Project Proposal No.

_______________
(To be assigned by the School) MBA

School of Management Studies INDIRA GANDHI NATIONAL OPEN

UNIVERSITY Proforma for Approval of Project Proposal (MS-100)

Enrolment No. : 178506225 Study Centre Code : 2711

Regional Centre Code : 31
Name of the Student : Anita Panwar
Address of the Student : UPNL Office near Nainital Bank Pilokothi
Kaladungi Road Haldwani District Nainital 263139
E-mail Address : anitapanwar28@gmail.com

Title of the Project : WORKING CAPITAL MANAGEMENT OF ICICI BANK LTD

Subject Area : MBA (Finance)

Name of the Guide :

Address of the Guide :

Is the Guide an Academic Counsellor of Management Programme of IGNOU? No

If Yes, Name and Code of :
Study _________________________________________________________
Centre, the courses s/he is __________________________________________________________
counselling, and period __________________________________________________________

No. of Students currently working : 1

under the guide for MS-100

Signature of Student Signature of Guide

Date: Date :

Please do not forget to enclose the Project Proposal and signed Bio-data of the guide.

For Office Use only

Proposal Guide
(SIGNATURE OF MANAGEMENT FACULTY)
Approved Approved
Date ..........................................
Not Approved Not Approved
 PROJECT SYNOPSIS

WORKING CAPITAL MANAGEMENT OF

ICICI BANK LTD

Submitted By:

Anita Panwar

Enrollment No: 178506225

Under The Guidance Of:

Mr.

Submitted To:

INDIRA Gandhi National Open University

In partial fulfillment for the award of the Master’s Degree in Business

Administration (Finance)
 INTRODUCTION

Business capital is broadly divided into two groups: fixed capital and working
capital. Fixed capital refers to the funds investment in such fixed or permanent
asset as land, building machinery etc. while working capital refers to funds locked
up in materials, work-in-progress, finished goods, receivable and cash etc.. since
these asset are known as current assets in very simple term “working capital may
be defined as capital invested in current assets”

“working capital management is concerned with the problems that arises in

attempting to manage the current assets, current liabilities and the interrelationship
that exists between them”.

The working capital management is thus concerned with maintaining a trade off
between profitability and risk associated within a firm’s level of CA & CL.

The basic goal of working capital is to manage the firm’s CA & CL so as to

achieve a satisfaction level of working capital it is. Necessary because if the firm is
not able to maintain these level it is likely to because in solvent and may even be
forced into bankruptcy.

There are two concept of working capital.

1) Gross working capital: -

Gross working capital simply called as working capital, refers to the firm’s
investment in current Assets. Current Assets which can be converted into cash
within an accounting year and include cash short-term security, debtors, bills
receivables and stock investment.

2) Networking capital: -

Net working capital refers to the difference between current assets and current
liabilities net working capital can be positive or negative, A positive net working
capital will arise when current assets exceeds current liabilities. A negative net
working capital occurs when current liabilities are in excess of current Assets.

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 Introduction of the organizations

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. The Bank has a network of 2,586
branches and 8,003 ATMs in India, and has a presence in 19 countries, including
india. 

ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through
its specialised subsidiaries in the areas of investment banking life and non-life
insurance, venture capital and asset management. 

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,
branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and
Dubai International Finance Centre and representative offices in United Arab
Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our
UK subsidiary has established branches in Belgium and Germany. 

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).

After consideration of various corporate structuring alternatives in the context of

the emerging competitive scenario in the Indian banking industry, and the move
towards universal banking, the managements of ICICI and ICICI Bank formed the
view that the merger of ICICI with ICICI Bank would be the optimal strategic
alternative for both entities, and would create the optimal legal structure for the
ICICI group's universal banking strategy.

ICICI PRUDENTIAL INSURANCE COMPANY

ICICI LOMBARD GENERAL INSURANCE COMPANY

ICICI PRUDENTIAL AMC & TRUST:

ICICI SECURITIES LIMITED

ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED

 RATIONALE OF THE STUDY

Working capital (abbreviated WC) is a financial metric which represents operating

liquidity available to a business, organization or other entity, including
governmental entities. Along with fixed assets such as plant and equipment,
working capital is considered a part of operating capital. Gross working capital is
equal to current assets. Working capital is calculated as current
assets minus current liabilities.

A company can be endowed with assets and profitability but may fall short

of liquidity if its assets cannot be readily converted into cash. Positive working
capital is required to ensure that a firm is able to continue its operations and that it
has sufficient funds to satisfy both maturing short-term debt and upcoming
operational expenses. The management of working capital involves managing
inventories, accounts receivable and payable, and cash.

The need for working capital to run the day today business activities can not day
over emphasized. In its endeavourer to maximize the shareholder wealth a firm
should earn sufficient return from its operation. Earning a steady amount of profit
require a steady amount of profit require successful sales activity. The firm has to
invest enough funds in current assent for the success of sales activity. Current asset
are needed because sales do not convert into cash spontaneously. There is always
an operating cycle involved in the conversion of sales into cash. Although numbers
vary by industry, a working capital ratio below 1.0 is generally indicative of a
company having trouble meeting its short-term obligations. Working capital ratios
of 1.2 to 2.0 are considered desirable, but a ratio higher than 2.0 may indicate a
company is not effectively using its assets to increase revenues.
 PROBLEM STATEMENT

To analyze the financial statements and working capital management of

ICICI BANK LTD using various analytical tool.

OBJECTIVES OF THE STUDY

The main objectives of this project are the following:

 To assess past performance and current financial position.

 To analyze the financial statement i.e P&L account and Balance sheet of
ICICI BANK.
 To learn about Working capital management with view of ICICI BANK
 To understanding the meaning and need of Balance Sheet and profit and loss
account.
 The purpose is to portray the financial position of ICICI BANK.
 To evaluate the financial soundness , stability and liquidity of ICICI BANK.
 RESEARCH METHODOLOGY

The appropriate research design formulated is detailed below. We will be more

dependent on secondary data to get various financial statements so that I can apply
analytical tools.

NATURE OF DATA: In research methodology data must be collected. And there

are two sources of collection of data i.e.

 PRIMARY DATA:

OBSERVATIONS - It is the methods of nothing and recording information

without asking specific question from the respondents.

PERSONAL INTERVIEWS - In this method I asks the question to the concerned

persons in the order questions are listed.

 SECONDARY DATA: Secondary data is that data which is already

available and published. It could be internal and external source of data.

INTERNAL SOURCE OF DATA: It originates from the specific field of study

like published brochures, official reports, etc.

EXTERNAL SOURCE OF DATA: It originates outside the field of study like

books, periodicals, journals, newspapers and internet.
Evaluate Balance sheet, P/L statement and future cash flows for the organizations.

RATIO ANALYSIS RELATED TO WORKING CAPITAL :

 LIQUIDITY RATIO: Liquidity ratios are measures of the short-term

ability of the company to pay its debts when they come due and to meet unexpected
needs for cash.

 CURRENT RATIO: The current ratio is a rough indication of a firm ability

to service its current obligations. Generally, the higher the current ratio, the
greater the cushion between current obligations and a firm ability to pay
them. The stronger ratio reflects a numerical superiority of current assets over current
liabilities Current ratio is calculated as follows:

Current ratio= Current Assets/Current Liabilities

 QUICK RATIO: It is also known as the “acid test” ratio; this is a

refinement of the current ratio and is a more conservative measure of
liquidity. The quick ratio expresses the degree to which a company’s current
liabilities are recovered by the most liquid current assets. quick ratio is
calculated as follows:

Quick ratio= (cash + marketable securities +Receivables)/current liabilities

 SOLVENCY RATIO: Solvency ratios indicate the ability of the company to

meet its long-term obligations on a continuing basis and thus to survive over a long
period of time

 Debt/Worth Ratio: This ratio expresses the relationship between capital

contributed by creditors and that contributed by owners. It expresses the
degree of protection provided by the owners for the creditors.
 The higher the ratio, the greater the risk being assumed by creditors. The lower the
ratio,  the   gr e a t e r   the long term  financial
s a f e t y .   A   f i r m   w i t h   a   l o w debt/worth ratio usually has a greater flexibility to
borrow in the future. Amore highly leveraged company has a more limited debt
capacity.

Debt/worth ratio=Total Liabilities / Tangible Net Worth

 PROFITABILITY RATIO: Profitability ratios are gauges of the

company's operating success for a given period of time.

 Return on assets: Return on assets is a measure of how effectively the

f i r m ’ s a s s e t s a r e b e i n g u s e d t o g e n e r a t e pr o f i t . I t i s
c a l c u l a t e d a s follows:

Return On Assets= Net Income/Total Assets

 Return on equity: Return on equity is the bottom line measure for

t h e s h a r e h o l d e r s , m e a s u r i n g f o r t h e p r of i t s e a r n e d f o r e a c h
r u p e e invested in business. It is calculated as follows:

Return on Equity= Net income/shareholder’s equity

 FIXED/WORTH RATIO: This ratio measures the extent to which

owner’s equity (capital) has been invested in plant and equipment (fixed assets). A
lower ratio indicates a proportionately smaller investment in fixed assets i n
r e l a t i o n t o n e t w o r t h a n d a b e t t e r c u s h i o n f or c r e d i t or s i n
c a s e of   liquidation. Similarly, a higher ratio would indicate the opposite situation.
The p r e s e n c e   of substantial leased fixed  assets (not
s h o w n   o n   t h e  balance-sheet ) may deceptively lower this ratio. Fixed Worth
Ratio=Net Fixed Assets/ Tangible Net Worth
 LIMITATIONS OF THE STUDY

Efforts will be made to make the study as accurate as possible, 100% accuracy
cannot be claimed because of the following reasons:

 Time constraint of study

 Error in secondary data collected from various sources.
 The analysis only covers available past financial data of ICICI Bank.
 BIBLIOGRAPHY

I have referred following books and used following websites for the
preparation of this project report on working capital management of ICICI Bank
Ltd.

 Chandra. Financial management – R.P Rustagi

 www.google.com
 www.icici.co.in
 www.rbi.org.in
 www.moneycontrol.com
 www.equitymaster.com
 mwww.nseindia.com http://www.business-standard.com/india/index2.php
 http://economictimes.indiatimes.com/