A REPORT ON

“WORKING CAPITAL MANAGEMENT”

AT ODISHA STATE CO-OPERATIVE BANK

Submitted for B. Com Programme in D.A.V. School of Business Management,

Affiliated to Utkal University

SUBMITTED BY:
SUBHASMITA SAHU
2020-23
University Roll No.- 2003010190550052

EXTERNAL GUIDE: INTERNAL GUIDE:

Mr. A.R. MOHANTY Mr. MUNA SAHOO
ASSISTANT MANAGER ASST. PROFESSOR IN COMMERCE
OSCB DSBM

Committed to Excellence
D.A.V. SCHOOL OF BUSINESS MANAGEMENT
(Recognised by the Govt. of Odisha and Affiliated to Utkal University)
D.A.V. CAMPUS, UNIT-8, NAYAPALLI, BHUBANESWAR-751012, ODISHA
2023
 D.A.V. SCHOOL OF BUSINESS MANAGEMENT
(Recognised by the Govt. of Odisha and Affiliated to Utkal University)
D.A.V. CAMPUS, UNIT-8, NAYAPALLI, BHUBANESWAR-751012, ODISHA

DECLARATION

I do hereby declare that the project work entitled “(WORKING CAPITAL MANAGEMENT)”submitted to
D.A.V. School of Business Management, Affiliated to Utkal University, is a recordof original work done by
me under the guidance of (Mr. A.R MOHANTY), FACULTY, OSCB and(Mr. Muna Sahoo), (Faculty,
DSBM).

Date: Name: SUBHASMITA SAHU

Place: Bhubaneswar Roll No: 2003010190550052

 ACKNOWLEDGEMENT

It is really a great pleasure to have this opportunity to express the feeling of gratitude
imprisoned in the deepest core of my heart.

At the onset, I convey my sincere gratitude to the Mr. A.R Mohanty, Faculty, OSCB for giving me
the opportunity to prepare my project work.

I do express my sincere thanks to Mr. Muna Sahoo, Faculty, of DAV School of Business
Management for his/her diligent guidance and continuous monitoring of the project.

I must also express my deepest gratitude to our Principal, Dr. D.N. Mishra and the Faculty
Council of DSBM, for their timely help as and when required.

I cannot conclude this acknowledgement without thanking my family, relatives, acquaintances,

and friends who have offered their valuable cooperation to me at every stage.

Date: Name: SUBHASMITA SAHU

Place: Bhubaneswar Roll No: (2003010190550052)
 D.A.V. SCHOOL OF BUSINESS MANAGEMENT
UNIT-VIII, NAYAPALLI, BHUBANESWAR-751012

Email: dsbmbbsr@gmail.com. Website: www.dsbm8.org, Tel: 0674 2560 539

Committed to Excellence

CERTIFICATE OF THE INTERNAL GUIDE

Certified that the project report titled “Working Capital Management” is the bona fide work of
Ms. Subhasmita Sahu bearing roll no. 2003010190550052, who carried out the work under my
supervision. Certified that to the best of my knowledge the work reported herein does not form
part of any other project report or dissertation on the basis of which a degree or award
conferred on an earlier occasion on this or any other candidate.

DATE: Mr. MUNA SAHOO

Place: Bhubaneswar Assistant Professor in commerce
 CONTENTS

TITLE PAGE
DECLARATION
ACKNOWLEDGEMENT
CERTIFICATE OF THE EXTERNAL GUIDE
CERTIFICATE OF THE INTERNAL GUIDE
TABLE OF CONTENTS
EXECUTIVE SUMMARY
1.INTRODUCTION
1.1 Identification of Problem
1.2 Objectives of the Study
1.3 Scope and Limitations of the Study
2.REVIEW OF LITERATURE
2.1 Background study
2.2 Company Profile
3.METHODOLOGY
3.1 Sample Design
3.2 Data Collection
ANALYSIS AND INTERPRETATION
FINDINGS
5.1 Discussion
5.2 Conclusion
BIBLIOGRAPHY
EXECUTIVE SUMMARY

Working capital is the day to day need of any business and it can be also referred as the lifeline of any
business. There is no specific tool to know the exact amount of working capital required by any business
concern. Working capital management is widely viewed as the one of the important jobs of the finance
department of any company.

In Odisha State Co-operative Bank, the working capital is managed on the

estimate basis. It is taken as the estimate of the working capital for the current
period as per the expenditure of the previous year and the estimated future
expenses.

The objective of the project is to analyse the working capital requirement of the
State Cooperative Bank. To know the various components of the working capital,
trend analysis and ratio analysis are used in the project report.

This project is intended to make the State Co-operative Bank free from hassle in
the future regarding its working capital management.
 1. INTRODUCTION

The Odisha State Cooperative Bank (OSCB) is one of the Scheduled State Cooperative Banks incorporated
under the Orissa Cooperative Societies Act on 2nd April, 1948. Since its inception, the Bank has been
playing a pivotal role in transforming the agrarian economy of the State by catering to the credit
requirement of the farm families. The Bank has also facilitated organization and credit linkage of Self-
Help Groups (SHGs) and Joint Liability Groups (JLGs) to meet the credit requirements of the
sharecroppers and oral lessees. The Bank has established a State-of-the-Art Core Banking Data
Management Centre in its Head Office premises and linked all the Branches of DCCBs to the Data Centre
along with its functional units as a part of the Core Banking Solution (CBS) being assisted by the State
Government. The Bank has been earning profit since its inception. The Bank has firm commitment to the
prosperity of the State by way of providing credit for capital formation through Medium Term and Long-
Term loans for agriculture. Keeping in view the credit requirement of the large number of handloom
weavers, rural artisans, adequate credit have been sanctioned in favour of the Primary Weavers
Cooperative Societies and artisan members of the PACS. The Bank has a network of 14 Branches spread
across the State and it has been supporting the Central Cooperative Banks with its 323 Branches to
consolidate the Short-Term Cooperative Credit Structure.

Working Capital Management involves managing the balance between firm’s short-term assets and its short-
term liabilities. The goal of working capital management is to ensure that the firm is able to
continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and
upcoming operational expenses.
The interaction between current assets and current liabilities is, therefore, the main theme of the theory of
working capital management.

There are many aspects of working capital management which makes it important function of financial
management.

 Time: Working capital management requires much of the finance manager’s time.
 Investment: Working capital represents a large portion of the total investment in assets.
 Credibility: Working capital management has great significance for all firms but it is very critical for small
firms.
 Growth: The need for working capital is directly related to the firm’s growth.
Working Capital Management

In simple terms working capital means is that the amount of funds that a company require finance for its
day-to-day operations. Working capital states that the period of debtors, receivables etc for a company
to raise finance from them at the earliest. Finance manager should develop sound techniques of managing
current assets. Working capital management involves managing the relationship between a firm's
short-term assets and its short-term liabilities. The goal of working capital management is to ensure that the
firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing
short-term debt and upcoming operational expenses.

The following should be effective in working capital management:

Cash management: Identify the cash balance which allows for the business to meet day to day expenses,
but reduces cash holding costs.
Inventory management: Identify the level of inventory which allows for uninterrupted production but
reduces the investment in raw materials and minimizes reordering costs-and hence increases cash flow.
Besides this, the lead times in production should be lowered to reduce Work in Progress (WIP) and similarly,
the Finished Goods should be kept on as low level as possible to avoid over production.
Debtor’s management: Identify the appropriate credit policy, i.e. credit terms, discounts etc. which will
attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by
increased revenue and hence Return on Capital. Debtors credit period should be less than 90 days to achieve
good working capital ratio and position of the company.

Importance of Adequate Working Capital

Management of working capital is an essential task of the finance manager. He has to ensure that the amount
of working capital available with his concern is neither too large nor too small for its requirements. A large
amount of working capital would mean that the company has idle funds. Since funds have a cost, the
company has to pay huge amount as interest on such funds. If the firm has inadequate working capital, such
firm runs the risk of insolvency. Paucity of working capital may lead to a situation where the firm may not
be able to meet its liabilities. The various studies conducted by the Bureau of Public Enterprises have shown
that one of the reasons for the poor performance of public sector undertakings in our country has been the
large amount of funds locked up in working capital. This results in over capitalization. Over capitalization
implies that a company has too large funds for its requirements, resulting in a low rate of return a situation
which implies a less than optimal use of resources. A firm has therefore, to be very careful in estimating its
working capital requirements.

Maintaining adequate working capital is not just important in the short-term. Sufficient liquidity must be
maintained in order to ensure the survival of the business in the long-term as well. When business make
investment decisions, they must not only consider the financial outlay involved with acquiring the new
machine or the new building, etc., but must also take account of the additional current assets that are usually
required with any expansion of activity. For e.g.: Increased production leads to hold additional stocks of raw
materials and work in progress. An increased sale usually means that the level of debtors will
increase. A general increase in the firm’s scale of operations tends to imply a need for greater levels of
working capital.

1.1 IDENTIFICATION OF PROBLEM

The Co-operative Bank is an important component of the Indian Financial System. The Co-
operative banks in India play an important role even today in rural financing. The business of
Co-operative Banks in the urban areas also has increased phenomenally in recent years due
to the sharp increase in the number of primary Co-operative Banks. The study finds that
owned fund, borrowing, advance and working capital, share capital and reserve are
statistically significant in the short run; and deposits, share capital and reserve are
statistically significant in the long run. The empirical results suggest that deposits and
advances impact the profits of OSCB positively while cost of management, capital and
reserves lead to lower profits. Hence, the study proposes the OSCB to follow a proactive
management of capital with higher deposit generation and larger advances strategy to
become a strong bank and grow steadily. Working capital management has deep impact on
overall performance of the firm.
1.2 Objectives of the study
To study the various components of working capital.

 To analyse the liquidity trend of Odisha State Co-operative Bank.

 To measure and evaluate the liquidity and profitability position of State Co-operative Bank.

Scope of the study

This project is vital to me in a significant way. It does have some importance for the company too. These are
as follows –
• This project will be a learning device for the finance students.
• Through this project I would study the various methods of the working capital management.
• The project will be a learning of planning and financing working capital.
• The project would also be an effective tool for credit policies of the companies.
• This will show different methods of holding inventory and dealing with cash and receivables.
• This will show the liquidity position of the company.

Limitation of the study

• Time factor is the most crucial one. The study was conducted within a short period of two
months.
• Odisha State Co-operative Bank executives were hesitating to provide information.
• I had to wait for a long time to make contact with the executives, because they were busy
with their work.
• Due to busy work schedule, detailed discussions were not possible.
• It is also found that some of the executives lack interest, enthusiasm, initiative and
involvement, which was de-motivated me.
• Lot of time consumed during survey.
 Review of literature

The Odisha State Cooperative Bank (OSCB) is one of the Scheduled State
Cooperative Banks incorporated under the Orissa Cooperative Societies Act on
2nd April, 1948. Since its inception, the Bank has been playing a pivotal role in
transforming the agrarian economy of the State by catering to the credit
requirement of the farm families. The Bank leads the Short-Term Cooperative
Credit Structure (STCCS) in Odisha comprising 2709 PACS (including 212 LAMPS
and 6 FSS) at the grassroots level, 17 District Central Cooperative Banks (with 323
Branches) at the middle tier. The Bank has facilitated enrolment of 53.69 lakh
agricultural families from out of about 55 lakh agricultural families in the State
covering 97.6% of the families. As a State partnered Bank, the OSCB has been
implementing various plans and programmes of the State Government meant for
agriculture production and productivity with rural development. The Bank has a
network of 14 Branches spread across the State and it has been supporting the
Central Cooperative Banks with its 323 Branches to consolidate the Short-Term
Cooperative Credit Structure. The PACS are also being transformed as One Stop
Shop to provide all the requirements of the farm families under one roof. The
Bank has also facilitated organization and credit linkage of Self-Help Groups
(SHGS) and Joint Liability Groups (JLGs) to meet the credit requirement of the
share croppers and oral lessees. The Bank has firm commitment to the prosperity
of the State by way of providing credit for capital formation through Medium
Term and Long-Term loans for agriculture. Keeping in view the credit requirement
of the large number of handloom weavers, rural artisans, adequate credit have
been sanctioned in favour of the Primary Weavers Cooperative Societies and
artisan members of the PACS. The Bank has established a State-of-the-Art Core
Banking Data Management Centre in its Head Office premises and linked all the
Branches of DCCBs to the Data Centre along with its functional units as a part of
the Core Banking Solution (CBS) being assisted by the State Government. The
Bank has been earning profit since its inception.

HISTORY OF THE BANK

With the growth of Central Banks, the need for loan and advantages and cash credit at a reasonable rate of
interests grew for central banks to enable them to make adequate finance available to the society. So, in 1914
the Bihar and Odisha provincial co-operative bank was formed. The early 40s witnessed the introduction of
provincial autonomy in all British-Indian provinces and what was of paramount was the birth of Odisha
provinces on 1st April, 1936. The Odisha provincial co-operative bank is one of the manifestations of great
historical identity of Odia people. During this period, the number of central banks in north Odisha were 13.
A few months after the formation of separate Odisha province, the Odisha Cooperative Bank was registered
on 25th August, 1936 and sum of 10,520 was collected towards share capital of the bank.

MILESTONE IN THE HISTORY OF OSCB BANK Ltd.

1. 1954-55: The Orissa Cooperative Society Act 1951 was enforced and the rules were formed their under.
2. 1955-56: M.T. Agriculture Loans were advanced to the farmer for the First time.
3. 1956-57:
a. Line of credit for the handloom introduced
b. Bank's deposit exceeds 1 crore.
4. 1957-58: Loan and advances of the bank exceeded Rs.1 core and stood 1.8cr.
5. 1959-60: Financing of the Industrial Cooperative Society started.
6. 1965-66: The Banking Regulation Act, 1949 was made applicable
7. 1968-69: Crop loan was introduced
8. 1970-71: The 1st branch of the Bank was opened at Bhubaneswar on
15-12-1970.
9. 1974-75: The Bank made loss of Rs 86000/- in the history of 50 years i.e. from
1947 to 2000
10. 1978-79: Cooperative storage projects stated in Orissa.
11. 1981-82: A.C.S.T.I of the Bank was set up on 19-11-1985.
12. 1990-91: New Cooperative year commenced from 01-04-1990
13. 1994-95: MOU was signed between OSCB, NABARD and Govt. of Orissa.
14. 1996-97:The bank became a member of Indian Bank Association on 23-04-
1996.
15. 1997-98: The bank started total branch automation, the main branch was fully
computerized, NABARD awarded the bank with Two best Performance prize for
excellent performance.
16. 2000-02: ATM were installed in Cuttack and Bhubaneswar. Customer attitude
survey was taken up through the Xavier Institution of Management,
Bhubaneswar.
17. 2002-03:
a. Introduction of cooperation bank mutual Arrangement scheme. (COBMASO)
b. Recovery of cooperative duties in Orissa.
c. The cooperative Bank has earned highest profit in that year.
18. 2003-04:
a. Cooperation of "Mini Bank Schemes" at PACS level to mop up Rural savings.
b. Computerization Programs for improving the quality of customer service
streamlines MIS and Financial Accounting System

Function of OSCB
The OSCB as the apex institution of the short-term co-operative credit delivery system in the state playing a
vital role in making strong PACS for the socio- economic development of the state.

MISSION OF O.S.C.B LTD.:

The mission of O.S.C.B. Ltd is to become a strong and Vibrant Bank having
competition edge and to lead a rejuvenated short term Cooperative Credit
Structure to serve the people of Orissa.

ACHIEVEMENT:
#Net worth exceeding 140 corers and deposits more than 1026 corers.
#ATM service is available in the Main branches for anytime banking.
#Earning profits since inception and paying dividend to shareholders.
#Awarded for best performance by finance Ministry, Govt. of India.
# Loan for commercial vehicles, small business building. Purchase of customer and durables.
# Demand draft issued on all types of deposits and on ace major cities of country.

Role towards the credit policy at the state level

 Kisan credit has been introduced to attract and ensure adequacy of crop down among farmers of the state.
 OSCB is preparing annual credit plan as a leader of STCCS in the state.

Recovery agricultural loan

With a competitive and spiritual mind among staff, OSCB has taken the following steps:
Introduction of new incentive scheme for recovery of loan, regular review of performance PACS, publicity
through e-media etc.

Role towards customer service

A committee under the chairmanship of Sri M.N. Golpuria has been setup in September, 1990 on customer
service by RBI.
Golpuria committee has made suitable and recommendation of customer service in the bank. OSCB to
follow important recommendation and advised its branches and DCCB to follow important recommendation
to ensure customer satisfaction in the bank.
WORKING CAPITAL ANALYSIS OF OSCB
CAPITAL STRUCTURE

The paid-up share capital stood at as on March 31st, 2021 and this is an increase from position of last year.

Particulars 31.03.2018 31.03.2019 31.03.2020 31.03.2021

Paid-up share 507.31 531.77 608.04 692.68
capital

Govt. share capital 104.23 104.23 124.23 149.23

Percentage of govt. 20.55 19.60 20.43 21.54

share capital from
total share capital

Growth rate of 16.46 4.86 14.34 13.92

share capital over
previous year
 SHARE CAPITAL

2011-12 2012-13 2013-14 2014-15 2015-16

17067.22 20675.58 25962.38 34473.26 37615.61

2016-17 2017-18 2018-19 2019-20 2020-21

43543.87 50712.57 53177.01 60804.22 69268.22

12
YEAR
10 2011-12
8 2012-13
2013-14
6 2014-15
4 50000 2015-16
2 2016-17
45000
2017-18
0 40000 2018-19
12 1 3 1 4 1 5 1 -17 -18 -19 -20
6 2019-20
1 1- 12- 13- 14- 15- 135000
6 1 7 18 1 9
20 20 20 20 20 20 30000 20 2 0 20 2020-21

25000
20000
15000
10000
5000
RESERVES 0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Since inception, the bank has not
achieved the breakeven level of business but also attained viability in its operations. As a result, the bank
continued to build up its reserves as per the Odisha Co-operative Society Act and Rules framed thereon and
by laws of the bank.

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

26986.74 30216.68 35183.0 37393.97 43791.22 46687.17 65133.68 66056.1 69026.76 55393.75
0 3

2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
80000
70000
60000
50000
40000
30000
20000
10000
0
12 13 14 15 16 1 7 1 8 1 9 20 21
1 1- 12- 13- 14- 15- 1 6- 1 7- 1 8- 19- 20-
2 0 2 0 2 0 2 0 2 0 20 20 20 2 0 2 0
80000

70000

60000

50000

40000

30000

20000

10000

0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
 WORKING CAPITAL

2011-12 2012-13 2013-14 2014-15 2015-16

812977.84 927796.61 1139259.83 1279900.47 1295528.65

2016-17 2017-18 2018-19 2019-20 2020-21

1652820.89 1624575.11 1714883.35 1855456.97 2041154.35

1800000 1800000

1600000 1600000
1400000 1400000
1200000 1200000 2011-12
1000000 2012-13
1000000
2013-14
800000
800000 2014-15
600000 2015-16
600000
400000 2016-17
400000
200000
0 200000
2011- 2012-0 2013- 2014- 2015- 2016-
12 13 14 15 16 17
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
 RESEARCH METHODOLOGY
The research involved extensive and intensive studies of the Orissa State Cooperative Bank Ltd. This project
has been made to study the financial analysis of the bank. During this period, I study the final position and
performance of the bank. At last, I have given interpretation and conclusion of the study.

DATA COLLECTION
The data collection is completely made from primary as well as secondary sources.
The secondary sources are:
 Annual report
 Official records in the organization
 Files
 Websites
 CONCLUSION
Liquidity is an attribute that signifies the capacity to meet financial obligations of the company when
required. The importance of liquidity to meet the day-to-day operations and urgent payment to suppliers. A
firm should maintain adequate level of working capital to meet the day- to-day operations and maintain
business operations. The effective management of working capital requires both medium – term planning
and immediate reactions to the fast changes taking in the present business environment. The effectiveness of
working capital depends on all current assets and current liabilities.