A REPORT ON

WORKING CAPITAL MANAGEMENT of ODISHA STATE CO-OPERATIVE BANK

Submitted for B. Com Programme in D.A.V. School of Business Management,

Affiliated to Utkal University

SUBMITTED BY:
SUBHASMITA SAHU
2020-23
University Roll No.-2003010190550052

EXTERNAL GUIDE: INTERNAL GUIDE:

Mr. A.R. MOHANTY Mr. MUNA SAHOO
ASSISTANT MANAGER ASST. PROFESSOR IN COMMERCE
OSCB DSBM

Committed to Excellence
D.A.V. SCHOOL OF BUSINESS MANAGEMENT
(Recognised by the Govt. of Odisha and Affiliated to Utkal University)
D.A.V. CAMPUS, UNIT-8, NAYAPALLI, BHUBANESWAR-751012, ODISHA
2023
 DECLARATION

I do hereby declare that the project work entitled “WORKING CAPITAL MANAGEMENT” submitted to
D.A.V. School of Business Management, Affiliated to Utkal University, is a record of original work done by
me under the guidance of Mr. A.R MOHANTY, Asst. Manager, OSCB and Mr. Muna Sahoo, Asst. Professor
in Commerce, DSBM.

Date: Name: SUBHASMITA SAHU

Place: Bhubaneswar Roll No:2003010190550052

 ACKNOWLEDGEMENT

It is really a great pleasure to have this opportunity to express the feeling of gratitude imprisoned in the
deepest core of my heart.

At the onset, I convey my sincere gratitude to the Mr. A.R Mohanty, Faculty, OSCB for giving me the
opportunity to prepare my project work.

I do express my sincere thanks to Mr. Muna Sahoo, Faculty, of DAV School of Business Management for
his/her diligent guidance and continuous monitoring of the project.

I must also express my deepest gratitude to our Principal, Dr. D.N. Mishra and the Faculty Council of
DSBM, for their timely help as and when required.

I cannot conclude this acknowledgement without thanking my family, relatives, acquaintances, and friends
who have offered their valuable cooperation to me at every stage.

Date: Name: SUBHASMITA SAHU

Place: Bhubaneswar Roll No: (2003010190550052)
 D.A.V. SCHOOL OF BUSINESS MANAGEMENT
UNIT-VIII, NAYAPALLI, BHUBANESWAR-751012

Email: dsbmbbsr@gmail.com. Website: www.dsbm8.org, Tel: 0674 2560 539

Committed to Excellence

CERTIFICATE OF THE INTERNAL GUIDE

Certified that the project report titled “Working Capital Management” is the bona fide work of Ms.
Subhasmita Sahu bearing roll no. 2003010190550052, who carried out the work under my supervision.
Certified that to the best of my knowledge the work reported herein does not form part of any other project
report or dissertation based on which a degree or award conferred on an earlier occasion on this or any other
candidate.

DATE: Mr. MUNA SAHOO

Place: Bhubaneswar Assistant Professor in commerce
CONTENTS

TITLE PAGE

DECLARATION

ACKNOWLEDGEMENT

CERTIFICATE OF THE EXTERNAL GUIDE

CERTIFICATE OF THE INTERNAL GUIDE

TABLE OF CONTENTS

EXECUTIVE SUMMARY

1.INTRODUCTION
1.1 Identification of Problem
1.2 Objectives of the Study
1.3 Scope and Limitations of the Study

2.REVIEW OF LITERATURE
2.1 Background study
2.2 Company Profile

3.METHODOLOGY
3.1 Sample Design
3.2 Data Collection

4.ANALYSIS AND INTERPRETATION

5.FINDINGS
5.1 Conclusion
 EXECUTIVE SUMMARY

Working capital is the day to day need of any business and it can be also referred as the lifeline of any
business. There is no specific tool to know the exact amount of working capital required by any business
concern. Working capital management is widely viewed as the one of the important jobs of the finance
department of any company.

In Odisha State Co-operative Bank, the working capital is managed on the estimate basis. It is taken as the
estimate of the working capital for the current period as per the expenditure of the previous year and the
estimated future expenses.

The objective of the project is to analyse the working capital requirement of the State Cooperative Bank. To
know the various components of the working capital, trend analysis and ratio analysis are used in the project
report.

This project is intended to make the State Co-operative Bank free from hassle in the future regarding its
working capital management.
1.INTRODUCTION

The Odisha State Cooperative Bank (OSCB) is one of the Scheduled State Cooperative Banks incorporated
under the Orissa Cooperative Societies Act on 2nd April, 1948.Since its inception, the Bank has been
playing a pivotal role in transforming the agrarian economy of the State by catering to the credit
requirement of the farm families. The Bank has also facilitated organization and credit linkage of Self-
Help Groups (SHGs) and Joint Liability Groups (JLGs) to meet the credit requirements of the
sharecroppers and oral lessees. The Bank has established a State-of-the-Art Core Banking Data
Management Centre in its Head Office premises and linked all the Branches of DCCBs to the Data Centre
along with its functional units as a part of the Core Banking Solution (CBS) being assisted by the State
Government. The Bank has been earning profit since its inception. The Bank has firm commitment to the
prosperity of the State by way of providing credit for capital formation through Medium Term and Long-
Term loans for agriculture. Keeping in view the credit requirement of the large number of handloom
weavers, rural artisans, adequate credit have been sanctioned in favour of the Primary Weavers
Cooperative Societies and artisan members of the PACS. The Bank has a network of 14 Branches spread
across the State and it has been supporting the Central Cooperative Banks with its 323 Branches to
consolidate the Short-Term Cooperative Credit Structure.

Working Capital Management involves managing the balance between firm’s short-term assets and its short-
term liabilities. The goal of working capital management is to ensure that the firm can
continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and
upcoming operational expenses.
The interaction between current assets and current liabilities is, therefore, the main theme of the theory of
working capital management.

There are many aspects of working capital management which makes it important function of financial
management.

 Time: Working capital management requires much of the finance manager’s time.
 Investment: Working capital represents a large portion of the total investment in assets.
 Credibility: Working capital management has great significance for all firms but it is very critical for small
firms.
 Growth: The need for working capital is directly related to the firm’s growth.
Working Capital Management

In simple terms working capital means is that the amount of funds that a company require finance for its
day-to-day operations. Working capital states that the period of debtors, receivables etc for a company to
raise finance from them at the earliest. Finance manager should develop sound techniques of managing
current assets. Working capital management involves managing the relationship between a firm's short-term
assets and its short-term liabilities. The goal of working capital management is to ensure that the firm is able
to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and
upcoming operational expenses.

The following should be effective in working capital management:

Cash management: Identify the cash balance which allows for the business to meet day to day expenses,
but reduces cash holding costs.

Inventory management: Identify the level of inventory which allows for uninterrupted production but
reduces the investment in raw materials and minimizes reordering costs-and hence increases cash flow.
Besides this, the lead times in production should be lowered to reduce Work in Progress (WIP) and similarly,
the Finished Goods should be kept on as low level as possible to avoid over production.

Debtor’s management: Identify the appropriate credit policy, i.e. credit terms, discounts etc. which will
attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by
increased revenue and hence Return on Capital. Debtors credit period should be less than 90 days to achieve
good working capital ratio and position of the company.

Importance of Adequate Working Capital

Management of working capital is an essential task of the finance manager. He must ensure that the amount
of working capital available with his concern is neither too large nor too small for its requirements. A large
amount of working capital would mean that the company has idle funds. Since funds have a cost, the
company must pay huge amount as interest on such funds. If the firm has inadequate working capital, such
firm runs the risk of insolvency. Paucity of working capital may lead to a situation where the firm may not
be able to meet its liabilities. The various studies conducted by the Bureau of Public Enterprises have shown
that one of the reasons for the poor performance of public sector undertakings in our country has been the
large amount of funds locked up in working capital. This results in over capitalization. Over capitalization
implies that a company has too large funds for its requirements, resulting in a low rate of return a situation
which implies a less than optimal use of resources. A firm has therefore, to be very careful in estimating its
working capital requirements.
Maintaining adequate working capital is not just important in the short-term. Sufficient liquidity must be
maintained in order to ensure the survival of the business in the long-term as well. When business make

investment decisions, they must not only consider the financial outlay involved with acquiring the new
machine or the new building, etc., but must also take account of the additional current assets that are usually
required with any expansion of activity. For e.g.: Increased production leads to hold additional stocks of raw
materials and work in progress. An increased sale usually means that the level of debtors will
increase. A general increase in the firm’s scale of operations tends to imply a need for greater levels of
working capital.

1.1 Identification of problem

The Co-operative Bank is an important component of the Indian Financial System. The Co-operative banks
in India play an important role even today in rural financing. The business of Co-operative Banks in the
urban areas also has increased phenomenally in recent years due to the sharp increase in the number of
primary Co-operative Banks. The study finds that owned fund, borrowing, advance and working capital,
share capital and reserve are statistically significant in the short run; and deposits, share capital and reserve
are statistically significant in the long run. The empirical results suggest that deposits and advances impact
the profits of OSCB positively while cost of management, capital and reserves lead to lower profits. Hence,
the study proposes the OSCB to follow a proactive management of capital with higher deposit generation
and larger advances strategy to become a strong bank and grow steadily. Working capital management has
deep impact on overall performance of the firm.

1.2 Objectives of the study

To study the various components of working capital.

 To analyse the liquidity trend of Odisha State Co-operative Bank.

 To measure and evaluate the liquidity and profitability position of State Co-operative Bank.
1.3 Scope of the study
This project is vital to me in a significant way. It does have some importance for the company too. These are
as follows –
• This project will be a learning device for the finance students.
• Through this project I would study the various methods of the working capital management.
• The project will be a learning of planning and financing working capital.
• The project would also be an effective tool for credit policies of the companies.
• This will show different methods of holding inventory and dealing with cash and receivables.
• This will show the liquidity position of the company.

Limitation of the study

• Time factor is the most crucial one. The study was conducted within a short period of two months.
• Odisha State Co-operative Bank executives were hesitating to provide information.
• I had to wait for a long time to contact the executives, because they were busy with their work.
• Due to busy work schedule, detailed discussions were not possible.
• It is also found that some of the executives lack interest, enthusiasm, initiative, and involvement, which
was de-motivated me.
• Lot of time consumed during survey.
2. REVIEW OF LITERATURE

2.1 BACKGROUND OF THE STUDY

The business model for focusing only on Agriculture is possible for sustenance when the balance sheet is
small. But as the balance sheet size expands, the bank is taking steps to diversify into other segments of
lending to sustain the growth momentum. Use of technology has redefined relationship in the banking
products available to Indian customer. But Core Banking Solution in the bank is yet to be grounded although
the work is in progress. However, the bank dwarf other banks in Agricultural finance.

2.2 COMPANY PROFILE

The Odisha State Cooperative Bank (OSCB) is one of the Scheduled State Cooperative Banks incorporated
under the Orissa Cooperative Societies Act on 2nd April, 1948. Since its inception, the Bank has been
playing a pivotal role in transforming the agrarian economy of the State by catering to the credit requirement
of the farm families. The Bank leads the Short-Term Cooperative Credit Structure (STCCS) in Odisha
comprising 2709 PACS (including 212 LAMPS and 6 FSS) at the grassroots level, 17 District Central
Cooperative Banks (with 323 Branches) at the middle tier. The Bank has facilitated enrolment of 53.69 lakh
agricultural families from out of about 55 lakh agricultural families in the State covering 97.6% of the
families. As a State partnered Bank, the OSCB has been implementing various plans and programmes of the
State Government meant for agriculture production and productivity with rural development. The Bank has a
network of 14 Branches spread across the State and it has been supporting the Central Cooperative Banks
with its 323 Branches to consolidate the Short-Term Cooperative Credit Structure. The PACS are also being
transformed as One Stop Shop to provide all the requirements of the farm families under one roof. The
Bank has also facilitated organization and credit linkage of Self-Help Groups (SHGS) and Joint Liability
Groups (JLGs) to meet the credit requirement of the share croppers and oral lessees. The Bank has firm
commitment to the prosperity of the State by way of providing credit for capital formation through Medium
Term and Long-Term loans for agriculture. Keeping in view the credit requirement of the large number of
handloom weavers, rural artisans, adequate credit have been sanctioned in favour of the Primary Weavers
Cooperative Societies and artisan members of the PACS. The Bank has established a State-of-the-Art Core
Banking Data Management Centre in its Head Office premises and linked all the Branches of DCCBs to the
Data Centre along with its functional units as a part of the Core Banking Solution (CBS) being assisted by
the State Government. The Bank has been earning profit since its inception.
HISTORY OF THE BANK
With the growth of Central Banks, the need for loan and advantages and cash credit at a reasonable rate of
interests grew for central banks to enable them to make adequate finance available to the society. So, in 1914
the Bihar and Odisha provincial co-operative bank was formed. The early 40s witnessed the introduction of
provincial autonomy in all British-Indian provinces and what was of paramount was the birth of Odisha
provinces on 1st April, 1936. The Odisha provincial co-operative bank is one of the manifestations of great
historical identity of Odia people. During this period, the number of central banks in north Odisha were 13.
A few months after the formation of separate Odisha province, the Odisha Cooperative Bank was registered
on 25th August, 1936 and sum of 10,520 was collected towards share capital of the bank.

MILESTONE IN THE HISTORY OF OSCB BANK Ltd.

1. 1954-55: The Orissa Cooperative Society Act 1951 was enforced and the rules were formed their under.
2. 1955-56: M.T. Agriculture Loans were advanced to the farmer for the First time.
3. 1956-57:
a. Line of credit for the handloom introduced
b. Bank's deposit exceeds 1 crore.
4. 1957-58: Loan and advances of the bank exceeded Rs.1 core and stood 1.8cr.
5. 1959-60: Financing of the Industrial Cooperative Society started.
6. 1965-66: The Banking Regulation Act, 1949 was made applicable
7. 1968-69: Crop loan was introduced
8. 1970-71: The 1st branch of the Bank was opened at Bhubaneswar on15-12-1970.
9. 1974-75: The Bank made loss of Rs 86000/- in the history of 50 years i.e., from1947 to 2000
10. 1978-79: Cooperative storage projects stated in Orissa.
11. 1981-82: A.C.S.T.I of the Bank was set up on 19-11-1985.
12. 1990-91: New Cooperative year commenced from 01-04-1990
13. 1994-95: MOU was signed between OSCB, NABARD and Govt. of Orissa.
14. 1996-97: The bank became a member of Indian Bank Association on 23-04-1996.
15. 1997-98: The bank started total branch automation, the main branch was fully computerized, NABARD
awarded the bank with Two best Performance prize for excellent performance.
16. 2000-02: ATM were installed in Cuttack and Bhubaneswar. Customer attitude survey was taken up
through the Xavier Institution of Management, Bhubaneswar.
17. 2002-03:
a. Introduction of cooperation bank mutual Arrangement scheme. (COBMASO)
b. Recovery of cooperative duties in Orissa.
c. The cooperative Bank has earned highest profit in that year.
18. 2003-04:
a. Cooperation of "Mini Bank Schemes" at PACS level to mop up Rural savings.
b. Computerization Programs for improving the quality of customer service streamlines MIS and Financial
Accounting System.
STRUCTURE:

RESERVE BANK OF INDIA (CENTRAL BANK)

Commercial Insurance companies Mutual Fund Development

Bank Banks
1. S.B.I Groups 1. LIC 1.U.T.I NABARD
2. National Banks SIDBI
3. Regional Rural 2.G.I.C EXIM BANK
4. Private Bank SFCS
IFC
ICICI
IDBI

State Land Development

Cooperative Urban Bank State Cooperative Bank

Primary Land Development 17 District Central Cooperative Bank

Society 2747 Primary Agricultural Cooperative

HOW ORISSA STATE COOPERATIVE BANK GET FINANCE?
NABARD (National Bank for Agriculture and Rural Development)

Orissa State Cooperative Bank

District Central Cooperative Bank

Primary Agricultural Cooperative Society

Members

The India Scenario Of The Orissa State Cooperative Bank Is As Follows:

Chit fund

Indigenous banker Unorganized

Money lender

Organised

Nidhi Organized

R.B.I S.E.B.I MOF

Foreign Indian Cooperative banks

Private sector Public sector SCBs SCARD UCBs

Bank Bank
CCBs

CARD BANKS
SBI & Nationalized PRBs
Subsidiaries Banks
PACs
Function of OSCB
The OSCB as the apex institution of the short-term co-operative credit delivery system in the state playing a
vital role in making strong PACS for the socio- economic development of the state.

MISSION OF O.S.C.B LTD.:

The mission of O.S.C.B. Ltd is to become a strong and Vibrant Bank having competition edge and to lead a
rejuvenated short term Cooperative Credit Structure to serve the people of Orissa.

ACHIEVEMENT:
#Net worth exceeding 140 corers and deposits more than 1026 corers.
#ATM service is available in the Main branches for anytime banking.
#Earning profits since inception and paying dividend to shareholders.
#Awarded for best performance by finance Ministry, Govt. of India.
# Loan for commercial vehicles, small business building. Purchase of customer and durables.
# Demand draft issued on all types of deposits and on ace major cities of country.

ROLE TOWARDS THE CREDIT POLICY AT THE STATE LEVEL

 Kisan credit has been introduced to attract and ensure adequacy of crop down among farmers of the state.
 OSCB is preparing annual credit plan as a leader of STCCS in the state.

RECOVERY AGRICULTURAL LOAN

With a competitive and spiritual mind among staff, OSCB has taken the following steps:
Introduction of new incentive scheme for recovery of loan, regular review of performance PACS, publicity
through e-media etc.
Role towards customer service
 A committee under the chairmanship of Sri M.N. Golpuria has been setup in September, 1990 on
customer service by RBI.

 Golpuria committee has made suitable and recommendation of customer service in the bank. OSCB to
follow important recommendation and advised its branches and DCCB to follow important recommendation
to ensure customer satisfaction in the bank.
3. RESEARCH METHODOLOGY

The research involved extensive and intensive studies of the Orissa State Cooperative Bank Ltd. This project
has been made to study the financial analysis of the bank. During this period, I study the final position and
performance of the bank. At last, I have given interpretation and conclusion of the study.

3.1 SAMPLE DESIGN

CAPITAL STRUCTURE

The paid-up share capital stood at as on March 31st, 2021 and this is an increase from position of last year.

Particulars 31.03.2018 31.03.2019 31.03.2020 31.03.2021

Paid-up share 507.31 531.77 608.04 692.68
capital

Govt. share capital 104.23 104.23 124.23 149.23

Percentage of govt. 20.55 19.60 20.43 21.54

share capital from
total share capital

Growth rate of 16.46 4.86 14.34 13.92

share capital over
previous year
 SHARE CAPITAL

2011-12 2012-13 2013-14 2014-15 2015-16

17067.22 20675.58 25962.38 34473.26 37615.61

2016-17 2017-18 2018-19 2019-20 2020-21

43543.87 50712.57 53177.01 60804.22 69268.22

12
YEAR
10 2011-12
8 2012-13
2013-14
6 2014-15
4 50000 2015-16
2 45000 2016-17
2017-18
0 40000
2018-19
12 13 14 15 16 35000 17 1 8 19 2 0 2019-20
1 1- 1 2- 13- 1 4- 1 5- 16- 1 7- 18- 1 9-
20 20 20 20 20 20 30000 20 2 0 20 2020-21
25000
20000
15000
10000
5000
0
RESERVES 2011- 2012- 2013- 2014- 2015- 2016-
12 13 14 15 16 17
Since inception, the bank has not
achieved the breakeven level of business but also attained viability in its operations. As a result, the bank
continued to build up its reserves as per the Odisha Co-operative Society Act and Rules framed thereon and
by laws of the bank.

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

26986.74 30216.68 35183.0 37393.97 43791.22 46687.17 65133.68 66056.1 69026.76 55393.75
0 3
80000
70000
60000
50000
40000 2011-12
2012-13
30000
2013-14
20000 2014-15
10000 2015-16
2016-17
0
20 -12

20 -14

20 -16
20 -13

20 -15

20 -17
20 -18
20 -19
20 -20

1
-2
11
12
13
14
15
16
17
18
19
20
20

80000
70000
60000
50000
40000
30000
20000
10000
0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
 WORKING CAPITAL

2011-12 2012-13 2013-14 2014-15 2015-16

812977.84 927796.61 1139259.83 1279900.47 1295528.65

2016-17 2017-18 2018-19 2019-20 2020-21

1652820.89 1624575.11 1714883.35 1855456.97 2041154.35

1800000 1800000

1600000 1600000
1400000 1400000
1200000 1200000 2011-12
1000000 2012-13
1000000
2013-14
800000
800000 2014-15
600000 2015-16
600000
400000 2016-17
400000
200000
0 200000
2011- 2012-0 2013- 2014- 2015- 2016-
12 13 14 15 16 17
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

3.2 DATA COLLECTION

The data collection is completely made from primary as well as secondary sources.

The secondary sources are:

 Annual report
 Official records in the organization
 Files
 Websites
4. ANALYSIS AND INTERPRETATION
From the above analysis, it is concluded that the growth trends of the OSCB, Bhubaneswar is satisfactory of
periodicity of the study. Current ratio of the OSCB, Bhubaneswar is not satisfactory so that bank should
focus on the how to increase the Current ratio of the Bank.

Many of the other ratios are fluctuating year by year but bank should implement the different types of the
policies to increase the level of the bank. Overall performance of the OSCB, Bhubaneswar is satisfactory
and employment generation of the bank is increasing year by year. The capital, reserves and borrowings
increased almost double during the study period, with a nominal percentage of variation. The cooperative
banks have been maintaining on an average ratio.

The OSCB, Bhubaneswar has been showing maximum, growth in investment. It is suggested that
government should formulate specific policies and they should be implemented for the upliftment of urban
cooperative banks in Maharashtra. OSCB, Bhubaneswar should try to upgrade technology and should
formulate customer friendly policies to face competition with commercial banks. The present study has been
an attempt to identify the financial performance of efficiency of OSCB, BHUBANESWAR.
5. FINDINGS

1. As a convention of current ratio the maximum of 2:1 is referred to as a bank’s rule of thumb. Thus, from
the current ratio analysis, bank’s overall liquid position is satisfactory.

2. The standards norm or absolute liquidity ratio is 0.5:1. But in case of OSCB absolute liquidity position is
satisfactory.

3. In case of debt equity ratio of OSCB outsides fund has increased over the year, which states that the
claims of outsiders are greater than those of owners.

4. In case of funded debt to total capitalization ratio says that there is no rule of thumb. But still the lesser is
the better, i.e., up to 50% or 55%. So funded debt to total capitalization ratio of OSCB is satisfactory.

5. The proprietary ratio of OSCB over the year shows that business concern becomes more dependent upon
creditors to supply its working capital.

6. The concern assets to proprietary fund of the bank are very high over the year it means that proprietary’s
fund of bank over the year are not satisfactory.

7. The fixed assets to proprietary’s fund of the bank over the year are not satisfactory.

8. The solvency ratio of OSCB is high over the year but low percentage is satisfactory. It indicates the long
term solvency position of the company is not so good.

9. The fixed assets to current assets of OSCB is very high which has reminded idle that is not satisfactory to
the company.
10. The return on assets of OSCB is satisfactory that is the resources of the organization were being used
properly.

11. The return on equity capital of OSCB provides a higher rate of dividend to its equity shareholders.

12.The earnings per share of OSCB over the year have gradually increased which is satisfactory to the equity
shareholders.
5.1 CONCLUSION

From all the above interpretation I conclude that the overall performance of the bank is satisfactory. The
growth rate of the bank shows a sound position. The organization does not utilize its assets. The bank has
been earning profit since its inception and continuously giving dividends to its shareholders. All the branches
and extension counters of the bank are fully computerised to provide efficient customer service.

Liquidity is an attribute that signifies the capacity to meet financial obligations of the company when
required. The importance of liquidity to meet the day-to-day operations and urgent payment to suppliers. A
firm should maintain adequate level of working capital to meet the day- to-day operations and maintain
business operations. The effective management of working capital requires both medium – term planning
and immediate reactions to the fast changes taking in the present business environment. The effectiveness of
working capital depends on all current assets and current liabilities.

The OSCB has designed its loan policy document and manual of instruction with a broadly concept
minimizing its credit facilities to the right borrowing. It is the most leading bank in the sector of cooperative
and it has all types of financial facilities to the customers.