Working Capital Finance

Plans and policies

Presented by:
Jainendra singhal(16)
Shilpi raj kasodhan(45)
Ankit gupta(06)
Sameeha parvez(41)
Ankit singh(07)

Working capital is life blood of every

business
Working capital is short term finance that business
keeps.
Working capital is the money used to pay for the
everyday trading activities carried out by the businessstationary needs,staff salaries and wages,rent,energy
bills,payments and so on
Working capital is defined as:

working capital =
current assets current liabilities

Current assets
These are short term sources of finance such as stocks,
debtors and cash the amount of cash and cash equivalents
the business has at any time. Cash is cash in hand and
deposits payable on demand (e.g. current accounts). Cash
equivalents are short term and highly liquid investments which
are easily convertible into cash.

Current liabilities
These are short term requirements for cash including trade
creditors ,tax owing- the amount of the business owes to other
people/groups/business at any one time that needs to be
repaid within the next month or so. (within an accounting
year)

It is an operating liquidity available to a business.

Along with fixed assets such as plant and
equipment,working capital is considered
a part of operating capital.

Types of working capital:

Gross working capital :
It refers to the firms investment in total current
assts of the enterprise

Net working capital :

It refers to the difference between the
current assets and current liabilities.

Two most significant sources

of finance for using working
capital:

Trade credit
&
Bank credit

Management will use a combination of policies and techniques

for the management
of working capital.

These policies aim at managing the current asset (generally

cash and cash equivalent,inventories and debtors) and the
short term financing,such that cash flows and returns are
acceptable.

Cash management; identify the cash balance which allows

for the business to meet day to day expences,such that cash
flows and returns are acceptable

Inventory management. Identify the level of inventory

which allows for uninterrupted production but reduces the
investment in raw materials and minimizes reducing costs
and hence increases cash flow.

Conti..
Debtors management. Identify the appropriate credit
policy,i.e. credit terms 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.

Short term financing. Identify the appropriate source of

financing, given the cash conversion cycle: the inventory is
ideally financed by credit granted by the supplier; however, it
may be necessary to utilize a bank loan, or to convert debtors
to cash through factoring.

RBI guidelines regarding

working capital
The measures are set out below:

1. Lending norms of working

capitalreatment

2. Treatment of term loan instalments for

assestment of working

Capital purposes.

3. Export credit
4. Withdrawl of maximum permissible

bank finance.

RBI has been issuing guidelines and directives to the

banking sector toward this end.

Implemented by RBI in mid 1960s in order to

Measure of discipline among industrial borrowers.
Redirect creditto the priorityt sector of the economy

concepts:

Corporate finance is an area of finance dealing with financial

decisions business enterprises
Goal of corporate finance is to maximize corporate value while
managing the firms financial risks.
It is a matter related to investment banking.

BANK OF BARODA

Bank of Baroda offers

corporations Working Capital

Finance to meet their operating
expenses, purchasing inventory,
receivables financing, either by direct
funding or by issuing letter of credit.

Key Benefits Of Bank Of Baroda

Funded facilities, i.e. the bank provides

funding and assistance to actally purchase

business assets or to meet business
expenses.

Non-Funded facilities, i.e. the bank can

issue letters of credit or can give a

guarantee on behalf of the customer to the
suppliers, Government Departments for the
procurement of goods and services on
credit.

Available in both Indian as well as Foreign

currency.

ICICI
We provide customers with:

Limits offered : Rs. 25 lacs to Rs. 5

crores
Collaterals : Funding against
commercial / industrial / residential
property & liquid securities.
Facilities offered : Cash Credit /
Overdraft Bank Guarantee / Letter of
Credit / Export Credit

ICICI
Management Services - Fast

processing and quick availability of

loans with lesser documents. Best
suited for : Retailers / Traders /
Manufacturers / Wholesalers /
Distributors / Importers / Exporters /
Dealers Pre-requisites : Minimum one
year business vintage & audited
financials.

ICICI
E-mail, Mobile alerts. - Internet

banking convenience - 8am to 8pm

banking in select locations
Working capital limits to support your
growth plans and enhancements based
on your further requirements - ranging
from 25 lacs to 5 crores.

ICICI
No requirement of collateral security. Available

in two attractive variants

i. Cash Credit
Working capital as cash-credit facility (with charge on
current assets)
Facility for a period of 12 months
Floating interest rate. Interest levied only on amount
utilized.
Flexibility of paying a minimum amount every month.
ii. Business Installment Loan
Term loan with equated monthly installments (with
charge on current assets / fixed assets financed through
Business Installment Loan
Choice of fixed tenure for repayment (6 months to 48
months)
Loan for purchase of assets / expansion / working
capital
Fixed rate of interest.Working capital as cash-credit
facility (with charge on current assets)

ICICI
Interest rates on loans and advances

are IBAR (ICICI Bank Benchmark

Advance Rate) linked. Present Interest
rate is I BAR + 3% based on product
offered.
I-BAR is 15.75% p.a. payable monthly
with effect from June 05,2009.

Working Capital
Finance
SBI OFFERS WORKING CAPITAL FINANCE TO
MEET THE ENTIRE RANGE OF SHORT TERM
REQUIREMENT THAT ARISE WITH IN A
CORPORATES DAY TO DAY CYCLE.

HELPS IN:1).FINANCING INVENTORIES

2).MANAGING INTERNAL CASH FLOWS.
3).FUNDING PROTECTION.
4).MARKETING OPERATION.
5).CASH SUPPORT TO MARKET EXPANSION

Corporate Banking
SBI is a one shop
providing financial
products/services of a
wide range for large,
medium and small
customers both domestic
and international.

Schemes of SBI
1). Project Finance :SBI has formed a dedicated Project
Finance Strategic Business Unit to
assess credit proposals from and
extend term loans for large industrial
and infrastructure projects.
It Covers: Greenfield Industrial Projects.
Capacity expansion at existing
manufacturing units.
Business expansion planning and
diversification, replacement of
equipment.

Corporate Term Loan

SBI corporate term loan can support
your company in funding ongoing
business expansion, repaying high
cost debt , technology up gradation,
R&D expenditure etc.
Available for tenure from 3 to 5 years.

Dealer Financing
SBI extends financial support to the
corporate distribution networks by
providing both working capital finance
and term loans to selected dealers of
identified companies . This gives
dealers to leverage their business
relationship with major corporates to
avail low cost credit. So this type of
financial solutions allow the corporate
negotiate a better price with dealers.

Other Schemes:Structured Finance .

Deferred Payment Guarantee.

Conclusion:SBI has the worlds largest

banking Network of over 9000
branches and this enables to
deliver the financial solution at
your suppliers doorsteps across
the span of the country.