Internship Report On-

Analysis Of Asset, Liability & Risk Management Data Of

Amrita Consumers Food Products Ltd.

Supervised By:
Mohammad Rakibul Islam
Associate Professor & Internship Supervisor
Department of Accounting & Information Systems
University of Barishal

Submitted by:
Exam Roll: AIS040/2
Session: 2019-2020 (Admission: 2019-2020)
Department of Accounting and Information Systems
University of Barishal

Date of Submission:
15th November 2022
 LETTER OF
TRANSMITTAL
17 August, 2022
Mohammad Rakibul Islam
Associate Professor
Department of Accounting & Information Systems
University of Barishal

Subject: Submission of Final Internship Report.

Dear Sir,

With great pleasure I would like to submit my internship study on Analysis Of Asset, Liability
& Risk Management Data Of Amrita Consumers Food Products Ltd. as a requirement of
MBA program from Department of Accounting and Information Systems, University of Barishal.
I have tried to collect as much data as possible from both the primary and secondary sources.
Primary data is collected through survey from the Annual studies of Amrita Consumer Food
Products Ltd.. Besides secondary data have been collected from relevant papers, journals,
websites and magazines.

Through this paper, the preparation of this study accelerates me to a great extent to fuse my
theoretical knowledge with practical implications. I would like to express my deep gratefulness
for your kind and conscious guidance in preparing my study in the given time.

Thank you sir for your heartiest co-operation.

Yours Sincerely,

…………………………………………..

Exam Roll: AIS-040/2

Session: 2019-20 (Admission: 2019-20)
Department of Accounting & Information Systems ,University of Barishal
 SUPERVISOR‟S CERTIFICATE

This to certify that the study titled is Analysis Of Asset, Liability & Risk Management Data
Of Amrita Consumers Food Products Ltd. a bona fide work of Exam Roll No AIS-040/2, a
regular student who worked under my supervision during the internship period as a partial
requirement for fulfilling MBA. He worked hard to collect sufficient amount of data related to
the topic that made this study a data-rich, realistic, and attractive one. To the best of my
knowledge, the work studied here in is not from part of any other study, thesis or dissertations. I
wish him all the best for all the future endeavors.

Mohammad Rakibul Islam

Associate Professor
Department of Accounting & Information Systems.
University of Barishal .
 DECLARATION OF THE STUDENT

I am a student of MBA(Final Semester), Exam Roll No. AIS-040/2, Department of Accounting

and Information Systems, University of Barishal hereby declare that this study on the topic of
Analysis Of Asset, Liability & Risk Management Data Of Amrita Consumers Food
Products Ltd. is prepared solely by me under the supervision of Mohammad Rakibul Islam,
Associate professor, Department of Accounting and Information Systems, University of Barishal.
I confirm that the study is only prepared for my academic requirement not for any other purpose.
I also confirm that that this study includes genuine information free from plagiarism.

Exam Roll: AIS-040/2

Session: 2019-20 (Admission: 2019-20)
Department of Accounting & Information Systems.
University of Barishal
 ACKNOWLEDGEMENT

I feel honored to lay my sincerest gratitude to my honorable supervisor, Mohammad Rakibul

Islam, Associate professor of Accounting and Information Systems department, University of
Barishal, for his help, encouragement, Guidance and valuable suggestions throughout the period
of this study, without which it would not have been possible to submit this report on time.

It was a great opportunity for me to complete my internship program at Amrita Consumer Food
Products Ltd. I am also very grateful to head of accounting, marketing, regional sales manager,
territory sales manager and other officers for their great support.

I am fortunate for the aid and encouragement I have received from all of my teachers and friends
and students of The University of Barishal.

Exam Roll: AIS-040/2

Session: 2019-20 (Admission: 2019-20)
Department of Accounting & Information Systems.
University of Barishal
 Executive Summary
The goal of asset and liability management is to properly manage the risk related to changes in
interest rates, the mix of balance sheet assets and liabilities, the holding of foreign currencies,
and the use of derivatives. These risks should be managed in a manner that contributes
adequately to earnings and limits risk to the financial margin and member equity.

Proper management of asset/liability risk is facilitated through board approved policy, which sets
limits on asset and liability mix, as well as the level of interest rate risk and foreign currency risk
to which the credit union is willing to expose itself. Policy should also set out guidelines for the
pricing, term and maturity of loans and deposits. The use of derivatives, if any, should also be
controlled by policy, which should state among other things that derivatives must only be used to
limit interest rate risk and must never be used for speculative or investment purposes.

The demand for risk reporting

A growing demand for better reporting of business risks has emerged in recent decades. This is
based on the belief that improved understanding of business risks by investors and other users of
corporate reporting should lead to better stewardship of companies and to a more efficient
allocation of resources. It is generally accepted that there was a widely-shared underestimation of
risk before the financial crisis of 2007 and beyond. This has reinforced calls for improved risk
reporting, by banks in particular, in the expectation that it should help make future crises less
likely. but the crisis has also led to calls for better risk reporting by companies in all sectors. The
demand for better risk reporting is an entirely legitimate one, and risk reporting can and should
be improved. but careful consideration needs to be given to how it should be improved and to
how far the expectations of all those who now call for change can be met. Risk in business is
about much more than the possibilities of corporate failure. Yet unexpected collapses, especially
when there is a rash of them in a crisis, inevitably focus attention on the quality of risk reporting
and may give rise to unrealistic expectations that better risk reporting could prevent future
failures. but in a competitive economy business failures are inevitable, and it would be
unreasonable to expect risk reporting to provide a reliable early warning of which businesses are
most likely to fail – still less to prevent their failure.

Experience of risk reporting

Researchers who have looked at the experience of risk reporting by businesses across different
sectors often express a degree of disappointment with it, sometimes suggest that disclosure
requirements have had limited effect, and tend to make comments along the lines that there is
„formal disclosure but substantial non-disclosure‟. Actual research findings are mixed. While
there is some evidence that both quantitative and qualitative risk reporting may have been useful,
there is also evidence that qualitative risk reporting is not considered useful by some users of
corporate reporting. Indeed, users appear to have conflicting views on risk reporting – some
finding it useful, some not. As for banks specifically, there is a widespread and understandable
view that there must have been inadequate risk reporting in the run up to the financial crisis.

Risk reporting challenges

I identify five main reasons why the usefulness of risk reporting by businesses across different
sectors sometimes seems to be in doubt:

 It is impossible to know even after the event whether most qualitative, and some
quantitative, risk reporting is accurate or inaccurate. This must limit the reliance that
users can place on it.
 There are often competitive costs to informative risk disclosures and they also have
potential costs for managers. These costs may exceed the perceived benefits of risk
reporting, leading to uninformative disclosures. Indeed, risk reporting creates its own
risks and so needs to be undertaken by preparers, and interpreted by users, as an exercise in
risk management.
 It may well be appropriate to comply with requirements for the provision of risk lists by
making generic disclosures, even though they will be seen as boilerplate.
 The effectiveness of a firm‟s risk management depends on the quality of its managers,
and this is something that statements of the company‟s attitude to risk and disclosures of
internal structures and procedures are unlikely to reveal.
 There are some risks that firms will never report and others that they are always liable to
understate.

The way forward

It is important to have practical solutions to the problem of how to improve risk reporting. Risk
reporting requirements vary widely among different jurisdictions, and so it would be impractical
to put forward improvements to them that would have general validity. In any case, and perhaps
more importantly, the evidence suggests that risk reporting requirements often have only limited
effectiveness. For these reasons, our suggestions – set out in seven principles – do not include
any proposals for new or tougher regulation. The principles are purely points for consideration
by those interested in improving risk reporting and by preparers of corporate reporting
information, and are intended to apply to public companies in all sectors. The seven principles
for better risk reporting are:
 Tell users what they need to know. Users of corporate reporting want information about
a company‟s risks so that they can make their own assessment of risk. Companies should
focus on this objective in deciding what to disclose.
 Focus on quantitative information. Disclosing more detailed analyses of the quantitative
data that firms already provide would give helpful new information. Too much weight has
been placed on the production of descriptive risk lists. This is not a call for quantification
of risks, which usually involves dubious assumptions about the probability of future
events. Nor is it a call for qualitative information to be neglected. What we have in mind
is more information on the breakdown of firms‟ activities, geographically and by sector,
and on their assets, liabilities and commitments.
 As far as possible, integrate information on risk with other disclosures. Financial
reporting provides much information on risks already, and this should be integrated with
other risk disclosures. but information on risk should also be integrated with firms‟
descriptions of their business models, their forward-looking disclosures, their discussion
of past performance, and their financial reporting. A firm‟s risks are usually inherent in its
business model, so explaining the business model should involve explaining its risks.
Risk is forward-looking and cannot be fully understood except in the context of broader
forward-looking information about a firm‟s performance, plans and prospects.
 Think beyond the annual reporting cycle. Many risks stay the same from one year to
the next. Others are highly variable and information on them needs to be updated more
frequently than once a year. The internet, rather than the annual report, would probably be
the right place for information on both sorts of risk.
 Where possible, keep lists of principal risks short. Users are currently faced with long
and indigestible risk lists that are all too easy to ignore. Where it is useful for companies
to disclose other risks as well as those identified as the principal ones, they should still do
so.
 Highlight current concerns. It is likely to be of interest to users to know what risks are
currently most discussed within a firm. These will often be different from the firm‟s
principal risks, and disclosing them could give users a valuable insight into the business.
 Review risk experience. Companies could usefully review their experience of risk in the
reporting period. What went wrong? What lessons have been learnt? How do their
experiences match up with the risks that they had previously reported?
 TABLE OF CONTENTS

1.1 Introduction 11
1.2 Origin of the Study: 11
1.3 Objective of the study: 12
1.4 Methodology of the Study: 12
1.5 Data Analysis: 13
1.6 Limitation of the Report: 13
1.7 Report Layout: 13
2.1 Literature Review of the Study 14
3.1 Beginning History of Amrita Consumer Food Products Ltd.: 16
3.2 Corporate Information: 17
3.3 Products of Amrita Consumer Food Products Ltd.: 18
3.4 Mission, Vision and Other Strategies of the Company: 19
3.5 Hierarchy of Organizational Authority of ACFPL: 19
4.1 Risk management 22
Organizational Risks 23
Risk Management Payoff Model 24
4.2 A Risk Management Framework 25
The Risk Management Cycle 25
Risk Management Tools for Different Categories of Financial Risk 26
4.3 Legislative Summary 27
4.5 Interest Rate 27
4.6 Policy 27
4.7 Asset/Liability Management Philosophy 28
4.8 Balance Sheet Mix 28
4.9 Managing Liabilities 29
Strategy Schedule 29
Term Deposits 30
Diversification 30
Brokered Deposits 31
Borrowings 31
4.10 Managing Assets 32
4.11 Pricing ALM 32
Deposit Pricing Policy 33
Loan Pricing Policy 33
4.12 Terms 33
Term Deposits 34
Term Loans 34
Operational Procedures 34
4.13 Interest Rate Risk 34
4.14 Matching Maturities 35
4.15 Foreign Currency Risk 35
4.16 Planning 35
4.17 Risk Measurement and Board Reporting 35
Risk Measurement 36
Risk Management Techniques 36
5.1 Key Operating and Financial Records 38
5.2 Key Performance Indicators 39
5.3 Analysis of Sales Revenue of Continued Operation 41
5.4 Value Added Statement 42
Market share information 42
Economic Value Added 43
5.5 Shareholding Information 43
5.6 Business risk 43
Impact Factor Vs Strength of Control 44
Matrix Implications 44
Coefficient of Variation 45
Remarks on the findings 45
5.7 Criteria for rating of risks and strength of controls 45
5.8 Statement of Financial Position 47
5.9 Statement of Changes In Equity 48
5.10 Statement of Cash Flows 49
5.11 Property, Plant and Equipment 50
6.1 Findings 52
6.2 Recommendations 53
6.3 Conclusion 53
References 54
 CHAPTER: ONE
Introduction

1.1 Introduction:
Global businesses are operating in the midst of challenging times. An organization today, in order
to be profitable and ahead of its peers, needs to compete in more markets, operate across more
platforms and manage more stakeholders than ever before. One of the important elements in the
organizational orderliness of asset, liability and risk management is organizations management.
Given 100-year perspective, the history of research on asset, liability and risk management is
much more limited than that for performance appraisal. While some of the tools and practices
described in this paper have been developed by risk managers for use in and by financial
institutions, the primary target audience for this paper is the financial manager in non- financial
organizations that face an array of financial risks and challenges inherent in doing business in
today‟s global economy. Amrita Consumers Food Products Ltd is a leading food manufacturing
company in the southern part of Bangladesh. ACFPL is trying to do something for the proper
asset and liability risk management & improvement of the employee as well as stakeholders.
Asset, liability and risk management system is designed and implemented in such a way that the
organization‟s assets plays a significant role in achieving the goals of the organization as well as
impacts on risk of organization. Bangladesh‟s economic growth is reflected by acceleration in the
food manufacturing company. In the southern part of Bangladesh there are many foods
manufacturing companies growing day by day. Because of the hygienic products of Amrita
Consumer Food Products Ltd. shall once gain the unique status representing and disseminating,
he everlasting choices of Bengalese the world over. Among other companies ACFPL is the
oldest food manufacturing company.

Origin of the Study:

Internship program is a pre-requisite for acquiring MBA degree. Before completion of the degree,
a student must undergo the Internship program. As the classroom discussion alone cannot make a
student perfect in handling the real business situation, therefore, it is an opportunity for the
students to know about the real life situation through this program and a report is required to be
prepared to summarize the intern‟s analysis, findings and achieved knowledge from this
program.

This report is a basic academic requirement for the completion of MBA under the Department of
Accounting and Information Systems, University of Barishal.
Objective of the study:
The objective of the study can be viewed as two forms:

A) Primary objective:
The objective of the study is to gain an insight into the concept of asset, liability and risk
management and how they are managed at a multinational corporation and how it influences the
overall performance of the company.

B) Specific objectives:
The specific objectives are as follows:

a) Evaluation of capital management

b) Evaluation of asset of an organization
c) Evaluation of liabilities and risk management

1.2 Methodology of the Study:

The process used to collect information and data for the purpose of making business decisions.
The methodology may include publication research, interviews, surveys and other research
techniques, and could include both present and historical information (business dictionary).

Source of Information:
In order to make the report more meaningful and presentable, two sources of data and
information have been used widely.

Primary Source:
It refers the source from which I collected the raw data. The sources are as follows: -

 Face-to-face conversation with the respective officers.

 Annual report
 Relevant file study as provided by the officers concerned.

Secondary Source:
The 'Secondary sources' are as follows: -

 Website such as Wikipedia, Investopedia etc.

 Related journals, books, articles.
1.3 Data Analysis:
As it is a quantitative report, data have been tabulated, analyzed and interpreted with the help of
different financial ratios and statistical tools and most of the calculation was done through
Microsoft Excel.

1.4 Limitation of the Report:

The report faced some problems during its preparation, which has limited the purpose of the
report. The limitations are:

 To maintain the confidentiality of the information data availability is a big issue.

 The internship has been made for three months long duration but it is very much difficult
to set true practical experience with current world circumstances in this short span of
time.

In spite of all these limitation I have tried to put the best effort as per as possible.

1.5 Report Layout:

This report has six chapters. In the first chapter I give an introduction to this report. The first
chapter of introduction includes introduction of the study, origin of the study, objectives of the
study, methodology of the study, scope of the study, significance of the study, limitations of the
study, report layout and report framework. The second chapter covers literature review of the
study. The third chapter describes about company‟s overview. The fourth chapter deals with
different dimensions and practices of performance management system. The fifth chapter gives a
detail how the data was analyzed. And the last chapter of this report includes findings,
recommendations and conclusions.
 CHAPTER: TWO
Literature Review of the Study

2.1 Literature Review of the Study

The study was supported by three theories. These were the agency theory, information
asymmetry theory and signaling theory. Agency theory was linked to Amrita Consumer Food
Products Ltd.‟s performance while information asymmetry and signaling theories were linked to
the risks undertaken by the managers of the firm and the expected impact on firms‟
performances.

Managers and the executive board with the role of managing risks affect the organizational
performance. These risks if managed well can help achieve the goal of maximizing investment
returns and earnings of ACFPL. In practice, shareholders are not aware of all information available
to the firm‟s managers that influence the risky ventures taken by them on behalf of the
shareholders of the firm. As a result, the effects on ownership and governance, and the indirect
costs to a firm‟s performance which include administrative, operational and even reputation costs
emerge much later when dismal performances are reported at the end of a financial year. Thus,
information asymmetry came into play when investigating the risks taken by the managers and the
overall effects on the firm performance. Amrita Consumer Food Products Ltd. sought to
investigate operational risk of Supermarkets in Bangladesh. Cost to income ratio was utilized as
an indicator to operational risk while ROA as representation of financial performance. Descriptive
research design was employed with quantitative data. The study was supported by extreme value
theory, financial distress theory and firm value maximization theory. Multiple regression to
ascertain the effect between operational risk on return on asset of supermarkets in county was
used. From their findings, operational risk negatively affected ROA. Thestudyused six
independent variables which included credit risk, liquidity risk and solvency risk. The dependent
variable for performance was return on assets (ROA). The outcome of regression indicated that
credit risk, liquidity risk, solvency risk had a negative and important impact on the profitability.

In this study, credit risk was measured by the characteristic of the borrower which was used to
determine the credit score. The study established that non-performing loans negatively affected a
bank‟s lending ability. For the methodology, multiple regression model was employed. The
extreme value theory, credit risk theory and capital Structure theory supported their research.
Market risk and operational risks had significant negative effects on ROE.

This research sought to add value by reviewing liquidity risk on a non-insurance sector of thus
filling the contextual gap. ACFPL had a research on financial risk and financial performance of
commercials in Dhaka. A sample of 43 commercial organization was licensed by central Bank of
Bangladesh for the years from 2005 to 2014 were studied. The findings of the study indicated
that credit and liquidity risks have significant negative effect on return on equity. The study
deduced that there was an inverse effect between financial risk and financial performance of
banks in.

The researcher used cost to income to gauge operational risk. ROA and ROE were used as proxies
to performance. Panel regression was employed as the model for the study Minitab software was
used to ascertain the significance levels of the research constructs. The research findings showed
that operational risk is inversely related with both performance indicators. This (2009) study was
conducted in a financial sector, the findings cannot be extrapolated to the commercial and
services sector which is non-financial. This study added value by increasing two additional risk
categories, namely credit risk and liquidity risk to the independent variable. Based on the
research objectives and the research gaps identified from the literature review, the study
instituted the following hypotheses:

Hypothesis 1 (H1). Credit risks have no significant effect on the performance of

commercial and services companies.
Hypothesis 2 (H2). Liquidity risks have no significant effect on the performance of
commercial and services companies.
Hypothesis 3 (H3). Operational risks have no significant effect on the performance of
commercial and services companies.
 CHAPTER:THREE
OVERVIEW OF THE COMPANY

3.1 Beginning History of Amrita Consumer Food Products Ltd.:

Amrita Consumer Food Products Ltd. is founded in 1948 in Barishal, the Venice of Bengal, by
the great philanthropist Amrita Lal Dey, the organization flourished from a tiny personal
initiative to its present-day grand status and reputation due to the honesty, sincerity, integrity and
devotion of the founder. Now it stands as one of the famous enterprises of the country employing
a large work force and drawing much of good will from the common masses while contributing a
lot to the economic development of the land.

In 1988 Amrita Oil & Food Products set sail as a sister concern and began its journey along the
path of food items production which received well responses from the customers. Production of
international standard and quality food products like powdered spices, mixed spices, noodles,
vermicelli, snacks etc. saw the light of the day with particularity in terms of taste, flavor and
texture. Side by side with expanding local market the company is looking for space in the foreign
market which would enable earning of hard foreign currency that might contribute to the
advancement of the national economy and also enhance employment opportunities. The ultimate
goals of our company: Continue the production and marketing of hygienic and quality food at
minimum price.

Finding out the needs of consumers‟ and provide them with the products aspire after. Explore
new segments of internal market and place products in the international market. Maintaining the
goodwill of the company by serving intrinsic quality of hygienic food products with authentic
taste is main concern. Carrying on efforts to expand market globally and set up distribution
network so as to make products available at doorsteps of customers.

The Company believes that the consumers do always have the right to expect safer as well as
tasty foods. It is, therefore, trying to provide them with quality foods in keeping with everyday
changing tastes. The initiative for that was taken by the great patron and one of the country‟s
biggest charity donors Amrita Lal Dey. With due respect to him the Company is going to launch
Amrita Consumer Food Products Ltd. under Amrita Oil & Food Products at Amrita Lal Dey
Road, Barishal. The Company is aware of customers‟ health & hygiene and hope that all its efforts
taken in view of its everlasting attitude towards customers‟ welfare shall go a long way to
maintain and enhance its glories.
3.2 Hierarchy of Organizational Authority of ACFPL:
Amrita Consumer Food Products Ltd. is a small company in consumer sector of the country. It has
11 depots throughout the country. The Head Office of the bank is located at 9/1, A.C. Roy Road
Armanitola, Dhaka-1100. All the activities are operated by Barishal office that is located at 119,
Amrita Lal Dey Road (Hospital Road) Barishal-8200,, Bangladesh. The managing activities are
done by the following way:
 CHAPTER: FOUR
Dimension of asset, liability & risk management

4.1 RISK MANAGEMENT

In a recent Management Accounting Guideline, “Identifying, Measuring and Managing
Organizational Risks for Improved Performance”, Marc [Link] and Adriana Rejc developed a
model (the Risk Management Payoff Model) and measures for improving the identification,
measurement and management of various organizational risks to improve management decisions.
It built on newly created risk assessment requirements of the Sarbanes-Oxley Act of 2002. It also
built on work by the Committee of Sponsoring Organizations of the Tread way Commission
(COSO) and the recently issued Enterprise Risk Management Framework, by further specifying
the necessary tools for identifying and measuring a broad set of organizational risks. In that
guideline, ACFPL provided a comprehensive overview of the risk management process,
specifically highlighting the role of risk identification and measurement. Risk identification and
measurement represent the focus of that guideline.

Risk management starts with „Event Identification‟. The Guideline suggested that to minimize risk
exposure, organizations should first make a comprehensive list of potential organization-wide
risks. Within this step presents a broader framework for identifying risk and listing potential risks
organizations often face. Listing potential organizational risks could increase the attention
managers and employees pay to events that might indicate risk. ACFPL develop a combination of
techniques and supporting tools to identify risks, such as

a) internal analysis,
b) process flow analysis,
c) discovery of leading event indicators, and
d) facilitated,interactive group workshops and interviews,brainstorming sessions,etc.

Developing these techniques and tools will likely ensure that all relevant risks are identified and
their sources determined. Within the „Risk Assessment‟ step,all risks identified as potentially
important should be assessed for magnitude and probability of occurrence. Various quantitative
techniques are available in addition to assessing the potential cost of a risk materializing, benefits
accruing from an appropriate response to the risk should also be assessed. Quantification of both
costs and benefits of ACFPL then makes it possible to determine the payoff of a risk management
initiative. This Guideline argues that ACFPL need a framework of key factors (antecedents and
consequences) that can enable decision-makers to assess the impacts of risks on costs but also
and more importantly, the benefits offered by successful risk management initiatives. The model
includes the critical inputs and processes that lead to risk-related outputs and ultimately to
overall organizational success (outcomes).It also includes specific drivers related to risk -related
inputs,processes, outputs,and outcomes.

By identifying the causal relationships between these drivers, managers can better understand
how risk management strategies, structures and systems affect organizational [Link]
Risk Management Payoff Model demonstrates how improved risk measurement and
management provides benefits throughout the organization. Benefits extend to ACFPL are,

a) enhanced working environment,

b) improved allocation of resources to the risks that really matter,
c) sustained or improved corporate reputation, and
d) other gains, all of which lead to prevention of loss,better performance and profitability,
and increased shareholder value.

Here is the overview of all risks that Amrita Consumer Food Products Ltd. has been dealing
with,

Organizational Risks:
Risk Management Payoff Model of ACFPL includes specific performance measures for inputs,
processes, outputs and outcomes. Such metrics will of course vary from one organization to the
next. This Management Accounting Guideline offers many measures from which managers can
select or adapt metrics that are more closely aligned with ACFPL's risk management strategy.
Finally this step includes a formula to calculate the ROI of risk management initiatives, so the firm
is performing,

a) monitor and manage risks,

b) evaluate the profitability of risk management initiatives, and
c) evaluate the tradeoffs between different risk responses.

Having identified the various risks and measured their potential impact, ACFPL must decide
how to respond. This Guideline suggests various approaches and techniques for preventing,
mitigating, transferring and sharing organizational risks. Using the quantification process outlined
in the Risk Management Payoff Model, management more knowledgeably determine an
appropriate risk response as well as assess the effectiveness of existing risk management
processes and controls. Here is the basic structure of Amrita Consumer Food Products Ltd.‟s risk
management payoff model,

Risk Management Payoff Model:

4.2 A Risk Management Framework
Amrita Consumer Food Products Ltd. faces many different types of risks and they are all be
managed using some common techniques. They are summarized in below that directly applies to
financial risk management and provides a context for subsequent sections that,

a) outline the different types of financial risks and

b) explain how financial risks may be identified and assessed before implementing
appropriate strategies and control systems.

According to the risk management cycle, risk management forms a control loop that starts with
defining risks by reference to organizational goals, then progressing through a series of stages to a
reassessment of risk exposures following the implementation of controls. At the organizational
level, the stages of the risk cycle are set against the background of a clearly articulated risk policy.
Drafted by senior management, the policy indicates the types of risks senior management wants
the Amrita Consumer Food Products Ltd. to take or avoid, and establishes the organization‟s
overall appetite for risk taking. The starting point is therefore a general understanding of ,

a) the range and type of risks that the organization may face in pursuing its specific strategic
objectives, and
b) the scale and nature of any interdependencies between these risks.

The Risk Management Cycle:

This overview of risk management of Amrita Consumer Food Products Ltd. can then be used as
the basis for constructing a more detailed risk management strategy for each risk category and
the core elements of a financial risk management system are:

 Risk identification and assessment

 Development of a risk response
 Implementation of a risk control strategy and the associated control mechanisms
 Review of risk exposures (via internal reports) and repetition of the cycle

Knowing the potential scale and likelihood of any given financial risk, management needs to
decide how to deal with it. This means deciding whether it wishes to accept, partially mitigate, or
fully avoid the risk. Different tools exist for each of these choices and for each risk type.

Another useful approach to quantifying risk involves scenario analyses (sometimes also referred
to stress tests, sensitivity tests, or „what if?‟ analyses). These involve a financial model of the firm
and a set of specified scenarios. We ask „what if‟ one or more scenarios should occur, and they
use the model to determine the impact of these scenarios on the firm‟s financial position. The
scenarios chosen include any we believe might be relevant to our organization. Here the basic
risk management tools of Amrita Consumer Food Products Ltd. are shown,

Risk Management Tools for Different Categories of Financial Risk:

4.3 Legislative Summary
Legislation mainly deals with the management of interest rate risk. Legislation also prescribes
limits on various asset/liability categories. Finally, FSCO prescribes guidelines on the use of
derivatives. Provided below is a summary of the legislation as it pertains to ALM. As only a
summary is provided here

4.5 Interest Rate

Risk In order to assist a credit union in the control of interest rate risk, requires the establishment
of minimum policies and procedures to address:

 exposure to interest rate risk;

 techniques to measure interest rate risk;
 internal controls;
 corrective action for high levels of exposure;
 reporting requirements.

The limits on the exposure of the credit union to interest rate risk should be designed to
complement the Amrita Consumer Food Products Ltd.‟s overall risk profile.

Examples of ALM policy are available in DICO Sample Board Policies, which have been
published by Amrita Consumer Food Products Ltd. and are available to the industry for review,
customization and elective adoption.

4.6 Policy
It is recommended that the credit union of Amrita Consumer Food Products Ltd. adopts an
asset/liability management policy that addresses:

 limits on the maximum size of major asset/liability categories;

  pricing loans and deposits;
 correlating maturities and terms;
 controlling interest rate risk and establishing interest rate risk measurement techniques;
 controlling foreign currency risk;
 controlling the use of derivatives;
 requiring management analysis and expert consultation for derivative transactions;
 frequency and content for board reporting.

These recommended objectives of ALM policy are discussed in greater depth below. Adopting
an ALM policy will assist the credit union to manage risk and to comply with the Standards.

4.7 Asset/Liability Management Philosophy

Adopting an asset/liability management philosophy is an important first step in drafting ALM
policy. The philosophy is set out the broad goals and objectives of the credit union‟s
asset/liability portfolio, as established by the board of directors, who represent the membership at
large. This philosophy governs all ALM policy constraints and helps address new situations
where policy does not yet exist.

While goals and objectives will differ depending upon the circumstances and environment of the
credit union, the ALM philosophy should always address the following principles: • The credit
union will manage its asset cash flows in relation to its liability cash flows in a manner that
contributes adequately to earnings and limits the risk to the financial margin. • Product terms,
pricing and balance sheet mix must balance members „product demands with the need to protect
the equity of the credit union. • Financial derivatives instruments must only be used to limit
interest rate risk and must never be used for speculative or investment purposes.

4.8 Balance Sheet Mix

ALM policy is established portfolio limits on the mix of balance sheet liabilities such as deposits
and other types of funding, as a percentage of total assets, considering the differential costs and
volatility of these types of funds. Similarly, prudent portfolio limits on the mix of balance sheet
assets are set by policy considering of Amrita Consumer Food Products Ltd.‟s differential levels
of risk and return.

Policy limits should be realistic (based on historical trend analysis) but also effective in terms of
shaping overall business so as to maximize future viability and market competitiveness of the
organization.
4.9 Managing Liabilities
In this Section, I'll provid direction on how Amrita Consumer Food Products Ltd. sets policy
constraints on the size and types of deposits and borrowings so as to minimize the cost of funds
and maximize opportunities to finance growth.

Sources of funds for a credit union can be summarized into three types: capital, deposits and
borrowings.

Strategy Schedule
This summarizes the various strategies which the management adopt in building its liability base,

 Attract loans to meet deposit supply.

 Attract funds to meet loan demand.
 Adopt a mixed approach in order to match the maturity structure of liabilities with the
maturity structure of assets at the cheapest cost.

As highlighted above, the first approach, reflecting deposit driven growth, generally results in
limited satisfaction of members' long term lending needs because of depositors' preference for
short term instruments. The approach can result in excess liquidity and reduced earnings for the
credit union.

The second approach, which reflects asset driven growth, results in higher than average funding
costs because of the need to guarantee financing to borrowers, which may necessitate funding by
external borrowings. Both strategies may cause an unfavorable divergence from market rates.

Due to the major disadvantages inherent in the deposit driven and the asset driven strategies, a
compromise approach to liability management is recommended. The credit union relys on natural
deposit growth, fostered through competitive "at market" interest rates, in order to influence loan
pricing and growth.

Loan demand which exceeds the natural deposit base are filled through limited price stimulus on
deposits, assuming sufficient profitability. Long term deposits are generally be sought if term
mortgage loan business is available. Alternatively, an interest rate swap or a long term
investment can be purchased to match against term deposits. Interest rate swaps and other
derivative instruments are discussed.

Alternatively, if loan growth has increased beyond the natural growth of deposits, the ALM policy
is encouraged on the solicitation of new members with deposits who otherwise would not meet
the bond of association (this may require a revision to the membership by-law). Persons normally
ineligible for membership could become members under the basket membership clause of
section31 of the Act (to a limit of three per cent of total members). Deposit accounts to pursue
include community agencies which generally have an interest in improving community relations.
If loan growth continues to exceed natural deposit growth, then loan syndication, asset sales,
asset securitization or loan referrals involving other co-operative institutions.

Term Deposits
The following operational policy alternatives are considered for cost effective management of
Amrita Consumer Food Products Ltd. These strategies are evaluated in light of corporate
philosophy and members' service expectations.

 Offer an attractive first year rate on term deposits with a “wait and see” clause for
subsequent annual rates.
 Establish minimum monthly balances for short term deposits, which pay higher rates to
rate sensitive members without raising the cost of all funds in these accounts.
 Adopt a policy of substantial penalties for premature term deposit withdrawals in order to
maximize available funds.
 Offer non-callable deposits at a premium over callable deposits with like terms, for the
same purpose.
 Alternatively, offer callable deposits subject to a penalty equivalent to the applicable
interest rate differential. Establish reasonable flat or volume driven service charges or
termination fees for the operation of deposit accounts to offset interest costs.
 Establish in policy the requirement for periodic measurement and analysis of the cost of
funds of various deposit accounts to determine those deposit categories which may not be
cost effective, and which are redesigned or discontinued.
 Require in policy the manager's authorization for any substantial deposit withdrawals in
order to give the manager an opportunity to determine if and why funds are being
transferred by members to other financial institutions.
 The volume of deposits in categories where loan demand is scarce can be discouraged by
unattractive deposit pricing. This practice may cause membership flight and other
alternatives such as interest rate swaps should be considered to manage members demand
for term loans. Refer to Section 7502 for an explanation of interest rate swaps.

Diversification
In addition to minimizing the cost of Amrita Consumer Food Products Ltd.‟s deposit base, the
credit union must promote the stability of its deposits. In this regard, policies encourage the
diversification of members' deposits by origin and term structure. Operational policies encourage
that funding is not unduly concentrated with respect to:
  an individual member;
 market source of deposit;
 deposit term to maturity;
 foreign currency.

Concentrated funding sources expose the credit union to potential liquidity problems because of
the likelihood of unexpected deposit withdrawals. Credit unions with excessive funding
concentrations are maintained additional liquid assets.

Brokered Deposits
The credit union typically solicits these deposits from local investment agents and brokers
(usually for an introduction fee) in order to finance unexpectedly high loan demand. New
depositors, via arrangements with a broker, will invest in a credit union because they may receive a
higher rate of return than other financial institution deposits.

Brokered deposits can benefit credit unions which need immediate deposit financing to fund loan
growth. However, there are risks when relying on brokered deposits. The credit union may need
to:

 pay finder fees/commissions to the deposit broker;

 pay higher interest rates to attract brokered deposits;
 manage greater liquidity risk due to more volatile deposit re-investment behaviour;
 ensure the deposits are properly administered for deposit insurance purposes.

Brokered deposits generally represent a more expensive source of funds owing to potential fees
and higher interest rates. Additionally, they are usually larger in size than other deposits and
liquidity problems result if large brokered deposits were suddenly withdrawn from the credit
union on maturity.

Borrowings
In addition to the deposit base, credit unions of Amrita Consumer Food Products Ltd. rely on
external league/bank borrowings to finance their asset portfolio. Since external borrowings may
be a more expensive source of funding, policy requires limited reliance on these borrowings, and
observance of the regulatory ceiling on league borrowing. External loans are always viewed as
temporary financing. Lines of credit with leagues or other financial institutions, however, are
established in order to regulate operational liquidity.
4.10 Managing Assets
The assets of a credit union can be classified into two broad categories: earning assets and non-
earning assets. ALM policy should promote the maximization of earning assets which reward the
credit union for its operating risks. Earning assets are those assets which generate direct revenues
for the credit union. The basic classification of Amrita Consumer Food Products Ltd.‟s assets in
each category.

 Productive Loans
 Short Term Investments
 Long Term Investments
 Cash on Premises
 Non-accrual Loans
 Payroll Receivables
 Pre-paid expenses

Non-earning assets are therefore be minimized, investment in cash, non-accrual

loans/investments and capital assets.

There is a requirement for credit unions to maintain a certain amount of its assets in liquid form.
This liquidity need not be held in cash, but can be in the form of callable deposits of a league or a
Canadian chartered bank/trust company. Despite the legal flexibility, surplus cash is often left on
the premises of a credit union rather than being placed into interest bearing accounts.

Operational procedures limit the maximum amount of cash left on premises. High teller floats or
ATM balances, excessive funds in transit or idle cash in non-interest current accounts will
increase the amount of nonearning assets and lower financial spread. In the case of teller floats or
ATM balances, operational procedures should set maximum limits that still accommodate
members' needs.

The best contributor to earning assets in a credit union are productive loans; these assets
presumably earn the highest yields. In order to maximize financial margin, ALM policy require
management to periodically measure and compare the gross yields for various asset categories
(e.g. mortgages, personal loans, business loans, etc.) and maximize volumes in the most
profitable categories without attracting unsatisfactory levels of risk.

4.11 Pricing ALM

Policy specifies that the pricing of all loans and deposits offered are established so that overall, a
net contributions to earnings is provided.
In order to ensure that deposit and lending rates are sufficiently responsive, policy may delegate
to management the authority to set interest rates without board approval but in accordance with
pre-established criteria as described below.

Deposit Pricing Policy

Rates offered on deposits are tied to external benchmarks in the local market and generally
approximate the average of these market indicators (for example, the bank rate or the prime rate).
Policy allows management flexibility to negotiate more favorable rates within a prescribed range
to maintain key deposit accounts. In order to protect financial margin, credit unions avoid
engaging in price wars with competitor financial institutions including other credit unions. Pricing
strategies of competitor institutions reflect the need for funds in these organizations. Liquidity
requirements of the competitor institution may differ vastly from the credit union's needs;
therefore, caution is exercised when setting rates.

Loan Pricing Policy

It is recommended that loans be priced at market rates, and subject to interest rate rebates only at
the end of the year, if sufficient earnings and reserves are available.

Loan pricing is also used to balance minor gap mismatches of Amrita Consumer Food Products
Ltd. Where funding from deposits is high for a particular term of loan, the price for these loans
are made more attractive than terms whose funding sources are scarce.

In order to establish fair interest rates for both the borrower and the credit union, the following
factors are considered by Amrita Consumer Food Products Ltd.,

Cost of funds and the spread required for financing the loan.

 Market rates offered by the competition.

 Excess liquidity position of the credit union.
 Maturity and repayment terms of the loan.
 Credit risk of the loan (e.g. loan purpose, size and security).
 Length of loan amortization period (generally, the longer the period, the higher the rate).

4.12 Terms
ALM policy sets reasonable limits on the terms of loans and deposits. These limits are broad
enough so that management can set varying terms for individual products in operational
procedures based on product purpose, so long as these do not exceed the maximum term limits
approved by the board.
There are no regulatory requirements for the maximum term on any assets or liabilities which a
credit union can assume.

Term Deposits
It is recommended that the board establish maximum term limits on term deposits. Operational
procedures describe the availability of alternative term deposits and correlate differential pricing
for these products within this limit. The board sets a general five year maximum term on deposits
in policy and requires that any products with terms greater than five years require special board
approval.

Term Loans
It is recommended that the board establish maximum term limits on term loans. Operational
procedures describe the availability of alternative term loans and correlate differential pricing for
these products within this limit. The board sets a general five year maximum term on loans in
policy and require that any products with terms greater than five years require special board
approval.

Operational Procedures
The criteria for offering term loans of varying length are specified in operational procedures.
Operational procedures of Amrita Consumer Food Products Ltd. require that loan terms set to
similar lengths as the life of the security (e.g. large loans secured by higher valued assets would
normally have longer terms to maturity). Due to the higher repayment and security risks of
longer term loans, and the usually limited consumer demand for term deposits in excess of five
years, it is recommended that generally, term loans be offered with five year maximum
maturities. For increased competitiveness, however, loan maturities in excess of five years may
occasionally be sanctioned up to a prescribed policy limit or approved by the board on an
exception basis.

Mortgage terms of seven to ten years have become more commonplace in the market but
generally are offered by credit unions if arrangements are in place to manage the gap between
five year funding deposits and those longer term mortgages. Credit unions consult with their
league for appropriate strategies prior to offering extended term mortgages.

4.13 Interest Rate Risk

Interest rate risk is the risk of an impact on an institution's earnings and capital due to changes in
interest rates. One of the primary causes are mismatches in the terms of a credit union's deposits
and loans.
Interest rate risk are periodically measured in Amrita Consumer Food Products Ltd. and
controlled through proper management or matching of the institution's assets and liabilities.

4.14 Matching Maturities

Policies require that, as much as possible, liability maturities and cashflows correlate to asset
maturities and cash flows in organisation.

"Matching" refers to the process of structuring the balance sheet so that maturities of interest rate
sensitive assets correspond closely to the maturities of interest rate sensitive liabilities. If the
balance sheet is well-matched, a change in interest rates will have little or no impact on margin,
because assets and liabilities re-price at the same time. The better a credit union is matched, the
more likely it is to have stable profits for Amrita Consumer Food Products Ltd.

4.15 Foreign Currency Risk

Fluctuations in the value of foreign currency investments or deposits pose a risk to credit union
earnings. ALM policy of Amrita Consumer Food Products Ltd. defines the maximum amount of
permissible unhedged foreign exchange risk and require that this be monitored closely. The
monitoring and management of foreign currency risk are addressed by ALM policy. The volume
of foreign currency deposits accepted by a credit union are minimal relative to fund deposits, due
to ineligibility for deposit insurance. Where the level of foreign liabilities is significant,
measurement/monitoring of exposure are undertaken on a more frequent basis (e.g. monthly,
weekly, depending upon the size of the holdings). Additionally, the credit union estimate foreign
exchange exposure assuming a range of currency exchange fluctuations.

4.16 Planning
Annually, management and the board of directors of Amrita Consumer Food Products Ltd.
develop an business plan, summarizing the credit union‟s goals and objectives for the coming
year.

This annual business plan includes a strategic financial plan that addresses each area of risk
management, including asset/liability management. As part of the strategic financial plan,
management and the board set financial targets and plans for asset/liability management.

4.17 Risk Measurement and Board Reporting

The credit union of Amrita Consumer Food Products Ltd. measure the performance and risk level
of the credit union‟s asset/liability management activities, and report these findings to the board.
Risk Measurement
The following are minimum risk and performance measures of ALM:

 Periodic measurement of overall balance sheet mix.

 Periodic measurement of asset, liability and capital growth or decline.
 Periodic measurement of operational cash flows.
 Periodic measurement of financial margin.
 Periodic measurement or projection of the impact of interest movements.
 Periodic measurement of the level of unhedged foreign currency funds.
 Periodic assessment of the appropriateness of financial derivatives held.

The credit union also meet ALM measurement requirements set out in the Act and Regulations.
The credit union may track any other measures of the loan portfolio as it sees fit.

These measurements are compared to financial targets in the annual business plan and the
budget, so that management can determine whether the credit union is meeting its goals.
Management can also assess whether there are material variances from the plan which need to be
addressed.

Risk Management Techniques

Board Reports : The above measurements are reported to the board of directors, so that the
board can also monitor ALM activities and ensure adherence to regulatory requirements and to
the annual business plan. Material variances from plan, and their causes, as well as
management's plan to correct the variance are included. Management also provides the board
with a summary on compliance with ALM policy and relevant regulatory requirements.

Frequency : Management providea the board with a report on the ALM portfolio at least
quarterly.

Form : Sample Board Report on ALM Management, which is used by management to monitor the
credit union's ALM activities, ensure regulatory compliance and report findings to the board. The
report compiles and compares the important measures of asset and liability portfolio mix, interest
rate risk, foreign exchange risk and derivatives use. This report can be adopted or amended for
use by the credit union.
 CHAPTER-FIVE
FINANCIAL DATA ANALYSIS

The specific accounting policies have been selected and applied by the Company's management
for significant transactions and events that have a material effect within the framework for
preparation and presentation of Financial Statements. Financial Statements of Amrita Consumer
Food Products Ltd. have been prepared and presented in compliance with IAS, Presentation of
Financial Statements. The previous year's figures were re-arranged according to the same
accounting policies. Accounting and valuation methods are disclosed for reasons of clarity. The
Company classified the expenses using the function of expenses method as per IAS 1,
Presentation of Financial Statements.

The Financial Statements have been prepared on a going concern basis. The Company reviews its
resources available for continuing operation to assess its financial strength. As at end of
December 2019, the Management concluded that the organization has adequate resources to
continue its operation in foreseeable future. Therefore, the Financial Statements have been
prepared on It‟s accumulated basis and verified by the audit committee.
5.1 Key Operating and Financial Records
5.2 Key Performance Indicators
5.3 Analysis of Sales Revenue of Continued Operation
5.4 Value Added Statement
The value added statement provides a detailed account of total value addition and the distribution
of the value created by Amrita Consumer Food Products Ltd.

Amrita Consumer Food Products Ltd. contributes positively to socio-economic development by

empowering employees through the payment of salaries and allowances; by paying attractive and
consistent dividend to the shareholders; by assisting the regulatory authorities through paying
taxes & duties.

Market share information of major categories of products - %

2018 numbers have been restated due to univrese change.

Economic Value Added (EVA)

EVA provides a measurement a Amrita Consumer Food Products Ltd.'s economic success over a
period of time. It shows how well a company has added value for its investors and it can be
compared against company's peers for an analysis of how well the company is operating in its
industry.

The positive number of EVA reveals that the Company has more than covered its cost of capital.

5.5 Statement of Financial Position

As at 31 December 2019
5.6 Statement of Changes In Equity
For the year ended 31 December 2019
5.7 Statement of Cash Flows
For the year ended 31 December 2019
5.8 Property, Plant and Equipment
Non-derivative financial assets are categorized into “Financial Asset at Fair Value through Profit
and Loss (FVTPL)”, “Held to maturity financial assets”, “loans or receivable” or “available for
sale financial assets”.

The following is the Statement of Property, Plant & Equipment

The following Property, Plant & Equipment were disposed off during the
year
Intangible Assets
 CHAPTER: SIX
FINDINGS, RECOMMENDATIONS &
CONCLUSION
6.1 Findings
In this section, a list of findings has been shown according to analysis and objectives of the report.
Although this Risk Assessment covered the Risks, Amrita Consumer Food Products Ltd. could
benefit through a formal risk management approach in the organization, with the intention to
Institutionalize Risk management throughout the organization. The use of the standard ISO
would give the organization good insight on managing risk using the best practices that are used
by good companies of the world.

From the analysis we also find that there is a strong relationship between training & development
and employee performance. The dimension of training & development of PMS has significantly
impact on employee performance. The data also establishes that training and development
(T&D) policy ensures employees are exposed to relevant skills to improve productivity. From the
analysis it is clear that Training and development (T&D) opportunities provided encourage staff
to be creative hence improved productivity.

The study finds out that there are no links between performance appraisal and employee
performance as indicated. Performance appraisal doesn‟t give recognition for good performance.
Performance appraisal does not suggest changes to improve departmental services and outcomes.

6.2 Recommendations
It is recommended that Amrita Consumer Food Products Ltd should identify areas of
improvement in the implementation of performance management system and align their
practice(s) with national norms and standards.

The declining trend of performance in commercial and services listed companies between the
years 2013 and 2017 triggered the desire for the researcher to undertake this study. The study
aimed to investigate the effects of financial risks specifically operational, liquidity and credit risks
on performance of commercial and services companies listed.

It is also recommended that Amrita Consumer Food Products Ltd should modify its performance
appraisal system. Performance appraisal should be fair to all employees supervised. Amrita
Consumer Food Products should be kept in mind so that performance appraisal can make
changes to improve departmental services and outcomes.
A firm needs to design hedging strategies carefully. Three important issues that arise especially
with derivatives hedging strategies are (a) basis risk, (b) leverage, and (c) the financing risk
implied by any hedging strategy. Amrita Consumer Food Products Ltd. should focus over these
systems more effectively and be aware of the limitations regarding these paths.

ACFPL can set itself as a market leader in case of employee performance sector by maintaining
appropriate PMS rules, regulations, and policy in the organization. This will help organization to
increase employee performance as well as company performance.

6.3 Conclusion
This research was carried out with a main purpose of finding out the Influence of asset and
liability management sectors throughout the risk management process. The study concluded that,
for companies to generate more revenues, they needed to manage their financial risks as proxied
by ratios. Operational risk that was proxied by cost to income ratio indicated that higher cost-to-
income ratios implied that companies were not efficient in controlling costs. They therefore
needed to implement cost cutting initiatives to manage expenses. Increased cost-to- income ratios
should be an immediate indicator to firms of emerging problems in the cash flow. The general
objective of the study was to determine the Influence of PMS on Employee performance in
Amrita consumer Food Products Ltd. The specific research objectives that guided the study were;
to determine the extent to which development of performance plans influences Employee
performance in Amrita consumer Food Products Ltd, to assess the extent to which review of
employee progress on an ongoing basis influences Employee performance in Amrita consumer
Food Products Ltd, to assess the extent to which training and development of employee needs
influences Employee performance in Amrita consumer Food Products Ltd and to assess the
extent to which rewarding of employees influences Employee performance in Amrita consumer
Food Products Ltd.

Amrita Consumer Food Products Ltd should maximize this as a major tool for correcting and
improving performance. A continuous review creates room for early detection of problems
hence corrections therefore promoting employee productivity.
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