INTRODUCTION:

Asset Liability Management (ALM) is a strategic approach of managing the balance sheet dynamics in
such a way that the net earnings are maximized. This approach is concerned with management of net
interest margin to ensure that its level and riskiness are compatible with the risk return objectives of the
bank.
If one has to define Asset and Liability management without going into detail about its need and utility,
it can be defined as simply “management of money” which carries value and can change its shape very
quickly and has an ability to come back to its original shape with or without an additional growth. The
art of proper management of healthy money is ASSET AND LIABILITY MANAGEMENT (ALM).
The Liberalization measures initiated in the country resulted in revolutionary changes in the Banking
sector. There was a shift in the policy approach of banks from the traditionally administered market
regime to a free market driven regime. This has put pressure on the earning capacity of co-operative
banks, which forced them to foray into new operational areas thereby exposing themselves to new
risks.
As major part of funds at the disposal of banks come from outside sources, the bank management are
concerned about RISK arising out of shrinkage in the value of asset, and managing such risks became
critically important to them.
Although co-operative banks are able to mobilize deposits, major portions of it are high cost fixed
deposits. Maturities of these fixed deposits were not properly matched with the maturities of assets
created out of them. The tool called ASSET AND LIABILITY MANAGEMENT provides a better
solution for this.
ASSET LIABILITY MANAGEMENT (ALM) is a portfolio management of assets and liability of an
organization. This is a method of matching various assets with liabilities on the basis of expected rates
of return and expected maturity patter
In the context of banks, ALM is defined as “a process of adjusting banks liability to meet loan
demands, liquidity needs and safety requirements”. This will result in optimum value of the bank, at the
same time reducing the risks faced by them and managing the different types of risks by keeping it
within acceptable levels.
The concept of asset/liability management focuses on the timing of cash flows because company
managers must plan for the payment of liabilities. The process must ensure that assets are available to
pay debts as they come due and that assets or earnings can be converted into cash. The asset/liability
management process applies to different categories of assets on the balance sheet.
ALM sits between risk management and strategic planning. It is focused on a long-term perspective
rather than mitigating immediate risks and is a process of maximising assets to meet complex liabilities
that may increase profitability.

NEED OF THE STUDY:

The need of the study is to concentrates on the growth and performance of heritage and to calculate the
growth and performance by using asset and liability management. And to know the management of
nonperforming assets.
• To know financial position of heritage
• To analyse existing situation of heritage
• To improve the performance of heritage
• To analyse competition between heritage with other cooperative banks.

OBJECTIVES OF THE STUDY:

• To study the concept of asset & liability management in heritage
• To study process of cash inflows and outflows in heritage
• To study risk management under heritage
• To study reserves cycle of ALM under heritage
• To study functions and objectives of ALM committee.
• To find out the component of assets explaining variance in liability and vice versa
• To study the impact of ownership over asset liability management in banks
• To study impact of ALM on the profitability.

SCOPE OF THE STUDY:

In this study the analysis based on ratios to know asset and liabilities management under HERITAGE
and to analyses the growth and performance of HERITAGE by using the calculations under asset and
liability management based on ratio.
Scope of the study is limited. We can say that 70% of the analysis is proved good for the investor, but
the 30% depends upon market sentiment.
The topic is selected to analyses the factors that affect the future EPS of a company based on
fundamentals of the company.
The market standing of the company studied in the order to give a better scope to the Analysis is
helpful to the investors, shareholders, creditors for the rating of the company.
• Ratio analysis
• Comparative statement
• Common size balance sheet.
RESEARCH METHODOLOGY:
DATA COLLECTION METHOD:
The data needed for this project is collected from the following sources.

 The data is adopted purely from secondary sources.

 The theoretical contents are collected purely from prominent text book and references.
 The financial data and data are collected from annual reports of the company.
 RBI guidelines for ALM.

STATISTICAL METHODS:

 The project is presented using tables, graphs and with their interpretations.
 No survey is undertaken or observation study is conducted by evaluating asset and liability
performance of the company.

REVIEW OF LITERATURE:
There has been good number of studies and plenty of literature relating to asset-liability management in
banks is available The Basel committee on banking supervision (2001) proposed and formulated the
broad supervisory framework and suggested required standards for bringing best practices in the
supervision mechanism of banking system.
The motto behind this was to encourage global convergence towards common approaches and
standards for banking system per-se. This body also suggested setting up of rigorous risk and capital
management requirements to ensure adequate capital reserve for various risks exposure in the process
of lending and borrowing operations. It infers banks need to hold larger capital amount for greater
exposure of risks. This will ensure solvency and stability.
The Basel II norms (2004) focused on international standard for the amount of capital to be maintained
by banks as a safeguard against various risks they come across in the banking business. Basel II
proposed setting up rigorous risk and capital management requirements designed to ensure that a bank
holds capital reserves appropriate to the risk the bank exposes itself to through its leading and
investment practices. It infers that the greater risk to which the bank is exposed, the greater the amount
of capital the bank needs to hold to ensure solvency and stability.
Gardner and Mills (1991) discussed the principles of asset-liability management as a part of banks’
strategic planning and as a response to the changing environment in prudential supervision, e-
commerce and new taxation treaties.
Haslem et al (1999) used canonical analysis and the interpretive framework of asset/liability
management in order to identify and interpret the foreign and domestic balance sheet strategies of large
U.S. banks in the
context of the “crisis in lending to LDCs.” In their study it was revealed that the least profitable very
large banks have the largest proportion of foreign loans, but they focus on asset/liability matching
strategies.
Charumathi (2008) in her study on interest rate risk management concluded that balance sheet risks
include interest rate and liquidity risks.
Vaidya and Shahi (2001) studies asset liability management in Indian banks. They suggested in
particular that interest rate risk and liquidity risk are two key inputs in business planning process of
banks.
Rajan and Nallari (2004) used canonical analysis to examine asset-liability management in Indian
banks in the period 1992-2004. According to this study, SBI and associates had the beat asset-liability
management in the period 1992-2004. They also found that, other than foreign banks, all other banks
could be said to be liability- managed. Private sector banks were found to be aggressive in profit
generation, while nationalized banks were found to be excessively concerned about liquidity.
Milir Venkatesh and Bhargav (2008) focused on price matching and maintaining spreads.
Taking one step ahead, the banks now focus on integrated balance-sheet management where all the
relevant factors which effect an appropriate balance sheet composition deserve consideration.
Therefore, various components of balance sheet are analyzed keeping in view the strengths of a bank.
The earlier approach of managing certain deposits, loans and advances has no much relevance. The
basic difference in earlier approach and dynamic approach can be described in term of focus on value
addition, analysis of different scenarios, comprehensive risk and dynamic approach of balance sheet
evaluation in the present ALM system.
Dash and Pathak (2011) proposed a linear model for asset-liability assessment. They found that public
sector banks have best asset liability management positions, maintaining profitability, satisfying the
liquidity constraints, and reducing interest rate risk exposure. The present study analyses the impact of
RBI guidelines on effective management of ALM in banks.

LIMITATION OF THE STUDY:

1. The study is the limited up to the date and information provided by Heritage Foods India
Limited and its annual reports.
2. The study is mainly based on secondary data.
3. The use of budget may lead to restricted use of resources.
4. Efforts may therefore not be made to exceed the performance beyond the budgeted targets.
5. In order that a system may be successful, adequate budget education should be imparted at least
through the formative period.
6. This subject is based on past data of heritage
7. The analysis is based on structural liquidity statement and gap analysis.
8. Sufficient training programs should be arranged to make employees gibe positive response to
budgetary activities.
9. The study is the limited up to the date and information provided by Heritage Foods India
Limited and its annual reports.

FOOD INDUSTRY:
India is the world's second largest producer of food next to China, and has the potential of being the
biggest with the food and agricultural sector. The total food production in India is likely to double in
the next ten years and there is an opportunity for large investments in food and food processing
technologies, skills and equipment, especially in areas of Canning, Dairy and Food Processing,
Specialty Processing, Packaging, Frozen Food/Refrigeration and Thermo Processing. Fruits &
Vegetables, Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods,
Alcoholic Beverages & Soft Drinks and Grains are important sub-sectors of the food processing
industry. Health food and health food supplements is another rapidly rising segment of this industry
which is gaining vast popularity amongst the health conscious.
India is one of the world’s major food producers but accounts for less than 1.5 per cent of international
food trade. This indicates vast scope for both investors and exporters. Food exports in 1998 stood at US
$5.8 billion whereas the world total was US $438 billion. The Indian food industries sales turnover is
Rs 140,000 crore (1 crore = 10 million) annually as at the start of year 2000. The industry has the
highest number of plants approved by the US Food and Drug Administration (FDA) outside the USA.
India's food processing sector covers fruit and vegetables; meat and poultry; milk and milk products,
alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like
confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods
etc. We cover an exhaustive database of an array of suppliers, manufacturers, exporters and importers
widely dealing in sectors like the -Food Industry, Dairy processing, Indian beverage industry etc. We
also cover sectors like dairy plants, canning, bottling plants, packaging industries, process machinery
etc.
The most promising sub-sectors includes -Soft-drink bottling, Confectionery manufacture, Fishing,
aquaculture, Grain-milling and grain-based products, Meat and poultry processing, Alcoholic
beverages, Milk processing, Tomato paste, Fast-food, Ready-to-eat breakfast cereals, Food additives,
flavours etc.

Food processing:
The food industry is the complex, global collective of diverse businesses that together supply much of
the food energy consumed by the world population.
Only subsistence farmers, those who survive on what they grow, can be considered outside of the scope
of the modern food industry.
Food processing is the methods and techniques used to transform raw ingredients into food for human
consumption. Food processing takes clean, harvested or slaughtered and butchered components and
uses them to produce marketable food products. there are several different ways in which food can be
produced.
One Off Production This method is used when customers make an order for something to be made to
their own specifications, for example a wedding cake. The making of One-Off Products could take days
depending on how intricate the design is and also the ability of the chef making the product. today...
Batch Production This method is used when the size of the market for a product is not clear, and where
there is a range within a product line. A certain number of the same goods will be produced to make up
a batch or run, for example at Greggs Bakery they will bake a certain number of chicken bakes. This
method involves estimating the number of customers that will want to buy that product.
Mass production This method is used when there is a mass market for a large number of identical
products, for example, chocolate bars, ready meals and canned food. The product passes from one stage
of production to another along a production line.
Just in Time This method of production is mainly used in sandwich bars such as Subway, it is when all
the components of the product are there and the customer chooses what they want in their product and
it is made for them fresh in front of them.
SNACKS AND CONFECTIONERY:
The Indian market holds enormous growth potential for snack food, which is estimated to be worth
US$ 3 billion, with the branded snack market estimated to be around US$ 1.34 billion, growing at 15-
20 per cent a year. While the growth rate of the US$ 1.56 billion unorganized sector is 7-8 per cent.

HEALTH FOOD:
Recognizing the growth potential of the branded health food sector in India, fast moving consumer
goods (FMCG) majors are foraying into this sector in a big way. As Hindustan Lever Ltd (HUL) is test
marketing its health food brand, Kissan Amaze, in three southern states in India, Godrej Hershey Foods
& Beverages Ltd (GHFBL), a joint venture between Godrej Beverages & Foods Ltd and Hershey
Company, is planning to introduce select brands from its international portfolio in the domestic market.
DAIRY:
According to Dairy India 2015 estimates, the current size of the Indian dairy sector is US$ 62.67 billion
and has been growing at a rate of 5 per cent a year. The dairy exports in 2014—15 rose to US$ 210.5
million against US$ 113.57 last fiscal, whereas the domestic dairy sector is slated to cross US$ 110
billion in revenues by 2016.
India continues to be the largest producer of milk in the world. It produced 110 million tonne of milk in
2015-2016.

BEVERAGES:
According to industry experts, the market for carbonated drinks in India is worth US$ 1.5 billion while
the juice and juice-based drinks market accounts for US$ 0.25 billion. Growing at a rate of 25 per cent,
the fruit-drinks category is one of the fastest growing in the beverages market. Sports and energy
drinks, which currently have a low penetration in the Indian market, have sufficient potential to grow.
The market for alcoholic beverages has been growing consistently. 'The Future of Wine', a report on
the state of the wine industry over 50 years, suggests that the market for wine in India was growing at
over 25 per cent per year.

MAJOR INVESTMENTS:
Private investment has been one of the key drivers for growth of the Indian food industry. The 'India
Food Report 2016, reveals that the total amount of investments in the food processing sector in the
pipeline for the next three years is about US$ 23 billion.
• The government has received around 40 expressions of interest (EoI) for the setting up of 10
MFPs with an investment of US$ 514.37 million.
• Reliance Industries Ltd has invested US$ 1.25 billion in a dairy project.
• Focusing on India as a rapidly growing market, US soft drinks giant PepsiCo would pump in an
estimated US$ 152.30 million to set up four new food and beverages projects by 2014.
• Geneva-based food service chain Global Franchise Architects (GFA) aims to open 250 stores
around the world by March 2016, of which 100 will be in India.

GOVERNMENT INITIATIVES:
The new trade policy places increased focus on Agro-based industries.
• Food processing industries have been put in the list of priority sectors for bank lending. The
Centre has also announced a series of new initiatives which include a separate policy at the state level,
thrust on contract farming and making the sector tax-free.
• The government plans to open 30 mega food parks by the end of the 11th five-year plan (2013-
2017).
• Fruit and vegetable processing units have been completely exempted from paying excise duty.
• Automatic approval for foreign equity up to 100 per cent is permitted for most of the processed
food items.

• Items like fruits and vegetables products, condensed milk, ice cream, meat production has been
completely exempted from Central Excise Duty.
• Excise duty on ready to eat packaged foods and instant food mixes has been brought down to 8
per cent from 16 per cent.
• Excise duty on aerated drinks has been reduced to 16 per cent from 24 per cent.

COMPANY PROFILE:
Overview of the company.
The Heritage Group, founded in 1992 by Sri Nara Chandra Babu Naidu, is one of the fastest growing
Private Sector Enterprises in India, with four-business divisions viz., Dairy, Retail, Agri, and Bakery
under its flagship Company Heritage Foods (India) Limited (HFIL). The annual turnover of Heritage
Foods crossed Rs.2482 Crores in 2018-19.
Presently Heritages milk products have market presence in Andhra Pradesh, Karnataka, Kerala, Tamil
Nadu, Maharashtra, Orissa and Delhi and its retail stores across Bangalore, Chennai and Hyderabad.
Integrated Agri operations are in Chittoor and Medak Districts and these are backbone to retail
operations and the state of art Bakery division at Uppal, Hyderabad, and Andhra Pradesh.
In the year 1994, HFIL went to Public Issue to raise resources, which was oversubscribed 54 times and
its shares are listed under B1 Category on BSE (Stock Code: 519552) and NSE (Stock Code:
HERITGFOOD)
About the founder:
Sri Chandra Babu Naidu is one of the greatest Dynamic, Pragmatic, Progressive and Visionary Leaders
of the 21st Century. With an objective of "Bringing prosperity into the rural families through co-
operative efforts", he along with a few likeminded, friends and associates promoted "Heritage Foods"
in the year 1992 taking opportunity from the Industrial Policy, 1991 of Government of India and he has
been successful in his endeavour. At present, Heritage has market presence in the states of Andhra
Pradesh, Karnataka, Kerala, Tamil Nadu Maharashtra and
Orissa. More than three thousand villages and three lakh farmers are being benefited in these states. On
the other side, Heritage is serving millions of customer’s needs, employing more than 3500 employees
and generating indirect employment opportunities to more than 10000 people. Beginning with a humble
annual turnover of Rs.4.38 Crores in 1993-94, the annual turnover has crossed Rs.900 Crores during
the financial year 2010-2011.

Sri Chandra Babu Naidu was born on April 20, 1951 in Naravaripally Village, Chittoor District, and
Andhra Pradesh, India. His late father Sri N. Kharjura Naidu was an agriculturist and his late mother
Smt. Ammanamma was a housewife. Mr. Naidu had his school education in Chandragiri and his
college education at the Sri Venkateswara Arts College, Tirupati. He did his Masters in Economics
from the Sri Venkateswara University, Tirupati. Sri Naidu is married to Ms. Bhuvaneswari D/o Sri N T
Rama Rao, Ex-Chief Minister of Andhra Pradesh and famous Star of Telugu Cinema. Mrs. N
Bhubaneswari is presently the Vice Chairperson & Managing Director of the company.
Mr. Naidu held various positions of office in his college and organized a number of social activities.
Following the 1977 cyclone, which devastated Diviseema taluk of Krishna district, he actively
organized donations and relief material from Chittoor district for the cyclone victims. Mr. Naidu has
been evincing keen interest in rural development activities in general and the upliftment of the poor and
downtrodden sections of society in particular.
Sri Naidu held various coveted and honorable positions including Chief Minister of Andhra Pradesh,
Minister for Finance & Revenue, Minister for Archives & Cinematography, Member of the A.P.
Legislative Assembly, Director of A.P. Small Industries Development Corporation, and Chairman of
Karshaka Parishad.
Sri Naidu has won numerous awards including " Member of the World Economic Forum's Dream
Cabinet" (Time Asia), "South Asian of the Year " (Time Asia), " Business Person of the Year "
(Economic Times), and " IT Indian of the Millennium " (India Today).
Sri Naidu was chosen as one of 50 leaders at the forefront of change in the year 2000 by the Business
Week magazine for being an unflinching proponent of technology and for his drive to transform the
State of Andhra Pradesh.

Forward looking statements:

We have grown, and intended to grow, focusing on harnessing our willingness to experiment and
innovate our ability to transform our drive towards excellence in quality, our people first attitude and
our strategic direction.

Mission & vision

Mission

 Bringing prosperity into rural families of India through co-operative efforts and providing
customers with hygienic, affordable and convenient supply of "Fresh and Healthy" food
products.
 To enhance prosperity and the empowerment of the farming community through its unique
“relationship farming” model.
 To be a preferred employer by nurturing entrepreneurship, managing career aspirations and
providing innovated avenues for enhanced employee prosperity.
 To be a Nationally recognised brand for healthy and fresh products with revenue of Rs.6000
crore (USD 1 billion) by 24.
Vision:
Delighting every home with fresh and healthy products and empowering the farmer.

Heritage Slogan:
When you are healthy, we are healthy When you are happy, we are happy
We live for your "HEALTH & HAPPINESS".

Members:
Name Designation
N Bhuvaneswari CEO
A Prabhakara Naidu Chief Financial Officer
J Samba Murthy Head
M Sambasiva Rao President
N Bhuvaneswari Vice Chairperson & M. D
N Brahmani Executive Director
V Nagaraja Naidu Non-Executive Director
D Seetharamaiah Non-Exe. & Ind. Director
N Sri Vishnu Raju Non-Exe. & Ind. Director
Rajesh Thakur Ahuja Non-Exe. & Ind. Director
Aparna Surabhi Non-Exe. Women Independent Director
Umakanta Barik Secretary
Umakanta Barik Co. Secretary & Compl. Officer

Board of Directors:
Sri D. Seetharamiah, Chairman, aged 87 years, a commerce graduate from the Andhra University and a
member of the Institute of Chartered Accountants of India, is the senior partner of Brahmayya & Co., a
leading Chartered Accountants firm. He has been in practice for the last five decades. He had occupied
several coveted positions, which include, Membership of the Southern Regional Board of Reserve
Bank of India, Federation of Andhra Pradesh Chamber of Commerce and Industry,
Chairmanship of Tirumala Tirupati Devasthanams Trust Board etc. He is also on Board, of several
Companies.
Dr. A. Appa Rao, Director, aged 87 years, a B.Sc. (Agri), Ph.D. in Agriculture (Madras University),
completed his post-doctoral work at Kansas State University as TCM- USA Scholar, retired as the Vice
Chancellor of the Andhra Pradesh Agricultural University. He is an author of around 40 papers
published in the fields of Plant Pathology and Agricultural Research & Education. Being associated
with the IDRC financed Agricultural Research Management (Asia) Project, was instrumental in
implementing SEARCA, Philippines for over
5 years. He is also a Director in several Companies and a member of several committees including the
ICAR.
Dr. V. Nagaraja Naidu, Director, aged 66 years, an M. Com, M. Litt and a PhD. (Financial
Management), starting from Administrative Staff College of India, Hyderabad in 1972 held various
positions in reputed Universities, Viz., Professor, Dean Director etc., and taught in the fields of Finance
and Business Economics at Post graduate and Doctorate levels for about 25 years. He had been the
Registrar (Administrative head) of the Dr B R Ambedkar Open University for about 10 years. He has
been associated with the Company since inception and has been able to utilize his intimate
understanding of the rural socio-economic scenario to strengthen the milk procurement systems and
strategies of Heritage, which contributed to the current status of Heritage as a leading player in South
India.
Dr. N. R Sivaswamy, Director, aged 77 years, a LL.B, M.A. (Economic), M.A. (Public
Administration), Ph.D. in Economics (University of Wisconsin, U.S.A) and a Fellowship holder of the
Ford Foundation, U.S.A, is a leading Advocate and Tax consultant and author of a book titled
"Employment potential of the Indian Industrial Sector" and several other articles and Journals. He
retired as the Chairman of the Central Board of Direct Taxes.
Sri N. P Ramakrishna, Director, aged 66 years, who has substantial experience in the transport
business, has a thorough understanding of the systems of milk procurement and transportation and has
enabled Heritage to strengthen its main milk procurement base at Chittoor, Bangalore and nearby areas.
He is also the Managing Director of Hotel Ramakrishna Private Limited situated at Chittoor and was
Chairman of the Chittoor Co-operative Sugar Factory.
Smt N. Bhuvaneswari, Vice-Chairman & Managing Director, aged 51 years, a B.A, is a dynamic leader
who has extensive experience in business and has been successfully steering Heritage towards growth
and better prospects. She is also a Director in several other Companies.
Sri Lokesh Nara, Director, aged 35 years, completed his Master’s Degree in Business Administration
from Stanford University and graduated with a Bachelor of Science degree in Management Information
Systems from Carnegie Mellon University.
Before joining the Board of Heritage Foods, he was associated with the Company as a Vice-President
of the Retail division. Before joining Heritage Foods, he worked with the World Bank as a Junior
Professional Associate where he completed various projects including an e-Governance Capacity
Building program for the government of Ethiopia, and e- Governance Capacity Building program for
the governments of South Sudan and Kenya.
Smt N.Brahmani, Executive Director, aged 30 years, completed her Master’s Degree in Business
Administration from Stanford University and graduated with a Bachelor of Science degree in Electrical
Engineering from Santa Clara University USA and Completed Bachelor of Engineering with
specialization of Electronics and Communications from Chaitanya Bharathi Institute of Technology.
Before joining the
Board of Heritage Foods, she worked as Investment Associate in Vertex Venture Management Pvt Ltd
between 2015 to 2017 in Singapore and associated with the Company as a Vice-President (Business
Development).

Commitments:
Milk Producers:
Change in life styles of rural families in terms of:
• Regular high income through co-operative efforts.
• Women participation in income generation.
• Saved from price exploitation by un-organized sector.
• Remunerative prices for milk.
• Increase of milk productivity through input and extension activities.
• Shift from risky agriculture to dairy farming.
• Heritage.
• Financial support for purchase of cattle; insuring cattle.
• Establishment of Cattle Health Care Centers.
• Supplying high quality Cattle feed.
• Organizing "Rythu Sadasu" and Video programmes for educating the farmers in dairy farming.

Customers:
• Timely Supply of Quality & Healthy Products
• Supply high quality milk and milk products at affordable prices
• Focused on Nutritional Foods
• More than 4 lakh happy customers
• High customer satisfaction
• 24 hours help lines (<10 complaints a day)

Employees:
• Enhancing the Technical and Managerial skills of Employees through continuous training and
development
• Best appraisal systems to motivate employees
• Incentive, bonus and reward systems to encourage employees
• Heritage forges ahead with a motto "add value to everything you do"

Shareholders:
Returns:
Consistent Dividend Payment since Public Issue (January 1995) Service:
• Highest impotence to investor service; no notice from any regulatory authority since 2001 in
respect of investor service
• Very transparent disclosures

QUALITIES OF MANAGEMENT PRINCIPLES:

1. Customer focus to understand and meet the changing needs and expectations of customers.
2. People involvement to promote team work and tap the potential of people.
3. Leadership to set constancy of purpose and promote quality culture trough out the organization.
4. Process approach to assess the efficiency and effectiveness of each process.
5. Systems approach to understand the sequence and interaction of process.
6. Factual approach to decision making to ensure its accuracy.
7. Continual improvement processes for improved business results.
8. Development of suppliers to get right product and services in right time at right place.

Fact Sheet (Milestones) Awards & Recognition

1st prize in Energy Conservation
Main Dairy Plant, Gokul, near Kasipentla on Tirupati- Chittoor Highway had won the Prestigious 1st
prize in Energy Conservation for the Year 2011 at the National Level for its outstanding performance in
conserving the Natural Resources through the most efficient use of Energy.
THE GREAT INDIAN ICE CREAM CONTEST 2010

Heritage Foods (India) Limited 6-3-541/C, Panjagutta,

Hyderabad, AP. Phone: 040 - 23391221/222
Fax: 040 — 23318090, Email: hfil@heritagefoods.co.in

Products of the company (For Marketing Projects with Logo if it is possible)

Milk
3.Double 5.Standar
1.Toned Milk 2.Full Cream 4.Golden Cow 6.Slim Milk
Toned dised
Milk Milk
Milk Milk
11.Ezhu
7.UHT Toned 8.UHT Slim 9.Smart 10.Manjunath a 12.Padmanab
malai
Milk Milk Milk Milk ha Milk
Milk
Milk Products — Fresh
2.Full Cream
1.Toned Milk Curd 3.Curd 4.Fruit n 5.Butte 6.Jeera
Milk Curd Cup Pouch Curd Cup r Milk Butter
Cup Milk
11.Chees
7.Garlic 9.Cookin 10.Pasturised e 12.Cheese
Butter 8.Paneer g Butter Table Butter Chiplets Slice
Milk
 13.Cheese -
Carton & 14.Doodhpe 15.Milk 16.Malai 17.Sunu 18.Soan
Tin Packs da Cake Laddu n dalu Papidi
Milk Products - Long Shelf Life
1.Ghee
Polypack - 2.Ghee Alu 5.Skimm
3.Ghee 4.Ghee Tin 6.Dairy
Cow & Foil - Cow ed Milk
Jar - - Buffalo Whitener
Buffalo & Buffalo Powder
Cow
Ice Cream
1.Small 2.Large Cup 3.Kulfi 4.Twin Bars 5.Sundae 6.Novelties
Cup
7.Celebratio 9.Bar 11.Sunda 12.Home
8.Chocobars 10.Juicy Bar
n Cone Novelties e Magic Packs
13.Eco- 14.Premium 15.Utsav 16.Party
Packs Tubs Packs Packs
Beverages
1.Packaged
Drinking 2.Premiu 3.Popula 4.Flavoured 5.Flavour
6.Sweet
Water m Tea r Tea Milk - Bottles ed Milk - Lassi
Tetrapac
k
8.Instant 9.Ground
7.Fruit Lassi
Coffee Coffee
LIST OF HERITAGE PRODUCTS:

Curd Butter Milk

Flavoured Milk Ghee

Doodh Peda Paneer

Ice Cream Cooking Butter

Lassi Fresh Cream

ASSET LIABILITY MANAGEMENT (ALM) SYSTEM IN CO-OPERATIVE
BANKS:
Introduction:
In the normal course, the banks are exposed to credit and market risks in view of the asset liability
transformation. With the liberalization in the
Indian financial markets over the last few years and growing integration of domestic markets and with
external markets the risks associated with banks operations have become complex, large, requiring
stragic management. Banks are now operating in a fairly deregulated environment and are required to
determine on their own, interest rates on deposits and advance in both domestic and foreign currencies
on a dynamic basis. The interest rates on banks investments in government and other securities are also
now market related. Intense competition for business involving both the assets and liabilities, together
with increasing volatility in the domestic interest rates, has brought pressure on the management of
banks to maintain a good balance among spreads, profitability and long-term
viability. Impudent liquidity management can put banks earnings a reputation at great risk. These
pressures call for structured and comprehensive measures and not just adahoc action. The management
of banks has to base their business decisions on a dynamic and integrated risk management system and
process, driven by corporate strategy. Banks are exposed to several major risks in course of their
business-credit risk, interest rate and operational risk therefore important than banks introduce effective
risk management systems that address the issues related to interest rate, currency and liquidity risks.
Banks need to address these risks in a structured manner by upgrading their risk management and
adopting more comprehensive Asset-Liability management (ALM) practices than has been done
hitherto. ALM among other functions, is also concerned with risk management and provides a
comprehensive and dynamic framework for measuring, monitoring and managing liquidity interest rate,
foreign exchange and equity and commodity price risk of a bank that needs to be closely integrated
with the banks business strategy. It involves assement of various types of risks altering the asset
liability portfolio in a dynamic way in order to manage risks.
The initial focus of the ALM function would be to enforce the risk management discipline, viz.,
managing business after assessing the risks involved.
In addition, the managing the spread and riskiness, the ALM function is more appropriately viewed as
an integrated approach which requires simultaneous decisions about asset/liability mix and maturity
structure.

RISK MANAGEMENT IN ALM:

Risk management is a dynamic process, which needs constant focus and attention. The idea of risk
management is a well-known investment principle that the largest potential returns are associated with
the riskiest ventures. There can be no single prescription for all times, decisions
have to be reversed at short notice. Risk, which is often used to mean uncertainty, creates both
opportunities and problems for business and individuals in nearly every walk of life.
 Risk sometimes is consciously analyzed and managed; other times risk is simply ignored, perhaps out
of lack of knowledge of its consequences. If loss regarding risk is certain to occur, it may be planned
for in advance and treated as to definite, known expense. Businesses and individuals may try to avoid
risk of loss as much as possible or reduce its negative consequences.
Several types of risks that affect individuals and businesses were introduced, together with ways to
measure the amount of risk. The process used to systematically manage risk exposure is known as
RISK MANAGEMENT. Whether the concern is with a business or an individual situation, the same
general steps can be used to systematically analyze and deal with risk.

STEPS IN RISK MANAGEMENT:

 Risk identification
 Risk evaluation
 Risk management technique
 Risk measurement
 Risk review decisions
Integrated or enterprise risk management is an emerging view that recognizes the importance of risk,
regardless of its source, in affecting a firm’s ability to realize its strategic objectives. The detailed risk
management process is as follows;

Risk identification:
The first step in the risk management process is to identify relevant exposures to risk. This step is
important not only for traditional risk management, which focuses on uncertainty of risks, but also for
enterprise risk management, where much of the focus is on identifying the firm’s exposures from a
variety of sources, including operational, financial, and strategic activities.

Risk evaluation:
For each source of risk that is identified, an evaluation should be performed.
At this stage, uncertainty of risks can be categorized as to how often associated losses are likely to
occur. In addition to this evaluation of loss frequency, an analysis of the size, or severity, of the loss is
helpful. Consideration should be given both to the most probable size of any losses that may occur and
to the maximum possible losses that might happen.

Risk management techniques:

The results of the analyses in second step are used as the basis for decisions regarding ways to handle
existing risks. In some situations, the best plan may be to do nothing. In other cases, sophisticated ways
to finance potential losses may be arranged. The available techniques for managing risks are GAP
Analysis, VAR Analysis, Heinrich Domino theory etc., with consideration of when each technique is
appropriate.

Risk measurement:
Once risk sources have been identified it is often helpful to measure the extent of the risk that exists. As
part of the overall risk evaluation, in some situations it may be possible to measure the degree of risk in
a meaningful way. In other cases, especially those involving individual’s computation of the degree of
risk may not yield
helpful information.

Risk review decisions:

Following a decision about the optimal methods for handling identified risks, the business or individual
must implement the techniques selected. However, risk management should be an ongoing process in
which prior decisions are reviewed regularly. Sometimes new risk exposures arise or significant
changes in expected loss frequency or severity occur. The dynamic nature of many risks requires a
continual scrutiny of past analysis and decisions.
(I). PRODUCT MARKET RISK:
This risk decision relates to the operating revenues and expenses of the form that impact the operating
position of the profit and loss statements which include crisis, marketing, operating systems, labour
cost, technology, channels of distributions at strategic focus. Product Risks relate to variations in the
operating cash flows of the firm, which effect Capital Market, required Rates Of Return;

(1) CREDIT RISK

(2) STRATEGIC RISK
(3) COMMODITY RISK
(4) OPERATIVE RISK
(5) HUMAN RESOURCES RISK
(6) LEGAL RISK

Risk in Product Market relate to the operational and strategic aspects of managing operating revenues
and expenses. The above types of Product Risks are explained as follows.

(1) CREDIT RISK:

The most basic of all Product Market Risk in a Bank or other financial intermediary is the erosion of
value due to simple default or non-payment by the borrower. Credit risk has been around for centuries
and is thought by many to be the dominant financial services today. Banks intermediate the risk
appetite of lenders and essential risk ness of borrowers. Banks manage this risk by ; (A) making
intelligent lending decisions so that expected risk of borrowers is both accurately assessed and priced;
(B) Diversifying across borrowers so that credit losses are not concentrated in time; (C) purchasing
third party guarantees so that default risk is entirely or partially shifted away from lenders.

(2). STRATEGIC RISK:

This is the risk that entire lines of business may succumb to competition or obsolescence. In the
language of strategic planner, commercial paper is a substitute product for large corporate loans.
Strategic risk occurs when a bank is not ready or able to compete in a newly developing line of
business. Early entrants enjoyed a unique advantage over newer entrants. The seemingly conservative
act of waiting for the market to develop posed a risk in itself. Business risk accrues from jumping into
lines of business but also from staying out too long.

(3). COMMODITY RISK:

Commodity prices affect banks and other lenders in complex and often unpredictable ways. The macro
effect of energy price increases on inflation also contributed to a rise in interest rates, which adversely
affected the value of many fixed rate financial assets. The subsequent crash in oil prices sent the
process in reverse with nearly equally devastating effects.

(4). OPERATING RISK:

Machine-based system offer essential competitive advantage in reducing costs and improving quality
while expanding service and speed. No element of management process has more potential for surprise
than systems malfunctions. Complex, machine-based systems produce what is known as the “black box
effect”. The inner working of system can become opaque to their users. Because developers do not use
the system and users often have not constitutes a significant Product Market Risk. No financial service
firm can small management challenge in the modern financial services company.

(5). HUMAN RESOURCES RISK:

Few risks are more complex and difficult to measure than those of personnel policy; they are
Recruitment, Training, Motivation and Retention. Risk to the value of the Non-Financial Assets as
represented by the work force represents a much more subtle of risk. Concurrent with the loss of key
personal is the risk of inadequate or misplaced motivation among management personal. This human
redundancy is conceptually equivalent to safety redundancy in operating systems. It is not inexpensive,
but it may well be cheaper than the risk of loss. The risk and rewards of increased attention to the
human resources dimension of management are immense.

(6). LEGAL RISK:

This is the risk that the legal system will expropriate value from the shareholders of financial services
firms. The legal landscape today is full of risks that were simply unimaginable even a few years ago.
More over these risks are very hard to anticipate because they are often unrelated to prior events which
are difficult and impossible to
designate but the management of a financial services firm today must have these risks at least in view.
They can cost millions.

(II). CAPITAL MARKET RISK:

In the Capital Market Risk decision relate to the financing and financial support of Product Market
activities. The result of product market decisions must be compared to the required rate of return that
results from capital market decision to determine if management is creating value. Capital market
decisions affect the risk tolerance of product market decisions related to variations in value associated
with different financial instruments and required rate of return in the economy.

1. LIQUIDITY RISK
2. INTEREST RATE RISK
3. CURRENCY RISK
4. SETTLEMENT RISK
5. BASIS RISK

1. LIQUIDITY RISK:
For experienced financial services professionals, the foremost capital market risk is that of inadequate
liquidity to meet financial obligations. The obvious form is an inability to pay desired withdrawals.
Depositors react desperately to the mere prospect of this situation.

They can drive a financial intermediary to collapse by withdrawing funds at a rate that exceeds its
capacity to pay. For most of this century, individual depositors who lost faith in banks’ ability to repay
them caused bank failures from liquidity. Funds are deposited primarily as a financial of rate. Such
funds are called “purchased money” or “headset funds” as they are frequently bought by employees
who work on the money desk quoting rates to institutions that shop for the highest return. To check
liquidity risk, firms must keep the maturity profile of the liabilities compatible with that of the assets.
This balance must be close enough that a reasonable shift in interest rates across the yield curve does
not threaten the safety and soundness of the entire firm.

2. INTEREST RATE RISK:

In extreme conditions, Interest Rate fluctuations can create a liquidity crisis. The fluctuation in the
prices of financial assets due to changes in interest rates can be large enough to make default risk a
major threat to a financial services firm’s viability. There’s a function of both the magnitude of change
in the rate and the maturity of the asset. This inadequacy of assessment and consequent mispricing of
assets, combined with an accounting system that did not record unrecognized gains and losses in asset
values, created a financial crisis. Risk based capital rules pertaining to banks have done little to mitigate
the interest rate risk management problem. The decision to pass it off, however is not without large
cost, so the cost benefit trade-off becomes complex.

3. CURRENCY RISK:
The risk of exchange rate volatility can be described as a form of basis risk among currencies instead of
basis risk among interest rates on different securities. Balance sheets comprised of numerous separate
currencies contain large camouflaged risks through financial reporting systems that do not require
assets to be marked to market. Exchange rate risk affects both the Product Markets and The Capital
Markets. Ways to contain currency risk have developed in today’s derivative market through the use of
swaps and forward contracts. Thus, this risk is manageable only after the most sophisticated and
modern risk management technique is employed

4. SETTLEMENT RISK:
Settlement Risk is a particular form of default risk, which involves the banks competitors. Amounts
settle obligations having to do with money transfer, check clearing, loan disbursement and repayment,
and all other inter-bank transfers within the worldwide monetary system. A single payment is made at
the end of the day instead of multiple payments for individual transactions.

5. BASIS RISK:
Basis risk is a variation on the interest rate risk theme, yet it creates risks that are less easy to observe
and understand. To guard against interest rate risk, somewhat non comparable securities may be used as
a hedge. However, the success of this hedging depends on a steady and predictable relationship
between the two no identical securities. Basis can negate the hedge partially or entirely, which vastly
increases the Capital Market Risk exposure of the firm.

HISTORY OF INDIAN FOODS INDUSTRY

By stating productions in 1914 the story of Indian Foods is a stage of continuous growth. Foods is
derived from the Latin word “Foodsam”.
Egyptians and Romans found the process of manufacturing Foods. In England during the first century
the hydraulic Foods has become more versatile building material. Later on, Portland Foods was
invented and the invention was usually attributed to Joseph Aspdin of Enland.
India is the world’s 4th largest Foods produced after China, Japan and U.S.A. The
South Industries have produced Foods for the first time in 1904. The company was setup in Chennai
with the installed capacity of 30 tonnes per day. Since then the Foods industry has progressing leaps
and bounds and evolved into the most basic and progressive industry. Till 1950 — 1951, the capacity
of production was only 3.3 million tonnes. So far annual production and demand have been growing a
pace at roughly 78 million tonnes with an installed capacity of 87 million tonnes.
In the remaining two years of 8th plan an additional capacity of 23 million tones
will actually come up.
India is well endowed with Foods grade limestone (90 billion tonnes) and coal (190 billion tonnes).
During the nineties it had a particularly impressive expansion with growth rate of 10 percent.
The strength and vitality of Indian Foods Industry can be gauged by the interest shown and support
given by World Bank, considering the excellent performance of the industry in utilizing the loans and
achieving the objectives and target. The World Bank is examining the feasibility of providing a third
line of credit for further upgrading the industry in varying areas, which will make it global. With
liberalization policies of Indian Government. The industry is posed for a high growth rates in nineties
and the installed capacity is expected to cross 100 million tones and production 90 million tonnes by
2003 A.D.
The industry has fabulous scope for exporting its product to countries like the U.S.A., U.K.,
Bangladesh, Nepal and other several countries. But there are not enough wagons to transport Foods for
shipment.

Foods — The Product:

The natural Foods is obtained by burning and crushing the stones containing clayey, carbonate of lime
and some amount of carbonate of magnesia. The natural Foods is brown in color and its best variety is
known as “ROMAN FOODS”. It sets very quickly after addition of water.
It was in the eighteenth century that the most important advances in the development of Foods were
which finally led to the invention of Portland Foods.
In 1756, John Sematon showed that hydraulic lime which can resist the action of water can be obtained
not only from hard lime stone but from a limestone which contain substantial proportion of clayey.
In 1796, Joseph Parker found that modules of argillaceous limestone made excellent hydraulic Foods
when burned in the usual manner. After burning the product was reduced to a powder. This started the
natural Foods industry.
The artificial Foods is obtained by burning at a very high temperature a mixture of calcareous and
argillaceous material. The mixture of ingredients should be intimate and they should be in correct
proportion. The calcined product is known as clinker. A small quantity of gypsum is added to clinker
and it is then pulverized into very fine powder, which is known as Foods.
The common variety of artificial Foods is known as normal setting Foods or ordinary Foods. A mason
Joseph Aspdn of Leeds of England invented this Foods in 1824. He took out a patent for this Foods
called it “PORTLAND FOODS” because it had resemblance in its color after setting to a variety of
sandstone, which is found a abundance in Portland England.
The manufacture of Portland Foods was started in England around 1825.
Belgium and Germany started the same 1855. America started the same in 1872 and India started in
1904. The first Foods factory installed in Tamilnadu in 1904 by South

India limited and then onwards a number of factories manufacturing Foods were started. At present
there are more than 150 factories producing different types ofFoods.

Composition of Foods:
The ordinary Foods contains two basic ingredients, namely, argillaceous and calcareous. In argillaceous
materials the clayey predominates and in calcareous materials the calcium carbonate predominates.
A good chemical analysis of ordinary Foods along with desired range of ingredients.

Ingredients Percent Range

Lime (CaO) 62 62 — 67

Silica (SiO2) 22 17 — 25

Alumina (Al2O3) 5 3—8

Calcium Sulphate 4 3—4

(CaSO4)
Iron Oxide (Fe2O3) 3 3—4

Magnesia (MgO) 2 1—3

Sulphur (S) 1 1—3

Alkalies 1 0.2 — 1
Industry Structure and Development:
With a capacity of 115 million tons of large Foods plants, Indian Foods industry is the fourth largest in
the world. However per capita consumption in our country is still at only 100 Kgs against 300 Kgs of
developed countries and offers significant potential for growth of Foods consumption as well as
addition to Foods capacity. The recent economic policy announced Foods by the government in respect
of housing, roads, power etc., will increase Foods consumption.

Opportunities and Threats

In view of low per capita consumption in India, there is a considerable scope for growth in Foods
consumption and creation of new capacities in coming years.
The Foods industry does not appear to have adequately exploited Foods consumption in rural segment
where damaged where damaged growth is possible.
Landed cost of Foods (with import duty) continues to be higher than home market prices but with
reduced import duty, increasing imports, may pose a serious threat to the domestic Foods industry.
Outlook
The recent change in the budget 2001 — 2002 relating to fiscal incentives for individual housing and
reduction in borrowing cost for this purpose and with the government reaffirmation to accelerate the
reform process, infrastructure development should logically get priority leading to increase in demand
of Foods in coming years. The addition capacity of Foods in the pipeline is limited and therefore the
demand and supply situations is expected to be more favorable and Foods prices are likely to firm up.

Risks and concerns:

Slow down of Indian economy or drop in growth rate of agriculture may adversely affect the
consumption. The recent increase in railway freight coupled with diesel / petrol price like will increase
the cost of production and distribution, as being dulky, Foods is freight intensive increase in Limestone
royalty also adds to the cost of production, which is considerably higher than corresponding costs of
many other developing countries.
In our country there is a need to undertake a massive programme of house construction activity into the
rural and urban areas. It is impossible to construct a house without Foods and steel, in other words,
Foods is one of the basic construction materials and therefore it is one of the vital elements for the
economic development of the nation.
India inspite of being the 4th biggest producers of Foods in the world has still a
very low per capital consumption of Foods.

Foods Companies 51 Nos

 Foods Plants 99 Nos
Installed Capacity 64.8 mt
Total Investment (approx) Rs. 10,000 Crores
Total Manpower Over 1.25 Lakhs

Management Award of the Government of Andhra Pradesh. Heritage is also conscious of its social
responsibilities. Its rural and community development programmes include adoption of two nearby
villages, running an Agricultural Demonstration Farm, a Model Dairy Farm etc., Impressed by these
activities, FAPCCI chose Heritage to confer the Award for “Best efforts of an Industrial Unit in the
State to Develop Rural Economy” twice, in the year 1994 as well as in 1998. Heritage also has to its
credit the National Award (Shri. S.R. Rangta Award for Social Awareness) for the year 1995 — 1996,
for the Best Rural Development Efforts made by the Company. In the same year Heritage got the First
Prize for Mine Environment and Pollution Control for year 1999 too, for the 3rd year in succession in
July, 2001 Heritage annexed the “Vana Mithra” Award from the Government of Andhra Pradesh.
Quality conscious and progressive in its outlook, Heritage Foods is an OHSAS 08001 Company and
also joined the select brand of ISO9001-2000 Companies.

History
The first unit was installed at Basanthnagar with a capacity of 2.5 lack TPA (tonnes per annum)
incorporating humble supervision, preheated system, during the year 1969.
The second unit followed suit with added a capacity of 2 lack TPA in 1971. The plant was further
expanded to 9 lack by adding 2.5 lack tones in August,
1978, 1.13 lack tones in January, 1981 and 0.87 lack tones in September, 1981.

Power
Singareni Colleries makes the supply of coal for this industry and the power was obtained from AP
TRANSCO. The power demand for the factory is about 21MW. Heritage has got 2 diesel generator sets
of 4MW each installed in the year 1987.
Heritage Foods now has a 15 KW captive power plant to facilitate for uninterrupted power supply for
manufactured of Foods.

HERITAGE FOODS
One among the industrial giants in the country today, serving the nation on the industrial front
HERITAGE FOODS INDIA LIMITEDhas a chequered and eventful history dating back to the Twnties
when the Industrial House of Birlas acquired it.
With only a Textile Mill under it banner in 1924, it grew from strength to strength and spread its
activities to never firlds like Rayon, Pulp, Transparent paper, Spun pipes and Refractories, Tyres, Oil
Mills and Refinery Extraction.
Looking to the wide gap between demand and supply, of a vital commodity, Foods, which plays an
important role in nation — building the Government of India de
— licensed the Foods Industry in the year 1966 with a view to attract private entrepreneurs to
argument the Foods product Heritage rose to the occasion and decided to set up a few Foods plants in
the country.
The first Foods Plant of Heritage with a capacity of 2.5 lack tonnes per annum based on dry process,
was established in 1969 at Basanthnagar a backward area in Karimnagar District, Andhra Pradesh, and
christened it Heritage Foods. The second unit followed suit, which added a capacity of 2.00 lack tones
in 1971. The plant was further expanded to 9.00 lack tones by adding 2.5 lack tones in August 1978.
1.14 lack tones in January, 1981 and 0.87 lack tones in September, 1981.
Heritage Foods has outstanding track record of performance and distinguished itself among all the
Foods factories in India by bagging the coveted National Productivity Award for two successive years,
i.e., in 1985 and 1936, so also the National Awards for Foods Safety for two-year 1985 — 86 and 1986
- 87. Heritage also bagged NCBMs (National Council for Foods and Building Materials) National
Award for Energy Conservation for the year 1989 — 90.
Heritage got the prestigious State Award “Yajamnya Ratna” & “Best Management Award” for the year
1989; so also, the FAPCCI (Federation of Andhra Pradesh Chamber of Commerce and Industry) Award
for the Best Family planning effort in the State. For the year 1987 — 88, Heritage also got the FAPPCI
Award for Best Industrial Promotion / Expansion effort in the state. In the year 1991 Heritage also got
the May day Award of the Government of Andhra Pradesh for “Best Management” and “Pandit
Jawaharlal Nehru Silver Rolling Trophy for the Best Productivity effort in the State, sponsored by
FAPCCI, for 1993 Heritage got the Best.

Performance:
The performance of Heritage Foods industry had been outstanding achieving over cent per cent
capacity utilization although despite many odds like power cuts and which most 40% was waste due to
wagon shortage etc.
The Company being a continuous process industry works round the clock and has an excellent record
of performance achieving over 100% capacity utilization.
Heritage has always combined technical progress with industrial performance.
The company had a glorious track record for the last 27 years in the industry.

Technology:
Heritage Foods uses most modern technology and the computerized control in the plant. A team of
dedicated and well — experienced experts manages the plant. The quality is maintained much above
the bureau of Indian Standards.
The raw materials used for manufacturing Foods are:
 Lime stone
 Bauxite
 Hematite
 Gypsum

Environmental and Social Obligations:

For environmental promotion and to keep — up the ecological balance, this section has undertaken
various social welfare programs by adopting ten nearly villages, organizing family welfare camps,
surgical camps, children immunization camps, animal health camps, blood donation camps, distribution
of fruit bearing trees and seeds, training for farmers etc., were arranged.

Awards of Heritage:

Awards National /
No Year
State
Best family planning effort in State
1 1984 the
state
2 1985 — 86 National productivity award National

1985 — 86 — Foods safety National

3
87
Best industrial promotion / State
4 1987 — 88
expansion effort

5 1987 — 89 Productivity award State

6 1988 — 89 Best industrial promoter State

7 1988 — 89 Expansion effort in the state State

 Award for contribution given for State
8 1988 — 89
rural economy
9 1989 Best family planning effort State
Yajamanya Ratna & Best State
10 1989
Management Award
Community development State
11 1988 — 90
programs
12 1988 — 90 Energy conservation National
May Day award of the State
13 1991 Government
of Andhra Pradesh for best
management
Pandit Jawaharlal Nehru rolling State
14 1991
trophy for best national
productivity effort
Indira Gandhi National Award State
15 1993 for
Excellence in Industry (Best
Management Award)
 16 1994 Best industrial rebellion award State
Rural development chief State
17 1995 — 96
minister environmental and
mineral
conservation award.
18 2000 Best industrial rebellion award. State
Best effort of an industrial unit State
19 2002 to
develop rural economy
Shri S.R. Rangta award for National
20 2004
social awareness for best
rural
development efforts.
21 2006 Best workers welfare. State
22 2009 Best family welfare award. State
First prize for mine State
23. 2014 environment & pollution
rd
control for the 3 year in
succession.
Vana Mithra award from Andhra State
24 2016
Pradesh Government.
Best Management Award from State
25 2017
Andhra Pradesh Government.

In this food’s safety week celebrations, under the auspices of the Director General of Foods Safety,
Heritages Basanthnagar limestone Foods won 2 first prizes for environment and pollution control and
safe drilling and blatting and 14 2nd prizes for overall performance, productivity, operation and
maintenance of machines publicity / propaganda etc.,
This section also bagged the award for Environment Protection in the Godavari River belt, sponsored
by the Godavari Pradushna Pariharna Pariyavarana.

Production:
Last 20 years production of HERITAGE FOODS INDIA LIMITED Industry, Basanthnagar.

Year Production (in

tones)
1994 — 95 7,49,197

1995 — 96 7,61,581

1996 — 97 8,05,921

1997— 98 7,60,708
1998 —
5,50,254
1999
1999 —
6,01,453
2000
2000 —2001 6,43,307
2001 —
6,43,663
2002
2002 — 03 7,48,258

2003 — 04 6,85,596

2004 — 05 7,31,177

2005 — 06 7,84,555

2006 — 07 7,82,383

2007 — 08 7,31,049

2008 — 09 7,46,474

2009 — 10 6,88,305

2010 — 11 7,77,092

2011 — 12 6,92,424

2012 — 13 7,27,447
 2013-14 7,34,456

2014-15 7,68,872

2015-16 8,75,012

2016-17 10,46,466

2017-18 10,56,742

Last 20 years production of HERITAGE FOODS INDIA LIMITED Industry, Basanthnagar.

Note: Production including internal consumption also Foods and clinker production were
lower than the previous year mainly because of lower dispatches of Foods due to recession
prevailing in Foods industry with slow down in demand during the year under review. This
section had to curtail production due to accumulation of large stocks of clinker. However,
sales realization during the second half of the year has improved and it is hoped that prices
will stabilize at some reasonable levels.

VISION OF THE HERITAGE:

• To prepare development action plan at the apex level, DCCB level and at PACS level
and organize implementation.
• To cover all agricultural member of PACS under cooperative kisan credit card scheme
to achieve 100 % coverage and also to provide timely and adequate credit support both short
term and long-term investments.
• To improve the lending to the small and marginal farmers as also SC and ST
agriculturists.
• To provide more advances through Rythu Mirta Groups (RMGs)
• To formulate and adopt appropriate strategy for improved loan recoveries and to
reduce Non-Performing Assets (NPAs).
• To ensure writing books of accounts and also ensure regular audit at all levels.
• To ensure uniform accounts, Ledger maintenance at PACs level and DCCB level.
• To provide ATM services at various important places in twin cities.

• To provide anywhere banking services and Teller banking services.

• To convert extension counters into full ledged branches.
• To raise deposits upto Rs. 2040 crores.
• To computerize the operations of DCCBs and their branches.
• To provide basic training and also periodical refresher courses to staff members at all
level.
• To reduce cost of management.

RISK MANAGEMENT SYSTEM:

Assuming and managing risk is the essence of business decision-making. Investing in a new
technology, hiring a new employee, or launching a marketing campaign is all decisions with
uncertain outcomes. As a result, all the major management decisions of how much risk to
take and how to manage the risk.

The implementation of risk management varies from business to business, from one
management style to another and from one time to another. Risk management in the financial
services industry is different from others. Circumstances, Institutions and Managements are
different. On the other hand, an investment decision is no recent history of legal and political
stability, insights into the potential hazards and opportunities.

Many risks are managed quantitatively. Risk exposure is measured by some numerical index.
Risk cost tradeoff many tools are described by numerical valuation formulas.
Risk management can be integrated into a risk management system. Such a system can be
utilized to manage the trading position of a small-specialized division or an entire financial
institution. The modules of the system can be implemented with different degrees of accuracy
and sophistication.

RISK MANAGEMENT SYSTEM:

Arbitrage pricing models range from simple equations to large scale numerically
sophisticated algorithms. Cash flow generators also vary from a single formula to a simulator
that accounts for the dependence of cash flows
on the history of the risk factors.
Financial engineers are continuously incorporating advances in econometric techniques, asset
pricing models, simulation techniques and
optimization algorithms to produce better risk management systems.
ALM INFORMATION:
ALM is a risk management tool through which Market risk associated with business are
identified, measured and monitored to maintain profits by restructuring Assets and Liabilities.
The ALM framework needs to be built on sound methodology with necessary information
system as back up. Thus, the information is key element to the ALM process.
There are various methods prevalent worldwide for measuring risks. These range from the
simple Gap statement to extremely sophisticate and data intensive Risk adjusted profitability
measurement (RAPM) methods. The central element for the entire ALM exercise is the
availability of adequate and accurate information.
However, the existing systems in many Indian Banks do not generate information in manner
required for the ALM. Collecting accurate data is the biggest challenge before the banks,
particularly those having wide network of branches, but lacking full-scale computerization.
Therefore, the introduction of these information systems for risk measurement and
monitoring has to be addressed urgently.
The large network of branches and the lack of support system to collect information required
for the ALM which analysis information on the basis of residual maturity and behavioural
pattern, it would take time for banks in the present state to get the requisite information.

ALM ORGANISATION:
Successful implementation of the risk management process requires strong commitment on
the part of senior management in the bank to integrate basic operations and strategic decision
making with risk management.
The Board of Directors should have overall responsibility for management of risk and should
decide the risk management policy of the bank, setting limits for liquidity, interest rate,
foreign exchange and equity / price risk.
The Asset Liability Management Committee (ALCO) consisting of the banks senior
management, including CEO/CMD should be responsible for ensuring adherence to the limits
set by the Board of Directors as well as for deciding the business strategy of the bank (on the
assets and liabilities sides) in line with the banks budget and decided risk management
objective.
The ALM support group consisting of operation staff should be responsible for analysing,
monitoring and reporting the risk profiles to the ALCO. The staff should also prepare
forecasts (simulations) showing the effects of various possible changes in market condition
related to the balance sheet and recommend the action needed to adhere to banks internal
limits,
The ALCO is a decision-making unit responsible for balance sheet planning from a risk-
return perspective including the strategic management of interest rate and liquidity risks.
Each bank has to decide on the role of its ALCO, its responsibility as also the decision to be
taken by it. The business and risk management strategy of the bank should ensure that the
bank operates within the limits / parameters set by the Board. The business issues that an
ALCO would consider, inter alia, will include product pricing for deposits and advances,
desired maturity profile and mix of the incremental Assets and Liabilities, etc. in addition to
monitoring the risk levels of the bank, the ALCO should review the results of and progress in
implementation of the decisions made in the previous meetings. The ALCO would also
articulate the current interest rate view of the bank and base its decisions for future business
strategy on this view. In respect of this funding policy, for instance, its responsibility would
be to decide on source and mix of liabilities or sale of assets. Towards this end, it will have to
develop a view on future direction of interest rate movements and decide on funding mixes
between fixed vs. floating rate funds, wholesale vs. retail deposits, Money markets vs. Capital
market funding, domestic vs. foreign currency funding etc. Individual banks will have to
decide the frequency for holding their ALCO meetings.
COMPOSITION OF ALCO:
The size (number of members) of ALCO would depend on the size of each institution,
business mix and organizational complexity, to ensure commitment of the Top management
and timely response to market dynamics, the CEO/MD or the GM should head the
committee. The chiefs of Investment, Credit, Resources Management or Planning, Funds
Management / Treasury (domestic), etc., can be members of the committee. In addition, the
head of the computer (technology) Division should also be an invitee for building up of
MIS and related computerization. Some banks may even have Sub-Committee and Support
Groups.
ALM ORGANIZATION consists of following categories:
 ALM BOARD
 ALCO
 ALM CELL
 COMMITTEE OF DIREC

ALM BOARD
The Board of management should have overall responsibility for management of risk and
should decide the risk management policy of the bank and set limits for liquidity and interest
rate risks.

ALCO:
The bank has constituted an Asset- Liability committee (ALCO). The committee may consist
of the following members.
i) General Manager / Banking Head of Committee
ii) General Manager (Loans & Advances) Member
iii) General Manager (CMI & AD) Member
iv) AGM / Head of the ALM Cell Member
The ALCO is a decision-making unit responsible for ensuring adherence to the limits set by
board as well as for balance sheet planning from risk return perspective including the
strategic management of interest rate and liquidity risks, in line with the banks budget and
decided risk management objectives.
The Business issues that an ALCO will include fixation of interest rates for both deposits and
advances, desired maturity profile of the incremental assets and liabilities etc.
The ALCO would also articulate the current interest rate due of the bank and base its
decisions for future business strategy on this view. In respect of funding policy, for instance,
its responsibility would be decided on source and mix of liability.
Individual Banks will have to decide the frequency for their ALCO meetings. However, it is
advised that ALCO should meet at least once in a fortnight. The ALCO should review results
of and process in implementation of the decisions made in the previous meetings

ALM CELL:
The ALM desk / cell consisting of operating staff should be responsible for analysing,
monitoring and reporting the profiles to the ALCO. The staff should also
prepare forecasts (simulations) showing the effects of various possible changes in market
conditions related to the balance sheet and recommend the action needed to adhere to Banks
internal limits.

COMMITTEE OF DIRECTORS:
The Banks should also constitute professional, management and supervisory committee,
consisting of three to four directors, which will oversee the implementation of the ALM
system, and review its functioning periodically.

ALM PROCESS:
The scope of ALM function can be described as follows:
1. Liquidity Risk Management
2. Interest Rate Risk Management
3. Currency Risk Management
4. Settlement Risk Management
5. Basis Risk Management
The RBI guidelines mainly address Liquidity Risk Management and Interest Rate Risk
Management.
The following are the concepts discussed for analysis of banks Asset-Liability Management
under above mentioned risks.
● Liquidity Risk
● Maturity profiles
● Interest rate risk
● Gap analysis

1. Liquidity Risk Management:

Measuring and managing liquidity needs are vital activities of the banks. By assuring a
bank’s ability to meet its liability as they become due, liquidity management can reduce the
probability of an adverse situation development. The importance of liquidity transcends
individual institutions, as liquidity shortfall in one institution can have repercussions on the
entire system.
Liquidity risk management refers to the risk of maturing liability not finding enough
maturing assets to meet these liabilities. It is the potential inability to meet the banks liability
as they became due. This risk arises because bank borrows funds for different maturities in
the form of deposits, market operations etc. and lock them into assets of different maturities.
Liquidity Gap also arises due to unpredictability of deposit withdrawals, changes in loan
demands. Hence measuring and managing liquidity needs are vital for effective and viable
operations of the bank.
Liquidity measurement is quite a difficult task and usually the stock or cash flow approaches
are used for its measurement. The stock approach used certain
liquidity ratios. The liquidity ratios are the ideal indicators of liquidity of banks operating in
developed financial markets, the ratio does not reveal the real liquidity profile of banks which
are operating generally in a fairly illiquid market. The assets, which are commonly
considered as liquid like Government securities, have limited liquidity when the market and
players are in one direction. Thus, analysis of liquidity involves tracking of cash flow
mismatches.
The statement of structural liquidity may be prepared by placing all cash inflows and
outflows in the maturity ladder according to the expected timing of cash flows.
The MATURITY PROFILE could be used for measuring the future cash flows in different
time bands.
The position of Assets and Liabilities are classified according to the maturity patterns a
maturing liability will be a cash outflow while a maturing asset will be a cash inflow. The
measuring of the future cash flows of banks is done in different time buckets.

The time buckets, given the statutory Reserve cycle of 14 days may be distributed as under:
1. 1 to 14 days
2. 15 to 28 days
3. 29 days and up to 3 months
4. Over 3 months and up to 6 months
5. Over 6 months and up to 1 year
6. Over 1 year and up to 3 years
7. Over 3 years and up to 5 years
8. Over 5 years.

MATURITY PROFILE — LIQUIDITY:

A. Outflows:

HEAD OF ACCOUNTS Classification into time buckets

1.Capital, reserves, and Surplus Over 5years bucket.
2.Demand deposits (current & Savings Bank Demand Deposits may be classified into volatile
Deposits) and core portions, generally 25% of deposits
withdraw able on demand. This portion may be
treated as volatile. While volatile portion may
be placed in the first-time bucket i.e.,1-14 days,
the core portion may be placed in 1-2years,
bucket.
3.Term Deposits Respective maturity buckets.
4.Borrowings Respective maturity buckets.
5.Other liabilities and provisions
i. Bills payable i. 1-14 days bucket.
ii. Inter-office adjustment ii. Items not representing cash payable
iii. Provisions for NPAs may be placed in over 5years bucket.
a) sub-standard iii. a)2-5 years bucket.
b) doubtful debts and loss b) over 5 years bucket.
iv. Provisions for depreciation in iv. over 5 years bucket.
investments v. a)2-5years bucket.
v. Provisions for NPAs in investment b) over 5years bucket.
vi. Provisions for other purposes vi. Respective buckets depending on the
purpose.
 B. Inflows:
1.Cash 1-14 days bucket.
2.Balance with other Banks
i. Current account i. Non-withdraw able portion on account of
ii. Money at call and short Notice, Term stipulations of minimum
Deposits and other placements Balances may be shown less than 1-14 days
bucket.
ii. Respective maturity buckets.

3.Investments
1) Approved securities
2) Corporate debentures and bonds, CD’s
and CP’s, redeemable preference shares,
units of mutual funds (close ended).
Etc.
3) Share/units of mutual funds (open
ended).
4) Investment in subsidiaries/Joint
Venture.
1. Respective maturity buckets excluding the amount
required to be reinvested to maintain SLR.
2. Respective Maturity buckets. Investments
classified as NPA’s should be shown under 2-5
years bucket (sub-standard) or over 5 years bucket
(doubtful and loss).
3. Over 5 years bucket.
4. Over 5 years bucket.

4.Advances (performing/standard)
I. Bills purchased and Discounted
(including bills under DUPN).
II. Cash credit/Overdraft (including TOD)
and demand loan component of working
capital.
III. Term loans
5. NPA’s
 Sub-standard.
 Doubtful and loss.
6. Fixed assets.
7. Other-office adjustment.
o Inter-office adjustments.
o Others.
1) Respective maturity buckets.
2) Banks should undertake a study of behavioural
and seasonal pattern of a ailments based on
outstanding and the core and volatile portion
should be identified. While the volatile portion
should be identified. While the volatile portion
could be shown in the respective maturity bucket.
The core portion may be shown under 1-2 years
bucket.
3) Interim cash flows may be shown under respective
maturity buckets.
 2-5 years bucket.
 Over 5 years bucket.
Over 5 years bucket.
o As per trend analysis, intangible items or
items not representing cash receivables
may be shown in over 5 years bucket.
o Respective maturity buckets. Intangible
assets and assets not representing cash
receivables may be shown in over 5 years
bucket.

Terms used:
CDs: Certificate of Deposits. CPs: Commercial Papers.
DTL PROFILE: Demand and Time Liabilities.
Inter office adjustment:
Outflows: Net Credit Balances Inflows: Net Debit Balances
Other Liabilities: Cash payables, Income received in advance, Loan Loss and Depreciation in
Investments.
Other assets: Cash Receivable, Intangible Assets and Leased Assets.

2. Interest Rate Risk:

Interest Rate Risk refers to the risk of changes in interest rates subsequent to the creation of
the assets and liabilities at fixed rates. The phased deregulations of interest rates and the
operational flexibility given to banks in pricing most of the assets and liabilities imply the
need for banking system to hedge the interest rate risk. This is a risk where changes in the
market interest rates might adversely affect a bank’s financial conditions.
The changes in interest rates affect banks in large way. The immediate impact of change in
interest rates is on banks’ earnings by changing its Net Interest Income (NII). A long-term
impact of changing interest rates is on banks Market Value of Equity (MVE) or net worth as
the economic value of banks assets, liabilities and off-balance sheet positions get affected due
to variation in market interest rates.
The risk from the earnings perspective can be measured as changes in the Net Interest Income
(NII) OR Net Interest Margin (NIM).
Gap Analysis:
The Gap or mismatch risk can be measured by calculating Gaps over different time buckets
as at a given date. Gap analysis measures mismatches between rate sensitive liabilities and
rate sensitive assets including off-balance sheet position.

An asset or liability is normally classified as rate sensitive if:

 If there is a cash flow within the time interval.
 The interest rate resets or reprices contractually during the interval.
 RBI changes the interest rates i.e., on saving deposits, export credit, refinance, CRR
balances and so on, in case where interest rate is administered.
 It is contractually pre-payable or withdrawable before the stated maturities

The Gap is the difference between Rate Sensitive Assets (RSA) and Rate sensitive Liabilities
(RSA) for each time bucket.
The positive GAP indicates that RSAs are more than RSLs (RSA>RSL). The negative GAP
indicates that RSAs are more than RSALs (RSA<RSL).

2.2 TABLE:
 months up to 3 3 to 6 6 to 12 above 1 year
inflows 69176.2 330487.3 157602.3 529926.8
outflows 131724.6 95515.39 133159.8 430353.8
GAP 62548.39 62467.14 -24442.5 -99573

The above analysis reveals the extent of mismatches and the nature of sensitivity of Assets
and Liabilities which are having high liquidity. In short term maturity bucket of the bank are
having excess liquidity and the liquidity crisis is arising only in long term maturity bucket.
The bank can adequately plan their long liquidity according to the buckets effect on
profitability.
The bank can implement ALM policies for the better identification of the mismatch, risk and
for the implementation of various remedial measures.

GENERAL:
The classification of various components of assets and liabilities into different time buckets
for preparation of Gap reports (Liquidity and interest rate sensitivity) may be done as
indicated in Appendices I & II as a sort of bench mark. Banks which are better equipped to
reasonably estimate the behavioural pattern, embedded options, rolls-in and rolls-out etc of
various components of assets and liabilities on the basis of past date. Empirical studies could
classify them in the appropriate time buckets, subject to approval from the ALCO / Board. A
copy of the note approved by the ALOC / Board may be sent to the Department of Banking
Supervision.
The present framework does not capture the impact of embedded options, i.e., the customers
exercising their options (premature closure of deposits and prepayment of loans and
advances) on the liquidity and interest rate risks profile of banks. The magnitude of
embedded option risk at times of volatility in market interest rates is quite substantial banks
should therefore evolve suitable mechanism, supported by empirical studies and behavioural
analysis to estimate the future behaviour of assets; liabilities and off-balance sheet items to
changes in market variables and estimate the embedded options.
A scientifically evolved internal transfer pricing model by assigning values on the basis of
current market rates to funds provided and funds used is an imported component for elective
implementation of ALM systems. The transfer price mechanism can enhance the
management of margin i.e., landings or credit spread the funding or liability spread and
mismatch spread. It also helps centralizing interest rate risk at one place which facilitates
effective control and management of interest rate risk. A well-defined transfer pricing system
also provide a rational framework for pricing of assets and liabilities.

2.3 TABLE
STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2016
(Rs in lakhs).

Up to 3 3-6 Above 1
S.N 6-12 months Total
months months year
o Particulars
A Liabilities:
1 Deposits
I. Current A/c 797.51 2392.51 3190.02
II. SB A/c 2326.15 6978.46 9304.61
117894.1
6527.21 14607.72 16270.13 155299.17
III. Fixed Dep. 1
127265.0
9650.87 14607.72 16270.13 167793.8
Sub-Total 8
144680.4
2 49186.96 62102.79 65967.38 321937.57
Borrowings 4
3 Paid-up Share 19013.72 19013.72
Capital
4 Reserves and 64270.99 64270.99
Surpluses
5 Other provisions 47222.42 47222.42
6 Balance P & L A/C 415.72 415.72
7 Other Liabilities 16210.24 829.28 1070.16 16703.4 34813.08
77539.7 419571.7
75048.07 83307.67 655467.3
TOTAL (A) 9 7
B. ASSETS:
1 Cash in Hand 734.22 734.22
2 Bank Balances 1405.71 565.04 629.98 4931.5 7532.23
3 Advances:
Agriculture-LT 25804.99 5618.56 148457.6 179881.15
Agriculture-ST 17632.22 49643.25 63833.34 80567.43 211676.24
Bills purchased 329.64 329.64
Other Loans 574.44 653 10409.89 45096.54 56733.87
Current Assets /
4 25668.8 15400 11200 60506.4 112775.2
Investments
 5 Fixed Assets & other 20124.38 672.05 9053.33 55954.99 85804.75

Assets
66933.3 395514.4
92274.4 100745.1 655467.3
TOTAL (B) 4 6
- -
C Mismatches (B-A) 17226.33 17437.43
10606.45 24057.31
D C as % to A 22.95 -13.68 20.93 -5.73

1.3 GRAPH

STRUCTURAL LIQUIDITY STATEMENT ANALYSIS 2016:

(1) The total current liabilities for the three months are Rs. 75048.07 is less than the total
assets for the 3 months are Rs.92274.4. Therefore, the assets are more than the liabilities. So,
there is a positive gap of Rs.17226.33.
(2) The total current liability for the 3-6 months is Rs.77539.79 is more than the total
assets for the 3-6 months are Rs.66933.34. Therefore, the liabilities are more than the assets.
This is a negative gap so the company should take steps to ensure the liquidity position.
(3) The total current liabilities for the 6-12 months are Rs.83307.67. current assets are
Rs.100745.1. current liabilities less than the current assets so there is a positive gap of
Rs.17437.43.
(4) The total current liabilities for the above 1-year amount 419571.77. Current assets
amount Rs.395514.46. Current Liability is more than the current assets.
This is negative gap. So, the company should take steps to ensure the liquidity position.

2.4 TABLE
STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2017
(Rs in lakhs).

6-12 Above
S.no Particulars Up to 3 3-6 Total
months 1years
. months months

A LIABILITIES:
1 DEPOSITS
I) Current A/C 998.25 0 0 2994.76 3993.01
ii) Savings 2351.63 0 0 7054.9 9406.53
Bank A/C
iii) Term 3860.87 21958.14 29535.68 118010.02 173364.71
Deposits
Sub-total 7210.75 21958.14 29535.68 128059.68 186764.25
2 Borrowing 33421.23 73972.32 65328.19 139630.18 312351.92
3 Other 22274 1926.62 1689.58 160740.84 186631.04
Liabilities
TOTAL 'A' 62905.98 97857.08 96553.45 428430.7 685747.21
B ASSETS
1 Cash in hand 8614.44 0 0 411.04 9025.48
&Bank
Balance
2 Advances
I) LT — 22602.8 0 0 222561.37 245164.17
operations
ii) ST- 80033.7 43083.29 80265.3 5832.45 209214.74
operations
iii) other loans 1809.51 17582.02 2860.37 39613.13 61865.03
including BP
 3 Investments 14775 6500 10850 61325.22 93450.22
4 Other Assets 15755.15 678.46 81.37 50512.59 67027.57
TOTAL 'B' 134976.16 67843.77 94057.04 379844.76 676721.73
C MISMATCHES 72070.18 -30013.31 -2496.41 -48585.94
(B-A)
D C as % to A 128.26 -30.6 -2.59 -11.24

1.4 GRAPH

Structural liquidity statement analysis as on 2017:

(1) The total current liabilities for the 3 months are Rs.62905.98 is less than the total
assets for the 3months are Rs.134976.16. Therefore, the assets are more than the liabilities.
So, there is a positive gap of Rs.72070.18
(2) The total current liabilities for the 3-6months are Rs.97857.08 is more than the total
assets for 3-6 months are Rs.67843.77. This is a negative gap. So, the company
should take steps to ensure the liquidity position.
(3) The total current liabilities for the 6-12 months are Rs.96553.45 is more than the total
assets for the 3-6months are Rs.94057.04. This is a negative gap. So, the company should
take steps to ensure the liquidity position .
(4) The total current liabilities for the above 1year amount Rs.428430.7. current asset
amount Rs.379844.76. current liability is more than the current asset. This a negative gap. So,
the company should take steps to ensure the liquidity position.

2.5 TABLE
STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2018
(Rs. In lakhs)
 Upto 3
S.no Particulars 3-6 months 6-12 Above Total
months
months 1year
A Liabilities
1 Deposits
I) Current A/C 1337.91 4013.73 5351.64
ii) SB A/C 3051.33 9153.97 12205.3
iii)Fixed Dep. 33172.78 14614.27 47364.4 57006.47 152157.92
Sub-Total 37562.02 14614.27 47364.4 70174.17 169714.86
2 ST Borrowings 16493.88 15976.62 107647.03 82276.53 222394.06
3 LT Borrowings 42.8 1454.4 957.56 182624.5 185079.32
6
4 Paid-up Share 19192.55 19192.55
Capital
5 Reserves 116703.3 116703.38
8
6 Other 3246.47 3246.47
Reserves/Provisi
ons
7 Balance P&L 300.38 300.38
A/C
8 Interest Payable 5021.66 987.81 1623.37 21921.62 29554.46
9 Other Liabilities 10055.84 15.15 9.97 33487.16 44568.12
TOTAL'A' 69176.2 33048.25 157602.33 529926.8 790753.6
2
B Assets:
1 Cash in hand 954.44 954.44
2 Bank Balances 9404.34 9404.34
3 Advances:
I) LT-operations 20383.8 4633.7 236705.3 261722.86
6
ii) ST-operations 34340 76352.64 126802.3 64850.36 302345.3
4 Bills purchased 20.6 20.6
5 Current 48220 18442 835.31 76805.6 144302.91
Assets/Investme
nts
6 Interest 18300.57 720.75 888.31 34583.98 54493.61
Receivable
7 Other Assets 100.84 17409.5 17510.34
TOTAL'B' 131724.59 95515.39 133159.62 430354.8 790753.6
C MISMATCHES (B- 62548.39 62467.14 -24442.71 -
A) 99572.02
D C as % to A 90.42 189.02 -15.51 -18.79
1.5 GRAPH

Structural liquidity statement analysis on 2018

(1) The total current liabilities for the 3months are Rs.69176.2 is less than the total assets
for the months are Rs.131724.59. Therefore, the assets are more than the liabilities. So, there
is a positive gap of Rs.62548.39
(2) The total current liabilities for the 3-6 months are Rs.33048.25 is less than the assets
for the 3months are Rs.95515.39. Therefore, assets are more than the liabilities. So, there is a
positive gap of Rs.62467.14
(3) The total current liabilities for the 6-12 months are Rs.157602.33 is more than total
assets for 6-12 months are Rs.133159.62. Therefore, the liabilities are more than the assets.
This is a negative gap. So, the company should take steps to ensure the liquidity position.
(4) The total current liabilities for the above 1 year are Rs.529926.82 is more than the
total assets for the above 1-year Rs.430354.8. Therefore, the liabilities are more than the
assets. This is a negative gap. So, the company should take steps to ensure the liquidity
position.

BALANCE SHEET OF HERITAGE AS AT 31-03-2018

(Amount in Cr)

YEAR Mar-18 Mar-17 Mar-16

sources of funds
Total share capital 23.2 23.2 23.2
Equity share capital 23.2 23.2 23.2
 Reserves 754.81 570.02 216.79
Net worth 778.01 593.22 239.99
Secured loans 221.12 109.65 103.95
Unsecured loans 19.42 25 1.15
Total debt 240.54 134.65 105.1
Total liabilities 1018.55 727.87 345.09
Application of funds
Gross block 444.78 295.6 504.99
less: accum. Depreciation 32.77 16.93 192.96
Net block 412.01 278.67 312.03
Capital work in progress 29.66 9.76 0
Investments 1001.16 477.46 0.98
Inventories 150.52 116.49 144.91
Sundry debtors 10.1 11.29 28.79
cash and Bank balance 61.03 45.97 45.23
Total current Assets 221.65 173.75 218.93
Loans and Advances 20.94 26.29 33.41
Total CA, Loans & advances 242.59 200.04 252.34
Current liabilities 653.98 227.18 208.5
Provisions 12.89 10.88 21.34
Total cl & provisions 666.87 238.06 229.84
Net Current Assets -424.28 -38.02 22.5
Total Assets 1018.55 727.87 335.51
Contingent Liabilities 34.6 30.05 54.08
Book Value (Rs) 167.68 255.71 103.45

FINDINGS:
1. ALM technique is aimed to tackle the market risks. Its objective is to stabilize and
improve Net interest Income (NII).
2. Implementation of ALM as a Risk Management tool is done using maturity profiles
and GAP analysis.
3. ALM presents a disciplined decision-making framework for heritage while at the
same time guarding the risk levels.
4. For the duration of up to 3 months, the heritage has a positive gap Rs 17226.33 per
the year 2016 &Rs72070.18 for the year 2015 however for the year 2016 there is a negative
Gap of Rs 62548.39.
5. For duration of 3-6 months, the heritage has a negative Gap of Rs 10606.45 for the
year 2016 &Rs 30013.31 for the year 2015. In the year 2014 Bank is able to maintain a
positive gap of Rs 62467.14.
6. For the duration 6-12 months, the heritage has positive Gap of Rs 17437.43 in the
year 2015. However, for the year 2016-2017, the Gap is negative.
7. For the time duration of above 1 year the heritage has negative Gap in all the 3 years
is Rs 24057.31 In the year 2013 Rs 48585.94 in the year 2014 of& Rs 99572.02 in the year
2017.

SUGGESTIONS:
1. The heritage should strengthen its management information system (MIS) and
computer processing capabilities for accurate measurement of liquidity and interest
rate Risks in their heritage Books.
2. In the short term the Net interest income or Net interest margins (NIM) creates
economic value of the heritage which involves up gradation of existing systems &
Application software to attain better & improvised levels.
3. It is essential that heritage remain alert to the events that effect its operating
environment & react accordingly in order to avoid any undesirable risks.
4. HERITAGE requires efficient human and technological infrastructure which will
future lead to smooth integration of the risk management process with effective
heritage business strategies.

CONCLUSIONS:
The total current liabilities for the above 1 year are Rs.529926.82 is more than the total assets
for the above 1-year Rs.430354.8. Therefore, the liabilities are more than the assets. This is a
negative gap. So, the company should take steps to ensure the liquidity position.
The total current liabilities for the above 1year amount Rs.428430.7. current asset amount
Rs.379844.76. current liability is more than the current asset. This a negative gap. So, the
company should take steps to ensure the liquidity position.
The total current liabilities for the above 1-year amount 419571.77. Current assets amount
Rs.395514.46. Current Liability is more than the current assets. This is negative gap. So, the
company should take steps to ensure the liquidity position.

BIBILIOGRAPHY:
Title of the Books Author
1. Risk management Gustavson hoyt
2. Management Research magazine P.M. Dileep Kumar
3. India financial system M.Y. Khan
WEB SITES:
www.heritageap.in
www.rbi.org.com