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Profile of the Organisation
Mission:- Promotion and sustenance of economic interest & providing easy finance, cost
effective and quality banking services to customer
Punjab Cooperatives resolve for Greater self-reliance, Administrative efficiency and
structural reforms.
Values & Principles:-
"Cooperatives" A cooperative is an system voluntarily to meet
their common economic, social and cultural needs and aspirations through a jointly-owned
and democratically controlled enterprise.
Principles
Voluntary and open membership
Cooperatives and voluntary organisation, open to all persons able to use their services and
willing to accept the responsibilities of membership, without social , racial , political and
religious discrimination
Democratic member Control
Cooperatives are democratic organizations controlled by their members , who actively
participate in setting their policies and making decisions . Men and women serving as
elected representatives are accountable to the membership
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Members' Economic Participation
Members contribute equitably to, and democratically control, the capital of their cooperative.
At least partially that capital is usually the common property of the cooperatives. Members
usually receive limited compensation, if any, on Capital Subscribed as a condition of
membership. Members allocate surpluses for any or all of the following purposes
1) Developing their cooperatives possibly by setting up reserves, part of which at
least would be indivisible
2) Benefiting the members in proportion to their transaction with the cooperative
and supporting other activities approved by the membership
Autonomy and Independence:
Cooperatives are autonomous, self-help organizations controlled by their members . If
they enter into agreements with other organizations, including governments, or
raise capital from external sources, they do so on terms that ensure democratic
control by their members and maintain their cooperatives autonomy.
Education, Training and Information
Cooperatives provide Education and Training for their members, Managers and employees
so they can contribute effectively to the development of their cooperatives.
Cooperation among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperatives
movement by working together through Local, National, Regional and International
structures
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Concern for Community
Cooperatives work for the sustainable development of their communities through policies
approved by their members. There motto is to make the progress line go higher and
higher.
History Of \Punjab State Cooperative Bank
The Punjab State Cooperative Bank was established on 31st August, 1949 at Shimla vide
registration No. 720 has a principle financing institution of the cooperative movement in
Punjab. In 1951 its Head Office was shifted to Jalandhar from where it moved in 1963 to its
present building at Chandigarh. In the cooperative Banking structure, the position of the
Punjab State Cooperative Bank is extremely important as the whole credit system revolves
around it. It has 18 branches and 3 extension counter in Chandigarh. There are 19 District
Central Cooperative Banks having 813 branches all over Punjab, mostly in rural areas of the
State. One new Central Cooperative Bank and 110 new bank branches have been opened
during the last four years, 1997-2001.
Experience a whole new Era of Banking Technology where banking is made easier and
convenient for our customers. The Punjab State Cooperative Bank provides you with the
New Generation banking architecture to progress in the future in an evolutionary manner.
Punjab State Cooperative Bank (PSCB) is customer centric. Therefore it is designed to
encompass all the constituents of the banking space- the management of the bank, the
employees of the bank and the customers of the bank.110 new branches of Cooperative
Banks have been opened during the last four years as against 35 opened during 1992-1997.
At present, 822 branches of Cooperative Banks are working. The Branch opening policy of
the Cooperative Banks is being revamped. It is proposed to consolidate and strengthen
existing branches and open new branches only in those areas where it is economically viable
to do so.
With a view to provide uniform identity to all Central Cooperative Banks and their branches,
sign boards of all the branches, their building designs i.e. exterior as well as interior, have
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http://pbcooperatives.gov.in/DCCB.htm#local%20brancheshttp://pbcooperatives.gov.in/DCCB.htm#dccbshttp://pbcooperatives.gov.in/DCCB.htm#dccbshttp://pbcooperatives.gov.in/DCCB.htm#local%20brancheshttp://pbcooperatives.gov.in/DCCB.htm#dccbshttp://pbcooperatives.gov.in/DCCB.htm#dccbs -
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been designed on the same pattern. The branches of the bank are being renovated and de-
signed to update and modernize their facilities.
74 branches have been shifted to new suitable places up to 31.1.2001 and 3 branches have
constructed their own buildings. Telephone facility has been provided in 623
branches. The Punjab State Cooperative Bank has constructed a new building at
Sector 34 at a cost of Rs. 8.96 crore. This building is spread over 13 bays and has 5
storey. It is centrally air-conditioned. All the modern amenities have been provided
in the building. Cooperatives have played a vital role in improving the economic
conditions of farmers and accelerating the pace of development in Punjab
Development through Cooperatives was a dream cherished by freedom fighters of
India ever since Independence. Cooperative principles ensure harmonious
development, through democratic management and governance.
Cooperatives have brought both the services and resources at the doorsteps of villagers in
Punjab. These have been enthusiastically serving the people of Punjab in area such as
agriculture, housing, spinning, sugar production, weaving and dairy etc. The performance of
Cooperative Movement in Punjab, is very impressive. Cooperatives constitute the major
source of institutional credit for agriculture. Cooperatives are playing a pivotal role in socio-
economic development of the State. These are key instruments of the State to develop and
sustain its rural economy, which is primarily agrarian.
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Branches of Cooperative Bank in Punjab
S.No.NAME OF THE CENTRAL
COOPERATIVE BANKLOCATION PHONE NO.
1.AMRITSAR CENTRAL
COOPERATIVE BANKAMRITSAR
0183-2543351,2543076-
5099101
2.BHATINDA CENTRALCOOPERATIVE BANK
BHATINDA 0164-5004336,2212104
3. FARIDKOT CENTRALCOOPEATIVE BANK
FARIDKOT 01639-250144,500527
4.FAZILKA CENTRAL
COOPERATIVE BANKFAZILKA 01634-222245,500199
5.FEROZEPUR CENTRAL
COOPERATIVE BANKFEROZEPUR 01632-227082,227315
6.GURDASPUR CENTRAL
COOPERATIVE BANKGURDASPUR 01874-246239,500146
7.HOSHIARPUR CENTRALCOOPERATIVE BANK
HOSHIARPUR 01882-224100,502243
8.JALANDHAR CENTRAL
COOPERATIVE BANKJALANDHAR 0181-2224571,5054695
9.KAPURTHALA CENTRAL
COOPERATIVE BANKKAPURTHALA 01822-500725,509072
10.LUDHIANA CENTRAL
COOPERATIVE BANKLUDHIANA 0161-2442412,5053568
11.MANSA CENTRAL
COOPERATIVE BANKMANSA
01652-25907,92572-
25317
12.MOGA CENTRAL
COOPERATIVE BANK
MOGA 01636-223629,501593
13.MUKTSAR CENTRAL
COOPERATIVE BANKMUKTSAR 01633-264457,501102
14.NAWANSHAR CENTRAL
COOPERATIVE BANKNAWANSHAR 01823-223977,503712
15.PATIALA CENTRAL
COOPERATIVE BANKPATIALA 0175-5000271,5000272
16. ROPAR CENTRAL ROPAR 01881-226543,220379
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COOPERATIVE BANK
17.SANGRUR CENTRAL
COOPERATIVE BANKSANGRUR 01672-234336,501328
18.TARANTARAN CENTRAL
COOPERATIVE BANKTARANTARAN 01852-226239,50251819
19.
FATEHGARH SAHIB
CENTRAL COOPERATIVE
BANK
FATEHGARH
SAHIB01763-220093,500593
20.SAS NAGAR CENTRALCOOPERATIVE BANK
SAS NAGAR 0172-5091661,5091639
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Branches of Cooperative Bank in Punjab
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Organisation Structure Of Punjab State Cooperative Bank
Chairman
Board of Directors
Managing Director
Additional Managing Director (Administration) Additional Managing Director (Banking)
Deputy
Vigilance
Officer
Establishment
Officer
Liaison
Officer
ACFA
Deputy
General
Manager
(System)
General
Manager
(O&A)
General
Manager
(Development)
General
Managers
(Division
Officers at
Jalandhar,
Bhatinda &
Amritsar)Deputy
General
Managers
Deputy
General
Managers
AssistantGeneral
Manager
AssistantGeneral
Managers
AssistantGeneral
Managers
Assistant GeneralManagers
Deputy
Managers
Deputy Managers Deputy Managers
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ORGANIZATION-STRUCTURE
11
Sh. Jasjit Singh, Chairman
BOARD OF DIRECTORS
Sh. G.S. Mangat, Managing Director
Smt. Nisha Rana, Additional Managing Director
(Administration)
Sh. Udham Singh, Additional
Managing Director (Banking)
DeputyVigilance
Officer
Establishment
Officer
Liaison
OfficerACFA
Deputy
GeneralManager
(System)
Sh.Jeevan
Kr.
Bansal,General
Manager
(O&A)
GeneralManager
(Development)
GeneralManagers
(Division
Officers atJalandhar,
Bhatinda &
Amritsar)DeputyGeneral
Managers
Deputy General
Managers
Assistant
General
Manager
Assistant
GeneralManagers
Assistant
GeneralManagers
Assistant
GeneralManagers
Deputy
Managers
Deputy
Managers
Deputy
Managers
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Services Provide By Cooperative Bank
A new scheme namely Kisan Credit Card Scheme has been implemented by the bank for
the benefit of farmers. The Scheme improves upon existing scheme of Crop Loans by
allowing the farmers flexibility and freedom of choice to avail and repay loans as per their
requirements. Under the scheme, Total Limits worth Rs. 5997.50 crore have been sanctioned
to 887173 KCC holders in the state.
1) Non Farm Sector Loan
With a view to diversify and benefit the small industrialists & businessman, the cooperative
bank has started non-farm sector loan depending upon the requirements of the projects. These
loans are given to the rural youth for self-employment. The Central Cooperative Banks have
advanced Rs.4950.81 lacs from 1-4-2007 to 31-3-2008 to 8013 beneficiaries. During 2008-
09(up to Jan.) Rs. 3498.00 Lacs have been disbursed under this scheme.
2) Cash Credit to Traders & Businessmen
With a view to provide the cash credit facility to traders and others for meeting the working
capital requirements of the business, a cash credit limit upto Rs.25.00 Lacs can be sanctioned
to small businessman and traders depending upon their business turnover on easy terms at a
normal rate of interest. During the year 2007-08, the central cooperative banks have
sanctioned Rs.29091.28 lacs under the scheme upto Jan. 2009, limits worth Rs. 30426.00
lacs have been sanctioned under this scheme since inception.
3) Personal Loan
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A specially designed personal loan scheme has been framed which aims at providing credit
facility for meeting out social needs of employees, such as children education, furnishing
home, buying a computer, sons/ daughter marriage, holiday tour with family or any other
basic requirement without giving any purpose for the loan. Under the scheme, every govt /
semi govt employees is provided loan upto Rs.2.00 Lac repayable in 5 years in easy monthly
installment. During the year 2007-08, the Central Coop.Banks have advanced Rs.12164.46
Lacs under the scheme. During 2008-09 (upto Jan), Rs.10227.00 Lac have been disbursed in
the state.
4) Consumer Durable Loan
With a view to provide credit facility to their customers, the cooperative banks have
introduced a scheme of loan for purchase of consumer durable. Under the scheme, every
employee is provided loan upto Rs.1.00 lac and non-salary person is provided loan upto
Rs.50000 repayable in 5 years in easy monthly installments. The loan can be utilized for
purchase of T.V., refrigerator, scooter, furniture etc. A significant section of the salary class
has benefited from the scheme. During the year 2007-08, the Central Coop. Banks have
advanced Rs.7695.31 lacs under the scheme. During 2008-09(upto Jan.) Rs. 6031.00 Lacshave been disbursed under this scheme.
5) Urban Housing Loan Scheme
With a view to provide the housing loan to individual and members of house building society
the Bank can advance a loan upto Rs.25.00 Lacs for the purchase of plot, purchase of built up
house, construction of house, repair, addition, alteration etc. in the existing house. Loan
shall also be given for acquiring a plot, flat, house in an exixting cooperative house building
society and approved scheme of PUDA, HOUSEFED, Improvement Trust or any other govt.
agency. . During the year 2007-08, the Central Coop.Banks have advanced Rs.3961.62 Lacs
under the scheme. During 2008-09(upto Jan.) Rs. 3176.97 Lacs have been disbursed under
this scheme.
6) Rural Housing Loan Scheme
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With a view to provide housing facility to the masses which is a basic need of human need
the Central Coop. Banks has designed a scheme particularly for rural people, where other
financial institutions are reluctant to advance. Under the scheme, maximum loan upto
Rs.15.00 Lacs can be advanced for purchase of built up house, construction of a new house
or repair/ renovation / addition/ alteration of existing house in rural areas. During the year
2007-08, the Central Coop. Banks have advanced Rs.5959.08 Lacs under the scheme.
During 2008-09, Rs. 4133.25 lac have been disbursed under this scheme upto Jan. 2009.
7)Mini Dairy Loan Scheme
The Central Coop. Banks through its branches are extending loan facility to the farmers for
dairy development/ mini dairy for purchasing 25 cattle. Under the scheme, a maximum loan
upto 5 Lacs can be advanced with a ceiling of Rs.25000 for each animal. During 2007-08 Rs.
275.54 Lacs have disbursed by CCBs in the state. During 2008-09(upto Jan.) Rs. 217.78
Lacs have since been disbursed.
8) Vehicle Loan Scheme
With a view to provide the vehicle loan to individuals, firms, HUF, companies, trust and
cooperative societies etc. a financial assistance upto Rs.10 Lacs is provided for the purchaseof new vehicle. During the year 2007-08, the Central Coop. Banks have advanced
Rs.6128.29 under the scheme. During 2008-09(upto Jan.) Rs. 6809.00 Lacs have been
disbursed under this scheme.
9) Two Wheeler Loan to farmers
Under the scheme the bank can grant loan to the farmers for purchase of two wheeler upto
Rs.50000/-. During the year 2007-08, the Central Coop.Banks have advanced Rs.3962.62Lacs under the scheme. Similarly, during 2008-09 (upto Jan.) Rs. 1885.59 Lac have been
disbursed under this scheme.
10) Second hand vehicle loan scheme
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In the modern era there is a heavy demand of second hand vehicles and the banks have
surplus loan-able funds to diversify the loan portfolio and to provide financial assistance to
the borrowers for purchase of second hand vehicle, this scheme has been devised. Under the
scheme loan upto Rs 5 Lacs can be sanctioned for purchase of second hand vehicle. .
11) Education loan scheme
With a view to provide the education facility to the children of the employees a loan upto Rs.
10 Lacs can be sanctioned under the scheme. . During the year 2007-08, the Central
Coop.Banks have advanced Rs.234.73 Lacs under the scheme. Similarly, during 2008-
09(upto Jan.) Rs.399.51 Lac have been disbursed under this scheme.
New schemes launched by the Bank
1) Loan against property
The scheme is for providing finance against mortgage of immoveable property & is designed
to offer instant solutions relating to socio economic and business needs such as children
higher education travel / daughter marriage, medical emergencies etc. Under the scheme
maximum loan upto Rs.25 Lacs can be advanced. During 2007-08, CCBs have disbursed Rs.
325.14 Lacs in the state. During 2008-09(upto Jan.) Rs.1459.68 Lac have been disbursed.
2) Loan scheme for earnest money
In order to meet the requirements of the public the bank has launched a loan scheme known
as Loan scheme for earnest money to meet the financial requirements towards the earnest
money deposit to book residential plot/ built up house, flats being sold by govt. housing
agency, urban development authority like; PUDA, HUDA and Housing Board etc.
3) Loan against rental income scheme
For meeting business/ personal needs a new scheme for property owners having their
property situated it the area of operation of the bank and who have let out or proposal to let
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out such property to PSUs, reputed govt/ semi govt/ corporates, banks, financial institutions,
cooperative societies, insurance companies etc. is launched. The minimum amount under the
scheme is Rs.1 lac, there is no upper limit but it must be within prudential exposure norms.
During 2008-09(upto Jan.) Rs.77.50 Lac have been sanctioned under this scheme.
4) Commercial Dairy Development scheme
To increase the income of milk producers by helping them to purchase high yielding milch
cattle and to purchase necessary equipments for the purpose, a new scheme known ascommercial dairy development scheme has been launched for the central cooperative banks.
Under the scheme the bank can provide maximum loan upto Rs. 25 Lacs. During 2007-08,
CCBs have disbursed Rs. 21.64 Lacs in the state. During 2008-09(upto Jan) Rs.64.49 Lacs
have since been disbursed.
5) Dairy Loan Scheme for purchase of a cow
Under the scheme a member of the Milk Producers Society can be advanced upto Rs.0.50
Lacs for the purchase of a cow. During 2007-08, CCBs have disbursed Rs. 27.84 Lacs in the
state. During the year 2008-09(upto Jan.) Rs. 225.75 Lac have since been disbursed by CCBS
in the state.
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Future Prospective
Cooperatives are not unaffected by structural adjustments and globalization of commodity
market. As a result, Cooperative Banks are required to redesign their strategies for
sustainability and growth. The economic reforms initiated by the government of
India in 1991 have affected the Financial Institutions including the Cooperative
Financial Institutions. These reforms aim at liberalization and deregulation of Indian
economy.
The Cooperative Banks of Punjab have accepted the reforms in Indian economy, especially,
the financial reforms in right spirit. Since these Banks have mainly been providing
credit to agriculture sector, changes in agricultural economy affect them more
closely. The Banks envisage following scenario as a result of liberalized agricultural
policy :
Liberalization of agricultural policy would result in greater capital intensity
and borrowed capital requirements of agriculturists. In order to induce
diversification and produce quality products for international market. For this
purpose, Punjab farmers would need greater credit support for improved
technology, seeds and agro-inputs.
Liberalized agricultural policy would reverse the process of fragmentation of
land holdings and would result in exodus of employment opportunities from
agricultural sector to other sectors of economy. Such as small business
enterprises, services and industrial sector.
Liberalization of agriculture would professionalize and modernize agriculture,
thereby earning a status of industry attracting high skilled professionals in
agriculture sector.
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Liberalized agricultural economy would lead to a greater role of private
research and development institutions in improving the productivity and
quality of agricultural operations.
The liberalized agricultural policy would result in greater thrust on value
addition in agriculture. Therefore, a great deal of thrust would be on agro-
processing units.
The liberalized agricultural policy would lead to contract forming for ensuring
marketing of agricultural produce at better prices.
The liberalized agricultural policy would bring greater thrust on export of raw
and value added agro-products.
The liberalized agricultural economy would lead to sowing/planting of new
crops. Leading to a great deal of crop diversification.
COOPERATIVE CREDIT POLICY FOR 2001-2008
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The Cooperative would continue to sustain agricultural production in changing scenario of
agriculture in the State. They would endeavor to provide for short-term and long
term requirements of the farmers, through specifically targeted schemes and
projects, which do not encourage and increase indebtedness amongst the farmers.
The Cooperative Banks would act as catalyst to bring about and sustain diversification in
agricultural sector in keeping with the liberalized economy. Credit provisioning and
interest rates would be restructured induce diversification of agriculture. Greater
thrust would be given on short-term loans for cultivation of sugarcane, sunflower,
vegetables and fruits and long term loans for warehousing, commercial dairies,
cattle breeding and marketing infrastructure. Cash Credit Scheme would be pursued
for Primary Milk Producers Cooperative Societies to encourage quality milk
production in the State.
The Cooperative Banks would continue to be farmer driven, ensuring to make agriculture a
multi-functional occupation. They would finance and support agri-business, agro-
processing and farm equipments industry to supplement and complement farmers
sources of income.
The Cooperative Banks would give greater thrust on processes and initiatives aimed at
improvement in quality of agricultural produce and products by giving liberal
finance for technology introduction and up-gradation and for procuring high
quality agro-inputs.
The Cooperative Banks would encourage creation of common assets like storage facilities,
farm machinery like tractors and other agricultural implements at the level of
Cooperative Marketing-cum-Processing Societies and PACS so as to reduce debt
burden and input costs of the farmers.
The Cooperative Banks would pursue with renewed vigor lending in non-farm sector of
economy, especially for those rendered surplus in rural and semi-urban areas due
to liberalized agriculture policy Gainful self employment activities and small
businesses would be promoted by providing cheap, easy and adequate credit.
Special schemes and products would be launched for low income groups including
small and marginal farmers.
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AWARDS & ACHIEVEMENTS
DEPOSITS:- The deposits of Central Cooperative Banks have touched Rs.6434.32 crore as
on Jan. 2009. The deposits of the State Coop. Bank have increased from Rs.1565.64 crore as
on 31.3.2008 to Rs.1801.30 crore upto Jan. 2009.
ADVANCES:-
Agricultural advances
1) Short Term Agricultural advances:-During the year 2007-2008, the Punjab
State Cooperative Bank has advanced loans of Rs.5828.28 crore. During the
year 2008-09 the bank plans to disburse Rs. 6740.00 crores against which Rs.
3581.90 crores have since been disbursed upto 20-02-2009.
2) Medium Term Agricultural advances:-The Central Cooperative Banks have
advanced Rs.210.31 crore as Medium-term Agricultural advances in the State
upto March, 2008. This loan is given to farmers for undertaking activities
allied to agriculture
Revolving Cash Credit
Under the scheme, the Central Cooperative Banks have sanctioned credit limits of
Rs.2060.43 crore to 147793 farmers upto Jan. 2009. The rate of interest is 11%.
Non-Farm Sector loans
The Punjab State Cooperative Bank is providing non-agricultural loans to Sugar Mills,The most important feature of the cooperative banks in the State is that they started advances
of Non-Farm Sector during the year 1993. The Central Cooperative Banks have advanced
Rs.49.50 crore to 8013 beneficiaries during 2007-08. These loans are mainly given to rural
youth for self-employment. The rate of interest is 13.25%- 13.75%.
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Loans for consumer durables to salary earners:-
With a view to provide credit facilities to their customers, the Cooperative Banks introduced
a scheme of loans for purchase of consumer durables. Under the scheme, every
Government/semi-Government employee is provided loan upto Rs.1.00 lac repayable in 3-5
years in easy monthly installments. The loan can be utilized for purchase of TV, Refrigerator,
Scooter, Furniture etc. A significant section of the salaried class has benefited from the
scheme. More than Rs.79.71 crore have been advanced under the scheme during the years
2007-08.
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INTEREST RATES PROVIDED BY BANK
Savings: 3.50% A minimum amount of Rs.500/- is required without cheque booksand Rs.1000/- with cheque book.
Fixed Deposits A minimum amount of Rs.1000/- is required to open the account.
Duration Interest rate ( in percent)
7 days to 14 days 3.75%
15 days to 45 days 4.75%
46 days to 90 days 5.75%
91 days to 179 days 7.00%
180 days < 1 year 7.75%1 year < 2 years 8.50%
2 years < 3 years 8.25%
3 years above 8.00%
Interest rate @ 0.50% above these rates to the Senior citizen will be admissible on
single Fixed deposit Receipt of Rs. 5000/- and above . All other terms and conditions
will be remain the same.
Financial Analysis
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Financial Analysis is the process of identifying the financial strength and weaknesses of the
entity by properly established relationships between the variables of balance sheet and Profit
and loss account .The purpose of Financial Analysis is to diagnose the information the
information given in the financial statement in such a manner so as to judge the liquidity,
profitability and financial soundness of the entity .
Financial analysis is a study of relationship among various financial factors in a business as
disclosed by a single setoff statement and a study of trend of these factors as shown in a
series of statements.
Analysis financial statement is a process of evaluating relations between components parts
of financial statements to obtain a better understanding of firms position and performance.
Types of Analysis
Financial analysis may be classified either
On the basis of Material used
On the basis of Objective of Analysis
According to Material Used it may be as
1) External analysis
2) Internal analysis
External Analysis:- It is made by those who do not have access to the detailed records of
the company .Such Analysis depends entirely upon published financial statements.
Internal Analysis:- It is conducted by those who have access to the books of accounts and
other related information from records of the company. Such analysis is conducted by the
executives themselves or by the government and court agencies who assume special power
by virtue of some enactments.
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According to Objective the analysis may be
1) Long Term Analysis
2) Short Term Analysis
Long Term Analysis:- This analysis is made in order to study the long term Financial
stability ,solvency and liquidity as well as profitability earning capacity of the business
concern. The purpose of making such type of analysis is to know whether in long term
the concern will able to earn a minimum amount which will be sufficient to maintain a
reasonable rate on investment.
Short term Analysis:-This is made to determine the short term solvency ,stability and
liquidity as well as earning capacity of the business. the purpose of this analysis to
know whether in the short run a business concern will have adequate funds to meet
short term requirements.
Techniques used in Financial Analysis
The most commonly used methods or devices for analysis are:-
1) Comparative Statements
2) Statements of changes i.e Flow Statements
3) Trend analysis
4) Common Size Statements
5) Ratio Analysis
1. Comparative Statements:- are the statements showing the figures of two
periods as well as the relationship between balance sheet and income statement.
Statement prepared in a comparative form enables as in depth study of financial
position and operative results.
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2. Statements of changes (Flow Statements):- Balance Sheet reflects the positions
at point of time. when two Balance Sheet are compared then position as on two
different dates is known. What happen in between is not reflected by the balance sheet
3. Trend analysis:-Financial Statements may be analyzed by computing trends
.method involves computation of percentage relationship at each statement item bears
to the same item in the base year. Usually the first year is taken as a base year .figures
of base year are taken as 100 and trend ratio for other years is calculated.
4. Common Size Statements:-Show analytical percentages. Common size income
statement shows sales at 100 and remaining items as a percentage of 100.similarly total
balance sheet is presented as 100 and items of balance sheet as components of 100.
5. Ratio analysis :- Ratio is the arithmetical relationship between two accounting
variables but they assume significance if these variables have cause and effect
relationship. Ratios are simply a means of high lighting in arithmetical terms the
relationship between figures drawn from financial statements.
RATIO ANALYSIS
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Ratios are simply a means of high lighting in arithmetical terms the relationship between
figures drawn from financial statements.The Balance Sheet and the Statement of Income are
essential, but they are only the starting point for successful financial management. Apply
Ratio Analysis to Financial Statements to analyze the success, failure, and progress of your
business.
Ratio Analysis enables the business owner/manager to spot trends in a business and to
compare its performance and condition with the average performance of similar businesses in
the same industry. To do this compare your ratios with the average of businesses similar to
yours and compare your own ratios for several successive years, watching especially for any
unfavorable trends that may be starting. Ratio analysis may provide the all-important early
warning indications that allow you to solve your business problems before your business is
destroyed by them.Ratios are classifed into following types:-
Liquidity Ratios
Activity Ratios
Solvency Ratios
Profitability Ratios
Liquidity ratios measure the ability of a business to meet short term obligations. This ratio
shows short term financial soundness of the business. Higher Ratio means better capacity to
meet its current obligations . Following are the type of liquidity ratios:
1) Current Ratio:- Measures the company's ability to pay its short-term liabilities from
short-term assets. The formula used to calculated current Ratio is
Current Ratio =Current Assets / Current Liabilities
2) Quick Ratio :- Also known as Acid Test, measures the company's ability to pay off its
short-term obligations from current assets, excluding inventories. The formula to used
calculated quick Ratio is
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Quick Ratio = (current assets - inventory) / current liabilities
or
Quick Assets Ratio = Liquid Assets/ Current Liabilities
3) Absolute Liquid Ratio :- Measures the extent to which current obligations can be paid
from cash or near cash assets. The formula used to calculated Absolute Liquid Ratio is
Absolute Liquid Ratio = (absolute liquid ratio) / current
liabilities
Activity Ratios:- This Ratio shows the number of times the capital has been rotated in the
process of carrying on of business. Higher the ratio better the efficiency in the
utilization of capital. Activity ratios help assess the efficiency of managers' actions.
1) Stock Turnover Ratio: indicate the velocity with which stock of finished goods is
sold. It is expressed as the number of times the average stock has been turned over or
rotated during year. The Formula used to calculated Stock Turnover Ratio is
Stock Turnover Ratio = net sales /Average inventory at cost
2) Debtors /Receivables Turnover Ratio:- Account receivable is term which includes
trade debtors and bills receivables. These are the components of the current assets. This
ratio shows how quickly debts are collected. formula to calculated Debtors Turnover
Ratio is
Debtor Turnover Ratio = Annual credit sales/ Average account Receivables
Where account receivable = Trade Debtor + Bill receivables
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3) Creditor /Payable Turnover Ratio:- It indicates the speed with which the payments
are to be made to the trade creditors. It established the relationship between net credit
annual purchases and average accounts receivables. The formula used to calculated
Creditor Turnover Ratio is
Creditor Turnover Ratio = Annual Net Credit Purchases / Average
Account Payables.
4) Fixed Assets Turnover Ratio:- It established the relationship between sales and fixed
assets. The purpose is to judge whether the firm is generating adequate sales for
investment in fixed assets of the firm. The formula used to calculated Fixed Assets
Turnover Ratio is
.
Fixed Asset turnover ratio = sales or cost of goods sold / total fixed
assets
Profitability Ratio :- These Ratios are calculated to measure the efficiency of the
business. Profitability Ratio are the indicator whether or not the firm earns substantially
more than its pays interest for the use of the borrowed funds. Following are the type of
Profitability ratios :-
1) Gross Profit Ratio:- Gross Profit Ratio is the ratio of gross profit to net sales i.e sales
less sales returns. It is the most commonly calculated ratio.it is calculated as follows
Gross Profit Ratio = ( Gross profit / net sales )* 100
Where Gross Profit = Net Sales - Cost of Goods Sold
Net sales = sales returns inwards
2) Net Profit Ratio:- It established the relationship between net profit after taxes andsales. The ratio is a measure of the overall profitability.net profit is arrived at after
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taking into account both the operating and non-operating items of incomes and
expenses. The Ratio is calculated as
Net Profit ratio = (Net Profit after taxes / Net sales) * 100
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OBJECTIVES OF THE STUDY
Every study is conducted with key objectives and aims kept in the fore. Without
aims and objectives the study is like a ship without radar. My research covers the
Ratio Analysis vis Liquidity, Solvency, Activity and Overall Profitability Ratios.
Also it comprises the study of the trends of the various variables relevant to
Working Capital Management assess the future requirements of working capital in
the bank
.
.
To assess the liquidity position of THE KAPURTHALA COOPERATIVE BANK
by the analysis of ratios.
To analyze the trends of the various components of the working capital of THE
KAPURTHALA COOPERATIVE BANK
SCOPE OF STUDY
To know the financial position of the THE KAPURTHALA COOPERATIVE
BANK
The study gives an idea about emerging trends and technologies in THE
KAPURTHALA COOPERATIVE BANK.
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RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. The research
methodology included various methods and techniques for conducting a research. Marketing
Research is a systematic design, collection, analysis, and reporting of data and finding
relevant solution to a specific marketing situation or problem. Sciences define research as
the manipulation of things, concepts or symbols for the purpose of generalizing to extend,
correct or verify knowledge, whether that knowledge aids in construction of theory or in
practice of an art.
Research is thus, an original contribution to the existing stock of knowledge marketing for its
advancement, the purpose of research is to discover answers to the questions through the
application of scientific procedure.
My research project has a specified framework for collecting the data in an effective manner.
Such framework is called Research Design. The research process which was followed by
me consisted following steps.
4.1) Defining the problem & Research Objectives
It is said, A problem well defined is half solved. The step is to define the project under
study and deciding the research objective. The definition of problem includes Financial
Analysis Of Kapurthala Central Cooperative Bank
Developing the Research Plan:
The second stage of research calls for developing the efficient plan for gathering the needed
information. Designing a research plan calls for decision on the data sources, researchapproach, research instruments, sampling plan and contacts methods.
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The development of Research plan has the following Steps:
a.) Data Sources
Two types of data were taken into consideration i.e. Secondary data and Primary data.
My major emphasis was on gathering the primary data. The secondary data has been used
to make things more clear.
Primary Data: Direct collection of data from the source of information, including personal
interviewing, survey etc.
Methods: There are several methods of collecting primary data particularly in surveys and
descriptive researches. Important ones are:-
1. Observation method
2. Interview method
3. Through questionnaires
4. Through schedules
5. Other methods are:
Warranty cards.
Distribution audits
Pantry audits
Consumer panel
Using mechanical devices
Through projective techniques
Depth interviews and,
Content analysis.
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Secondary Data: Indirect collection of data from sources containing past or recent
information like, Annual Publications, Books, Newspaper and Magazines etc.
Usually published data are available in:-
i. Various publications of the Central, State or Local Governments.
ii. Various publications of Foreign Governments or of International Bodies and their
subsidiary organizations.
iii. Technical and trade generals.
iv. Books, magazines and newspapers.
v. Report and publications of various associations connected with Business and
Industry, banks, stock exchanges etc.
vi. Reports prepared by research scholars, universities, economists, etc. in different
fields.
vii. Public records and statistics, historical document, and other sources of published
information.
4.3.) Research Approach
Research approach of my project is Secondary data
4.4.) Research instrument
4.5.) Collecting the information
The collection of data is a tedious task. For conducting any sort of research data was
needed. So for my research, there was plenty of primary data and for increasing the
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validity of information collected, some books, journals, pamphlets, information about
the company were studied and taken into considerations.
Collection of Secondary Data: Secondary Data is the one which has already been
collected by someone else and some other person is using that information. The
source of secondary data was, some related books and websites related to the
company. The competent staff of the company helped me a lot in providing
information about the company.
4.6) Analyze the Information
The next step is to extract the pertinent findings from the collected data. I have
Tabulated the collected data and developed frequency distributions. Thus the whole data was
grouped aspect wise and was presented in tabular form. .
4.7.) Presentation of findings:
This is the last and important step in the research process. The findings are presented in the
form of graphs, pie charts, conclusions, suggestions and recommendations after data analysis.
SOURCES OF DATA
Main sources of collection of my data are
SECONDARY DATA:-
Secondary data has been collected from the following sources
Annual report.
Balance Sheets of the Bank
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Published reports of Bank.
Data from various department
Relevant diagrams and charts like bar charts to give pictorial presentation of
data collected for better understanding.
PRIMARY DATA
The primary source of data includes personal interviews from various accounts officer in the
enterprise or other employees of the Kapurthala Cooperative Bank.
Steps of methodology:
Collection of data
Organization of data
Presentation of data
Analysis of data
Interpretation of data
1. Collection of data: Both the primary data and secondary data has been collected
from the bank. The secondary data was provided through the annual report; balance
sheet etc. of the bank and the primary data was collected through the medium of face
to face interactions/ interviews with the employees of the bank.
2. Organization of data: Data once collected needed to be organized for further
processing.
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3. Presentation of data: The data collected is of no use unless and until it is given in a
presentable form. Thus, after proper organization, the data is given in a presentable
form with complete details with the help of Ratios, Trends, bar diagrams, pie charts
etc.
4. Analysis of the data: The data is carefully analyzed keeping in consideration both
the pros and cons for the purpose of arriving at concrete solutions.
5. Interpretation of data: After carefully analyzing the data, it has been aptly
interpreted in order to give concrete solutions and proper recommendations.
Techniques used in analysis
Financial AnalysisFinancial Analysis is the process of identifying the financial strength & weakness of the firm
by establishing relationship between the items of Balance Sheet & Profit & Loss Account.
The purpose of Financial Analysis is to diagnose the information contained in financial
statement so as to judge the profitability & financial soundness of the firm. The term analysis
includes interpretation also. Financial statement analysis is an attempt to determine the
significance and meaning of the data contained in the financial statements so that prediction
may be made regarding the future earnings, ability to meet its liabilities and profitability of
the business.
Analysis involves re-grouping and re-arranging the data in a useful manner whereas
Interpretation means explaining the meaning and significance of the data so processed.
However both analysis and interpretation is complimentary to each other Analysis is useless
without interpretation and Interpretation without analysis is difficult or even impossible.
Financial Analysis involves:-
Study of Financial Statements.
Analysis of data given in Financial Statement.
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After analyzing the financial Statement, Interpretation has to be made so that
the interested party can easily understand the statement.
Interpretation of Financial Statement
Financial Analysis of Kapurthala Cooperative Bank is as follows:-
Financial Analysis is done on the basis of published Financial Statement like
Balance Sheet & Profit & Loss Account.
Ratio Analysis & Trend Analysis is done to know the financial position of the
Company.
1. RATIO ANALYSIS
One of the most widely used forms of financial analysis is the uses of ratios. A ratio is a
simple arithmetical expression of the relationship of one number to another. It may be
defined as the indicated quotient of two mathematical expressions.
According to Kell and Bedford, a ratio is an expression of the quantitative relationship
between two numbers.
A Financial ratio is the relationship between two accounting figures expressed
mathematically. A ratio can also be expressed as percentage by simply multiplying the ratio
by 100.
Ratio analysis is a technique of analysis and interpretation of financial statements. It is
process of establishing and interpreting various ratio for helping in making certain decisions.
Ratio analysis is an accounting tool, which can be used to measure the solvency, the
profitability and the overall financial strength of a firm by analysing its financial accounts.
Ratio enable us to discover favourable or unfavourable trends that are developing gradually
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over time, as well as pointing up any numbers that have changed sharply in the space of time
of just one year-
The following are the four steps involved in the ratio analysis are :
The selection of relevant data from the financial statements depending upon the
objective of the analysis.
Calculation of appropriate ratios from the above data.
Comparison of the calculated ratios with the ratios of the same firm in the past.
Interpretation of the ratios.
CLASSIFICATION OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are different parties
interested in the ratio analysis for knowing the financial position of the firm for different
purposes. In view of various users of ratios, there are many types of ratios which can be
calculated from the information given in the financial analysis.
Liquidity Ratio
Efficiency Ratio
Solvency Ratio
Profitability Ratio
For better understanding of position of Kapurthala Cooperative Bank various ratios have
been calculated
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1) Liquidity Ratios:-
Liquidity Ratios are the ratio, which have been used to judge the current position of the
company. Current position of the company refers to the capacity of the company to pay off
its liability in time. Liquidity refers to the ability of a concern to meet its current obligations
as and when these become due. The short term obligations are met by realising in amounts
from current, floating or circulating assets.
If the current assets can pay off current liabilities, then liquidity position will be satisfactory.
On the other hand, if current liabilities may not be easily met out of current assets the
liquidity position will be bad. These ratios have been classified into three categories. Those
are:-
Current Ratio
Liquid Asset Ratio
Absolute Ratio
CURRENT RATIO
Current Ratio is the ratio, which establishes the relationship between Current Asset andCurrent Liabilities. This ratio indicates the position of the company to pay off its current
obligation. Current obligation means the liabilities, which the company has to pay with
in year.
An Asset is any 'thing' a business can own. Buildings, equipment, and vehicles are
examples of assets that can be depreciated, while cash, bonds, and inventories are assets
that are not depreciated.
Current Assets are most easily converted into cash in less than a year.
Current Liabilities are obligations that must be met within a year.
Inventory is the amount of finished product available for sale. It can be found on the
balance sheet in the current assets section.
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Liquid Assets are the most current of current assets. Liquid assets can be
immediately spent. For example, cash and checks are liquid assets; inventory is a current
asset but is not liquid.
Current Asset: Current assets are those assets, which can be converted into cash with
in the period of one year. The items included under current assets are :
Cash in Hand
Cash at Bank
Inventory
Debtor
Prepaid Expenses
Bills Receivables
Other Loan & Advances
Current Liabilities: - Current Liabilities are those liabilities, which the
company has to pay with in the period of one year. The items included under it are :-
Sundry Creditors
Bills Payable
Bank Loan, which have to be paid with in a year
Unclaimed Dividend
Provision of Taxation
Other Outstanding Liabilities
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QUICK RATIO
It is also known as liquid ratio or acid test. It is a more rigorous test of liquidity than the
current ratio. Quick ratio indicates the relationship between quick/liquid assets andcurrent/liquid liabilities. An asset is said to be liquid if it can be converted into cash within a
short period without loss of value.
Absolute Liquid Ratios:
Although receivables, debtors, and bill receivables are generally more liquid than inventories,
yet there may be doubts regarding their realisation into cash immediately or in time. Hence,
some authorities are of a opinion that the absolute liquid ratio should also be calculated
together with current ratio and acid test ratio so as to exclude even receivables from the
current assets and find out the absolute liquid assets. This ratio indicates the availability of
proper cash to meet our Liabilities. For this purpose we include both Cash at Bank & Cash in
Hand and Marketable securities in Absolute Liquid Asset.
2) Efficiency Ratio:
This ratio indicates that how efficiently the assets available with the firm have been utilized
to create the sales. In other words, it means how many times the asset has been turned over to
create the sales. The better the management of assets, the larger is the amount of sales and the
profits. There are various assets, which can be utilized to generate the sales. Those are Stock,
Debtor, Working Capital, Fixed Asset, etc. these ratios are also called turnover ratio because
they indicate the speed with which the assets are converted or turned over into sales. These
ratios are classified into different categories on the basis of assets:
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Inventory Turnover Ratio:
It is also known as stock turnover ratio. Every firm has to maintain a certain level of
inventory of finished goods so as to be able to meet the requirements of the business. But the
level of inventory should neither be too high nor too low. Stock Turnover Ratio shows that in
a year how many times a stock can generate the sales. So sale can be materialized after a time
period, for that time period a company requires the fund to carry out its activity. This
requirement of funds can be met through working capital.
Debtor Turnover Ratio:
A concern may sell goods on cash as well as on credit. Credit is one of the important
elements of sales promotion. This ratio indicates that how efficiently the debtor has been
used to materialize the sale. It means how many times the debtor has been turned around to
generate the sale.
In the same way that stock is a vital aspect of working capital management, so too is debtors
control. Many businesses need to sell their goods on credit, otherwise they might find it
difficult to survive if their competitors provide such credit facilities; this could mean losing
customers to the opposition.
Creditor Turnover Ratio:
This ratio indicates that how many times in the year the payment has been made to the party.
In the course of business operations, a firm has to make credit purchases and incur short term
liabilities. A supplier of goods i.e. creditors is naturally interested in finding out how much
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time the firm is likely to take in repaying its trade credit. If credit purchases is not available,
the figure of total purchase may be taken as the numerator and the trade creditors include
sundry creditors and bills payable
Working Capital Turnover Ratio:
This ratio indicates that how efficiently the working capital has been utilized to create the
sales. Working capital turnover ratio indicates the velocity of the utilisation of net working
capital. This ratio indicates the number of times the working capital is turned over in course
of a year. This ratio measures the efficiency with which the working capital is being used by
a firm. A higher ratio indicates efficient utililization of working capital and vice-versa. But a
very high working capital turnover ratio is not good situation for any firm and hence care
must be taken while interpreting the ratio.
LIMITATIONS OF PROJECT
1) The research was to be conducted in a limited span of time which also posed a limiting
factor.
2) Limited access to secondary data or any other information was another problem in
finding a correct response.
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ANALYSIS OF DATA AND INTERPRETATION
Keeping in mind the objectives of the study, the following interpretation were
being drawn.
CURRENT RATIO:- This represents the excess of current assets over current liabilities.
The ratio is calculated as:
Higher the current ratio, larger the amount of rupee available per rupee of current liability.
Current ratio of Kapurthala Cooperative Bank For last five years can be interpreted as:
Table:-1 Current Ratio
Years 2004 2005 2006 2007 2008
Current
Assets
642018198.2
1
868424784.0
8
1438368486.2
9
1974679761.1
2
1720818825.07
Current
Liabilities
251720599.3
2
245597115.5 677503208.33 693040847.72 953994457.91
CurrentRatio
2.5 3.5 2.1 2.8 1.8
44
CURRENT RATIO=
CURRENT ASSESTS
------------------------------------
CURRENT LIABILITIES
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Graph 1:- Current Ratio
20082006
2004
2005
2007
0
0.5
1
1.5
2
2.5
3
3.5
4
1 2 3 4 5 6
Years 2004 - 2008
CurrentRati
Interpretation It means in the year 2004 for every rupee of liability, current assets of Rs.2.5
was available to meet them but in 2005 it increased to 3.5 which again reduced to 2.1 in the
year 2006 and rose to 2.8 in the year 2007which decreased to 1.8 in year 2008. Thus oncomparing the ratios of last five years it can be observed that the highest ratio is in 2005.
.
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QUICK RATIO
The Quick ratio is the ratio between quick current assets and current liabilities and is
calculated as follows:
The term quick Assets refer to the current assets which can be converted into cash
immediately. Generally a quick ratio of 1:1 is considered satisfactory as a firm can easily
meet all current claims. Quick Ratio in Kapurthala Cooperative Bank for last five years
can be interpreted as:
Table 2:- Quick Ratio
Years 2004 2005 2006 2007 2008
Liquid
Assets
608089586.6
4
830616383.2
1
1389936683.6
1
1932244331.7
5
1673632813.7
Current
Liabilities
251720599.3
2
245597115.5 677503208.33 693040847.72 953994457.91
Quick Ratio 2.4 3.3 2.0 2.7 1.7
QUICK RATIO:
QUICK ASSETS
-------------------------------
CURRENT LIABILITIES
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Graph 2:- Quick Ratio
2008
2007
2006
2005
2004
0
0.5
1
1.5
2
2.5
3
3.5
1 2 3 4 5
Years 2004-2008
QuickRatio
Interpretation In case of Kapurthala Cooperative Bank the quick ratio was 2.4 in the
year 2004 but it increased to 3.3 in the year 2005. Again reduced to 2.0 in the year 2006
but in 2007 it increased to 2.7.In year 2008 the ratio is decreased to 1.75
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ABSOLUTE LIQUID RATIO
The absolute liquid ratio measures the extent to which current obligations can be paid
from cash or near cash assets. The formula used to calculated Absolute Liquid Ratio is
Absolute Liquid assets refer to only cash, cash at bank and marketable securities.
Absolute Liquid Ratio in Kapurthala Cooperative Bank for last five years can be
interpreted as:
Table 3:- Absolute Liquid Ratio
Years 2004 2005 2006 2007 2008
Absolute
Liquid
Assets
591760432.2
0
807802594.8 1355226736.2
8
1852357042.1 1501688363.12
CurrentLiabilities
251720599.32
245597115.5 677503208.33 693040847.72 953994457.91
Absolute
Liquid Ratio
2.3 3.2 2.0 2.6 1.5
ABSOLUTE LIQUID RATIO:
ABSOLUTE LIQUID ASSETS
-------------------------------
CURRENT LIABILITIES
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Graph 3:- Absolute Liquid Ratio
2007
2008
2006
2005
2004
0
0.5
1
1.5
2
2.5
3
3.5
1 2 3 4 5
Years 2004-2008
Absolute
Liquid
Rati
Interpretation The absolute liquid ratio in the year 2004 2.3 but in 2005 it increased to
3.2 which again reduced to 2.0 in the year 2006 and rose to 2.6 in the year 2007 which
decreased to 1.5 in year 2008. Thus on comparing the ratios of last five years it can be
observed that the highest ratio is in 2005.
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CREDITORS/PAYABLE TURNOVER RATIO
This ratio can be calculated by dividing Net Credit Sales by average debtors outstanding
during the year.
Table 4:- Creditor Turnover Ratio
Years 2004 2005 2006 2007 2008
Net Creditpurchases
30126700 22755800 440616207.04 8401100.00 55223843
Accounts
Payables
32700900.24 16124542.89 306818854.04 61809624.63 66167012.79
CreditorTurnover
Ratio
0.92 1.41 0.40 0.83 0.84
CREDITORS TURNOVER RATIO:
ANNUAL NETCREDIT PURCHASES
-------------------------------------------------------
AVERAGE ACCOUNTS PAYABLES
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Graph 4: Creditor Turnover Ratio
20082007
2006
2005
2004
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1 2 3 4 5
years 2004-2008
CreditorTurnoverRatio
Interpretation In case of Creditors Turnover Ratio it was 0.92 in the year 2004 but it
increased to 1.41 in the year 2005. Again reduced to 0.40 in the year 2006 but in 2007 it
increased to 0.83 .In year 2008 the ratio is decreased to 0.84.
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Debtor /receivable Turnover Ratio:-This ratio can be calculated by dividing Net
Credit Sales by average debtors outstanding during the year.
A high ratio is indicative of shorter time lag between credit sales and cash collections.
This ratio measures how rapidly the debts are collected.
Table 5:- Debtors Turnover Ratio
Years 2004 2005 2006 2007 2008
Annual
Credit
Sales
1564093547.6
8
144103100.2
3
1812822762.1
4
1832983542.7
1
2562381888.03
AccountsReceivables
50257765.71 60622189.94 83146749.2 122322719.02 219130461.95
DebtorTurnoverRatio
31.12 23.7 21.8 14.9 11.6
DEBTORS TURNOVER RATIO:
ANNUAL CREDIT SALES
---------------------------------------------------
AVERAGE ACCOUNT RECIEVABLE
Account Receivable= Trade Creditor + Bill Receivable
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Graph 5: Debtors Turnover Ratio
20082007
20062005
2004
0
5
10
15
20
25
30
35
1 2 3 4 5
years 2004-2008
De
btorTurnoverRatio
Interpretation In case Debtors turn over ratio shows wide fluctuations. It was 31.12 in
the year 2004 but decrease to 23.7 in the year 2005. In the year 2006 it again reduced to
21.8. But was recorded 14.9 in 2007. In 2008 the ratio is 11.6 A low ratio shows that
debts are not being collected rapidly.
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WORKING CAPITAL TURNS OVER RATIO:
Working capital turn over ratio is computed by dividing sales by net working capital.
Table 6:- Working Capital Turnover Ratio
WORKING CAPITAL TURNS OVER
RATIO:
SALES
------------------------------------------
NET WORKING CAPITAL
= SALES
C.ASSETS C. LIABILITIES
Years 2004 2005 2006 2007 2008
Annual
CreditSales
1564093547.6
8
144103100.2
3
1812822762.1
4
1832983542.7
1
2562381888.03
NetWorking
Capital
390297598.89 622827668.58
760865277.96 1281638913.4 766824367.16
Working
Capital
TurnoverRatio
4.00 2.30 2.30 1.43 3.30
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Graph 6: Working Capital Turnover Ratio
2008
2007
20062005
2004
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1 2 3 4 5
years 2004-2008
WorkingCapitalT
urnoverRatio
Interpretation In case Working Capital turn over ratio shows wide fluctuations. It was
4.00 in the year 2004 but decrease to 2.30in the year 2005. In the year 2006 it again was
2.30. But was recorded 1.43 in 2007. In 2008 the ratio of working capital turnover ratio is
3.30.
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ASSETS TURN OVER RATIO
Assets are used to generate sales. The firm can compute net assets turn over ratioby dividing sales by net assets.Net Assets include Net fixed assets and net current assets.
Table 7:- Assets Turnover Ratio
Graph 7:- Assets Turnover Ratio
ASSETS TURN OVER RATIO:
SALES
--------------------------------------
NET ASSETS
Years 2004 2005 2006 2007 2008
Sales 1564093547.68
144103100.23 1812822762.14
1832983542.71
2562381888.03
NetAssets
3793206491.05
4212548796.80
5081227553.65
5857963262.52
6527503584.35
AssetsTurnover
Ratio
0.41 0.34 0.35 0.31 0.39
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2008
200720062005
2004
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
1 2 3 4 5
Years 2004-2008
AssetsTurnoverRatio
Interpretation In case Assets turn over ratio it 0.41 in the year 2004 but decrease to
0.34 in the year 2005. In the year 2006 it was 0.35. But it was recorded 0.31 in 2007. In
2008 the ratio of assets turnover ratio is 0.39.
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RETURN ON INVESTMENTS
The term investments may refer to total assets or net assets. The funds employed in net
assets are known as Capital employed. Here investments refer to pool of funds supplied
by shareholders and lenders while Pat represents residue income of the shareholders.
Years 2004 2005 2006 2007 2008
EBIT 83836798.75 74892275.92 62160253.76 25883078.55 32918000.20
Net Assets 3793206491.05
4212548796.80
5081227553.65
5857963262.52
6527503584.35
Return on
Investment
0.05 0.05 0.03 0.01 0.01
RETURN ON INVESTMENTS:
EARNINGS BEFORE INTEREST AND TAX
NET ASSETS
Earnings before Interest and Tax
Return on Investments == ----------------------------------------------
Net Assets
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20082007
2006
20052004
0
0.01
0.02
0.03
0.04
0.05
0.06
1 2 3 4 5
Years 2004-2008
ReturnOnInvestment
Since ROI is also used for comparing the operating efficiencies of the firm we can easily
make out from the figures above that the return on investments is increasing year by year
which is a very good sign for SJVNL. It indicates the projects are making lot of profit
every year.
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GROSS MARGIN
The Gross margin reflects the efficiency with which management produces each unit of
product. This ratio indicates the average spread between the cost of goods sold and the
sales revenue.
Generally a high gross profit margin ratio is a sign of good management.
GROSS MARGIN=
EARNINGS BEFORE INTEREST&
TAX SALES
Years 2004 2005 2006 2007 2008
EBIT 83836798.75 74892275.92 62160253.76 25883078.55 32918000.20
Net
Sales
1564093547.6
8
1441031000.2
3
1812822762.1
4
1832983542.7
1
256238.1888.03
GrossMargin
0.05 0.05 0.03 0.01 0.01
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20082007
2006
20052004
0
0.01
0.02
0.03
0.04
0.05
0.06
1 2 3 4 5
Year 2004-2008
EBI
Comparing the figures of last four years its found that gross margin is lowest in the year
2005 i.e. 0.28 which indicates inefficient utilization of Plant and machinery or
overinvestment in plant and machinery resulting in higher cost of production.
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Observations & Conclusions
During the analysis of Finiacal position , it was observed that net working capital
requirement is continuously increasing year by year from Rs.1740.77 lacs in 2003-04. to
30673.02 lacs in 2004-05.In 2005-06 it further increased to 36408.51 lacs and in 2006-07
it went upto 46026.00 lacs in the year 2006-07. This increase in requirement is due to the
blockage of funds in the sales and debtors. Sales increased from Rs.21693.50 lacs in
2003-04 to 161823.00 lacs in 2006-07. The debtors which were at the level 4755.02 lacs
in the year 2003-04 rose to 14082.00 in the year 2006-07.
The working capital requirements is being financed by banker and by funds generated
from the operations and by the promoters.
Except organizations own sources i.e. profit generated from operations, all other sources
carry interest cost which leads to the increase in cost of production.
To make the optimum utilization of funds and better management of working capital,
organization may adopt the following systems:-
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ANNEXURE
BIBLIOGRAPHY
Cherunilam Francis, Business Environment, Himalaya Publishing House,
Millennium Edition 2001.
Gupta K Shashi, R.K Sharma, Financial Management, Kalyani Publishers,
Fifth Edition 2007.
Bhalla V.K, Working Capital Management, Anmol Publications, Sixth
Edition.
Kothari C.R, Research Methodology, New Age International Publisher,
Second Edition.
Balance sheets of the bank from 2004 to 2008.