personal banking services, the Nainital Bank Ltd provides a number of financial

solutions and benefits to the customers. The services offered by the bank help people to become

financially stable through proper accumulation of funds. In addition to providing account

schemes such as fixed deposits, current deposits and savings deposits, the bank also provides a

number of flexible yet lucrative schemes like:

 Apna Ashiyana scheme

 Naini Sahyog scheme

 Suhana Safar scheme

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 Due to the high class facilities and services, the corporate banking facilities of Nainital Bank Ltd

are also gaining popularity among the big level corporate houses, offices and other business

units. The business services of the bank cater to the business and marketing needs of the

companies and help to be financially stable. Some of the well known business services offered

by the bank consist of:

 Working capital finance services

 Retail business finance services

 Project finance services

 Long term and short term loan services

Rural and agro based services is one of the major areas of expertise of the Nainital Bank Ltd.

The bank offers financial help and stability to the farmers and the rural people by providing short

term and long term loans and credits for the purchase of seeds, pesticides and other agricultural

equipments. In addition to these services, one can also avail some other services like collection

services, electronic transfer services, locker services and so on.

The bank also uses the help of technology to offer better and upgraded facilities and services.

Customers can also avail a number of services such as internet banking, ATMs, mobile banking

services, TM branch inter connectivity services and so on.

The bank also uses the help of technology to offer better and upgraded facilities and services.

Customers can also avail a number of services such as internet banking, ATMs, mobile banking

services, TM branch inter connectivity services and so on.

The Nainital Bank Ltd is a pioneer bank that has its headquarters in Nainital, Uttarakhand. Over

the years, the bank has emerged as a customer oriented bank and provides a wide range of

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products and services to its consumers. The Nainital Bank Ltd. loan is one of the services

provided by the bank.

One can avail loans like the Nainital Bank Ltd home loan, the Nainital Bank Ltd education loan

and the Nainital Bank Ltd car loan. Besides, there are loans for salaried class, doctors and

businessmen. There is a scheme for traders, hoteliers, contractors, transport operators and small

and medium enterprises.

Nainital Bank Loans

The Nainital Bank Ltd home loan can be availed by the eligible applicants. In the bank, the home

loan is known as 'Apna Ashiana'. If one applies for a loan for an existing house, the repayment

should begin after 3 months from the date of disbursement.

On the other hand, if one has purchased a house or a flat from a development authority, a society

or a builder, then the repayment would begin after the execution of sale deed, or after possession,

or after 18 months, whichever is earlier. However, if one has bought a piece of land or

constructed a house, then the tenure of repayment should not exceed 20 years from the

disbursement of the loan date.

The Nainital Bank Ltd car loan is known as 'Suhana Safar'. If one wants to purchase a car or a

two wheeler, one can avail loan upto `15 lac for new and `5 lac for old car. With the car loan, one

would be able to realize his dreams of owning a vehicle.

One can apply for the Nainital Bank Ltd education loan or 'Siksha' for upto `7.5 lac in order to

study in India. Whereas in case of abroad studies, one can apply for a loan upto `15 lac. For a

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loan upto `4 lac, no guarantor is required. However, loan more than `4 lac and upto `7.5 lac

requires guarantee and loan more than that requires collateral security of suitable value.

In order to get the Nainital Bank Ltd loan, one would need to apply in a standardized way.

The loan application form can be downloaded from the official website of the bank. The form

would include the application charges, refundable money (if the application is rejected),

prepayment options and other interest of the recipient.

Along with the loan application form, one needs to submit the photocopy of all other relevant

documents. However, any change in the service charges and interest rates would be posted on the

website or in other print and other media.

Contact Address

Head Office

The Nainital Bank

Seven Oaks Building

Mallital, Nainital

Uttarakhand - 263 001

Ph No.:-05942-236138; 236195

Fax:- 05942-236939

Official Website: http://www.nainitalbank.co.in

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 Nainital Bank Informational Data

Name of
Nainital Bank
Bank

No. of Offices 92

No. of Employees 693

Business per Employee (in `Lakh) 425

Profit per Employee (in `Lakh) 6

Interest Income (in `Crore) 209

Other Income (in `Crore) 10

Interest Expended (in `Crore) 116

Operating Expenses (in `Crore) 39

Return on Assets 1.68

CRAR 13.1

Net NPA Ratio 0

Last Updated on May 20, 2015

List of Bank Branches in India

 Abhyudaya Co Op Bank Ltd

 Abu Dhabi Commercial Bank

 Allahabad Bank

 Andhra Bank

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 Axis Bank

 Bank Of America

 Bank Of Bahrain And Kuwait

 Bank Of Baroda

 Bank Of Ceylon

 Bank Of India

 Bank Of Maharashtra

 Bank Of Tokyo Mitsubishi Ufj Ltd

 Barclays Bank Plc

 Bassein Catholic Co Op Bank Ltd

 Bnp Paribas

 Canara Bank

 Catholic Syrian Bank Ltd

 Central Bank Of India

 Chinatrust Commercial Bank

 Citibank

 Citizen Credit Co Op Bank Ltd

 City Union Bank Ltd

 Corporation Bank

 Credit Agricole Corp N Invsmnt Bank

 Dbs Bank Ltd

 Dena Bank

 Deutsche Bank Ag

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 Development Credit Bank Limited

 Dhanlaxmi Bank Ltd

 Dicgc

 Dombivli Nagari Sahakari Bank Limited

 Firstrand Bank Limited

 Hdfc Bank Ltd

 Hsbc Bank Ltd

 Icici Bank Ltd

 Idbi Bank Ltd

 Indian Bank

 Indian Overseas Bank

 Indusind Bank Ltd

 Janakalyan Sahakari Bank Ltd

 Janata Sahakari Bank Ltd

 Jp Morgan Chase Bank

 Kapol Co Op Bank

 Karnataka Bank Ltd

 Karur Vysya Bank

 Kotak Mahindra Bank

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LITERATURE REVIEW

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MEANING OF WORKING CAPITAL:

Capital required for a business can be classifies under two main categories:
 Fixed Capital
 Working Capital
Every business needs funds for two purposes for its establishments and to carry out day to day

operations. Long term funds are required to create production facilities through purchase of fixed

assets such as plant and machinery, land and building, furniture etc. Investments in these assets

are representing that part of firm’s capital which is blocked on a permanent or fixed basis and is

called fixed capital. Funds are also needed for short term purposes for the purchasing of raw

materials, payments of wages and other day to day expenses etc. These funds are known as

working capital. In simple words, Working capital refers to that part of the firm’s capital which

is required for financing short term or current assets such as cash, marketable securities, debtors

and inventories.

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:

 Balance Sheet concepts
 Operating Cycle or circular flow concept

BALANCE SHEET CONCEPT:

There are two interpretation of working capital under the balance sheet concept:

 Gross Working Capital

 Net Working Capital

The term working capital refers to the Gross working capital and represents the amount of funds

invested in current assets . Thus, the gross working capital is the capital invested in total current

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assets of the enterprises. Current assets are those assets which are converted into cash within

short periods of normally one accounting year. Example of current assets is:

Constituents of Current Assets:

 Cash in hand and Bank balance

 Bills Receivable

 Sundry Debtors

 Short term Loans and Advances

 Inventories of Stock as:

 Raw Materials

 Work in Process

 Stores and Spaces

 Finished Goods

 Temporary Investments of Surplus Funds

 Prepaid Expenses

 Accrued Incomes

The term working capital refers to the net working capital. Net working capital is the excess of

current assets over current liabilities or say:

Net Working Capital = Current Assets – Current Liabilities.

NET WORKING CAPITAL MAY BE NEGATIVE OR POSITIVE:

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When the current assets exceed the current liabilities, the working capital is positive and the

negative working capital results when the current liabilities are more than the current assets.

Current liabilities are those liabilities which are intended to be paid in the ordinary course of

business within a short period of normally one accounting year of the current assets or the

income of the business. Examples of current liabilities are:

CONSTITUENTS OF CURRENT LIBILITIES:

 Bills Payable

 Sundry Creditors or Account Payable

 Accrued or Outstanding Expenses

 Short term Loans, Advances and Deposits

 Dividends Payable

 Bank Overdraft

 Provision for Taxation, If does not amount to appropriation of profits

The gross working capital concept is financial or going concern concept whereas net working

capital is an accounting concept of working capital.

OPERATING CYCLE OR CIRCULATING CASH FORMAT:

Working Capital refers to that part of firm’s capital which is required for financing short term or

current assets such as cash, marketable securities, debtors and inventories. Funds thus invested in

current assets keep revolving fast and being constantly converted into cash and these cash flows

out again in exchange for other current assets. Hence it is also known as revolving or circulating

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capital. The circular flow concept of working capital is based upon this operating or working

capital cycle of a firm. The cycle starts with the purchase of raw material and other resources.

And ends with the realization of cash from the sales of finished goods. It involves purchase of

raw material and stores, its conversion into stocks of finished goods through work in progress

with progressive increment of labor and service cost, conversion of finished stocks into sales,

debtors and receivables and ultimately realization of cash and this cycle continuous again from

cash to purchase of raw materials and so on. The speed/ time of duration required to complete

one cycle determines the requirements of working capital longer the period of cycle, larger is the

requirement of working capital.

Receivable conversion period Raw material storage

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 (RCP) conversion period (RMSCP)

Cash received form

Debtors and paid to suppliers

Of raw materials

Sales of finished Raw materials

Goods introduced into process

Finished Goods

Produced

Finished goods conversion Work in process

Period (FGCP) Conversion period

(WIPCP)

The gross operating cycle of a firm is equal to the length of the inventories and receivables

conversion periods. Thus,

Gross Operating Cycle = RMCP + WIPCP + FGCP + RCP

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Where,

RMCP = Raw Material Conversion Period

WIPCP = Work –in- Process Conversion Period

FGCP = Finished Goods Conversion Period

RCP = Receivables Conversion Period

However, a firm may acquire some resources on credit and thus defer payments for certain

period. In that case, net operating cycle period can be calculated as below:

Net Operating Cycle Period = Gross Operating Cycle Period

Further, following formula can be used to determine the conversion periods.

 Raw Material Conversion Period = Average Stock of Raw Material.

Raw Material Consumption per day

 Work in process Conversion Period = Average Stock of Work-in-Progress

Total Cost of Production per day

 Finished Goods Conversion Period = Average Stock of Finished Goods

Total Cost of Goods sold per day

 Receivables Conversion Period = Average Accounts Receivables

Net Credit Sales per day

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  Payable Deferral Period = Average Payable

Net Credit Purchase per day

CLASSIFICATION OR KIND OF WORKING CAPITAL:

Working capital may be classified in two ways:

 On the basis of concept

 On the basis of time

Om the basis of concept, working capital is classified as gross working capital and net working capital.

The classification is important from the point of view of the financial manager.

On the basis of time, working capital may be classified as:

 Permanent or Fixed working capital

 Temporary or Variable working capital.

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 Kinds of Working Capital

On the basis of concept On the basis of time

Permanent or
Fixed Working Temporary or
Gross Working Net Working
Capital Capital
Variable Working
Capital t

Regular Reserve Working Special Working

Working Capital Capital Capital

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1. PERMANENT OR FIXED WORKING CAPITAL:

Permanent or fixed working capital is the minimum amount which is required to ensure effective

utilization of fixed facilities and for maintaining the circulation of current assets. There is always

a minimum level of current assets which is continuously required by the enterprises to carry out

its normal business operations.

2. TEMPRORAY OR VARIABLE WORKING CAPITAL:

Temporary or variable working capital is the amount of working capital which is required to

meet the seasonal demands and some special exigencies.Varibles working capital can be further

classified as second working capital and special working capital. The capital required to meet the

seasonal needs of the enterprises is called the seasonal working capital.

Temporary working capital differs from permanent working capital in the sense that is required

for short periods and cannot be permanently employed gainfully in the business.

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25
IMPORATNCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL:

Working capital is the life blood and nerve centre of a business . just a circulation of a blood is

essential in the human body for maintaining life, working capital is very essential to maintain the

smooth running of a business. No business can run successfully without an adequate amount of

working capital. The main advantages of maintaining adequate amount of working capital are as

follows

 Solvency of the Business

 Goodwill

 Easy Loans

 Cash discounts

 Regular supply of Raw Materials

 Regular payments of salaries, wages & other day to day commitments.

 Exploitation of favorable market conditions

 Ability of crisis

 Quick and regular return on investments

 High morals

THE NEED OR OBJECTS OF WORKING CAPITAL:

The need for working capital cannot be emphasized. Every business needs some amount of

working capital. The need of working capital arises due to the time gap between production and

realization of cash from sales. There is an operating cycle involved in the sales and realization of

cash. There are time gaps in purchase of raw materials and production, production and sales,

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And sales, and realization of cash, thus , working capital is needed for the following purposes:

 For the purchase of raw materials , components and spaces

 To pay wages and salaries

 To incur day to day expenses and overhead costs such as fuel, power and office expenses

etc.

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

 To provide credit facilities to the customers.

 To maintain the inventories of raw materials, work –in- progress, stores and spares and

finished stock

FACTORS DETERMING THE WORKING CAPITAL REQUIRMENT:

The working capital requirements of a concern depend upon a large number of factors such as

nature and size of the business, the characteristics of their operations, the length of production

cycle , the rate of stock turnover and the state of economic situation. However the following are

the important factors generally influencing the working capital requirements.

NATURE OR CHARACTERSTICS OF A BUSINESS:

The nature and the working capital requirement of enterprises are interlinked. While a

manufacturing industry has a long cycle of operation of the working capital, the same would be

short in an enterprises involve in providing services. The amount required also varies as per the

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nature, an enterprises involved in production would required more working capital then a service

sector enterprise.

MANAFACTURE PRODUCTION POLICY:

Each enterprises in the manufacturing sector has its own production policy, some follow the

policy of uniform production even if the demand varies from time to time and other may follow

the principles of demand based production in which production is based on the demand during

the particular phase of time. Accordingly the working capital requirements vary for both of them.

OPERATIONS:

The requirement of working capital fluctuates for seasonal business. The working capital needs

of such business may increase considerably during the busy season and decrease during.

MARKET CONDITION:

If there is a high competition in the chosen project category then one shall need to offer sops like

credit, immediate delivery of goods etc for which the working capital requirement will be high.

Otherwise if there is no competition or less competition in the market then the working capital

requirements will be low.

AVABILITY OF RAW MATERIAL:

If raw material is readily available then one need not maintain a large stock of the same thereby

reducing the working capital investment in the raw material stock . On other hand if raw material

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is not readily available then a large inventory stocks need to be maintained, there by calling for

substantial investment in the same.

GROWTH AND EXAPNSION:

Growth and Expansions in the volume of business result in enhancement of the working capital

requirements. As business growth and expands it needs a larger amount of the working capital.

Normally the needs for increased working capital funds processed growth in business activities.

PRICE LEVEL CHANGES :

Generally raising price level require a higher investment in the working capital. With increasing

prices, the same levels of current assets needs enhanced investments.

MANAFACTURING CYCLE:

The manufacturing cycle starts with the purchase of raw material and is completed with the

production of finished goods. If the manufacturing cycle involves a longer period the need for

working capital would be more. At time business needs to estimate the requirement of working

capital in advance for proper control and management. The factors discussed above influence the

quantum of working capital in the business. The assessment of the working capital requirement

is made keeping this factor in view. Each constituents of the working capital retains it form for a

certain period and that holding period is determined by the factors discussed above. So for

correct assessment of the working capital requirement the duration at various stages of the

working capital cycle is estimated. Thereafter proper value is assigned to the respective current

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assets, depending on its level of completion. The basis for assigning value to each component is

given below:

COMPONENTS OF WORKING

CAPITAL BASIS OF VALUATION

Stock of Raw Material Purchase of Raw Material

Stock of Work -in- Process At cost of Market value which is lower

Stock of finished Goods Cost of Production

Debtors Cost of Sales or Sales Value

Cah Working Expenses

Each constituent of the working capital is valued on the basis of valuation.Enumerated above for

the holding period estimated. The total of all such valuation becomes the total estimated working

capital requirement.

The assessment of the working capital should be accurate even in the caseof small and micro

enterprises where business operation is not very large. We know that working capital has a very

close relationship with day-to-day operations of a business. Negligence in proper assessment of

the working capital, therefore, can affect the day-to-day operations severely. It may lead to cash

crisis and ultimately to liquidation. An inaccurate assessment of the working capital may cause

either under-assessment or over-assessment of the working capital and both of them are

dangerous.

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 PRINCIPLES OF WORKING CAPITAL MANAGEMENT POLICY:

The following are the general principles of a sound working capital management policy:

PRINCIPLES OF WORKING CAPITAL MANAGEMNT POLICY

PRINCIPLES OF PRINCIPLES OF PRINCIPLES OF PRINCIPLES OF

MATURITY OF
RISK COST OF EQUITY PAYMENTS
VARIATIONS CAPITAL PRINCIPLES

1. PRINCIPLE OF RISK VARAITAION (CURRENT ASSETS POLICY):

Risk here refers to the inability of a firm to meet its obligations as and when they become due for

payment. Larger investment in current Assets with less dependence on short term borrowings,

increase liquidity, reduces risk and thereby decreases the opportunity for gain or loss. On the

other hand less investments in current assets with greater dependence on short term borrowings,

reduces liquidity and increase profitability. In other words there is a definite inverse relationship

between the degree of risk and profitability. In other words, there is a definite inverse

relationship between the risk and profitability. A conservative management prefers to minimize

risk by maintaining a higher level of current assets or working capital while a liberal

management assumes greater risk by reducing working capital. However, the goal of

management should be to establish a suitable trade off between profitability and risk.

2. PRINCIPLES OF COST OF CAPITAL: The various source of raising working capital

finance have different cost of capital and the degree of risk involved. Generally, higher and risk

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however the risk lower is the cost and lower the risk higher is the cost. A sound working capital

management should always try to achieve a proper balance between these two

3.PRINCIPLE OF EQUITY POSITION:

The principle is concerned with planning the total investments in current assets. According to

this principle, the amount of working capital invested in each component should be adequately

justified by a firm’s equity position. Every rupee invested in current assets should contribute to

the net worth of the firm. The level of current assets may be measured with the help of two

ratios:

1. Current assets as a percentage of total assets and

2. Current assets as a percentage of total sales

While deciding about the composition of current assets, the financial manager may consider the

relevant industrial averages.

4. PRINCIPLES OF MATURITY OF PAYMENT:

The principle is concerned with planning the source of finance for working capital. According to

the principles, a firm should make every effort to relate maturities of payment to its flow of

internally generated funds. Maturity pattern of various current obligations is an important factor

in risk assumptions and risk assessments. Generally shorter the maturity schedule of current

liabilities in relation to expected cash inflows, the greater the inability to meet its obligations in

time.

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CONSEQUENCES OF UNDER ASSESMENT OF WORKING CAPITAL:

 Growth may be stunted. It may become difficult for the enterprises to undertake

profitable projects due to non availability of working capital.

 Implementations of operating plans may brome difficult and consequently the profit goals

may not be achieved.

 Cash crisis may emerge due to paucity of working funds.

 Optimum capacity utilization of fixed assets may not be achieved due to non availability

of the working capital.

The business may fail to honour its commitment in time thereby adversely affecting its

creditability. This situation may lead to business closure.The business may be compelled to by

raw materials on credit and sell finished goods on cash. In the process it may end up with

increasing cost of purchase and reducing selling price by offering discounts . both the situation

would affect profitable adversely.

Now avaibility of stocks due to non availability of funds may result in production stoppage.

While underassessment of working capital has disastrous implications on business

overassesments of working capital also has its own dangerous.

CONSEQUENCES OF OUR OWN ASSESMNET OF WORKING CAPITAL:

 Excess of working capital may result in un necessary accumulation of inventories.

 It may lead to offer too liberal credit terms to buyers and very poor recovery system &

cash management.

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  It may make management complacent leading to its inefficiency.

 Over investment in working capital makes capital less productive and may reduce return

on investment.

Working Capital is very essential for success of business & therefore needs efficient

management and control. Each of the components of working capital needs proper management

to optimize profit.

INVENTORY MANAGEMNT:

Inventory includes all type of stocks. For effective working capital management, inventory needs

to be managed effectively. The level of inventory should be such that the total cost of ordering

and holding inventory is the least. Simultaneously

stock out costs should be minimized. Business therefore should fix the minimum safety stock

level reorder level of ordering quantity so that the inventory costs is reduced and outs

management become efficient.

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RECEIVABLE MANAGEMENT:

Given a choice, every business would prefer selling its produce on cash basis. However, due to

factors like trade policies , prevailing market conditions etc. Business are compelled to sells their

goods on credit. In certain circumstances a business may deliberately extend credit as a strategy

of increasing sales. Extending credit means creating current assets in the form of debtors or

account receivables. Investment in the type of current assets needs proper and effective

management as, it gives rise to costs such as :

 Cost of carrying receivables

 Cost of bad debts losses

Thus the objective of any management policy pertaining to accounts receivables would be to

ensure the benefits arising due to the receivables are more then the costs incurred for the

receivables and the gap between benefit and costs increased resulting in increase profits. An

effective control of receivables

Help a great deal in properly managing it. Each business should therefore try to find out

coverage credit extends to its clients using the below given formula:

35
 Average Credit = Total amount of receivable

(Extend in days) Average credit sale per day

Each business should project expected sales and expected investments in receivable based on

various factor, which influence the working capital requirement. From this it would be

possible to find out the average credit days using the above given formula. A business should

continuously try to monitor the credit days and see that the average. Credit offer to clients is

not crossing the budgeted period otherwise the requirement of investment in the working

capital would increase and as a result, activities may get squeezed. This may lead to cash

crisis.

36
 CASH BUDGET:

Cash budget basically incorporates estimates of future inflow and outflows of cash cover a

projected short period of time which may usually be a year, a half or a quarter year . effective

cash management is facilated if the cash budget is further broken down into months, weeks

or even a daily basis.

There are two components of cash budget are:

1. Cash inflows

2. Cash outflows

The main source for thses flows are given here under:

1. Cash Sales

2. Cash received from debtors

3. Cash received from Loans, deposits etc.

4. Cash receipts other revenue income

5. Cash received from sale of investment or assets.

37
 CASH OUTFLOWS:

1. Cash Purchase

2. Cash payments to Creditors

3. Cash payment for other revenue expenditure

4. Cash payment for assets creation

5. Cash payments for withdrawals, taxes.

6. Repayments of Loan etc.

A suggestive for, at for cash budget is given below:

38
 MONTHS

FERBUAR

PARTICULARS JANUARY Y MARCH

Estimated cash inflows

………………………………

………………………………….

I. Total cash inflows

Estimated cash outflows

……………………………..

…………………………..

II. Total cash outflows

III. Opening cash balances

IV. Add/deduct surplus/deflictduring the

month ( I-II)

V. Closing cash balances (III -IV)

VI. Minimum level of cash balance

39
VII. Estimated excess or short fall of cash (V-

VI)

40
 OBJECTIVE OF STUDY

To analyze the financial position of NAINITAL BANK

 To analyze the liquidity position of NAINITAL BANK

41
 SCOPE OF STUDY

Every business needs funds for two purposes for its establishments and to carry out day to day

operations. Long term funds are required to create production facilities through purchase of fixed

assets such as plant and machinery, land and building, furniture etc. Investments in these assets

are representing that part of firm’s capital which is blocked on a permanent or fixed basis and is

called fixed capital. Funds are also needed for short term purposes for the purchasing of raw

materials, payments of wages and other day to day expenses etc. These funds are known as

working capital. In simple words, Working capital refers to that part of the firm’s capital which

is required for financing short term or current assets such as cash, marketable securities, debtors

and inventories.

42
43
 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

For every comprehensive research a proper research methodology is indispensable & it has to be

properly conceived. The methodology adopted by me is as follows:-

RESEARCH PROBLEM

 To know the working capital management of Nainital Bank with the help of ratio

analysis.

RESEARCH DESIGN

According to Clifford Woody, “research comprises defining and redefining problems,

formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;

making deductions and reaching conclusions; and at last carefully testing the conclusions to

determine whether they fit.

Working Capital Management through secondary data based on certain parameters;

SOURCES OF DATA

The secondary data are those which have already been collected by someone else and which

have already been passed through the statistical process.

44
STATISTICAL TOOLS USED

The various statistical tool used were data distribution tables, graphs and pie charts. Ratio

analysis was used for determining the working capital management of Nainital Bank pvt.Ltd.

Secondary Data:

Any data, which have been gathered earlier for some other purpose, are secondary data in the

hands of researcher. Those data collected first hand, either by the researcher or by someone

else, especially for the purpose of the study is known as primary data.

The data collected for this project has been taken from the secondary source. Sources of

secondary data are:-

 Internet

 Magazines

 Publications

 Newspapers

 Broachers

45
DATA ANALYSIS

46
 WORKING CAPITAL ESTIMATION

FY 07-

Current assets Loans & advances FY 05-06 FY 06-07 08

Currents assets

Inventories

stock in trade 223.94 662.87 1176.85

work in progress 2528.4 4563.76 8714.56

raw materials 7224.96 8145.37 9242.58

stores and spare parts 1131.8 1463.13 1810.73

Total Inventories 11109.1 14835.13 20944.72

Debtors 5516.14 7402.6 14211.12

Cash & Bank balances 1027.1 8042.12 5225.01

(subtracting FCCB issue unutilized -6910.46 -5272.52

money as it amounts to long term

liability)

loans and advances 3249.1 7529.5 8647.1

Net current assets 20901.44 30898.89 43755.43

47
 FY 07-

Current Liabilities FY 05-06 FY06-07 08

Sundry Creditors 1476.37 1589.57 3748.82

Creditors for capital expenditure 1456.05 365.64 258.4

other liabilities 342.26 645.34 621.04

unclaimed dividend 21.33 31.66 35.29

sundry deposits 174.14 229.23 321.66

advances from customers 217.21 362.59 73.55

interest accrued but not due on loan 7.04 20.05 32.12

Net current liabilities 3694.404 3244.08 5090.88

INVENTORIES

In the context of NAINITAL BANKthe major increase in the present three financial years has

been of the inventor

48
 INVENTORIES

25000

20000
stock in trade
15000 work in progress
raw materials
10000 stores and spare parts
Total Inventories
5000

0
FY 05-06 FY 06-07 FY 07-08

Reasons:

 The pile up of inventory that is used in trial run, before hand to be used in the checking

the machinery & the newly installed production capacity.

 The increased inventory to produce more goods so as to utilize the new plant set up .

DEBTORS AND AVERAGE RECEIVABLES

The debtors are increasing heavily in the financial year 06-07 because of a sales boom that has

accounted for huge accounts receivables increase.

49
 DEBTORS AND AVERAGE RECEIVABLES

16000
14000
12000
10000
8000 Debtors
6000
4000
2000
0
FY 05-06 FY 06-07 FY 07-08

50
CASH AND BANK BALANCES

Cash and bank balance as per the balance sheet it is seen to be increasing but from the above

chart it is seen to be decreasing. This discrepancy can be attributed to the fact that balance sheet

figures carry additional cash balance of unutilized FCCB issue proceeds which amount to long

term liability as well. Thus the actual figures are distorted because the money from FCCB issue

has to be returned and it is a kind of long term loan which the company has sought for expansion

purpose.

As a result to find the actual outlay of cash the unutilized money has been subtracted. Also we

should take note of the fact that the FCCB money can only be used for expansion purpose and

not as money for usual application of working capital.

CASH & BANK BALANCE

5225.01
FY 07-08

8042.12
FY 06-07 Cash & Bank balances

1027.1
FY 05-06

0 2000 4000 6000 8000 10000

LOANS

51
AND ADVANCES

Loans & advances are increasing on the part of increased advances that are given to pile up

inventory when the company went for the expansion mode:

LOANS AND ADVANCES

FY 05-06
17%

FY 07-08 FY 05-06
44% FY 06-07
FY 07-08
FY 06-07
39%

52
CURRENT ASSETS

Current Assets includes cash & those assets which can be easily converted into cash within a

short period generally one year such as marketable securities , bills receivables, sundry debtors,

inventories, work in progress, prepaid expenses etc .The total current assets are the sum of below

contingency i.e.

Current Assets = Stock/ Inventory + Sundry Debtors + Advances + Cash and bank

balances + other current assets

CURRENT ASSETS

loans and advances

FY 07-08
Cash & Bank balances
Debtors
Total Inventories
FY 06-07
stores and spare parts
raw materials
work in progress
FY 05-06
stock in trade

0 5000 10000 15000 20000 25000

NET CURRENT ASSETS

FY 05-06
22%

FY 07-08
46%

FY06-07
32%

Conclusions: The trend of the current

assets in NAINITAL BANKthroughout the period from 2005-08 are shown in the pie-chart .it is

53
evident from the table that the current assets in NAINITAL BANKhas increased except in year

2006-07.

CURRENT LAIBILITIES

These are those obligations which are payable within a short period of generally one year and

includes outstanding expenses, bills payable, sundry creditors, accrued expenses, bank overdraft,

short term advances, income tax payable.

TOTAL CURRENT LAIBILITIES

Sundry Creditors
4000
Creditors for capital
3500
expenditure
3000 other liabilities
2500
2000 unclaimed dividend

1500
sundry deposits
1000
500 advances from
0 customers
FY 05-06 FY06-07 FY 07-08 interest accrued but not
due on loan

54
 NET CURRENT LAIBILITIES

6000

5000

4000

3000 Net current liabilities

2000

1000

0
FY 05-06 FY06-07 FY 07-08

Conclusion:

The trend of Current Liabilities of NAINITAL BANKthroughout the period from 2005-2008 are

shown in the table. It is evident from the table that it shows increasing trends in the year 2005 to

2008. It shows that the NAINITAL BANKhas stability in trends of Current Liabilities.

55
 CREDITORS OF CAPITAL EXPENDITURE

Creditors of NAINITAL BANKlimited are increasing from 70 Cr (FY 05-06) to 18 Cr (FY 06-

07) to 12 Cr (FY 07-08). The main reason for the increase in can be attributed to the heavy

purchase of the inventory for stocking it up for trial run & use before the expansion mode.

Creditors for capital expenditure seem to be decreasing over the three years i.e. from 18Cr (FY

05-06) to 12 Cr (FY 06-07) which is in sync with the fact that the expansion work that has been

in process and all preparations for that are coming to an end.

CREDITORS FOR CAPITAL EXPENDITURE

1600
1400
1200
1000 Creditors for capital
800 expenditure
600
400
200
0
FY 05-06 FY06-07 FY 07-08

56
 RATIO ANALYSIS

FY 05-06 FY 06-07 FY 07-08

Current assets 29843.52 47163.72 61410.49

current liabilities 7611.44 6597.95 7459.4

quick assets 12759.32 14530.46 20880.64

quick liabilities 7611.44 6597.95 7459.4

Net turnover (sales) 45503 52527.1 81786.93

working capital 22232.08 40565.77 53951.09

average inventory (average of opening & closing

stock of year) 8594.615 14476.465 22666.83

cost of goods sold = cost of sales 37398 47018.31 67855.4

total assets 87666 124436.12 138465.6

total annual expenses -(depreciation +debt

expenses) 37313.16 27364.06 23898.65

average gross income 97754.89 63633.37 51858

PROFIT before interest and taxes 5998 8120.16 14612.92

Total interest 747.8 2653.75 5214.77

Net Profit after tax (NPAT) 4115 3893.37 7383.56

57
capital employed (FA+CA-CL ) 89529.68 106917.71 111772.7

investment (FA+CA) 97141.12 113515.66 119232.1

Fixed assets 67297.6 66351.94 57821.59

58
 LIQUIDITY RATIOS

CURRENT RATIO

Current ratio is defined as the relationship between current assets and current liabilities. It is a

measure of general liquidity & is most widely used to make the analysis of short term financial

position of a firm. Current ratio is the ratio of current assets to current liabilities. A relatively

higher ratio is an indication that the firm is liquid and has the ability to pay its current obligations

on time. On the other hand a low current ratio indicates that the Liquidity position of the firm is

not good and shall not be able to pay its current liabilities in time. Current Ratio:

The Current ratio is calculated by dividing current assets by current liabilities:

Current ratio: Current Assets

Current Liabilities

FIANANCIAL CURRENT CURRENT CURRENT

YEAR ASSETS LAIBILITIES RATIO

FY 2005-2006 29843.52 7611.44 3.92

FY 2006-2007 47163.72 6597.95 7.14

FY2007-2008 61410.49 7459.4 8.23

59
 CURRENT RATIO

20%

43% FY 2005-2006
FY 2006-2007
QUICK
FY2007-2008
ASSETS

QUICK 37%

FIANANCIAL LIABILITITE QUICK

YEAR S CURRENT LAIBILITIES RATIO

FY 2005-2006 12759.32 7611.44 1.67

FY 2006-2007 14530.46 6597.95 2.2

FY2007-2008 20880.64 7459.4 2.78

60
QUICK RATIO:

Quick ratio or liquid ratio is a more rigorous test of liquidity than the current ratio. The term

liquidity refers to the ability of the firm to pay short term obligations as and when they become

due. Quick ratio may be defined as ration of quick assets to quick liabilities. Liquid assets

include all the current assets excluding inventories & prepaid expenses. Liquid liabilities mean

all liabilities excluding bank overdraft. Inventories & prepaid expenses are not termed as liquid

assets because they cannot be converted into cash immediately without a loss of value.

61
 QUICK RATIO

25%

42% FY 2005-2006
FY 2006-2007
FY2007-2008

33%

62
CURRENT SCENERIO INTERPRETATION

While interpreting the figures of both the above ratios we should keep in mind the following one

point

 NAINITAL BANK is a manufacturing concern

Since it is manufacturing concern the an excess of inventory as compared to other industry

models such as the services sector is an integral fact. As a result it is bound to have higher

current ratio and quick ratio as compared to other industries.

The sharp rise of current ratio from 20% (FY 05-06) to 37% (FY 06-07) to 43 %( FY 07-08)

Can be attributed to

a. Higher pile up of inventory which was to be used up for trial run in producing new

products from the new plant set up.

b. Higher prepaid expenses related to advances given so as to pile up the inventory so that

when the inventory is needed for trial run, it’s available.

c. An increase in average receivables which was in sync with increased capacity of

production and also increased sales.

An important point to note here is that an excess of cash balance arising out of idle money

coming out of FCCB issue expense has been deducted as correspondingly it accounts for long

term liability (debentures) which have no effect on working capital management. The quick ratio

63
is a more important indicator of liquid position of NAINITAL BANKas it hardly varies from

25% (FY 06-07) to 33% (FY 07-08). Obviously the effect of inventories has been negated.

EFFICIENCY RATIO

From the perspective of working capital management we would be discussing three important

ratios they are.

 Sales to working capital ratio

 Inventory turnover ratio

 Current assets turnover ratio.

SALES TO WORKING CAPITAL RATIO

This ratio is computed by dividing working capital by sales. This ratio helps to measure

efficiency of the utilization of net working capital. It signifies that for an amount of sales. A

relative amount of working capital is needed. If any increase in sales in contemplated, working

capital should be adequate & thus this ratio helps management to maintain the adequate level of

working capital

Financial Year FY 05-06 FY 06-07 FY 07-08

Sales to working capital ratio 2.046727 1.294863 1.51595

64
 SALES TO WORKING CAPITAL RATIO

2.046727

2.5 1.515946
1.29486264
2
1.5
1
0.5
0
FY 05-06 FY 06-07 FY07-08

Sales to working capital ratio

CURRENT SCENERIO INTERPRETATION

As seen from the above table the ratio has decreased from 2 (FY 05-06) to 1.29 in (FY 06-07)

and then increased to 1.5 (FY 07-08). This ratio is again indicative of the fact that the year in

which the expansion took place the sales did not match up with the scale of expansion.

Otherwise it would have remained intact and not decreased. The slight increase from 1.29 to

1.51 is indicative of the fact that the full impact of expansion is being slowly realized & sales are

slowly increasing.

65
INVENTORY TURNOVER RATIO

This ration indicates the effectiveness and efficiency of inventory management. This ratio is

calculated as cost of goods sold: average inventory shows how speedily the inventory is turned

into accounts receivables through sales. The higher the inventory turnover ratio (also called stock

velocity) the more the efficient inventory management.

Financial Year FY 05-06 FY 06-07 FY07-08

inventory turnover ratio/ stock velocity 4.351329 3.2479138 2.9936

INVENTORY TURNOVER RATIO

FY07-08

inventory turnover ratio/

FY 06-07
stock velocity

FY 05-06

0 1 2 3 4 5

66
CURRENT SCENERIO INTERPRETATION

The stock velocity is decreasing subsequently from 4.35 (FY 06-07) to 2.99 (FY 07-08) which

shows inefficiency on the part of inventory management.

Partly the reason for the fall can be attributed to stocking up of inventory for the trail run&

using them in testing the expansion mode machinery.

CURRENT ASSETS TURNOVER RATIO

This ratio is indicated by sales upon current assets. This ratio indicates the efficiency with which

the current assets turn into sales & higher current assets turnover ratio implies by & large a more

efficient use of funds in current assets. Thus, a high turnover rate indicates reduced lock up of

funds in current assets. An analysis of this ratio over a period reflects working capital

management of the firm

Financial Year FY 05-06 FY 06-07 FY07-08

current assets turnover ratio 1.52472 1.11371834 1.331807

67
 CURRENT ASSETS TURNOVER RATIO

1.6 1.52472
1.4 1.331807
1.2 1.11371834
1
0.8 current assets turnover
ratio
0.6
0.4
0.2
0
FY 05-06 FY 06-07 FY07-08

68
CURRENT SCENERIO INTERPRETATION

The ratio is slightly decreasing from 1.52 (FY 05-06) to 1.11 (FY 06-07) & then increasing to

1.33 (FY 07-08) which shows that sales increase is not matched by the increase in current assets

in the expansion phase of NAINITAL BANK. The reason can be well attributed to the piling up

of trial stock and not full use of the expanded production capacity.

OPERATING RATIOS

 Working ratio

 Interest coverage ratios

WORKING RATIO

A ratio used to measure a company's ability to recover operating costs from annual revenue.

This ratio is calculated by taking the company's totalannualexpenses (excluding depreciation

and debt-related expenses) anddividing itby the annual gross income. A working ratio below

1 implies that the company is able to recover operating costs, whereas a ratio above 1 reflects

the company's inability to do so.

Financial Year FY 05-06 FY 06-07 FY07-08

69
 working ratio 0.381701 0.43002689 0.460848

WORKING RATIO

FY07-08 0.460848

FY 06-07 0.43002689 working ratio

FY 05-06 0.381701

0 0.1 0.2 0.3 0.4 0.5

CURRENT SCENERIO INTERPRETATION

The ratio consistently has been below 1 which means company can very well take out its

operating costs, though the margin of comfort is slightly decreasing because of the increase in

expenses of the United Engineering Service

70
71
 RECMONDATION

 Making available just adequate quantum of working capital. Some of the existing

machinery is new with absolute equipments requiring modernization and rebuilding.

 The company should administrate their credit on the basis of certain well recognized and

established principle of credit administration.

 The company should maintain an optimum level of cash in the business in order to

maintain a proper liquidity in the business.

72
 FINDING

And sales, and realization of cash, thus , working capital is needed for the following purposes:

 For the purchase of raw materials , components and spaces

 To pay wages and salaries

 To incur day to day expenses and overhead costs such as fuel, power and office expenses

etc.

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

 To provide credit facilities to the customers.

 To maintain the inventories of raw materials, work –in- progress, stores and spares and

finished stock

73
 LIMITATION

The need for working capital cannot be emphasized. Every business needs some amount of

working capital. The need of working capital arises due to the time gap between production and

realization of cash from sales. There is an operating cycle involved in the sales and realization of

cash. There are time gaps in purchase of raw materials and production, production and sales,

74
 CONCLUSION

Working capital management is an important aspect of any business. Every business concern

should have adequate working capital to run its business operation. Every concern should have

neither redundant of excess working capital nor inadequate or shortage of working capital. Both

excess as well as short working capital positions are bad for any business.

The three elements of working capital management are cash management receivable

management and inventory management. If a finance manager maintains these three elements of

working capital management properly means the concern will get dramatic improvement in their

sales volume and also in business. Working capital policies of a firm have a great effect on its

profitability, liquidity and structured health of the organization.

Every concern should adopt some new tread management strategies that will help in greater

productivity, inventory optimization and also better working capital management. So, it is noted

that working capital is a means to run business smoothly and profitability. Thus, the concept of

working capital has its own important in a going concern.Good management of working capital

is part of good finance management effective use of working capital will contribute to

theoperational efficiency of a department; optimum use will help to generate maximum return.

NAINITAL BANKis also using “SAP” 6.0 versions which is very advanced to do every

transaction of any organization. ‘SAP’ 6.0 also applicable for e-transaction.

75
 SUGGESTION AND RECOMMENDATION

The main reasons a business needs finance are to:

• Start a business

• Finance expansions to production capacity

• To develop and market new products

• To enter new markets

• Take-over or acquisition

• Moving to new premises

• To pay for the day to day running of business

Every business needs adequate liquid resources in order to maintain day to day cash flows. It

needs enough cash to by wages and salaries as they fall due and to pay creditors if it is to keep

its workforce and ensure its supplies. Maintaining adequate working capital; is not just

important in the short term.

76
77
 ANNEXURE

BALANCE SHEET OF NAINITAL BANK

PERIOD ENDING 27-Dec-10 29-Dec-09 30-Dec-08

Assets

Current Assets

Cash And Cash Equivalents 2,064,000 910,000 1,651,000

Short Term Investments 213,000 1,571,000 1,171,000

Net Receivables 4,683,000 4,389,000 3,725,000

Inventory 2,522,000 2,290,000 1,926,000

Other Current Assets 1,324,000 991,000 657,000

Total Current Assets 10,806,000 10,151,000 9,130,000

Long Term Investments 3,998,000 4,475,000 3,839,000

Property Plant and Equipment 11,663,000 11,228,000 9,687,000

Goodwill 5,124,000 5,169,000 4,594,000

Intangible Assets 1,860,000 2,044,000 1,849,000

Accumulated Amortization - - -

Other Assets 2,324,000 1,356,000 599,000

Deferred Long Term Asset Charges 219,000 205,000 232,000

Total Assets 35,994,000 34,628,000 29,930,000

78
Liabilities

Current Liabilities

Accounts Payable 6,494,000 6,209,000 5,271,000

Short/Current Long Term Debt 369,000 - 274,000

Other Current Liabilities 1,924,000 1,544,000 1,315,000

Total Current Liabilities 8,787,000 7,753,000 6,860,000

Long Term Debt 7,858,000 4,203,000 2,550,000

Other Liabilities 7,017,000 4,792,000 4,624,000

Deferred Long Term Liability Charges 226,000 646,000 528,000

Minority Interest - - -

Negative Goodwill - - -

Total Liabilities 23,888,000 17,394,000 14,483,000

Stockholders' Equity

Misc Stocks Options Warrants - - (79,000)

Redeemable Preferred Stock (97,000) - -

Preferred Stock - 41,000 -

Common Stock 30,000 30,000 30,000

Retained Earnings 30,638,000 28,184,000 24,837,000

79
 Treasury Stock (14,122,000) (10,519,000) (7,758,000)

Capital Surplus 351,000 450,000 584,000

Other Stockholder Equity (4,694,000) (952,000) (2,246,000)

Total Stockholder Equity 12,203,000 17,234,000 15,447,000

Net Tangible Assets $5,219,000 $10,021,000 $9,004,000

INCOME STATEMENT OF RELIANNCE

PERIOD ENDING 27-Dec-08 29-Dec-07 30-Dec-06

Total Revenue 13,796,000 13,591,000 12,730,000

Cost of Revenue 7,586,000 7,370,000 6,810,000

Gross Profit 6,210,000 6,221,000 5,920,000

Operating Expenses

Research Development - - -

Selling General and Administrative 5,149,000 5,150,000 4,903,000

Non Recurring 412,000 - -

Others - - -

Total Operating Expenses - - -

Operating Income or Loss 649,000 1,071,000 1,017,000

80
 Income from Continuing Operations

Total Other Income/Expenses Net (25,000) 6,000 (11,000)

Earnings Before Interest And Taxes 564,000 983,000 947,000

Interest Expense 290,000 274,000 266,000

Income Before Tax 274,000 709,000 681,000

Income Tax Expense 112,000 177,000 159,000

Minority Interest (60,000) (94,000) (59,000)

Net Income From Continuing Ops 162,000 532,000 522,000

Non-recurring Events

- - -
Discontinued Operations

Extraordinary Items - - -

Effect Of Accounting Changes - - -

Other Items - - -

Net Income 162,000 532,000 522,000

Preferred Stock And Other Adjustments - - -

81
Net Income Applicable To Common Shares $162,000 $532,000 $522,000

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 www.Nainital Bank.com

 www.google.com

 Financial Management theory and practice by Chandra Prassanna

 Financial Management theory and practice by Gupta Shashi .K. & Sharma R.K.

 Sharma R.K & Gupta shashi K; “Management accounting principles and practice.” Eight

edition, kalyani publisher’s New Delhi.

 Bhalla V.K “financial management and policy”, first edition, annual publication, New

Delhi.

 Maheshwari S.N ; “Management accounting and financial control”, thirteen edition,

sultan chand & sons, New Delhi.

 Kothari C.R;”Research methodology methods & techniques”, second edition, vishwa

prakashan Delhi(1990).

 Gupta Sunita, management of working capital, first edition , New century publications,

New Delhi(2003).

 Chandra Prasana Financial Management, TMH, 4th edition, 1997, New Delhi.

82