CHAPTER-I

INTRODUCTION, DESIGN AND EXECUTION OF THE STUDY

1.1 INTRODUCTION

The cooperative movement became the largest socio-economic movement in the

world. It has contributed significantly to the alleviation of poverty, creation of productive
employment and the enhancement of social integration in the country. The cooperative
movement in India has taken deep roots in various sectors. It has also been making a
significant contribution towards economic and social development of the people.

Cooperative have mainly concerned with agricultural credit, marketing of agricultural

produce and distribution of fertilizers and pesticides and other essential commodities.
Cooperative Banking Structure has a unique position in the Rural Credit Delivery System of
India. They have made significant strides in the field of rural credit. Over the years, they have
remained the prime institutional agency with their vast network, wide coverage and outreach
extending to the remote parts of the country. At present, there are 5.49 lakhs cooperative
societies functioning with the membership of 22.95 crores.

Cooperative Banking system is an integrated one. The short-term Cooperative

Banking Structure is a three tier structure, which consists of State Cooperative Banks at the
State level, District Central Cooperative Banks at the District level, and PACS at the regional
level. The structure is not uniform across the country.

1.2 EMERGENCE OF PACS

Based on the recommendations of a committee appointed by the Government under

the chairmanship of Edward Law, the Cooperative Credit Societies Act birth on 25 th March
1904 in response to eliminate the exploitation of moneylenders the laudable measure was
hailed as a turning point in economic and social history. It holds the promise of helping to
solve a host of problems in rural masses, raising moral as well as economic status and laying
down the foundation to a new social order.

The cooperative solely catered to the needs of the rural poor up to the adoption of
Multi-Agency Approach during the year 1969. In the passage of time and at the end of 20 th
century, this movement has passed through many ups and downs.

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1.3 AGRICULTURAL MOVEMENT OF INDIA

Development of Rural Credit System has always been a complicated affair and this is
clear from India’s history. Intermittent failure of monsoons, unscientific farming practice and
rural indebtedness, seasonal need for credit and other risks has ensured that high interest rates
remain a norm rather than an exception with respects to credit. This problem was also noticed
by our colonial masters and to this date providing a formal system of credit seems to be a
challenge.

1.4 PRIMARY AGRICULTURAL CREDIT SOCIETIES

Primary Agricultural Credit Societies lie at the root of the cooperative credit structure
of the country. These are at the local or base level. In rural areas, there are Primary
Agricultural Credit Society (PACS), which cater to the short and medium-term credit needs
of the farmers and also distributes agricultural inputs like fertilizers and seeds. These directly
deal with the farmers and serve as a last link between the ultimate borrowers. The
membership fee is nominal and the members have unlimited liabilities.The PACSs grant
short-term and medium-term loans only to their members against the personal securities or
mortgage security. The rates of interest charged by PACSs vary from state to state.

(i) There are 4,462 Primary Agricultural Co-operative Credit Society functioning in
the state. Their main objective is to provide agricultural and non-agricultural
credit in rural areas. Agricultural Credit includes crop loan and loans for a
agricultural purposes like purchase of farm machineries, micro irrigation, milch
animals etc.
(ii) The comparative position of loans and deposits of the Primary Agricultural
Cooperative Credit Societies during past five years is given below;

Amount (Rs. in Crore)

Details 2013-14 2014-15 2015-16 2016-17 2017-18

Deposits 5995.49 5987.72 6874.66 7352.64 6606.17
Loan 20989.51 20326.63 19409.52 15403.51 17784.88
Disbursement

Source: primary source

1.5 STRUCTURE OF AGRICULTURAL CREDIT INSTITUTION IN INDIA

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 Structure of agricultural credit institutions in India
GOI RBI

NABARD
Cooperative Banks Commercial Banks Regional Rural Banks

Short term Long term Metropolitan Branches PRB Branches

(14543)
Loan Loan

SCB SLDBS Urban Branches

(28) (20) (8032)

SCB PLDBs Semi Urban Branches

Branches (2959)

DCCBs Rural Branches (32641)

(351)

DCCBs Branches
(11791)

PACS (91720)

Depositors and borrowers

Source: primary source

1.6 EVOLUTION OF FINANCIAL INSTITUTIONS

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 The traditional source of agricultural credit in India has been the village
moneylenders. Though farmers find it convenient and expedient to approach the money
lenders because of their simple procedure of financing, the cost of financing is very high to
the borrowers, not only in terms of the high rate of interest but also because of malpractices,
even in their reformed and improved shape could not meet the short term and long term credit
needs of the farmers. It was felt that the government should come forward in the aid of the
needy agriculturists.
The first attempt was made by the government to help the agriculturists in the form of
Taccavi loans by introducing the land improvement loans act, 1883, and the agriculturists’
loan act, in 1884. The Taccavi loans were to be granted either in the period of famine or
distress or for development purposes. The farmers require loans for their current farm and
consumption expenditures, which are not considered under Taccavi loans.
The slow tempo of agricultural production was causing concern to the government
and after much discussion and deliberations; a new agency for providing credit to farmers
came into existence in 1904 in the form of co-operatives when the co-operative society Act,
1904 was passed. "The Rural Banking Enquiry Committee" headed by Purushottam Thakur
Das in its report took the note about the machinery for Rural credit and recommended that
attention should be concentrated on building up the institutional machinery for rural credit.
The establishment of single agency to cover the entire field of rural credit would not be
feasible in existing conditions. The committee also emphasized for setting up a separate
structure for long term and short term agricultural credit.
Until the introduction of social control (1968) and Nationalization of 14 major
commercial banks in 1969, the cooperatives were the sole agency in the area of institutional
agricultural credit (as a matter of the government policy) since Nationalisation, the banks
entered into the field of agricultural finance along with the cooperatives. The agricultural
finance corporation was also set up in 1968, for formulation of project and consultancy
services on a consortium basis. The Small Farmers Development Agency (SFDA), Marginal
Farmers And Agricultural Labourers (MFAL) and Integrated Rural Development programme
(IRDP) were also started by the government of India, for providing agricultural credit and
subsidies in their respective area, during the fifth plan, SFDA and MFAL were combined for
the same purposes.
The establishment of Regional Rural Banks in 1975 specially meant for the credit
need of small fanners and other weaker sections of the society to strengthen the rural credit
system. The establishment of NABARD by merging the agricultural credit development

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corporation in 1982 was another landmark in the history of rural credit system. In fact, the
cooperative credit movement has given much impetus to the development of agriculture in
India. It also created new hopes and inspirations in the minds of rural community. At least to
some extent in curbing the activities of village moneylender by providing credit to farmers at
cheaper rate of interest.
1.7 CROP LOAN

Crop loan is the most important component of agricultural credit extenced by Primary
Agricultural Cooperative Societies. Effects have been made to achieve inclusiveness in crop
loan disbursal farmers belonging to SC/ST category. On the basis of decision taken on
reorganizing the credit societies it has been recommended that societies should reorient their
operational policies so that credit is production oriented, its use was supervised and its
recovery was regular and would coincide with harvest time. The credit societies were
expected to advance loans on the basis of what is called "The Crop Loan System". Special
features of the programme are:

1. These loans are chiefly for productive purposes.

2. Short-term loans are given on the basis of anticipated crop and not on land orany
tangible security.
3. Loans are related in amount to the estimated outlay on raising the crop: and
4. Recoveries are made as and when the crop is sold. It would be seen that the size of
the loan is not to be determined by the fact of ownership of land or by the value of tangible
security but by the fact that;
 He is a Bonafide cultivator.
 He requires credit for undertaking production; and
 That he is able to repay the loan out of his production.

1.8 FUNCTIONS OF PACCS

1. Provides credit to the farmers, distribute inputs like fertilizers and also run outlets
under the Public Distribution System.

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 2. Provides short term and medium term credit for agriculture and allied activities.
The short-term loans are repayable within a period of 12 to 15 months and the medium term
loans are repayable within 3 to 5 years.
3. Crop loan is the prominent item of credit to the farmers by Primary Agricultural
Cooperative Credit Societies, provided without collateral security up to 10 acres in respect of
registered sugarcane growers and up to Rs.1 lakh in respect of other crops. The loan amount
exceeding this limit is secured with the mortgage of property or pledge of jewels.
4. Primary Agricultural Cooperative Credit Societies also issue loans for other
agricultural purposes like purchase of farm machinery and;
5. To provide marketing facilities for the sale of agricultural produce and to associate
itself with economic and social welfare programmes of the village. Role of PACCS in
Agricultural Development

1.9 OBJECTIVES OF THE STUDY

The following are the main objectives of the study

 To trace the origin and growth of the Perumanallur Primary Agricultural Cooperative
Credit Society Ltd.
 To measure the growth rate and growth index of the Perumanallur Primary
Agricultural Cooperative Credit Society Ltd.
 To find the financial performance through financial statement analyses.
 To summarize the findings of the study and offer suitable suggestions for the
improvement of the Perumanallur Primary Agricultural Cooperative Credit Society
Ltd.

1.10 METHODOLOGY AND DATA COLLECTION

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 The present study evaluates the performance of the Perumanallur Primary
Agricultural Cooperative Credit Society Ltd from 2008-2009 to 2017-2018. The present
study is based mainly on secondary data. The secondary data collected for the study is
analyzed with the help of appropriate tools of analysis.

1.11 SOURCES OF DATA

The secondary data used in this study is collected from the financial statement and
audit report of the study unit. NABARD, RBI regulations an also referred for the financial
performance and reference for the loan operations, sources of fund the banks.

1.12 PERIOD OF THE STUDY

The study covers the period of ten years from 2008-2009 to 2017-2018.

1.13 FRAMEWORK OFANALYSIS

In order to study the working performance of the Perumanallur Agricultural

Cooperative Credit Society, the following tools for analysis have been used.

1.14 TOOLS FOR ANALYSIS

1. Growth index
2. Ratio analysis
3. Trend analysis
4. Mean
5. Standard deviation
6. Variance

1. GROWTH INDEX

An index is an indicator or measure of something, and in finance, it typically refers to

a statistical measure of change in a securities market. Indices consist of a hypothetical
portfolio of securities representing a particular market or a segment of it.

(Current year / Past year) *100

2. RATIO ANALYSIS

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 Ratio is an expression of one number in relation to another. Ratio analysis is the
process of determining and numerical relationship between figures of financial statement. A
1ratio is a mathematical relationship quantitative from.

1.15 CLASSIFICATION

The classification of ration on the basis of purpose is as follows:

 Liquidity ratio
 Activity Ratio
 Profitability Ratio

1. LIQUIDITY RATIOS

Liquidity ratios measure the societies ability to pay off current dues repayable within
a year. Liquidity ratio are otherwise called as Short Term Solvency Ratio. The important
liquidity ratios are

 Current Ratio
 Liquid Ratio
 Absolute Liquid Ratio

2. ACTIVITY RATIOS

Activity ratio indicate the performance of the business. The performance of the
business is judged with it sales or cost of goods sold. These rations are thus referred to as
Turnover Ratios. A few important activity rations are discussed below:

 Debtors Turnover Ratio

 Creditors Turnover Ratio
 Working Capital Ratio

3. PROFITABILITY RATIOS

Efficiency of a business is measured by profitability. Profitability ratio measured the

profit earning capacity of the business concern. The important profitability ratio are discussed
below:

 Gross profit Ratio

 Net profit Ratio

1.16 TREND ANALYSIS

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 Trend analysis is a technique used in technical analysis that attempts to predict the
future stock price movement based on recently observed trend date. Trend analysis is based
on the idea that what has happened in the past gives traders an idea of what will happen in the
future.

Yc = a+b (x)

∑X
a = mean value of y a=
N

∑ XY
b= rate of change b=
∑X2

1.17 MEAN ( X́ )

The mean is the total of the values of the items divided by the number. Mean is the
abbreviation and X́ is the symbol for arithmetic mean. Arithmetic mean is called mean.

1.18 STANDARD DEVIATION (σ )

Standard Deviation is the root mean square deviation of the values from their
arithmetic mean. It is a mathematical deficiency of mean deviation to ignore negative sign.
Standard Deviation possesses most of the desirable properties of a good measure of
dispersion.

1.19 VARIANCE (σ 2)

In profitability theory and statistical, variance is the expectation of the squared

deviation of a random variable from its mean. Informally it measure how for a set of
(random) numbers are spread out from their average value.

1.20 LIMITATIONS OF THE STUDY

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 The present study is done with almost care and delegation. Even though, it has some
drawbacks as follow;

 The study is based on the published annual report of the company which is subject to
limitation.
 Time is the basic limitations of the research within the short period the researcher has
to collect lot of information.

1.21 CHAPTER SCHEME

CHAPTER-I

Introduction, design and execution of the study

CHAPTER-II

Review of Literature

CHAPTER-III

Profile of the Perumanallur Primary Agricultural Cooperative Credit Society Ltd.,

CHAPTER-IV

Ratio Analysis of Perumanallur Primary Agricultural Cooperative Credit Society Ltd.,

CHAPTER-V

Trend Analysis of Perumanallur Primary Agricultural Cooperative Credit Society

Ltd.,

CHAPTER-VI

Summary of Finding , Suggestions and Conclusion

CHAPTER-II

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 REVIEW OF LITERATURE

2.1 INTRODUCTION

In the present chapter, the earlier empirical works conducted in India are reviewed, so
as to find the gap in the earlier research works. important findings of some of the studies
carried out in the past, having a bearing on the performance and role of the cooperative
banking are reported below;

Udayakumar and Gabriel simon Thattil (2001) have examined the status of kisan credit
card business in India as well as in the State of Kerala. In the backdrop of the current kisan
credit card scenario, a micro level study presenting the utilization pattern of credit available
under the scheme by a group of kisan credit card holders in Trivandrum district was
undertaken. In this study, it has been found that the misutilisation of credit was a major factor
which threatens the successful growth of kisan credit card scheme.

Mathur (2001) herculean efforts have been made for providing credit to agriculture by
various agencies. No doubt, these efforts contributed positively to the growth of agriculture.
Much has been done and much remains to be done. But one fact is certain that agricultural
sector performed well only because of role played by credit institutions. No doubt there have
been some lapses noticed in the system, but most of them are made by man for self interest.
There has been a feeling that advances extended to rural areas that too priority sector result in
higher level of non-performing assets than in other sectors. For any credit system to sustain
its operations on a viable basis, it is necessary that it enforces strong credit discipline among
the client. The institutions have engaged in granting agricultural credit need to tackle the
problem of low recovery by implementing effective measures. The problem of recovery is
quite alarming in co-operative credit institutions.

Joshi (2001) made an appraisal of the performance of cooperative banks. It was found that
the cooperative banks were not able to generate funds because of poor resource base, high
transaction costs (i.e. management expenses, staff cost, administration cost), lack of
professional management and business diversification. It was suggested that dual control on
cooperative banks should be abolished and primary agricultural credit societies (PACS)
should be reorganized and there should be professionalism in management of cooperative
banks.

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Prasuna (2001) examined that cooperative banks expanded by leaps and bounds over the last
decade. However, the regulating environment and other systematic controls are yet to be put
in place. The regulating structure of cooperative banks and the supervision process is so lax
that it conveys the attitude of no man’s child. Major problems with the cooperative banks are
inadequate entry norms, absence of compliance to prudential norms of banking, politicizing
the management, absence of proper supervision mechanisms and the biggest one is the
duality of control. It was found that there is no short cut that could bring the lost credibility
back to cooperative banks. It is only by mending their ways, adhering to prudential norms
and setting themselves right then only cooperatives can improve their performance.

Das, Balishter and Singh (2001) made an attempt to examine the performance of
cooperatives in rural development and the performance was examined through contribution
of cooperatives in the development of rural infrastructure facilities, supply of credit and
organizing the marketing and processing activities. But it was found that the performance was
not up to the mark due to several weaknesses, i.e., resource constraint, large overdue and
defective management. It was found that the rural economy is the weaker section of the
national economy and this weakness is responsible for backwardness of the economy and
cooperatives seem to be the only hope to accelerate the growth of rural economy so
cooperatives should be strengthened through effective monitoring system, strong resource
base, effective management, and trained and professional staff.

Viswanath (2001) attempted to analyze the qualitative performance of agricultural credit

cooperatives and their problem of overdue in India. He highlighted the main factors causing
overdue. It was analyzed that out of 16 states only performance of 5 states is above the
national average. The agricultural advanced states, i.e., Punjab and Haryana have the
performance below the national average. It was found that overdue, membership, working
capital and amount of loans advanced move in the same direction. It was also found that the
main factors causing overdue are misutilisation of 130 loans, natural calamities, willful
default by farmers, unqualified staff, inefficient management and cooperatives are dominated
by economically powerful and socially dominated groups. It was suggested that cooperatives
should diversify their transactions; there should be no political interference in recovery of
loans and there should be professional management.

Kamesam (2001) attempted to study Corporate Governance in the cooperative sector. The
concept of Corporate Governance came into sharp focus because more and more cooperative

12
banks in India both in rural and urban areas, have experienced grave problems in recent time
that have threatened the profile and identity of the entire cooperative system. It is necessary
that cooperative banks should work like professional organization on sound managerial
system with the needs of the time to retain and improve their market share and identity in the
long run. There is need of greater transparency in the balance sheet of cooperative banks and
also proper internal control to reach higher standards. There is greater need of clarity in
defining the roles of various control institutions, i.e., State Government, RBI and NABARD
so as to remove overlapping of control over cooperative banks.131

Zeratsion,Fessha, (2002) in his study on the performance of primary agricultural credit

societies in Karnataka has revealed that total loan recovered by primary agricultural credit
societies in the state steadily increased recording a growth of 15.37 per cent. During the study
period from 1986-87 to 1997-98 the overdues increased at 3.15 per cent annually and it was
not significant.

Sangmi (2002) made an attempt to identify the factors responsible for superior performance
as well as poor performance of the commercial banks. It was found that the banks
maintaining higher difference, i.e., spread (difference between interest earned and interest
paid) have higher profitability. The second factor affecting the profitability positively is
diversified banking activities, i.e., earning more from the non-fund activities; and the third
factor is low operating costs which contribute to high profitability and productivity. It was
suggested that to earn high profits the banks should concentrate not only on mobilization of
deposits but also invest them in channels which will generate more income. It was further
suggested that banks should diversify their activities to control the operating costs.

Chalam and Prasad (2003) made an attempt to analyses the role of Primary Agricultural
Cooperative Societies (PACS) in West Godavari district of Andhra Pradesh in providing
services and members perception about the working of PACS. It was analysed that landless
laborers are more than half in the total membership and they become members not on their
own initiatives but are motivated by the candidates contesting elections. Majority of the
members, i.e., 80% availed short-term credit, and small and marginal farmers were the
maximum beneficiaries of credit services of PACS. It was also found that the loans provided
by the banks do not fulfill all the requirements of the farmers and they have to depend upon
other sources also. The findings of the study further provide that the small and marginal
farmers repay the loan in time but big farmers generally delay the payments. It was suggested

13
that membership fees should be increased to discourage the contestants to the post of
president and directors from joining their friends as member of PACS just before elections
and the PACS in addition to providing credit and non-credit services should also arrange
other services, i.e., farm guidance and education training to the members.

Kumar,sanjeev(2004) attempted to evaluate the profitability and productivity of Public

Sector Banks (PSBs) in the post-liberalization period. The results show that liberalization
measures introduced by the Indian government have altered the banking sector and
profitability of PSB has declined to a large extent. The results show that net profit in absolute
terms has increased in majority of the PSBs but profitability witnessed a decline. The banks
will have to pay greater attention to strategic management, strategic planning and technical
aspects of lending and credit evaluation to improve their performance.

Tripathy (2004) brought out that with globalization and financial sector reforms, the
cooperatives have come under severe pressure from other competitive financial institutions. It
was found that cooperative credit institutions are facing many problems i.e. poor recovery
performance, lack of professionalism, low level of diversification in business operations,
mounting overdue, NPA and low capital base. It was suggested that to achieve the targeted
objective of cooperative credit institutions there is need of appropriate credit planning and
loan appraisal system, professionalisation in cooperatives, diversification of loans,
modernization of their operational procedures and ensuring better managerial skill with
efficient risk management, transparency and high recovery ratio so as to facilitate their
development as self reliant and economically viable rural financial organization. It was also
suggested that the cooperative sector should diversify itself in different export promotion
activities.

Nair (2004) in his paper titled, “Village Co-operatives − A Century of Service to the Nation”
observed that by 2004, the formal institutionalized co-operative sector completed a century of
its service to the nation. Analyzing the progress of Primary Agricultural Co-operative
Societies, he observed that during the half century spread over 1951-2001, the PACs made
rapid strides in membership, owned funds, deposits, and in channelizing the production credit
for farmers. They were versatile in the sense that they can take up any type of rural financing
and rural service activity at short notice and at lowest transaction cost. But besides excelling
on all fronts, the co-operatives are feeling handicapped due to mounting NPAs. The overdue
loans of PACs increased to Rs. 95,899.60 million in 2000-01 as compared to Rs. 63.79

14
million indicated in 1950-51, there by subjecting them to a sustained and systematic process
of reviews, reorganization and restructuring.
Mohan (2004) Agricultural credit has played a vital role in supporting agricultural
production India. The green revolution characterized by a greater use of inputs like fertilizers,
seeds and other inputs, increased credit requirements which were provided by the agricultural
financial institutions. Though the outreach and the amount of agricultural financial
institutions. Though the outreach and the amount of agricultural credit have increased over
the years, several weakness have crept in which have affected the viability and sustainability
of these institutions. Furthermore, antiquated legal framework and the outdated tenancy laws
have hampered flow of credit and development of strong and efficient agricultural credit
institutions.
Ayenew Belay et al. (2004) have examined the trend and growth in size of operation of
Primary Agricultural Co-operative societies, and have also analysed the pace of deposit
mobilization, pattern of loan disbursement and sources of working capital of PACSs.
Sunil Kumar (2004) has stated that the Indian agriculture, dominated by the small
operational landholdings has been facing a serious problem of insufficient credit availability.
The traditional methods of financing like subsidised credit through cooperatives, Priority
sector lending and other farm credit schemes have proved to be insufficient and
unsustainable.
Dayanandan (2004) has revealed there are two groups of borrowers (non-defaulters and
defaulters); in agricultural sector, two characteristics namely, number of times borrowed and
utilization are the factors having high discriminating power. If a borrower avails loan for a
number of times, he can use it for cultivation continuously which will yield regular income.
Ultimately he can earn additional income to repay the loan promptly. Further, proper
utilization of loans results in good yield from the venture and motivates the borrowers to
repay the loan regularly. If mis-utilized, there is no chance of generating additional income
resulting in default. In agriculture-allied sector, utilization and number of visits to the bank
are the variables having high discriminating power. If the loan amount is not utilized
properly, no positive impact can be absorbed from the venture. That situation will lead the
borrowers to become defaulters. Moreover, if the borrower made a number of visits to the
bank to get the loan, he will get frustrated and will decide not to repay the loan. This situation
leads to more defaulters.
Guhajeniffer (2005) in his paper, has studied the phenomenon of farmer Suicides in India,
specifically in the State of Maharashtra. Research was collected through primary Sources

15
(interviews) as well as secondary sources (journal articles and books on previously completed
studies). There is not one single cause for the suicides; therefore this paper looks at the
several compounding factors (political, economic, and social) that influence the decision of
the farmers commit suicide. Some of these factors include: integration with the world market,
genetically modified crops, government policies, water access and drought, as well as social
issues. Lastly, this paper analyzes policies and preventative measures in order to make a final
recommendation of endorsing organic farming techniques, creating more insurance schemes,
and creating more community groups for farmers. The paper also includes a discussion of the
prevalence of farmer suicides in the media, and highlights the new 2012 Budget, which
includes an increase in funding towards agriculture.

Krishnaveni and Narayan Sah (2005) have aimed to estimate the centrality measures with
respect to direct agricultural credit, short term and long term credit by taking the scheduled
commercial banks and RRBs as rivals of co-operatives. The main reasons for the failure of
the co-operative in the provision of agricultural credit are (i) huge dependence on local
resources and larger dependence on higher credit institutions (ii) problem of high level of
over dues (iii) regional disparities in the distribution of credit (iv) high level of NPAs (v)
politicization of co-operatives (vi) domination of government over the co- operatives (vii)
poor management (viii) lack of enthusiasm and dedication among the members. In recent
years the public sector banks are trying to trim the operation costs to improve their
profitability in the wave of competition from private banks. In this process, the closure of
uneconomic banks may hinder the provision of credit to the agricultural sector .This decision
reduces the access to credit in rural areas that were served by the banks since nationalization
through bank expansion drive and worsens the tendency towards reduced provision of credit
to the agricultural sector. As a result of this credit squeeze the agriculture and allied activities
of the rural economy may face severe problems of working capital for cultivation. In this
critical situation again there is a possibility of revival of private money lending in rural
areas .Thus this type of retrogression has serious consequences on the farming community as
well as the future of Indian agriculture.

Katchova and Barry (2005) have developed models for quantifying credit risk in
agricultural lending. They have calculated probabilities of default, loss given default,
portfolio risk, and correlations using data from farm businesses. The authors showed
that the calculated expected and unexpected losses under Basel II critically depend on
the credit quality of the loan portfolio and the correlations among farm performances.

16
These analyses of portfolio credit risk could be further enhanced if segmented by
primary commodity and geographical location. Agricultural lenders could adopt similar
models to quantify credit risk, a key component in the calibration of minimum capital
requirements.

Ganesan (2005-06) made an attempt to study the relative performance of State Cooperative
Banks (SCBs) in India for the years 2002-03 and 2003-04. For analysing the performance of
the banks, different input parameters (i.e. membership, labor, borrowed funds and number of
branches) and output parameters (i.e. advances and 134 investments) were used. In relative
efficiency it was found that 5 SCBs, i.e., Gujarat, Himachal Pradesh, Maharashtra, Tamil
Nadu and West Bengal were found to be efficient in 2002-03 and 6 SCBs, i.e., Andhra
Pradesh, Delhi, Gujarat, Himachal Pradesh, Maharashtra and West Bengal were found to be
efficient in 2003-04. The average efficiency for the SCBs in India was 0.46 in 2002-03 and
0.47 in 2003-04. In traditional self-efficiency approach, it was found that SCBs of Andhra
Pradesh, Gujarat, Maharashtra and West Bengal have high self-efficiency and in cross
efficiency approach, it was found that SCBs of Andhra Pradesh, Assam, Tripura, Nagaland
and Mizoram are the worst performers.

Govindarajan and Singh (2006) attempted to evaluate the extent of success or failure of
Tamil Nadu State Cooperative Bank Ltd. in its efforts of mobilizing resources and diverting
them to cooperative banks at regional level. An attempt was also made to study the
profitability and the factors affecting the profitability of the bank. It was found that the
profitability of the bank is slowly declining year after year. Though cooperative banks meant
for service motive, the banks must also earn some profits for their existence. It was suggested
that the bank should have control over the non interest expenditure and earn more noninterest
income due to diversification of its activities and proper steps should be taken to improve the
profitability of the bank.

Goyal et al. (2006) made an attempt to study the changes and regional variations in growth
of Primary Agricultural Cooperative Societies (PACS) in Haryana. It was analysed that there
is significant growth in share capital, owned funds, working capital and loan advance and
membership. But the growth rate of overdue is very high. There are large scale variations in
membership per society and loan advanced per society, proportion of profit making societies
was more in the western region than the eastern region. The variables with regard to
membership, overdue are increasing but with regard to loan advanced these are reducing. It

17
was suggested that the societies should streamline the recovery drive to improve the viability
of societies.

Thorat (2006) observed that in 2004-05 the share of cooperatives in credit disbursement
decreased and the share of 137 commercial banks increased. It was found that this is due to
the poor financial health of cooperatives. The duality of control, unprofessional methods of
operations including poorhouse keeping, weak internal control and poor quality of audit
resulted in low performance of cooperatives. It was suggested that financial assistance should
be given to cooperatives and cooperatives need to introspect, to find ways and means on how
to retain their market share and how to increase it overtime. Cooperatives must innovate in
terms of products and processes and embrace information technology to yield good results.

Prasad and Shandilya (2006) in their book ‘Agricultural Credit and NABARD’ studied the
importance of agriculture finance, the different credit agencies, functions, and organizational
set-up and refinance operations of NABARD. They found that though there are several credit
institutions providing credit facilities to the agricultural sector but most of them are acting as
credit shops disbursing credit and getting it back while the basic concept of development
oriented financing is that credit is to be consciously used as a lever of development.
However, NABARD was set-up on the recommendations of the Committee to review
arrangements for institutional credit for agriculture and rural development (CRAFICARD)
and it undertakes the functions of apex refinance for the promotion of agriculture and allied
activities.
Bagchi (2006) in his study, ‘Agriculture and Rural Development are synonymous in Reality-
suggested Role of CAs in Accelerating process’ analyzed the performance of Primary
Agricultural Credit Societies, and observed that PACS could not match up to the increasing
requirements of growth dimensions in the agriculture / rural developments in the post
Independence period, although till the late 50”s, they were the only available source of
institutional rural finance.
Hatai (2006) while analyzing agricultural credit and overdue in Uttar Pradesh has found that
out of total borrowing on marginal farms crop loan shared about 61 and 74 per cent in the
west and east zones respectively. The term loan is only 25 and 38 per cent of the total
borrowing in the east and west zone respectively on the marginal farms. The share of crop
loans is further reduced to 32 per cent on large farms. He has concluded that crop loan has
inverse relationship with the size of holding, whereas the positive relationship has been
observed between the term loan and the size of holdings.

18
ZakirHussain (2006) has made an analysis by comparing the performance of PACSs in
Kerala with all India position to find out the reasons for the failure in achieving profitability.
He has concluded that it is high time that the service co- operative banks in Kerala have to
analyse the profitability of each of their activity, plan their funds efficiently and effectively,
utilize their work force to the maximum in order to get a reasonable profit and survive in their
competitive environment.

Prasad (2006) has pointed out the several problems faced by PACSs. He states that the
problems faced by PACSs have greatly affected their performance. He has suggested that
PACSs must advance more amounts of short-term, medium-term and long-term loans to the
members and link the credit with marketing of products which will go a long way towards
better recovery of loans and advances, which in turn, will surely improve the financial
soundness of PACSs.

Bhagavati Prasad (2006) has examined the performance of co-operative credit and banking
structure. He has analyzed the critical problems faced by PACSs such as lack of
diversification in business portfolio, low volume of business, declining percentage of
borrowing membership, high cost of management, imbalances in loan outstanding, unskilled
staff, lack of professionalism, weak MIS, involvement in less profitable PDS business and
low interest margin.

Bandopadhyaya (2007) has developed a credit scoring model for agricultural loan
portfolio of a large Public Sector Bank in India and suggest how such model would
help the Bank to mitigate risk in Agricultural lending. The logistic model has been
developed in this study reflects major risk characteristics of Indian agricultural sector,
loans and borrowers and designed to be consistent with Basel II, including
consideration given to forecasting accuracy and model applicability. Study shown how
agricultural exposures are typically can be managed on a portfolio basis which will not
only enable the bank to diversify the risk and optimize the profit in the business, but
also will strengthen banker borrower relationship and enables the bank to expand its
reach to farmers because of transparency in loan decision making process.

Chalam and Prasad (2007) attempted to analyse the financial performance of PACS
working in West Godavari District of Andhra Pradesh. For evaluating the performance, the
ratios like liquidity, operational, productivity and profitability were used. It was found that
cash to deposit and credit to deposit ratio were very high. It was also found that establishment

19
expenditure of the PACS was very high. It was suggested that the management should check
the expenditure to ensure profitability, and societies should take necessary steps to enhance
their income from non-credit activities. The societies should also take steps to maintain
consistent and higher level of profitability.

Chalam and Prasad (2007) have analyzed the financial performance of nine selected
primary agricultural co-operative societies and suggested that the co-operative societies
should strike a balance between liquidity and profitability.

Sujatha (2007) attempted to analyse the financial performance of Krishna Cooperative

Central Bank Ltd. for a period of 11 years from 1995 to 2005. To analyse performance
various liquidity, productivity and profitability ratios were used. It was found that the
strength of the bank is: higher level of owned funds, reasonable cost of deposits & 139
borrowings, low expense ratio, favorable burden ratio but the bank has the weakness of high
level of liquid & cash assets, low credit to deposit ratio and low yield on advances. It was
suggested that the bank should launch deposit mobilization campaign and there is need to
diversify the loan portfolio. Also the bank should enforce the provisions to recover loans in
order to reduce its NPAs.

Sikandar Kumar and Rakesh Singh (2007) in their study on “Impact of co-operative credit
on the agriculture sector of Himachal Pradesh: A study of Mid Hill Zone” has suggested the
proper guidance regarding utilization of the available high yielding varieties of seeds,
fertilizers and pesticides depending on soil conditions and effective supervision from time to
time.

Mishra and Mishra (2007) have identified that the large farmers by their political influence
get access to considerable amount of credit but the small and marginal farmers are found to
divert the productive credit for other purposes and very often they are alleged not to have
repaid the amount intentionally.

Gaur (2008) in his paper has highlighted that the loan waiver scheme of the Union Budget
2008 has some serious flaws, and it is perfectly fine because the outreach of any government
measure is limited, and some section of the society would be benefited more than the other.
But the most important consideration is the fact that agriculture is facing a serious crisis and
some productive measures have to be undertaken by the government in this regard. The
present scheme has a very limited number of beneficiaries, and with such huge amount of

20
money the least to be expected by a government scheme is to reach a large number of people.
It seems that the assumptions under which the Finance Minister developed this scheme were
flawed, despite the comprehensive committee report of Dr. R Radhakrishnan on rural in
datedness. The loan waiver scheme targets a selected group of farmers, and the problem is
not with the small section of farmers being benefited, but the fact that the potential of such a
huge amount of money is enormous and many more could have been benefited.

Paramasivan (2008) has focused on the primary agricultural co- operative societies in
Mallasamudram block in Namakkal district of Tamil Nadu. He has suggested that the
restructuring of co-operative societies is unavoidable in the present day situation and the
primary agricultural co-operative banks should change their structure and programs in
accordance with modern development.

Vishwanath (2008) has made an attempt to understand the problems of institutional rural
finance in Karnataka. The author has looked into the recommendations of various committees
related to rural finance and provided valuable suggestions for its improvement.

Sriniwasan (2008) has identified that the loan waiver scheme is an effort that cures
symptoms than causes. It has high visibility, but unlikely to produce lasting results in the
development of farm sector. The large amount of money being spent could have been
used to usher in fundamental reforms in agriculture and make it market oriented and
profit centered. The government intervention in farming should move towards improving
profitability and target farm incomes through measures in the real sector than merely
making marginal changes through the financial sector . The opportunity to do the right
thing by the farmers and agriculture is not lost; but certainly the money is.

Samantaray (2008) made an attempt to study the growth of performance indicators of

Cuttack Credit Cooperative Ltd. for the period 1998-99 to 2005-06; and the performance
indicators selected for the study include membership, working capital, investment, loans &
advances and net profit. It was found that growth of performance indicators is found to be
improving as compared to the previous years. It was suggested that efforts should be made to
maintain stability in the growth to remain in the competitive market with increasing rate of
productivity.

Okerhejoseph,emimarealex,(2009) have examined the credit risk exposure of banks in

agricultural financing. Sources of bank risks are highlighted. Farm risks that limit credit

21
repayment capacity are outlined. Statistical techniques for risk measurement are discussed
alongside process and strategies for credit risk management. Recommendations for
minimizing losses from bank risks in financing agriculture are also provided.

Sourovi (2010) in his paper he has presented an overview of the agrarian credit scenario in
India. Drawing from past studies and previous research, this paper provides a detailed
analysis of the various issues pertinent to the functioning of agrarian credit markets. These
include the glaring chasm between demand and supply of agrarian credit, the emergence of
sectors within the Indian economy which compete with agriculture for institutional credit and
the aversion of institutional lenders towards agrarian borrowers. The paper also attempts an
analysis of deficiencies plaguing the three distinct phases of a credit cycle resource
mobilization, lending and recovery.

John, Lakshmi and Chatterjee (2010) have given an insight into the agricultural history of
India and touches upon the role of liberalisation in aggravating the agrarian crisis experienced
by the country. According to them Indian agriculture flourished under the phenomenal
success of the Green Revolution during the 1980s. But now rural indebtedness is the single
biggest challenge facing India, as the farmers of India are suffering under the burden of debt
and penury. In order to arrest the increasing number of farmers' suicides, the government of
India implemented the Agricultural Debt Waiver and Debt Relief Scheme, 2008. The cost of
the scheme worked out to be INR71, 680crore. It has been widely criticized to be a populist
measure proposed by the government, paying least regard to the root-cause of the problem.

Satish (2010) the agricultural credit delivery system in India is multi-agency in

approach. With the availability of a large number of more than 150 000 rural retail
banking outlets of commercial banks, cooperative banks and regional rural banks, the
formal banking system has basically an enormous potential to provide financial services
almost in nearly all rural areas in the country. But several studies have brought out disturbing
trends with regard to the flow of credit to agriculture from institutional sources. Though the
share of commercial banks in agricultural credit is increasing, data gaps indicate to its
insufficiency, as also to its direction away from small farmers. Cooperatives that have
become moribund in most parts of the country are on the threshold of reforms. However their
doubts as to the sustainability of reforms on a long term, as these institutions are a part of
the political economy process rather than a professional banking set up. This leaves us
with only one institutional alternative-Regional Rural Banks (RRBs) This agency was

22
not allowed to blossom to its full potential and even its existing presence is not being fully
leveraged. A dedicated and robust agricultural credit system can emerge in India only if
RRBs are repositioned to play the leading role as purveyors of agricultural credit.

Hooda,vijay singh and Chahal (2010) made an attempt to study the growth of PACS in
India for a period of ten years, i.e., 1998-99 to 2007-08. For the purpose of the study, several
indicators, i.e., number of 140 societies, membership, borrowers, employees, owned funds,
deposits, advances, borrowings, working capital and recovery performance were analysed. It
was found that there was not significant growth in terms of expansion of societies but number
of members and borrowers showed an increasing trend. It was also found that owned funds,
deposits, loans and working capital showed an increasing trend but at the same time overdue
were also increasing. It was suggested that there is need of proper infrastructural facilities,
close inspection and regular audit and loan policies should be framed according to the
requirements of beneficiaries and steps should be taken to increase deposits from members.

Bhardwaj, priyanka and Raheja (2011), has analyzed the role of co-operative banks in
agricultural credit in India from 2001/2012 to 2006/2007 with the help of compound growth
rate (ACGR). The study reveals that the aggregate amount of agricultural credit has
increased, while the share in total institution agricultural credit has been decreased from
37.91 in 2001/2002 to 18.51 in 2006/07 and further, found that the level of NPA’s in co-
operative banks is very high as compare to other financial institution in India so, co-
operatives bank should control their NPA’s level for surviving in credit market of India in
future. The study also reveals that the ACGR of agricultural credit by co-operatives banks
always less as comparison to ACGR of all India institutional agriculture credit during the
period under consideration and the level of NAPs in co-operative banking system is very high
as compare to other financial institutions, Therefore, co-operatives banks should control their
NPAs level for surviving in credit market of India in future.

Ramkumar (2011) has studied the recent trends of Agricultural credit in India and drawn
two inferences. First, the growth rate of credit flows to agriculture from commercial banks in
the period 2002 to 2011 was 17.6 per cent per annum, which was significantly higher than the
corresponding growth rate in the period between 1991 and 2001. However, contrary to
general perception, this revival of credit flows to agriculture cannot be attributed to the
announcement of the government in 2004 to double credit flows to agriculture in three years.
In fact, the revival had begun in the late-1990s itself. Secondly, the extent of revival of credit

23
flow to agriculture in the 2000s would have been far less impressive in the absence of a sharp
growth in indirect finance to agriculture. About one third of the increase in credit flow to
agriculture between 2002 and 2011 was on account of the increase in indirect finance. This
growth does not originate from a growth in the traditional components of indirect finance,
such as loans for the supply of inputs, power and credit to agriculture. The sharp growth in
indirect finance in the 2000s was, in all likelihood, a result of a series of definitional
changes effected since the second half of the 1990s. These definitional changes broadly
involved (a) the addition of new forms of financing commercial, export- oriented and capital-
intensive agriculture; and (b) raising the credit limit of many existing forms of indirect
financing. Indeed, meeting the task of doubling agricultural credit appears to have become
much easier for banks as a result of these definitional changes.

Thruipathi (2013) has found that PACCS functioning at grass-root level has direct contact
with the rural people and meet the financial requirements of 10.983 crore members. PACCS
rely heavily on external support and have not yet been able to become self-reliant with
respect to resources through deposit mobilization and internal accruals, affecting their growth
and expansion of business activities. The present study explores the sources of funds of
PACCS and the mobilization and deployment of funds. The suggestions given aim at helping
the societies to improve their performance and achieve their objectives.

CONCLUSION

Studies relating to cooperative banking system reveal that over the years, cooperative
banks have remained the prime institutional agencies with their vast network, wide coverage
and outreach to the remotest parts of the country. But, the overall picture of the cooperative
sector is not too healthy. Studies pointed out that there are certain weaknesses which
accumulated in the cooperative system over the years such as regional imbalance, high
transaction cost, poor resource base, huge Non Performing Assets, duality of control, poor
141 resources, lack of business diversification, lack of professionalization, softer regulations,
dependence on other agencies for refinancing facilities and high overdue. These weaknesses
affected the profitability, productivity and economic viability of the cooperative banks. With
the opening of the economy, liberalization of the Government policies, increasing
competition from the private sector affected the cooperatives in the way they carry out their
business. So, there is need of stronger and effective managesment in the cooperative banks.
With the introduction of reforms like deregulation of interest rates and application of

24
prudential norms, cooperatives witnessed changes in their functional areas. Studies
suggested that there is need of professionalization in management of cooperative banks,
removal of duality of control between the state Government and Reserve Bank of India over
the functioning of cooperative banks, need of human resource development and introduction
of new techniques in the cooperative banks. There is also need to give full freedom to the
cooperative banks to deploy their funds.

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28
 CHAPTER- III

THE GENERAL PROFILE OF THE PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY LTD.,
3.1 INTRODUCTION

The first cooperative society was established in India on 1904 at Thirur in Thiruvallur
district. The Primary Agricultural Cooperative Credit Societies should be the foundation of
the cooperative credit movement in India. At present there are 4538 PACCS in Tamilnadu.
Agricultural credit is the foundation stone of the cooperative credit structure and constituted
by the largest number of the cooperative institution in India. The society started for poor
farmers and their villages. So long ago, the poor farmers were suffered by natural causes like
flood, cyclone, etc. The objects of organizing these types of agricultural cooperative societies
are to provide credit facilities, to save from money lenders and to inculcate the saving habits,
thrift and self help among the members.

Primary agricultural credit societies are considered as miniature banks or village

banks as they are issue in loans to individuals and accepting deposits in the rural areas.
Though the PACS are called as banks in some of the states like Kerala, Tamilnadu and
Pondicherry they are not controlled by RBI and not brought under banking regulation act.
They are governed by the “Banking Laws (Co-operative Societies) Act 1665.PACS occupy a
predominant position in the Co-operative structure and form its base.

The Perumanallur Agricultural Cooperative Credit Society Limited (No.K 1594)

under the Tamil Nadu Cooperative Society Act, 1983, the funding provide is the “District
Central” Cooperative Bank affiliated with the society. The group is the board of
management of the society. The “Registrar” represents the semi-seminar registrar of section
2(23).

3.2 DATE OF REGISTERATION AND COMMENCEMENT

The Perumanallur Primary Agricultural Cooperative Credit Society was registered on

22.11.1956 and started its functions from 13.12.1956.

3.3 AREA OF OPERATION

The area of operation of the society is confined to 7 revenue villages in Perumanallur,

KalliPalayam and PonguPalayam.
29
3.4 LIABILITY

The liability of the society is ‘Limited’ to the amount of share capital subscribed by
its members.

3.5 OBJECTIVES AND FUNCTIONS

 To encourage savings habits among members.

 Transfer payment.
 Engaging in insurance business with insurance companies allowed by the registrar.
 Purchase and sell the products and agricultural materials of the farmer’s agricultural
produce.
 To keep the goods purchased and the members own their warehouses for renting.
 To provide loans for farm and non farming sectors.
 To provide crop loans to the members.
 To provide loans for agricultural and allied activities in the form of short-term and
medium-term loans.
 To collect deposits from members and non members.
 To increase the saving habits among the public through collection of deposit.
 To provide educational loans for the professional courses.

3.6 MEMBERSHIP

The membership comprises of the farmers and agricultural labourers residing in the
area of operation of the PACS. Any person above the age of 18 residing in the area of
operation or possess a land in area of operation of the society are eligible for membership.
Membership of the society is open to all persons. Those who attainted sound-minded,
residing within the area of operation are eligible to join the society.

 ‘A’ Class members; and

 Associate members

‘A’CLASS MEMBERS

‘A’ class members should have voting rights in the constitution of their board. They
have to pay share capital plus entrance fee.

30
ASSOCIATE MEMBERS

The associate members should pay entrance fees of Rs.10 only. They are eligible for
getting only the jewel loan. Associate members do not have the voting rights.

TABLE 3.1

MEMBERSHIP

MEMBERSHIP GROWTH
YEAR
(No. of members) INDEX
2008-09 3271 -
2009-10 2973 90.89
2010-11 2973 100
2011-12 2755 92.67
2012-13 3595 130.49
2013-14 1804 50.18
2014-15 1804 100
2015-16 1804 100
2016-17 1840 101.10
2017-18 1802 97.93

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.1 represents the membership position of the society for the past ten years. In
the year 2008-09 the membership was 3271. Further it has been decreased to 1802 in the year
2017-18 because the bank has removed the membership of individuals who are residing
within the area of operation and the people who are not alive.

CHART-3.1

31
 MEMBERSHIP

4000 3595
3500 3271
2973 2973 2755
3000
(No. of members)
MEMBERSHIP 2500
2000 1804 1804 1804 1840 1802
1500
1000
500
0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18
YEAR

3.7 SOURCES OF FUND

SOURCES OF FUND

Owned fund Borrowed fund

Share capital Reserve fund Deposits Borrowings

3.8 OWNED FUND

The owned capital consisted of the total of paid up share capital and accumulated
reserve fund and other funds created out of profits of a cooperative society or otherwise. Paid
up share capital is contributed by the members of a cooperative society.

3.9 SHARE CAPITAL

The share capital represents the initial contribution which is made by the members. It
is a significant source of fund for the society. The society drives to mobilize more amount of
the share capital. Member share capital represents individual member commitment to the
cooperative form of business. It also identifies the individual member’s financial stake. The
value of per share capital is Rs.100.

TABLE 3.2

SHARE CAPITAL

32
 SHARE CAPITAL GROWTH
YEAR
(Rs. in lakhs) INDEX
2008-09 16.93 -
2009-10 15.39 90.90
2010-11 15.65 101.69
2011-12 15.24 97.38
2012-13 16.18 106.17
2013-14 16.35 101.05
2014-15 15.71 96.09
2015-16 16.24 103.37
2016-17 18.38 113.18
2017-18 17.16 93.36
TOTAL 163.23 -
MEAN X́ 16.323 -
SDσ 0.906 -
VARIANCEσ 2 0.820 -

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.2 represents the share capital position of the society for the past ten years. In
the year 2008-09 the share capital was Rs.16.93 lakhs. Further it has been increased to
Rs.17.16 lakhs in the year 2017-18. Here, the mean value of the share capital is 16.323 and
SD and variance are 0.906 and 0.820 respectively.

CHART -3.2

SHARE CAPITAL

33
 18.38
16.93 17.16
20 15.39 15.65 15.24 16.18 16.35 15.71 16.24

SHARE CAPITAL
15

(Rs. in lakhs)
10

0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18
YEAR

3.10 RESERVE FUND

The reserve fund has to be created from the net profit earned by the society. It is
meant to meet the unforeseen losses of the society in future. The reserve fund is allocated out
of the net profit of the society. It also occupies an important position in the working capital of
the society. Not less than 25% of the net profit is allocated as reserve fund.

The reserve fund of The Perumanallur Agricultural Cooperative Credit Society is

constant over a period of study from 2008-09 to 2017-18 (0.734 lakhs).

3.11 BORROWINGS

The borrowings are one of the main sources of funds of the society. In addition to the
share capital, reserves and deposits, borrowings occupy an important portion of the working
capital of PACS. PACS borrow funds from CDCCBs, State Government and commercial
banks. The maximum borrowing power of society is any time of paid up share capital plus
reserve funds. The Perumanallur Primary Agricultural Cooperative Credit Society borrowed
funds from the Coimbatore District Central Cooperative Bank.

TABLE 3.3

34
 BORROWINGS

BORROWINGS GROWTH
YEAR
(Rs. in lakhs) INDEX
2008-09 334.97 -
2009-10 364.20 108.73
2010-11 390.33 107.17
2011-12 472.43 121.03
2012-13 534.21 113.08
2013-14 443.84 83.08
2014-15 443.84 100
2015-16 184.76 41.63
2016-17 18.19 9.85
2017-18 129.85 713.85
TOTAL 3316.62 -
MEAN X́ 331.66 -
SD σ 158.45 -
VARIANCE σ 2 251.09 -

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.3 represents the borrowing position of the society for the past ten years. In the
year 2008-09 the borrowing was Rs.334.97 lakhs. Further it has been decreased toRs.129.85
lakhs in the year 2017-18. Here, the mean value of the borrowings is 331.66 and SD and
variance are 158.45 and 251.09 respectively.

CHART -3.3

BORROWINGS

35
 534.21
600 472.43 443.84 443.84
500 390.33
334.97 364.2
BORROWINGS
400

(Rs. in lakhs)
300 184.76
200 129.85

100 18.19
0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18
YEAR

3.12 DEPOSITS

Deposit is one of the main sources working capital of the society. The society accepts
deposits from both members and non members. Promotion of thrift and savings among the
members is one of the objectives of PACS. At the beginning, PACS were collecting only
thrift deposits from the members. The society is collecting deposit in the different name such
as,

 Fixed deposits
 Recurring deposit
 Savings deposits
 Safety Locker deposits

a) FIXED DEPOSITS

Fixed deposit is called ‘Term deposit’ or ‘Time deposit’. These are repayable at a
certain period or term; a fixed amount is deposited for a period of time. The society provides
9% of rate of interest for fixed deposits.

INTEREST RATE FOR FIXED DEPOSITE

36
 The rate of interest will vary year to year. From the year 2017, the rate of interest will
be as follows;

 4.50% for 15 days to 45 days

 4.75% for 46 days to 90 days
 5.25% for 91 days to 180 days
 6.25% for 181 days to 364 days
 6.80% for 365 days above and 2 years
 6.60% for above 2 years

b) RECURRING DEPOSIT

This is similar to the fixed deposit with a difference being a fixed amount of money
deposited every month into account for a specific period of time and the society would
compound the interest every month and pay you in lump sum at the end of the tenure. The
society provides 6.75% of rate of interest for Recurring deposits.

c) SAVINGS DEPOSIT

The main objective of the savings deposit is to motivate the saving habit among the
members. Generally salaried persons of the lower and middle income group small traders and
farmers open such accounts .The maximum amount that a person should hold in account is
day owned and maximum amount that can be received from depositor and to have credit at
any time should not exceed 4.0% of the interest.

d) SAFETY LOCKER DEPOSITS

These boxes or lockers are commonly kept available in different sizes depending upon
the contents that would be placed in it and, the demand from customers for different types of
lockers on the basis of the price or rental that they charge.

TABLE 3.4

37
 DEPOSITS

DEPOSITS GROWTH
YEAR
(Rs.in lakhs) INDEX
2008-09 292.96 -
2009-10 360.29 122.98
2010-11 557.53 154.74
2011-12 774.21 138.86
2012-13 996.34 128.69
2013-14 113.38 11.38
2014-15 146.92 129.58
2015-16 184.74 125.77
2016-17 171.73 92.94
2017-18 155.67 90.65
TOTAL 3316.62 -
MEAN X́ 331.66 -
SD σ 158.45 -
VARIANCE σ 2 251.09 -

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.4 represents the Deposits position of the society for the past ten years. In the
year 2008-09 the sum of deposits accepted by the society was Rs.292.96 lakhs. Further it has
been decreased toRs.155.67 lakhs in the year 2017-18, at present the society accepts various
types of deposits in order to mobilize fund and also to encourage the saving habit among the
members for increasing the working capital. Here, the mean value of the deposits is 331.66
and SD and variance are 158.45 and 251.09 respectively.

CHART -3.4

DEPOSITS

38
 1200
1000 996.34
800 774.21

(Rs.in lakhs)
DEPOSITS 600 557.53
400
292.96 360.29 113.38 146.92 184.74 171.73 155.67
200
0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18
YEAR

3.13 WORKING CAPITAL

Working capital consisting of owned funds and borrowed funds. Owned fund is
consisting of share capital and reserve fund. Borrowed fund is consisting of deposits and
borrowings.

TABLE 3.5

WORKING CAPITAL

WORKING CAPITAL GROWTH

YEAR
(Rs. in lakhs) INDEX
2008-09 640.98 -
2009-10 740.62 115.54
2010-11 964.25 130.19
2011-12 125.13 12.98
2012-13 169.51 135.47
2013-14 183.47 108.23
2014-15 190.79 310.70
2015-16 213.57 121.37
2016-17 251.85 39.29
2017-18 199.15 79.07
TOTAL 3679.32 -
MEAN X́ 367.93 -
SD σ 282.59 -
VARIANCE σ 2 788.56 -

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.5 represents the working capital position of the society for the past ten years.
In the year 2008-09 the working capital was Rs.640.98 lakhs. Further it has been decreased
toRs.199.15 lakhs in the year 2017-18.Here, the mean value of the working capital is 367.93
and SD and variance are 282.59 and 788.56 respectively.

39
 CHART -3.5

WORKING CAPITAL

1200
WORKING CAPITAL

964.25
1000
800 740.62
640.98
600
(Rs. in lakhs)

400 213.57 251.85 199.15

200 125.13 169.51 183.47 190.79
0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18
YEAR

a) LENDING OPERATION

The Perumanallur Primary Agricultural Cooperative Credit Society issues various

loans such as agricultural loans, jewel loans, SHG loans, fixed deposit loans, micro credit
loan, etc...

b) SHG LOAN

A Self Help Group (SHG) is a village based financial intermediary committee usually
composed of 12 local men or women. Funds may then be lent back to the members or to
others in the village for any purpose. In India, many SHG are linked to banks for the delivery
of micro-credit.

c) JEWEL LOAN
A form of debt financing whereby a potential gold producer borrows gold from a
lending institution, sells the gold on the open market, uses the cash for mine development ,
then pays back the gold from the actual mine production.

d) MICRO CREDITLOAN

40
 As extremely small loan given to impoverished people to help them become self
employed. This is also known as ‘Micro lending’ or ‘Micro loan.

e) PHYSICALLY HANDICAPPED PERSON LOAN

To help physically challenged persons to function independently, the society lends

them to purchase durable and sophisticated aids/appliances that promote their physical and
social rehabilitation.

f) KCC LOAN

KCC loan is a short term credit to formers to meet their immediate credit needs during
the crop season. They can purchase items related to their forming needs using their KCC and
also withdraw the required amount for related expenses. This scheme was introduced in India
during 1998 by the joint effort of Government of India, Reserve Bank of India (RBI) and
National Bank for Agricultural and Rural Development (NABARD) to help farmer access
timely and adequate credit.

g) PLEDGE LOAN

A pledge loan is collateral pledge by a borrower to a lender (usually in return for a

loan).The lender has the right to seize the collateral if the borrower defaults on the obligation.

3.14 CROP LOAN

Crop loans are provided on the basis of the crop cultivated by the farmers and credit
limit is fixed for each crop. One of the most significant innovations in the operational policies
of the cooperative financing system is the adoption of the crop loan system advocated by the
All India Rural credit Survey Committee. Crop loan is given in three forms (i.e.) in the form
of cash, fertilizers and seeds.

TABLE 3.6

CROP LOAN

YEAR CROP LOAN GROWTH

(Rs. in lakhs) INDEX
2008-09 9.54 -
2009-10 11.74 123.06

41
 2010-11 12.83 110.60
2011-12 11.60 90.41
2012-13 13.09 112.84
2013-14 13.29 101.53
2014-15 16.42 123.55
2015-16 18.65 113.58
2016-17 11.46 61.45
2017-18 18.49 161.34
TOTAL 137.11 -
MEAN X́ 13.711 -
SD σ 2.945 -
2
VARIANCE σ 8.672 -
Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.6 represents the crop loan position of the society for the past ten years. In the
year 2008-09 the crop loan position was Rs.9.54 lakhs. Further it has been increased to Rs.
18.49 lakhs in the year 2017-18.Here, the mean value of the crop loan is 13.711 and SD and
variance are 2.945 and 8.672 respectively.

CHART -3.6

CROP LOAN

20 18.65 18.49
16.42
15 13.09 13.29
11.74 12.83 11.6 11.46
CROP LOAN
(Rs. in lakhs)

9.54
10

0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18

YEAR

3.15 LOANS ISSUED

The societies provide only medium term loans to its members for Agricultural and non-
Agricultural purpose.

TABLE 3.7
LOANS ISSUED

YEAR LOANS ISSUED GROWTRH

42
 (Rs.in lakhs) INDEX
2008-09 649.11 -
2009-10 821.66 126.58
2010-11 105.73 12.87
2011-12 131.65 124.52
2012-13 163.24 123.99
2013-14 167.74 102.76
2014-15 166.31 99.15
2015-16 150.19 90.31
2016-17 140.18 93.34
2017-18 157.51 112.29
TOTAL 2653.32 -
MEAN X́ 265.33 -
SD σ 238.83 -
VARIANCE σ 2 570.42 -

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.7 represents the Loan issued position of the society for the past ten years. In
the year 2008-09 the loan issued was Rs.649.11 lakhs. Further it has been decreased to
Rs.157.51 lakhs in the year 2017-18.Here, the mean value of the loans is 265.33and SD and
variance are 238.83 and 570.42 respectively.

CHART -3.7

LOANS ISSUED

43
 821.66
800
649.11
600

LOAN ISSUED
(Rs. in lakhs)
400
163.24 167.74 166.31 150.19 140.18 157.51
200 105.73 131.65
0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18

YEAR

3.16 INVESTMENT

The society has been invested its funds in the Coimbatore DCCB in the name of bad
debts Reserve fund and others etc.

TABLE 3.8

INVESTMENT

YEAR INVESTMENT GROWTH

(Rs. in lakhs) INDEX
2008-09 62.66 -
2009-10 54.41 86.83
2010-11 79.87 146.72
2011-12 109.22 136.74
2012-13 202.39 185.30
2013-14 26.61 13.15
2014-15 424.77 1596.28
2015-16 771.51 181.63
2016-17 815.73 105.73
2017-18 727.16 89.14
TOTAL 3274.33 -
MEAN X́ 327.43 -
SD σ 310.58 -
VARIANCE σ 2 964.57 -

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.8 represents the investment position of the society for the past ten years. In
the year 2008-09 the loan issued was Rs.62.66 lakhs. Further it has been increased to Rs.
727.16 lakhs in the year 2017-18.Here, the mean value of the investment is 327.43 and SD
and variance are 310.58 and 964.57 respectively.

CHART -3.8

44
 INVESTMENT
1000
771.51 815.73 727.16
800
INVESTMENT 600 424.77
(Rs. in lakhs) 400 202.39
200 62.66 54.41 79.87 109.22 26.61
0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18

YEAR

3.17 GROSS PROFIT

Gross profit is the profit a company make after deducting the costs associated with
making and selling its productions or the costs associated with providing services. It is
reported on the classified income statements. The formula for calculating gross profit is Gross
Profit as follows; Gross Profit = Net sales - Cost of goods sold.

TABLE 3.9

GROSS PROFIT

YEARGROSS PROFIT GROWTH

(Rs. in lakhs) INDEX
2008-09 24.61 -
2009-10 32.88 133.60
2010-11 37.79 114.93
2011-12 17.73 46.92
2012-13 16.86 95.09
2013-14 13.30 78.85
2014-15 -0.47 -3.53
2015-16 0.49 104.25
2016-17 0.55 112.24
2017-18 1.51 274.55
TOTAL 145.25 -
MEAN X́ 14.525 -
SD σ 13.355 -
VARIANCE σ 2 178.36 -
Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.9 represents the gross profit position of the society for the past ten years. In
the year 2008-09 the gross profit was Rs.21.64 lakhs. Further it has been decreased to Rs.1.51
lakhs in the year 2017-18.Here, the mean value of the gross profit is 14.525 and SD and
variance are 13.355 and 178.36 respectively.

45
 CHART -3.9

GROSS PROFIT

37.79
40 32.88
GROSS PROFIT & LOSS

35
30 24.61
25 17.73 16.86
20 13.3
15
(Rs. in lakhs)

10 1.51
5 -0.47 -0.49 0.55
0
-5 2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18
YEAR

3.18 NET PROFIT

The actual profit earned by the society after meeting all expenses is called net profit.
It is an original profit of the society. The net profit should be distributed in accordance with
the provisions of the Tamil Nadu Cooperative Societies Act 1983 and Rule 1988.

Net profit, also referred to as the bottom line, net income, or net earnings is a measure
of the profitability of a venture after accounting for all costs and taxes.

TABLE 3.10

NET PROFIT

NET PROFIT GROWTH

YEAR
(Rs.in lakhs) INDEX
2008-09 18.13 -

46
 2009-10 29.95 165.20
2010-11 38.31 127.91
2011-12 59.87 156.28
2012-13 66.27 110.69
2013-14 78.46 118.39
2014-15 10.03 12.78
2015-16 10.31 102.79
2016-17 83.51 809.99
2017-18 84.10 100.71
TOTAL 478.94 -
MEAN X́ 47.89 -
SD σ 28.531 -
VARIANCE σ 2 814.07 -

Source: compiled and computed figures from audit and annual report of Perumanallur
Agricultural Cooperative Credit Society.

Table 3.10 represents the Net profit position of the society for the past ten years. In
the year 2008-09 the Net profit was Rs.18.13 lakhs. Further it has been increased to Rs. 84.10
lakhs in the year 2017-18.Here, the mean value of the Net profit is 47.89 and SD and variance
are 28.531 and 814.07 respectively.

CHART -3.10

NET PROFIT

90 83.51 84.1
78.46
80 66.27
70 59.87
60
NET PROFIT
(Rs. in lakhs)

50 38.31
40 29.95
3018.13
20 10.03 10.31
10
0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017-
09 10 11 12 13 14 15 16 17 18

YEAR

47
3.19 DIVIDEND

Reserve fund
38% Cooperative research
and development fund
50%
Cooperative education
fund
ACSF
5%
8%

3.20 BOOKS AND REGISTERS MAINTAINED THE SOCIETY

 Day Book
 General Ledger
 Investment Register
 Loan Issue Register
 Cash Credit Register
 Borrowing Register
 Employees Attendance Register
 Jewel Loan Register
 Cash Chitta

3.21 MANAGEMENT

The management of the society is vested in the hands of president who has been
elected by the board of directors. At present, M.Ponnulingam is the president and K.Palamani
is the secretary of the society.

3.22 ADMINISTRATIVE SET-UP

PRESIDENT

VICE PRESIDENT

48
 BOARD OF DIRECTORS

SECRETARY

ASSISTANT SECRETARY

SENIOR CLERK

JUNIOR CLERK

SUB-STAFF

3.23 AUDIT CLASSIFICATION

Regular audit is conducted by the auditor appointed by the cooperative audit

department. The audit is also conducted to check the day to day affairs of the society. It is
classified under ‘A’ class in the year 2016-17.

3.24 SPECIAL FEATURES

 The society is functioning as a self-sufficient society in its own building and owned
fund.
 The safety locker deposit available in the society.
 The society is supplying food articles to nearly 4866 ration card holders.

49
3.25 FUTURE PLAN

 To fulfil the customer service and increase the of business the society has to be
computerized with new up dated techniques in all aspects.
 To lend mortgage loan and housing loans to members.

3.26 PROBLEMS

 Delay in sanctioning and recovery of loans.

 Delay in decision making.
 Political interference.
 Changes in the government policies.
 High cost of management.
 Outstanding loans.

3.27 SUGGESTIONS

 The society should maintain effective recovery system for the collection of loans in
time.
 The political interference should be avoided.
 The government has to control the policy changes.
 To fix nominal rate of interest for loans.

3.28 CONCLUSION

The K 1594 Perumanallur Primary Agricultural Cooperative Credit Society is

continuous working on profit. It gives better services to its member. The society achieved a
goal of success in the overall performance. These are the main reason for the continuous
success of the society. The society should recover the Loan amount and take necessary action
as early as possible for the continuous survival of the society.

50
 CHAPTER-IV

RATIO ANALYSIS OF PERUMANALLUR PRIMARY AGRICULTURAL

COOPERATIVE CREDIT SOCIETY

4.1 INTRODUCTION

The first cooperative society was established in India on 1904 at Thirur in Thiruvallur
district. The Primary Agricultural Cooperative Credit Societies should be the foundation of
the cooperative credit movement in India. At present there are 4589 PACCS in Tamilnadu.

51
Agricultural credit is the foundation stone of the cooperative credit structure and constituted
by the largest number of the cooperative institutions in India.

In this chapter we analysis the financial performance of Perumanallur Primary

Agricultural Cooperative Credit Society Ltd., Using ratios for the fulfilment of our study.

4.2 RATIO ANALYSIS

The term ratio refers to the numerical or quantitative relationship between two
figures. It is simple arithmetical expression of the relationship of one number to another. It
may be defined as the indicated quotient of 2 mathematical expressions. In a simple language
ratio is one number expressed in items of another and can be worked out by dividing one
number in to another.

4.3 CLASSIFICATIONS OF RATIOS

The classifications of ratios on the basis of purpose are an follows:

 Liquidity ratios
 Activity ratios
 Profitability ratio

4.3.1 LIQUIDITY RATIO

Liquidity ratio measure the firm’s ability to pay off current dues i.e., Solvency ratio
the important liquidity ratio are;

 Current ratio
 Liquid ratio
 Absolute liquid ratio
 CURRENT RATIO

52
 Current ratio may be defined as the relationship between current asset and current
liabilities. This is also known as working capital ratio. It is a measure of general liquidity and
is most widely used to make the analysis of a short-term financial position of a firm. It is
calculated by dividing the total of current asset by total of the current liabilities.

FORMULA

Current Assets
Current Ratio = Current Liabilities

TABLE-4.1

CURRENT RATIO

(Rs. in lakhs)

CURRENT CURRENT
YEAR RATIO
ASSETS LIABILITIES
2008-2009 32.89 35.89 0.92
2009-2010 18.34 31.78 0.58
2010-2011 17.79 30.27 0.59

53
 2011-2012 35.63 42.74 0.83
2012-2013 34.09 61.10 0.06
2013-2014 43.53 58.60 0.74
2014-2015 144.24 167.54 0.86
2015-2016 360.67 136.05 2.65
2016-2017 382.89 1745.71 0.22
2017-2018 202.55 153.88 1.32
TOTAL 5.78
MEAN X́ 0.578
S.D σ 0.276
VARIANCE σ 2 0.076

Source: Published Annual Report

Current ratio given in table-4.1.It indicates the mean ratio of Perumanallur Primary
Agricultural Cooperative Credit Society is 0.578. The standard deviation of the society is
0.276. The variance value is 0.076. The ratio between 2008-2009 to 2017-2018 of current
assets is increased from 32.89 to 202.55 and Current liabilities increased 35.89 to 153.88. The
financial position of the society is satisfactory.

 LIQUID RATIO

This ratio is used to assess the firm’s short term liquidity. The relationship of liquid
assets to current liabilities is known a liquid ratio. It is also known as the acid-test ratio is a
type of liquid ratio which measures the ability of a institution to use its near cash or quick
assets to extinguish. It is otherwise called as quick ratio. The ratio is calculated as:

FORMULA

Liquid Asset
Liquid Ratio =
Current Liabilities

54
 TABLE-4.2

LIQUID RATIO

(Rs. in lakhs)

CURRENT
YEAR LIQUID ASSETS RATIO
LIABILITIES
2008-2009 77.17 35.89 2.15
2009-2010 68.51 31.78 2.16
2010-2011 91.55 30.27 3.02
2011-2012 33.64 42.74 0.79
2012-2013 31.38 61.10 0.05
2013-2014 30.61 58.60 5.22
2014-2015 58.05 167.54 0.35
2015-2016 282.04 136.05 2.07
2016-2017 312.25 1745.71 0.18

55
 2017-2018 129.16 153.88 0.84
TOTAL 16.83
MEAN X́ 1.683
S.D σ 1.520
VARIANCE σ 2 2.310

Source: Published Annual Report

Liquid profit ratio given in table-4.2. It indicates the mean ratio of Perumanallur
Primary Agricultural Cooperative Credit Society is 1.683. The standard deviation of the
society is 1.520. The variance value is 2.310. The ratio between 2008-2009 to 2017-2018 of
liquid assets is increased from 77.17 to 129.16 and Current liabilities increased 35.89 to
153.88. The financial position of the society is satisfactory.

 ABSOLUTE LIQUID RATIO

It is a modified form of liquid ratio. The relationship of absolute liquid assets to liquid
liabilities is known as absolute liquid ratio. The relationship between the absolute liquid
assets and current liabilities is established by the ratio. This ratio is also called as “Super
quick ratio”.

FORMULA

Absolute Liquid Asset

Absolute Liquid Ratio =
Current Liabilities

56
 TABLE-4.3

ABSOLUTE LIQUID RATIO

(Rs. in lakhs)

ABSOLUTE CURRENT
YEAR RATIO
LIQUID ASSETS LIABILITIES
2008-2009 3.41 35.89 0.09
2009-2010 6.52 31.78 0.02
2010-2011 3.87 30.27 0.13
2011-2012 23.66 42.74 0.55
2012-2013 13.74 61.10 0.22
2013-2014 32.41 58.60 0.55
2014-2015 58.05 167.54 0.35
2015-2016 282.04 136.05 2.07
2016-2017 312.25 1745.71 0.18
2017-2018 129.16 153.88 0.84
TOTAL 3.01
MEAN X́ 0.301
S.D σ 0.253
VARIANCE σ 2 0.064

57
Source: Published Annual Report

Absolute liquid ratio given in table-4.3. It indicates the mean ratio of Perumanallur
Primary Agricultural Cooperative Credit Society is 3.01. The standard deviation of the
society is 0.253. The variance value is 0.064. The ratio between 2008-2009 to 2017-2018 of
absolute liquid assets is increased from 3.41 to 129.16 and Current liabilities increased 35.89
to 153.88. The financial position of the society is satisfactory.

4.3.2 ACTIVITY RATIO

Activity ratio indicates the performance of the business. The performance of the
business is judged with it revenue or cost of goods sold. This ratio is referred to as turnover
ratio.

 DEBTORS TURNOVER RATIO

Debtor’s turnover ratio establishes the relationship between revenue and average
account receivable. Debtor’s turnover ratio indicates the efficiency of the business concern
toward the collection of amount due from debtors.

Net Credit Annual Sales

Debtors Turnover Ratio =
Average Trade Debtors

58
 TABLE-4.4

DEBTORS TURNOVER RATIO

(Rs. in lakhs)

NET CREDIT AVERAGE

YEAR RATIO
ANNUAL SALES TRADE DEBTORS
2008-2009 56.34 14.09 3.99
2009-2010 62.62 110.45 0.57
2010-2011 80.05 7.64 10.48
2011-2012 73.25 8.18 8.96
2012-2013 67.81 12.03 5.64
2013-2014 64.86 1.22 53.24
2014-2015 66.04 8.31 7.95
2015-2016 68.71 31.53 4.01
2016-2017 63.06 12.68 3.75
2017-2018 65.68 15.48 2.73
TOTAL 101.32
MEAN X́ 10.132
S.D σ 14.652
VARIANCE σ 2 214.69

Source: Published Annual Report

Debtor’s turnover ratio given in table-4.4. It indicates the mean ratio of Perumanallur
Primary Agricultural Cooperative Credit Society is 101.32. The standard deviation of the
society is 14.652. The variance value is 214.69. The ratio between 2008-2009 to 2017-2018

59
of Net Credit Annual Sales is increased from 56.34 to 65.68 and Average Trade Debtors
increased 14.09 to 15.48. The financial position of the society is satisfactory.

 CREDITORS TURNOVER RATIO

In the course of business operation, a firm has to make credit and incur short – term
liabilities. This establishes the relationship between revenue and average accounts payable.
Credit turnover indicates the period in which the payments are made to creditors.

Net Credit Annual Sales

Creditors Turnover Ratio =
Average Trade Creditors

60
 TABLE-4.5

CREDITORS TURNOVER RATIO

(Rs. in Lakhs)

NET CREDIT AVERAGE TRADE

YEAR RATIO
ANNUAL PURCHASE CREDITORS
2008-2009 56.95 14.74 3.86
2009-2010 58.89 17.86 3.29
2010-2011 77.05 15.97 4.82
2011-2012 70.37 18.07 3.89
2012-2013 67.21 23.11 2.91
2013-2014 64.25 25.50 2.52
2014-2015 61.87 28.72 2.15
2015-2016 56.91 18.92 6.38
2016-2017 53.29 34.87 1.53
2017-2018 55.79 36.59 1.52
TOTAL 32.87
MEAN X́ 3.287
S.D σ 1.444
VARIANCE σ 2 2.084

Source: Published Annual Report

Creditor’s turnover ratio given in table-4.5. It indicates the mean ratio of

Perumanallur Primary Agricultural Cooperative Credit Society is 32.87. The standard
deviation of the society is 1.444. The variance value is 2.084. The ratio between 2008-2009
to 2017-2018 of Net Credit Annual purchase is decreased from 56.95 to 55.79 and Average
Trade creditors increased 14.74 to 36.59. The financial position of the society is satisfactory.

61
  INVENTORY TURN OVER RATIO

The inventory turnover ratio is an efficiency ratio that shows how effectively
inventory is managed by comparing cost of goods sold with average inventory for period.
This measures how many times average inventory is “turned” or sold during a period.

Cost Of Goods Sold

Inventory Turnover Ratio =
Average Stock

62
 TABLE-4.6

INVENTORY TURNOVER RATIO

(Rs. in lakhs)

YEAR SALES AVERAGE STOCK RATIO

2008-2009 56.34 2.96 18.32
2009-2010 62.62 4.37 14.33
2010-2011 80.05 5.16 15.51
2011-2012 73.25 4.69 15.60
2012-2013 67.81 3.97 17.09
2013-2014 64.86 4.38 14.79
2014-2015 66.04 5.03 13.12
2015-2016 68.71 5.71 12.03
2016-2017 63.06 5.24 12.03
2017-2018 65.68 4.92 13.35
TOTAL 146.17
MEAN X́ 14.617
S.D σ 1.9732
VARIANCE σ 2 3.8935

Source: Published Annual Report

Inventory turnover ratio given in table-4.6. It indicates the mean ratio of Perumanallur
Primary Agricultural Cooperative Credit Society is14.617. The standard deviation of the
society is 1.9732. The variance value is 3.8935. The ratio between 2008-2009 to 2017-2018
Sales is increased from 56.34 to 65.68 and Average Stock increased 2.96 to 4.92. The
financial position of the society is satisfactory.

 WORKING CAPITAL TURNOVER RATIO

63
 The working capital turnover ratio is calculated by dividing net annual sales by the
average amount of working capital-current assets minus current liabilities-during the same
12-month period. Also referred to as net sales to working capital, work capital turnover
shows the relationship between the funds used to finance a institution operations and the
revenues a institution generates as a result.

Cost Of Goods Sold

Working Capital Turnover Ratio =
Average WorkingCapital

TABLE-4.7

64
 WORKING CAPITAL TURNOVER RATIO

(Rs. in Lakhs)

YEAR SALES WORKING CAPITAL RATIO

2008-2009 63.54 682.69 0.09
2009-2010 59.29 690.8 0.09
2010-2011 40.33 852.44 0.05
2011-2012 73.28 544.69 0.13
2012-2013 65.75 147.32 0.45
2013-2014 64.87 176.49 0.18
2014-2015 59.19 187.13 0.32
2015-2016 60.93 202.18 0.30
2016-2017 3.84 232.71 0.16
2017-2018 54.85 185.5 0.29
TOTAL 2.06
MEAN X́ 0.206
S.D σ 0.122
VARIANCE σ 2 0.013

Source: Published Annual Report

Working capital turnover ratio given in table-4.7. It indicates the mean ratio of
Perumanallur Primary Agricultural Cooperative Credit Society is 0.06. The standard
deviation of the society is 0.122. The variance value is 0.013. The ratio between 2008-2009
to 2017-2018 Sales is decreased from 63.54 to 54.85 and Working capital decreased 682.69
to 185.5. The financial position of the society is satisfactory.

4.3.3 PROFITABILITY RATIO

Efficiency on the business is measured by profitability ratio measures are the profit
earning capacity of the business concern. The impartment profitability ratios are discussed
below:

 Gross profit

65
  Net profit
 GROSS PROFIT

This ratio is indicates the efficiency of trading activities. Gross profit ratio is a profitability
ratio that shows the relationship between gross profit and total net sales revenue. It is popular
tool to evaluate the operational performance of the institution. This ratio is computed by
dividing the gross profit figure by net sales. The relationship of gross profit to sales known as
Gross Profit Ratio. The ratio is calculated as:

Gross profit
Gross profit = ×100
Sales

TABLE-4.8

GROSS PROFIT RATIO

(Rs. in Lakhs)

YEAR GROSS PROFIT SALES RATIO

2008-2009 2.46 56.34 4.37
2009-2010 3.28 62.62 5.25

66
 2010-2011 5.44 80.05 6.81
2011-2012 1.77 73.26 2.42
2012-2013 1.68 67.81 2.48
2013-2014 1.32 64.86 2.05
2014-2015 0.47 61.61 0.76
2015-2016 0.49 61.12 0.81
2016-2017 0.56 55.29 1.01
2017-2018 1.51 56.06 2.70
TOTAL 27.66
MEAN X́ 2.766
S.D σ 2.0313
VARIANCE σ 2 4.1261

Source: Published Annual Report

Gross profit ratio given in table-4.8. It indicates the mean ratio of Perumanallur
Primary Agricultural Cooperative Credit Society is 27.66. The standard deviation of the
society is 2.0313. The variance value is 4.1261. The ratio between 2008-2009 to 2017-2018
of Gross Profit is decreased from 2.46 to 1.51 and Sales decreased 56.34 to 56.06. The
financial position of the society is satisfactory.

 NET PROFIT RATIO

The ratio determines the overall efficiency of the business. The relationship of net
profit to revenue is known as Net Profit Ratio. Net profit ratio is taken from the profit and
loss account of the concern of the gross profit of the concern less administration expenses,
selling and distribution expenses and financial expenses.

The net profits are obtained after deducting income-tax and generally, non operating
incomes and expenses are excluded from the net profit for calculating this ratio. Thus,
incomes such as interest on investment outside the business, profit on sale of fixed assets etc.

67
 Net Profit
Net Profit Ratio = × 100
Sales

TABLE-4.9

NET PROFIT RATIO

(Rs. in Lakhs)

YEAR NET PROFIT SALES RATIO

2008-2009 18.14 56.34 32.19
2009-2010 29.95 62.62 47.83
2010-2011 39.98 80.05 49.94
2011-2012 59.88 73.26 81.74
2012-2013 66.27 67.81 97.73
2013-2014 78.47 64.86 120.98
2014-2015 100.38 61.61 162.91

68
 2015-2016 103.17 61.12 168.80
2016-2017 83.51 55.29 151.05
2017-2018 84.10 56.06 150.04
TOTAL 1063.21
MEAN X́ 106.32
S.D σ 48.996
VARIANCE σ 2 2400.63

Source: Published Annual Report

Net profit ratio given in table-4.9.It indicates the mean ratio of Perumanallur Primary
Agricultural Cooperative Credit Society is 106.321. The standard deviation of the society is
48.996. The variance value is 2400.63. The ratio between 2008-2009 to 2017-2018 of Net
profit is increased from 18.14 to 84.10 and sales decreased 56.34 to 56.06. The financial
position of the society is satisfactory.

4.7 CONCLUSION

The financial performance of Perumanallur Primary Agricultural Cooperative Credit

Society Ltd., has been analyzed by using liquidity ratio, Printability ratio and Activity ratio
(Turnover ratio). The overall liquidity ratio and profitability ratio was satisfactory in the
study period. By means of this ratio analysis, the bank’s financial position and performance
has been evaluated.

69
 CHAPTER-V

TREND ANALYSIS OF PERUMANALLUR PRIMARY AGRICULTURAL

COOPERATIVE CREDIT SOCIETY LTD.,

5.1 INTRODUCTION

The Perumanallur Primary Agricultural Cooperative Credit Society was started with
the main objectives of to help farmers in providing loans to them they also collect deposits
from members and non-members in order to mobilize fund and also to inhabit the saving
habit of the members.

The financial performance may be analyzed by computing trends of a series of

information. Trend analysis determines the direction of upwards and downwards involves the
computing of statement item bears to the same items in base years. The information for a
number of years taken up and one year, generally the first year taken as the base year. The

70
figures of the base year taken trend analysis for other year are called on the base year.
Markets move in trends. This phenomenon is one of the major organising principles of
market behaviour and one the tents of the Dow Theory. Some well know axioms have been
coined cover the decades regarding market trends, such as “The trends is your friends” and
“Don’t fight the trend. “Numerous trading and investment strategies have been developed
around the fact that market move in trends.

In this chapter the trend analysis of Perumanallur Primary Agricultural Cooperative

Credit Society is studied to predict future trend and tendencies of the society.

5.2 FORMULAS FOR LEAST SQUARE TREND

Yc=a+bx

Where, Yc= trends values,

a=y intercept or trend value at origin i.e.,

b=slope of trend line or amount of change in trend value per unit of x.

Slope may be positive or negative.

X=time unit which may be half year, one quarter, one month, one week or one day.

TO DETMINE THE VALUE OF a & b

∑Y
a= N

∑ XY
b = ∑X2

TABLE-5.1

PROGRESSIVE GROWTH OF MEMBERSHIP IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

MEMBERSHIP
YEAR X X² XY Yc=a+bx
(y)
2008-2009 3271 -5 25 -16355 807.33

71
 2009-2010 2973 -4 16 -11892 1138.28
2010-2011 2973 -3 9 -8919 1469.24
2011-2012 2755 -2 4 -5510 1800.19
2012-2013 3595 -1 1 -3595 2131.14
2013-2014 1804 0 0 0 0
2014-2015 1804 1 1 1804 2793.05
2015-2016 1804 2 4 3608 3124.00
2016-2017 1840 3 9 5520 3454.95
2017-2018 1802 4 16 7208 3785.91
∑y=24621 ∑x² =85 ∑xy=-28131

Source: compiled and computed figures from audit and annual report of Perumanallur
Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc=a+b(x)

∑ Y 24621
a= N = 10 = 2462.1

∑ XY 28131.08
b = ∑X2 = 85 = 330.95294

CALCULATION

YC = 2462.1+330.95294(-5) =807.33

YC = 2462.1+330.95294(-4) =1138.28

YC = 2462.1+330.95294(-3) =1469.24

YC = 2462.1+330.95294(-2) =1800.19

YC = 2462.1+330.95294(-1) =2131.14

YC = 2462.1+330.95294(0) = 0

YC = 2462.1+330.95294(1) =2793.05

72
YC = 2462.1+330.95294(2) =3124.00

YC = 2462.1+330.95294(3) =3454.95

YC = 2462.1+330.95294(4) =3785.91

YC =2462.1+330.95294(5) =4116.86

YC = 2462.1+330.95294(6) =4447.81

Table 5.1 reveals the progressive of Membership by the Perumanallur Primary

Agricultural Cooperative Credit Society. In 2008-2009 the membership position is 807.33
and 3785.91 in 2017-2018.it shows fluctualting trend during the year. The trend value of
membership is increased during the study period from 2008-2009 to 2017-2018. The overall
membership position is quite satisfactory.

TABLE-5.2

PROGRESSIVE GROWTH OF OWNED FUNDS IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

SHARE

YEAR CAPITAL X X² XY Yc=a+bx

(y)
2008-2009 16.93 -5 25 -84.65 12.33
2009-2010 15.39 -4 16 -61.56 13.13
2010-2011 15.65 -3 9 -46.95 13.92
2011-2012 15.24 -2 4 -30.48 14.73
2012-2013 16.18 -1 1 16.18 15.52
2013-2014 16.35 0 0 0 16.323
2014-2015 15.71 1 1 15.71 17.12
2015-2016 16.24 2 4 32.48 17.92
2016-2017 18.38 3 9 55.14 18.72
2017-2018 17.16 4 16 68.64 19.51

73
 2018-2019 - 5 25 - 20.31
2019-2020 - 6 36 - 21.11
∑y=163.23 ∑x² =85 ∑xy=-67.85

Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc =a+b(x)

∑ Y 163.23
a= N = 10 =16.323

∑ XY 67.85
b = ∑X2 = 85 = 0.79823

CALCULATION

YC = 16.323+0.79823(-5) =12.33

YC = 16.323+0.79823(-4) =13.13

YC = 16.323+0.79823(-3) =13.92

YC = 16.323+0.79823(-2) =14.73

YC = 16.323+0.79823(-1) =15.52

YC = 16.323+0.79823(0) =16.323

YC = 16.323+0.79823(1) =17.12

YC = 16.323+0.79823(2) =17.92

YC = 16.323+0.79823(3) =18.72

YC = 16.323+0.79823(4) =19.51

YC = 16.323+0.79823(5) =20.31

YC = 16.323+0.79823(6) =21.11

74
 Table 5.2 reveals the progressive of Share Capital by the Perumanallur Primary
Agricultural Cooperative Credit Society. In 2008-2009 the Share Capital position is 12.33
and 19.51 in 2017-2018. It shows fluctuating trend during the year. The trend value of Share
capital is increased during the study period from 2008-2009 to 2017-2018. The overall Share
Capital position is quite satisfactory.

TABLE-5.3

PROGRESSIVE GROWTH OF BORROWINGS IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

BORROWINGS
YEAR X X² XY Yc=a+bx
(y)
2008-2009 334.97 -5 25 -1674.85 72.95
2009-2010 364.20 -4 16 -1456.8 124.67
2010-2011 390.33 -3 9 -1170.99 176.39
2011-2012 472.43 -2 4 -944.86 228.11
2012-2013 534.21 -1 1 -534.21 279.83
2013-2014 443.84 0 0 0 0
2014-2015 443.84 1 1 443.84 383.28
2015-2016 183.76 2 4 367.52 435.00
2016-2017 18.19 3 9 54.57 486.72
2017-2018 129.85 4 16 519.4 538.45
∑y=3315.62 ∑x² =85 ∑xy=4396.38

Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

75
Yc = a+b(x)

∑ Y 3315.62
a= N = 10 = 331.56

∑ XY 4396.38
b = ∑X2 = 85 = 51.72211

CALCULATION

YC = 331.562+51.72211(-5) =72.95

YC = 331.562+51.72211(-4) =124.67

YC = 331.562+51.72211(-3) =176.39

YC = 331.562+51.72211(-2) =228.11

YC = 331.562+51.72211(-1) =279.83

YC = 331.562+51.72211(0) = 0

YC = 331.562+51.72211(1) =383.28

YC = 331.562+51.72211(2) =435.00

YC = 331.562+51.72211(3) =486.72

YC = 331.562+51.72211(4) =538.45

YC =331.562+51.72211(5) =590.17

YC = 331.562+51.72211(6) =641.89

Table 5.3 reveals the progressive of Borrowings by the Perumanallur Primary

Agricultural Cooperative Credit Society. In 2008-2009 the borrowings position is 72.95 and
538.45 in 2017-2018. It shows fluctuating trend during the year. The trend value of
borrowings is increased during the study period from 2008-2009 to 2017-2018. The overall
borrowings position is quite satisfactory.

76
 TABLE-5.4

PROGRESSIVE GROWTH OF DEPOSIT IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

DEPOSITS
YEAR X X² XY Yc=a+bx
(y)
2008-2009 292.96 -5 25 -1464.8 53.68
2009-2010 360.29 -4 16 -1441.16 118.02
2010-2011 557.53 -3 9 -1672.59 182.36
2011-2012 774.21 -2 4 -1548.42 246.69
2012-2013 996.34 -1 1 -996.34 311.04
2013-2014 113.38 0 0 0 0
2014-2015 146.92 1 1 146.92 439.72
2015-2016 184.78 2 4 369.56 504.06
2016-2017 171.73 3 9 515.19 568.40
2017-2018 155.67 4 16 622.68 632.74
2018-2019 - 5 25 - 697.08
2019-2020 - 6 36 - 761.42
∑y=3751.81 ∑x² =85 ∑xy=-5468.96

Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc = a+b(x)

∑ Y 3753.81
a= N = 10 = 375.18

∑ XY 5468.96
b = ∑X2 = 85 = 64.34070

CALCULATION

YC = 375.38+ 64.34070(-5) =53.68

77
YC = 375.38+ 64.34070(-4) =118.02

YC = 375.38+ 64.34070(-3) =182.36

YC = 375.38+ 64.34070(-2) =246.69

YC = 375.38+ 64.34070(-1) =311.04

YC = 375.38+ 64.34070(0) = 0

YC = 375.38+ 64.34070(1) =439.72

YC = 375.38+ 64.34070(2) =504.06

YC = 375.38+ 64.34070(3) =568.40

YC = 375.38+ 64.34070(4) =632.74

YC = 375.38+ 64.34070(5) =697.08

YC = 375.38+ 64.34070(6) =761.42

Table 5.4 reveals the progressive of Deposits by the Perumanallur Primary

Agricultural Cooperative Credit Society. In 2008-2009 the Deposits position is 53.68 and
632.74 in 2017-2018. It shows fluctuating trend during the year. The trend value of Deposits
is increased during the study period from 2008-2009 to 2017-2018. The overall Deposits
position is quite satisfactory.

TABLE-5.5

PROGRESSIVE GROWTH OF WORKING CAPITAL IN PERUMANALLUR

PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

YEAR WORKIG X X² XY Yc=a+bx

CAPITAL

78
 (y)
2008-2009 640.98 -5 25 -3204.9 47.35
2009-2010 740.62 -4 16 -2962.48 36.07
2010-2011 964.25 -3 9 -2892.75 119.48
2011-2012 125.13 -2 4 -250.26 202.90
2012-2013 169.51 -1 1 -169.51 286.32
2013-2014 183.47 0 0 0 0
2014-2015 190.79 1 1 190.79 453.15
2015-2016 231.57 2 4 463.14 536.56
2016-2017 251.85 3 9 755.55 619.98
2017-2018 199.15 4 16 796.6 703.39
2018-2019 - 5 25 - 786.81
2019-2020 - 6 36 - 870.22
∑y=3697.32 ∑x² =85 ∑xy=-7090.35

Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc = a+b(x)

∑ Y 3697.32
a= N = 10 = 369.732

∑ XY 7090.35
b = ∑X2 = 85 = 83.41588

CALCULATION

YC = 369.732+83.41588(-5) =47.35

YC = 369.732+83.41588(-4) =36.07

YC = 369.732+83.41588(-3) =119.48

YC = 369.732+83.41588(-2) =202.90

YC = 369.732+83.41588(-1) =286.32

YC = 369.732+83.41588(0) = 0

YC = 369.732+83.41588(1) =453.15

79
YC = 369.732+83.41588(2) =536.56

YC = 369.732+83.41588(3) =619.98

YC = 369.732+83.41588(4) =703.39

YC = 369.732+83.41588(5) =786.81

YC = 369.732+83.41588(6) =870.22

Table 5.5 reveals the progressive of Working Capital by the Perumanallur Primary
Agricultural Cooperative Credit Society. In 2008-2009 the Working Capital position is 47.35
and 703.39 in 2017-2018. It show fluctuating trend during the year. The trend value of
Working Capital is increased during the study period from 2008-2009 to 2017-2018. The
overall Working Capital position is quite satisfactory.

TABLE-5.6

PROGRESSIVE GROWTH OF CROP LOAN IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

CROP LOAN
YEAR X X² XY Yc=a+bx
(y)
2008-2009 9.54 -5 25 -47.7 13.28
2009-2010 11.74 -4 16 -46.96 13.36
2010-2011 12.83 -3 9 -38.49 13.45
2011-2012 11.60 -2 4 -23.2 14.54
2012-2013 13.09 -1 1 13.09 13.62
2013-2014 13.29 0 0 0 0
2014-2015 16.42 1 1 16.42 13.79
2015-2016 18.65 2 4 37.3 13.88
2016-2017 11.46 3 9 34.38 13.97
2017-2018 18.49 4 16 73.96 14.05
2018-2019 - 5 25 - 14.14
2019-2020 - 6 36 - 14.23
∑y=137.11 ∑x² =85 ∑xy=-7.38

80
 Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc = a+b(x)

∑ Y 137.11
a= N = 10 = 13.711

∑ XY −7.38
b = ∑X2 = 85 = 0.08682

CALCULATION

YC = 13.711+0.08682(-5) =13.28

YC = 13.711+0.08682(-4) =13.36

YC = 13.711+0.08682(-3) =13.45

YC = 13.711+0.08682(-2) =13.54

YC = 13.711+0.08682(-1) =13.62

YC = 13.711+0.08682(0) = 0

YC = 13.711+0.08682(1) =13.79

YC = 13.711+0.08682(2) =13.88

YC = 13.711+0.08682(3) =13.97

YC = 13.711+0.08682(4) =13.05

YC =13.711+0.08682(5) =14.14

YC = 13.711+0.08682(6) =14.13

81
 Table 5.6 reveals the progressive of Crop loan by the Perumanallur Primary
Agricultural Cooperative Credit Society. In 2008-2009 the Crop loan position is 13.28 and
14.05 in 2017-2018. It show fluctuating trend during the year. The trend value of Crop loan
is increased during the study period from 2008-2009 to 2017-2018. The overall Crop loan
position is quite satisfactory.

TABLE-5.7

PROGRESSIVE GROWTH OF LOANS ISSUED IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

YEAR LOANS ISSUED X X² XY Yc=a+bx

(y)
2008-2009 649.11 -5 25 -3245.55 59.50
2009-2010 821.66 -4 16 -3286.64 5.46
2010-2011 105.73 -3 9 -317.19 70.43
2011-2012 131.65 -2 4 -26.33 135.39
2012-2013 163.24 -1 1 -163.24 200.36
2013-2014 167.74 0 0 0 0
2014-2015 166.31 1 1 166.31 330.29
2015-2016 150.19 2 4 300.38 395.25
2016-2017 140.18 3 9 420.54 460.22
2017-2018 157.141 4 16 629.64 525.18
2018-2019 - 5 25 - 590.15
2019-2020 - 6 36 - 655.11
∑y=2653.22 ∑x² =85 ∑xy=5522.08

Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc = a+b(x)

82
 ∑ Y 2653.22
a= N = 10 = 265.32

∑ XY 5522.08
b = ∑X2 = 85 = 64.96564

CALCULATION

YC = 265.322+64.96564(-5) =59.50

YC = 265.322+64.96564(-4) =5.46

YC = 265.322+64.96564(-3) =70.43

YC = 265.322+64.96564(-2) =135.39

YC = 265.322+64.96564(-1) =200.36

YC = 265.322+64.96564(0) = 0

YC = 265.322+64.96564(1) =330.29

YC = 265.322+64.96564(2) =395.25

YC = 265.322+64.96564(3) =460.22

YC = 265.322+64.96564(4) =525.18

YC =265.322+64.96564(5) =590.15

YC = 265.322+64.96564 (6) =655.11

Table 5.7 reveals the progressive of Loans Issued by the Perumanallur Primary
Agricultural Cooperative Credit Society. In 2008-2009 the Loans Issued is 59.50 and 525.18
in 2017-2018. It shows fluctuating trend during the year. The trend value of Loans Issued is
increased during the study period from 2008-2009 to 2017-2018. The overall Loans Issued
position is quite satisfactory.

TABLE-5.8

83
 PROGRESSIVE GROWTH OF INVESTMENT IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

INVESTMENT
YEAR X X² XY Yc=a+bx
(y)
2008-2009 62.66 -5 25 -313.3 33.29
2009-2010 54.41 -4 16 -217.64 38.86
2010-2011 79.87 -3 9 -239.61 11.00
2011-2012 109.22 -2 4 -218.44 183.145
2012-2013 202.39 -1 1 -202.39 255.29
2013-2014 26.61 0 0 0 0
2014-2015 442.77 1 1 424.77 399.57
2015-2016 771.51 2 4 1543.02 471.72
2016-2017 815.73 3 9 2447.19 543.87
2017-2018 727.16 4 16 2908.64 616.00
2018-2019 - 5 25 - 688.15
2019-2020 - 6 36 - 760.29
∑y=3274.33 ∑x² =85 ∑xy=6132.24

Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc = a+b(x)

∑ Y 3274.33
a= N = 10 = 327.43

∑ XY 6132.24
b = ∑X2 = 85 = 72.144

CALCULATION

YC = 327.433+72.144(-5) =33.29

YC = 327.433+72.144(-4) =38.86

YC = 327.433+72.144(-3) =111.00
84
YC = 327.433+72.144(-2) =183.145

YC = 327.433+72.144(-1) =255.29

YC = 327.433+72.144(0) = 0

YC = 327.433+72.144(1) =399.57

YC = 327.433+72.144(2) =471.721

YC = 327.433+72.144(3) =543.87

YC = 327.433+72.144(4) =616.00

YC =327.433+72.144(5) =688.15

YC = 327.433+72.144(6) =760.29

Table 5.8 reveals the progressive of Investment by the Perumanallur Primary

Agricultural Cooperative Credit Society. In 2008-2009 the Investment position is 33.29 and
616.00 in 2017-2018. It shows fluctuating trend during the year. The trend value of
Investment is increased during the study period from 2008-2009 to 2017-2018. The overall
Investment position is quite satisfactory.

TABLE-5.9

PROGRESSIVE GROWTH OF GROSS PROFIT IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

GROSS

YEAR PROFIT X X² XY Yc=a+bx

(y)
2008-2009 24.61 -5 25 -123.05 2045.77
2009-2010 32.88 -4 16 -131.52 4.86

85
 2010-2011 37.79 -3 9 -113.37 0.01
2011-2012 17.73 -2 4 -35.46 4.82
2012-2013 16.86 -1 1 -16.86 9.67
2013-2014 13.30 0 0 0 0
2014-2015 -0.47 1 1 -0.47 19.37
2015-2016 -0.49 2 4 0.98 24.22
2016-2017 0.55 3 9 1.65 29.06
2017-2018 1.51 4 16 6.04 33.91
2018-2019 - 5 25 - 38.76
2019 -2020 - 6 36 - 43.61
∑y=145.25 ∑x² =85 ∑xy=-412.02

Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc = a+b(x)

∑ Y 145.25
a= N = 10 = 14.525

∑ XY −412.02
b = ∑X2 = 85 = 4.84776

CALCULATION

YC = 145.25+4.84776(-5) =13.28

YC = 145.25+4.84776(-4) =13.36

YC = 145.25+4.84776(-3) =13.45

YC = 145.25+4.84776(-2) =13.54

YC = 145.25+4.84776(-1) =13.62

YC = 145.25+4.84776(0) = 0

YC = 145.25+4.84776(1) =13.79

YC = 145.25+4.84776(2) =13.88

YC = 145.25+4.84776(3) =13.97

86
YC = 145.25+4.84776(4) =13.05

YC =145.25+4.84776(5) =14.14

YC = 145.25+4.84776(6) =14.13

Table 5.9 reveals the progressive of Gross profit by the Perumanallur Primary
Agricultural Cooperative Credit Society. In 2008-2009 the Gross profit position is 2045.77
and 33.91 in 2017-2018. It shows fluctuating trend during the year. The trend value of Gross
profit is increased during the study period from 2008-2009 to 2017-2018. The overall Gross
profit position is quite satisfactory.

TABLE-5.10

PROGRESSIVE GROWTH OF NET PROFIT IN PERUMANALLUR PRIMARY

AGRICULTURAL COOPERATIVE CREDIT SOCIETY

(Rs. in Lakhs)

NET PEOFIT
YEAR X X² XY Yc=a+bx
(y)
2008-2009 18.13 -5 25 -90.65 41.65
2009-2010 29.95 -4 16 -119.8 42.89
2010-2011 38.31 -3 9 -114.93 44.15
2011-2012 59.87 -2 4 -119.74 45.39
2012-2013 66.27 -1 1 -66.27 46.64
2013-2014 78.46 0 0 0 0
2014-2015 10.03 1 1 10.03 49.14
2015-2016 10.31 2 4 20.62 50.39
2016-2017 83.51 3 9 250.53 51.64
2017-2018 84.10 4 16 336.4 52.89
2018-2019 - 5 25 - 54.14
2019-2020 - 6 36 - 55.39
∑y=478.94 ∑x² =85 ∑xy=-106.19

87
 Source: compiled and computed figures from audit and annual report of Perumanallur

Primary Agricultural Cooperative Credit Society Ltd., from 2008-2009 to 2017-2018.

Yc = a+b(x)

∑Y 478.94
a= N = 10 = 47.894

∑ XY 106.19
b = ∑X2 = 85 = 1.24929

CALCULATION

YC = 47.894+1.24929(-5) =41.65

YC = 47.894+1.24929(-4) =42.89

YC = 47.894+1.24929(-3) =44.15

YC = 47.894+1.24929(-2) =45.39

YC = 47.894+1.24929(-1) =46.64

YC = 47.894+1.24929(0) = 0

YC = 47.894+1.24929(1) =49.14

YC = 47.894+1.24929(2) =50.39

YC = 47.894+1.24929(3) =51.64

YC = 47.894+1.24929(4) =52.89

YC = 47.894+1.24929(5) =54.14

YC = 47.894+1.24929(6) =55.39

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 Table 5.10 reveals the progressive of Net Profit by the Perumanallur Primary
Agricultural Cooperative Credit Society. In 2008-2009 the Net Profit position is 41.65 and
52.89 in 2017-2018. It shows fluctuating trend during the year. The trend value of Net Profit
is increased during the study period from 2008-2009 to 2017-2018. The overall Net Profit
position is quite satisfactory.

5.3 CONCLUSION

The Perumanallur Primary Agricultural Cooperative Credit Society is an continuous

profit and it has been archived a great success in its overall a performance. It gives better
service to the members. This is the main reason for the continuous success for the survival of
the society.

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 CHAPTER-VI

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

6.1 INTRODUCTION

The performance of concept occupies pivotal role in the theory of financial

management. The analysis of financial is a process of evaluating the relationship between
various components of us financial statement of the performance of the Perumanallur Primary
Agricultural Cooperative Credit Society. The researcher has made an attempt to view
financial soundness by applying tools like financial statements of trend. This chapter is
allocated to summaries the major findings of the study and relevant suggestion.

6.2 SUMMARY OF FINDINGS

6.2.1 GROWTH ANALISIS

The Growth Index and mean and compound annual growth rate of Perumanallur
Primary Agricultural Cooperative Credit Society Ltd. For a period of ten years between
2008-2009 and 2017-2018 were quite satisfactory and highly encouraging.

I. Membership

The Membership position of the society for the past ten years. In the year 2008-2009
the Membership position of the society was 3271. Further it has been decreased to 1802 in
the year 2018-2018. In the year 2009-2010 the Growth Index of the Membership was 90.89.
Further it has been increased 97.93 in 2017-2018. The overall Membership position is quite
satisfactory.

II. Working capital

The Working Capital position of the society for the past ten years. In the year 2008-
2009 the Working Capital position of the society was 640.98. Further it has been increased to

90
1991.55 in the year 2018-2018. In the year 2009-2010 the Growth Index of the Working
Capital was 115.54. Further it has been increased 790.77 in 2017-2018. The value of Mean
for the Working Capital was 367.932. The overall Working Capital position is quite
satisfactory.

III. Share capital

The Share Capital position of the society for the past ten years. In the year 2008-2009
the Share Capital position of the society was 16.93. Further it has been increased to 17.16 in
the year 2018-2018. In the year 2009-2010 the Growth Index of the Share Capital was 90.90.
Further it has been increased 93.36 in 2017-2018. The value of Mean for the Share capital
was 16.323. The overall Share Capital position is quite satisfactory.

IV. Deposits

The Deposit position of the society for the past ten years. In the year 2008-2009 the
Deposit position of the society was 292.96. Further it has been decreased to 155.67 in the
year 2018-2018. In the year 2009-2010 the Growth Index of the Deposit was 122.98. Further
it has been decreased 90.65 in 2017-2018. The value of Mean for the Deposit was 375.377.
The overall Deposit position is quite satisfactory.

V. Borrowings

The Borrowing position of the society for the past ten years. In the year 2008-2009
the Borrowing position of the society was 334.97. Further it has been decreased to 129.85 in
the year 2018-2018. In the year 2009-2010 the Growth Index of the Borrowing was 108.73.
Further it has been decreased 713.85 in 2017-2018. The value of Mean for the Borrowing
was 331.662. The overall Borrowing position is quite satisfactory.

VI. Crop Loan

The Crop Loan position of the society for the past ten years. In the year 2008-2009
the Crop Loan position of the society was 9.54. Further it has been increased to 18.49 in the
year 2018-2018. In the year 2009-2010 the Growth Index of the Crop Loan was 123.06.
Further it has been increased 161.34 in 2017-2018. The value of Mean for the Crop Loan
was 13.711. The overall Crop Loan position is quite satisfactory.

91
VII. Loans

The Loans position of the society for the past ten years. In the year 2008-2009 the
Loans position of the society was 649.11. Further it has been decreased to 157.51 in the year
2018-2018. In the year 2009-2010 the Growth Index of the Loans was126.58. Further it has
been decreased 112.29 in 2017-2018. The overall Loans position is quite satisfactory.

VIII. Gross Profit

The Gross Profit position of the society for the past ten years. In the year 2008-2009
the Gross Profit position of the society was 24.61. Further it has been decreased to 1.51 in the
year 2018-2018. In the year 2009-2010 the Growth Index of the Gross Profit was133.60.
Further it has been increased 274.55 in 2017-2018. The value of Mean for the Gross Profit
was 14.525. The overall Gross Profit position is quite satisfactory.

IX. Net Profit

The Net Profit position of the society for the past ten years. In the year 2008-2009 the
Net Profit position of the society was 18.13. Further it has been increased to 84.10 in the year
2018-2018. In the year 2009-2010 the Growth Index of the Net Profit was 165.20. Further it
has been decreased 100.71 in 2017-2018. The value of Mean for the Net Profit was 47.894.
The overall Net Profit position is quite satisfactory.

6.2.2 RATIO ANALYSIS

I. LIQUIDTY RATIOS

 CURRENT RATIO

The Current ratio of the society for the past ten years between 2008-2009 to
2017-2018 of current assets is increased from 32.89 to 202.55 and Current liabilities
increased 35.89 to 153.88. The financial position of the society is satisfactory.

 LIQUID RATIO

The Liquid ratio of the society for the past ten years between 2008-2009 to 2017-
2018 of liquid assets is increased from 77.17 to 129.16 and Current liabilities increased 35.89
to 153.88. The financial position of the society is satisfactory.

 ABSOLUTE LIQUID RATIO

92
 The Absolute liquid ratio of the society for the past ten years between 2008-2009 to
2017-2018 of absolute liquid assets is increased from 3.41 to 129.16 and Current liabilities
increased 35.89 to 153.88. The financial position of the society is satisfactory.

II. ACTIVITY RATIO

 DEBTORS TURNOVER RATIO

The Debtor’s turnover ratio of the society for the past ten years between 2008-2009
to 2017-2018 of Net Credit Annual Sales is increased from 56.34 to 65.68 and Average Trade
Debtors increased 14.09 to 15.48. The financial position of the society is satisfactory.

 CREDITORS TURNOVER RATIO

The Creditor’s turnover ratio of the society for the past ten years between 2008-2009
to 2017-2018 of Net Credit Annual purchase is decreased from 56.95 to 55.79 and Average
Trade creditors increased 14.74 to 36.59. The financial position of the society is satisfactory.

 INVENTORY TURN OVER RATIO

The Inventory turnover ratio of the society for the past ten years between 2008-2009
to 2017-2018 Sales is increased from 56.34 to 65.68 and Average Stock increased 2.96 to
4.92. The financial position of the society is satisfactory.

 WORKING CAPITAL TURNOVER RATIO

The Working capital turnover ratio of the society for the past ten years between 2008-
2009 to 2017-2018 Sales is decreased from 63.54 to 54.85 and Working capital decreased
682.69 to 185.5. The financial position of the society is satisfactory.

III. PROFITABILITY RATIO

 GROSS PROFIT

The Gross profit ratio of the society for the past ten years between 2008-2009 to
2017-2018 of Gross Profit is decreased from 2.46 to 1.51 and Sales decreased 56.34 to 56.06.
The financial position of the society is satisfactory.

 NET PROFIT RATIO

93
 The Net profit ratio of the society for the past ten years between 2008-2009 to
2017-2018 of Net profit is increased from 18.14 to 84.10 and sales decreased 56.34 to 56.06.
The financial position of the society is satisfactory.

6.2.3 FINANCIAL PERFORMANCE THROUGH TREND

I. Share capital

The progress of share capital in Perumanallur Primary Agricultural Cooperative

Credit Society. In 2008-2009 the share capital position is 16.93 and 17.16 in 2017-2018. This
position shows fluctuality trend during the year. The trend value of share capital 12.33 in
2008-2009 is increasing up to 19.51 in 2017-2018. The share capital is increasing year by
year which in concluded from the trend analysis of share capital. The overall share capital
position is quite satisfactory.

II. Working capital

The progress of Working capital in Perumanallur Primary Agricultural Cooperative

Credit Society. In 2008-2009 the Working capital position is 640.98 and 199.15 in 2017-
2018. This position shows fluctuality trend during the year. The trend value of Working
capital 47.35 in 2008-2009 is increasing up to 703.39 in 2017-2018. The Working capital is
increasing year by year which in concluded from the trend analysis of Working capital. The
overall share capital position is quite satisfactory.

III. Deposits

The progress of Deposits in Perumanallur Primary Agricultural Cooperative Credit

Society. In 2008-2009 the Deposits position is 292.96 and 155.67 in 2017-2018. This position
shows fluctuality trend during the year. The trend value of Deposits 53.68 in 2008-2009 is
increasing up to 632.74 in 2017-2018. The Deposits is increasing year by year which in
concluded from the trend analysis of Working capital. The overall Deposits position is quite
satisfactory.

IV. Net Profit

The progress of Net Profit in Perumanallur Primary Agricultural Cooperative Credit

Society. In 2008-2009 the Net Profit position is 18.13 and 84.10 in 2017-2018. This position

94
shows fluctuality trend during the year. The trend value of Net Profit 41.65 in 2008-2009 is
increasing up to 52.89 in 2017-2018. The Net Profit is increasing year by year which in
concluded from the trend analysis of Net Profit. The overall Net Profit position is quite
satisfactory.

V. Investment

The progress of Investment in Perumanallur Primary Agricultural Cooperative Credit

Society. In 2008-2009 the Investment position is 62.66 and 727.16 in 2017-2018. This
position shows fluctuality trend during the year. The trend value of Investment 33.29 in 2008-
2009 is increasing up to 616.00 in 2017-2018. The Investment is increasing year by year
which in concluded from the trend analysis of Investment. The overall Investment position is
quite satisfactory.

VI. Loans

The progress of Loans in Perumanallur Primary Agricultural Cooperative Credit

Society. In 2008-2009 the Loans position is 649.11 and 157.141 in 2017-2018. This position
shows fluctuality trend during the year. The trend value of Loans 59.50 in 2008-2009 is
increasing up to 525.18 in 2017-2018. The Loans is increasing year by year which in
concluded from the trend analysis of Investment. The overall Loans position is quite
satisfactory.

VII. Borrowings

The progress of Borrowings in Perumanallur Primary Agricultural Cooperative Credit

Society. In 2008-2009 the Borrowings position is 334.97 and 129.85 in 2017-2018. This
position shows fluctuality trend during the year. The trend value of Borrowings 72.95 in
2008-2009 is increasing up to 538.45 in 2017-2018. The Borrowings is increasing year by
year which in concluded from the trend analysis of Investment. The overall Borrowings
position is quite satisfactory.

VIII. Crop Loan

The progress of Crop Loan in Perumanallur Primary Agricultural Cooperative Credit

Society. In 2008-2009 the Crop Loan position is 9.54 and 18.49 in 2017-2018. This position
shows fluctuality trend during the year. The trend value of Crop Loan 13.28 in 2008-2009 is
increasing up to 14.05 in 2017-2018. The Crop Loan is increasing year by year which in

95
concluded from the trend analysis of Investment. The overall Crop Loan position is quite
satisfactory.

IX. Gross Profit

The progress of Gross Profit in Perumanallur Primary Agricultural Cooperative Credit

Society. In 2008-2009 the Gross Profit position is 24.61 and 1.51 in 2017-2018. This position
shows fluctuality trend during the year. The trend value of Gross Profit 2045.77 in 2008-2009
is increasing up to 33.91 in 2017-2018. The Gross Profit is decreasing year by year which in
concluded from the trend analysis of Gross Profit. The overall Gross Profit position is quite
satisfactory.

6.3 SUGGESTIONS

The researcher offers the followings suggestion for the improvement of work
conditions of the study unit.

 The society should make arrangements to give attractive rate of interest for all
loans.
 With regard of lending operations more efforts should be taken to popularize
fixed deposit and special recurring deposit.
 The bank must take necessary step to recover over dues immediately.
 Advertisement with regard to various of types of loans can be made
effectively.
 The bank should offer more and more facilities for customers and members.

6.4 CONCLUSION

The various levels of cooperative credit structure have been systematically arranged,
so that the members can assimilate the true spirit and working of the cooperative movement
particularly the practical part of this movement, helps to raise productivity. Cooperative have
to be self-reliant and the survival of the cooperative will finally depend upon the performance
and competitiveness, The main activity of the societies on deposits and lending performance
of Perumanallur Primary Agricultural Cooperative Credit Society. The finding and justified
with the interpretation on that basis appropriate suggestion are given from the study, the

96
overall performance evaluation operation is good and the future trend for deposit and lending
also good.

BIBLIOGRPHY

BOOKS REFERRED

1. R.D. Bedi Theory history and practice of Cooperative Meerut, loyal book dept
1974
2. D. Tyagir Recent trends in cooperative movement in India, Bombay, Asia
publishing House, 1968.
3. Baker, C J. (1984): An Indian Rural Economy, 1880-1955, the Tamilnadu
Countryside, Oxford University Press, Oxford.

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