CONTENTS

About the co-operative society

Introduction
Definition
Establishment of co-operative society
Administration in Bank
Types
Advantages
About the study
Need for the study
Purpose of the study
Objective of the study
About the Bank
History
Functions
Details of Bank registered member
Details of Finance
Objectives
General organization chart
Administrative organization chart
Head office
Staff pattern at Administrative office
Working Capita Management
Meaning & Definition
Components
Classification
Factors
Findings
Suggestion
Conclusion
Bibliography

KARNATAKA UNIVERSITY DHARWAD

KARNATAKA UNIVERSITY DHARWAD
KARNATAKA UNIVERSITY DHARWAD
KARNATAKA UNIVERSITY DHARWAD
 Declaration

I, Mr. NAVEED AHMAD .S.PATEL here by declare that this project

report is genuine & bonafied work prepared me and submitted to Karnataka

University Dharwad.

To the best of my knowledge and belief the matter presented on this

project report has not been submitted by any one to the Karnataka University

Dharwad.

The present work is original and conclusion drawn are based on data

collected by me. And I have tried to put all the possible efforts to make this

study a success.

KARNATAKA UNIVERSITY DHARWAD

 Acknowledgment

I express my regards to the principal of the SIBA B.B.A Mr,

Sadanand Rudgi sir and his continuous interaction and encouragement

during entire span of project.

My sincere thanks are to our guide Mr.

MUKHTAR sir & faculty of SIBA B.B.A. who guided and

encouraged me to accomplish the task I also extend my heartiest

thanks to Mr C.I. MUDAKAMATH who gave me the co-operation

during the time of the project.

Lastly I would like thanks to all my friends who have directly

& indirectly supported me to complete this project.

KARNATAKA UNIVERSITY DHARWAD

 Introduction
Definition
Establishment
Administration in Bank
Types
Advantages

Introduction

KARNATAKA UNIVERSITY DHARWAD

 Co-operative societies are one of the forms of business organization.

They are formed all over the world. It is voluntary association of person for

mutual benefit and its aim are accomplished of through self help and

collective efforts.

Co-operative organization is mutual help i.e. each for all and all

for each. Thus poor formers may form co-operative credit societies to get

cheap credit facilities and protect themselves against the exploitation of

money lenders. Small producer may form co-operative marketing societies

the exploitation of traders.

The idea behind a co-operative society is that an isolated and power

less man in association with others can lift himself as well others out of

weakness into strength co-operative ( i.e. work together) for working out

(i.e. solving) your economic problems is the theory of co-operation.

Working capital is life blood of business and nerve center for all business

activities. It is also regarded as the heart of business. If it becomes weak, the

business can hardly prosper and survive.

KARNATAKA UNIVERSITY DHARWAD

DEFINITION & MEANING OF CO-OPERATIVE

SOCIETY

According to Indian co-operative societies which has its objective

the promotion of the interest of its members in accordance co-operative

principle.

H. calvert

Define co-operation as a form of organization where in persons

voluntarily associate together as human beings on the basis of equality for

the promotion of the economic interest of themselves.

KARNATAKA UNIVERSITY DHARWAD

FEATURES OF CO-OPERATIVE SOCIETY

1) Voluntary association:- A co-operative society is totally based on

voluntary membership. Persons having a common interest can join together

to form as association.

2) Association of persons:- A co-operative society is as association

of persons & not of capital. Individuals join a co-operative as human beings

& not as capitalization.

3) Open membership:- Membership of a co-operative society is open

to all adults irrespective of caste, class, religion etc

KARNATAKA UNIVERSITY DHARWAD

4) Service motive: - unlike other forms of business organization, the

primary objective of any co-operative society is to provide service to its

members and not for earning maximum profits. service, not profit.

5) Equity of distribution of profit:- In co-operative society

society, are not distributed as dividend among the members. A small portion

of profit, generally 9% of profits.10% of profit is used for the general

welfare of the locality in which the society is working.

6) Corporate status and state control: - A co-operative

society may be registered but most of the co-operative societies are

registered. A registered co-operative society enjoys certain privileges. Such

as exemption from the payment of income tax, stamp duty and registration.

KARNATAKA UNIVERSITY DHARWAD

 Establishment of a co-operative society

In India, the formation and registration of co-operative societies is

governed by the provision of the Indian co-operative society Act of 1912 or

the state co-operative Act enforce in various state.

For the formation of a co-operative society there should at list ten

member who are bound together bound by a common bound ( i.e. belonging

to the same locality, class or occupation and having common and economic

need). These members are ( promoters) should submit an application for

registration to the register of co-operative societies of the state in which the

societies office is to be located.

KARNATAKA UNIVERSITY DHARWAD

The application for registration should state that

Name & address of organization.

Its function area.

Its name & objectives.

Liability & span of the members.

Objective of the capital use.

Rules & condition for the persons who want be members and other
liabilities.

KARNATAKA UNIVERSITY DHARWAD

 Points to be considered while forming of co-
operative society

A) Apex is the union bank of the co-operative society.

B) Financial year of the bank start from April 1st of every year and end on

31st march.

C) An application of registration of co-operative society must contain all the

information as per the provision of Indian co-operative societies Act 1912 or

the state co-operative society enforce in various state.

D) Five copy of the rules and regulation of the co-operative society should

be attached with the application.

E) If all the application of the group are male then there number should be

les then ten.

F) All the applicant should be having more then 18 years age & all applicant

should not belonging to same family.

G) The person who are submitting the application must have a co-operative

group & represent all of them & he should be given all the rights of signing.

KARNATAKA UNIVERSITY DHARWAD

 WHO CAN BE THE MEMBERS 0F CO-
OPERATIVE SOCIETY

The member should not be minor (not less than 18 years).

The member should not be of unsound mind.

He should not be engaged in any illegal activities forbidden by the

law.

Administration of co-operative societies

The management of co-operative societies is entrusted to

a committee known as Managing committee. The members of the

managing committee are elected directly by the members of the co-operative

society at the Annual general meeting.

KARNATAKA UNIVERSITY DHARWAD

Generally a co-operative society has the following office bearers.

President

Vice president

Secretary

Treasurer

The general body of the members lays down the broad objectives and

the polices of the society.

The managing committee determines the detailed programmers and

procedure of the society. It is accountable to the general body of the

members.

The office bearers are responsible for the conduct of the day-to-day

affairs of the society in accordance with the decision of the managing

committee.

KARNATAKA UNIVERSITY DHARWAD

 Types of co-operative societies

1) Consumer co-operative societies

2) Producers co-operative societies

3) Marketing co-operative societies

4) Forming co-operative societies

5) Housing co-operative societies

6) Other co-operative societies

KARNATAKA UNIVERSITY DHARWAD

 Advantages of co-operative society

1) The registration of co-operative society is simple, so a c-operative enjoys

the facility of easy formation.

2) The life of a co-operative society is not affected by the death, insolvency

etc of a member, so a co-operative society has continuity of existence.

3) A co-operative society helps to pool together the resource of weaker

sections of the society for constructive purpose.

4) It promotes the sprit of co-operation among the members.

5) It does not aim profit; it tried to render maximum service to its members.

KARNATAKA UNIVERSITY DHARWAD

 Need for the Study
Purpose of the study
Objective of the study

Need for the Study:

KARNATAKA UNIVERSITY DHARWAD

 The aim need for the organization study is to make the students

acquainted with the practical knowledge about the overall functioning of the

finance department in the organization.

It gives opportunity to study the human behavior and also makes one

ready to face different situation which normally would come across while

working in a company in different environment.

To understand the behavior, culture of an organization and to know

about the various policies of the organization and its performance and its

future strategies.

Purpose of the Study:-

The Purpose of the Study about the profit & loss of the Bank.

About there share capital, Deposit & working capital of the SHRI

SHEDDESHWAR CO-OPERATIVE SOCIETY BANK

KARNATAKA UNIVERSITY DHARWAD

 OBJECTIVES OF THE STUDY:

The primary objective of the specialization study is to the

students to know the practical applicability of the theoretical concept into

business decision in the organization.

The other objectives of the study are as follows.

Details study of finance department.

To understand the aspect of the finance department.

To gain first-hand experience from the organization.

To integrate practical experience with theoretical concept.

To gain all-round view of financial management operation.

To understand the behavior and culture of an organization.

To analyze the present status and future strategies of the organization.

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 History
Functions
Details of bank register member
Details of finance
Objectives
General organization chart
Administrative organization chart
Head branches
Staff pattern at Administrative office

About the Bank

KARNATAKA UNIVERSITY DHARWAD

HISTORY:

Shri Sheddeshwar c-operative Bank was started in the years

1912 April 22. in the years 1912 under the leadership of Late Vachana

pitamaha Rao Bahadur Dr. F.G Halakati ( B.A LLB) and in association of

Late Diwan Bahadur Shri S.G Deshmukh ( Almel ) under co-operative rules

for a small business, for the sake of poor and middle class people, with the

amount of Rs. 2500/- Share capital without any deposits started the business.

In the year 1932 with Rs 20,839 Share capital, Rs 16,821 reserved fund and

otherfunds, Rs 35,0661/- deposits and Rs 80,200 working capital Bank

started working with rules. Late after analyzing the financial position and

working procedure, Reserve bank of India in the year 1982 granted

permission. At present in the co-operative field sheddeshwar bank is one of

the biggest bank. In the end of the year 31/03/09 bank contains Rs. 7.07

crore share, Rs 9.91 crore deposit and Rs. 251 crore working capital.

Functions:-

It motivates limited, self service and co-operative feelings.

KARNATAKA UNIVERSITY DHARWAD

 Through share, Deposits, Loans it reserve money and the reserved

fund are given in the form of loan without any burden on the people

and reserve more amount.

It reserve funds to the members of bank and the people dependent on

them.

It undertakes work in progress.

It provides security blocks.

It motives to start business, company and other business and to fulfill

this and to increase its profit it provides possible help.

It has necessary infrastructure.

Details of Bank register member

No & Date 4217. Date 22/04/1912

KARNATAKA UNIVERSITY DHARWAD

Date of business started 22/04/1912
The permission of DBOD, UBD, KA 322D Date 18/11/1982
reserve bank of India
sl, no and date
Offices Bijapur, Bagalkot, Belgaum, and Gulbarga
district. Head office and 11 branch
Details of members 1) ordinary member
2) co-members
Own buildings and plots Administration bank, main bank K.C market
branch, College campus branch. Jorapur
peth branch, paschapur peth branch, hudko
colony branch, Indi town branch & Ashram
road branch these are having building APMC
branch & Basav nagar are also
having buildings
Auditing 1) According to accounting calculation the
RBI, assigned Auditors & audits
according to rules
Auditing from reserve Bank Every year in the end of month march,
of India according to calculation RBI officers
Auditing observation Except DD facility everything is computerized

Details of finance:-

Share capital:-

KARNATAKA UNIVERSITY DHARWAD

In the last 5 years the amount of share capital and the number of members

and co-members will be as follows.

Years numbers Amount

31/03/2005 40937 7, 21, 97,275/-
31/03/2006 39801 6, 97, 76,975/-
31/03/2007 40060 7, 03, 34,000/-
31/03/2008 39787 7, 03, 73,950/-
31/03/2009 39116 7, 06, 90,325/-

2) Funds:-

From the last 5 years the reserve fund and other funds details are as

follows

KARNATAKA UNIVERSITY DHARWAD

 Years Reserve other funds Total
31/03/2005 7, 75, 49,077.64 14,38,54,217.70 22,14,03,295.34
31/03/2006 8, 12, 71,904.84 23,84,55,912.37 31,97,27,817.21
31/03/2007 8, 64, 35,187.23 25,17,09,626.37 33,81,44,813.50
31/03/2008 9, 08, 08,788.00 30,30,60,176.37 39,38,68,964.37
31/03/2009 9, 90, 81,878.73 31,87,03,446.68 41,77,85,325.41

3) Working Capital:-
The Details of the working capital is as follows.

Years Amount
31/03/2005 236, 52, 77,214.91

KARNATAKA UNIVERSITY DHARWAD

 31/03/2006 254, 55, 57,407.75
31/03/2007 216, 99, 81,701.48
31/03/2008 240, 81, 26,904.27
31/03/2009 250, 74, 37,705.73

4) Deposit:-

KARNATAKA UNIVERSITY DHARWAD

 Bank accepts regular, saving, pigmy and fixed deposits the details

of the deposits in the last 5 years as following. In the end of the 31/03/2005

& 31/03/2006 deposits gets supposed. In the end of last 3 years i.e. 31/03/07,

31/03/08 & 31/03/09 there is an increase and deposits are secured.

Years Amount
31/03/2005 2,10,90,70,260.65
31/03/2006 2,24,22,65,504.69
31/03/2007 1,85,02,61,329.29
31/03/2008 1,99,66,76,887.43
31/03/2009 2,08,54,52,346.55

5) Out side Borrowings:-

KARNATAKA UNIVERSITY DHARWAD

 From the last few years the situation of outside borrowing has

not raised. The reserve of bank are more.

6) Investments:-

According to banking Act 1949 secin the end of the year

31/03/09 Rs 6972.57 accordingly reserved invested investment in these Rs

3651.44 are government & confidential letters.

The inflation & deflation funds created by government

confidential letter. These funds contains Rs 30 lakhs

7) Borrowings:-

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 while providing loans more importance is given to profit. It

gives more importance to those forms which are necessary / important and

then grant loans. The details of the loans provided in last 5 years

years Amount
31/03/2005 1,56,47,99,350.00
31/03/2006 1,39,01,76,619.00
31/03/2007 1,25,23,36,852.95
31/03/2008 1,00,00,76,639.83
31/03/2009 93,05.37,955.52

8) over due debts:-

KARNATAKA UNIVERSITY DHARWAD

 in the end of the year 31/03/09 over due debts amount to RS

3168.83 lakhs & the total debts will be 34.05% last year its percentage was

33.50 ( It is a irregular loan accounts )

Non performance assets:-

( Loan account treated as non performance account after 90

days of the date of over due )

in the last 5 years the non-performance assets are as follows

year N.P.A NPA & %

31/03/2005
31/03/2006
31/03/2007
31/03/2008
31/03/2009

KARNATAKA UNIVERSITY DHARWAD

P & L account / net loss:-
The details of the P & L account & net loss in the last 6 years

is as under.

Year P&L Net loss

31/03/2005 -463.41lakh 463.41lakh

31/03/2006 -821.93lakh 1285.34lakh
31/03/2007 27.80lakh 1257.54lakh
31/03/2008 155.34lakh 1102.20lakh
31/03/2009 60.22lakh 1102.17lakh

KARNATAKA UNIVERSITY DHARWAD

KARNATAKA UNIVERSITY DHARWAD
On the basis of possible loss in the property the
maximum number of capital ( CRAR) Capital Risk
Assets Rtio :-

According to the direction of reserve bank of India the C.R.A.R of

the bank should be maximum 9 from last 6 years the Ratio of the C.R.A.R

will be as follows

Year % age
31/03/2005 8.02
31/03/2006 4.47
31/03/2007 7.31
31/03/2008 10.69
31/03/2009 12.97

KARNATAKA UNIVERSITY DHARWAD

Auditing:-

There is a system of concurrent auditing as well as statutory auditing

by the charted accountant appointed by the state government.

Branching:
There are totally 11 main branches. In which one of the branch is in

indi town & the rest of 10 are situated in different areas of Bijapur. Main

branch of Bank are in K.C market, college campus, Jorapur peth, paschapur

peth, Hudco colony, and in Indi & Ashram Road, branches are having

security Blocks. In the Branch except Indi, other branches are gaining profit.

Computerized:-
To provide good service to the members of Bank, Depositors &

customers in main branch & other branches. And except D rest other work of

banks are done through computers.

KARNATAKA UNIVERSITY DHARWAD

 OBJECTIVES OF THE BANK

To finance co-operative societies registered and deemed to have been

registered under that co-operative societies Act in force in the area.

To rise funds for the purpose of financing co-operative societies,

individuals and other and generally to carry on Banking business.

To develop assist and co-ordinate the work of affiliated societies.

To act as balancing center for the surplus funds of such societies.

To arrange for the supervision and inspection of affiliated societies.

To open branches, pay office and extension counter and suitable

center and frame rules for their conduct and working and transact any

type of banking business on behalf of other banks and societies

registered under any Act with the previous approval of the register.

To make advance to individuals on the pledge of valuable/ approved

securities subject to the rules framed by the Board and approved by

the Registrar.

KARNATAKA UNIVERSITY DHARWAD

 To purchase, sell, transfer, pledge Government promissory notes,

bonds, securities, municipal, zilla parishat and port trust Bonds,

debenture guaranteed by government for the legitimate investment of

the surplus funds of the bank or on behalf of its members or

depositors without incurring any financial responsibility and to do all

things incidental to such business.

To deploy the resource of the bank in profitable avenues subject to

rules framed by Board and approved by the Registrar.

To the ordinary banking business for properly utilizing surplus funds

at the disposal of the bank provided this business is carried on only for

such period and under such conditions as the Register shall prescribe

in each case.

To maintain a library of co-operative literatures and laboratories.

To receive for safe custody securities and ornaments.

To draw, accept, negotiate and sell bills of exchange and other

negotiable instruments in accordance with the rules that shall be

framed by the board for the purpose.

KARNATAKA UNIVERSITY DHARWAD

Organization chart of S.S bank

ANNUAL GENERAL BORD OF SHARE HOLDRES

BOSRD OF DIRECTORS

PRESIDENT (in his absence VICE-PRESIDENT)

GENERAL MANAGER (chief Executive Officer)

1) Administrative office

2) Head office

3) Branches

KARNATAKA UNIVERSITY DHARWAD

Administrative office

KARNATAKA UNIVERSITY DHARWAD

Head office / Branches

KARNATAKA UNIVERSITY DHARWAD

 Staff pattern at Administrative Office

Administration & Establishment:

Deputy General manager or In-charge of the section and to assist

Asst general manager the general manager.
To record proceeding and maintain
files of the section.
Senior assistant Establishment maintenance of some
files & registers.
Junior assistant To assist the junior officer in
disposing off the loan
applications and maintain
inward & out ward.

Banking & funds management

Asst general manager In-charge of the section, control over

the Head Office & Branches and
Development activities and
Investment of funds.
Junior Officer Inspection of Branches and
submission of reports.
Consolidation of accounts and
preparation of statement.

KARNATAKA UNIVERSITY DHARWAD

Junior assistants To assist the junior officers,
in-charge of Branch
inspection.

Loans and Recovery of loans

Assist General manager In-charge of the section and review

the recovery of loan at H.O and
Branches
.
Senior assistant To arrange to file ABN cases and
preparation of consolidated
statements of loan section.
Junior assistant To assist the senior officer.

Legal & public relation

Senior officer To attend the legal cases, staff
disciplinary action, customers,
Deposits and members
complaints and grievance.

Sales department
Senior officer As sale officer of the Department.
Junior Assistant To assist the sale officer.

KARNATAKA UNIVERSITY DHARWAD

Peon Authorized peon of the department

Meaning & Definition of WCM

Components
Classifications
Factors

KARNATAKA UNIVERSITY DHARWAD

 MEANING & DEFINITION OF WORKING
CAPITAL: -

Working capital in simple terms is the amount of funds, which a company,

must have to finance its day-to-day operation, it can be regarded as

part/portion of capital, which is, employed in short operation.

Every organization invests their funds in two terms of capital namely,

1. Fixed Capital.

2. Working Capital

The amount invested in the assets like Plant and Machinery, Building,

Furniture etc, blocked on permanent basis and is called Fixed Capital

Organization not only requires Fixed Capital, but also need of fund to meet

day to day operations for short term purpose, such funds is called Working

Capital.

KARNATAKA UNIVERSITY DHARWAD

Definition of Working Capital: -

Genestenberg: -

Working Capital means Current Assets of a company that are changed in

the ordinary course of business, from one to another, for ex, from cash to

inventories, inventories to receivable, receivable to cash.

Westen & Brigham: -

Working capital refers to a term investment in short term assets cash, short

term securities accounts receivables and inventories.

J. Smith: -

The Sum of the current assets is the working capital of the business.

WORKING CAPITAL = CURRENT ASSETS CURRENT

LIABILITIES.

KARNATAKA UNIVERSITY DHARWAD

 COMPONENTS OF WORKING CAPITAL

There are two components of Working Capital

A. Current Assets

B. Current Liabilities

A. Current Assets

An asset is termed as current assets when it is acquired either for the

purpose of selling or disposing of after taking some required benefit through

the process of manufacturing of which constantly changes in form and

contributes to transactions take place with the operation of the business

although such assets does continue for long in the same form.

KARNATAKA UNIVERSITY DHARWAD

 Components of Current Assets are as follows:

Cash & Bank Balance

Stock of Raw Material at cost- work in process and Finished Goods.

Advanced Recoverable in Cash or kind or kind or for value to be

received.

Security deposits with electricity board-telephone department balances

with customers.

Deposits under the company scheme.

Prepaid Expenses.

Miscellaneous Stores implements goods in transit.

Advanced payment of income takes credit certificates.

Excise duty and sales tax recoverable.

Outstanding debts for a period exceeding six months.

KARNATAKA UNIVERSITY DHARWAD

 Current Liabilities:

Components of Current Liabilities are as follows:

Non-Refundable non-interest bearing advances against subscription to

shares.

Sundry Creditors for the goods and expenses.

Income tax deducted at sources from contractors.

Expenses Payable.

Amount due to promoter of company.

Unclaimed Dividend.

Security Deposits.

Dealers Deposits.

Liabilities for bills discounted.

KARNATAKA UNIVERSITY DHARWAD

 CLASSIFICATION OF WORKING CAPITAL

Working capital

On the basis of concept on the basis of time

Net working Gross working permanent variable

Capital capital working working
Capital capital

Seasonal Specail
Working working
Capital capital

Initial Regular
Working working
Capital capital

KARNATAKA UNIVERSITY DHARWAD

A. On the basics of Concept

(a) 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.

Gross working Capital is the amount of funds invested in the various

components of current assets.

(b) Gross Working Capital

Net working capital refers to the difference between current assets and

current liabilities. This concept enable the firm to determine how many

amount is available at its disposal for its operational requirements.

KARNATAKA UNIVERSITY DHARWAD

A. On the basis of Time

a. Permanent Working Capital

Permanent Working Capital is permanently locked up in the

circulation of current assets. It covers the minimum amount requested for

maintaining the circulation of current assets.

i. Initial Working Capital

At its inception and during the formative period of its operations a

company must have enough cash fund to meet its obligations. The need for

initial working capital is for every company to consolidate its position.

ii. Regular Working Capital

It refers to the minimum amount of liquid capital required to keep up

the circulation of the capital from the cash inventories to account receivable

and from account receivables to back again cash. It consists of adequate

KARNATAKA UNIVERSITY DHARWAD

cash balance on hand and at bank, adequate stock of raw materials and

finished goods and amount of receivables.

b. Variable Working Capital

It refers to the past of the Working Capital that changes with the

volume of business; it may be divided into two classes.

i. Seasonal Working Capital

The working capital required to meet the seasonal requirements of the

business is seasonal temporary working capital

ii. 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, is also know as Special Working Capital.

KARNATAKA UNIVERSITY DHARWAD

DETERMINANTS OF WORKING CAPITAL: -

These are following factors which define the extent of the working capital

1). General Nature of Business

Public utility concern, like Railways needs less amount of working

capital compared to that of trading or manufacturing concern.

2) Size of the business unit:

Generally the larger the size of the firm, the larger will

be the amount of working capital required and vice versa.

3) Length of the period of manufacturer:

KARNATAKA UNIVERSITY DHARWAD

 The time taken to convert the raw material is also

determining the working capital needed by the particular company.

4) Seasonality of operations:

A firm manufacturing fans require more working capital

in summer months compared to that winter month.

5) Production policy:

In the labour intensive industries, the working capital

requirements are more, where as in the cases of highly capital-

intensive industries are less.

6) Rapidity of turnover:

The faster the sale, the larger will be the turnover and

also the working capital required will be less compared to that

slow turnover.

7) Terms of purchase and sales:

KARNATAKA UNIVERSITY DHARWAD

 Firm which purchase goods on cash basis, but sells

there goods on credit basis naturally required a larger amount of

working capital compared to that of the firm purchasing goods on

credit basis and selling those on cash basis.

8) Dividend policy:

A company following conservative dividend policy needs little

amount of working capital, that the company following liberal dividend

policy.

9) Growth and expansion of business:

Growing companies require more working capital than that of static

companies, which do not go for available opportunities.

10) Market conditions:

The degree of competition in the market tends to determine the need

of working in the perfect competition has to have huge amount of working

capital.

KARNATAKA UNIVERSITY DHARWAD

Finding & Recommendation
Conclusion
Suggestion
Bibliography

KARNATAKA UNIVERSITY DHARWAD

 FINDINGS AND SUGGESTIONS

Findings

1. Net Operating Profit after Tax of the OTPL Company shows the good profit in the

current year. So, the company has maintaining good interest in since last two years.

And also company earned handsome profit.

2. Weighted Average Cost of Capital has increased last year to current year. It shows that

cost of capital is maintained properly in the current year. Because Cost of Equity has

remained the same in these two years, and the over all cost of capital is distributed

equally to share holders.

3. As per calculation of consolidated statement of EVA, EVA showing positive balance

since last two year. So, the OTPL Company has earned so much of profit for

continuously for two year with tax rate of 35%.

KARNATAKA UNIVERSITY DHARWAD

4. Cost of Equity is the same for two year. It showing that no increased and no

decreased in the last two years, because, it maintained a sufficient equity in the

company.

Conclusion

Economic Value Added can be every companys most useful metric

and decision guide in the new economy. It is equally useful for the

management of the tangible and intangible the clicks and bricks, the people

and the machines, the labor and the capital. EVA is a new tool in analyzing

the companys financial performance, companies financial performance can

be better understood with the help of EVA.

EVA is based also on historical accounting items. This peculiar

characteristic of EVA is due to the fact that book value is irrelevant i.e. it can

be canceled out in valuation formula of EVA. In periodical performance

measurement EVA can however in some occasions give misleading

information because it suffers from the same shortcomings as accounting

rate of return (ROI).

KARNATAKA UNIVERSITY DHARWAD

 As per my study the company is positive Economic Value Added for

the past two year. So, company should satisfy.

Suggestions

1. NOPAT is increasing year to year. I would like to suggest that company

should concentrate on increasing cost of capital and interest. It

automatically Leads Company earns higher profit.

2. WACC has increased in last year to current year. So, the company should

continue increasing WACC in coming years also. Because overall cost of

capital is distributed among the share holders.

3. As per Consolidated EVA chart it showing that increased in 2005-06

compared to last year. So, it should be concentrate on the better

management of Operating Investing Capital.

KARNATAKA UNIVERSITY DHARWAD

4. Cost of equity has remained same since last two years, So, the company

is to redesign its capital structure because increasing cost of equity in up

coming years.

BIBLOGRAPHY

Financial Management by books used from which I have taken help for

the theory part of the study:

o M.V. Khan

o I.M. Pandey

I have also used the balance sheet of SHRI SHEDDESHWAR CO-

OPERATIVE SOCEITY BANK (S.S.B). Those are from the year 2006-

2007, 2007-2008 & 2008-2009.

I have also used the profit & loss of the SHRI SHEDDESHWAR CO-

OPERATIVE SOCIETY BANK BIJAPUR.

KARNATAKA UNIVERSITY DHARWAD

KARNATAKA UNIVERSITY DHARWAD