PROJECT REPORT

ON

Importance of Working Capital Management in ICICI BANK

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1
 INDEX

PAGE
SL.NO CONTENTS
NO.

PART – I
1 2-6
 EXECUTIVE SUMMARY
PART – II
2
 INTRODUCTION TO THE STUDY 7 - 14
 INDUSTRY PROFILE

PART - III
3
15 - 35
 INTRODUCTION OF BANK

PART - IV
4 36 - 39
 RESEARCH METHDOLOGY
 OBJECTIVES OF THE STUDY

PART - V
6 40 - 66
 WORKING CAPITAL MANAGEMENT
PART - VI
7 67 - 85
 DATA ANALYSIS AND INTERPRETATION

PART – VII
 FINDINGS
8 86 - 89
 SUGGESTIONS &

 CONCLUSIONS.
ANNEXURE

9 BIBILOGROPHY. 90 - 91
PART - I

EXECUTIVE SUMMARY

INDUSTRY PROFILE.
BANK PROFILE.
NEED FOR THE STUDY.
OBJECTIVES OF THE STUDY.
SCOPE OF THE STUDY.
LIMITATIONS OF THE STUDY.
METHODOLOGY.
FINDINGS.
SUGGESTIONS.
CONCLUSION.
 EXECUTIVE SUMMARY

Title of the study:

“Importance of Working Capital Management in ICICI BANK”

As a part of curriculum, every student studying MBA has to undertake a project on a particular
subject assigned to him/her. Accordingly I have been assigned the project work on Importance of
Working Capital Management in ICICI BANK.

Decisions relating to working capital (Current assets-Current liabilities) and short term financing
are known as working capital management. It involves the relationship between a firm’s short-
term assets and its short term liabilities.

The goal of working capital management is to ensure that the firm is able to continue its
operation and that it has sufficient cash flow to satisfy both maturing short term debt and
upcoming operational expenses.

Working capital is used in ICICI BANK, for the following purpose:-

Work in progress, finished work, inventories, sundry debtors, and day to day cash requirements.
The ICICI BANK, keep certain funds which is automatically available to finance the current
assets requirements.

The various information regarding “Working Capital Management” such as classification,

determinants, sources have been discussed relating to ICICI BANK

Ratio Analysis has been carried out using Financial Information for 2017 - 2018 Ratios like
Working capital Turnover Ratio, Quick Ratio, Current Ratio,
Inventory Turnover Ratio, Debtor Turnover Ratio, Creditors turnover ratio have also been
analyzed. A Statement of Changes in Working Capital has also been analyzed.
 BANK PROFILE

Icici bank, formerly Industrial Credit and Investment Corporation of India, established in 1943 in

Mumbai, is a major government-owned commercial bank of India. During FY 2013-14, its total

business was ₹ 4.55 lakh crore. Based on 2014 data, it is ranked 1860 on Forbes Global 2000

List. Icici bank was ranked 294th among India's most trusted brands according to the Brand Trust

Report 2014, a study conducted by Trust Research Advisory. It was a rise of 796 ranks

considering it was listed at the 1090th position among India's most trusted brands in the Brand

trust Report 2013. As of 30 March 2017 the bank had 4,000 plus service units 49 zonal offices

spread all over India. It also has two overseas branches in Singapore and Hong Kong. Icici bank's

headquarters is on Mumbai.

NEED FOR THE STUDY

 The study has been conducted for gaining practical knowledge about Working Capital
Management& activities ICICI BANK
 The study is undertaken as a part of the MBA curriculum for the fulfillment of the
requirement of MBA degree.

OBJECTIVES OF THE STUDY

 To study the sources and uses of the working capital.

 To study the liquidity position through various working capital related ratios.

 To study the working capital components such as receivables accounts, Cash

management, Inventory management

 To make suggestions based on the finding of the study.

SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The main

scope of the study was to put into practical the theoretical aspect of the study into real life

work experience. The study of working capital is based on tools like Ratio Analysis,

Statement of changes in working capital. Further the study is based on 2017 - 2018 Annual

Reports of ICICI BANK

LIMITATIONS OF THE STUDY

 The study duration is short.

 The analysis is limited to just one year of data study 2017 - 2018 for financial analysis.
 Limited interaction with the concerned heads due to their busy schedule.

 The findings of the study are based on the information retrieved by the selected unit.

METHDOLOGY

In preparing of this project the information collected from the following sources.

Primary data:

The Primary data has been collected from Personal Interaction with Director, Branch Manager and
other staff members.

Secondary data:

The major source of data for this project was collected through annual reports, profit and loss
account & some more information collected from internet and text sources.

SAMPLING DESIGN

Sampling unit : Financial Statements.

Sampling Size : Annual Report 2017-2018 & 2016-2017
Tools Used: MS-Excel has been used for calculations

FINDINGS:

 Working capital of the ICICI BANK was increasing and showing positive working capital
per year.

 The ICICI BANK has higher current and quick ratios are The performance of banking
sectors, as a whole and PSBs in particular continued to be subdued in the current financial year.

 Bank credit grew at 10.3% and aggregate deposit grew at 6.7% as of

March 2018.
During the reporting financial year, Bank has consciously downsized its
Balance Sheet owing to capital constraints. Bank posted an overall Global
business of `3,05,838 crore in FY 17- 18 as against `3,32,940 crore as at FY 16-
17. Global Deposit stood at `1,81,849 crore compared to `2,01,285 crore in the
previous financial year 2016-17. Gross Advances of Bank were at `1,23,989
crore as against `1,31,655 crore during the previous FY 17-18 .Domestic
deposit of the Bank was
`1, 72,017 crore in FY17-18 compared to `1,85,102 crore in FY16-17.
Bank's low cost deposit (CASA) grew by 2.07% on
Y-O-Y and it share in domestic deposit improved from 33.92% in March 2017
to 37.25% in March 2018. Gross Domestic Advances stood at `1,08,746 crore
in the FY 2017-18 against
`1,12,917 crore in FY 2016-17. Bank's posted a net loss of
` 4,436 crore in FY17-18 compared to `1,851 crore in FY 16-
17 due to higher provisioning in NPA accounts.

SUGGESTIONS

 Working capital of the Bank has increasing every year. Profit also increasing every year this
is good sign for the Bank. It has to maintain it further, to run the business long term.

The Current and quick ratios are almost up to the standard requirement, So the Working capital
management of ICICI BANK is satisfactory and it has to maintain it further.

CONCLUSION:

The study on working capital management conducted in ICICI BANK to analyze the
financial position of the Bank. The Bank’s financial position is analyzed by using the tool of
annual reports from 2016-2017 & 2017-2018.

The financial status of ICICI BANK is good. In the last year the inventory turnover has
increased, this is good sign for the Bank.

On the whole, the Bank is moving forward with excellent management.

 PART - II

INTRODUCTION TO THE STUDY

INDUSTRY PROFILE
 INTRODUCTION TO THE STUDY

BACKGROUND OF STUDY

"Cash is the lifeblood of business" is an often repeated maxim amongst financial

managers. Working capital management refers to the management of current or short-term assets

and short-term liabilities. Components of short-term assets include inventories, loans and

advances, debtors, investments and cash and bank balances. Short-term liabilities include

creditors, trade advances, borrowings and provisions. The major emphasis is, however, on short-

term assets, since short-term liabilities arise in the context of short-term assets. It is important

that companies minimize risk by prudent working capital management.

STATEMENT OF THE PROBLEM

This project deals with the study about “Working Capital

Management” in ICICI BANK

IMPORTANCE OF THE STUDY

There are numerous aspects of working capital management that makes it an important topic for
the study.

The management of assets in any organization is an essential part of overall management. The
enterprise, at the time of formation attaches great importance to fixed assets management, as a
part of investment decision- making. However, in the overall day-to-day financial management,
after the initial investment, the management gives more importance to managing
working capital. If we look at any financial statement it will be evident that the investment in
fixed assets remains more or less static but the working capital is constantly changing. A healthy
working capital position is the sine- qua-non of a successful business. This is reflected in
adequate inventories, lowest level of debtors, minimum utilization of bank facilities for working
capital, etc. thus Importance of Working Capital Management in ICICI BANK occupies an
important place in financial management.

INDUSTRIAL PROFILE

HISTORY

Icici bank, formerly Industrial Credit and Investment Corporation of India, established in 1943 in

Mumbai, is a major government-owned commercial bank of India. During FY 2013-14, its total

business was ₹ 4.55 lakh crore. Based on 2014 data, it is ranked 1860 on Forbes Global 2000

List. Icici bank was ranked 294th among India's most trusted brands according to the Brand Trust

Report 2014, a study conducted by Trust Research Advisory. It was a rise of 796 ranks

considering it was listed at the 1090th position among India's most trusted brands in the Brand

trust Report 2013. As of 30 March 2017 the bank had 4,000 plus service units 49 zonal offices

spread all over India. It also has two overseas branches in Singapore and Hong Kong. Icici bank's

headquarters is on Mumbai.
Ghanshyam Das Birla, an eminent Indian industrialist, during the Quit India movement of 1942,

conceived the idea of organising a commercial bank with Indian capital and management, and

the Industrial Credit and Investment Corporation of India Limited was incorporated to give shape

to that idea. The bank was started with Mumbai as its head office with an issued capital of ₹2

crores and a paid-up capital of ₹1 crore. Birla was its chairman and the Board of Directors

included eminent personalities of India drawn from many fields. The bank opened 14 branches

simultaneously across India.

After World War II, Industrial Credit and Investment Corporation of India opened several

overseas branches. The first, in 1947, was in Rangoon. Branches in Singapore (1951), Hong

Kong (March 1952), London (1953), and Malaysia followed. In 1963 the Burmese Government

nationalized Industrial Credit and Investment Corporation of India's three branches there, which

became People's Bank No. 6.

On 15 September 1967, Jalpaiguri Banking and Trading Corporation (JBTC) which had been

established in Jalpaiguri in 1887 (or 1889; accounts differ), made a voluntary transfer of its

assets and liabilities to Industrial Credit and Investment Corporation of India. JTBC had only one

office and specialised in lending against mortgages on tea gardens.

The Government of India nationalised Industrial Credit and Investment Corporation of India on

19 July 1969. The nationalised bank continued the operations of the overseas branches in

London, Singapore, and Hong Kong. However, Malaysian law forbade foreign government

ownership of banks in Malaysia. Therefore, United Commercial, Indian Overseas Bank, and

Indian Bank contributed their operations in Malaysia to a new joint-venture bank incorporated in

Malaysia, United Asian Bank, with each of the three parent banks owning a third of the shares.

At the time, Indian Bank had three branches, and Indian Overseas Bank and Industrial Credit and

Investment Corporation of India had eight between them.

An act of parliament changed the bank's name to Icici bank in 1985, as a bank in Bangladesh

existed with the name "Industrial Credit and Investment Corporation of India", which caused

confusion in the international banking arena.

In 1991, Bank of Commerce acquired United Asian Bank; in time CIMB came to own Bank of

Commerce.
In 1998, UCO closed its London branch. Bank of Baroda acquired the assets and liabilities, but

not the personnel, who were made redundant.

BOARD OF DIRECTOR AS PER ANNUAL REPORT 2018

 PART - III

INTRODUCTION OF BANK

BANK PROFILE.
VISION AND MISSION.
BOARD OF DIRECORS.
OBJECTIVES
PRODUCT PROFILE
SWOT ANALYSIS
ORGANIZATION STRUCTURE.
INTRODUCTION OF THE BANK

Icici bank, formerly Industrial Credit and Investment Corporation of India, established in 1943 in

Mumbai, is a major government-owned commercial bank of India. During FY 2013-14, its total

business was ₹ 4.55 lakh crore. Based on 2014 data, it is ranked 1860 on Forbes Global 2000

List. Icici bank was ranked 294th among India's most trusted brands according to the Brand Trust

Report 2014, a study conducted by Trust Research Advisory. It was a rise of 796 ranks

considering it was listed at the 1090th position among India's most trusted brands in the Brand

trust Report 2013. As of 30 March 2017 the bank had 4,000 plus service units 49 zonal offices

spread all over India. It also has two overseas branches in Singapore and Hong Kong. Icici bank's

headquarters is on BTM Sarani, Mumbai.

Financial Performance:

During the FY 2017-18, Bank posted a Net loss of `4436 crore

compared to `1851 crore for the previous year FY

2016-17. Net loss of the bank increased due to increase in provisioning in

FY 2017-18. Operating profit of Bank stood at `1334 crore. Total income

declined by `3299 crore while total expenses of the bank also declined by

`1707 crore in FY 17-18. During the year Bank made provision of `5771

crore as compared to `4777 crore in FY16-17. Cost of deposits declined to

5.37% in FY 17-18 from 5.83% in FY 16-17. Interest income of the Bank

declined by `2306 crore. Cost income ratio of the Bank stood at 68.57% in

FY 17-18 as against 50.67% in FY 16-17.CD ratio has improved from

65.41% to 68.18% during the period.

 VISION AND MISSION OF ICICI BANK

Our Vision Statement

To emerge as the most trusted, admired and sought-after world class financial institution

and to be the most preferred destination for every customer and investor and a place of pride for

its employees.

Our Mission Statement

To be a Top-class Bank to achieve sustained growth of business and profitability,

fulfilling socio-economic obligations, excellence in customer service; through upgradation of

skills of staff and their effective participation making use of state-of-the-art technology.

Global banking has changed rapidly and Icici bank has worked hard to adapt to these

changes. The Bank looks forward to the future with excitement and a commitment to bring

greater benefits to you.

Icici bank, with years of dedicated service to the Nation through active financial

participation in all segments of the economy - Agriculture, Industry, Trade & Commerce,

Service Sector, Infrastructure Sector etc., is keeping

pace with the changing environment. With a countrywide network of more than 3000 service

units which includes specialised and computerised branches in India and overseas, Icici bank has

marched into the 21st Century matched with dynamism and growth.

Overview

We are in the Service of Community since 1943. We have more than 3000 Service Units

spread all over India. We also operate in two Major International Financial Centres, namely

Hong Kong and Singapore. We have our Correspondents/Agency arrangements all over the

world. We undertake Foreign Exchange Business in more than 50 Centers in India. We have

Foreign Exchange Dealing Operations at 1 Center.

Our Strengths

Country-wide presence Overseas Presence with Profitable Overseas Operations Strong

Capital Base High Proportion of Long Term Liabilities A Well Diversified Asset Portfolio A

Large and Diversified Client Base All Branches under Core Banking Solution(CBS) Branch

representation in Top 100 Centres (as per deposits) in the country

 Organisation Structure

Headquartered in Mumbai, the Bank has 42 Zonal Offices spread all over India. Branches

located in a geographical area report to the Zonal Office having jurisdiction over that area. These

Zonal Offices are headed by Senior Executives ranging upto the rank of Deputy General

Manager, depending on size of business and importance of location. The Zonal Offices report to

8 Circle Offices headed by General Managers/senior Deputy General Managers.

Our Commitment to Customers

In all our promotional activities, we will be fair and reasonable in highlighting the salient

features of the schemes marketed by us. Misleading or unfair highlighting of any aspect of any

scheme/service marketed by the Bank leading to unfair practice shall not be resorted to by the

Bank.

In commemorating the 50th Year of Independence of India, the Bank released a booklet

entitled "Our Commitment to Customers" incorporating the Citizens’ Charter on services

provided by the Bank.

 In our continuing endeavour to serve our customers better, we have considerably

extended the business hours for public transaction at the branches on all week-days.

Products & Services

The international banking services in India is provided for the benefit of Indian

customers, corporates, NRIs, Overseas Corporate Bodies, Foreign Companies/ Individuals as

well as Foreign Banks etc. by our Authorised Forex Branches and Integrated Treasury Branch

Our other branches in India also provide international banking facilities through the

aforesaid network of our branches.

All the facilities are subject to the prevalent rules & guidelines of the Bank and RBI.

Brief details of services provided are as under:-

 NRI Banking (Please visit NRI Corner)

 Foreign Currency Loans

 Finance/Services to Exporters

 Finance/Services to Importers
 Remittances

 Forex & Treasury Services

 Resident Foreign Currency (Domestic) Deposits

 Correspondent Banking Services

 PART - IV

 RESEARCH METHDOLOGY.

SCOPE OF THE STUDY.

OBJECTIVES OF THE STUDY.
METHDOLOGY.
SCOPE OF THE STUDY

The scope of the study is identified after and during the study is conducted. The main scope of

the study was to put into practical the theoretical aspect of the study into real life work

experience. The study of working capital is based on tools like Ratio Analysis, Statement of

changes in working capital. Further the study is based Annual Reports of ICICI BANK.

OBJECTIVES OF THE STUDY

 To study the sources and uses of the working capital.

 To study the liquidity position through various working capital related ratios.

 To study the working capital components such as receivables accounts, Cash

management, Inventory management

 To make suggestions based on the finding of the study.

RESEARCH METHDOLOGY

INTRODUCTION:

Research methodology is a way to systematically solve the research problem. It May be

understood as a science of studying now research is done systematically. In that various steps,

those are generally adopted by a researcher in studying his problem along with the logic behind

them.
“The procedures by which researchers go about their work of describing, explaining and predicting

phenomenon are called methodology”.

TYPE OF RESEARCH:

This project “Study on Working Capital Management “is considered as an analytical research.

Analytical Research is defined as the research in which, researcher has to use facts or

information already available, and analyze these to make a critical evaluation of the facts,

figures, data or material.

SOURCE OF RESEARCH DATA:

There are mainly two through which the data required for the research is collected.

PRIMARY DATA:

The primary data is that data which is collected fresh or first hand, and for first time which is

original in nature.

In this study the Primary data has been collected from Personal Interaction with Finance

manager, Branch Manager, Director and other staff members.

SECONDARY DATA:

The secondary data are those which have already collected and stored. Secondary data easily get

those secondary data from records, annual reports of the Bank etc. It will save the time, money

and efforts to collect the data.

The major source of data for this project was collected through annual reports, profit and loss

account & some more information collected from internet and text sources.

SAMPLING DESIGN

Sampling unit : Financial Statements

Sampling Size : Annual Report

Tool Used for calculations: - MS-Excel.

TOOLS USED FOR ANALYSIS OF DATA

The data were analyzed using the following financial tools. They are

 Ratio analysis.

 Statement of changes in working capital.

LIMITATIONS OF THE STUDY

 The study duration is short.

 The analysis is limited to two year for financial analysis.

 Limited interaction with the concerned heads due to their busy schedule.

 The findings of the study are based on the information retrieved by the selected unit.
 PART - V

WORKING CAPITAL MANAGEMENT.

INTRODUCTION.
MEANIG OF CAPITAL.
MEANING OF WORKING CAPITAL.
NEED OF WORKING CAPITAL.
CLASSIFICATION OF WORKING CAPITAL.
ESTIMATION OF REQIUREMENTS
OPERATING CYCLE OF WORKING CAPITAL.
FINANCING OF WORKING CAPITAL.
DETERMINANTS OF REQUIREMENTS.
COMPONENTS OF WORKING CAPITAL
Introduction:

Capital is the keynote of economic development. In this modern age, the level of

economic development is determined by the proportion of capital available.

Meaning of Capital:

In the ordinary sense of the word Capital means initial investment invested by businessman or

owner at the time of commencing the business.Capital (economics), a factor of production that is

not wanted for itself but for its ability to help in producing other goods.

Definition:

Capital is a factor of production with a specific, changeable value attached to it that could,
potentially, provide its owner with more wealth. It is an abstract economic concept, and, as such,
has many different definitions and classifications, but the unifying feature of capital is that it has
a certain value, so it in itself is a type of wealth, and it has the potential of generating more
wealth.

Features of Capital:

Capital has the following features.

1. Capital is a man made.

2. Capital is a perishable.

3. Capital is a human control possible.

4. Capital is a mobile.
 5. Capital is a human sacrifice.

6. Capital is a scarce.

7. Capital is a passive factor.

INTRODUCTION OF WORKING CAPITAL:

Working capital is the life blood and nerve centre of a business. Just as circulation of blood is
essential in the human body for maintaining life, working capital is very essential to maintain
the smooth running of a business. No business can run successfully without an adequate
amount of working capital.

There is operative aspects of working capital i.e. current assets which is known as funds also
employed to the business process from the gross working capital Current asset comprises cash
receivables, inventories, marketable securities held as short term investment and other items
nearer to cash or equivalent to cash. Working capital comes into business operation when actual
operation takes place generally the requirement of quantum of working capital is determined by
the level of production which depends upon the management attitude towards risk and the factors
which influence the amount of cash, inventories, receivables and other current assets required to
support given volume of production.

Working capital management as usually concerned with administration of the current assets as
well as current liabilities. The area includes the requirement of funds from various resources and
to utilize them in all result oriented manner. It can be stated without exaggeration that effective
working capital management is the short requirement of long term success.
The importance of working capital management is indisputable; Business liability relies on its
ability to effective management of receivables, inventory, and payables. By minimizing the
amount of funds tied up in current assets. Firms are able to reduce financing costs or increase the
funds available for expansion. Many managerial efforts are put into bringing non- optimal level
of current assets and liabilities back towards their optimal levels.

MEANING OF WORKING CAPITAL

Working capital means the funds (i.e.; capital) available and used for day to day operations (i.e.;

working) of an enterprise. It consists broadly of that portion of assets of a business which are

used in or related to its current operations. It refers to funds which are used during an

accounting period to generate a current income of a type which is consistent with major purpose

of a firm existence.

In Accounting:

DEFINITIONS:

Many scholars’ gives many definitions regarding term working capital some of these are

given below.
According to Weston & Brigham

“Working capital refers to a firm’s investment in short-term assets cash, short

term securities, accounts receivables and inventories.

Mead Mallott& Field

“Working capital means current assets”.

Bonnerille

“Any acquisition of funds which increases the current assets increases working capital for they

are one and the same”.

Positive working capital means that the Bank is able to pay off its short-term liabilities

companies that have alot of working capital will be more successful since they can expand and

improve their operations.

Negative working capital means that a Bank currently is unable to meet its short-term liabilities

with its current assets. . Companies with negative working capital may lack the fundsnecessary

for growth

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

Effective management of working capital is means of accomplishing the

firm’s goal of adequate liquidity. It is concerned with the administration of current assets and

current liabilities. It has the main following objectives-

1. To maximize profit of the firm.

 2. To help in timely payment of bills.

3. To maintain sufficient current assets.

4. To ensure adequate liquidity of the firms.

5. It protects the solvency of the firm.

6. To discharge current liabilities.

7. To increase the value of the firm.

8. To minimize the risk of business.

THE NEED FOR THE WORKING CAPITAL

The need for working capital arises due to the time gap between production and realization of

cash from sales. Working capital is must for every business for purchasing raw-materials, semi

finished goods, stores & spares etc

WORKING CAPITAL MANAGEMENT

Working Capital Management refers to management of current assets and currentLiabilities. The
major thrust of course is on the management of current assets .This Ii understandable because
current liabilities arise in the context of current assets.Working Capital Management is a
significant fact of financial management. ItsImportance stems from two reasons:-
  Investment in current assets represents a substantial portion of total investment.
 Investment in current assets and the level of current liabilities have to be geared quickly to
change in sales. To be sure, fixed asset investment and long term financing are responsive to
variation in sales. However, this relationship is not as close and direct as it is in the case of
working capital components.

CLASSIFICATION OF WORKING CAPITAL

WORKING CAPITAL

On The Basis of Concepts On The Basis of Time

Gross Working Net Working Permanent / Fixed Temporary /

Capital Capital Working Capital Fluctuating Working Capital

Initial Working Regular Working

Capital

Seasonal Working Special Working

Capital Capital
I. On The Basis of Concepts
1) Gross Working Capital
Gross working capital is the amount of funds invested in various components of current

assets. Current assets are those assets which are easily / immediately converted into cash within a

short period of time say, an accounting year.Current assets,includes Cash in hand and cash at

bank, Inventories, Bills receivables, Sundry debtors, short term loans and advances.

This concept has the following advantages:-

i. Financial managers are profoundly concerned with the current assets.

ii. Gross working capital provides the correct amount of working capital at the right time.

iii. It enables a firm to realize the greatest return on its investment.

iv. It helps in the fixation of various areas of financial responsibility.

v. It enables a firm to plan and control funds and to maximize the return on investment.

For these advantages, gross working capital has become a more acceptable concept in financial

management.

1) Net Working Capital

This is the difference between current assets and current liabilities. Current liabilities are
those that are expected to mature within an accounting year and include creditors, bills payable
and outstanding expenses.
 Working Capital Management is no doubt significant for all firms, but its significance is
enhanced in cases of small firms. A small firm has more investment in current assets than fixed
assets and therefore current assets should be efficiently managed.

The working capital needs increase as the firm grows. As sales grow, the firm needs to invest
more in debtors and inventories. The finance manager should be aware of such needs and finance
them quickly.

II. On The Basis of Concepts

1) Permanent / Fixed Working Capital
Permanent or fixed working capital is minimum amount which is required to ensure
effective utilization of fixed facilities and for maintaining the circulation of current assets. Every
firm has to maintain a minimum level of raw material, work- in-process, finished goods and cash
balance. This minimum level of current assets is called permanent or fixed working capital as
this part of working is permanently blocked in current assets. As the business grow the
requirements of working capital also increases due to increase in current assets.

a) Initial working capital

At its inception and during the formative period of its operations a Bank must have
enough cash fund to meet its obligations. The need for initial working capital is for every
Bank to consolidate its position.

b) Regular working capital

Regular working capital refers to the minimum amount of liquid capital required to keep
up the circulation of the capital from the cash inventories to accounts receivable and from
account receivables to back again cash. It consists of adequate cash balance on hand and at
bank,
 adequate stock of raw materials and finished goods and amount of receivables.

2) Temporary / Fluctuating Working Capital

Temporary / Fluctuating working capital is the working capital needed to meet seasonal
as well as unforeseen requirements. It may be divided into two types.

a) Seasonal Working Capital

There are many lines of business where the volume of operations are different and
hence the amount of working capital vary with the seasons. The capital required to meet the
seasonal needs of the enterprise is known as seasonal Working capital.

Special Working Capital

The Capital required to meet any special operations such as experiments with new products or
new techniques of production and making interior advertising campaign etc, are also known as
special Working Capital.

IMPORTANCE OF WORKING CAPITAL

1. Solvency of the business: Adequate working capital helps in maintaining the solvency of

the business by providing uninterrupted of production.

2. Goodwill: Sufficient amount of working capital enables a firm to make prompt

payments and makes and maintain the goodwill.

3. Easy loans: Adequate working capital leads to high solvency and credit standing can

arrange loans from banks and other on easy and favorable terms.
 4. Cash discounts: Adequate working capital also enables a concern to avail cash discounts

on the purchases and hence reduces cost.

5. Regular Supply of Raw Material:Sufficient working capital ensures regular supply of

raw material and continuous production.

6. Regular payment of salaries, wages and other day to day commitments: It leads to

the satisfaction of the employees and raises the morale of its employees, increases their

efficiency, reduces wastage and costs and enhances production and profits.

7. Exploitation of favorable market conditions: If a firm is having adequate working

capital then it can exploit the favorable market conditions such as purchasing its

requirements in bulk when the prices are lower and holdings its inventories for higher

prices.

8. Ability to Face Crises: A concern can face the situation during the depression.

9. Quick and regular return on investments: Sufficient working capital enables a concern

to pay quick and regular of dividends to its investors and gains confidence of the

investors and can raise more funds in future.

10. High morale: Adequate working capital brings an environment of securities, confidence,

high morale which results in overall efficiency in a business.

ADEQUACY OF WORKING CAPITAL:

 Working capital should be adequate so as to protect a business from the adverse
effects of shrinkage in the values of current assets. It ensures to a greater extent the maintenance
of a Bank’s credit standing and provides for such emergencies as strikes, floods, fire etc. It
permits the carrying of inventories at a level that would enable a business to serve satisfactorily
the needs of its customers. It enables a Bank to operate its business more efficiently because
there is no delay in obtaining materials etc; because of credit difficulties.

INADEQUATE OF WORKING CAPITAL:

When working capital is inadequate, a Bank faces many problems. It stagnates, the
growth and it becomes difficult for the firm to undertake profitable projects for non-availability
of working capital funds. Difficulty in implementing operating plans and achieving the firm’s
profit targets. Operating inefficiencies creep in when it becomes difficult even to meet day- to-
day commitments. Fixed assets are not utilized efficiently thus the firm’s profitability would
deteriorate. Paucity of working capital funds renders the firm unable to avail attractive credit
opportunities. The firm loses its reputation when it is not in a position to honor it short-term
obligations thereby leading to tight credit terms.

DANGERS OF EXCESSIVE WORKING CAPITAL:

Too much working capital is as dangerous as too little of it. Excessive working capital raises

problems.
 1. It results in unnecessary accumulation of inventories. Thus chances of inventory

mishandling, waste, theft and losses increase.

2. Indication of defective credit policy and slack collection period.

Consequently, it results in higher incidence of bad debts, adversely affecting profits,

3. Makes the management complacent which degenerates in to managerial inefficiency.

4. The tendencies of accumulating inventories to make a speculative profit, which tends to

liberalize the dividend policy, make it difficult for the concern to cope in the future when

it is not able to make speculative profits.

ESTIMATION OF WORKING CAPITAL REQIUREMENTS

Managing the working capital is a matter of balance. The firms must have sufficient

funds on hand to meet its immediate needs. UCOLimited is manufacturing oriented organization.

The following aspects have to be taken into consideration while estimating the working capital
requirements.

They are:

1. Total costs incurred on material, wages and overheads.

2. The length of time for which raw material are to remain in stores before they are

issued for production.

3. The length of the production cycle or work-in-process, i.e., the time taken for

conversion of raw material into finished goods.

4. The length of sales cycle during which finished goods to be kept waiting for sales.

5. The average period of credit allowed to customers.

6. The amount of cash required paying day-today expenses of the business.

7. The average amount of cash required to make advance payments.

8. The average credit period expected to be allowed by suppliers.

9. Time lag in the payment of wages and other expenses.

OPERATING CYCLE OF WORKING CAPITAL:

The working capital cycle reserves to the length of time between the firm paying cash for

materials etc., this working capital also known as operating cycle. Working capital cycle or

operating cycle indicates the length or time between companies paying for materials entering

into stock and receiving the cash from sales of finished goods. The operating cycle (Working

Capital) consists of the following events. Which continues throughout the life of business?
 CASH

DEBTORS RAW
MATERIALS

FINISHED STOCK WORK-IN-PROGRESS

 Conversion of cash into raw materials.

 Conversion of raw materials into work in progress.

 Conversion of work in progress into finished stock.

 Conversion of finished stock into accounts receivables(Debtors)through sale and

 Conversion of account receivables into cash.

 FINANCING OF WORKING CAPITAL
 Introduction:
 After determining the level of working capital, a firm has to decide how it is to be
financed.
 In that ICICI BANK, it was financing the working capital from the following four
common sources. They are,

1. SHARES:

The ICICI BANK has issued the equity shares for raising the funds. The Equity shares do not

have any fixed commitment charges and the dividend on these shares is to be paid subject to the

availability of sufficient funds. These funds have been injected from the Bank’s own personal

resources and from the members.

2. TRADE CREDIT:

The trade credit referto the credit extended by the suppliers of goods in the normal course

of business. The firm has a good relationship with the trade creditors. So that suppliers send the

goods to the firm for the payment to be received in future as per the agreement or sales invoice.

In this way, the firm generates the short-term finances from the trade creditors. It is an easy and

convenient method to finance and it is informal and spontaneous source of finance for the firm.

3. BANK CREDIT:
 Commercial banks play an important role in financing the trade & industry Bank

provides short-term, medium term &long term finance to an industrialist or a business man.

1. Loans: The ICICI BANK, has taken loan from the commercial bank for working capital

requirement for a certain period at certain interest rate.

2. Cash Credit / Overdrafts: Under cash credit/overdraft from/arrangement of bank

finance, the bank specifies a determined borrowings/credit limit. The borrower can

draw/borrow up to the stipulated credit/overdraft limit. Within the specified limit/ line of

credit, any number of drawals/drawings are possible to the extent of his requirement

periodically. This form of financing of working capital is highly attractive to the borrowers

because, firstly, it is flexible in that although borrowed funds are repayable on demand, banks

usually do not recall cash advances/roll them over and, secondly, the borrower has the

freedom to draw the amount actually outstanding. However, cash credit/overdraft is

inconvenient to the banks and hampers credit planning.

4. CUSTOMER ADVANCES:

ICICI BANK follows the practice of collecting advance money from the customers as soon as

orders are placed and before the actual delivery of the goods. Such an advance received from the

customers constitutes one of the short-term sources of finance.

Certain % of the price of the goods to be sold to the customers is collected in the advance. Seller

can utilize the advance money so collected for meeting these urgent financial obligations.

DETERMINANTS OF WORKING CAPITAL REQUIREMENTS

In order to determine the amount of working capital needed by the firm a number of factors have

to be considered by finance manager. These factors are explained below.

1. Nature of Business:
The Nature of the business effects the working capital requirements to a great

extent. For instance public utilities like railways, electric companies, etc. need very little

working capital because they need not hold large inventories and their operations are

mostly on cash basis, but in case of manufacturing firms and trading firms, the requirement

of working capital is sufficiently large as they have to invest substantially in inventories

and accounts receivables .

Pull Mac Crane is a production firm, there for working capital required is more in period of

production as compared to other period.

2. Production Policies:

The production policies also determine the Working capital requirement. Through the production

schedule i.e. the plan for production, production process etc.

The ICICI BANK has small production process.

3. Credit Policy:

The credit policy relating to sales and affects the working capital.

The credit policy influences the requirement of working capital in two ways:

1. Through credit terms granted by the firm to its customers/buyers.

2. Credit terms available to the firm from its creditors.

The credit terms granted to customers have a bearing on the Magnitude of Working capital by

determining the level of book debts. The credit sales, results is higher book debts (re available)

higher book debt means more Working capital.

On the other hand, if liberal credit terms are available from the suppliers of goods [Trade

creditors], the need for working capital is less. The working capital requirements of business are,

thus, affected by the terms of purchase and sale, and the role given to credit by a Bank in its

dealings with Creditors and Debtors.

In ICICI BANKBank raw materials are purchased with a credit or cash and finished goods are

sold on cash basis and also credit basis.

Changes in Technology:
 Technology used in manufacturing process is mainly determined need of working capital.

Modernize technology needs low working capital, where as old and traditional technology needs

greater working capital.

5. Size of the Business Unit:

The size of the business unit is also important factor in influencing the working capital

needs of a firm. Large Scale Industries requires huge amount of working capital compared to

Small scale Industries.

Growth and Expansion:

The growth in volume and growth in working capital go hand in hand, however, the

change may not be proportionate and the increased need for working capital is felt right from the

initial stages of growth.

7. Dividend Policy:

Another appropriation of profits which has a bearing on working capital is dividend

payment. Payment of dividend utilizes cash while retaining profits acts as a source as working

capital Thus working capital gets affected by dividend policies.

The ICICI BANKfollows liberal dividend policy will require more working capital than Bank

that follows a strict dividend policy.

8. Supply Conditions:
 If supply of raw material and spares is timely and adequate, the firm can get by with a
comparatively low inventory level. If supply is scarce and unpredictable or available during
particular seasons, the firm will have to obtain raw material when it is available. It is essential to
keep larger stocks increasing working capital requirements.

Market Conditions:

The level of competition existing in the market also influences working capital

requirement. When competition is high, the Bank should have enough inventories of finished

goods to meet a certain level of demand. Otherwise, customers are highly likely to switch over to

competitor’s products. It thus has greater working capital needs. When competition is low, but

demand for the product is high, the firm can afford to have a smaller inventory and would

consequently require lesser working capital. But this factor has not applied in these technological

and competitive days.

Business Cycle:

The working capital requirements are also determined by the nature of the business cycle.

Business fluctuations lead to cyclical and seasonal changes which, in turn, cause a shift in the

working capital position, particularly for temporary working capital the variations in the business

conditions may be in two directions:

1. Upward phase when boom condition prevail,

2. Downswing phase when economic activity is marked by a decline.

11. Profit Level:

Profit level also affects the working capital requirements as a concern higher profit

margin results in higher generation of internal funds and more contributing to working capital.

ESTIMATION OF CURRENT ASSETS

1. Raw Material Inventory:

The Investment in Raw Material can be computed with the help of the following
formula:-

Budgeted Cost of Raw Average Inventory

Production x Material(s) x Holding

Period

( In units ) per unit (months/days)

12 months / 52 weeks / 365days

2. Work-in-progress (W/P) Inventory:

The relevant cost of determine work in process inventory are the proportionate share
of cost of raw material and conversion costs (labors and Manufacturing over Head cost excluding
depreciation) In case, full until of raw material is required in the beginning the unit cost of work
is process would be higher, i.e., cost of full unit + 50% of conversion cost compared to the raw
material requirement.Throughout the production Cycle, working process is normally equivalent
to 50% of total cost of production. Symbolically,
 Budgeted Estimated work- Average Time Span

Production x in-progress cost x of work-in-

progress

( In units ) per unit inventory (months/days)

12 months / 52 weeks / 365days

3. Finished Goods Inventory:

Working capital required to finance the finished goods inventory is given by factors
summed up as follows:-

Budgeted Cost of Goods Produced Finished

Goods

Production x per unit (excluding x Holding

Period

( in units ) depreciation)
(months/days)

12 months / 52 weeks / 365days

4. Debtors:
The working capital tied up in debtor should be estimated in relation to total cost price
(excluding depreciation) symbolically,

Budgeted Cost of Sales per

Average Debt
Production x unit excluding x Collection
Period

( In units ) depreciation
(months/days)

12 months / 52 weeks / 365days

5. Cash and Bank Balances:

Apart from Working Capital needs for Financing Inventories and Debtors, Firms also find
it useful to have such minimum cash Balances with them. It is difficult to lay down the exact
procedure of determining such an amount. This would primarily be based on the motives of
holding cash balances of the business firm, attitude of management towards risk, the access to
the borrowing sources in times of need and past experience.

ESTIMATION OF CURRENT LIABILITIES

The Working Capital needs of business firms are lower to the extent that such needs are

met through the Current Liabilities(other than Bank Credit) arising in the ordinary course of

business. The Important Current Liabilities in this context are Trade-Creditors, Wages and

Overheads:-

1. Trade Creditors:
The Funding of Working Capital from Trade Creditors can be computed with the help of
the following formula:-
Budgeted Yearly Raw Material Credit
Period

Production x Cost x Allowed by creditors

( In units ) per unit

(months/days)

12 months / 52 weeks / 365days

Note:-Proportional adjustment should be made to cash

purchases of Raw Materials.

2. Direct Wages:
The Funding of Working Capital from Direct Wages can be computed with the help of the

following formula:-

Budgeted Yearly Direct Labor Average

Time-lag in

Production x Cost x Payment of wages

( In units ) per unit

(months/days)

12 months / 52 weeks / 365dayss

Note:-The average Credit Period for the payment of wages approximates to half-a-month in the

case of monthly wage payment. The first days monthly wages are paid on the 30th of the month,

extending credit for 29 days, the second day’s wages are, again, paid on the 30th day, extending

credit for 28 days, and so on. Average credit period approximates to half-a-month.

3. Overheads (other than Depreciation and Amortization):

The Funding of Working Capital from Overheads can be

computed with the help of the following formula:-

Budgeted Yearly Overhead Average

Time-lag in

Production x Cost x Payment of

overheads

( In units ) per unit

(months/days)

12 months / 52 weeks / 365days

Note:-The amount of Overheads may be separately calculated for different types of Overheads.

In the case of Selling Overheads, the relevant item would be sales volume instead of Production

Volume.

FORMAT FOR DETERMINATION OF WORKING CAPITAL:

SL.
PARTICULARS AMOUNT
NO

1 ESTIMATION OF CURRENT ASSETS

1) Minimum desired cash and Bank balances.

xxx

2) Inventories

Raw material xxx

Work-in-progressxxx

Finished stock xxx

3) Debtors

xxx Total XXX

Current Assets
 2

ESTIMATION OF CURRENT LIABILITIES

1) Creditors

xxx XXX

2) Wages XXX
xxx

3) Overheads
XX
xxx

Total current liabilities

XXXX
NET WORKING CAPITAL

(Total Current assets – Total Current liabilities) Add :

Margin for contingency net

Working capital requirement

COMPONENTS OF WORKING CAPITAL

The components of working capital are:

 CASH MANAGEMENT
 RECEIVABLES MANAGEMENT
 INVENTORY MANAGEMENT

 CASH MANAGEMENT:

Cash is the important current asset for the operation of the business. Cash is theBasic
input needed to keep the business running in the continuous basis, it is also the ultimate output
expected to be realized by selling or product manufactured by the firm.

The firm should keep sufficient cash neither more nor less. Cash shortage will disrupt the
firm’s manufacturing operations while excessive cash will simply remain ideal without
contributing anything towards the firm’s profitability. Thus a major function of the financial
manager is to maintain a sound cash position. Cash is the money, which a firm can disburse
immediately without any restriction. The term cash includes coins, currency and cheques held by
the firm and balances in its bank account.

NEED FOR HOLDING CASH

The need for holding Cash arises from a variety of reasons which are,

1. Transaction Motive:
A Bank is always entering into transactions with other entities. While some of
these transactions may not result in an immediate inflow/outflow of cash (E.g. Credit
purchases and Sales), other transactions cause immediate inflows and outflows. So firms keep
a certain amount of
 cash so as to deal with routine transactions where immediate cash payment is required.

2. Precautionary Motive:
Contingencies have a habit of cropping up when least expected. A sudden fire may
break out, accidents may happen, employees may go on a strike, creditors may present bills
earlier than expected or the debtors may make payments earlier than warranted. The Bank has
to be prepared to meet these contingencies to minimize the losses. For this purpose companies
generally maintain some amount in the form of Cash.

3. Speculative Motive:
Firms also maintain cash balances in order to take advantage of opportunities that
do not take place in the course of routine business activities. For example, there may be a sudden
decrease in the price of Raw Materials which is not expected to last long or the firm may want to
invest in securities of other companies when the price is just right. These transactions are purely
of speculative nature for which the firms need cash.

OBJECTIVES OF CASH MANAGEMENT

Primary object of the cash management is to maintain a proper balance between liquidity and
profitability. In order to protect the solvency of the firm and also to maximize the profitability,
Following are some of the objectives of cash management.

1. To meet day to day cash requirements.

2. To provide for unexpected payments.
3. To maximize profits on available investment opportunities.
 4. To protect the solvency of the firm and build up image.
5. To minimize operational cost of cash management.
6. To ensure effective utilization of available cash resources.

CASH BUDGETING

Cash budgeting is an important tool for controlling the cash. It is prepared for future
period to know the estimated amount of cash that may be required. Cash budget is a
statement of estimated cash inflows and outflows relating to a future period. It gives
information about the amount of cash expected to be received and the amount of cash
expected to be paid out by a firm for a given period.

Cash budgeting indicates probably cash receipts and cash payments for an under
consideration. It is a statement of budgeted cash receipts and cash payment resulting in
either positive or negative cash or for a week or for a year and so on.

 RECEIVABLES MANAGEMENT:

Receivables or debtors are the one of the most important parts of the current

Assets which is created if the Bank sells the finished goods to the customer but not receive the
cash for the same immediately. Trade credit arises when a Bank sales its products or services on
credit and does not receive cash immediately. It is an essential marketing tool, acting as a bridge
for the moment of goods through production and distribution stages to customers.
The receivables include three characteristics

1) It involve element of risk which should be carefully analysis.

2) It is based on economic value. To the buyer, the economic value in goods or services passes
immediately at the time of sale, while seller expects an equivalent value to be received later on.

3) It implies futurity. The cash payment for goods or serves received by the buyer will be made
by him in a future period.

A Bank gives trade credit to protect its sales from the competitors and to attract the potential
customers to buy its products at favorable terms. Trade credit creates receivables or book debts
that the Bank is accepted to collect in the near future. The customers from who receivables have
to be collected are called as “Trade Debtors” receivables constitute a substantial position of
current assets.

Granting credit and crediting debtors, amounts to the blocking of the companies funds. The
interval between the date of sale and the date of payment has to be financed out of working
capital as substantial amounts are tied up in trade debtors. It needs careful analysis and proper
management.

ICICI BANK,areselling the goods on cash basis and also on credit basis

 INVENTORY MANAGEMENT:
Inventories are goods held for eventual sale by a firm. Inventories are thus one of the
major elements, which help the firm in obtaining the desired level of sales. Inventories
includes raw materials, semi finished goods, finished products.
In Bank there should be an optimum level of investment for any asset, whether it is plant, cash or
inventories. Again inadequate disrupts production and causes losses in sales. Efficient
management of inventory should ultimately result in wealth maximization of owner’s wealth. It
implies that while the management should try to pursue financial objective of turning inventory
as quickly as possible, it should at the same time ensure sufficient inventories to satisfy
production and sales demand.

The main objectives of inventory management are operational and financial.

The operational mean that means that the materials and spares should be available in sufficient
quantity so that work is not disrupted for want of inventory. The financial objective means that
investments in inventories should not remain ideal and minimum working capital should be
locked in it.

The following are the objectives of inventory management:-

 To ensure continuous supply of materials, spares and finished goods.

 To avoid both over and under stocking of inventory.
 To maintain investments in inventories at the optimum level as required by the operational
and sale activities.
 To keep material cost under control so that they contribute in reducing cost of production and
overall purchases.
 To minimize losses through deterioration, pilferage, wastages and
damages.
 To design proper organization for inventory control so that management. Clear cut account
ability should be fixed at various levels of the organization.
 To ensure perpetual inventory control so that materials shown in stock ledgers should be
actually lying in the stores.
 To ensure right quality of goods at reasonable prices.
BENEFITS OF HOLDING INVENORIES:

Holding of large and adequate inventories is very beneficial to every firm. The
benefits or advantages of holding inventories area as follows

1. Reducing orders cost.

2. Continuous production.
3. To avoid loss.
4. Availing quantity discount.
5. It enables the firm to avoid scarcity of goods meant for either production o sale.

COST OF HOLDING INVENTORIES:

Holding of inventory exposes the firm to a number of risks and costs. Risks of
holding inventories can be put as follows.

1. Material cost
2. Order cost
3. Storage cost
4. Insurance
5. Obsolescence
6. Spoilage
 In the ICICI BANK, each of the above mentioned costs have to be controlled through efficient
inventory management technique. That is:

Economic Order Quantity (EOQ):

This refers to the optimal ordering quantity that will incur the minimum total cost (order cost and
carrying cost) for an item of inventory. With the increase in the order size, the ordering cost
decreases but the carrying cost increases and the optimal order, quantity is determined where
these two costs are equal. The Bank is always tried to keep an eye on the level of safety stock
and the lead-time associated with the orders made.

E.O.Q = √ 2AO

Here, A= Annual consumption. O= Ordering cost per order. C= Carrying cost per unit.
 PART - VI

DATA ANANLYSIS AND INTERPRETATION.

REPORT OF THE BOARD OF DIRECTORS : 2017-18

1. GLOBAL ECONOMY

Global growth is expected to remain at 3.9% in both 2018 and 2019. Advanced

economies will grow faster this year and in next year also. Euro- areas economies

are set to grow at slow rate.

Aggregate growth in emerging market and developing economies is projected to

firm further, with continued strong growth in emerging Asia and Europe. US

growth will slow below potential as the expansionary impact of recent fiscal

policy changes goes into reverse. In the US, financial conditions could tighten

faster than expected.

China's economy began 2018 on a firm note with buoyant retail sales indicating

robust consumption and increasing industrial production. Global trade, which has

been picking up since late 2016 early 2017 led by strengthening global demand,

capital spending and robust manufacturing activity. World trade is projected to

grow by 4.6% in 2018. The March 2018 projections

of the Federal Open Market Committee (FOMC) participants suggest that the

Federal Reserve Bank of USA could hike the policy rates two times in 2018.

Monetary policy stances remained diverse in Emerging Market Economies (EMEs)

with many Central Banks in key Emerging Market Economies (EMEs) reducing

policy rates.

2. DOMESTIC ECONOMY

India grew at more than seven percent during last three years , however in the year

2017-18 as per the Second Advance Estimate of National income released by CSO

on 28th February 2018, estimated the growth of GDP at constant Market prices for

the year 2017-18 to be 6.6% and it is projected to grow 7.4% in 2018-19. The WPI

inflation remained at 2.5% during 2017-18

and CPI inflation stood at 4.28%. The Index of Industrial Production grew by 4.3%

during 2017-18. The production of food grains during 2017-18 is estimated at 277.5

million tonnes. During 2017-18, the value of merchandise exports and imports

increased 9.8% and 19.6% respectively. Foreign exchange reserves stood

at US$ 424.4 billion as on 30th March 2018. The rupee depreciated against the

US dollar, Pound Sterling, Euro and Japanese Yen by 1.0%, 0.8%, 0.9% and

2.8% respectively in

March 2018.

Banking and Financial Market:

The Growth of money supply on a Y-O-Y basis as of 30th March 2018 stood at

9.6% and growth of currency with Public was 39.2% as of 30th March 2018. The

growth rate of time deposits with Banks was 6.2% and demand deposits grew by

6.8%. The Growth of Aggregate Deposits of Scheduled Commercial Banks as of

March 2018 was 6.7%. In terms of Bank Credit, growth was 10.3% as of 30th

March 2018. As per revised estimate for 2017-18, the fiscal deficit of Central Govt.

as % of GDP is 3.5%. The fiscal deficit is budgeted to decline to 3.3% of GDP in FY

2018-19.

In the domestic financial market, various segments have exhibited diverse

movements. Money markets remained laden with the overhang of liquidity that

characterized the first half of the year.

Liquidity in the system moved between surplus and deficit during February-March

2018. Interest rates on Treasury bills and discount rates on commercial papers are

hardening as markets sense that liquidity conditions are balancing out. Bond yields

have increased sharply since August 2017 reflecting a variety of factors, including

concerns that fiscal deficit might be greater than budgeted,expectation of higher

inflation and expectation of rate increase in the US. An increase in international

crude price and rise in global interest rates contributed to the hardening of yields.

Thereafter, yields declined sharply on favorable inflation print for February 2018.

Since the beginning of August 2017, yields in

the secondary govt. securities (G-sec) market hardened almost monotonically, driven

mostly by domestic factors up to early March 2018.

Business Profile

Bank's Global Deposits stood at `1,81,849 crore and gross global

advances at `1,23,990 crore as on 31.3.2018. Total Business of Bank was

`3,05,838 crore as on 31.3.2018 compared to `3,32,940 crore on

31.3.2017.
DOMESTIC

Domestic Deposits of bank were `1,72,017 crore as on 31.3.2018 against

`1,85,102 crore as on 31.3.2017, Gross advances were `1,08,746 crore

compared to `1,12,917crore during the above period. Total deposits of the bank

declined
due to the shedding of bulk deposits and advances declined because of

some selective infrastructure sectors declared as stress.

Saving deposits have grown by 6.39% from `51,456 crore to `54,746 crore

as on 31.3.2018 . Current Deposits stood

at `9330 crore compared to `11323 as on 31.3.2017. Decline in Current deposits

is due to decline in Iran deposits of the Bank. The share of CASA deposits to

total domestic deposits has increased from 33.92% in 31.3.2017 to 37.25% in

31.3.2018.CASA deposits of the Bank have improved from

`62,779 crore to `64,076 crore as of 31.3.2018.

Financial Performance:

During the FY 2017-18, Bank posted a Net loss of `4436 crore compared

to `1851 crore for the previous year FY 2016-17. Net loss of the bank

increased due to increase in provisioning in FY 2017-18. Operating profit

of Bank stood at `1334 crore. Total income declined by `3299 crore while

total expenses of the bank also declined by `1707 crore in FY 17-18.

During the year Bank made provision of `5771 crore as compared to `4777

crore in FY16-17. Cost of

deposits declined to 5.37% in FY 17-18 from 5.83% in FY 16-17. Interest

income of the Bank declined by `2306 crore. Cost income ratio of the Bank

stood at 68.57% in FY 17-18 as against 50.67% in FY 16-17.CD ratio has

improved from 65.41% to 68.18% during the period.

SOCIAL BANKING

Priority Sector Advances:

The Bank has been showing significant performance in lending to Priority

Sector over the years and has been

effectively servicing the priority sector and agriculture sector with its vast

network of rural and semi-urban branches.

As on 31.03.2018, the Priority Sector Advances of the Bank stood at

`54,698 crore constituting 41.45% of Adjusted Net Bank Credit (ANBC).

Agriculture Advances:

Total Agriculture Advances of the Bank stood at `20,876 crore constituting

15.82% of ANBC. Direct Agriculture stood at `13,019 crore constituting

9.87% of ANBC.

Advances to Weaker Sections:

Advances to Weaker Section stood at `15396 crore as of 31st March,

2018 constituting 11.66% of ANBC.

UCO Samagra Gramin Vikas Yojna : For all-round

development of villages

The Bank has adopted 10 villages in 6 states i.e. Gujarat, Himachal

Pradesh, Odisha, Kerala, Uttar Pradesh & West Bengal for its all-round

development under UCO Samagra

Gramin Vikas Yojna.

In these villages, Bank has conducted financial literacy camps to educate the

villagers, extended financial support

to them and has also initiated developmental activities under Corporate

Social Responsibility. Under financial assistance,

Bank has given General Credit Cards (GCC) to small traders, Artisan Credit

Cards (ACC) to artisans, Kisan Credit Cards (KCC) to farmers, loan to

SHGs, loan for doing animal husbandry activities, loan to women & SC/ST

beneficiaries. Many small traders have started their own business with the

support of Bank loan. Through CSR activities, Bank

has given Ceiling Fans, Water purifiers to different schools, Steel Almirahs,

Books for school library, School uniform for school going children, installation

of hand pumps for drinking water in the villages, installation of Solar street

lights in the villages, construction of metallic road.

 Business Responsibility Report

P2 P3 P4 P5 P6- P7- P8- P9

P1- - - - - Plea Plea Plea -
Please refer Plea Plea Plea Plea Plea
Note P1 se se se
se se se se refer refer refer se
refer refer refer refer Note Note Note refer
Note Note Note Note P6 P7 P8 Note
P2 P3 P4 P5 P9
1 Do you have a Y Y Y Y Y N N Y Y
policy/policies for....
2 Has the policy been Y Y Y Y Y – – Y Y
formulated in
consultation with the
relevant stakeholders?
3 Does the policy conform Y Y Y Y Y – – Y Y
to any national
/international standards?
If yes, specify? (50
words)
4 Has the policy been Y Y Y Y Y – – Y Y
approved by the Board?
*
If yes, has it been signed Y Y Y Y Y – – Y Y
by
MD/owner/CEO/approp
riate Board Director?
5 Does the Company have Y Y Y Y Y – – Y Y
a specified committee of
the Board/
Director/Official to
oversee the
implementation of the
policy
6 Indicate the link for the Y Y Y Y Y – – Y Y
policy to be viewed
online?
7 Has the policy been Y Y Y Y Y – – Y Y
formally communicated
to all relevant internal
and external
stakeholders?
8 Does the company have Y Y Y Y Y – – Y Y
in-house structure to
implement the policy/
 policies.

9 Does the Company have Y Y Y Y Y – – Y Y

a grievance redressal
mechanism related to the
policy/policies to
address stakeholders’
grievances related to the
policy/policies?
10 Has the company carried Y Y Y Y Y – – Y Y
out independent
audit/evaluation of the
working of this policy
by an internal or
external agency? Please
see#
P1 Sr No 3 - The Bank has an Anti-Bribery & Anti-Corruption Policy, Group Code of Business
Conduct and Ethics and Whistle Blower Policy. The Anti-Bribery & Anti-Corruption Policy
broadly conforms to the requirements of anti-bribery statutes and the regulatory guidance
issued in relation to the same. While the corporate governance requirements prescribed under
the Listing Agreement require the Bank to have a Code of Conduct, there is no prescribed
standard for the same. The Group Code of Business Conduct and Ethics is based on
professional and ethical standards which the Bank believes all its employees should adopt. The
Whistle Blower Policy broadly conforms to the standards set by the Protected Disclosure
Scheme of Reserve Bank of India. The Whistle Blower Policy also confirms to the
requirements as stipulated by the Companies Act, 2013 and its rules. Sr No 6 - The Group
Code of Business Conduct and Ethics is available on the website of the Bank
(www.icicibank.com). The other policies are internal documents and accessible only to
employees of the organisation.
P2 The Bank complies with regulations governing its products and services and has taken
initiatives to promote inclusive growth and environmental sustainability. Sr No 3 - The Bank
has a three year plan for financial inclusion which outlines its policy towards providing
sustainable banking products to people in villages and rural areas. The plan is framed based on
the guidelines issued by Reserve Bank of India and is approved by the Board of the Bank and
reviewed by it on a quarterly basis. ICICI Foundation focuses on the areas of elementary
education, sustainable livelihoods, primary healthcare and financial inclusion. Sr No 6 - The
initiatives of ICICI Foundation can be viewed on the link www.icicifoundation.org. The
details of agri and rural banking products and facilities are available on
http://www.icicibank.com/rural/index.html. The Bank has a Corporate Social Responsibility
Policy which can be viewed on the weblink http://www.icicibank.com/managed-
assets/docs/about-us/ICICI-Bank-CSR-Policy.pdf.
P3 Sr No 3 - In line with the general laws and regulations and sound ethical practices followed
nationally, the Bank has adopted employee oriented policies covering areas such as employee
benefits and sexual harassment at the workplace which endeavour to provide an environment
of care, nurturing and opportunity to accomplish professional aspirations. Sr No 6 - These
policies can be viewed online only by the employees of the organisation.
P4 The principle enunciates the aspect of being responsive towards all stakeholders especially
those who are disadvantaged, vulnerable and marginalized. Sr No 3 - The Bank has a three
year plan for financial inclusion which outlines its policy towards extending banking services
to the disadvantaged and vulnerable stakeholders in villages and other rural areas. The plan
is framed based on the guidelines issued by Reserve Bank of India and is approved by the
Board of the Bank and reviewed by it on a quarterly basis. The Bank has set processes in
place to achieve the objectives addressed by this principle. In addition, ICICI Foundation
works towards inclusive growth through interventions in areas like elementary education,
sustainable livelihoods and healthcare. Sr No 6 - The details of financial inclusion efforts of
ICICI Group are available on
http://www.icicigroupcompanies.com/financial_inclusion_efforts.htm l. The details of agri and
rural banking products and facilities are available on
http://www.icicibank.com/rural/index.html. The Bank has a Corporate Social Responsibility
Policy which can be viewed on the weblink http://www.icicibank.com/managed-
assets/docs/about-us/ICICI-Bank-CSR-Policy.pdf.
P5 Sr No 3 - The Group Code of Business Conduct & Ethics (Code) which has been adopted by
the Bank and all its subsidiary companies addresses the requirements of this principle. The
Code emphasises fair employment practices & diversity, fair competition, prohibition of
harassment & intimidation and safety at the workplace. The Bank follows the Code of
Commitment based on the standards issued by The Banking Codes and Standards Board of
India which covers aspects like good and fair banking practices, transparency in services and
products, high operating standards and cordial relationship with customers. The Bank is an
equal opportunity employer and believes in providing a safe workplace and an enabling work
environment to its employees. Sr No 6 - The Group Code of Business Conduct and Ethics is
available on the website of the Bank (www.icicibank.com). The Code of Commitment is
available at the Bank's branches and made available to customers on their request.
P6 The aspects outlined under this Principle are not substantially relevant to the Bank given the
nature of its business. The Bank complies with applicable environmental regulations in respect
of its premises and operations. Further, the Bank participates in initiatives towards addressing
environmental issues. The Bank also requires the borrowers of project loans to comply with
 the various national environmental standards.

P7 While there is no specific policy outlined for this principle, the Bank, through trade bodies and
associations, puts forth a number of suggestions with respect to the economy in general and
the banking sector in particular. The Bank, directly, and along with ICICI Foundation has been
working on several initiatives for promotion of inclusive growth.
P8 Sr No 3 - The Bank has a three year plan for financial inclusion which outlines its policy towards
extending banking services to the disadvantaged and vulnerable stakeholders in villages and other
rural areas. The plan is framed based on the guidelines issued by Reserve Bank of India and is
approved by the Board of the Bank and reviewed by it on a quarterly basis. ICICI Foundation
focuses on the areas of elementary education, sustainable livelihoods, primary healthcare and
financial inclusion. Sr No 6 - The details of financial inclusion efforts of ICICI Group are
available on http://www.icicigroupcompanies.com/financial_inclusion_efforts.html. The details of
agri and rural banking products and facilities are available on
http://www.icicibank.com/rural/index.html. The initiatives of ICICI Foundation can be viewed on
the link www.icicifoundation.org. The Bank has a Corporate Social Responsibility Policy which
can be viewed on the weblink http://www.icicibank.com/managed-assets/docs/about-us/ICICI-
Bank-CSR-Policy.pdf.
P9 Sr No 3 - The Bank has a Customer Grievance Redressal Policy and a Customer Compensation
Policy which conform to the guidelines issued by Reserve Bank of India. Sr No 6 - The two
policies can be viewed online on http://www.icicibank.com/notice-board.html.
PART - VII

FINDINGS.

SUGGESTIONS &

CONCLUSIONS.
FINDINGS.

 Working capital of the ICICI BANK was increasing and showing positive working capital
per year.

 The ICICI BANK has higher current as compared to previous

 Inventory turnover ratio is decreases as compared to previous annual report.

 Debtor’s turnover ratio is very high as compared to previous.

 Creditor’s turnover ratio has increased as compared to last annual report.

SUGGESTIONS

 Working capital of the Bank has increasing every year. Profit also increasing every year this

is good sign for the Bank. It has to maintain it further, to run the business long term.

 The Current and quick ratios are almost up to the standard requirement.

So the Working capital management ofICICI BANKis satisfactory and it has to maintain it

further.
 TheBank has sufficient working capital and has better liquidity position.

By efficient utilizing this short-term capital, then it should increase the turnover.

 The Bank should take precautionary measures for investing and collecting funds from

receivables and to reduce the bad debts.

 The Bank is utilizing working capital effectively this is good for the Bank. It has to maintain
it further.

CONCLUSIONS

The study on working capital management conducted in ICICI BANK to analyze the

financial position of the Bank. The Bank’s financial position is analyzed by using the tool of

annual reports from 2016-2017 and 2017-2018

Examination of working capital administration is a top to bottom investigation. It covers the whole
monetary administration of the organization.

ICICI BANK which offer inclination to the regular keeps an eye on by giving better client
administrations.

Any adjustment in the working capital will affect a business' money streams. A positive change in
working capital shows that the business has paid out money.

Consequently, an expansion in working capital will negatively affect the business' money holding.
 Be that as it may, a negative change in working capital shows bring down reserve to satisfy here and
now liabilities (current liabilities), which may had terrible aberrant impact to the fate of the
organization.

For the best administration to the working capital strict eye watch ought to be their now-a-days.

WCM is demon part of budgetary administration in the bank. The assessment of WCM in ICICI
BANK has uncovered that the present proportion is in expanding pattern.

The investigation has been directed on WCM which will assist the organization with managing its
working capital proficiently and viably.

By and large the organization has great liquidity position however as observe to current liabilities.
They not having adequate assets to reimbursement of liabilities.

The financial status of ICICI BANK is good.

BIBLIOGRAPHY

TEXT BOOKS

 M.Y.Khan / P.K Jain, Financial Management Text, Problem’s Cases,

5THEdition,Tata McGraw –Hill Publishing Bank Limited

 Prasanna Chandra, Financial Management Theory and Practice, 5THEdition,

 Tata McGraw –Hill Publishing Bank Limited,

 Annual Report of ICICI BANK.2016-2017, 2017-2018

WEB SITE VISITED

www.google.com

www.wikipedia.orgwww.I

CICIBANK.com