A Study on Working Capital Management at The Kanyakumari District Central Cooperative Bank Ltd, Nagercoil

M. Ani Monisha¹, S. Jeevitha²

¹Assistant Professor, Department of Business Administration, St. Jerome’s College of Arts and Science, Anandhanadarkudy, Nagercoil - 629201. Kanya Kumari District, Tamil Nadu.

²Assistant Professor and Head in Business Administration, St. Jerome’s College of Arts and Science, Anandhanadarkudy, Nagercoil - 629201. Kanya Kumari District, Tamil Nadu.

*Corresponding Author E-mail: rahujee@gmail.com, anifrancis1998@gmail.com

ABSTRACT:

The research was intended to assess working capital management. It was carried out in Cooperative Bank as the case study with following Objective, to study and analyze the working capital position in The Kanyakumari District Central Cooperative Bank Ltd, the study reviewed literature related to working capital management giving emphasis on the methods used to manage working capital. The research design was Analytical research. The Sample size was last five years financial statements. Data was collected from secondary sources which include annual reports of The Kanyakumari District Central Cooperative Bank. The study used tables and figures to present the collected data while percentage provided the basis upon which analysis and interpretation was based. The period considered for the study is five years i.e., 2017-2018 to 2021-2022. This project tries to evaluate how the management of working capital is done in The Kanyakumari District Central Cooperative Bank through Ratio analysis, Comparative statement analysis, Common size statement and Trend analysis. The study of working capital management has shown that The Kanyakumari District Central Cooperative Bank Ltd has a fairly strong working capital position. Bank is utilizing working capital effectively this is good for the bank. It has to maintain it further.

KEYWORDS: Working Capital, Assets, Liability, liquidity, solvency, finance.

1. INTRODUCTION:

The cooperative movement in India is the largest in the world and the cooperatives have been playing a distinct and significant role in the country’s socio- economic development. For the purpose of socio-Economic development of the rural area the successful functioning of Cooperative banks is must The most important function required for the purpose of the success of Cooperative bank is working capital management. Working capital management is one of the most important functions of cooperative bank management Working capital can be utilized for the payment of lease employee’s payroll and pretty much any other operating costs that are involved in the everyday life of business. The overall success of the cooperative banks depends upon its working capital position¹.

Cooperatives are organized groups of people jointly managed and democratically controlled enterprises. They exist to serve their members and depositors and produce better benefits and services for them. Professionalism in Cooperative banks reflects the coexistence of high levels of skills and standards in performing, duties entrusted to an individual.² Cooperative Bank needs current and future development in information technology, (Nakkiran.S, 2002) It is indeed necessary for Cooperative banks to devote adequate attention towards maximizing their returns on every unit of resource through effective services. Cooperative banks have completed 100 years of existence in India. They play a very important role in the financial system. The cooperative banks in India form an integral part of our money market today³. Therefore, a brief resume of their development should be taken into account. The history of Cooperative Bank goes back to the year 1904. In 1904, the cooperative credit society Act was enacted cooperative movement in India. But the development of Cooperative banks from 1904-1951 was the most disappointing one⁴.

2. INDUSTRY PROFILE:

Banking is nearly as old as civilization. The history of banking could be said to have started with the appearance of money. The first record of minted metal coins was in Mesopotamia in about 2500BC The first European bank notes, which were hand written appeared in 1661, in Sweden. Cheque and printed paper money appeared in 1700 sand 1800 s with many banks created to deal with increasing trade. The history of banking in each country runs in lines with the development of trade and industry, and with the level of political confidence and stability. In today’s dynamic world banks are inevitable for the development of a country. Banks play a pivotal role in enhancing each and every sector. They have helped bring a draw of development on the world’s horizon and developing country like India is no exception.

A bank is a financial institution that provides banking and other financial services to their customers. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. There are also non-banking institutions that provide certain banking services without meeting the legal banks are a subset of the financial service industry. A banking system also referred as a system provided by the bank which offer cash management services for customers, reporting the transactions of their accounts and portfolios, throughout the day. The banking system in India, should not only be hassle free but it should be able to meet the new challenges posed by the technology and any other external and internal factors. For the past three decades, India’s banking system had several outstanding achievements to its credit. The banks are the main participants of the financial system in India. Before the establishment of banks, the financial activities were handled by money lenders and individuals. At that time the interest rates were very high.

3. COMPANY PROFILE:

● The Kanyakumari District Central Cooperative Bank Ltd, Nagercoil was established on 14-09-1957 with its registered office at Nagercoil.

● Our Mission is to become the primary bank of the district by providing modern, speedy, honest and secure services with the full commitment of various banking services to improve the quality of life of all parties.

● The Bank is also serving others like artisans, youth, employees, traders, etc and providing banking service to the general public through its network of 25 branches.

● Carrying out the banking services, financial assistance, technology development and banking activities to reach all the people of Kanyakumari district for the benefit of economic development

● Totally 160 employees in KDCC Bank. 4 to 5 employees in each branch and approximately 50 employees in head office.

4. STUDY OBJECTIVES:

Primary Objective:

To study the working capital position in Kanyakumari District Central Cooperative Bank.

Secondary Objective:

· To analyze the profitability and solvency position of the KDCC Bank.

· To examine the changes in working capital position in KDCC Bank.

· To analyze the financial position of the KDCC Bank.

4.1 Methodology of Data Collection:

The methodology of data collection pertains to information to how the data is collected i.e. either from primary sources or secondary sources. It explains the methods utilized and the instruments used in data collection.

4.2 Sources of Data:

The sources of data can be classified in two categories:

● Primary sources

● Secondary sources

Primary Sources:

The primary data are collected by the through and detailed discussion was conducted with the Assistant General Manager-Finance and accounts. And the discussion.

Secondary Sources:

I used secondary sources also for collecting the data. They are:

● Information from the text sources

● Information from the internet sources

● Information from the materials provided by the concern

4.3 Limitations of the study:

● The study is confined only to a period of 5 years.

● Time constraint.

● The study is used on secondary data such as annual report of the Bank.

4.4 Sampling Design:

Sampling Unit: Financial statement

Sampling Size: Last 5 years financial statements

4.5 Tools used for analysis of Data:

The data were analyzed using the following financial tools. They are:

● Ratio analysis

● Statement of changes in working capital

● Common size statement

● Trend analysis

5 DATA ANALYSIS AND INTERPRETATION:

5.1 Working Capital Turnover Ratio:

It is taken as one of the primary indicators of the short-term solvency of the business. It establishes their relationship with the net sales. This ratio represents the number of times the working capital is turned over in course of a year i.e. it measures the efficiency with which the working capital is being used by the firm.

Loan

Working capital turnover ratio = ---------------------------

Net working capital

Net working capital = Current Asset – Current liabilities

Table: 1 Working Capital Turnover Ratio

S. No	Year	Loan	Net working capital	Ratio
1	2017-2018	5755196965.73	3162473391	1.81
2	2018-2019	6257537117.39	2414690644	2.5
3	2019-2020	7412394134	1745516619	4.2
4	2020-2021	8662800699.58	718141044.3	1.2
4	2021-2022	8550568023.26	1702790667	5.02

Source: Secondary Data

Interpretation:

In the year 2021-2022 the working capital turnover ratio is very high when compared with the previous year 2017-2018 with 1.81%. A high working capital turnover ratio indicates that a bank is running smoothly.(figure-1)

Figure: 1: Chart: Working Capital Turnover Ratio

Table 2: Statement of changes in working capital for the year 2019 -2020 to 2020-2021

Particular	2019-2020	2021-2021	Increase	Decrease
Current Asset	-	-	-	-
Cash	107872498	69789418		38083080
Balance with other banks	277568977	464630493	187061516
Loansand Advances	7412394134	8662800699	1250406565
Interest receivable	56617326	55612118		1005208
Total(A)	7854452935	9252832728	1437486081	39088288
Particular	2018-2019	2019-2020	Increase	Decrease
Current liabilities	-	-	-	-
Borrowings	1755227494	2344862120	589634626
Overdue interest reserve	2522027	4052388	1530361
Interest payable	170872810	191787199	20914390
Total (B)	1928622331	2540701707	799140893	39088288
Net working capital (A-B)	5925830604	6712131021	786300417
Increase in working capital	-	786300417
Total	5925830604	6712131021	786300417	0

Source: Secondary Data

6. FINDINGS:

Findings are the end result of the project study. It is the conclusion, which the researcher establishes after analyzing the data from the annual report.

● The current ratio of the bank is below the standard ratio 2:1 from the lowest ratio of the 0.4 in 2017-2018 to the highest ratio of 1.8 in 2021-2022.

● The Gross profit ratio is maximum in the year 2016-2017 is 1.8 and minimum in the year 2021-2022 is 0.49

● The absolute liquidity ratio is lowest ratio of 0.02 in the year 2017-2018. The absolute liquidity ratio is below the standard ratio of 0.5:1 ratio. It shows that liquidity position of the concern is unsatisfactory.

● The working capital turnover ratio is lowest ratio of 1.2 in the year 2020-2021 and highest ratio of 5.02 in the year 2021-2022. A high working capital turnover ratio indicates that a bank is running smoothly.

● The Proprietary ratio is lowest ratio of 120.4 in the year 2020-2021 and highest ratio of 203.86 in 2018-2019. A high Proprietary ratio indicates a strong Financial position of the bank and greater security for the creditors.

● The comparative balance sheet of fixed asset has increased in the year 2018-2019 and decreased in the year 2019-2020.

● The comparative balance sheet of liabilities of the bank has increased 81.4% in 2018-2019.

● The comparative of working capital is increased in the year 2020-2021 and decreased in the year 2018-2019. The profit position of the bank was higher in 2020+2021 when compared with the previous year.

● The trend analysis was increased in the year 2020-2021 and the probability level was decreased in the year 2021-2022.

7. CONCLUSIONS:

By analyzing the topic of working capital management in KanyaKumari District Central Cooperative Bank Ltd. I conclude that the bank is having less working capital in the year 2020 but in the year 2021 the working capital is increasing. So the bank maintains the constant working capital which helps perform the day to day business by increasing the current asset. This project report helps me to get knowledge on the working capital utilization for better maintenance of the bank. After going through the different aspects of the industry departments and the awards it has received in different fields. There is good relationship between manager and the employee. The management concerned about employees complete health and wealth. Working capital may be regarded as life blood of a business. It’s effective provision can do much to ensure the success of a business. Today working capital is considered to be an important tool for progress. Working capital management techniques are playing significant role in assisting the management for decision making.

REFERENCE:

1 Vinay A. Kumar. Working Capital Management – A comparative study,1^st edition, Northern Book Centre, New Delhi, 2001: 43.

2 Narendra Kumar Jain (2004), working capital Management,1^st edition, A.P.H. publishing corporation, New Delhi, P,85.

3 Hyderabad R.L. (2001), Working capital Management, Chp, 2, Management of liquidity and profitability Deep and Deep publication, New Delhi, p, 13.

4 Satish B. Mathur (2007), Working Capital Management and Control: Principles and Practice, New Age International (P) Limited, New Delhi.

Received on 05.10.2024 Revised on 06.12.2024

Accepted on 11.01.2025 Published on 17.03.2025

Available online from March 26, 2025

Asian Journal of Management. 2025;16(1):7-10.

DOI: 10.52711/2321-5763.2025.00002

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Creative Commons License.