CHAPTER-I

INTRODUCTION

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INTRODUCTION

Working capital control is an crucial a part of average company control.

Many finance managers, who're pretty at domestic and in a position in
coping with long term decisions, including capital investments experience
difficulties once they have to scout for price range to fulfill the day to day
running desires. With financial institution finance getting an increasing
number of scare, regulated and high-priced the emphasis has shifted to
closer attention to inner technology of price range and the improvement of
the firms ability to raise finances within the marketplace.

WORKING CAPITAL MANAGEMENT AND POLICY

Working capital can be defined as the quantity at funds, which a Company
must have to finance its daily operations. It can also be seemed as that
proportion of the agencies’ general capital, that's hired in “cutting-edge
liabilities” which are short time period property which might be usually
predicted to get converted into cash within a yr. Current liabilities are short
time period liabilities maturing for the fee within a short length say three
hundred and sixty five days, and that they partially guide the funding in
contemporary property. In other phrases they serve as a supply of working
capital.
• Net running capital is described as the difference between present day
property and Current liabilities, and represents the volume to which
contemporary property are financed by way of long-term price range.

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• Working capital management is the technique of administration of
contemporary assets and Current liabilities in the policy pointers of the
company.
• Working capital policy is worried with fundamental policy decisions
concerning.
• The target stages each class of contemporary property.
• The methods of financing the current property.

Current property in lots of cases constitute extra than half of the overall
Assets employed In business and therefore, it's miles vital to adapt an
appropriate running capital policy to healthy the specific desires of the
company an control its running capital for this reason.

Current liabilities which can be mainly financing present day property

come underneath the preview of working capital coverage. These are
distinct from present day liabilities which are results of past long term
financing selections, which include present day maturates of long time debt
or those in nature of brief financing of capital tasks so one can be in the end
funded by way of long time assets off finance.

The intention in running capital control and policy is to maintain a right

stability between the importance of running capital and the general scale of
operations of the corporation and to decide, with regard therefore, the
proper stages of components of modern belongings to be maintained and
the sample of financing them.

IMPROTANCE OF WORKING CAPITAL MANAGEMENT

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The significance of operating capital control can be. Traced to the
following major concerns.
Current belongings represent the dominant segment of the full
belongings hired in most business and, therefore, require extra severe and
careful managerial attention.
The investment in modern-day belongings and stage of cutting-edge
liabilities are very sensitive to modifications in sale and the finances
necessities shifts swiftly, worrying quick brief-term decisions to maintain
smooth operations.
Through profitability and right selection of investments are crucial for
the lengthy fun prosperity of the enterprise, its short-time period survival
depends on its liquidity or potential to fulfill short-term duties fully and
promptly. The precondition for liquidity is efficient control of the elements
of running capital and the ability to raise sufficient quick and long-term
finance. The finance managers of organizations will have to dedicate good
sized time and power in arranging quick term financing acquiring favorable
credit score terms from the suppliers of products and offerings, choosing
credit guidelines for credit sales, keeping n check at the finances blocked in
inventories and monitoring and directing the movement of cash inside the
business.

OBJECTIVES OF THE STUDY:

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 The objective of the look at is to understand the fast term financial role
of the Mulkanoor Co-operative Rural Bank with Working Capital
Management.
To, become aware of the limitations in control of the Mulkanoor Co-
operative Rural Bank and hints to triumph over the ones barriers.
To offer a conceptual frame paintings and theoretical notion
approximately the overall performance of Mulkanoor Co-operative Rural
Bank.
To provide credit score facilities to the clients
To pay wages and salaries to the employees running within the agency.
To recognize the everyday prices.

METHODOLOGY

For the motive of the study, the data accumulated from primary and
Secondary has sanitized edited and supplied within the form of tables and
statements. The analysis of the statistics has been made with the assist of
positive mathematical strategies lie chances and so on. Where ever feasible
and opportiate graphs and diagrams are used.
The collection of facts is performed via two standards sources viz
1. Primary Data
2. Secondary Data
3. . The administrative officer of the MCRB
four. The annual report and different reviews
five. . Discussion with Manager /Manager of finance purchases and
stores
6. The MCRB library

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7. In this have extensively utilized annual inventory reviews and
evaluation

PRIMARY DATA:-

It is the records amassed directly without any reference. In the have a

look at, it mainly interviews with concerned officers and staff both
individually or collectively. Some of the information were verified or
supplemented with non-public statement, the facts amassed thru
undertaking personal interview with the officer of the Mulkanoor Co-
operative Rural Bank.

SECONDARY DATA:-
When an investigator makes use of the data that's already been amassed
by way of other, that facts is known as secondary records. Such as
pamphlets annual reports, go back and internal facts.
The records includes:
1. Collection of required data from annual document of Mulkanoor Co-
operative Rural Bank, Mulkanoor.
2. Reference from textual content ebook and journals referring to monetary
management.
3. Articles published in business dailies like monetary times, Business
world, and etc

SCOPE OF THE STUDY

The Mulkanoor Co-operative Rural Bank is the prevailing examine but

became able to cowl Mulkanoor Co-operative Rural Bank financing

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services. Moreover it's far a case look at about Mulkanoor Co-operative
Rural Bank the financing activities at Mulkanoor Co-operative Rural Bank
stage were included.

LIMITATIONS OF THE STUDY

The limitations of present look at are as follows:

1. Due to the time constraint the look at is limited to the evaluation of

operating capital management handiest.
2. Data amassed for 5 years that is confined.
3. The look at is confined to the secondary source of facts and figures are
taken from the yearly reviews and tips of various accountants.
4. The records that is used on this project are taken from the once a year
reports, posted on the end of the yr.
5. The observe is restrained to the period of 2015-2019.

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 CHAPTER-II

ORGANIZATIONAL PROFILE

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 ORGANIZATIONAL PROFILE

Profile of the Mulkanoor Co-operative Rural Bank & Marketing Society Limited.
This bankruptcy is devoted to present the ancient aspects of the financial institution.
The targets of the bank, the organizational structure of the bank, and region of the
operation.
The Mulkanoor Co-operative Rural Bank is located in Mulkanoor Village of
Bheemadevarapally Mandal of Karimnagar district in Andhra Pradesh.
It turned into registered as primary agricultural credit score society underneath
Hyderabad Co-operative Society act XVI of 1952, it become commenced inside the
12 months of 1956 with paid-up Share capital of Rs.2792.And authorized proportion
capital of Rs.25000.The legal proportion capital more suitable Rs. 2 crore on 30th
June, 1994 and the paid up proportion capital inside the year became Rs. 1 crore, the
paid of proportion capital eighty four,188 within the 12 months 2007-2008. The
initial membership of Mulkanoor Co-operative Rural Bank become best 373 but, it
multiplied to 7,432 within the year 2012-2013.

CO-OPERATIVE BANKING PRINCIPLE:

A Co-operative bank has been described as an corporation that's in a role to
deal with small men’s on his very own phrases accepting the security he has with
out drawing at the safety of the wealthy. The employer have to no longer be a
channel for pouring charity or subsidizing the small guy out of public funds as
opposed to the material help must be subsidized through moral development and
strengthening the fiber.

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AREA OF OPERATION:
The region operation of Mulkanoor Co-operative rural Bank confined to the
subsequent 14 villages are as follows:
Mulkanoor,Mutharam,MallaramBheemadevarapally,Errabelli,Mustafapoor,
Gopalpoor,Jeelugula,Kothakonda,Vangara,Gatlanarsingapoor,Koppur, Rathnagiri
and Kothapalli.

All these villages are located around 5 miles distance from the top Quarters of the
MCRB i.E., Mulkanoor as much as 1969-70.The Karimnagar district co-operative
significant bank become the financing bank to the MCRB. According to the hints of
the Reserve Bank of India, presently the State Bank of Hyderabad is its financing
bank.

ESTABLISHMENTOF MULKANOORCO-OPERATIVE RURAL BANK &

MARKETING SOCIETY LIMITED:

Mulkanoor and advertising society constrained become established inside the

year1956 so that it will serve the small investors, middle class households,
exceptional specialists and backward magnificence human beings of Mulkanoor and
hear villages via lending loans on Co-operative principles. The following
participants are nominated in the assembly for the handling Committee to
appearance after the established order of the Bank and Marketing Society Limited.

Sarvasri:-

1) A.K. Praveen Reddy Garu PRESIDENT

2) P.V. Gadha Komuraiah Garu VICE-PRESIDENT
three) A. Raji Reddy Garu TREASURER
4) A. Papaiah Garu DIRECTOR

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Co-operative Department Member
Block Development officer or village degree workers

P.Chandraiah Garu PROMOTER

Narayana Garu ACCOUNTANT
Krishna Garu STATIONARY
Veera Reddy Garu WATCH MAN
V. Illaiah ATTENDER
K. Venkateshwarlu ATTENDER
M. Yadagiri ATTENDER

The Mulkanoor Co-operative Rural Bank has been a successful multi Co-operative
society in India and were given a variety of appreciation from leading national and
global authorities on co-operatives. The BBC has taken a movie on the numerous
feature of the society. It turned into one of the best multi-co-operatives in the Asian
vicinity. The president of the MCRB became the recipient of the exceptional
manager award within the yr of 1981 from the Hyderabad Management Association
.The overall performance of the MCRB via covering the functions along with credit
and non-credit.

Funds: Funds can be raised through the following approach:

I. The funds of the co-operative shall encompass the subsequent.

1) Share capital from members and nominal individuals.

2) Deposits from members and others.

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3) Loans and borrowings from individuals and others.
Four) Grants and donations from individuals and others.
Five) Reserves and surplus from individuals and others.
6) Donations, grants & subsides

II. The funds shall be mobilized and managed in accordance with the rules of the
board.
Maximum percentage maintaining
No member may additionally hold stocks really worth.
Members:
When a bank is said to be referred to as as a nearby rural financial
institution by using enjoyable the following conditions as follows. The rural zone in
any area which has
1) Population no longer exceeding 5000 participants.
2) Density of populace now not more than400 according to square kilo
meter.
Three) At least seventy fivep.Cof the mall working populations engaged in
Agriculture.

ELEGIBILITY FOR MEMBERSHIP:

Agriculturists involved in agriculture and allied sports who're cultivators, who're

competent to contract and who live in one of the villagers stated in the “Area of
operation” will be eligible for admission as participants. Subject to the via Laws, any
character who is desirous of using the offerings of co-operative shall specific his/ her
willingness to simply accept the obligations of club and fulfill Such different
situations as may be required to by means of the board of fashionable body and there

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Upon she /he can be admitted as a member, concern to condition that the co -
operative is able to amplify its services to the applicant.
The members of the co-operative shall be drawn from the 14 revenue
villages as referred to the “area of operation” And their hamlets in Elkathurthy
mandal of Karimnagar district.

Normal member:

The following may be admitted as nominal contributors.

1. A minor who is the prison heir of member and on whose behalf the
participants
May must execute a mort age deed in want of the co-operative.
2. Persons who are dwelling the villages of Saidapoor,Husnabad,
Elkathurthy, Bheemadevarapally, Dharmasagar, and Ghanpur
3. Any business financial institution or some other enterprise which intends to
financially
Support the Co-operative.
Four. Nominal members shall have no voting rights and will be entitled most
effective to
Nominal shares which do now not convey any interest.
Services:

The co-operative shall provide the following services to members and Conduct the
subsequent activities so one can satisfy its objectives.
1. Financial services
2. Produce advertising offerings
three. Consumer offerings
4. Welfare services
five. General services

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 Financial offerings:

Loans for various crops

Medium term loan - deepening of wells, installation of pump units, laying of
Pipe line, orchards, fowl, diary, sheep rearing, tractor, personal loans, and 18
forms of loans.
Member budget - voluntary budget
Fixed deposits
Self imposed deposits
Share capital

Inputs deliver offerings:

Supply of fertilizers, pesticides, seeds, sprayers, pump units, Accessories, pipe

lines, seedlings of orchards, chicken feed and drugs, diesel.
Technical services to farmers by using our Agricultural officials.

MARKETING SERVICES: _ VALUE ADDITION TO PRODUCE

Purchase of paddy produce from its members.

Processing of paddy and promoting rice in its marketplace.
Purchase of cotton and ginning of cotton.
Purchase of maize.
Production of paddy seed, processing & advertising.

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Consumer services:

Cloth, cosmetics, food grains suitable for eating& non fit for human
consumption articles
Fair fee stores (PDS)
Supply of cooking gas of Bharath petroleum’s.

Welfare Services:

Providing drinking water with the aid of bore wells

Conduct of circle of relatives making plans camps, eye camps
Insurance offerings thru L.I.C, N.I.C.
Mutual circle of relatives welfare fund as much as Rs.25000
Funeral fees Rs.1500
Janatha twist of fate coverage Rs.50000
Life insurance of Rs.20000
Merit student ships to students of Rs.30000
Electric vehicles coverage
Loan coverage schemes to the quantity of crop loans
Scholar deliver to college students of Rs.16,90,800 through L.I.C
Electrifying the village

Conditions prevailed:

Lack of irrigation centers.

Lack of finance
High charge of interest
Lack of inputs
Remunerative charge for Agriculture produce

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 Lack of self esteem amongst farmers.

The Mulkanoor Cooperative Rural Bank & Marketing Society Ltd., Mulkanoor,
Mandal: Bheemadeverapally, District: Karimnagar.

Year of established : 1956

No. Of members it started with : 373
No. Of villages : 14
Total proportion capital accrued : Rs. 2,three hundred
No. Of personnel : 1
Short time period loan given : Rs.32, 000
PRIMARY OBJECTIVE:

Timely available of finance

Increase their manufacturing for excessive returns from his manufacturing
To forestall migration

STRUCTURE:

Registered below A.P. Act 1964 in the year 1956

Converted via APMACS act 1995 in the year 1995
General body consist of 7,432 members
Managing committee encompass 15
President
General manger and employees-114

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FINANCE:

1. Main sources
2. Our participants
three. State Bank of Hyderabad National co-operative
Development Corporation
4. Government of ANDHRA PRADESH
5. After 1969 we are ceded to State Bank of Hyderabad

STATEMENT SHOWING MEMBERSHIP FOR LAST 5-YEARS

This is a co-operative. They believe inside the will in their participants. Experience
has shown, too that within the last 50 years. The decisions of the members have been
on the entire, sensible and reasonable. They made some errors, but then they're the
human beings.
They had years of trauma – however that became when our democratic
Structure changed into not allowed to function when our participants have been not
making decisions. Constant increases of individuals were there in the financial
institution yr to year.

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 (Rupees in Lakhs)

S.No Period Members Share Capital Rs.

1 2015-2016 6410 34423

2 2016-2017 6934 42037

3 2017-2018 7246 48276

4 2018-2019 7356 58490

5 2019-2020 7349 71950

OBJECTIVES OF THE BANK

The goals of the co-operative will be to reap the economic and social improvement
of its members, on the basis of mutual help and cooperation according with the following 6
co-operative principles.

1. Membership of the cooperative will be voluntary & available with out restrictions of
any social, political, racial or spiritual discrimination, to all persons who can make use of its
offerings & are willing to take obligations of club.
2. Co-operative societies are democratic organizations. Their shall be Administered to
the people elected or appointed in a way agreed via the participants and responsible to them.
Members of number one cooperative societies shall experience equal Rights of balloting (1
member, 1 vote) and participation in choice affecting their Cooperative societies in other than

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primary cooperative societies. The management shall be performed on a democratic basis in a
appropriate shape.
Three. Share capital shall simplest obtain a strictly confined fee of hobby, if any.
Four. The economic outcomes springing up out of the operation of a cooperative society,
belong to the members of that cooperative society and will be allotted in this sort of manner
as might avoid one member gaining at the cost of others which shall be finished.
• By provision for improvement of the commercial enterprise of the
cooperative society.
• By provision of commonplace services.
• By distribution among the individuals in proportion to their
transactions with the cooperative society.
Five. All co-operative societies shall make provision for the training of their
individuals, workplace bears & employees and of most people inside the
principles and strategies of cooperation, both monetary and democratic.
6. All cooperative societies so one can first-rate serve the interest of their
member and their Communities, shall actively cooperate in each practical way
with different cooperatives at local, countrywide &international degrees, having
as their intention the success of harmony of action by cooperators at some point
of the world.

ORGANISATION STRUCTURE OF THE MCRB AND MS LTD

The Mulkanoor cooperative rural bank and marketing society limited don’t has
no Branches till 31-three-2013.General body consists of all the consumer
contributors they've 7,432 of them all from the 14 villages and all agriculturists.
They pick 15 individuals as coping with committee consisting of the
president with a time period of 5 years and once in each 20 months there will be
election to 5 seats in staggered time period. We consider that the proprietors of
any organisation ought to keep in mind that company it's far to be touchy to
them and be possible. Our dealing with committee makes the policy selections.

21
While the posts of president and committee participants are honorary. We
expect our president to place numerous hours in week at the cooperative and our
committee individuals to available for consultations of their villages. The
agency shape of the financial institution is as shown in chart.

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 ORGANIZATIONAL CHART

GENERAL BODY

BOARD OF DIRECTORS

CHAIR MAN

VICE CHAIR MAN

CHIEF EXECUTIVE OFFICER

ACCOUTANT

CLERKS

CLERK CUM TYPIST CLERK-COM-CASHIER

SUPPORTING STAFF
COMPOSITION OF BOARD OF DIRECTORS

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 The management of the co-operative shall be vest in the Board of Directors
Consisting of 15 members as indicated below

Scheduled castes 2

Scheduled Tribes 1

Back ward classes 3

Women 2

Open to all 7

GENERAL BODY:

Subject to the availability of the act and regulations, the very last
authority of the bank shall vest within the trendy frame. General frame
meeting shall, be of 3
Kinds viz,

1. Annual general body meeting

2. Special body assembly
three. Requisition trendy frame assembly

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1. GENERAL BODY MEETING:-
This form of assembly is held as soon as in a 12 months within the month
September this assembly shall be held within 6 months of closure of the
economic yr.

2. SPECIAL BODY MEETING:-

Held when there is an urgency or essential of all of the contributors. This
assembly may be convent by the board at any time at some stage in the yr.

Three. REQUISITIONED GENERAL BODY MEETING:-

This assembly may be convened by using the board within 30 days of
requisition signed with the aid of at least 1/10 of the participants. A requisition
as cited above will be addressed to the overall supervisor & shall kingdom the
want for the assembly & the proposed time table

IMPORTANT OBJECTIVES OF THE MCRB & MSL IN

MOBILIZATION DEPOSITS:

The MCRB &MSL are as follows:

1. To promote the economic interests of the members as per the co –
operative Principles.
2. To borrow or to raise price range to lend out to it members at a slight
charge of pastimes particularly for their agriculture wishes to furnish loans or
pity loans to contributors towards the mortgage of gold and accredited
securities and so forth.
3. To offer fertilizers and seeds, other agricultural implements to the
contributors to supply basic consumer goods and each day necessities
inclusive of sugar, kerosene, oil, cloths, cosmetics and so forth., to the
participants.
4. To inculcate the habits of thrift self assist via their very own shops
among its Members. To set up for the sale of agricultural produce milk, milk
merchandise, eggs & different products.
5. To open marketing (thrift society) branches in suitable facilities with
he permission of deputy registered of co-operatives of A.P (INDIA).

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 Properties as on 31-03-2014

S.no Properties Count

1 Parboiled Rice Mill Two Ton Capacity 1

2 Modern Rice Mill Two Ton Capacity 1

3 Seed Processing Plants Two Ton Capacity Each 5

4 Cotton Ginning and Pressing Unit with 24 Gins 1

5 Diesel and Petrol Bunk 1

6 Lorries 6

7 Oil Tanker 1

8 Van 1

9 Tractor 3

10 Sumo's 3

11 Jeep 1

12 Motor Cycles 5

13 Weigh Bridges 17

14 Generators 6

15 Godowns ( 38,175 Metric Tonnes Capacity ) 62

16 Paddy Purchase centers 16

17 Fertilizers and Pesticides Sales center 16

18 Cloth Sale Counter 1

19 Electrical Items Counter 1

20 Iron goods and Pipes Counter 1

21 Bharat Gas storage Godown 1

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 The members of the co-operative are getting financial benefits individually and jointly
from co-operative during the year 2013-14

S.no Particulars Insurance Premium Paid Benefits

1 Bonus Paid on Paddy seed and cotton ……… 1,81,37,854
Funeral Expenses paid to the expired
2 ……… 4,46,425
Members / Spouse
Amount paid for expired Members through
3 ……… 28,84,250
Welfare Scheme
Scholarships to students who passed the
Eamcet course and joined the Technical
4 Course have paid scholarship @ Rs. 5,000/- ………. 3,67,500
& Rs. 7,500/- to each student to the tune of
Rs. 3,67,500
Group Insurance premium paid to LIC to the
5 29,72,184 ……….
extent of Crop Loans (J.B.Y).
LIC paid to decreased members to the extent
6 ………. 23,30,000
of Crop Loan (J.B.Y)
7 JBY Scholarships to students through LIC ………. 6,06,000
Janatha Accidental Insurance Policy for 1
8 1,81,050 ………
year (Premium Paid)
Janatha Accidental Claims (J.P.A)-2012-13
9 ………. ………
claim
Insurance of Milch Animals and Sheep
10 17,21,709 ………
Premium for 3 years
Insurance claims towards death of sheep and
11 ………. 11,94,200
Milch Animals- 2012-13 Claim
Insurance claimed towards failure of
12 ………. 4,500
Electric Motors- 2012-13 Claim
IFFCO and Tokyo Insurance claims to
13 ………. Nil
members
Individuals Life Insurance Policies to
14 16,51,623 ……….
members through LIC (Premium Paid)

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 Received Subsidy and Margin from Water
Management / S.C., S.T., B.C Corporations
15 ………. 2,44,46,565
& oyher agencies towards welfare of the
Weaker Section of Society Members
16 Dividend 15% ……… 1,26,27,951
17 Int. on Thrift Deposit @ 9% …….. 1,06,52,848
18 Interest Subvention from Government …….. 1,17,24,680
19 Cotton Damage from Government …….. 2,31,44,100

TOTAL RS. ……… 11,39,66,873

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 Financial Position as on 31-03-2014
Members 7,432
Employees 114
Source of Funds ( In Lakhs )
Share Capital 841.88
Members Deposits 1,308.09
Non Members Deposits 2,154.75
Reserves 6,215.95
Borrowings 6,716.24
Payables 743.05
Surplus 306.59
TOTAL 18286.55
Use of Funds ( In Lakhs )
Loans Out standing 6,766.14
Investments 6,144.84
Properties 1,945.78
Stock on Hand ( Closing Stock Value ) 1,997.12
Cash on Hand 6.1
Receivable 1,426.57
TOTAL 18286.55
Service to Members ( In Lakhs )
Loans Advances 10,762.39
Sales of Inputs 1,797.32
Sales of Produce 5,547.11
Sales of Consumer goods 436.22
Customs Hire charges 30.35
Total Turnover 18573.39
Miscellaneous
Salaries ( Rs ) 208.51
Dividend % 15%
Turnover 18,573.39
Storage Capacity ( In Metric Tonnes ) 38,175
Audit Classification "A"

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 CHAPTER-III
THEOREATICAL FRAMEWORK

30
 WORKING CAPITAL

The term running capital refers to the capital required for daily operations of a
commercial enterprise enterprise. It is represented via extra of present day belongings,
over Current liabilities. It is necessary for any company to run efficaciously its affairs,
to provide for ok operating capital.

ADVANTAGES OF ADEQUATE WORKING CAPITAL

Working capital is the lifeblood and nerve center of commercial enterprise.

Just as flow of blood is essential in the human body for keeping lifestyles, operating
capital is very vital to keep the easy going for walks of a enterprise. No business can
run efficaciously with out an good enough quantity of working capital. The
fundamental blessings of retaining ok quantity of running capital are as follows:

1. Solvency of the commercial enterprise: Adequate running capital helps

in keeping solvency of the enterprise via offering uninterrupted waft of production.
2. Goodwill: sufficient operating capital enables a business problem to
make prompt payments and hence facilitates in growing and retaining goodwill.
3. Easy loans: a problem hacking ok running capital, excessive solvency
and top credit status can set up loans from banks and others on clean and favorable
phrases.
4. Cash Discounts: Adequate running capital additionally enables a
challenge to avail coins reductions at the purchases and consequently it reduces
prices.
5. Regular bills: Regular payments of salaries, wages and different
everyday commitments enterprise which has pattern working capital can make
ordinary price of salaries. Wages and different daily commitments which raises the
morale of its employees, boom their efficiency reduces wastage’s and fees and
complements production and income.
6. Regular supply of uncooked materials: Sufficient operating capital
guarantees ordinary supply of uncooked materials and continues production.
7. Bility to face Crisis: Adequate running capital enables a challenge to
stand commercial enterprise crisis in emergencies inclusive of despair because for the
duration of such intervals. Generally, there is lots pressure on running capital.

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 Eight. Quick and Regular go back on Investments: Every investor desires a
brief and regular go back on investments. Sufficient of working capital enables a
situation to pay brief and everyday dividends to its traders, as their may not be much
pressure to plough returned income. This gains the self belief of its traders and creates
a good market to raise additional budget inside the future.
9. High morale: Adequacy of operating capital creates an surroundings of
security, confidence and excessive morale creates common efficiency in a commercial
enterprise.

DISADVANTAGES OF EXCESSIVE WORKING CAPITAL

Every business challenge ought to have adequate running capital to run

its enterprise operations. It should have neither redundant or immoderate working
capital nor insufficient nor scarcity of running capital. Both immoderate as well as
quick running capital positions are terrible for any enterprise.

1. Excessive running capital way idle finances which earn no earnings for the
Business and hence the commercial enterprise can not earn a proper fee of
go back on its Investments.
2. When there may be redundant operating capital, it may result in
unnecessary
Purchasing and accumulation of inventories causing more possibilities of
Theft waste and losses.
Three. Excessive operating capital implies excessive debtors and defective
credit Policy, which can also cause higher prevalence of horrific money owed.

It may additionally end result into normal inefficiency within the

employer.
When there may be an excessive running capital relation with the
banks and different monetary establishments may not be maintained.
Due to low rate of return on investments the value of stocks may
Also fall.

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 DISADVANTAGES OF INADEQUATE WORKING CAPITAL

1. A problem, which has insufficient working capital, cannot pay its

brief-term liabilities in time. Thus it's going to unfastened its popularity and shall now
not be able to get exact credit score centers.
2. It can not buy its necessities in bulk can can not avail of discounts and
so forth.
Three. It will become hard for the company to make the most favorable
marketplace conditions and undertaken worthwhile because of loss of running capital.
4. The company can not pay daily expenses of its operations and it
creates inefficiencies, increase fees and decreases the earnings of the commercial
enterprise.
5. It will become not possible to make use of correctly the fixed property
because of non- availability of liquids finances.
6. The charge of go back on investments additionally falls with the dearth
of running capital.

DETERMINANTS OF WORKING CAPITAL

In determining the running capital requirements of a concern, the

following are to be considered.
1. Nature and size of Business
2. Manufacturing cycle
3. Sales Growth
four. Production Policy
five. Price Level Changes
6. Firms Credit Policy
7. Availability of Credit

1. Formative segment:
The Start up of a new mission years from the maximum important
segment Planning and provisioning of working capital price range. By neglecting
this, many ventures run into economic problems of their early running years, the
rather informal method to assessment of running capital desires all through the
intervals while enterprise and business functioned in a sellers market may be

33
recognize as on the banker became willing to soak up all shock of fluctuations in
assignment operations with the aid of imparting geared up funds to fulfill emergency
wishes. The position has gone through radical trade. The banker can not be taken with
no consideration and within the absence oil proper estimation of working capital
desires, the project might also have to face serious monetary troubles.

2. Position of Business Cycle:

Movements of the commercial enterprise cycle bring about
shifts in operating capital position. The upward swing is related to spurt in income
and increase in levels of inventories and ebook debts. There could be a coins scarcity
and borrowing can also become necessary. On the other hand, while there may be a
downswing, the extent of inventories and ebook debts may also fall, but revenues also
fall, even as sure categories of costs stay constant and cash shortage proper
nevertheless be felt.

Three. Nature of Business:

The nature of commercial enterprise has an vital pertaining to
its working capital desires, some ventures like retail shops, construction agencies and
so forth. Require an abundance of running capital. In different cases such as power
generations and supply, the contemporary property playa minor and secondary role.

1. The production Cycles:

A longer manufacturing cycle between the uncooked fabric
purchase and the final touch of the producing method will obviously suggest large tie
up of funds to fulfill elevated working capital wishes. In such instances control must
attempt to increase the fee of manufacturing and reduce the cycle time and for this
reason cut down running capital requirement. This can be done via system
modifications or through effective business enterprise and coordination in any respect
ranges of organization hobby. Frequent modifications in setups, awaiting substances,
tools or instructions and accumulations of working progress result in extending the
time cycle and blocking off more funds. Organized negotiations with suppliers for
appealing credit terms and retention in their continued confidence with the aid of the
agreement of payments on agreed dated can also help reduce working capital
necessities.

34
 1. Credit Terms to Customers:
The credit phrases to customers affect the operating capital stage by
using figuring out the level of investment in e-book money owed. Management has to
decide on appropriate credit score coverage relevant to every customer primarily
based at the merits of his case.
Unduly liable credit score guidelines and permissive attitude in the
count of collections of splendid can lock up budget that could be in any other case be
available for operating needs.

2. Vagaries in supply of Raw Materials

The sources of sure raw materials are few and irregular and
Pore problems in the matter of procurement and conserving, using up greater finances.
Materials which are to be had most effective in positive seasons must be acquired and
stored in advance. The operating capital requirements in such instances will display
seasonal fluctuations.

Three. Shifts in Demand for Products:

Some manufactured merchandise are subject to seasonal
fluctuations in sales. In order to utilize the potential to the maximum feasible quantity,
regular production may also should be maintained, through the demand for completed
merchandise may additionally vary sometimes. Finished items inventories will
consequently gather at some point of off season, requiring improved amounts of
running capital to aid better tiers of inventory. Financial making plans will ought to
offer for these price range, necessities associated with consistent, production and
seasonal income.

4. Production Polices:
To tackle the problem of getting to discover funds to aid the
increasing completed items inventory degrees till they're bought during the peak
seasons, a few groups diversify and bring other merchandise which might be in
demand, allowing manufacture of the main product to observe the seasonal pattern of
its call for.

35
 Five. Competitive Conditions:
In a competitive market, winnings and preserving Customers
goodwill will involve extra fees and gift a variety of running capital issues. To offer
the client the gain of choice, a selection of merchandise will ought to be synthetic and
stocked. This would mean higher tiers of inventories in all degrees and, therefore,
extra running capital funds. More beneficiant credit score terms may additionally have
to be extended and the investments in debts receivables can also must be better,
requiring additional price range. The diploma completion is as a result an crucial issue
influencing running capital requirements.

6. Growth and Expansion Programs:

As commercial enterprise grows, additional operating capital must be found.
In fact, the need for accelerated operating capital does not observe the growth in
business activity, however preceded it. Advance making plans of operating capital is
as a consequence a persevering with necessity for instance owing issue. Or else, the
agency can also have considerable profits but little coins. With fast increase, they will
be beneath steady strain for elevating outside funds similarly to the internal
generation. Forward making plans and continuous review, therefore, are very critical
for such corporations.

7. Profit Levels:
By the very nature of factors, a few organisations generate high margins in
comparison to others. The product category and the company’s Position in the market
may have given this blessings. Others need to struggle in a rather competitive
surroundings. But, profits cannot be taken into consideration as to be had coins at the
end of the duration. Even because the agency’s operations are in progress, cash is
used up for augmenting stocks, e-book money owed and glued assets. Elaborate
making plans and projections of expected sports and cash flows, at quick intervals,
anticipate significance. To meet expected deficits, resources of finances will have to
be diagnosed and wherein surpluses are anticipated, appropriate applications will
ought to be planned.

36
 Eight. Taxation:
Tax liability is an inescapable element in operating capital planning. It is a
brief term liability payable in coins. Advance taxes might also must be remitted in
installments, on the premise of predicted profits. Periods of excessive taxation impose
extra stress on operating capital. To able to get the first-class out of the to be had tax
incentives, the finance supervisor has to attract up the running plans of the
organization in advance and utilize the resources for research and development,
exports or other purposes which promise tax advantages and sell the organisation’s
earnings.

9. Dividend Policy:
Management has to preserve coins resources but on the equal time, it can't
fail to fulfill investor expectations. Market prestige for the stocks of the employer has
additionally lobe nurtured and maintained in its long term hobbies. During intervals of
low income, maintenances of regular dividends will contain draining of sources but
can be needed to preserve the organisation’s image.

10. Reserves Policy:

One of the loved aim of employer control is to build up ok reserves out of
earnings the urge to hold profits may act as a chief constraint at the dividend
coverage. The budget function being given higher priority over dividend policy.

11. Depreciation Policy:

Depreciation coverage determines the amount to be furnished as,
depreciation on the diverse classes of Fixed Assets. The depreciation expenses do not
in any coins outflow. Enhanced rated of depreciation have the impact of reducing
profits correspondingly, which in flip can help in preserving again of dividends. This
process conserves coins depreciation policies.

12. Price level modifications:

Rapidly raising costs creates the want for more funds for maintaining the
existing extent of interest for identical ranges of inventories, higher coins outlays are
wished. In an inflationary set up, even operating prices will grow for given ranges of
activity. Some companies may be capable of compensate part of those price will

37
increase via increases in costs for their products. The implications of converting
charge ranges on working capital position will vary from organisation to employer
relying on the nature of the company.

Thirteen. Operating Efficiency:

This is a close courting between the operating performance of a
organisation and its working capital function. Waste removal, stepped forward
coordination 19 reduce delays higher efficiency in operations and full utilization of
assets are a number of the projects taken to prevent erosion of profits. They also have
the effect of having greater out of given volume of running capital or acquiring the
modern tiers of out puts with a reduced quantity of working capital. Efficiency of
operation hurries up the area of the coins cycle, and improves the working capital
turnover.

WORKING CAPITAL MANAGEMENT

Working capital control involves the connection among a companies brief

term belongings and its brief time period liabilities. The purpose of working capital
control is to make sure that a company is capable of continue its operations and that it
has sufficient capability to fulfill each maturing short-term debt and upcoming
operational expenses. The management of running capital includes dealing with
inventories, money owed receivable and payable and coins.

Why firms maintain coins:

The finance career acknowledges the 3 primary reasons presented by using
economist JOHN Maynard Keynes to provide an explanation for why corporations
preserve coins. The three reasons are for the motive of hypothesis, for the reason of
precaution, and for making transactions. All 3 of those reasons from the want for
agencies to technique liquidity.

CONCEPTS OF WORKING CAPITAL

There are two concepts of operating capital:

(i) Gross Working Capital
(ii) Net Working Capital

38
 In the broad sense, the term working capital refers to the gross working capital
and represents the amount of funds invested in current assets. Current assets are those
assets, which in the ordinary course of business can be converted into cash within a
short period of normally one accounting year.

In a narrow sense, the term working capital refers to the net working capital.
Net working capital is the excess of current assets over current liabilities.

Working Capital = Current Assets – Current Liabilities

Net running capital may be advantageous or bad. When the contemporary

assets exceed the current liabilities, the operating capital is high quality and the poor
working capital outcomes while the cutting-edge liabilities are greater than the
cutting-edge assets.

The Gross running capital concept in financial or going problem idea while
internet working capital is an accounting concept of working capital. These principles
of running capital aren't exceptional; instead each have their personal merits.

Gross idea could be very appropriate to the organization form of corporation

wherein there's divorce between ownership, control and control. The internet concept
of working capital can be suitable best for proprietary form of businesses which
include sole-dealer or partnership firms. However, it is able to be made clear that as
consistent with the overall exercise net operating capital is stated definitely as running
capital.

TYPES OF WORKING CAPITAL

There are varying standards or perceptions of operating capital, that have

relevance to specific situations.

39
 1. GROSS WORKING CAPITAL:

Gross working capital represents via the sum overall of all

contemporary belongings of the employer. Enough budget will ought to
be furnished to preserve the movement of raw materials thru the work.

But quick term financing is extra risky than long term financing. In
Process to the completed goods stage and then to accounts receivables
and up to the realization of cash. In other words, the funds wished could
general up to the constituent components, specifically inventory of raw
materials and minimal coins and bank balances, constituting running
capital. In dealing with gross working capital, the shifts in funding in
contemporary property are beneath constant assessment, near interest and
spark off correction. Excessive investment in cutting-edge assets is to be
cautiously avoided, as otherwise earnings would be adversely affected.

2. NET WORKING CAPITAL:

Net operating capital is the distinction among the modern property

and present day liabilities. While contemporary assets are brief time
period belongings which might be anticipated to get transformed into
coins inside three hundred and sixty five days, cutting-edge liabilities are
brief-time period liabilities that are count on to fall due or mature for fee
in a brief length, typically within a 12 months, and represent quick time
period assets of funds. The idea of internet operating capital, as the extra
of current belongings over modern liabilities, highlights the person of the
Sources from which the funds were acquired to guide that part of modern
property in extra of modern liabilities. This a part of running capital may
be provided by means of way of share capital, from inner assets together

40
with reserves or plough returned of earnings or from outside assets inside
the shape of long time borrowings. There are two implications. The
control has to study what proportion of the cutting-edge assets has to be
financed with the aid of everlasting capital and long term borrowings.
Then there may be the fervour of short – time period creditors to affirm
whether the full modern belongings,

Representing closing supply of budget for the restoration of their

dues, continues a powerful stage above the full current liabilities or
duties. A sensible

Policy of mixing long term and permanent as awesome from quick

time period sources should be formulate to finance investment in
contemporary property.

Three. PERMANENT WORKING CAPITAL:

Permanent or fixed running capital is the minimum quantity, which

is required to ensure powerful utilization of fixed centers and for
retaining the circulation of contemporary belongings. There is always a
minimal.

Level of modern belongings, which might be continuously required

by way of the agency to carry out its normal commercial enterprise
operations. For instance. Every firm has to keep a minimum stage of raw
materials, work-in-progress, finished items and coins stability. This
minimum level of current property is referred to as fixed running capital.

41
 TEMPORARY WORKING CAPITAL:

Any quantity over and above the permanent level of working

capital is transient, fluctuating or variable operating capital. This part of
the specified running capital is wanted to meet fluctuations in demo
consequent upon adjustments in manufacturing and sales due to seasonal
modifications.

WORKING CAPITAL CYCLE

Cash flows in a cycle into, round and out of a business. It is the

enterprise’s lifeblood and each manager’s number one assignment is to
help maintain it flowing and to apply the cash flow to generate earnings.
If a business is working profitably, then it should, in idea, generate coins
surpluses. If it doesn’t generate surpluses, the commercial enterprise will
eventually run out or cash and expire.

The quicker a enterprise expands the extra cash it's going to want
for working capital and investment. The most inexpensive and high-
quality sources of cash exist as running capital proper inside enterprise.
Good management of operating capital will generate coins will assist
enhance income and decrease risks. Bear in thoughts that the fee of
presenting credit to clients and preserving shares can constitute a
considerable percentage of a firm’s total earnings.

There are two factors inside the business cycle that absorb coins –
Inventory (shares and paintings-in-progress) and Receivables (borrowers
owing you cash). The essential resources of cash are payables (your
lenders) and Equity and Loans.

42
 Each aspect of operating capital (particularly inventory, receivables
and payables) has dimensions … TIME ……. And MONEY. When it
involves dealing with working capital – TIME IS MONEY. If you can get
money to transport faster across the cycle (e.G. Accumulate monics due
from borrowers extra quick) or reduce the quantity of money tied up (e.G.
Reduce inventory ranges relative to sales). The business will generate
extra cash or it's going to want to borrow less money to discover running
capital.

Consequently, you could reduce the cost of bank hobby or you may
have additional loose cash to be had to help additional sales increase or
investment. Similarly, if you can negotiate, stepped forward phrases with
suppliers e.G. Get longer credit score or an expanded credit limit; you
efficaciously create free finance to help fund future sales.

43
 If you… Then…..

 Collect receivables (debtors)  You release cash from the

faster cycle
 Collect receivables (debtors)
slower  Your receivables soak up
 Get better credit (in terms of cash
duration or amount) from
suppliers  You increase your cash
 Shift inventory (stocks) faster resources
 Move inventory (stocks)
slower  You free up cash
 You consume more cash

It may be tempting to pay cash, if to be had, for constant assets e.G. Computer
systems, Plant, vehicles and so on. If you do pay cash, remember that this is now
longer to be had for running capital. Therefore, if coins is tight, don't forget other
methods of financing capital investment – loans, fairness, leasing and many others.
Similarly, if you pay dividends or growth drawings, those are coins outflows and, like
water flowing down a plughole, they dispose of liquidity from the enterprise.
More business fail for lack of coins than for need of income.
The 0.33 location inside the account receivable control is series policies. These
regulations cover two factors.
• Degree of effect to collect past due
• Type of collection consequences.

The collection policy have to aim at accelerating collections from sluggish payees and
reducing horrific debt

44
 CHAPTER-IV
DATA ANALYSIS AND INTERPRETATIONS

45
 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL

(In Rupees 000`)

2015 2016 INCREASE DECREASE
PARTICULARS Rs Rs.
Current Assets

Advance 2,93,275 3,59,798 66,523

Stock 71,897 1,40,894 68,997

Receivables 38,701 34,723 3,978

Cash 2,311 2,830 519

Total(a) 4,06,184 5,38,245

Current Liabilities

Borrowing 2,57,629 3,28,840 71,211

Payables 38,303 43,749 5,446

Total(b) 2,95,932 3,72,589

Networking capital 1,10,252 1,65,656

Increase in 55,404 55,404

working capital
Total: 1,65,656 1,65,656 1,36,039 1,36,039

46
INTERPRETATIONS:-

1. By staring at the above desk we are able to observe that the Gross Working
capital has elevated all through the 12 months 2015-2016.
2. From the above desk there has been boom in Current Assets from Rs. 4,06,184
within the 12 months 2015 to Rs. 5,38,245 in 12 months 2017 showing an ordinary
boom. And Current Liabilities accelerated from 2,ninety five,932 in yr 2009 to Rs.
3,72,589 in year 2017 showing an universal increase. Understudy of above desk
running capital typical boom fifty five,404 in 2015-2017.
Three. There it's miles to be noticed that more the net Working Capital better
liquidity, there's found 1year of Mulkanoor Co-operative Rural Bank

47
 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL

(In Rupees 000`)

INCREASE DECREASE
PARTICULARS 2017 2018 Rs Rs.
Current Assets

Advance 3,59,798 4,11,245 51,447

Stock 1,40,894 1,52,693 11,799
Receivables 34,723 87,003 52,280
Cash 2,830 3,196 366
Total(a)
5,38,245 6,54,137
Current Liabilities

Borrowing 3,28,840 3,47,271 18,431

Payables 43,749 39,017 4,732
Total(b)
3,72,589 3,86,288
Networking capital
1,65,656 2,67,849
Increase in working
capital 1,02,193 1,02,193
Total:
2,67,849 2,67,849 1,20,624 1,20,624

48
INTERPRETATIONS:-

1. By watching the above table we are able to word that the Gross Working
capital has improved in the course of the yr 2017-2018
2. From the above table there has been boom in Current Assets from Rs.
5,38,245 in the yr 2017 to Rs. 6,fifty four,137 in year 2018 displaying an usual
increase. And Current Liabilities elevated from 2,ninety five,932 in yr 2008 to Rs.
3,seventy two,589 in year 2017 to Rs. 3,86,288 inside the year 2018 showing an
universal boom. Understudy of above table operating capital common growth
1,02,193 in 2017-2018.
3. There it's far to be noticed that greater the net Working Capital better liquidity,
there is located 1year of Mulkanoor Co-operative Rural Bank

49
 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL
(In Rupees 000`)
INCREASE DECREASE
PARTICULARS 2018 2019 Rs Rs.
Current Assets

Advance 4,11,245 4,87,865 76,620

Stock 1,52,693 1,01,148 51,545

Receivables 87,003 1,35,767 48,764

Cash 3,196 2,601 595

Total(a) 6,54,137 7,27,381

Current
Liabilities
Borrowing 3,47,271 4,90,447 1,43,176

Payables 39,017 54,813 15,796

Total(b) 3,86,288 5,45,260

Networking 2,67,849 1,82,121

capital
Increase in 85,728 85,728
working capital
Total: 2,67,849 2,67,849 2,11,112 2,11,112

50
INTERPRETATIONS:
1. By gazing the above desk we are able to observe that the Gross Working
capital has improved for the duration of the year 2017-2018.
2. From the above desk there was increase in Current Assets from Rs. 6,fifty
four,137 within the yr 2018 to Rs. 7,27,381 in year 2019 showing an general increase.
And Current Liabilities decreases from 2,sixty seven,849 in 12 months 2018 to Rs.
1,82,121 in year 2019 showing an standard lower. Understudy of above table running
capital usual lower eighty five,728 in 2011-2012.
3. There it is to be noticed that more the internet Working Capital higher
liquidity, there is determined 1year of Mulkanoor Co-operative Rural Bank

51
 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL

(In Rupees 000`)

INCREASE DECREASE
PARTICULARS 2018 2019 Rs Rs.
Current Assets

Advance 4,87,865 5,92,409 1,04,544

Stock 1,01,148 2,06,402 1,05,254

Receivables 1,35,767 1,14,936 20,831

Cash 2,601 772 1,829

Total(a) 7,27,381 9,14,519

Current Liabilities

Borrowing 4,90,447 6,25,896 1,35,449

Payables 54,813 47,940 6,873

Total(b) 5,45,260 6,73,836

Networking capital 1,82,121 2,40,683

Increase in working 58,562 58,562

capital
Total: 2,40,683 2,40,683 2,16,671 2,16,671

52
INTERPRETATIONS:

1. By looking at the above table we will word that the Gross Working capital has
extended throughout the 12 months 2018-2019.

2. From the above desk there has been growth in Current Assets from Rs.
7,27,381 in the year 2012 to Rs. Nine,14,519 in 12 months 2019 displaying an
standard boom. And Current Liabilities accelerated from five,45,260 in year 2017 to
Rs. 6,seventy three,836 in year 2017 showing an usual growth. Understudy of above
table working capital typical boom fifty eight,562 in 2016-2017.

Three. There it's miles to be observed that greater the net Working Capital higher
liquidity, there may be located 1year of Mulkanoor Co-operative Rural Bank

53
 STATEMENT SHOWING THE CHANGES IN WORKING CAPITAL
(In Rupees 000`)

INCREASE DECREASE

PARTICULARS 2019 2020 Rs Rs.

Current Assets

Advance 5,92,409 6,76,614 84,205

Stock 2,06,402 1,99,712 6,690

Receivables 1,14,936 1,42,657 27,721

Cash 772 610 162

Total(a) 9,14,519 10,19,593

Current Liabilities

Borrowing 6,25,896 6,71,624 45,728

Payables 47,940 74,305 26,365

sTotal(b) 6,73,836 7,45,929

Networking capital 2,40,683 2,73,664

Increase in working 32,981 32,981

capital
Total: 2,73,664 2,73,664 1,11,926 1,11,926

54
INTERPRETATIONS:

1. By looking at the above table we can notice that the Gross Working capital has
expanded all through the yr 2019-2020

2. From the above table there was growth in Current Assets from
Rs nine,14,519 inside the yr 2017 to Rs. 10,19,593 in year 2019 showing an overall
increase. And Current Liabilities boom from Rs.6,seventy three,836 in yr 2018 to Rs.
7,forty five,929 in yr 2020.Showing an standard boom. Understudy of above table
working capital general boom 32,981 in 2018-2019.

3. There it's far to be noticed that more the internet Working Capital better
liquidity, there may be discovered 1year of Mulkanoor Co-operative Rural Bank.

55
 RATIOS OF WORKING CAPITAL IN MCRB&MS Ltd

MEASUREMENT OF CURRENT RATIO MCRB&MS Ltd

MEASUREMENT OF CURRENT RATIO’S

a) CURRENT RATIO:

Current ratio is the relationship between contemporary assets and contemporary

liabilities. This ratio’s is a measure of wellknown liquidity and is most extensively
used to make the analysis or a brief-term financial position or liquidity of a business
enterprise is calculated through dividing the total present day property by using
general contemporary liabilities.

CURRENT RATIO = CURRENT ASSETS /CURRENT LIABILITIES

The Ideal ratio of current ratio is= 2:1

(a) CURRENT RATIO

(b) QUICK RATIO

56
 A) CURRENT RATIO ANALYSIS

YEAR/PARTICULARS 2015-16 2016-17 2017-18 2018-19 2019-20

(Rs) (Rs) (Rs) (Rs) (Rs)

CURRENT ASSETS 944429 1192382 1381518 1641900 1934112

CURRENT LIABILITIES 668521 758877 931548 1219096 1419765

RATIO 1.41 1.57 1.48 1.34 1.36

Relatively excessive cutting-edge ratio is on indication of the enterprise’s liquidity position and
has the capacity to pay its duty in time as and after they turn out to be due on the other hand a
referring to low cutting-edge ratio represent that the liquidity role of the employer isn't always
correct and the organization shall not be able to pay its current liabilities in time without
dealing with problems. An growth in modern ratios represents the improvement within the
liquidity position of a organization at the same time as a decrease in cutting-edge ratio
indicated that there was a deterioration inside the liquidity role of agency as a conference. The
current ratio of 2:1 is considered to be best. But in case of corporations in India this is
approximately 1.Three:1 is as opposed to 2:1 during to strict financial policy of Reserve Bank
of India.

57
 RATIO

1.6

1.55 1.57

1.5

1.48
1.45

1.4 RATIO
1.41

1.35
1.36
1.34
1.3

1.25

1.2
2015 2016 2017 2018 2019

It may be study from the above graph that the modern-day ratio of the financial institution
2014-15 to 2017-18 In the 12 months 08-09 the cutting-edge ratio is 1.41,it is increased to at
least one.Fifty seven in 2016.
In the yr 2016-17 it's miles reduced to 1.Forty eight, within the 12 months 2017-18 if we
evaluate with to 16-17 it's miles reduced to one.34, inside the year 2017-18 it's miles increased
to at least one.36.

58
B) QUICK RATIO:
Quick Ratio also referred to as Acid Test or Liquid ratio is a greater lively quick assets and
contemporary Liabilities. Quick ratio can be calculated with the aid of dividing the overall brief
assets with the aid of general cutting-edge liabilities.

QUICK RATIO = QUICK ASSETS / CURRENT LIABILITIES

Usually a excessive brief ratio is an indication that the company is liquid and has the
capability to satisfy its contemporary or liquidity liabilities in time and however a low quick
ratio represents that the corporation liquidity position is not desirable. An boom in the quick
ratio well-knownshows the liquidity role of the organisation advanced. As a wellknown rule a
quick ratio of one:1 is taken into consideration to be excellent. But the desirable ratio for
Indian corporations can also zero.Eighty:1 as opposed to 1:1.

59
QUICK ASSETS = CURRENT ASSETS – (STOCK+PREPAID EXPENSES)

II.QUICK RATIO:-

YEAR/PARTICULARS 2015-16 2016-17 2017-18 2018-19 2019-20

(Rs) (Rs) (Rs) (Rs) (Rs)

QUICK ASSETS 20219 336771 460033 596891 620167

CURRENT LIABILITIES 668521 758877 931548 1219096 1419765

RATIO 0.03 0.44 0.49 0.48 0.43

RATIO
0.6

0.5
0.49 0.48
0.44 0.43
0.4

0.3
RATIO

0.2

0.1

0 0.03
2015 2016 2017 2018 2019

Interpretation:

60
By the above desk we are able to observe the short ratio of the financial institution at 2015-
sixteen is 2.45 however idle quick ratio is 1:1.
These ratios are used to know the liquidity positions of corporations. The best ratio for Quick
ratio is 1:1.The above graph indicates the modifications in brief ratio from the
yr

2015-sixteen to 2018-19.In the 12 months 15-16 the quick ratio is zero.03,it is improved to
0.44 in 2017.
In the year 2017-18 it's far elevated to 0.49, within the 12 months 2017-18 if we evaluate with
to 17-18 it is decreased to zero.48, in the yr 2018-19 it's far reduced to 0.Forty three.

61
 C) DEBT EQUITY RATIO = LONG TERM DEBTS / SHARE HOLDERS FUNDS

YEAR/PARTICULARS 2015-16 2016-17 2017-18 2018-19 2019-20

(Rs) (Rs) (Rs) (Rs) (Rs)

LONG TERM DEBTS 24902 23539 14349 17573 18325

SHRE HOLDERS FUNDS 373514 427755 477435 559226 628339

RATIO 0.06 0.05 0.03 0.03 0.02

SHARE HOLDERS FUND = SHARE CAPITAL + PREFERENCE SHARES

+GENERAL RESERVES

62
 RATIO

2500

2000
2019

1500

RATIO

1000

500

0
0.06
2015 0.05
2016 0.03
2017 0.03
2018 2019

Interpretation:
From the above graph it may be observe that in the yr 2015-sixteen the debt fairness ratio
is 0.06, which is reduced to zero.05 within the yr 2016-17. Within the 12 months 17-18 it's
miles decreased to zero.03, in 2018-19 it's far zero.03, within the 12 months 2019-20 it's miles
elevated to 0.02.

63
D) Absolute Cash Ratio=Absolute assets / Current Liabilities

YEAR/PARTICULARS
2015-16 2016-17 2017-18 2018-19 2019-20
(Rs) (Rs) (Rs) (Rs) (Rs)
Absolute assets 358078 358078 360816 548268 557881

Current Liabilities 758877 758877 931548 1219096 1419765

Ratio 0.527 0.471 0.387 0.449 0.392

Absolute Assets= C.H + C.B + Short Term Investment+ Market securities

RATIO

0.6

0.5 0.527
0.471
0.4 0.449
0.387 0.392 RATIO
0.3

0.2

0.1

0
2015 2016 2017 2018 2019

Interpretation:
From the above graph we can observe that the absolute cash ratio is decreased
compared to 2009-10 to 2010-11 is 0.527 to 0.471, in the year 2011-12 is 0.387 which is
increased to 0.449 in 2012-13.
In the year 2013-14 ratio is decreased compared to 2012-13 is 0.392.

64
 CHAPTER-V
SUGGESTIONS, CONCLUSIONS

65
SUGGESTIONS:

In the 5 years of this venture paintings of operating capital from 2015-2016 to 2018-
2019. There may be a incredibly increase in running capital in 2009-2010 to 2011-2012 It is a
excessive lighting fixtures of years. But in 2017-2018 12 months there may be a decrease in
operating capital.
Items, which our co-operative sells, our households ought to purchase handiest from the
co-operative if we want to buy after co-operative store is close for the day, then we should
discover ways to do with it until the next day. On account may be buying from different stores.
If co-operative sells the same item.
It is higher to look at affordable rates and later to return to surplus to members or add
the offerings being supplied to them.
Continuous internal audit by means of individuals / team of workers, appointed by
handling committee is have to for every co-operative because it exposes flaws early enough for
rectifications.
Elections to co-operative must be contested and only those who members have
confidence in should be allowed to controlled the co-operative any strive with the aid of a
collection of leaders to arrive at an understanding of compromise will mean denying
participants the right to determine who they wish to have at helm of affairs.
Individual who have no longer trouble to method to the co-operative for using its
services it element has no business stressful club on the time of election.

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CONCLUSIONS
In this bankruptcy attempt is made to performs appropriate idea to enhance the monetary
overall performance of “Mulkanoor Co-operative Rural Bank And Marketing Society Ltd
They are as follows
The society must take a few remedial measures to govern its productive value to
increase its earnings.
The society must decrease its unrecovered percent of loans and advances. It should
examine the credit score worthiness for the members and primarily based on this have to
superior loan.
If the society begins recording its non-appearing assets (MPA). It ought to understand
the modern monetary positions of its on the give up of the year and it could take essential to
manipulate NPA’S as this are effective

The society ought to lower its long time borrowing (deposits) to lower the interest
payment as it pays greater EPS.

The ROI of society became recorded terrible while evaluate to other economic
institutions.

It is due to rendering services to its members, even than it has to boom the hobby
percentage barely to live on and develop and serve its contributors.

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BIBLIOGRAPHY

68
 BIBLIOGRAPHY

NAME OF THE BOOKS, PUBLISHERS AND AUDITORS

 MANAGEMENT ACCOUNTING

 KALYANI PUBLISHERS, 8th  R.K. SHARMA &

EDITION
 SHASHI K. GUPTA

 COST ACCOUNTING

 KALYANI PUBLISHERS, 8th

EDITION
 S.P. JAIN & K.L. NARANG

 FINANCIAL MANAGEMENT PRINCIPLES AND PRACTICE

 S.M. MAHESWARI

 FINANCIAL MANAGEMENT

 GALGOTIA PUBLICATIONS  R.P. RUSTAGI

Websites:

 www.mcrbms.com
 www.google.co.in
 www.shodhganga.com

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