WORKING CAPITAL MANAGEMENT of axis bank Finance Research 2014 (2).doc

SUMMER TRAINING PROJECT REPORT On “Working Capital Initiatives at AXIS AN! "i#ite$%& 'A pro(e)t *n$ertaken at t+e AXIS AN! RANC, -I,ARSARI./I,AR/ In$ia&0

AXIS AN! "IMITE1

SUMITTE1 TO '"lo2$ Instit*te o3 Manage#ent an$ Te)+nolog2/ "IMT/ in partial 3*l3ill#ent o3 t+e $egree o3 Master4s o3 *siness A$#inistration5 o3 Uttar Pra$es+ Te)+ni)al Universit25 "*)kno6/ In$ia0

.a)*lt2 G*i$e 7/ POR.& RA,U" MIS,RA ASTT& PRO.ESSOR

A Project Report On Working Working Capital Management

S*8#itte$ 82/ M1 WASIM A!RAM M&&A& 9r$ Se#ester RO"" NO&:9:;<;==9; NO&:9:;<;== 9;

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PART/: 1EC"ARATION

I, “MD WASIM AKRAM to declare that the Diertation report entitled “WOR!ING CAPITA" MANAGEMENT O. AXIS AN! ! "eing #"mitted to the $%%AR PRAD&S' %&C'(ICA)

$(I*&RSI%+ or the partial #lillment o the re-#irement or the degree o Mater o .#ine Adm dmiinitra trattion i m/ o0n endea deaor or and it ha not not "ee "een #"m #"miitted ted ear earlier to an/ intit#tion2#nierit/ or an/ degree3

Place4 Date4


MD WA WASIM SIM AKRAM

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AC!NOW"E1GMENT

I hae "eneited a lot rom #mmer training project or o#r co#re o MA5 thi project ha "een a re0arding kno0ledge3 I hae got into the ario# apect o AXIS AN! 3 I take thi opport#nit/ to ackno0ledge the inal#a"le aitance o thoe people 0ho helped me in #cce#l completion o thi Diertation project report3 3 I alo thank (ihikant Singh and M#rt#6a ali or teering m/ conidence and capa"ilit/ or giing me inight into training "/ giing me e7po#re to the arena o competitie and real 0orld3 )at "#t not the leat, I e7pre m/ thank thank to all the department o a7i "ank 0ho al0a/ al0a/ enco#rage me and proided me #pport at all time3

M1 WASIM A!RAM

M.A 8III Sem9


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PRE.ACE

%hi project ha "een prepared in partial #lillment or the degree o Mater o .#ine Adminitration3 A project i a 0ork plan deied thro#gh inetigation and anal/i to achiee a et o"ject 0ithin a peciied time period3 A t#dent i aigned a topic and re-#ired to prepare a report ater making a t#d/ o 0orking o an/ organi6ation3 I 0a aigned to prepare a Diertation project report on Working Capital Management o A;IS .A(K3
A Project Report On Working Capital Management

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MD WASIM AKRAM

EXECUTI>E SUMMAR?

Working capital management or impl/ the management o capital ineted in c#rrent aet i the oc# o m/ t#d/3 M/ topic i to t#d/ WOR!ING CAPITA" MANAGEMENT IN AXIS AN!&

Working capital i the #nd ineted "/ a irm in c#rrent aet3 (o0 in a c#t throat competitie era 0here each irm compete 0ith each other to increae their prod#ction and ale, holding o #icient c#rrent aet hae "ecome mandator/ a c#rrent aet incl#de inentorie and ra0 material 0hich are re-#ired or mooth prod#ction r#n3 'olding o #icient c#rrent aet 0ill en#re mooth and #n interr#pted prod#ction "#t at the ame time, it 0ill con#me a lot o 0orking capital3 'ere creep the importance and need o eicient 0orking capital management3 Working capital management aim at managing capital aet at optim#m leel, the leel at 0hich it 0ill aid mooth r#nning o prod#ction and alo it 0ill inole inetment o nominal 0orking capital in capital aet3

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S&No&

:& <&

CONTENTS

PAGE NO&

C,APTER/: INTRO1UCTION C,APTER/< RE>IEW O. RE"ATE1

9& & D& & ;& @& B& :=&

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"ITRATURE

C,APTER/9 1ESIGN O. STU1? T,E STU1? OJECTI>ES O. STU1? 1ATA CO""ECTION MET,O1 1ATA CO""ECTION SOURCES C,APTER/  ANA"?SIS O. 1ATA C,APTER/ D .IN1INGS C,APTER/  CONC"USION AN1

99 B ;: ;< ; ;D ; B<

RECOMMEN1ATION ::& :<& :9&

RE.ERENCES II"IOGRAP,? ANNEXURE


:== :=: :=< :=9

?

INTRO1UCTION


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C,APTER/ :& INTRO1UCTION

AXIS AN! / RIE. ,ISTOR?

A7i .ank 0a the irt o the ne0 priate "ank to hae "eg#n operation in 1=, ater the Boernment o India allo0ed ne0 priate "ank to "e eta"lihed3 %he .ank 0a promoted jointl/ "/ the Adminitrator o the peciied #ndertaking o the Unit Trust of India (UTI - I) , Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU

in#rance companie, i3e3 National Insurance Company Ltd. The Ne! India "ssurance Company Ltd. The #riental Insurance Company Ltd. and United India Insurance Company Ltd.

%he .ank toda/ i capitali6ed to the e7tent o Rs& B@&9 )rore 0ith the p#"lic holding 8other than promoter9 at <:&DD

%he .ank Regitered Oice i at i+arsari3e an$ its Central O33i)e is lo)ate$ at M*#8ai& Preentl/, the .ank ha a er/ 0ide net0ork o more than <=< "ranch oice and &7tenion Co#nter3 %he .ank ha a net0ork o oer :
%he .ank ha trength in "oth retail and corporate "anking and i committed to adopting the "et ind#tr/ practice internationall/ in order to achiee e7cellence




AC,IE>EMENTS

AXIS "ank one o the "igget "ank in priate ector in India3 A on the /ear ended $arch %& '&%

the .ank had a net 0orth o Rs& @B<< Crore 0ith the p#"lic holding 8other than promoter9 at @&D& (et Proit or the /ear 0a #p 9&B@ to Rs :<;&=@ )rores 3 At the end o j#l/ 5E1=, the

.ank ha a er/ 0ide net0ork o more than <=< 8ran)+ o33i)es an$ EFtension Co*nters& %he .ank ha a net0ork o oer :
MISION O. T,E AN!

C#tomer Serice and Prod#ct Innoation t#ned to diere need o indiid#al and corporate clientele Contin#o# technolog/ #p gradation 0hile maintaining h#man al#e3

Progreie glo"ali6ation and achieing international tandard3

&icienc/ and eectiene "#ilt on ethical

practice3

>al*es

C#tomer Satiaction thro#gh proiding -#alit/ erice eectiel/ and eicientl/

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Smile, it enhance /o#r ace al#eF i a erice -#alit/ treed on

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Periodic C#tomer Serice A#dit

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Ma7imi6ation o Stakeholder




CURRENT SITUATION O. T,E AN! %oda/, more than a cent#r/ ater thoe tentatie irt tep, A;IS .A(K air/ tale i not onl/ going trong "#t "la6ing ne0 tandard, and that min#c#le initial inetment ha gro0n "/ leap and "o#nd to crore o r#pee in 0ealth or A;IS .A(K hareholder3 %he compan/G oering are pread acro the pectr#m 0ith erice3 'aing #cceeded in garnering the tr#t o almot oneHthird o IndiaG one "illion pop#lation and a trong management at the helm mean a7i 0ill contin#e to dream "ig on it path o innoation3 And million o c#tomer 0ill ao#r the re#lt, happil/ eer ater3


1E

STRUCTURE O. ORGANISATION

1R&SANJI> MISRA

C'AIRMA(

S,I!,A S,ARMA

MD  C&O

!&N PRIT,>IRAJ

DIR&C%OR

>&R !AUN1IN?A

DIR&C%OR

S3. MA%'$R

DIR&C%OR

PRASAD M&(O(

DIR&C%OR

Pro3 SAMIR K .AR$&

DIR&C%OR

SOM MI%%A)

DIR&C%OR

IR&&(A MI%%A)

DIR&C%OR

RO'I% .'ABA%

DIR&C%OR

> SRINI>ASAN

1IRECTOR

US,A SANGWAN

1IRECTOR


11

OAR1 O. 1IRECTORS D#ring the /ear, Shri S'IK'A S'ARMA, &7ec#tie Director 80holeHtime Director9 retired rom the erice o the .ank 03e33 :1 Decem"er 5E1E3 %he .oard o Director place on record their appreciation and gratit#de to Shri S3 Chatterjee or the al#a"le erice rendered "/ him d#ring hi %en#re a &7ec#tie Director o the .ank3 In accordance 0ith the proiion o the Companie Act, 1>? and the Article o Aociation o the .ank, Shri K3( PRI%'*IRAJ, Shri S3. MA%'$R and Smt3 PRASAD M&(O( retire "/ rotation at the %hirteenth Ann#al Beneral Meeting and, "eing eligi"le, oer themele or reHappointment a Director o the .ank3 SUSI1IARIES %he .ank ha et #p t0o 0holl/ o0ned #"idiarie i63

$.) Sale )td3 and $.) Aet Management Compan/ )td3 $.) Sale )td hae "een et #p or marketing credit card and other retail aet prod#ct3 %he o"jectie o thi #"idiar/ i to "#ild a peciali6ed orce o ale peronnel, optimi6e operational eicienc/ and prod#ctiit/ and there"/ red#ce cot3 %he ale #"idiar/ alo eek to proide greater control and monitoring o the ale eort iHHi the c#rrent DSA model3 %he econd #"idiar/ o the .ank, $.) Aet Management Compan/ )td3 ha "een ormed primaril/ to carr/ on the actiitie o managing 8directl/ or indirectl/9 inetment, ent#re capital #nd, oH hore #nd etc3 %he perormance o thee #"idiarie along 0ith their Director Report and inancial tatement are encloed a Anne7#re to thi report3 In line 0ith the Acco#nting Standard 51 8AS 519 i#ed "/ the Intit#te o Chartered Acco#ntant o India, the conolidated inancial re#lt o the .ank along 0ith it #"idiarie or the /ear ended :1 March 5E15 are encloed a an Anne7#re to thi report3


15

1IRECTORS4 RESPONSII"IT? STATEMENT

The oard of *irectors here+y declares and confirms that,

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%he applica"le acco#nting tandard hae "een ollo0ed in the preparation o the ann#al acco#nt and proper e7planation hae "een #rnihed, relating to material depart#re3

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Acco#nting policie hae "een elected, and applied conitentl/ and reaona"l/, and pr#dent j#dgement and etimate hae "een made o a to gie a tr#e and air ie0 o the tate o aair o the .ank and o the Proit  )o o the .ank or the inancial /ear ended :1 March 5E1=3

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Proper and #icient care ha "een taken or the maintenance o ade-#ate acco#nting record, in accordance 0ith the proiion o the Companie 8Amendment9 Act, 5EEE, or aeg#arding the aet o the .ank and or preenting and detecting ra#d and other irreg#laritie3

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%he ann#al acco#nt hae "een prepared on a going concern "ai3

PART/< STATUTOR? 1ISC"OSURE A Project Report On Working Capital Management

1:

Conidering the nat#re o actiitie o the .ank, the proiion o Section <:;':0'e0 o3 t+e Co#panies A)t5 :BD relating to coneration o energ/ and technolog/ a"orption do not appl/ to

the .ank3 %he .ank ha, ho0eer, #ed inormation technolog/ e7teniel/ in it operation3 %he tatement containing partic#lar o emplo/ee a re-#ired #nder Section <:;'? and the r#le made there #nder, i gien in an Anne7#re appended hereto and

orm part o thi report3 In term o Se)tion <:B':0 'iv0 o the Act, the Report and Acco#nt are "eing ent to the hareholder e7cl#ding the aoreaid anne7#re3 An/ hareholder intereted in o"taining a cop/ o the Anne7#re ma/ 0rite to the Compan/ Secretar/ at the Regitered Oice o the .ank3

AU1ITORS M2 S3 R3 .atli"oi  Co3, Chartered Acco#ntant, tat#tor/ a#ditor o the .ank ince 5EE? retire on the concl#ion o the %hirteenth Ann#al Beneral Meeting and are eligi"le or reHappointment, #"ject to the approal o Reere .ank o India, and o the hareholder3 A recommended "/ the A#dit Committee, the .oard ha propoed the appointment o S3R3 .atli"oi  Co3, Chartered Acco#ntant a tat#tor/ a#ditor or the inancial /ear 5E1:H1=3 %he hareholder are re-#eted to conider their appointment3

PER.ORMANCE O. T,E ORGANISATION A Project Report On Working Capital Management

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Net interest income up .%/ to 0S '123.1 Core s

(et0ork o "ranche and e7tenion co#nter increaed rom 1:5 to 5=E53 Total num+er of "T$s !ent up from'231 to &'4''. Net NP" ratio as a percenta5e of net customer assets do!n to.3&/ from .2/. Capital "de6uacy 0atio stood at&'.2/ as a5ainst the minimum re5ulatory norm of 1.2/. Proposed *i7idend up from / to/ 8ee 9 #ther income up 3.2' earnin5 per share (asic) increased from 0s. &2. to 0s.''.. / to 0s. &3.%4 Crores.

*eposits up 3./ to 0s. 2121.3 Crores "d7ances up 3.'3/ to 0s. 32123.1 Crores. 0etail assets up %2.3/ to 0s. 411'2. Crores.


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*emand deposits up 3.&&/ to 0s. %%.&4 Crores. Profit after ta: up %.43/ to 0s. &'32.1 Crores.

.oth "#ine and earning contin#ed to dipla/ high gro0th in <=:9/<=:& And the .ank earned a net proit o Rs& :<;&=@ )rores against Rs& B=&=D )rores in t+e previo*s 2ear5 registering a gro6t+ o3 9&@&

%he total income o the .ank in)rease$ 82 D9&BD to Rs& @5D;=&D< )rores 3ro# Rs& 5:@&< )rores last 2ear5 6+ile t+e operating pro3it rose 82 9&:: to Rs& :5<&= )rores 3ro# Rs& :==9&@:)rores last 2ear&


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O>ER>IEW O. .INANCIA" AN1 USINESS PER.ORMANCE

D#ring the /ear 5E1:H5E1=, the .ank ha 0itneed a trong gro0th in "#ine ol#me a 0ell a proit, 0ith the net proit increaing "/ :=3? to R3 15?@3E crore rom R3 ?E3E crore the preio# /ear3 %he total income o the .ank roe "/ >:3> to R3 ,>@E3>5 crore rom R3 =,?13=5 crore the preio# /ear3 D#ring the ame period, the operating reen#e increaed "/ =53>> to R3 :>531 crore, 0hile operating proit increaed "/ :?311 to R3 1,@?53?E crore3 On :1 March 5E1=, the .ank total aet increaed "/ ==3:1 to R3:, 5@@ crore3 %he total depoit o the .ank gre0 "/ =?3>> to R3>, @? crore, 0hile the total adance gre0 "/ ?>35? to R3 :?,@?crore3 %he total demand depoit 8aing "ank and c#rrent acco#nt depoit9 hae increaed "/ =?311 to R3 5:,=:E31 crore, contit#ting:3? o total depoit3 %he .ank ha increaed it market hare o aggregate depoit in All Sched#led Commercial .ank 8ASC.9, 0hich roe rom 13@? a on :1 March 5E1: to 53E on :E March 5E1=, While it hare o adance roe rom 13>E to 13@ d#ring the ame period3 In the inancial /ear 5E1:H1=, the .ank incremental market hare o aggregate depoit in ASC. 0a :3: 0hile it incremental hare in adance 0a 53@>3 %he olid perormance o the .ank depite higher proiioning on tandard aet, increae in rik 0eight on elect aet clae, red#ction on interet paid on CRR and a hardening o interet rate d#e to tightening o the oerall li-#idit/ it#ation #ndercore the eicac/ o the "#ine model adopted "/ the .ank3


1

%he .ank contin#ed to enhance hareholder al#e and the dil#ted earning per hare or the /ear 5E1:H1= increaed to R3 5@3@ rom R3 553E the preio# /ear3 A on :1 March 5E1=, the "ook al#e per hare o the .ank ha increaed to R3 1:>3>E rom R3 1113E? a on :1 March 5E1:3 %he .ank 0ill contin#e to derie "eneit rom the inratr#ct#re created Oer the /ear and 0ill contin#e to p#r#e a trateg/ o proita"le gro0th thro#gh tronger corporate relationhip and an accelerated retail c#tomer e7panion programmed drien "/ the .ank m#ltiple channel3 In 5E1:H 1=, the .ank trateg/3 %he .ank 0ill contin#e to emphai6e gro0th opport#nitie thro#gh higher )eel o c#tomer atiaction and lo/alt/, and deepening relationhip 0ith e7iting c#tomer3 It eek to maintain and enhance a trong retail and corporate ranchie, trengthen the tr#ct#re and delier/ channel or increaing SM& and agric#lt#ral "#inee, e7ploit croHell opport#nitie, oer priate "anking or highHnet 0orth c#tomer, conolidate ne0 "#ine initiatie #ch a Credit Card, Wealth Management and .anc a#rance or )ie In#rance, and encae opport#nitie thro#gh oerea oice or croH"order trade inance, /ndication o de"t and (RI "#ine deelopment3 %he .ank 0ill contin#e to oc# on highH-#alit/ earning gro0th thro#gh an emphai on core income tream #ch a (II and eeH"aed income and on maintaining a high tandard o aet -#alit/ "/ proiding emphai on rigoro# rikHmanagement practice3 %he .ank 0ill contin#e to #e %echnolog/ e7teniel/ to maintain competitie adantage and contin#e to #pHgrade the technolog/ platorm to proide leerage or "ringing in higher cot eiciencie3


1

1


5E

Per3or#an)e S*##ar2

Interet income gro0 "/ >> +o+ on the "ack o >E +o+ gro0th in adance3 (et interet margin improe to :3: d#e to lo0er cot o #nd and higher proportion o CASA3

Cot to income ratio remain ta"le at >E3

.ottom line gro0 "/ ?? +o+ aided "/ trong traction in ee income, depite higher proiioning3

Capital ade-#ac/ ratio 8CAR9 comorta"le at 1?33

Rs '#0

9.?:< 9.?:9 C+ange B#.?:< B#.?:9 C+ange


51

Interet income 11,?= Interet e7pene @,@:@ (et Interet :,11 Income (et interet margin 89 Other Income 5,@@ Other &7pene :,:? Proiion and >1> contingencie Proit "eore ta7 :,:: %a7 @@

Proit ater

1,E5: 1E,>>E

>=3@ :?3=

:1,5E1 5E,E

=, :5,:5

>3 >=3?

@,=@:

131

1E,5:

1@,>?

@E3@

53

:3:

@,EE ,@1>

15,:E 1=,5

@=3 @13:

=,@ >,?5

@=3= ?@31

5,EE1

53> 1,?=

=,1>=

1553

?,@5: 1,?>=

1E13: ,?? >3: 5,:::

1?,E:1 :,@E

?E3= ?53E

??

15?

>53? =,=@1

@,E@

>3@

1>3

1@3E

ta72

8lo9 (et proit margin 89 (o3 o hare 8m9 .ook al#e per hare 8R9 P2.* 879N

1=3:

1=35

5135

:>@3= 5:=3: =3@

A7i .ank to#ched the >E mark in it adance gro0th or the tenth conec#tie -#arter in :<+E3 What make the gro0th more #taina"le i that the "ank ha not concentrated it e7po#re to an/ ingle egment "#t ha "een altering it aet mi7 depending #pon the ind#tr/ cenario and it rik A Project Report On Working Capital Management

55

appetite3 Alo, a rie in the proportion o CASA 8c#rrent and aing acco#nt9 #gget a cot concio# trateg/ 0ith repect to depoit accretion3

Cost )entri) gro6t+&&

8R m9

m<+15

Adance Agric#lt#re Retail SM& )arge corporate Depoit CASA

:5:,:@E 5:,:@E 1,@E >@,51E 1>1,E1E >E,5EE 1,:E

 total @35 53= 1@3@ =?3@ :@31


o M/1: =?,:5E :?,@E 15E,EE E,EE 5:,:?E ?>,>1E :1E,:5E

 total @3? 5=3@ 13> =35 =>3:

o Change >E3= >@3= :E3 >@3> >3> :=3? ?=3:

5:

%erm depoit

:5E,:@E ?53

:@>,1E

Credit ratio

?:3>

@E3

depoit

>=3@

1@31

Contin#ing 0ith the trend een in the pat e0 -#arter, A7i .ank ee income regitered a trong gro0th o 1 +o+ d#ring :<+E1: and @1 +o+ d#ring m<+1:3 %he proportion o ee income to total income remained ta"le at :E3 Altho#gh the trading proit gre0 "/ ?> +o+, the hare o trading proit to operating reen#e decreaed marginall/ to 11 in :<+1: rom 15 in :<+153

While the "ank net (PA a a percentage o adance hae hr#nk to E3= in :<+1: againt E3@ in :<+15, the "ank ha alo #cceeded in arreting the incremental delin-#encie 8in a"ol#te term9 thi -#arter3 %he proiion held together 0ith acc#m#lated 0riteHo a a proportion o gro (PA amo#nted to :31 in m<+1:3 I the acc#m#lated 0riteHo are e7cl#ded, then the proiion

held

a

a

proportion

o

gro

(PA

amo#nted

to

=@3@3

D#ring 5<+15, A7i .ank #cce#ll/ raied $S 51 m "/ 0a/ o a BDR oering, R 1@ "n thro#gh a IP and R 1 "n thro#gh a preerential allotment to promoter3 %hi made the "ank 0ell e-#ipped to #tain it gro0th in the medi#m term3


5=

PRO1UCTS H SER>ICES O. T,E ORGANISATION T2pes o3 1eposit A))o*nts While ario# depoit prod#ct oered "/ the .ank are aigned dierent name3 %he depoit prod#ct can "e categoried "roadl/ into the ollo0ing t/pe3 1e#an$ $eposits mean a depoit receied "/ the .ank 0hich i 0ithdra0 a"le on demand3

Savings $eposits mean a orm o demand depoit 0hich i #"ject to retriction a to the

n#m"er o 0ithdra0al a alo the amo#nt o 0ithdra0al permitted "/ the .ank d#ring an/ peciied period3 A Project Report On Working Capital Management

5>

 Ter# 1eposit mean a depoit receied "/ the .ank or a i7ed period 0ithdra0 a"le onl/ ater

the e7pir/ o the i7ed period and incl#de depoit #ch a Rec#rring2Reinetment Income Certiicate2 &ncah 5=2Short term Depoit2
C*rrent A))o*nt mean a orm o demand depoit 0hererom 0ithdra0al are allo0ed an/

n#m"er o time depending #pon the "alance in the acco#nt or #p to a partic#lar agreed amo#nt and 0ill alo incl#de other depoit acco#nt 0hich are neither Saing Depoit nor %erm Depoit3

A))o*nt Opening an$ Operation o3 1eposit A))o*nts L

%he .ank "eore opening an/ depoit acco#nt 0ill carr/ o#t d#e diligence a re-#ired #nder

FKno0 +o#r C#tomerF 8K+C9 g#ideline i#ed "/ R.I and or #ch other norm or proced#re adopted "/ the .ank3 In the .ank, the a#thorit/ to open a Depoit Acco#nt i eted in the .ranch 'ead3 In er/ rare cae clariication are re-#ired to "e o#ght rom the higher a#thorit/3 L

%he acco#nt opening orm and other material 0o#ld "e proided to the propectie depoitor

"/ the .ank3 %he ame 0ill contain detail o inormation to "e #rnihed and doc#ment to "e prod#ced or eriication and or or record, it i e7pected o the .ank oicial opening the acco#nt3


5?

L

normall/ tip#late certain minim#m "alance to "e maintained a part o term and condition goerning operation o #ch acco#nt3
agencie

8a

adied

"/

Reere

.ank

o

India

8R.I9

rom

time

to

time9

Current "ccounts can "e opened "/ indiid#al 2 proprietorhip irm2 partnerhip irm 2 Priate and

P#"lic

)imited

Companie

2

'$<

2

Aociation

2

Societie

2

%r#t,

etc3

Term *eposits "ccounts can "e opened "/ indiid#al 2 proprietorhip irm2 partnerhip irm 2

Priate and P#"lic )imited Companie 2 '$<2 Aociation 2 Societie 2 %r#t, etc3 L

%he d#e diligence proce, 0hile opening a depoit acco#nt 0ill inole ati/ing a"o#t the

identit/ o the peron, eriication o addre, ati/ing a"o#t hi occ#pation3 O"taining introd#ction o the propectie depoitor rom a peron accepta"le to the .ank or thro#gh el introd#ction "/ 0a/ o prod#ction o certain doc#mentar/ eidence and o"taining recent photograph o the peron2 opening 2 operating the acco#nt are part o d#e diligence proce3 L

In addition to the d#e diligence re-#irement, #nder K+C norm the .ank i re-#ired "/ la0 to

o"tain Permanent Acco#nt (#m"er 8PA(9 or Beneral Inde7 Regiter 8BIR9 (#m"er or alternatiel/ declaration in

5@

Saing .ank Acco#nt can alo "e opened "/ a minor jointl/ 0ith nat#ral g#ardian or 0ith mother a the g#ardian 8kno0n a Minor Acco#nt93 Minor a"oe the age o 15 0ill alo "e allo0ed to open and operate aing "ank acco#nt independentl/3 L

Operation o Joint Acco#nt H %he Joint Acco#nt opened "/ more than one indiid#al can "e

operated "/ ingle indiid#al or "/ more than one indiid#al jointl/3 %he Saing .ank Acco#nt opened "/ minor jointl/ 0ith nat#ral g#ardian 2 g#ardian can "e operated "/ nat#ral g#ardian onl/3 L

%he joint acco#nt holder can gie an/ o the ollo0ing mandate or the dipoal o "alance in

the a"oe acco#nt4 &ither or S#rior 4 I the acco#nt i held "/ t0o indiid#al a/, A  ., the inal "alance along 0ith interet, i applica"le, 0ill "e paid to #rior on death o an/one o the acco#nt holder3 L

An/one or S#rior2 4 I the acco#nt i held "/ more than t0o indiid#al a/, A, . and C, the

inal "alance along 0ith interet, i applica"le, 0ill "e paid to the #rior on death o an/ t0o acco#nt holder3 %he a"oe mandate 0ill "e applica"le to or "ecome operational onl/ on or ater the date o mat#rit/ o term depoit3 %hi mandate can "e modiied "/ the conent o all the acco#nt holder3 L

At the re-#et o the depoitor, the .ank 0ill regiter mandate 2 po0er o attorne/ gien "/ him

a#thori6ing another peron to operate the acco#nt on hi "ehal3 %he term depoit acco#nt holder at the time o placing their depoit can gie intr#ction 0ith regard to clo#re o depoit acco#nt or rene0al o depoit or #rther period on the date o mat#rit/3 In a"ence o #ch mandate, the .ank 0ill eek intr#ction rom the depoitor2 a to the dipoal o the depoit "/ ending intimation "eore 1> da/ o the mat#rit/ date o term depoit3


5

A$vertising an$ Marketing

A7i 0ill make #re that all adertiing and promotional material i clear, air, reaona"le and not mileading3 A7i 0ill eek /o#r peciic conent or giing detail o /o#r name and addre to an/ third part/, incl#ding other entitie in o#r gro#p, or marketing p#rpoe3 A7i 0o#ld like to proide /o# 0ith the entire range o inancial erice prod#ct, ome o 0hich are o#r o0n prod#ct 0hile ome other are the prod#ct o o#r gro#p2aociate2entitie or companie 0ith 0hom 0e hae tieH#p arrangement3 A7i 0ill ho0eer tell /o# a"o#t o#r aociate 2 gro#p entitie or companie haing "#ine tieH#p arrangement 0ith # and i /o# o deire, direct their ta 2 agent or marketing their prod#ct3 A Project Report On Working Capital Management

5


:E

EMP"O?EE STOC! OPTION P"AN 'ESOP0

%o ena"le emplo/ee incl#ding 0holeHtime Director o the .ank to participate in the #t#re gro0th and inancial #cce o the .ank, the .ank ha intit#ted an &mplo/ee Stock Option Scheme #nder 0hich 5,,EE,EEE option can "e granted to emplo/ee3 %he emplo/ee tock option cheme i in accordance 0ith the Sec#ritie and &7change .oard o India 8&mplo/ee Stock Option and &mplo/ee Stock P#rchae Scheme9 B#ideline, 13 %he eligi"ilit/ and n#m"er o option to "e granted to an emplo/ee i determined on the "ai o the emplo/ee 0ork Perormance and i approed "/ the .oard o Director3 %he .ank hareholder approed plan in 5 0eek preceding the date o grant at the Stock &7change 0hich ha had the ma7im#m trading ol#me o the .ank e-#it/ hare d#ring that period 8preentl/ the (S&93 $nder the third plan and 0ith eect rom the grant made "/ the Compan/ on 1E J#ne 5EE>, the pricing orm#la ha "een changed to the cloing price o the preio# da/ o the grant date3 %he Rem#neration and (omination Committee granted option #nder thee plan on i7 occaion, o option o 11,1,5>Q 1@,@,@EEQ 5@,@=,=>EQ :,E,:EQ >@,E,5=E and =?,>,?E d#ring 5EE@HE, 5EEHE, 5EEH1E, 5E1EH11, 5E11H15 and 5E15H1: repectiel/3 %he option granted, 0hich are nonH tranera"le, et at the rate o :E, :E and =E on each o three #cceie annierarie ollo0ing the granting, #"ject to tandard eting condition, and m#t "e e7ercied 0ithin three /ear o the date o eting3 A o :1 March 5E15, , ?=,E: option had "een e7ercied and 1E,@5,1E option 0ere in orce3 Other tat#tor/ diclo#re a re-#ired "/ the reied S&.I g#ideline on &SOP are gien in the Anne3 A Project Report On Working Capital Management

:1

RE>IEW

O.

RE"ATE1 "ITRATURE


:5

C,APTER/ <& RE>IEW O. RE"ATE1 "ITRATURE

%he "anking ind#tr/ ha come #nder increaing peimim o late "eca#e o riing hort and longH term interet rate3 %he "anking ind#tr/ market capitali6ation made a #"tantial decline3 Mot inetor are concerned 0ith 0hether the ind#tr/ can #tain contin#ed proita"ilit/ a a re#lt o thee actor3 .ank hae reponded in recent /ear to thee pro"lem "/ dieri/ing a0a/ rom interet enitie prod#ct and erice3 .#t interet rate are the #ndamental apect o an/ inancial erice3 %hereore, I "eliee the inancial erice ind#tr/ 0ill "e deepl/ aected "/ riing interet rate3 .ank hae e7perienced good "#ine actor oer the pat t0o /ear3 Interet rate 0ere lo0, credit -#alit/ 0a good, and inlation 0a lo03 %hee actor are ##all/ predictie o the t/pe o earning "ank ho#ld report3 .#t good time cant contin#e "eca#e interet rate hike "eca#e red#ced lending actiit/, damaged credit -#alit/, and red#ced al#e o "ond portolio3 Porter
::

"argaining po0er4 I gro#ped thee t0o categorie together "eca#e in the "anking ind#tr/ the "#/er are the #pplier and ice era, o I might a 0ell j#t dic# the it#ation a a 0hole3 Interet rate are the ingle mot important apect o "ank proita"ilit/ the/ are the "argaining po0er3 Mot "ank proit are deried rom net interet income3 %hi i interet income receied on loan min# interet e7pene or "orro0ed #nd3 Interet rate determine the amo#nt o mone/ a "ank can earn3 Another mea#re i a "ank net interet margin 0hich i a "ank net interet income diided "/ it aerage earning aet3 %hi i a common mea#re o a "ank a"ilit/ to -#ee6e proit rom it loan3 When interet rate all, the/ hae a poitie eect on a "ank3

:=

MEANING O. WOR!ING CAPITA" MANAGEMENT

Working Capital i commonl/ deined a the dierence "et0een c#rrent aet and c#rrent lia"ilitie3 &icient 0orking capital management re-#ire that irm ho#ld operate 0ith ome amo#nt o 0orking capital, the e7act amo#nt ar/ing rom irm to irm and depending, among other thing on the nat#re o ind#tr/3 Capital re-#ired or a "#ine can "e claiied in t0o main categorie i63 :0 .iFe$ )apital5 an$ <0 Working )apital&

&er/ "#ine need #nd or t0o p#rpoeHor eta"lihment and to carr/ o#t it da/HtoHda/ operation3 )ongHterm #nd are re-#ired to create prod#ction acilitie3 %hro#gh p#rchae o i7ed aet #ch a plant and machiner/, land, "#ilding, #rnit#re, etc3 Inetment in thee aet repreent that part o irmG capital 0hich i "locked on permanent or i7ed "ai and i called i7ed capital3 <#nd are alo needed or hortHterm p#rpoe or the p#rchae o ra0 material, pa/ment o 0age and other da/HtoHda/ e7pene, etc3 %hee #nd are kno0n 0orking Capital3 In imple 0ord, 6orking )apital re3ers to t+at part o3 t+e 3ir#s )apital5 6+i)+ is reK*ire$ 3or 3inan)ing s+ort/ter# or )*rrent assets s*)+ as )as+5 #arketa8le se)*rities5 $e8tors an$ inventories& <#nd th# ineted in c#rrent aet keep reoling at and are "eing

contantl/ conerted into cah and thi cah lo0 o#t again in e7change or other c#rrent aet3 'ence, it i alo kno0n a reoling or circ#lating capital or hortHterm capital3


:>

C"ASSI.ICATION O. WOR!ING CAPITA" Working Capital ma/ "e claiied on t0o "ai4 H a0 On t+e 8asis o3 Con)ept7 /

On the "ai o concept, 0orking capital can "e claiied a, •

•

Bro Working Capital (et Working Capital

80 On t+e 8asis o3 Ti#e7 /

On the "ai o time, 0orking capital can "e claiied a, •

Permanent or
•

%emporar/ or *aria"le Working Capital

Gross Working Capital7 /

%he Bro Working Capital i the Capital ineted in the total c#rrent aet o the enterprie3 C#rrent aet are thoe aet, 0hich can "e conerted into cah 0ithin a hort period, normall/ an acco#nting /ear3 Gross Working Capital L Total C*rrent Assets Net Working Capital7 /

%he term (et Working Capital reer to the e7ce o c#rrent aet oer c#rrent lia"ilitie, or a/, Net Working Capital L C*rrent Assets - C*rrent "ia8ilities

(et Working Capital can "e poitie or negatie3 When the c#rrent aet e7ceed the c#rrent lia"ilitie the 0orking capital i poitie and the negatie 0orking capital re#lt 0hen the c#rrent lia"ilitie are more than the c#rrent aet3 C#rrent lia"ilitie are thoe lia"ilitie, 0hich are intended to "e paid in the ordinar/ co#re o "#ine 0ithin a hort period o normall/ one acco#nting /ear o#t o the c#rrent aet o the income o the "#ine3 %he gro 0orking capital concept i


:?

inancial or going concern concept 0herea net 0orking capital i an acco#nting concept o 0orking capital3 .oth the concept hae their o0n merit3 %he gro concept i ometime preerred to the concept o 0orking capital or the ollo0ing reaon4 H •

It ena"le the enterprie to proide correct amo#nt o 0orking capital at correct time3

•

&er/ management i more intereted in total c#rrent aet 0ith 0hich it ha to operate then the o#rce rom 0here it i made aaila"le3

•

It take into conideration o the act eer/ increae in the #nd o the enterprie 0o#ld increae it 0orking capital3

•

%he concept i alo #e#l in determining the rate o ret#rn on inetment in 0orking capital3

•

%he net 0orking capital concept, ho0eer, i alo important or the ollo0ing reaon4H

•

It i a -#alitatie concept, 0hich indicate the irmG a"ilit/ to meet it operating e7pene the hortHterm lia"ilitie3

•

It indicate the margin o protection aaila"le to hort term creditor3

•

It i an indicator o inancial o#ndne o enterprie3

•

It #gget the need o inancing a part o 0orking capital re-#irement o#t o the permanent o#rce o #nd3


:@

Per#anent or .iFe$ Working Capital7 / Permanent or i7ed capital i the minim#m amo#nt, 0hich i re-#ired to en#re eectie #tili6ation o i7ed acilitie and or maintaining the circ#lation o c#rrent aet3 &er/ irm ha to maintain a minim#m leel o c#rrent aet i called permanent or i7ed 0orking capital a thi part o 0orking capital i permanentl/ "locked in c#rrent aet3 A the "#ine, gro0 the re-#irement o 0orking capital alo increae d#e to increae in c#rrent aet3 %emporar/ or *aria"le Working Capital4 H %emporar/ or aria"le 0orking capital i the amo#nt o 0orking capital, 0hich i re-#ired to meet the eaonal demand and ome pecial e7igencie3 *aria"le 0orking capital can #rther "e claiied a eaonal 0orking capital and pecial 0orking capital3 %he capital re-#ired to meet the eaonal need o the enterprie i called the eaonal 0orking capital3 Special 0orking capital i that part o 0orking capital 0hich i re-#ired to meet pecial e7igencie #ch a la#nching o e7tenie marketing campaign or cond#cting reearch etc3 %emporar/ 0orking capital dier rom permanent 0orking capital in the ene that it i re-#ired or hort period and cannot "e permanentl/ emplo/ed gain#ll/ in "#ine Cal)*late )*rrent assets to 3iFe$ asset ratio

A irm need c#rrent and i7ed aet to #pport a partic#lar leel o o#tp#t3 'o0eer, to #pport the ame leel o o#tp#t the irm can hae dierent leel o c#rrent aet3 A the irmG o#tp#t and ale increae, the need or c#rrent aet increae3 Benerall/ the c#rrent aet do not increae in direct proportion to o#tp#t Q c#rrent aet ma/ increae at a decreaing rate 0ith inp#t3 %hi relationhip i "aed #pon the notion that it take a greater proportional inetment in c#rrent aet 0hen onl/ a e0 #nit o o#tp#t are prod#ced than it doe later on 0hen the irm can #e it c#rrent aet more eicientl/3 A Project Report On Working Capital Management

:

%he leel o the c#rrent aet can "e mea#red "/ relating c#rrent aet to i7ed aet3 %here are three policie4H :0 coneratie c#rrent aet polic/7

CA2
CA2
CA2

:

ESTIMATING WOR!ING CAPITA" NEE1S :& "iK*i$it2 >s& Pro3ita8ilit27 Risk Ret*rn Tra$e O33&

%he irm 0o#ld make j#t eno#gh inetment in c#rrent aet i it 0ere poi"le to etimate 0orking capital need e7actl/3 $nder perect certaint/, c#rrent aet holding 0o#ld "e at the minim#m leel3 A larger inetment in c#rrent aet #nder certaint/ 0o#ld mean a lo0 rate o ret#rn o inetment or the irm, a e7ce inetment in c#rrent aet 0ill not earn eno#gh ret#rn3 A mall inet in c#rrent aet, on the other hand, 0o#ld mean interr#pted prod#ction and ale, "eca#e o re-#ent tockHc#t and ina"ilit/ to pa/ to creditor in time d#e to retrictie polic/3 A it i not poi"le to etimate 0orking capital need acc#ratel/, the irm m#t decide a"o#t leel o c#rrent aet to "e carried3 <& T+e Cost Tra$e O337

A dierent 0a/ o looking into the rik ret#rn trade o i in term o the cot o maintaining a partic#lar leel o c#rrent aet3 %here are t0o t/pe o cot inoled4H I3 Cot o li-#idit/ II3 cot o illi-#idit/ •

HHI the irmG leel o c#rrent aet i er/ high , it ha e7ceie li-#idit/3 It ret#rn on aet 0ill "e lo0, a #nd tied #p in idle cah and tock earn nothing and high leel o de"tor red#ce proita"ilit/3 %h#, the cot o li-#idit/ increae 0ith the leel o c#rrent aet3

•

HHthe cot o illi-#idit/ i the cot o holding in#icient c#rrent aet3 %he irm 0ill not "e in a poition to hono#r it o"ligation i it carrie to little cah3 %hi ma/ orce the irm to "orro0 at high rate o interet3 %hi 0ill alo aderel/ aect the creditH0orthine o the


=E

irm and it 0ill ace diic#ltie in o"taining #nd in the #t#re3 All thi ma/ orce the irm into inolenc/3 Similarl/, the lo0 leel o tock 0ill re#lt in lo o ale and c#tomer ma/ hit to competitor3 Alo, lo0 leel o de"tor ma/ "e d#e to right credit polic/, 0hich 0o#ld impair ale #rther3 %h# the lo0 leel o c#rrent aet inole cot that increae a thi leel all3

Poli)ies 3or 3inan)ing )*rrent assets

HP#"lic depoit "ONG TERM .INANCING4

%he o#rce o long term inancing incl#de ordinar/ hare capital, preerence hare capital de"ent#re, long term "orro0ing rom inancial intit#tion and reere and #rpl#3 %he manage it long term inancing rom capital reere, hare premi#m A2C, oreign project reere, "ond redemption reere and general reere3 A Project Report On Working Capital Management

=1

S,ORT TERM .INANCING 4 %he hort term inancing i o"tained or a period le than one /ear3 It i arranged in adance rom "ank and other #pplier o hortHterm inance incl#de 0orking capital #nd rom "ank, p#"lic depoit, commercial paper, actoring o receia"le etc3 %he Manage se)*re$ loan a4H 19 )oan and adance rom "ank 59 Other loan and adance4 a9De"e"t#re2"ond "9)oan rom State Bot3 c9)oan rom inancial intit#tion8ec#red "/ pledge o PS$ "ond and "ill accepted g#aranteed "/ "ank9

:9 Interet accr#ed and d#e on loan 8a9 rom State Bot3 8"9 rom inancial intit#tion "ond and other %he Manage *nse)*re$ loan a4 H 19 P#"lic depoit 59 Short term loan and adance4 a9
=5

"9
Spontaneo# inancing reer to the a#tomatic o#rce o hort term #nd ariing in the normal co#re o a "#ine3 %rade Credit and o#ttanding e7pene are e7ample o pontaneo# inancing3 A irm i e7pected to #tilie thee o#rce o inance to the #llet e7tent3 %he real choice o inancing c#rrent aet, once the pontaneo# o#rce o inancing hae "een #ll/ #tili6ed, i "et0een the long term and hort term o#rce o inance3

W+at s+o*l$ 8e t+e #iF o3 s+ort an$ long ter# so*r)es in 3inan)ing )*rrent assets

Depending on the mi7 o hort and long term inancing, the approach ollo0ed "/ a compan/ ma/ "e reerred to a 4 13 Matching Approach 53 Coneratie Approach A Project Report On Working Capital Management

=:

:3 Aggreie Approach

Mat)+ing approa)+ %he irm can adopt a inancial plan 0hich matche the e7pected lie o aet 0ith the e7pected lie o the o#rce o #nd raied to inance aet3 %h#, a ten /ear loan ma/ "e raied to inance a plant 0ith an e7pected lie o ten /earQ tock o good to "e old in thirt/ da/ ma/ "e inanced 0ith a thirt/ da/ commercial paper or a "ank loan3 %he j#tiication or the e7act matching i that, ince the p#rpoe o inancing i to pa/ or aet, the o#rce o inancing and the aet ho#ld "e relin-#ihed im#ltaneo#l/3 $ing long term inancing or hort term aet i e7penie a #nd 0ill not "e #tili6ed or the #ll period3 Similarl/, inancing long term aet 0ith hort term inancing i cotl/ a 0ell a inconenient a arrangement or the ne0 hort term inancing 0ill hae to "e made on a contin#ing "ai3 When the irm ollo0 matching approach 8alo kno0n a hedging approach9 long term inancing 0ill "e #ed to inance i7ed aet and permanent c#rrent aet and hort term inancing to inance temporar/ or aria"le c#rrent aet3 'o0 eer, it ho#ld "e reali6ed that e7act matching i not poi"le "eca#e o the #ncertaint/ a"o#t the e7pected lie o aet3 %he irm i7ed aet and permanent c#rrent aet are inanced 0ith long term #nd and a the leel o thee aet in increae, the long term inancing leel alo increae3 %he temporar/ or aria"le c#rrent aet are inanced 0ith hort term #nd and a their leel increae, the leel o hort term inancing alo increae3 $nder matching plan, no hort term inancing 0ill "e #ed i the irm ha a i7ed c#rrent aet need onl/3


==

Conservative approa)+ A irm in practice ma/ adopt a coneratie approach in inancing it c#rrent and i7ed aet3 %he inancing polic/ o the irm i aid to "e coneratie 0hen it depend more on long term #nd or inancing need3 $nder a coneratie plan, the irm inance it permanent aet and alo a part o temporar/ c#rrent aet 0ith long term inancing3 In the period 0hen the irm ha no need or temporar/ c#rrent aet, the idle long term #nd can "e ineted in the trada"le ec#ritie to conere li-#idit/3 %he coneratie plan relie heail/ on long term inancing and, thereore, the irm ha le rik o acing the pro"lem o hortage o #nd3 %he coneratie inancing polic/ i ho0n "elo03 (ote that 0hen the irm ha no temporar/ c#rrent aet, the long term #nd releaed can "e ineted in marketa"le ec#ritie to "#ild #p the li-#idit/ poition o the irm3


=>

Aggressive Approa)+ A irm ma/ "e aggreie in inancing it aet3 An aggreie polic/ i aid to "e ollo0ed "/ the irm 0hen it #e more hort term inancing than 0arranted "/ the matching plan3 $nder an aggreie polic/, the irm inance a part o it permanent c#rrent aet 0ith hort term inancing3 Some e7tremel/ aggreie irm ma/ een inance a part o their i7ed aet 0ith hort term inancing3 %he relatiel/ more #e o hort term inancing make the irm more rik/3 %he aggreie inancing i Ill#trated in ig "elo03


=?

NEE1S AN1 OJECTI>ES .OR WOR!ING CAPITA" &er/ "#ine need ome amo#nt o 0orking capital3 capital3 %he need or 0orking capital, arie d#e to time gap "et0een prod#ction and reali6ation o cah rom ale3 %here i an operating c/cle inoled in ale and reali6ation o cah3 %here are time gap in p#rchae o ra0 material and prod#ction, prod#ction prod#c tion and ale, and reali6ation reali6a tion o cah3 %h#, 0orking capital i needed or the ollo0ing p#rpoe4 H •

•

%o pa/ 0age and alarie3

•

%o inc#r da/H toH da/ e7pene and oerhead cot #ch a #el, po0er and oice e7pene etc3

•

%o meet the elling cot #ch a packing, adertiing etc3

•

%o proide credit acilitie to the c#tomer3

•

%o maintain the inentorie o ra0 material, 0ork in progre, tore, pare, and inihed tock

3

=@

IMPORTANCE IMPORTANCE O. O . WOR!ING CAPITA" CA PITA" :&Ti#e $evote$ to 6orking )apital #anage#ent7/

%he larget portion o inancial manager  time i deoted to da/ to da/ internal operation the irm3 %hi ma/ "e appropriatel/ #m #p #nder the heading WORKI(B CAPI%A) MA(AB&M&(% & repreent more more than hal o the total total aet aet o a <&Invest#ent in )*rrent assets 4H c#rrent aet repreent "#ine irm3 .eca#e the/ repreent larget inetment and "eca#e thi inetment tend to relatiel/ olatile,c#rrent aet are 0orth/ or the inancial manager care#l attention& 9&I#portan)e 3or s#all 3ir#7/

c#rrent aet are imilarl/ important important or the inancial manager o mall mall irm3<#rther mall irm are relatiel/ limited acce to the long term market,it m#t necearil/ rel/ on the trade credit and hort term "ank loan , "oth o net eect on net 0orking capital "/ increaed c#rrent lia"ilitie&


=

.ACTORS .ACTORS 1ETERMINING 1ETERMIN ING T,E WOR!ING CAPITA" :&

REUIREMENT REUIREMEN T

NATURE O. O. USINESS7 /

%he re-#irement o 0orking capital i er/ limited limited in p#"lic #tilit/ #ndertaking #ndertaking #ch a &lectricit/, &lectricit/, Water S#ppl/ and Rail0a/ "eca#e the/ oer cah ale onl/ and #ppl/ erice not prod#ct and no #nd are tied #p in inentorie inentorie and receia"le3 On the other hand, the trading and inancial inancial irm re-#ire le inetment in i7ed aet "#t hae to inet large amo#nt in c#rrent aet3 %he man#act#ring #ndertaking re-#ire i6a"le amo#nt o 0orking capital along 0ith i7ed inetment3 <&

PRO1UCTION PO PO"IC?7 /

%he determination o 0orking capital need depend #pon the prod#ction polic/ o the "#ine3 %he demand or certain prod#ct i eaonal i3e3Q #ch prod#ct are p#rchaed in certain month o a /ear3
"ENGT, O. O. PRO1UCTION C? C?C"E7 /

%he longer the man#act#ring time, the ra0 material and other #pplie hae to "e carried or a longer time in the proce 0ith progreie increment o la"or and erice cot "eore the inal prod#ct i o"tained3 %hereore, 0orking capital i directl/ proportional to the length o the man#act#ring proce3 &

RATE O. STOC! TURNO>ER7 /


=

%here i an inere coHrelationhip "et0een the -#ant#m o 0orking capital and the elocit/ or peed 0ith 0hich the ale are aected3 A irm haing a higher rate o tock t#rnoer 0ill need lo0er amo#nt o 0orking capital a compared to a irm haing a lo0 rate o t#rnoer3

5. CRE1IT PO"IC?4 H Credit polic/ aect the 0orking capital re-#irement in t0o 0a/4 8a9

%erm o credit allo0ed "/ c#tomer to the irm,

8"9

%erm o credit aaila"le to the irm3

A concern that p#rchae it re-#irement on credit and ell it prod#ct2erice on cah re-#ire leer amo#nt o 0orking capital and iceHera3 &

WOR!ING CAPITA" C?C"E7 /

%he peed 0ith 0hich the 0orking c/cle complete one c/cle determine the re-#irement o 0orking capital3 )onger the c/cle larger i the re-#irement o 0orking capital3

1ETORS

CAS,

RAW MATERIA"


.INIS,E1 GOO1S

WOR! IN PROGRESS

>E

&ach component o 0orking capital 8namel/ inentor/, receia"le and pa/a"le9 ha t0o dimenion 333 %IM& 333333333 and MO(&+3 When it come to managing 0orking capital H TIME IS MONE?3 I /o# can get mone/ to moe ater aro#nd the c/cle 8e3g3 collect monie d#e rom

de"tor more -#ickl/9 or red#ce the amo#nt o mone/ tied #p 8e3g3 red#ce inentor/ leel relatie to ale9, the "#ine 0ill generate more cah or it 0ill need to "orro0 le mone/ to #nd 0orking capital3 A a cone-#ence, /o# co#ld red#ce the cot o "ank interet or /o#ll hae additional free mone/ aaila"le to #pport additional ale gro0th or inetment3 Similarl/3 i /o# can negotiate improed term 0ith #pplier e3g3 get longer credit or an increaed credit limit, /o# eectiel/ create free inance to help #nd #t#re ale


>1

If you ...

Then ...

Collect receia"le 8de"tor9 +o# releae cah ater rom the c/cle •

Collect receia"le 8de"tor9 +o#r receia"le lo0er oak #p cah

•

Bet "etter credit 8in term o +o# increae /o#r d#ration or amo#nt9 rom cah reo#rce

;&

#pplier RATE O. GROWT, AN1 EXPANSION O. USINESS7 /

%he larger i6e "#inee re-#ire more permanent and aria"le 0orking capital in comparion to mall "#ine3 I a compan/ i gro0ing, it 0orking capital re-#irement 0ill alo go on increaing3 %h#, the gro0ing concern re-#ire more 0orking capital a compared to the ta"le ind#trie3 @&

SEASONA" >ARIATION7 /

Benerall/, d#ring the "#/ eaon, a irm re-#ire larger 0orking capital than in the lack eaon3 B&

USINESS ."UCTUATION7 /

In period o "oom, 0hen the "#ine i propero#, there i a need or larger amo#nt o 0orking capital d#e to rie in ale, rie in price, optimitic e7panion o "#ine etc3 On the contrar/ in time o depreion, the "#ine contract, ale decline, diic#ltie are aced in collection rom de"tor and the irm ma/ hae a large amo#nt o 0orking capital idle3

:=&

EARNING CAPACIT? AN1 1I>I1EN1 PO"IC? 7/


>5

Some irm hae more earning capacit/ than other d#e to -#alit/ o their prod#ct, monopol/ condition, etc3 S#ch irm ma/ generate cah proit rom operation and contri"#te to their 0orking capital3 %he diidend polic/ alo eect the re-#irement o 0orking capital3 A irm maintaining a tead/ high rate o cah diidend irrepectie o it proit need more 0orking capital than the irm that retain larger part o it proit and doe not pa/ o high rate o cah diidend3 ::&PRICE "E>E" C,ANGES7 /

Price leel change alo aect 0orking capital need3 I the price o dierent good increae, to maintain ame leel o prod#ction, more 0orking capital i needed3 :<&A>AI"AI"IT? O. RAW MATERIA"7 /

Aaila"ilit/ o ra0 material on the contin#o "ai aect the re-#irement o 0orking capital3 %here are certain t/pe o ra0 material, 0hich are not aaila"le reg#larl/3 In #ch a it#ation irm re-#ire greater 0orking capital to meet the re-#irement o prod#ction3 Some ra0 material are aaila"le in partic#lar eaon onl/ or e7ample 0ool, cotton, oil eed, etc3 %he/ hae to keep greater 0orking capital3 :9&

MAGNITU1E O. PRO.IT7 /

Magnit#de o proit i dierent or dierent "#inee3 (at#re o prod#ct, control on the market and a"ilit/ o manager etc3 determine the -#ant#m o proit3 I the proit margin i high, it 0ill help to arrange #nd internall/, 0hich 0ill alo increae the 0orking capital3

:& OT,ER .ACTOR7 /

a9 Operating eicienc/ A Project Report On Working Capital Management

>:

"9 Management a"ilit/ c9 Irreg#laritie o #ppl/ d9 Import polic/ e9 Aet tr#ct#re 9 Importance o la"or

CAPITA" MANAGEMENT


>=

%he .ank trie or the contin#al enhancement o hareholder al#e3 It capital management rame0ork help to optimie the #e o capital "/ en#ring the right compoition o capital in relation to "#ine gro0th and the eicient #e o capital thro#gh an optimal mi7 o prod#ct and erice3

D#ring the /ear, the .ank contin#ed to attract inetor interet rom dometic and oreign intit#tional inetor, 0ith a i6ea"le increae in trading ol#me and price3 D#ring 5E1:H1=, the .ank ha raied capital aggregating R3 1,?531 crore thro#gh Innoatie Perpet#al De"t Intr#ment 8IPDI9, eligi"le a %ier I capital and %ier II capital in the orm o $pper %ier II and #"ordinated "ond 8#nec#red redeema"le nonconerti"le de"ent#re93 O thi, the .ank ha raied $S Dollar 55? million 8e-#ialent to R3 1E5:3E1 crore9 "/ 0a/ o '/"rid %ier I capital and $pper %ier II capital rom Singapore #nder the M%( Programme3 %hi additional capital ena"led the .ank to reinorce it gro0th trateg/ and hore #p it capital ade-#ac/ ratio3 Cone-#entl/, a on :1 March 5E1=, the .ank capital ade-#ac/ ratio roe to 113>@ rom 113E lat /ear3

%he ollo0ing ta"le et orth the rikH"aed capital, rikH0eighted aet and capital ade-#ac/ ratio comp#ted in accordance 0ith the applica"le R.I g#ideline 5E3 %he .ank ha al0a/ oc#ed on innoation and dierentiation3 In thi direction, d#ring the /ear, the .ank ha opened pecialied Priorit/ .anking "ranche or the high net0orth c#tomer egment3 Priorit/ .anking "ranche hae "een conceied a a ingle top hop or al#ent C#tomer, catering to all their "anking and inetment need, and the .ank i the irt to la#nch #ch a concept in India3 %hee "ranche are e7cl#ie "o#ti-#e "anking "ranche 0ith a pl#h am"ience catering to high net0orth indiid#al, that take the Priorit/ .anking prod#ct to an e7periential leel, oering erice in a dicreet manner 0hile maintaining comort and conidentialit/ or the c#tomer3 D#ring 5E1:H 1=, three #ch "ranche 0ere opened in the citie o P#ne, M#m"ai and Kolkata, 0ith plan to open more #ch "ranche at other #r"an center in 5E11H153


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%he .ank i er/ enitie to the priac/ o it c#tomer and doe not engage in #nolicited taleHcalling3 In thi regard, the .ank ha taken proactie mea#re to eek poitie c#tomer conent on croHelling initiatie3 %he .ank la#nched project Sampark, 0hich inole meeting c#tomer aceHtoHace at "ranch location, or o#tide A%M and eeking their 0ritten conent or croHelling initiatie3 %he project i an intenie logitical e7ercie and "/ endHMarch 5E11,  lac c#tomer conent hae "een ac-#ired3 %hi gie the .ank a #ll/ compliant internal data"ae or croHell initiatie #ch a or inetment adior/ erice and in#rance prod#ct3 %hi 0ill acilitate in "ooting the ee income rom croHell o ario# prod#ct3 In it contant endeaor to proide conenience to it c#tomer, the .ank ha "een aggreiel/ deeloping it alternatie "anking channel, namel/ the A%M net0ork, Internet .anking and Mo"ile .anking3 %hee channel hae receied oer0helming repone rom it c#tomer 0ith regitration and tranaction ig#re increaing #"tantiall/ oer the preio# /ear3 D#ring the /ear, the .ank added 1555 A%M, there"/ taking the net0ork i6e to 5=E5 on :1 March 5E1:3 %he .ank oer acce to it c#tomer to oer 1,EEE A%M acro the co#ntr/ thro#gh "ilateral and m#ltilateral A%M haring arrangement3 .eginning 5EE1, the .ank had identiied the A%M channel a a trong tool or c#tomer ac-#iition and conenience3 At =3@E A%M per "ranch, the .ank ha the highet A%M to "ranch ratio in the co#ntr/3 %he high A%M to "ranch ratio ha "een part o the gro0th trateg/ and ha "een a major actor in the high gro0th o aing "ank depoit acco#nt and "alance3 Contin#ing 0ith it eort in proiding the #tmot in conenience and aet/ to it c#tomer, the .ank ha promoted it mo"ile "anking erice to ena"le c#tomer to acce their acco#nt on their mo"ile phone3 %he erice alo end o#t peciic tranaction alert on the mo"ile phone o regitered c#tomer, inorming the c#tomer o the actiit/ in the acco#nt, there"/ giing an added leel o aet/ to the c#tomer3 %he mo"ile channel ha o#nd increaing acceptance among the .ank c#tomer3 D#ring the inancial /ear, =E o the incremental c#tomer igned on or mo"ile "anking erice3 With 131E million c#tomer regitered or mo"ile "anking, the .ank ha among the highet mo"ile regitration penetration leel among "ank c#tomer3 %he .ank i #ni-#el/ A Project Report On Working Capital Management >?

poied to take adantage o the gro0th o mo"ile commerce in the co#ntr/3 On the Internet .anking ront, the regitered #er "ae o the .ank roe rom 13 million acco#nt a on :1 March 5E15 to :3> million acco#nt a on :1 March 5E1:3 %o gie the c#tomer more relia"le erice, the Internet .anking platorm 0a reamped in the c#rrent /ear3 %o co#nter phaing attack on o#r c#tomer, the .ank haQ

Introd#ced an added ec#rit/ mea#re 0here"/ the c#tomer ha to enter certain additional detail rom hi de"it card n#m"er in addition to hi )ogin Identiication and pa0ord or cond#cting a inancial tranaction3 %he .ank ha et #p a Call Centre, aaila"le 5=2@, proiding aitance in 11 lang#age3 %he Call Centre a o March 5E1: handled oer :E,EEE call per da/3 With @E "ranche, ?: e7tenion co#nter, 1555 A%M, :3> million internet "anking c#tomer and 131E million mo"ile regitered c#tomer, the .ank proide one o the "et net0ork in the co#ntr/ 0ith real time onHline acce to it c#tomer3


>@

CORPORATE AN!ING Corporate .anking "#ine o the .ank proide -#alit/ prod#ct to large and midHi6ed client3 %he prod#ct incl#de credit, trade inance or dometic a 0ell a international tranaction, tr#ct#red inance, and project inance and /ndication erice3 %he .ank contin#e to p#r#e a t0oHpronged trateg/ o 0idening the c#tomer "ae a 0ell a deepening e7iting client relationhip3 Care#l choice o ne0 c#tomer "aed on appropriate rikH ret#rn g#ideline orm the "ai or the trateg/ o 0idening the c#tomer "ae3 %he deepening o e7iting client relationhip i achieed "/ a care#l acco#nt trateg/ oc#ing on increaing the croHell o ario# corporate "anking prod#ct, a alo prod#ct rom other diiion o the .ank incl#ding inetment "anking and retail prod#ct3 D#ring the /ear, large corporate adance gre0 "/ ?E to R3 1,:=? crore rom R3 11,5? crore in the preio# /ear3 %he .ank took tep to oc# on ee income mainl/ rom trade inance acilitie and doc#ment handling3 %hi method o ee generation i ta"le and #taining3 Bien the Increaing oerea preence o the .ank, the trade inance "#ine i et to gro0 igniicantl/ oer the coming /ear3 %he .ank take electie &7po#re to project inancing in area o inratr#ct#re a 0ell a man#act#ring project et #p "/ rep#ted ind#tr/ gro#p3 It contantl/ 0ork to #pgrade it kill in inancial tr#ct#ring to "e a"le to contin#e proiding al#e to it corporate c#tomer3 %he oerea preence ha ena"led the .ank to leerage it e7iting relationhip #rther "/ granting loan to0ard &C. "/ Indian corporate a 0ell a to ena"le ac-#iition inancing3 %he .ank ha alo contri"#ted to0ard inancing inratr#ct#re project and other orm o project inance thro#gh it oerea "ranche3 Channel inance alo gre0 on the "ack o trong corporate demand3 %he centralied Channel
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are the ke/ actiitie that ena"le all corporate "anking "#ine3 %he .ank ha in place proced#re and practice to en#re reg#lar #pdation o rik taken "/ the .ank on ario# client acco#nt3 Portolio dieriication remain the ke/ or managing aet -#alit/ and preenting concentration rik3 %he credit rik in corporate "anking i eal#ated and managed "/ gro#p organi6ed 0ith an ind#tr/ ector oc#3 %he .ank alo ha a Rik Management Department, 0hoe ie0 are critical or deciionHmaking 0ith regard to credit e7po#re3 Oerall, the rik control mechanim adopted "/ the .ank ha contin#ed to ere the .ank 0ell, a i o"ered in the ratio o net (PA to net c#tomer aet "eing at E3?13 Corporate .anking cr#p#lo#l/ adhere to all tat#tor/, reg#lator/ and related g#ideline or all it "#inee3


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TREASUR? %he integrated %rea#r/ manage the glo"al #nding o the "alance heet, dometic and oreign c#rrenc/ reo#rce o the .ank, compliance 0ith tat#tor/ reere re-#irement, a 0ell a optimi6e on opport#nitie in the market thro#gh managing proprietar/ poition in oreign e7change and interet rate market3 With the e7panion o the .ank oerea, the %rea#r/ 0ill look to leerage on the net0ork to 0iden prod#ct cope a 0ell a increae reen#e generation rom opport#nitie in the glo"al market3 %he contin#ed thr#t on ma7imi6ing ret#rn rom c#tomer relationhip in the %rea#r/ ha re#lted in gro0th o >1 in c#tomer e7change t#rnoer and ?E in reen#e3 %he %rea#r/ oered tr#ct#red ol#tion to c#tomer #ing oreign e7change and deriatie oering, 0hich ha re#lted in igniicant al#e addition to c#tomer relationhip3 In it contin#ed eort to oer top o the line pa/ment ol#tion to c#tomer, the .ank ha oered Real %ime Bro Settlement 8R%BS9 and (ational &lectronic <#nd %raner 8(&<%9 thro#gh =@E "ranche and e7tenion co#nter acro the co#ntr/3 %hro#ghp#t in R%BS gre0 "/ 5>1 oer the preio# /ear3 Depite a challenging interet rate enironment, the .ank holding in goernment ec#ritie ha "een #"tantiall/ protected rom market rik a it i held a per peciied g#ideline o R.I3 %he portolio gae a ret#rn o @3?=3 %he .ank eta"lihed a Medi#m %erm (ote 8M%(9 Programme or &#ro One "illion a a part o the #nding plan or it oerea operation3 D#ring the /ear, the .ank raied $SD 1>E million a $pper %ierHII 8the irt h/"rid capital i#ance o#t o India9 and $SD =? million a '/"rid %ierHI capital in term o recent g#ideline i#ed "/ R.I3 %he .ank alo raied enior de"t thro#gh the i#ance o $SD 5>E million o threeH/ear loating rate note 8
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USINESS AN!ING .#ine .anking ha conitentl/ oc#ed on proc#ring lo0 cot #nd "/ oering a range o c#rrent acco#nt prod#ct and cah management ol#tion acro all "#ine egment coering corporate, intit#tion, Central and State Boernment Minitrie and $ndertaking a 0ell a mall "#ine c#tomer3 Cro elling o tranactional "anking prod#ct to deelop acco#nt relationhip, aided "/ prod#ct innoation and a c#tomerHcentric approach hae "orne r#it in the orm o gro0ing c#rrent acco#nt depoit "alance and increaing realiation o tranaction "anking ee3 So#rcing o c#rrent acco#nt depoit i a oc# area or gro0th3 A o :1 March 5E11, c#rrent acco#nt depoit gre0 "/ =13: to R3 11,:E=3:1 crore rom R3 @,@E3E crore in the preio# /ear3 On a dail/ aerage "ai, c#rrent acco#nt depoit gre0 rom a leel o R3 =,=5 crore or the /ear 5EEH1E to R3 @,1: crore or the /ear 5E1EH113 D#ring 5E15H1:, the .ank o#rced @,>@ ne0 c#rrent acco#nt a againt @@,5?= in the preio# /ear3 %here 0a a greater oc# on ac-#iition o high al#e c#rrent acco#nt, th# accelerating the pace o gro0th in c#rrent acco#nt depoit "alance


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CAS, MANAGEMENT Cah Management Serice 8CMS9 initiatie leeraged the .ank gro0ing "ranch net 0ork and ro"#t technolog/ to proide a 0ide range o c#tomied ol#tion to #it the d/namic re-#irement o it client3 %he .ank oer CMS ol#tion or collection and pa/ment 0ith an ideal "lend o tr#ct#red MIS and #nd moement o that client are a"le to enhance their #nd management capa"ilitie3 Alo the .ank We" CMS initiatie allo0 them to ie0 their dail/ tranaction on a real time "ai3 %he trong correpondent "ank alliance 0ith partner "ank oer corporate client a 0ide geographical coerage3 CMS ora/ i not onl/ emerging a an important o#rce o ee income "#t i alo contri"#ting igniicantl/ to0ard garnering 6ero cot #nd, orging large relationhip3 %he .ank ha eta"lihed a trong preence "/ oering collecting "ank erice in the IPO2? A#thoried .ranche at 1: location3 %he .ank alo handle di"#rement o Ciil Penion thro#gh 51 A#thoried .ranche and Deence Penion thro#gh 1>1 A#thoried .ranche3 Additionall/, the .ank i proiding collection and pa/ment erice to o#r Central Boernment Minitrie and Department and een State Boernment and $nion %erritorie3 %he .ank ha #rther trengthened it aociation 0ith the eHBoernance initiatie o ario# State Boernment in India aimed at proiding "etter citi6en erice "/ etting #p integrated citi6en acilitation center3 D#ring the /ear, the .ank aociated 0ith the Choice Project o the Boernment o Chhattigarh and the eHS#idha initiatie o Boernment o $ttar Pradeh3 D#ring A Project Report On Working Capital Management

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5E1EH11, the .ank ha alo e7tended the "#ine o Stamp D#t/ Collection thro#gh ranking in Rajathan, in addition to Maharahtra and B#jarat3 %he .ank alo la#nched an eH%a7 Pa/ment

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"EN1ING TO AGRICU"TURE5 SME AN1 MI1 CORPORATES %o #ll/ e7ploit the "#ine potential o the Small and Medi#m &nterprie 8SM&9 and Mid Corporate egment, to "ring greater oc# on priorit/ ector lending, to achiee the mall cale ind#tr/ and agric#lt#ral lending target i7ed "/ R.I and to e7plore ne0 aen#e o lending like microinance, a eparate "#ine oc# 0a proided d#ring the /ear3 <#rther, a eparate "#ine gro#p 0a ormed to target peciic egment in SM& and Mid Corporate "#ine "/ rolling o#t chematic loan prod#ct 0here the appraial i "aed on /tematicall/ deigned coring heet and imple appraial techni-#e o a to red#ce t#rnaro#nd time and -#ickl/ increae the c#tomer "ae3 Adance Cell located at important "#ine center in the co#ntr/ hae gien a illip to the .ank SM&, MidHcorporate and Agric#lt#ral lending "#ine3 D#ring 5E11H15, the .ank added > more Adance Cell, "ringing the total n#m"er to 1>3 %hi ha re#lted in igniicant improement in perormance and portolio -#alit/3 Dedicated marketing team at the Adance Cell and in certain "ranche hae gien an impet# to ne0 "#ine relationhip3 %he .ank oc# on SSI lending 0a ampl/ demontrated "/ a @5 gro0th d#ring the /ear3 %he .ank gae priorit/ ector lending paramo#nt importance and or the i7th /ear in a ro0, the .ank 0a compliant 0ith the oerall priorit/ ector norm tip#lated "/ R.I3 %he .ank ha alo laid do0n a 0ell tho#ght o#t trateg/ to gro0 the retail agric#lt#ral lending "#ine3 %he .ank categoried centre acro the co#ntr/ "aed on agric#lt#ral prod#ctiit/, irrigation potential, inratr#ct#re acilitie and loan repa/ment track record, and choe ditrict 0ith the good potential or agric#lt#ral lending3 <#rther, the .ank i "ringing "ranche in a ditrict or een near"/ ditrict #nder the #m"rella o an 5? agric#lt#re cl#ter or oc#ed agric#lt#re lending3 %he .ank ha o ar opened 1 #ch agric#lt#re cl#ter3 In keeping 0ith the oc# o the goernment on increaing direct agric#lt#ral lending, the .ank rolled o#t eeral ne0 loan prod#ct or the arming A Project Report On Working Capital Management

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comm#nit/3 %he .ank alo ineHt#ned it e7iting loan prod#ct to #ll/ #it the aried re-#irement o it agric#lt#re "#ine clientele3 D#ring the /ear, the total agric#lt#ral adance o the .ank gre0 "/ an impreie 11>, 0ith direct agric#lt#ral lending recording a 1 gro0th oer the preio# /ear3 %h#, or the econd /ear in #cceion, the .ank direct agric#lt#ral lending ha gro0n "/ oer E3 At the end o the /ear, direct agric#lt#ral adance tood at 3> o the net "ank credit, 0hich i the highet eer achieed "/ the .ank3 %he .ank 0o#ld contin#e the oc# on "#ilding #p it agric#lt#re "#ine on proita"le line and i recr#iting agric#lt#re "#ine peronnel to #tain gro0th plan and maintain portolio -#alit/3

%he microHinance "#ine o the .ank 0itneed increaing o#treach thro#gh ?= microHinance relationhip3 %he portolio #nder microHinance increaed "/ 1?1 d#ring the /ear, 0hich correpond to a client o#treach o ?3?5 lac, the majorit/ "eing poor 0omen in r#ral area3 %he .ank alo initiated the proce o e7tending micro credit to elHhelp gro#p thro#gh illage organiation3 %he .ank ha alo "een implementing ario# goernmentHponored cheme3 With a ie0 to e7panding o#r reach in the (ortheatern region o the co#ntr/, the .ank ha igned a Memorand#m o $ndertanding 0ith So#th Aia &nterprie Deelopment

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INTERNATIONA" AN!ING With increaing integration o the Indian econom/ glo"all/ and cone-#ent t0o 0a/ lo0 o #nd and erice, the .ank had identiied international "anking a a ke/ opport#nit/ to leerage the kill and trength "#ilt in it dometic operation in ering the re-#irement o it client in the area o trade and corporate "anking, a alo inetment "anking "/ eta"lihing preence at trategic international inancial h#" in Aia3 In thi direction, the irt oerea "ranch o the .ank 0a opened in Singapore in April 5E1E and, #"e-#entl/, a "ranch in 'ong Kong and a repreentatie oice in Shanghai in China commenced operation d#ring the /ear 5E1EH113 In addition, the .ank ha alo et #p a "ranch in the D#"ai International

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1ESIGN O. STU1?


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C,APTER/ 9& 1ESIGN O. STU1?

RESEARC, MET,O1O"G?

%he methodolog/ decri"e the proce o reearch 0ork3 %hi contain the oerall reearch deign, the data collection method, the ampling proced#re, the ield #re/ method and the anal/i proced#re3

•

Decriptie Reearch

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Primaril/ "aed on primar/ data collection3

•

•

#antitatie Reearch

•

(onH Pro"a"ilitic conenience ampling3


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T,E STU1?

RESEARC, 1ESIGN

A Reearch deign i a rame0ork or "l#eprint or cond#cting the marketing reearch project3 EFplorator2 Resear)+

P#rpoe &7plorator/ Reearch • • • • • •

&7plorator/ reearch deign ha "een #ed3

SAMP"E •

SAMP"ING UNIT7 %he ampling #nit elected 0ere all a"oe 1 /ear o age 0ith diere

ocioHeconomic "ackgro#nd3 •

SAMP"ING TEC,NIUE7 Sample 0ere collected "/ 0a/ o conenient ampling and

-#etion 0ere aked to the repondent 0hen the/ 0ere coming o#t o their repectie "ank ater aailing the erice there3 •

SAMP"E SIE7 A total ample i6e o =E 0a elected3

OJECTI>ES O. T,E STU1?


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%he ollo0ing are the o"jectie o reearch cond#cted4



%o #ndertand the trategie o "ank3



%o #ndertand the "anking ind#tr/3



%o #ndertand the compan/G #nction3



%o #gget 0a/ or improing the market hare, proit margin3



%o make an eectie adertiing campaign3


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"ITERATURE RE>IEW Doing a )iterat#re Reie0 i a practical and comprehenie g#ide to reearching, preparing and 0riting a literat#re reie0, a major component o reearch project3 It i an eential tool not onl/ or potgrad#ate t#dent "#t alo or #ndergrad#ate and noice reearcher acro the ocial cience and h#manitie3

A literat#re reie0 i an e7amination o the reearch that ha "een cond#cted in a partic#lar ield o t#d/3 'art 819 deine it a4

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%he election o aaila"le doc#ment 8"oth p#"lihed and #np#"lihed9 on the topic, 0hich contain inormation, idea, data and eidence3 %hi election iT 0ritten rom a partic#lar tandpoint to #lil certain aim or e7pre certain ie0 on the nat#re o the topic and ho0 it i to "e inetigated, and

•

%he eectie eal#ation o thee doc#ment in relation to the reearch "eing propoed


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1ATA CO""ECTION MET,O1S

Data Collection i an important apect o an/ t/pe o reearch t#d/3 Inacc#rate data collection can impact the re#lt o a t#d/ and #ltimatel/ lead to inalid re#lt3

Data collection method or impact eal#ation ar/ along a contin##m3 At the one end o thi contin##m are -#antatatie method and at the other end o the contin##m are #alitatie method or data collection

*antitative an$ *alitative 1ata )olle)tion #et+o$s

%he *antitative $ata )olle)tion #et+o$s, rel/ on random ampling and tr#ct#red data collection intr#ment that it diere e7perience into predetermined repone categorie3 %he/ prod#ce re#lt that are ea/ to #mmari6e, compare, and generali6e3

#antitatie reearch i concerned 0ith teting h/pothee deried rom theor/ and2or "eing a"le to etimate the i6e o a phenomenon o interet3 Depending on the reearch -#etion, participant ma/ "e randoml/ aigned to dierent treatment3 I thi i not eai"le, the reearcher ma/ collect data on participant and it#ational characteritic in order to tatiticall/ control or their inl#ence on the dependent, or o#tcome, aria"le3 I the intent i to generali6e rom the reearch participant to a larger pop#lation, the reearcher 0ill emplo/ pro"a"ilit/ ampling to elect participant3

%/pical -#antitatie data gathering trategie incl#de4

•

&7periment2clinical trial3

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O"ering and recording 0ellHdeined eent 8e3g3, co#nting the n#m"er o patient 0aiting in emergenc/ at peciied time o the da/93


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•

O"taining releant data rom management inormation /tem3

•

Adminitering #re/ 0ith cloedHended -#etion 8e3g3, aceHto ace and telephone interie0, -#etionnaire etc93

1ATA CO""ECTION SOURCES

Poert/ map are not onl/ inl#enced "/ the election o a concept#al approach to deine poert/ and "/ the choice o a peciic poert/ indicator3 %he data collection method itel can determine the reol#tion o the poert/ map and the t/pe o anal/i to cond#ct3

A "rie reie0 o dierent data collection method 0ill highlight the pro and con o ario# #"jectie and o"jectie method and the tradeHo "et0een #re/ and cen# data3 A hort ection #mmari6ing major o#rce or international poert/ map 0ill ho0 that the pool o e7iting data or a glo"al poert/ map i limited3 Additional inetment in data collection and modeling need to "e made to prod#ce map 0ith higher reol#tion, more comprehenie poert/ mea#re, and a 0ider international co#ntr/ coerage3


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ANA"?SIS O. 1ATA


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C,APTER/ & ANA"?SIS O. 1ATA

MANAGEMENT 1ISCUSSION AN1 ANA"?SIS

$"C0#-
While macroHeconomic #ndamental hae generall/ "een trong in 5E15H1:, inlation, largel/ d#e to #ppl/Hide contraint, had "ecome an oerriding concern in the cloing month o ical 5E15H1:3 %he BDP i e7pected to ho0 a gro0th o 35 or the ical 5E1EH11 againt  lat ical /ear3 Agric#lt#re and allied ector are e7pected to gro0 at a rate o 53@ in 5E15H1:, 0hile ind#trial prod#ction i e7pected to gro0 "/ a"o#t 1E3 gro0th in ind#trial prod#ction 0a drien mainl/ "/ the man#act#ring ector, 0hich gre0 "/ 113: in 5E15H1: ollo0ing a gro0th o 31 in the preio# ical3 %he moment#m o gro0th in the erice ector contin#ed 0ith a gro0th o 1135 in ical 5E1EH113 Among the three #"Hector o erice, trade, hotel, tranport and comm#nication erice ha contin#ed to "oot the ector "/ gro0ing at do#"leHdigit rate or the o#rth #cceie /ear3 Inlation, 0ith it root in #ppl/Hide actor, 0a accompanied "/ "#o/ant gro0th o mone/ and credit in the lat t0o /ear3 Starting 0ith a rate o :3, the rate o inlation in 5E1EH11 ha "een on a generall/ #p0ard trend 0ith intermittent all3 'o0eer, aerage inlation d#ring 5E1EH11 remained at >, 0ith contin#ing ical and monetar/ polic/ interention aimed at controlling price leel3 )i-#idit/ condition remained airl/ comorta"le #p to earl/ Septem"er 5E1E3 With /earHonH/ear inlation t#""ornl/ a"oe > in the econd hal o the /ear, R.I anno#nced #rther mea#re to tem inlationar/ e7pectation and


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alo to contain the credit gro0th that p#t pre#re on the li-#idit/ poition, there"/ hardening interet rate in the econom/3 Bro0th trend 0ere accompanied "/ ro"#tne o oerall macroHeconomic #ndamental, partic#larl/ 0ith tangi"le progre to0ard ical conolidation and a trong "alance o pa/ment poition3 With an #p#rge in inetment, the o#tlook i ditinctl/ #p"eat3 'o0eer, the major challenge lie in taking macroHeconomic leel correctie action to tackle the #ppl/ ide contraint to keep inlation at an accepta"le leel3 Interet rate hae alread/ ho0n ign o hardening, 0hich ma/ aect #rther inetment in the ind#trial ector3 In order to maintain the BDP gro0th oer  in the coming /ear, the major challenge lie in "alancing o c#rrent pace o gro0th 0ith nonH accelerating inlation3 %he c#rrent polic/ mea#re adopted "/ monetar/ a#thoritie to tighten li-#idit/ in order to ight inlation led to an increae in interet rate, 0hich co#ld lo0 do0n economic gro0th in the coming /ear, partic#larl/ in repect o inratr#ct#re and other core ector project3 Againt the "ackdrop o generall/ trong economic #ndamental in the lat /ear, the "anking /tem eem to hae done 0ell d#ring 5E1EH11, relected in the gro0th o "#ine in the orm o aggregate depoit and adance3 In term o the Weekl/ Statitical S#pplement p#"lihed "/ R.I, the aggregate depoit o All Sched#led Commercial .ank 8ASC.9 a on :E March 5E1: hae gro0n "/ 5=35@ rom :1 March 5E15, 0hile "ank credit ha gro0n "/ 53>13 'o0eer, there contin#e to "e area o concern, primaril/ hardening interet rate that ma/ re#lt in pre#re #pon the net interet margin3 %he contin#ing rie in interet rate ma/ make ario# project economicall/ #nia"le, re#lting in higher (PA and alo aect al#ation3 )atl/, the harp increae in proiion on tandard aet 0ill impact the proita"ilit/ o "ank3


@@

COMPETITOR ANA"?SIS

A7i .ank tand apart rom it priate ector competitor U ICICI .ank and 'D
%he n#m"er here are -#ite intereting3 @ per cent 8R 5,EEE crore9 o the total loan a o March 5E113

In the cae o A7i .ank, retail loan hae declined rom :E per cent o the total loan "ook o R 5>,EE crore in J#ne 5E1E to aro#nd 5: per cent o loan "ook o R3=1,5E crore 8a o J#ne 5E1193 &en oer a longer period, 0hile the oerall aet gro0th or A7i .ank ha "een -#ite high and ha matched that o the other "ank, retail e7po#re gre0 at a lo0er pace3

I the harp decline in the retail aet "ook in the pat /ear in the cae o A7i .ank i part o a deli"erate "#ine trateg/, thi co#ld hae igniicant implication 8not necearil/ negatie9 or the oerall #t#re proita"ilit/ o the "#ine3

Depite the relatiel/ lo0er gro0th o the retail "ook oer a period o time and the o#tright decline een in the pat /ear, the "ankG #ndamental are -#ite reilient3 With the high leel o midHcorporate and 0holeale corporate lending the "ank ha "een doing, one 0o#ld hae e7pected the net interet A Project Report On Working Capital Management

@

margin to hae "een #nder greater pre#re3 %he "ank, tho#gh, appear to hae in#lated #ch pre#re3 Interet margin, 0hile the/ hae declined rom the :31> per cent een in 5EE:HE=, are till hoering cloe to the : per cent mark3 8%he compara"le margin or ICICI .ank and 'D
S#ch trong emphai and oc# on lending alo doe not appear to hae had an/ deleterio# impact on the oerall aet -#alit/3 %he "ankG nonHperorming loan are een no0, ater ie /ear o e7tremel/ rapid aet "#ildH#p, "elo0 1 per cent o it total loan3


@

GRAP,S

RATE O. 1I>E1EN1 1EC"AIRE1 ? AXIS AN!

+&AR

DI*&D&(D

5EE:H5EE=

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5E

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=> ?E

RETAI" "IAI"ITIES


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S. D&POSI% 8RS3 +&AR

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5

EN,ANCING S,ARE ,O"1ER >A"UE O. AXIS AN!

TA"ES RATIO ANA"?SIS O. AXIS AN!

Mar  E Mar  E@ Capital Ade-#ac/ E3EE 113>@

Mar  E? 113E


Mar  E> 153??

Mar  E= 11351 :

Ratio &AR(I(BS RA%IOS Income

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<#nd Adance a E3EE

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553>

income a a  o 1EE3EE >3>

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

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Op

Income Operating Income a a  o Working <#nd <#nd "aed

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On (et Worth .ORROWI(B RA%IOS .orro0ing rom R.I a  to %otal E3EE .orro0ing .orro0ing rom other "ank a a E3EE 

to

%otal

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%otal .orro0ing .orro0ing 0ithin India a a 

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%otal Depoit P&R .RA(C' RA%IOS Operating Income

Per

.ranch Operating Proit Per .ranch (et Proit

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.ranch Peronnel &7pene

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&mplo/ee Operating Proit 1,1>,=@?3?> 1,=>1,E>3E@ 1,5:,5=>3? 1,=:E,@=3 Per &mplo/ee (et Proit Per ??:,5?=3:

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&mplo/ee Peronnel &7pene

Per

&mplo/ee Depoit

Per >,E:,=E@35 ?1,51:,>3>@ ??,?E@,>>3@E ?E,@,E311

&mplo/ee <#nd Adance :?,>E,::3@ :=,E>1,:13E5 :5,@@5,:?53@= 5@,1?5,>E3?? Per &mplo/ee


@

SWOT ANA"?SIS .OR T,E AXIS STRENGT,S7 •

'igh -#alit/ erice proide

•

Strong and 0ell management3

•

Second larget priate "ank all oer India

•

A;IS .ank ha "een to a"le maintain the -#alit/ o it loan portolio

WEA!NESSES7




•

Strengthening o r#pee hitting proit

•

A"ilit/ to pa thro#gh price increae in ario# market d#e to

•

Intene competition3

•

Manpo0er pro"lem i "ig pro"lem3

OPPORTUNITIES7 •

Deelopment o modern "anking3

•

Potential or gro0th thro#gh increaed penetration3

•

Opport#nit/ to no41 "ank all oer india

•

Increaing pop#larit/ in oerea market

T,REATSC,A""ENGES7 •

&nironment 0ith diere pla/er

•

Riing competitor or priate "anking

•

Change in ical "eneit2la0

•

People attraction  retention

•

Management o co#ntr/ rik 3




.IN1INGS

C,APTER/ D& .IN1INGS

•

'ere lot o thing I ind to make thi project report3

•


E

•

Secondl/ kno0n there operation /tem3

•

%hirdl/ kno0n there controlling rik management3

•

•

'o0 to operate their hare holder3

•

Kno0 ho0 to control competitor3

•

Bro0th "anking ind#tr/3

•

Bro0th o a7i "ank3

"IMITATIONS Cre$it risk #anage#ent

%he changing operating enironment or "ank entail managing comple7 and aria"le rik in a diciplined ahion3 %he ke/ challenge or eectie management o ariegated rik emanate rom creation o kill et 0ithin the .ank 0ith appropriate domain kno0ledge and deeloping a #nctional rame0ork to monitor rik 0ith trigger in cae o "reache in the preHaccepted leel o A Project Report On Working Capital Management

1

identiied rik3 %he .ank, ince the inception o the Rik Department, ha deeloped inHho#e kill to manage ke/ area o rik i63, credit rik, market rik and operational rik3

Cre$it Risk

Credit rik coer the ina"ilit/ o a "orro0er or co#nterHpart/ to hono#r commitment #nder an agreement and an/ #ch ail#re ha adere impact on the inancial perormance o the .ank3 Accordingl/, the .ank trie to eectiel/ ae, adminiter, monitor and enorce recoer/ o loan to ario# client3 %he Additional mea#re o rik containment at the indiid#al e7po#re and at the portolio leel are4  Rating linked e7po#re norm adopted "/ the .ank are coneratie in comparion to the reg#lator/ pr#dential e7po#re norm3  Ind#tr/H0ie e7po#re ceiling are "aed on the ind#tr/ perormance, propect and the competitiene o the ector3  &7po#re 0ith "#llet repa/ment, long getation project, longer tenor e7po#re, and longer moratori#m are aeed 0ith additional care3 Committee o Director Rik Management Committee A#dit Committee .oard o Director Credit Committee  A)CO Operational Rik Inetment Committee Management Committee 5 Ditri"#tion o Credit Rik Aet "/ Aet #alit/ Ind#tr/ anal/i pla/ an important part in aeing the potential concentration rik rom 0ithin the loan portolio3 Partic#lar attention i gien to ind#tr/ ector 0here the .ank "eliee there i a high degree o rik or potential or olatilit/ in the #t#re33


5

Cons*#er Cre$it Risk Manage#ent %he .ank contin#ing aggreie ora/ into retail "anking ha re#lted in a harp "#ild #p in the retail aet portolio3 %he ke/ challenge or a health/ retail aet portolio i to en#re a ta"le rik adj#ted earning tream "/ maintaining c#tomer dea#lt 0ithin accepta"le leel3 %he .ank periodicall/ carrie o#t a comprehenie portolio leel anal/i o retail aet portolio 0ith a rik ret#rn perpectie3 Rik mea#rement or the retail portolio i aeed primaril/ on a credit coring "ai3 D#ring the /ear, the .ank ha initiated a project to reamp it e7iting credit coring model or retail aet 0ith e7ternal #pport rom a rep#ted international endor3

Market Risk Market rik i the rik to the .ank earning and capital d#e to change in the market leel o interet rate or price o ec#ritie, oreign e7change and e-#itie, a 0ell a the olatilitie o thoe change3 %he .ank i e7poed to market rik thro#gh it trading actiitie, 0hich are carried o#t "oth or c#tomer and on a proprietar/ "ai3 %he .ank adopt a comprehenie approach to market rik management or it trading, inetment and aet2lia"ilit/ portolio3 %he .ank #e ario# rik metric, "oth tatitical and nonHtatitical, incl#ding nonHtatitical mea#re like poition, gap and enitiitie 8d#ration, P*.P, option Breek9Q *al#e at Rik 8*aR9Q enitiit/ o net interet income 8&aR9Q and enitiit/ o the &conomic *al#e o &-#it/ 8&*&93

"iK*i$it2 Risk )i-#idit/ rik arie in an/ "ank general #nding o it actiitie3 A part o the li-#idit/ management contingenc/ planning, the .ank aee potential trend, demand, eent and #ncertaintie that co#ld reaona"l/ re#lt in an adere li-#idit/ condition3 %he .ank conider the impact o thee potential change on it o#rce o hort term #nding and long term li-#idit/ A Project Report On Working Capital Management

:

planning3 %he .ank A)M polic/ deine the gap limit or the tr#ct#ral li-#idit/ and the li-#idit/ proile o the .ank i anal/ed on a tatic a alo a d/namic "ai "/ tracking all cah inlo0 and o#tlo0 in the mat#rit/ ladder "aed on the e7pected occ#rrence o cah lo03 %he .ank #ndertake "ehaio#ral anal/i o the nonHmat#rit/ prod#ct i63 aing and c#rrent depoit and cah credit2 oerdrat acco#nt, on a periodic "ai to acertain the olatilit/ o reid#al "alance in thoe acco#nt3 %he rene0al pattern and premat#re 0ithdra0al o term depoit and dra0 do0n o #naailed credit limit are alo capt#red thro#gh "ehaio#ral t#die3

Co*ntr2 Risk %he .ank ha p#t in place a rik monitoring /tem or the management o co#ntr/ rik3 %he .ank #e the eenHcategor/ claiication i63 inigniicant, lo0, moderate, high, er/ high, retricted and oHcredit ollo0ed "/ the &7port Credit B#arantee Corporation o India )td3 8&CBC9 and rating o international rating agenc/ D#n  .radtreet or monitoring the co#ntr/ e7po#re3 %he rating o co#ntrie are "eing #ndertaken at monthl/ interal or at more re-#ent interal i the it#ation o 0arrant i3e3 in cae o a igniicant change in the condition o a co#ntr/ inoling harp deterioration o it rating3 &7po#re to a co#ntr/ incl#de all creditHrelated lending, trading and inetment actiitie, 0hether cro "order or locall/ #nded3 %he .ank ha et #p e7po#re limit or each rik categor/ a alo indiid#al co#ntr/ e7po#re limit, and the e7po#re limit are generall/ monitored at 0eekl/ interal3

Operational Risk Operational rik i the rik o lo re#lting rom inade-#ate or ailed internal procee, people or /tem, or normal e7ternal eent3 %he .ank i in the proce o rolling o#t a ot0are ol#tion or an operational rik management rame0ork 0ith emphai on identiication o ke/ rik indicator at A Project Report On Working Capital Management

=

the #nit leel, monitoring identiied rik at the #nit leel and then aggregating at a higher organi6ational leel3 %he "#ine #nit p#t in place the "aeline internal control a approed "/ the Prod#ct Management Committee to en#re a o#nd and 0ell controlled operating enironment thro#gho#t the organi6ation3 &ach ne0 prod#ct or erice introd#ced i #"ject to a rigoro# rik reie0 and igno proce 0here all releant rik are identiied and aeed "/ department independent o the rik taking #nit propoing the prod#ct3 *ariation o e7iting prod#ct, a 0ell a o#to#rcing, are alo #"ject to a imilar proce3 Rik Management rame0ork or Oerea Operation3

%he .ank ha p#t in place a comprehenie Rik Management polic/ or it glo"al operation and ha alo orm#lated co#ntr/ peciic rik polic/ or thee operation "aed on the hot co#ntr/ reg#lator g#ideline3 %he Aet )ia"ilit/ Management and all the rik e7po#re or the oerea operation are monitored centrall/ "/ implementing o#nd /tem and control, and alo "/ adopting the norm a peciied "/ the reg#lator in the hot co#ntr/3


>

CONC"USION

C,APTER/  . CONC"USION %he "anking ind#tr/ market capitali6ation made a #"tantial decline3 Mot inetor are concerned 0ith 0hether the ind#tr/ can #tain contin#ed proita"ilit/ a a re#lt o thee actor3 .ank hae reponded in recent /ear to thee pro"lem "/ dieri/ing a0a/ rom interet enitie prod#ct and erice3 .#t interet rate are the #ndamental apect o an/ inancial erice3


?

I "eliee the inancial erice ind#tr/ 0ill "e deepl/ aected "/ rie Interet rate hae alread/ ho0n ign o hardening, 0hich ma/ aect #rther inetment in the ind#trial ector3 In order to maintain the BDP gro0th oer  in the coming /ear, the major challenge lie in "alancing o c#rrent pace o gro0th 0ith nonHaccelerating inlation3 %he c#rrent polic/ mea#re adopted "/ monetar/ a#thoritie to tighten li-#idit/ in order to ight inlation led to an increae in interet rate, 0hich co#ld lo0 do0n economic gro0th in the coming /ear, partic#larl/ in repect o inratr#ct#re and other core ector project3ng interet rate3 A7i .ank tand apart rom it priate ector competitor U ICICI .ank and 'D
SUGGESTIONS •

An increae in interet rate i the reaon o decline in "ank actiit/ o interet rate ho#ld appropriate3


@

•

%echnolog/ ho#ld improe in "anking ector "eca#e ne0 technolog/ replace traditional "anking and red#ced peronnel cot3

•

.ank ho#ld oled the pro"lem o lack o eicient emplo/ee , o that man po0er co#ld not "ecome a h#rdle in #cce o "ank3




RE.ERENCES

RE.ERENCES H II"IOGRAP,?

Web sites.

0003google3com A Project Report On Working Capital Management



0003a7i"ank3com 0003ragadirect3com 0003altaita3com 0003an0er3com 0003lidehare3com 0003managementparadie3com


1EE

ANNEXURE

UESTIONNAIRE

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WORKING CAPITAL MANAGEMENT of axis bank Finance Research 2014 (2).doc

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