Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
SUBMITTED TO:
SUBMITTED TO THE SHRI GURU RAM RAI UNIVERSITY IN
PARTIAL FULLFILLMENT OF THE REQUIREMENTS FOR
THE AWARD OF THE DEGREE OF
BACHELOR OF BUSINESS ADMINISTRATION (B.B.A)
Submitted by:
TUSHAR CHAUHAN
EN.NO.: R1704250100
BATCH – 2017-2020
1
Faculty of Management and Business Studies
Shri Guru Ram Rai University
Dehradun
CANDIDATE’S DECLARATION
I, TUSHAR CHAUHAN hereby declare that the Summer Training Report, entitled
This is to certify that the statement made by the candidate is true to the best of my knowledge
and belief.
Signature of Guide
Date: Guide Name with Designation
Countersigned
Dean
2
ACKNOWLEDGEMENT
Preparing a project of this nature is an arduous task and I was fortunate enough to get support
from a large number of persons to whom I shall always remain grateful.
I take this opportunity to thank all the respondents for giving their precious time and relevant
information and experience, I require without which this project would have been a different
story.
In addition, I am thankful to MS. DIVYA VERMA Faculty BBA Deptt. & all the faculty of the
institute for their full-hearted co-operation & guidance. This project study is the result of their
right direction, motivation and support.
I would like to express my special gratitude to my Parents and my friends, who are always a
source of inspiration for me.
TUSHAR CHAUHAN
BBA – VTH SEM.
SGRR UNIVERSITY,
DEHRADUN
3
DECLARATION
I hereby declare that this project work entitled “WORKING CAPITAL MANAGEMENT IN
ICICI” is my work , carried out under the guidance of my faculty guide MS. DIVYA VERMA.
This report neither full nor in part has ever been submitted for award of any other degree of
either this university or any other university.
TUSHAR CHAUHAN
BBA – VTH SEM.
SGRR UNIVERSITY,
DEHRADUN
4
PREFACE
As an integral part of the curriculum I, student of BBA, need to get exposed to the
Working Capital of Management to get a better understanding of Finance by way of undergoing
practical training.
I consider myself fortunate enough that I had an opportunity to join ICICI Group,
Dehradun and undergo training at the same, for gaining substantial knowledge of “Working
Capital Management."
Finance is the major asset of any organization. ICICI has large number of Finance Sector
and the management of such a vast number requires a proper mix of conceptual skills to be
effective and meet the organizational goal.
In the present report, an attempt has been made to study the “WORKING CAPITAL
MANAGEMENT in ICICI Bank."
5
CONTENTS
CHAPTER 1.
● Introduction
● Company profile
● Objective & Rationale of the study
● An overview of performance appraisal
CHAPTER 2.
● Literature Review
● Research Methodology
A)Research Design
B)Research Tools
C)Collection/Compilation of data
CHAPTER 3.
● Data Analysis and Interpretations
CHAPTER 4.
● Conclusion
● Limitations of the study
● Questionnaire
● Bibliography
6
EXECUTIVE SUMMARY
Someone has rightly said that practical experience is far better and closer to the real world than
mere theoretical exposure. The practical experience helps the students to view the real business
world closely, which in turn widely influences their perceptions and arguments their
understanding of the real situation.
The phenomenon of creation is a long process requiring time, energy and dedications as well as
skill and experience of those people engaged in the task, ultimately in the outcome as the final
form of embodiment of the creator’s vision. Research work constitutes the backbone of any
management education program. A management student has to do research work quite frequently
during his/her entire span.
As we know working capital is very important for any and every organization, so my research
work is done on WORKING CAPITAL of a private limited organization ICICI .
Working Capital is the life blood and controlling nerve of an organization. ICICI being a large
organization, dealing in bank sector and one of the leading company in banking sector requires a
large amount of funds. Hence there is a need for proper management of working capital, so that
day to day operations do not hamper; at the same time there would not be any idle investment in
working capital.
7
NEEDS AND OBJECTIVES OF WORKING CAPITAL
The need for working capital cannot be over emphasized every business needs some amount of
working capital. The need for working capital arises due to the time gap between production &
realization of cash from sales. There is an operating cycle involved in the sales and realization of
cash.
The working capital is needed for the following purposes.
1. For the purchase of raw materials, components & spares.
2. To pay wages and salaries.
3. To incur day-to-day expenses & overhead cast such as fuel, power and office expenses,
etc.
4. To meet the selling costs are packing, advertising etc.
5. To provide credit facilities to the customers.
6. To maintain the inventories of raw material, work-in-process, stores and spares and
finished stock.
8
ICICI BANK COMPANY LIMITED
ICICI GROUP
In 1955, The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated
at the initiative of the World Bank, the Government of India and representatives of Indian
industry, with the objective of creating a development financial institution for providing
medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar
elected as the first Chairman of ICICI Limited.
ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding
from the World Bank and other multi-lateral agencies, ICICI was also among the first Indian
companies to raise funds from international markets
ICICI Bank is India's second-largest bank with total assets of Rs. 3,849.70 billion (US$ 82
billion) at September 30, 2008 and profit after tax Rs. 17.42 billion for the half year ended
September 30, 2008. The Bank has a network of about 1,400 branches and 4,530 ATMs in India
and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery channels and through its
specialised subsidiaries and affiliates in the areas of investment banking, life and non-life ,
venture capital and asset management. The Bank currently has subsidiaries in the United
Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri
Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab
Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK
subsidiary has established branches in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New
York Stock Exchange (NYSE).
9
Effect of Financial Crisis
The major financial crisis of the 21st century involves esoteric instruments, unaware regulators,
and nervous investors.
Starting in the summer of 2007, the United States experienced a startling contraction in wealth,
triggered by the sub prime crisis, thereby leading to increase in risk spreads, and decrease in
credit market functioning. During boom years, mortgage brokers enticed by the lure of big
commissions, talked buyers with poor credit into accepting housing mortgages with little or no
down payment and without credit checks. Higher default levels, particularly among less credit-
worthy borrowers, magnified the impact of the crisis on the financial sector.
The same financial crisis, which started last summer, is back with a vengeance. Paul Krugman
describes the analogy between credit – lending between market players and the financial
markets, and motor oil to car engines. The ability to raise cash on short notice, i.e. liquidity, is an
essential lubricant for the markets and for the economy as a whole.
The drying liquidity has closed shops of a large number of credit markets. Interest rates have
been rising across the world, even rates at which banks lend to each other. The freezing up of the
financial markets will ultimately lead to a severe reduction in the rate of lending, followed by
slowed and drastically reduced business investments, leading to a recession, possibly a nasty one.
A collapse of trust between market players has decreased the willingness of lending institutions
to risk money. The major reason behind this lack of trust being the bursting of the housing
bubble, which caused a lot of AAA labeled investments to turn out to be junk.
The IMF has warned the global economy of a spiraled mortgage crisis, starting in the United
States, ultimately leading to the largest financial shock since the Great Depression.
Since 1864, American Banking has been split into commercial banks and investment banks. But
now that’s changing. Some of the biggest names on Wall Street, Bear Stearns, Lehman Brothers,
and Merrill Lynch, have disappeared into thin air overnight. Goldman Sachs and Morgan Stanley
are the only two giants left. Nervous investors have been sending markets plunging down. Even
Morgan Stanley, one of the last two big independent investment banks on Wall Street, is
struggling to survive at the exchange, though it insists that the company is still in solid shape.
Markets all over the world are confronted by all-time low figures in the past couple of years or
more, including those of Britain, Germany, and Asia.
10
In India, IT companies, with nearly half of their revenues coming from banking and financial
service segments, are close monitors of the financial crisis across the world. The IT giants which
had Lehman Brothers and Merrill Lynch as their clients are TCS, Wipro, Satyam, and Infosys
Technologies. HCL escaped the loss to a great extent because neither Lehman Brothers nor ML
was its client.
The government has a reason to worry because the ongoing financial crisis may have an adverse
impact on the banks. Lehman Brothers and Merrill Lynch had invested a substantial amount in
the stocks of Indian Banks, which in turn had invested the money in derivatives, leading to the
exposure of even the derivates market to these investment bankers.
The real estate sector is also affected due to the same factor. Lehman Brothers’ real estate partner
had given Rs. 7.40 crores to Unitech Ltd., for its mixed use development project in Santa Cruz.
Lehman had also signed a MoU with Peninsula Land Ltd, an Ashok Piramal real estate company,
to fund the latter’s project amounting to Rs. 576 crores. DLF Assets, which holds an investment
worth $200 million, is another major real estate organization whose valuations are affected by
the Lehman Brothers dissolution.
Britain has also witnessed the so called “bursting of the Brown bubble”, in the form of the
highest personal debt per capita in the G7 combined with an unsustainable rise in housing prices.
The longest period of expansion in the 21st century, which Britain claimed to be undergoing,
eventually revealed itself of being an illusion. The illusion of rising to prosperity has been
maintained by borrowing to spend, often in the form of equity withdrawal from increasing
expensive houses. The bubble ultimately burst, exposing Britain to the most serious financial
crisis since the 1920s. This brings a lot of misery for home owners who are set to see the cost of
mortgages soar following the deepening of the banking crisis and the Libor – the rate at which
banks lend to each other.
The impact of the crisis is more vividly observable in the emerging markets which are suffering
from one of their biggest sell-offs.
“Everyone has exposure to everything…either directly or indirectly”, JP Morgan analyst, Brian
Johnson Economies with disproportionate offshore borrowings (like that of Australia) are
adversely affected by the western financial crunch. Globalization has ensured that none of the
economies of the world stay insulated from the present financial crisis in the developed
economies.
11
Analysis of the impact of the crisis on India can be on the basis of the following 3 criteria:
1. Availability of global liquidity
2. Demand for India investment and cost thereof
3. Decreased consumer demand affecting Indian exports
The main source of Indian prosperity was Foreign Direct Investment (FDI). American and
European companies were bringing in truck-loads of dollars and Euros to get a piece of the pie of
Indian prosperity. Less inflow of foreign investment will result in the dilution of the element of
GDP driven growth.
Liquidity is a major driving force of the strong market performances we have seen in emerging
markets. Markets such as those of India are especially dependent on global liquidity and
international risk appetite. While interest rates in some countries are increasing, countries such as
Brazil are decreasing interest rates. In general, rising interest rates tend to have a negative impact
on global liquidity and subsequently equity prices as fund may move into bonds and other money
markets.
Indian companies which had access to foreign funds for financing their import and export will be
worst hit Foreign funds will be available at huge premiums and will be limited only to the blue-
chip companies, thus leading to:
1. Reduced capacity of expansion leading to supply – side pressure
2. Increased interest rates to affect corporate profitability
3. Increased demand for domestic liquidity will put interest rates under pressure
Consumer demand will face a slow-down in developed economies leading to a reduced demand
for Indian goods and services, thus affecting Indian exports
1. Export oriented units will be worst hit, thus impacting employment
2. Widening of the trade gap due to reduced exports, leading to pressure on the rupee
exchange rate
“Every happy family is alike, but every unhappy family is unhappy in their own way.” – Leo
Tolstoy. While each financial crisis is undoubtedly distinct, there are also striking similarities
between them in growth patterns, debt accumulation, and in current account deficits.
Impact on ICICI bank
The move by Lehman Brothers Holdings, the fourth-largest investment bank to file for
bankruptcy in the US, will impact the country’s largest private bank ICICI Bank partly. The bank
will have to take a hit of $28 million on account of the additional provisioning that ICICI Bank’s
UK subsidiary will have to make. During this quarter, ICICI Bank pared its credit default swap
(CDS) exposures to overseas corporate from $650 million to $80 million. Some of the larger
state-owned banks are also likely to take small hits because of mark-to-market provisioning on
their overseas investments. ICICI Bank will also have to make additional provisioning on its
investments in corporate bonds and on CDS exposures of Indian corporates. However, officials
in the Mumbai-based bank said that the provisioning requirement for these investments is not
substantial.
For the first quarter of FY09, ICICI Bank had reported a net profit of Rs 728 crore. ICICI Bank’s
UK subsidiary had investments of euro 57 million (around $80 million) in senior bonds of
Lehman Brothers. It has already made a provision of close to $12 million against investment in
these bonds. Assuming a recovery of 50% of these investments, the additional provision required
would be about $28 million. The bank has already made a provision of $188 million in its
international books at the end of March 2007-08. According to a research report by broking
house Edelweiss, the UK subsidiary would have to book mark-to-market losses of $200 million.
The report said that the subsidiary had $600 million investments in mortgage-backed securities
and another $500 million investment in corporate bonds. However, bank officials said that it was
too early to comment on the mark-to-market on corporate bonds as things could change if the
Fed cuts rates. ICICI Bank and its subsidiaries had consolidated total assets of Rs 484,643 crore
as on June 30, while ICICI Bank UK had total assets of around $8.7 billion. At the end of the last
quarter, the bank had on its books CDS papers of overseas clients in the range of close to $650
13
million. Subsequently, the bank was able to pare this to $80 million. The bank also has close to
$1.5 billion of CDS of Indian papers. It is likely to take a small hit on these investments. Some of
the other Indian banks such as State Bank of India would also have to take a mark-to-market hit
on its investments. SBI officials said that it was too early to quantify the amount.
ICICI Bank Ltd., India's second- largest bank, reported $264 million of costs to write down the
value of overseas investments, the biggest loss disclosed by an Indian bank since the collapse of
the U.S. subprime-loan market.
The bank set aside $90 million through December and $70 million will be earmarked in fourth-
quarter earnings. The rest will be set off against the bank's net worth.
So far, 45 of the world's biggest banks and securities firms have written down or lost $181
billion related to investments tied to rising defaults on U.S. home loans or to people with poor
credit histories.
The company has the largest holdings of overseas investments among the nation's major banks
and has been expanding internationally to counter slowing demand for credit in India. The value
of the subprime-related investments in its $2 billion of overseas assets dropped because investors
are shunning all except the safest securities
14
DATA ANALYSIS AND INTERPRETATION
15
OPERATING REVIEW
Deposit growth
The Bank has adopted a conscious strategy of focusing on current and savings account deposits
and reducing its wholesale term deposit base. Current and savings account deposits increased
16% to Rs. 66,914 crore (US$ 14.2 billion) at September 30, 2011 from Rs. 57,827 crore (US$
12.3 billion) at September 30, 2010. Current and savings account (CASA) deposits constituted
30% of total deposits at September 30, 2011 compared to 25% at September 30, 2010. Total
deposits declined marginally on a year-on-year basis due to the reduction in term deposits
pursuant to the strategy adopted by the Bank. The Bank has significantly expanded its branch
network to expand its reach and further enhance its deposit franchise. At October 22, 2011, the
Bank had 1,400 branches and 4,530 ATMs.
Credit growth
Consolidated advances of the Bank and its banking subsidiaries and ICICI Home Finance
Company increased 16% to Rs. 264,665 crore (US$ 56.4 billion) at September 30, 2011 from Rs.
227,583 crore (US$ 48.5 billion) at September 30, 2010.
International operations
ICICI Bank’s international business continued to focus on:
Building a retail deposit base which gives the Bank access to low cost deposits on a
sustainable basis.
Being the preferred financier and adviser for overseas expansion of Indian corporate and
strengthening the global syndication network.
Being the preferred bank for non-resident Indians: The Bank’s remittance volumes
increased by 38.2% in Q2-2012 to about Rs. 11,946 crore (US$ 2.5 billion) compared to
Q2-2011.
ICICI Bank Canada’s profit after tax for the six months ended September 30, 2011 (H1-2012)
was CAD 22 million. ICICI Bank Canada’s capital position continued to be strong with a capital
adequacy ratio of 15.4% at September 30, 2011. ICICI Bank Canada’s deposit base increased by
over CAD 1.0 billion during the quarter to CAD 4.85 billion at September 30, 2011, of which
86% was term deposits.
16
ICICI Bank UK’s profit before mark to market impact and provision on investments was US$ 43
million for H1-2012. After the required provisioning charge in respect of its investment portfolio
(including the mark-to-market impact of credit spread widening during the period), ICICI Bank
UK reported a net loss of US$ 35 million. ICICI Bank UK’s capital position continued to be
strong with a capital adequacy ratio of 18.4% at September 30, 2011. ICICI Bank UK’s deposit
base was US$ 4.9 billion at September 30, 2011, of which 39% was term deposits. At September
30, 2011, ICICI Bank UK had zero net non-performing assets.
The Bank and its subsidiaries have entirely exited their non-India linked credit derivatives
portfolio at no incremental loss over and above the provisions already held.
Capital adequacy
The Bank’s capital adequacy at September 30, 2011 as per Reserve Bank of India’s revised
guidelines on Basel II norms was 14.01% and Tier-1 capital adequacy was 11.03%, well above
RBI’s requirement of total capital adequacy of 9.0% and Tier-1 capital adequacy of 6.0%.
17
Table 4 (Rs in billion)
MAR 31, 2018 JUNE 30, 2018 SEP 30. 2018
TOTAL CAPITAL 13.97% 13.42% 14.01%
- TIER 1 11.76% 11.29% 11.03%
- TIER 2 2.20% 2.13% 2.98% *
* Pursuant to clarification received from RBI, Upper Tier II capital bonds of US$ 750 mn
issued in January 2017 are included in Tier-II capital.
Asset quality
At September 30, 2018, the Bank’s net non-performing asset ratio was 1.8% on an
unconsolidated basis. The consolidated net NPA ratio of the Bank and its subsidiaries was 1.6%.
The specific provisions for nonperforming assets (excluding the impact of farm loan waiver)
were Rs. 868 crore (US$ 185 million) in Q2-2018 compared to Rs. 878 crore (US$ 187 million)
in Q1-2018.
Table 5 (Rs in billion)
SEP 30,2018 MAR 31, 2019 SEP 30,2018 MAR 31, 2019
GROSS NPAs 66.89 83.50 92.82 102.71
Less: cumulative 36.53 47.86 51.80 59.72
w/offs and
provision
NET NPAs 30.36 35.64 41.02 42.99
NET NPA ratio 1.41% 1.49% 1.74% 1.83%
Consolidated net NPA ratio of the Bank and its subsidiaries at 1.6%
Gross retail NPLs of Rs. 69.57 bn and net retail NPLs of Rs. 26.77 bn at September 30,
2011
18
Performance highlights of subsidiaries
ICICI BANK Company (ICICI Life) increased its overall market share in retail new business
weighted received premiums from 12.7% in the year ended March 31, 2017 (FY2019) to 13.7%
during April- August 2011. New business weighted received premium increased by 22% in H1-
2018 to Rs. 2,650 crore (US$ 564 million). While ICICI Life’s results reduced the consolidated
profit after tax of ICICI Bank by Rs. 466 crore (US$ 99 million) in H1-2009, ICICI Life’s
unaudited New Business Profit (NBP)2 in H1-2009 was Rs. 522 crore (US$ 111 million). Assets
held increased to Rs. 30,107 crore (US$ 6.4 billion) at September 30, 2008.
ICICI Lombard General Company (ICICI General) increased its overall market share from
11.9% in FY2017 to 12.5% during April-August 2017. ICICI General’s premiums increased
12.2% on a year-on-year basis to Rs. 1,925 crore (US$ 410 million) in H1-2018.
19
SUMMARY PROFIT AND LOSS STATEMENT
Table 6 (Rs in crore)
20
SUMMARY BALANCE SHEET
Table 7 (Rs in crore)
21
BALANCE SHEET FOR Q2 FY18-19
Assets
Table 8 (Rs in billion)
22
LIABILITIES
23
COMPARISON
Capital and reserves & 8360 12900 22556 24663 46820 3973 3994
surplus
Deposits 68109 99819 165083 230510 244431 29351 42026
Investments 43436 50487 71547 91258 111454 12096 14888
Advances 62648 91405 146163 195866 225616 22539 31355
Cost of Funds (CoF) 3.59 3.02 4.01 5.34 6.40 6.13 5.81
Return on advances 6.94 5.75 4.58 4.08 4.33 4.87 4.11
adjusted to CoF
Wages as % to total 5.70 7.47 7.41 7.01 6.57 10.34 13.96
expenses
24
COMPARISON AMONG VARIOUS BANKS ON VARIOUS PARAMETERS
I analysed the above banks on various parameters to find out how they are placed in terms of
business growth, efficiency and the comfort they provide in terms of their current financial
The growth-related variables indicate the last 5-year CAGR banks achieved in advances and
deposits. It also carries a ranking of these banks in terms of their latest CASA ratio. Axis Bank
On efficiency-related parameters, the cost/income ratio, quality of advances and the extent of
loan loss-loss provision coverage have been reviewed, and banks have been accordingly ranked.
In the next segment, certain comfort-related yardsticks have been compared. Capital-raising by
banks to bolster future growth, real estate exposure and overseas dependence for the business
have been compared. Although PNB did not raise any fresh capital and ranks last on that metric,
it ranks as the best bank with lower real estate and foreign exposure, which is critical during a
global economic slowdown. Also, we analysed banks that generate the maximum core interest
income as a proportion of total income. ICICI Bank and Axis Bank have greater proportions of
their income coming from 'other income' and these segments might have greater tendency to
show slower growth in the current scenario. A detailed analysis of the above parameters is
25
Growth metric - Loan growth comparison
The chart below shows that the last 5 years loan growth achieved by India's major banks. HDFC
Bank showed consistent growth over the last 3 years (even though it shows a slight falling trend
in the 5-year chart). Axis Bank achieved a high compounded annual growth during this period,
followed by ICICI Bank.
Table 10
Loan growth CAGR (from FY04 to FY08)
AXIS BOB BOI HDFC ICICI PNB SBI
BANK
59% 32% 25% 37% 38% 26% 27%
26
Table 11
Deposits growth CAGR (from FY14 to FY19)
AXIS BANK BOB BOI HDFC ICICI PNB SBI
43% 20% 20% 35% 38% 17% 14%
27
probability of default. Banks need to be extremely vigilant in terms of monitoring these loans
regularly, so that losses in the form of NPAs do not increase unreasonably and dent the quality of
the loan book.
However, a review of the gross NPA ratio, i.e., GNPA as a percentage of advances indicates that
HDFC Bank and other banks have ensured that the NPA increase is proportionate to that of the
loan growth. In fact, PSU banks have shown tremendous improvement in terms of loan quality,
as the GNPA ratio for these banks fell from average 8-9% levels to less than 3% levels in the last
5 years. Only ICICI Bank has shown deterioration of its loan quality as reflected in its increasing
GNPA ratio. The main reason for this increase is that the bank has substantial exposure to the
retail segment, including huge exposure to the real estate segment at almost 36% of total loans
that includes close to 30% exposure in the form of housing loans. The retail segment constitutes
close to 75% of ICICI Bank's NPAs.
Composition of loan book: Sept 30, 2008
Graph 9
Total loan book: Rs. 2,220 bn
Total retail loan book: Rs. 1,225 bn
Total retail disbursements (including ICICI Housing Finance Company): Rs. 170.00 bn in H1-
2009
1 Small ticket personal loans
28
Source: Antique research Graph 10
29
Source: Antique research
In terms of provision coverage for specific banks, Axis Bank has a low coverage ratio in the
private bank group at around 50%, and the SBI has a ratio of 42%, the lowest in PSU banks in
the comparison chart below.
30
Source: Antique research Graph 14
31
Board of Directors
Executive Director
(Finance)
Cash Internal
Management Budgeting Audit Taxation
Corporate Structure
at ICICI BANK
32
CONDENSED BALANCE SHEET
AS AT 30 JUNE 2019
(CURRENCY: INDIAN RUPEES THOUSAND)
ICICI BANK
33
WORKING CAPITAL OF ICICI BANK
=1, 47,169
= 3, 00,644
Difference in working capital of both years
=300644-147169
=153475
As figure shows that working capital of 2008 is decreasing in comparison to 2011. It means
company getting loss in 2008 while it was in profit in previous year.
34
ICICI BANK
30-Jun-19 30-Jun-18
INCOME
MANAGEMENT FEES 11,36,090 9,06,360
DIVIDENDS 12,255 3,002
PROFIT ON SALE OF
INVESTMENT(NET) 8,701 17,842
MISCELLANIOUS INCOME 1,551 49
11,58,597 9,27,253
EXPENDITURE
EMPLOYEES COST 2,48,777 1,87,004
ADMINISTRATIVE AND OTHER
EXPENSES 4,68,555 3,05,083
DEPRICIATION 29,125 17,429
7,46,457 5,09,516
35
ICICI BANK
CONDENSED CASH FLOW MANAGEMENT
FOR THE THREE MONTH ENDED 30JUNE 2019
(CURRENCY: INDIAN RUPEES THOUSAND)
30-Jun-
30-Jun-19 18
Cash generated from/(used) in operating
activities(A) 96586 93150
Cash generated from/ (used) in investing
activities(B) 1,83,384 6,453
36
PROFIT AND LOSS STATEMENT
OF ICICI BANK
( IN BILLION)
37
BALANCE SHEET: ASSETS
( IN BILION)
Mar 31,2019 June 30,2018 June30,2019 Y-O-Y
Growth
Cash balance with
Banks and SLR 1,130.72 1,060.68 1,075.58 1.4%
-Cash bank
Balance 380.41 296.48 355.51 19.9%
-SLR investment 750.31 764.20 720.07 (5.8)%
Advances 2,256.16 1,982.77 2,241.46 13.0%
Other investment 364.23 330.81 356.98 8.8%
Fixed $ other asset 246.84 195.05 264 35.5%
Total assets 3,997.95 3,569.32 3,941.56 10.4%
BALANCESHEET : LIABILITIES
( IN BILLION)
Mar31,2018 June30,2017 June30,2018 Y-O-Y
Growth
Net worth 464.70 246.86 473.94 92.0%
-Equity capital 11.13 9.03 11.13 23.3%
-Reserve 453.58 237.83 462.81 94.6%
Preference 3.50 3.50 3.50 ---
Deposite 2,444.31 2,307.88 2,344.61 1.6%
Borrowing 863.99 702.81 938.23 33.5%
Other liabilities 221.45 308.26 181.28 (41.2)%
Total liabilities 3,997.95 3,569.32 3,941.56 10.4%
38
IMPORTANCE OR ADVANTAGES OF ADEQUATE
WORKING CAPITAL
The main advantages of maintaining adequate amount of working capital are as follows:-
1. Solvency of the business
Adequate working capital helps in maintaining solvency of the business by providing
uninterrupted flow of production.
2. Goodwill
Sufficient working capital enables a business concern to make prompt payments and hence
helps in creating and maintaining goodwill
3. Easy loans
A concern having adequate working capital, high solvency and good credit standing can
arrange loans from bank and other financial institutions on easy and favorable terms.
4. Cash discounts
Adequate working capital also enables a concern to avail cash discounts on the purchases and
hence it reduces costs.
5. Regular supply of raw material
Sufficient working capital ensures regular supply of raw material and continuous production.
6. Ability to face crisis
Adequate working capital enables a concern to face business crisis in emergencies such as
depression because during such periods, generally, there is much pressure on working
capital.
7. Quick & regular return on investments
Every investor wants a quick and regular return on his investments sufficiency of working
capital enables a concern to pay quick and regular dividends to its investors as these may not
be much pressure to plough back profits.
39
FACTORS AFFECTING WORKING CAPITAL
40
policy of the suppliers of raw materials, goods etc., and two, the credit policy relating to credit
which it extends to its customers.
5.SUPPLY CONDITIONS
The time taken by suppliers of raw materials, goods etc., after placing an order, also determine
the working capital requirements.
WORKING CAPITAL CYCLE
In a manufacturing concern the working capital cycle starts with the realization of cash from the
sale of finished products. The speed with which the working capital completes one cycle
determines the requirement of working capital; longer the period of the cycle larger is the
requirement of working capital.
BANKING RELATIONS
A good bank – customer relationship is a pre- requisite of a successful working capital
management policy.
OTHER FACTORS
Certain other factors such as operating efficiency, taxation policy, dividend policy, etc., also
influence the requirements of working capital.
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ANALYSIS OF WORKING CAPITAL
The analysis of working capital is aimed at ascertaining the current financial soundness of the
firm. The various tools of analysis are:
1. Funds-flow statement
2. Ratio-Analysis
3. Working Capital Budget.
1. To optimize the investment in current assets and to reduce the level of current liabilities, so
that the company can reduce the locking up of funds in working capital employed in the
business.
2. The second important objective of working capital management is that the company should
always be in a position to meet its current obligations, which should properly be supported by
the current assets available with the firm. But maintaining excess funds in working capital
means locking of funds without return.
3. To manage the firm’s current assets in such a way that the marginal return on investment in
these assets is not less than the cost of capital employed to finance the current assets.
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METHODS OF ESTIMATING WORKING CAPITAL
It is not so easy to estimate the amount of working capital that may be required by a firm in order
to maintain a particular level of operation. Therefore, in order to avoid difficulties, a working
capital requirement forecast is to be prepared after scrutinizing and analyzing every aspect of
business activity. The main methods of estimation of working capital are as follows:
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COMPUTATION OF WORKING CAPITAL
NET INCOME
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OPERATING CYCLE CONCEPT OF WORKING CAPITAL
The new concept, which is gaining more and more importance in recent years, is the ‘operating
cycle concept’ of working capital. It can also be called working capital cycle. The operating
cycle refers to the average time elapses between the acquisition of raw materials and the final
cash realization. In other words, an operating cycle is the time- lag between purchases of raw
materials or others inventory items and their conversion into cash. In this way each cycle begins
with cash – outflow and after a time- lag (involving processing, credit sales, receivables etc.)
ends with a cash-inflow.
The shorter is the time-lag between the outflow and inflow of cash, the larger will be the number
of operating cycles and greater will be the volume of total business turnover with minimum of
investment of funds in current assets in an operating period.
In case of a manufacturing company, the operating cycle is the length of time necessary to
complete the following events:
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The operating cycle of a manufacturing business can be shown as given in the following
charts
Accounts
Receivable
In the case of a “trading firm” the operating cycle will include the length of time taken for (1)
conversion of cash into debtors, and (2) conversion of debtors into cash. The net duration of
operating cycle is equal to the number of days involved in the different stages of operation
commencing from purchase of raw materials and ending up with collection of sale proceeds from
debtors against which the number of days credit allowed by suppliers are to be adjusted. The
number of operating cycle in a period is determined by dividing the number of days in the same
by the length of net operating cycle once the number of operating cycle has been determined, the
actual working capital requirement is then arrived at by dividing the total operating expenses for
the period by the number of operating cycle in that period.
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IMPORTANCE OF OPERATING CYCLE CONCEPT
The application of operating cycle concept is mainly useful to ascertain the requirement of cash
working capital to meet the operating expenses of a going concern. This concept is based on the
continuity of the flow of values in a business operation. This is an important concept because the
longer the operating cycle, the more working capital funds the firm needs. Management must
ensure that this cycle does not become too long. This concept more precisely measures the
working capital fund requirements traces its changes and determines the optimum level of
working capital requirements.
1. It concerned with the formulation. It of policies with regard to profitability, liquidity and risk.
2. It is concerned with the decisions about the composition and level of current assets.
3. It is concerned with the decisions about the composition and level of current liabilities.
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SOURCES OF WORKING CAPITAL
A firm can arrange working capital from the following two sources:
1. Long – Term Sources and
2. Short – Term Sources
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(A) Internal Sources :
It mainly includes depreciation provision, outstanding liabilities and provision for
taxation.
(B) External Sources :
Short–Term external sources of financing working capital includes the following :
o Trade Credit :
Usually manufacturing concerns, wholesalers and retailers avail this type of credit. Such
credit is extended by supplier of goods or raw–materials. This facility is given for a short
period which may extend for a few weeks or a few months, based on prevailing market
usage. No interest is charged by the supplier if payment is made by the customer before
the expiry of the credit period.
o Bank Credit :
Normally companies obtain short–term working capital from banks in the form of short–
term loans, cash credit, overdraft and through discounting the bills of exchange.
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RESEARCH METHODOLOGY
Problem Formulation:
As working capital management is the backbone of an organization so this
study is being conducted to assess the various liquidity ratios and for the safety of
organization. Since working capital management studies the current assets and
current liabilities which will affect the performance of the ICICI BANK in future.
Hence, in order to make an accurate forecast of working capital management
certain ratios are calculated which forms the part of working capital management
in ICICI BANK
Analysis Design
The analysis design used in the project is:
METHODOLOGY
For the purpose of the study the relevant data has been entitled from the published
annual reports and manuals of the unit under reference that is ICICI BANK The
analysis of data has been supported by discussion with the managers of the
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enterprise. The data has been intensively examined with the help of different
accounting and statistical technique.
1. Primary Data
It means collection of the information for the first time. Such information is
collection through the discussion with the various managers working in various
section of the finance department.
o Information regarding the profile of the organization has been collected from
the annual plan and the interviews of the concerned offices of the company.
o The data are secondary in nature of are collected from the published
information of the finance department.
o Some information has been collected from website of ICICI BANK i.e,
www.icicibank.com.
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SAMPLE DESIGN
Research method : Sample Survey
Sample area : Dehradun
Sample size : 100 unit
Sample people : Customers
RESEARCH DESIGN
Research design is based on the ‘ Descriptive Method’ so as to describe the
characterstics of the market.
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NEEDS AND OBJECTIVES OF WORKING CAPITAL
The need for working capital cannot be over emphasized every business needs
some amount of working capital. The need for working capital arises due to the
time gap between production & realization of cash from sales. There is an
operating cycle involved in the sales and realization of cash.
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ICICI BANK
CONDENSED BALANCE SHEET
AS AT 30 JUNE 2018
(CURRENCY: INDIAN RUPEES THOUSAND)
ICICI BANK
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WORKING CAPITAL OF ICICI BANK
=1, 47,169
= 3, 00,644
Difference in working capital of both years
=300644-147169
=153475
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ICICI BANK COMPANY LIMITED
CONDENSED PROFIT AND LOSS ACCOUNT
(FOR THE THREE MONTH ENDED 30 JUNE 2018)
30-Jun-19 30-Jun-18
INCOME
MANAGEMENT FEES 11,36,090 9,06,360
DIVIDENDS 12,255 3,002
PROFIT ON SALE OF
INVESTMENT(NET) 8,701 17,842
MISCELLANIOUS INCOME 1,551 49
11,58,597 9,27,253
EXPENDITURE
EMPLOYEES COST 2,48,777 1,87,004
ADMINISTRATIVE AND OTHER
EXPENSES 4,68,555 3,05,083
DEPRICIATION 29,125 17,429
7,46,457 5,09,516
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ICICI BANK COMPANY LIMITED
CONDENSED CASH FLOW MANAGEMENT
FOR THE THREE MONTH ENDED 30JUNE 2018
(CURRENCY: INDIAN RUPEES THOUSAND)
30-Jun-
30-Jun-19 18
Cash generated from/(used) in operating
activities(A) 96586 93150
Cash generated from/ (used) in investing
activities(B) 1,83,384 6,453
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PROFIT AND LOSS STATEMENT
OF ICICI BANK
( IN BILLION)
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BALANCE SHEET: ASSETS
( IN BILION)
Mar 31,2019 June 30,2018 June30,2018 Y-O-Y
Growth
Cash balance with
Banks and SLR 1,130.72 1,060.68 1,075.58 1.4%
-Cash bank
Balance 380.41 296.48 355.51 19.9%
-SLR investment 750.31 764.20 720.07 (5.8)%
Advances 2,256.16 1,982.77 2,241.46 13.0%
Other investment 364.23 330.81 356.98 8.8%
Fixed $ other asset 246.84 195.05 264 35.5%
Total assets 3,997.95 3,569.32 3,941.56 10.4%
BALANCESHEET : LIABILITIES
( IN BILLION)
Mar 31,2019 June 30,2018 June30,2018 Y-O-Y
Growth
Net worth 464.70 246.86 473.94 92.0%
-Equity capital 11.13 9.03 11.13 23.3%
-Reserve 453.58 237.83 462.81 94.6%
Preference 3.50 3.50 3.50 ---
Deposite 2,444.31 2,307.88 2,344.61 1.6%
Borrowing 863.99 702.81 938.23 33.5%
Other liabilities 221.45 308.26 181.28 (41.2)%
Total liabilities 3,997.95 3,569.32 3,941.56 10.4%
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SUGGESTIONS
There are following suggestions which I would like to give to the Company:-
1 To tell client about that policies which are good running in the market.
2 The company should create awareness among the customers about the benefits of various
policies.
3 Company should go for an extensive personal contact program with the customers so that
customer may select policy plans as per their requirement and available finances for short and
long-term investment.
4 Company should give the knowledge to policy holders about their investment in share
market.
5 Company should behave as familiar with their investors or interested persons of the
portfolio of stock must be diversified, because it minimizes risk.
6 The sample investors were asked to give their suggestions for improvement of primary
market situation and they gave the following measures for strengthening primary market.
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CONCLUSION
ICICI BANK is first life Company in India. It has businesses spread out across the globe. It
currently ranks number two amongst the insurers in India (Source: annual premium provided by
the company).
The company faces a large amount of competition. To sustain itself it must promote its products
through advertising and improve its selling techniques. Consumers must be aware of the new
plans available at ICICI BANK . The medium of advertising used could be television since most
of its competitors use this tool to promote their products. The company must be promoted as an
Indian company since consumers seem to have more trust in investing in Indian firms.
The unit linked concept must be specifically promoted. The general perception of life has to
change in India before progress is made in this field. People should not be afraid to invest money
in and must use it as an effective tool for tax planning and long term savings.
ICICI BANK could tap the rural markets with cheaper products and smaller policy terms. There
are individuals who are willing to pay small amounts as premium but the plans do not accept
premiums below a certain amount. It was usually found that a large number of males were
insured compared to females. Individuals below the age of 30 (mostly male) were interested in
investment plans. This was a general conclusion drawn during prospecting clients.
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BIBLOGRAPHY
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BIBLOGRAPHY
WEBSITE-
o www.icici.com
o www.irdaindia.com
o www.money control.com
MAGAZINS –
o World
o The Outlook Money
o Secrets of Successful Sales by Mr. Jack Kinder
BOOKS-
o K.G . GUPTA “ ACCOUNTING FOR MANAGEMENT”
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