CHAPTER-I

INTRODUCTION

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1.1 INTRODUCTION

Asset Liability Management (ALM) is a strategic approach of managing the balance

sheet dynamics in such a way that the net earnings are maximized. This approach is

concerned with management of net interest margin to ensure that its level and

riskiness are compatible with the risk return objectives.

If one has to define Asset and Liability management without going into detail about

its need and utility, it can be defined as simply “management of money” which carries

value and can change its shape very quickly and has an ability to come back to its

original shape with or without an additional growth. The art of proper management of

healthy money is ASSET AND LIABILITY MANAGEMENT (ALM).

The Liberalization measures initiated in the country resulted in revolutionary changes

in thesector. There was a shift in the policy approach from the traditionally

administered market regime to a free market driven regime. This has put pressure on

the earning capacity of co-operative, which forced them to foray into new operational

areas thereby exposing themselves to new risks.As major part of funds at the disposal

from outside sources, the management are concerned about RISK arising out of

shrinkage in the value of asset, and managing such risks became critically important

to them. Although co-operatives are able to mobilize deposits, major portions of it are

high cost fixed deposits. Maturities of these fixed deposits were not properly matched

with the maturities of assets created out of them. The tool called ASSET AND

LIABILITY MANAGEMENT provides a better solution for this.

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ASSET LIABILITY MANAGEMENT (ALM) is a portfolio management of assets

and liability of an organization. This is a method of matching various assets with

liabilities on the basis of expected rates of return and expected maturity pattern

In the context of ASSET LIABILITY MANAGEMENT is defined as “a

process of adjusting s liability to meet loan demands, liquidity needs and safety

requirements”.This will result in optimum value of the same time reducing the risks

faced by them and managing the different types of risks by keeping it within

acceptable levels.

RBI revises asset liability management guidelines

On February 6/2014

Guidelines on ALM system issued in February 1999(first revised), covered, inter alia,

interest rate risk and liquidity risk measurementreporting framework and prudential

limits. Gap statements are prepared by scheduling all assets and liabilities according

to the stated or anticipated re-pricing date or maturity date. As a measure of liquidity

management, banks were required to monitor their cumulative mismatches across all

time buckets in their statement of structural liquidity by establishing internal

prudential limits with the approval of their boards/ management committees. As per

the guidelines, in the normal course, the mismatches (negative gap) in the time

buckets of 1-14 days and 15-28 days were not to exceed 20 per cent of the cash

outflows in the respective time buckets.

In the era of changing interest rates, Reserve Bank of India (RBI) has now revised its

Asset Liability Management guidelines. Banks have now been asked to calculate

modified duration of assets (loans) and liabilities (deposits) and duration of equity.

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This was stated by the executive director of RBI, V K Sharma, and here today. He

said that this concept gives banks a single number indicating the impact of a 1 per

cent change of interest rate on its capital, captures the interest rate risk, and can thus

help them move forward towards assessment of risk based capital. This approach will

be a graduation from the earlier approach, which led to a mismatch between the assets

and liabilities.

The ED said that RBI has been laying emphasis that banks should maintain a more

realistic balance sheet by giving a true picture of their non performing assets (NPAs),

and they should not be deleted to show huge profits. Though the banking system in

India has strong risk management architecture, initiatives have to be taken at the bank

specific level as well as broader systematic level. He also emphasized on the need for

sophisticated credit-scoring models for measuring the credit risks of commercial and

industrial portfolios.

Emphasizing on a need for an effective control system to manage risks, he said

that the implementation of BASEL II norms by commercial banks should not be

delayed. He said that the banks should have a robust stress testing process for

assessment of capital adequacy in wake of economic downturns, industrial downturns,

market risk events and sudden shifts in liquidity conditions. Stress tests should enable

the banks to assess risks more accurately and facilitate planning for appropriate

capital requirements.

Sharma spoke at length about the need to extend the framework of integrated risk

management to group-wide level, especially among financial conglomerates. He said

that RBI has already put in place a framework for oversight of financial

conglomerates, along with SEBI and IRDA. He also said that at the systematic level

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efforts are being made to create an enabling environment for all market participants in

terms of regulation, infrastructure and instruments.

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1.2 NEED AND IMPORTANCE OF THE STUDY:

The need of the study is to concentrate on the growth and performance by using asset

and liability management and to know the management of nonperforming assets .To

know financial position and to analyze existing situation which helps to improve the

performance ofcompany.The prime importance of the study is to analyze the

maintenance of the asset and liability it helps to compete with the other cooperatives.

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1.3 SCOPE OF THE STUDY:

In this study the analysis based on ratios to know asset and liabilities management and

to analyze the growth and performance by using the calculations under asset and

liability management based on ratio of the company. It covers both a prudential and

component and an optimization role, with in the limits of compliance .

1.4 OBJECTIVES OF THE STUDY

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  The main objective of the study is to present a proven solution set which

achieves integrated risk management.

 To study the concept of asset liability management and the process of cash

inflow and outflow .

 To practice financial risk arises due to the mismatch between asset and

liability .

 To study reserves cycle of ASSET LIABILITY MANAGEMENT

 It also ensures an acceptable balance between profitability and growth

rate.

1.5 RESEARCH METHODOLOGY OF THE STUDY

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The study of Asset-Liability Management is based on

 Secondary data collection

SECONDARY DATA COLLECTION:

Collected from books regarding journal, and management containing relevant

information about ALM and Other main sources were

 Annual report

 Published report

TOOLS FOR DATA ANALYSIS

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 Return on assets (ROA) is a financial ratio that shows the percentage of
profit a company earns in relation to its overall resources. It is commonly
defined as net income divided by total assets.
Net Income
Return on assets (ROA) ══ -----------------------
Average total assets
 Return on equity (ROE) is a measure of the profitability of a business in
relation to the equity, also known as net assets or assets minus
liabilities. ROE is a measure of how well a company uses investments to
generate earnings growth.
Net Income
Return on equity (ROE) ══ ------------------------------
Average stockholders’ equity
 Return on common equity ratio (ROCE) reveals the amount of net
profit that could potentially be payable to common stockholders.
Net Income
Return on common equity══ -------------------------------------
Average common stockholder’s equity

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 CHAPTER- II
REVIEW OF LITERATURE

ASSET LIABILITY MANAGEMENT (ALM) SYSTEM:

INTRODUCTION:
In the common direction, there exhibited to credit and enterprise interest perils in
context of the benefit criminal duty trade. With the headway in the Indian money

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related markets over the latest years and making mix of domestic markets and with
external markets the dangers associated with operations have grow to be convoluted, a
ways attaining, requiring stragic agency. Are thru and by way of operating in an
acceptably deregulated situation and are required to determine their own, leverage
expenses on stores and improve in each domestic and abroad money related buildings
on a dynamic basis. The strengthen prices on pastimes in authorities and more than a
few securities moreover are at gift promote related. Genuine opposition for
corporation mission regarding every the property and liabilities, all things viewed
with developing insecurity inside the domestic side interest fees, has delivered strain
on the corporation spare a best incredible amongst spreads, efficiency and lengthy
haul reasonableness. Impudent liquidity agency can placed benefits and popularity at
grand hazard. These weights call for advanced and intensive measures and no longer
truly adahoc movement. The manipulate of necessities to construct their wander
options as for a dynamic and fused hazard control tool and strategy, pushed via
corporate framework. Are uncovered to a couple of simple threats in route in their
enterprise attempt FICO appraisal hazard, redirection charge and operational chance
alongside these lines crucial than show knowledgeable shot manage systems that sport
design with the troubles related to hobby fee, forex and liquidity dangers.

Need to alter to the ones perils basedly with the aid of sparkling their chance
manipulate and greedy greater combination Asset-Liability control (ALM) practices
than has been done so far. ALM amongst numerous limits, is in like way involved
with peril manipulate and offers a total and dynamic structure for measuring,
checking and dealing with liquidity mortgage price, far flung alternate and esteem and
product fee chance of a that wishes to be immovably joined with the wander
technique. It consists of assement of various types of risks altering the gain real blue
duty portfolio progressively with a reason to manipulate threats.

The simple consideration regarding the ALM limit is probably to execute the
likelihood manipulate put together, viz., and overseeing wander consequent to
reviewing the threats involved.
In like manner, the dealing with the unfold and risk, the ALM trademark is extra
effectively discovered as an included approach which calls for simultaneous
alternatives about asset/valid responsibility mix and adulthood structure.
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 RISK MANAGEMENT IN ALM

Risk business enterprise is a dynamic framework, which needs unfaltering

discernment and thought. The chance of threat manipulate is a striking financing
figure out that the most primary farthest point returns are associated to the minimal
relaxed undertakings. There may additionally be no unmarried reply for all situations,
choices ought to be exchanged at brief word, that is persistently used to assume
defenselessness, makes every likelihood and problems for sizeable business and
people in each and every walk spherical lifestyles.

Risk now after which is purposefully dismembered and supervised, specific instances
threat is simply disregarded, perhaps out of nonattendance of know-how of its
property. If setback with apprehend to hazard is sure to occur, it might also be
contemplate for earlier and seen as to right, perceived rate. Associations and persons
might also additionally likewise mission and preserve away from threat of trouble as
abundance as can be permitted or lower its terrible results.

A couple of combos of risks that have an effect on human beings and undertakings
had been delivered, collectively with processes to gage the diploma of risk. The
technique used to purposely manipulate peril notoriety is known as RISK
MANAGEMENT. Despite whether or not or now not the prefer is with a commercial
enterprise undertaking or a individual condition, the similar standard advances can be
used to methodicallly dissect and address chance.

STEPS IN RISK MANAGEMENT:

1. Risk identification
2. Risk evaluation
3. Risk management technique
4. Risk measurement
5. Risk review decisions

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 Integrated or enterprise risk management is an emerging view that recognizes
the importance of risk, regardless of its source, in affecting a firm ability to realize its
strategic objectives. The detailed risk management process is as follows;

Risk identification:
The first step in the risk management process is to identify relevant exposures
to risk. This step is important not only for traditional risk management, which focuses
on uncertainty of risks, but also for enterprise risk management, where much of the
focus is on identifying the firm’s exposures from a variety of sources, including
operational, financial, and strategic activities.

Risk evaluation:
For each source of risk that is identified, an evaluation should be
performed. At this stage, uncertainty of risks can be categorized as to how often
associated losses are likely to occur. In addition to this evaluation of loss frequency,
an analysis of the size, or severity, of the loss is helpful. Consideration should be
given both to the most probable size of any losses that may occur and to the maximum
possible losses that might happen.

Risk management techniques:

The results of the analyses in second step are used as the basis for decisions
regarding ways to handle existing risks. In some situations, the best plan may be to do
nothing. In other cases, sophisticated ways to finance potential losses may be
arranged. The available techniques for managing risks are GAP Analysis, VAR
Analysis, Heinrich Domino theory etc., with consideration of when each technique is
appropriate.
Risk measurement:
Once risk sources have been identified it is often helpful to measure the
extent of the risk that exists. As part of the overall risk evaluation, in some situations
it may be possible to measure the degree of risk in a meaningful way. In other cases,
especially those involving individuals computation of the degree of risk may not yield
helpful information.

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Risk review decisions:
Following a decision about the optimal methods for handling identified
risks, the business or individual must implement the techniques selected. However,
risk management should be an ongoing process in which prior decisions are reviewed
regularly. Sometimes new risk exposures arise or significant changes in expected loss
frequency or severity occur. The dynamic nature of many risks requires a continual
scrutiny of past analysis and decisions.

DIMENSIONS OF RISK
Specifically massive classes of likelihood ar the premise for classifying money
services risk.
• Product market Risk.
• Capital market Risk.
Economists have prolonged labelled management problems as pertaining to either the
merchandise Markets Risks or The Capital Markets Risks.
TOTAL FINANCIAL SERVICES FIRMS RISK:

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Total Risk

(Responsibility of CEO)

Business Risk Financial Risk

Product Market Risk Capital Market Risk

(Responsibility of the (Responsibility of the
Chief Operating Officer) Chief Financial Officer)

Credit Interest charge

Strategic Liquidity
Regulatory currency
Operating Settlement
Human assets Basis criminal

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Fig three.1.1

PRODUCT MARKET RISK:

This chance choice relate to the working sales and fees of the form that effect the
working position of the profit and loss statements which encompass crisis,
advertising, operating structures, labor value, generation, channels of distributions at
strategic focus. Product Risks relate to variations in the working cash flows of the
company, which have an effect on Capital Market, required Rates of Return.

(1) CREDIT RISK

(2) STRATEGIC RISK
(3) COMMODITY RISK
(4) OPERATIVE RISK
(5) HUMAN RESOURCES RISK
(6) LEGAL RISK
Risk in Product Market relate to the operational and strategic components of dealing
with working sales and prices. The above types of Product Risks are explained as
follows.

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CREDIT RISK

The most fundamental of all Product Market Risk in an or other economic mediator is
the disintegration of expense resulting from truthful default or non-rate with the
manual of the borrower. Credit risk has been spherical for a enormous duration of
time and is thought with the aid of many to be the overwhelming cash related
offerings these days. Middle of the road the chance ask for sustenance of mortgage
bosses and fundamental threat of account holders. Deal with this danger by using,

(a) settling on amazing loaning selections all together that expected shot of debtors is
every precisely evaluated and valued;

(b) Diversifying throughout borrowers all together that credit score misfortunes are
not engaged in time;

(c) Purchasing third party ensures all together that default peril is absolutely or
particularly moved a protracted way from banks.

STRATEGIC RISK:
This is the risk that entire lines of business may succumb to competition or
obsolescence. In the language of strategic planner, commercial paper is a substitute
product for large corporate loans. Strategic risk occurs when is not ready or able to
compete in a newly developing line of business. Early entrants enjoyed a unique
advantage over newer entrants. The seemingly conservative act of waiting for the
market to develop posed a risk in itself. Business risk accrues from jumping into lines
of business but also from staying out too long.

COMMODITY RISK:
Commodity prices affect and other lenders in complex and often
unpredictable ways. The macro effect of energy price increases on inflation also
contributed to a rise in interest rates, which adversely affected the value of many fixed
rate financial assets. The subsequent crash in oil prices sent the process in reverse
with nearly equally devastating effects.

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OPERATING RISK:
Machine-based system offer essential competitive advantage in reducing
costs and improving quality while expanding service and speed. No element of
management process has more potential for surprise than systems malfunctions.
Complex, machine-based systems produce what is known as the “black box effect”.
The inner working of system can become opaque to their users. Because developers
do not use the system and users often have not constitutes a significant Product
Market Risk. No financial service firm can small management challenge in the
modern financial services company.

HUMAN RESOURCE RISK:

Hardly any dangers are additional muddled and hard to quantify than the ones of work
force method; they're Recruitment, Training, Motivation and Retention. Hazard to the
expense of the Non-Financial Assets as spoke to with the aid of techniques for the
works of art compel speaks to a far additional diffused of peril. Simultaneous with the
lack of key private is the threat of lacking or unusual proposal amongst manage
personal. This human repetition in all fairness equivalent to assurance excess in going
for walks frameworks. It isn't always more cheap, be that as it could it may correctly
be extra less expensive than the threat of misfortune. The danger and prizes of
quickened enthusiasm to the human assets measurement of manage are great.

LEGAL RISK:
This is the peril that the lawful device will dispossess charge from the investors of
cash related offerings organizations. The criminal show these days is loaded with
risks that were honestly unrealistic even some years prior. More completed those
dangers are extremely tough to foresee because of the truth they are as regularly as
possible disconnected to earlier than sports which may be extreme and impractical to
assign however the administration of a monetary offerings firm nowadays need these
risks in any event in see. They can price tens of millions.

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CAPITAL MARKET RISK:
In the Capital Market Risk choice relate to the financing and monetary assist of
Product Market sports activities. The cease end result of product marketplace choices
have to be in comparison to the desired fee of pass again that outcomes from capital
market selection to determine if control is developing price. Capital marketplace picks
have an effect on the threat tolerance of product marketplace alternatives related to
versions in fee associated with exceptional financial units and required rate of go back
within the monetary gadget.

1. LIQUIDITY RISK
2. INTEREST RATE RISK
3. CURRENCY RISK
4. SETTLEMENT RISK
5. BASIS RISK

1.LIQUIDITY RISK:
For talented budgetary administrations professionals, the most capital market threat is
that of missing liquidity to meet cash related commitments. The evident shape is a
failure to pay desired withdrawals. Investors reply urgently to the insignificant
prospect of this illustration.

They can weight a economic mediator to break down through chickening out price
extend at a cost that surpasses its capacity to pay. For maximum intense of this
century, guy or lady participants who misplaced self belief lack of capacity to repay
them provoked disappointments from liquidity. Assets are stored comprehensively
speakme as a money associated of price. Such spending plan are known as "offered
cash" or "headset funds" as they're mechanically offered via paintings force who
artistic creations on the money table bringing up expenses to foundations that hold for
absolutely the high-quality backtrack. To investigate liquidity peril, corporations
ought to maintain up the adulthood profile of the liabilities very a great deal
coordinated with that of the property. This dependability have to be near adequate that
an inexpensive flow in intrigue fees throughout the yield bend does now not debilitate
the guarantee and soundness of the whole firm.

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2. INTEREST RATE RISK:

In extreme conditions, Interest Rate fluctuations can create a liquidity

crisis. The fluctuation in the prices of financial assets due to changes in interest rates
can be large enough to make default risk a major threat to a financial services firm’s
viability. There’s a function of both the magnitude of change in the rate and the
maturity of the asset. This inadequacy of assessment and consequent mispricing of
assets, combined with an accounting system that did not record unrecognized gains
and losses in asset values, created a financial crisis. Risk based capital rules pertaining
to have done little to mitigate the interest rate risk management problem. The decision
to pass it off; however is not without large cost, so the cost benefit tradeoff becomes
complex.

3. CURRENCY RISK:
The risk of exchange rate volatility can be described as a form of basis risk
among currencies instead of basis risk among interest rates on different securities.
Balance sheets comprised of numerous separate currencies contain large camouflaged
risks through financial reporting systems that do not require assets to be marked to
market. Exchange rate risk affects both the Product Markets and The Capital Markets.
Ways to contain currency risk have developed in today’s derivative market through
the use of swaps and forward contracts. Thus, this risk is manageable only after the
most sophisticated and modern risk management technique is employed

4.SETTLEMENT RISK:
Settlement Risk is a selected type of default risk, which incorporates the contenders.
Sums settle obligations doing with coins switch, check clearing, contract charge and
reimbursement, and all high-quality among movements inside the worldwide
economic tool. An single fee is made by means of the day's end installation of two or
3 payments for man or lady exchanges.

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5. BASIS RISK :
Basis risk is a variation on the interest rate risk theme, yet it creates risks that are less
easy to observe and understand. To guard against interest rate risk, somewhat non
comparable securities may be used as a hedge. However, the success of this hedging
depends on a steady and predictable relationship between the two no identical
securities. Basis can negate the hedge partially or entirely, which vastly increases the
Capital Market Risk exposure of the firm.

RISK MANAGEMENT SYSTEM:

Assuming and managing risk is the essence of business decision-making.

Investing in a new technology, hiring a new employee, or launching a marketing
campaign is all decisions with uncertain outcomes. As a result all the major
management decisions of how much risk to take and how to manage the risk.

The implementation of risk management varies from business to business,

from one management style to another and from one time to another. Risk
management in the financial services industry is different from others. Circumstances,
Institutions and Managements are different. On the other hand, an investment decision
is no recent history of legal and political stability, insights into the potential hazards
and opportunities.

Many risks are managed quantitatively. Risk exposure is measured by some

numerical index . Risk cost tradeoff many tools are described by numerical valuation
formulas.isk management can be integrated into a risk management system. Such a
system can be utilized to manage the trading position of a small-specialized division
or an entire financial institution. The modules of the system can be implemented with
different degrees of accuracy and sophistication.

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RISK MANAGEMENT SYSTEM:

Dynamics of chance elements

Cash flows Arbitrage

Generator Pricing Model

Price and Risk

Profile Of Contingent Claims

Dynamic Risk Target

Trading Rules Optimizer Risk Profile

RISK MANAGEMENT SYSTEM:

Arbitrage valuing models extend from simple situations to large scale numerically
complex calculations. Money skim turbines furthermore trade from an single
framework to a test device that bills for the reliance of cash streams at the ancient
backdrop of the hazard factors.

Monetary designers are regularly fusing progresses in econometric approaches, aid

estimating models, reenactment techniques and development calculations to provide
better hazard management frameworks.

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The fundamental aspect of the danger administration approach is the treatment of
hazard additives and securities as an protected portfolio. Breaking down the
relationship the exceptional real, economic and key belongings of an office activates
clean gaining knowledge of of danger advent. Extraordinary intrigue is paid to risk
components, which suggest connection a substantial wide variety of the estimations of
securities. Distinguishing the connection the specific truthful peril additives brings
about extra a hit shot management.

Development Preference crisscross, Default, Currency Preference mis-match, Size of

exchange and Market get segment to and facts.

RISK MANAGEMENT IN CANARA BANK LIMITED:

They were required through the to acquaint effective shot control frameworks with
cover Credit hazard, show off peril and Operations hazard on precedence.

Narasimham board II, endorsed to conform to showcase threat in a hard and fast up
way via receiving Asset and Liability Management hones with affect from April first
2089.

Resource and obligation control (ALM) is "the Art and Science of picking the great
mixture of assets for the affiliation's gain portfolio and the pinnacle of the road blend
of liabilities for the organization's lawful duty portfolio". It is largely crucial for
Financial Institutions.

For pretty some time it was underestimated that the responsibility association of
monetary corporations modified into out of doors the capacity to control of the agency
accordingly management concentrated its endeavors on picking the gain combo.
Foundations treasury branch applied the assets supplied with the aid of stores to shape
a advantage portfolio that become appropriate for the given obligation portfolio.

With the approaching of Certificate of Deposits (CDs), had a gadget via which to
control the combination of liabilities that reinforced their Asset portfolios, which has
been one of the exuberant control of possessions and liabilities.

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Resource and responsibility administration programming develop immediately into a
important gadget for administration, the primary additives of the ALM gadget are:

1. ALM INFORMATION.
2. ALM ORGANISATION.
3. ALM FUNCTION.

ALM INFORMATION :

ALM is a danger administration machine through which Market danger related with
large commercial enterprise are analyzed, measured and checked to protect blessings
thru rebuilding Assets and Liabilities. The ALM gadget wishes to be based totally on
sound approach with fundamental information machine as returned up. Hence the data
is key element to the ALM method.

There are various strategies regular well-known for measuring risks. These assortment
from the basic Gap affirmation to substantially sophisticate and realities top to bottom
Risk balanced productivity measurement (RAPM) methodologies. The critical
element for the entire ALM practice is the arrangement of alright and specific records.

In any case, the principal frameworks in bunches of Indian don't create actualities in
manner required for the ALM. Gathering proper records is the most essential task
before the, specially those having extensive device of branches, but missing full-scale
computerization.

Along these lines the method of those records frameworks for danger length and
checking must be tended to direly.

The huge organization of branches and the absence of assist framework to acquire
insights required for the ALM which assessment information on the premise of
closing adulthood and behavioral example, it'd require some funding florin the
cutting-edge kingdom to get the critical records.

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ALM Organization:

Fruitful execution of the hazard management framework requires solid responsibility

on the a chunk of senior administration inside the to join fundamental operations and
crucial primary management with danger administration.

The Board of Directors should have everyday commitment for manage of threat and
want to decide the opportunity control scope of, as a long way as possible for
liquidity, interest price, remote alternate and price/price peril.

The Asset Liability Management Committee (CANARA BANK LIMITED) along the
senior administration, complete of CEO/CMD should be answerable for making sure
adherence as a ways as viable set through the Board of Directors and in addition for
choosing the business venture approach for the with reference to the debts and
decided danger manipulate objective.

The ALM help amass alongside operation institution of specialists need to be

accountable for perusing, following and detailing the hazard profiles to the CANARA
BANK LIMITED. The series of professionals need to likewise collect estimates
showing the effects of different possible changes in industrial center condition related
with the stability sheet and supporter the pastime predicted to maintain fast as far as
possible,

The HERITAGE FOODS IND LTDis a determination making unit obligated for
soundness sheet making arrangements from a chance go back point of view which
include the key administration of interest rate and liquidity risks. Every ha to decide
on the part of its CANARA BANK LIMITED, its dedication as furthermore the
choice to be taken with the aid of techniques for it. The enterprise and chance
manipulate method of the need to guarantee that the works inside the cutoff
points/parameters set via utilising the Board. The mission troubles that a HERITAGE
FOODS IND LTDmay want to remember entomb alia, will include item valuing for
stores and advances, desired improvement profile and blend of the incremental Assets
and Liabilities, et cetera. Further to following the risk scopes of the , the HERITAGE

26
 FOODS IND LTDwant to review the effects of and boost in usage of the choices
made within the beyond gatherings. The HERITAGE FOODS IND LTDmay also
moreover provide an explanation for the bleeding edge pastime rate attitude of the and
base its choices for predetermination business venture strategy on this view. In regard
of this financing scope, as a case, its duty may be to settle on deliver and blend of
liabilities or offer of outcomes. Towards this prevent, it will need to expand a view on
fate path of top class fee moves and choose challenge blends among constant as
opposed to Gliding charge spending plan, bargain versus Retail shops, Money
markets as opposed to Capital marketplace financing, home versus Remote foreign
exchange financing et cetera. Individual will should decide the recurrence for
containing their HERITAGE FOODS IND LTDconferences.

TYPICAL BUSINESS OF HERITAGE FOODS IND LTD

1. Reviewing of the effect of the executive alterations at the business.

2. Reviewing the pastime charge perspective for comparing of belongings and liabilities
(Loans and Deposits)

3. Deciding at the presentation of any new enhance/store object and their impact on
premium price/alternate price and numerous marketplace threats;

4. Reviewing the benefit and threat portfolios and as far as feasible and along those
lines, surveying the capital sufficiency;

5. Deciding on the popular adulthood profile of incremental property and liabilities and
along those traces surveying the liquidity threat;

6. Overseeing the budgetary procedure.

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7. Reviewing the modifications in actual and predicted exhibitions with reference to Net
Interest Margin (NIM), spreads and various asset document proportions.

COMPOSITION OF HERITAGE FOODS IND LTD

The length (collection of benefactors) of HERITAGE FOODS IND LTDcan also

depend upon the measurements of every establishment, venture combo and
hierarchical multifaceted nature, to assure responsibility of the Top control and
opportune response to exhibit progression, the CEO/MD or the GM need to go the
board of trustees. The head of Investment, Credit, Resources Management or
Planning, Funds Management/Treasury (domestic), and so forth., is probably
individuals from the panel. Likewise, the chief of the PC (innovation) Division ought
to likewise be an invitee for operating up of

MIS and related computerization a pair can likewise actually have Sub-Committee
and Support Groups.

ALM ORGANIZATION contains of following training:

1. ALM BOARD

2. HERITAGE FOODS IND LTD

3. ALM CELL

4. COMMITTEE OF DIRECT

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 ALM BOARD
The Board of administration have to have commonplace dedication for management
of peril and want to decide the opportunity manage scope of the and set cutoff points
for liquidity and intrigue fee risks.

HERITAGE FOODS IND LTD

The has constituted an Asset-Liability advisory group (CANARA BANK LIMITED).
The board might also moreover contains of the resulting contributors.

1. General Manager

2. Head of Committee

3. General Manager (Loans and Advances) Member

4. General Manager (CMI and AD) Member

5. AGM/Head of the ALM Cell Member

The HERITAGE FOODS IND LTDis a selection making unit in fee of ensuring
adherence as a ways as feasible set thru board and also for protection sheet arranging
from hazard go back factor which includes the crucial administration of entertainment
pastime fee and liquidity dangers, according with and decided peril management
objectives.
The Business issues that a HERITAGE FOODS IND LTDmay also bear in mind
interalia, will contain of obsession of top rate quotes for the 2 shops and advances,
desired adulthood profile of the incremental sources and liabilities and so on.
The HERITAGE FOODS IND LTDmight moreover specific the prevailing mortgage
price due of the and base its determinations for future enterprise venture technique in
this view. In recognize of financing scope, for example, its dedication can be chosen
supply and mix of chance.
Individual will need to determine the recurrence for his or her HERITAGE FOODS
IND LTDgatherings. In any case, it is proposed that HERITAGE FOODS IND
LTDneed to meet in any event when in a fortnight. The HERITAGE FOODS IND
LTDneed to survey affects of and manner in utilization of the choices made in the
first gatherings

29
ALM CELL
The ALM desk/cell alongside operating organization of employees should be
chargeable for analyzing, following and revealing the profiles to the CANARA
BANK LIMITED. The personnel need to furthermore assemble figures
(reenactments) demonstrating the outcomes of various appropriate modifications in
business center occasions associated with the accounting document and prescribe the
movement needed to keep speedy as a ways as feasible.

COMMITTEE OF DIRECTORS
They need to also constitute master, management and supervisory advisory group,
which incorporates three to 4 executives, a extremely good technique to modify using
the ALM contraption, and survey it's operating once in a while.

ALM PROCESS
The extent of ALM spotlight can be characterized as takes after:
1. Liquidity Risk Management
2. Interest Rate Risk Management
3. Currency Risk Management
4. Settlement Risk Management
5. Basis Risk Management
The RBI proposals especially adapt to Liquidity Risk Management and Interest Rate
Risk Management.
The accompanying are the ideas exact for evaluation of Asset-Liability Management
underneath previously noted risks.
1. Liquidity Risk
2. Maturity profiles
3. Interest price peril
4. Gap research

Liquidity Risk Management:

Measuring and handling liquidity needs are vital exercises of the s. By making sure
an ability to fulfill its duty as they emerge as being anticipated, liquidity manipulate
can lower the danger of a damaging situation development. The importance of

30
liquidity rises above person foundations, as liquidity shortage in one amassing may
have repercussions in popular device.
Liquidity danger manipulate alludes to the threat of developing lawful responsibility
in no way once more coming across sufficient developing resources for fulfill the
ones liabilities. It is the limit lack of ability to meet the obligation as they ended up
plainly due. This possibility emerges in mild of the reality that receives value go for
uncommon traits within the form of stores, put it up for sale operations and so on.
What's greater, bolt them into resources of various traits.

Liquidity Gap furthermore emerges due to eccentrics of store withdrawals,

modifications in contract requests. Henceforth measuring and handling liquidity
wishes are crucial for effective and viable operations of the.
Liquidity estimate is a extensive hard wander and usually the stock or coins take
delivery of the manner things are methods are applied for its estimation. The
inventory method applied positive liquidity proportions. The liquidity proportions are
the pleasant viable warning signs of liquidity of operating in evolved economic
markets, the share don't display the real liquidity profile of which can be operating in
most cases in a reasonably illiquid exhibit. The blessings, which might be usually
considered as fluid decide upon Government securities, have constrained liquidity at
the same time as the commercial center and gamers are in a solitary course. In this
way evaluation of liquidity consists of checking of profits jumbles.
The declaration of fundamental liquidity may be composed through utilising placing
all cash inflows and surges within the improvement stepping stool close to the
foreseen timing of cash streams.
The maturity profile can be utilized for measuring the predetermination cash streams
in unmistakable time organizations.
The position of Assets and Liabilities are classified regular with the adulthood styles a
maturing legal obligation can be a coins outflow even as a maturing asset is probably
a cash inflows The measuring of the destiny cash flows performed in specific time
buckets.
The time buckets, given the statutory Reserve cycle of 17 days may be allocated as
below:
1. 1 to 16 days
2. 17 to 28 days
31
3. 29 days and up to 3 months
4. Over 3 months and up to 6 months
5. Over 6 months and up to 1 year
6. Over 1 year and up to 3 years
7. Over 3 years and up to 5 years
8. Over 5 years.

MATURITY PROFILE – LIQUIDITY

HEAD OF ACCOUNTS Classification into time buckets

A.OUTFLOWS
1.Capital, Reserves and Surplus Over 5 years bucket.

2.Demand Deposits (Current & Demand Deposits may be classified into

Savings Deposits) volatile and core portions, 25 % of deposits
are generally withdraw able on demand.
This portion may be treated as volatile.
While volatile portion may be placed in the
first time bucket i.e., 1-16 days, the core
portion may be placed in 1-2 years, bucket.

3. Term Deposits Respective maturity buckets.

4. Borrowings Respective maturity buckets.

5. Other liabilities and provisions

Bills Payable (i) 1-16 days bucket

Inter-office Adjustment (ii) Items not representing cash

payable may be placed in over
years bucket

32
 (iii) Provisions for NAPs (iii)

a) sub-standard a) 2-5 years bucket.

b) doubtful and Loss b) Over 5 years bucket
.
(iv) provisions for depreciation (iv) Over 5 years bucket.
in Investments

(v) provisions for NAPs in (v)

investment a) 2-5 years bucket.
b) Over 5 years bucket

(vi) provisions for other purposes (vi) Respective buckets depending on

the purpose.

33
INFLOWS:

1. Cash 1-16 days bucket.

2. Balance with other s
(i) Current Account (i) Non-withdraw able portion on
account of stipulations of
minimum balances may be shown
Less than 1-16 days bucket.
(ii) Money at call and short Notice, (ii) Respective maturity buckets.
Term Deposits and other
Placements
3. Investments
(i) Approved securities (i) Respective maturity buckets
excluding the amount required to
be reinvested to maintain SLR
Corporate Debentures and bonds, (ii) Respective Maturity buckets.
CDs and CPs, redeemable Investments classified as NPAs
preference shares, units of Mutual Should be shown under 2-5 years
Funds (close ended). Etc. bucket (sub-standard) or over 5
(iii) Share / Units of Mutual years bucket (doubtful and loss).
Funds (iii) Over 5 years bucket.

(iv) Over 5 years bucket.

4. Advances (performing / standard)

(i) Bills Purchased and (i) Respective Maturity buckets.
Discounted (ii) should undertake a study
(including bills under Of behavioral and seasonal pattern of
DUPN) a ailments based on outstanding and
Cash Credit / Overdraft the core and volatile portion should be
(including TOD) and identified. While the volatile portion

34
 Demand Loan component of could be shown in the respective
Working Capital. maturity bucket. The core portion may
be shown under 1-2 years bucket.
(iii) Interim cash flows may be
(iii) Term Loans shown under respective maturity
Buckets.

5. NPAs
a. Sub-standard (I) 2-5 years bucket.
b. Doubtful and Loss (ii) Over 5 years bucket.

6. Fixed Assets Over 5 years bucket.

7. Other-office Adjustment As per trend analysis,

Inter-office Adjustment Intangible items or items
not representing cash
receivables may be shown
in over 5 years bucket.
Respective maturity buckets. Intangible
Others assets and assets not representing cash
receivables may be shown in over 5
years bucket.

35
Terms used:
CDs: Certificate of Deposits.
CPs: Commercial Papers.
DTL PROFILE: Demand and Time Liabilities.
Inter workplace adjustment:

Outflows: Net Credit Balances

Inflows: Net Debt Balances

Other Liabilities: Cash payables, Income acquired earlier, Loan Loss and
Depreciation in Investments.

Other assets: Cash Receivable, Intangible Assets and Leased Assets.

Interest Rate Risk:
Interest Rate Risk refers to the threat of changes in interest charges next to the
creation of the belongings and liabilities at fixed quotes. The phased deregulations of
hobby fees and the operational flexibility given to in pricing maximum of the assets
and liabilities propose the need for ing tool to hedge the hobby rate chance. This is a
threat wherein adjustments in the marketplace hobby charges could likely adversely
have an impact on economic situations.
The modifications in hobby prices affecting huge manner. The on the spot effect of
trade in hobby costs is on profits by way of changing its Net Interest Income (NII). A
long term effect of changing interest rates is on Market Value of Equity (MVE) or net
without a doubt worth because the financial charge of belongings, liabilities and
rancid-stability sheet positions get affected because of model in marketplace interest
charges.
The danger from the profits perspective can be measured as changes in the Net
Interest Income (NII) OR Net Interest Margin (NIM).
There are many analytical strategies for size and control of interest rate threat. In MIS
of ALM, sluggish pace of computerization in and the absence of overall deregulation,
the traditional GAP ANALYSIS are considered as a appropriate method to diploma
the hobby price threat.

36
2.2 ARTICLES

ARTICLE: 1

TITLE : Strategic Management for Co-operatives

AUTHOR: Subash

YEAR: 2003

PUBLISHER: Subash, T.Strategic Management for Co-operatives, Co-

operative Perspective, 37 ( 4), March 2003, p 1-5.

ABSTRACT:

Subash (2003)" in his article "Strategic Management for Co-operatives"

highlights the need for co-operatives to cope with the changes Occurring

in the economy and suggests that an effective and judicious Management

of physical and human sources available with the co-operatives. For this,

strategic planning is necessarily important for co-operatives. It helps the

determination of overall objectives, policies and strategies to achieve

these Objectives.

37
ARTICLE: 2

TITLE Performance of co-operative banks

AUTHOR: Maasali

YEAR: 2004

PUBLISHER: .Maasali, S. S., Performance of Co-operative banks: A

study of Co-operative Urban banks in Belgaum, Indian Co-operative

review, July 2004, p. 66

ABSTRACT

Maasali (2004) in his study "Performance of co-operative banks - A

Study of Co-operative Urban banks in Belgaum, by examining the nine

urban Co-operative banks in Belgaum district of Karnataka state observed

that UCB's Have to compete with local credit co-operatives for getting

deposits and Nationalized banks and private banks giving loans. Non-

interest incomes were Quite negligible and suffer from heavy non-

performing assets, employee

Performance was only average.

38
ARTICLE: 3

TITLE : Can the Ordinance Recover NPAs

AUTHOR: Kausick Saha

YEAR: 2003

PUBLISHER: Kausick, Saha, Can the Ordinance Recover NPAs?,

Management Review", IIMB, Bangalore, 15 (l), March 2003, p. 19-27

ABSTRACT

KausickSaha (2003)in his article, "Can the Ordinance Recover

NPAs? observed that lack of project appraisal, political favour and

incorrect Projection of pre demand in the industrial sector together with

recession in the last few years have resulted in the default of many loan

accounts resulting in non -performing assets (NPAs). As on March 3lSt,

2001, the gross NPAs of the scheduled commercial banks was Rs 63,883

crore and their net NPAs stood at Rs 32,468 crore.

39
ARTICLE:4

TITLE: Implementing Asset Liability Management

AUTHOR: Dharmarajan

YEAR: 2004

PUBLISHER: Dharmarajan, S., Implementing Asset-Liability

Management (ALM) System in Co-operative Banks, Vinimaya,

September 2004, p.2 1-27.

ABSTRACT:

Dharmarajan (2004) in his article, "Implementing Asset Liability

Management (ALM) in Co-operative Banks", observed that though

Introduction of ALM system in co-operative banks is not compulsory, the

System enables them to have a highly professional hinds management

practice. This may be useh1 to meet the information requirements of the

regulatory body in the near future and to ensure their financial discipline.

40
ARTICLE: 5

TITLE: Advantage Customer

AUTHOR: Shivaprasad

YEAR: 2003

PUBLISHER :Shivaprasad, V.V.S., Advantage Customer, Vinimaya,

XXIII (4b), Jan- March 2003, p.33.

ABSTRACT:

Shivaprasad (2003) in his article "Advantage Customer" observed that

the introduction of prudential norms of income recognition, asset

classification and provisioning resulted in the growing menace of non-

performing assets. Banks are competing with each other and are trying to

make their product more and more attractive with several offers. "Here is

a bank offering free of cost insurance coverage along with their home

loan product.

41
ARTICLE:6

TITLE: The Development and application of demand deposit costing

model

AUTHOR: Weight George dale

YEAR:1970

PUBLISHER: Weight, George Dale, The Development and Applications

of Demand Deposit Costing Model, (1 970)

ABSTRACT:

Weight George Dale (1970)', in his thesis "The Development and

Applications of Demand Deposit Costing Model", developed a model of

Demand deposit service costs for small banks. The model, utilizing the

deposit Ratio (Average Balance per account) as the output variable is

subjected to Regression analysis for the purpose of forecasting specific

cost relationship and Determining the presence of economies of scale

42
ARTICLE: 7

TITLE: The funds management in co-operative banks

AUTHOR: Pancras

YEAR :1978

PUBLISHER :Pancras, The funds management in co-operative banks",

Indian Co-operative Review, 15 (4), July 1978

ABSTRACT:

Pancras (1978)', studied the funds management in co-operative banks

and opined that co-operative banks in remote areas are forced to keep

more cash /liquid assets due to their distant location from apex banks. He

also stated that profitability in co-operative banks - matter of efficient

management of funds - acquisition and its use. By efficient control of cost

associated with funds management, the profitability of banks may be

improved.

43
ARTICLE: 8

TITLE: Deposit Mobilization by Apex CO operative banks in India

AUTHOR: Goyal

YEAR: 1979

PUBLISHER: Goyal, M.K, Deposit Mobilisation by Apex CO operative

Banks in India, Indian Co-operative Review, XVII( l), October 1979. pp.

13- 17. 6

ABSTRACT:

Goyal(1979)~ conducted a study on "Deposit Mobilization by Apex CO

operative Banks in India" and found that they mobilised deposits from

both individuals and institutions and the process was found satisfactory

during the period from 1971 to 1977. The savings and fixed deposits

recorded a steady growth and growth in deposits was more than the

growth registered in owned funds.

44
 CHAPTER – III
INDUSTRY PROFILE
&
COMPANY PROFILE

45
3.1 INDUSTRY PROFIL
Introduction

The Indian food industry is poised for huge growth, increasing its contribution to
world food trade every year. In India, the food sector has emerged as a high-growth
and high-profit sector due to its immense potential for value addition, particularly
within the food processing industry.

Accounting for about 32 per cent of the country’s total food market, The Government
of India has been instrumental in the growth and development of the food processing
industry. The government through the Ministry of Food Processing Industries
(MoFPI) is making all efforts to encourage investments in the business. It has
approved proposals for joint ventures (JV), foreign collaborations, industrial licenses,
and 100 per cent export oriented units.

Market Size
The Indian food and grocery market is the world’s sixth largest, with retail
contributing 70 per cent of the sales. The Indian food processing industry accounts for
32 per cent of the country’s total food market, one of the largest industries in India
and is ranked fifth in terms of production, consumption, export and expected growth.
It contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in
Manufacturing and Agriculture respectively, 15 per cent of India’s exports and six per
cent of total industrial investment. The Indian gourmet food market is currently
valued at US$ 1.3 billion and is growing at a Compound Annual Growth Rate
(CAGR) of 20 per cent. India's organic food market is expected to increase by three
times by 2021.

The online food ordering business in India is in its nascent stage, but witnessing
exponential growth. With online food delivery players like FoodPanda, Zomato,
TinyOwl and Swiggy building scale through partnerships, the organised food business
has a huge potential and a promising future. The online food delivery industry grew at
170 per cent year-on-year with an estimated Gross Merchandise Value (GMV) of US$
300 million in 2019.

46
Investments
According to the data provided by the Department of Industrial Policies and
Promotion (DIPP), the food processing sector in India has received around US$ 7.54
billion worth of Foreign Direct Investment (FDI) during the period April 2000-March
2020. The Confederation of Indian Industry (CII) estimates that the food processing
sectors have the potential to attract as much as US$ 33 billion of investment over the
next 10 years and also to generate employment of nine million person-days.
Some of the major investments in this sector in the recent past are:

 Global e-commerce giant, Amazon is planning to enter the Indian food

retailing sector by investing US$ 517 million in the next five years, as per Mr
Harsimrat Kaur Badal, Minister of Food Processing Industries, Government of
India.
 Parle Agro Pvt Ltd is launching Frooti Fizz, a succession of the original
Mango Frooti, which will be retailed across 1.2 million outlets in the country
as it targets increasing its annual revenue from Rs 2800 crore (US$ 0.42
billion) to Rs 5000 crore (US$ 0.75 billion) by 2021.
 US-based food company Cargill Inc, aims to double its branded consumer
business in India by 2021, by doubling its retail reach to about 800,000 outlets
and increase market share to become national leader in the sunflower oil
category which will help the company be among the top three leading brands
in India.
 Mad Over Donuts (MoD), outlined plans of expanding its operations in India
by opening nine new MOD stores by March 2020.
 Danone SA plans to focus on nutrition business in India, its fastest growing
market in South Asia, by launching 10 new products in 2020, and aiming to
double its revenue in India by 2021.
 Uber Technologies Inc plans to launch UberEATS, its food delivery service to
India, with investments made across multiple cities and regions.

Government Initiatives
Some of the major initiatives taken by the Government of India to improve the food
processing sector in India are as follows:

47
  The Government of India aims to boost growth in the food processing sector
by leveraging reforms such as 100 per cent Foreign direct investment (FDI) in
marketing of food products and various incentives at central and state
government level along with a strong focus on supply chain infrastructure.
 In Union Budget 2020-20, the Government of India has set up a dairy
processing infra fund worth Rs 8,000 crore (US$ 1.2 billion).
 The Government of India has relaxed foreign direct investment (FDI) norms
for the sector, allowing up to 100 per cent FDI in food product e-commerce
through automatic route.
 The Food Safety and Standards Authority of India (FSSAI) plans to invest
around Rs 482 crore (US$ 72.3 million) to strengthen the food testing
infrastructure in India, by upgrading 59 existing food testing laboratories and
setting up 62 new mobile testing labs across the country.
 The Indian Council for Fertilizer and Nutrient Research (ICFNR) will adopt
international best practices for research in fertiliser sector, which will enable
farmers to get good quality fertilisers at affordable rates and thereby achieve
food security for the common man.
 The Ministry of Food Processing Industries announced a scheme for Human
Resource Development (HRD) in the food processing sector. The HRD
scheme is being implemented through State Governments under the National
Mission on Food Processing. The scheme has the following four components:
o Creation of infrastructure facilities for degree/diploma courses in food
processing sector
o Entrepreneurship Development Programme (EDP)
o Food Processing Training Centres (FPTC)
o Training at recognised institutions at State/National level

Road Ahead
Going forward, the adoption of food safety and quality assurance mechanisms such as
Total Quality Management (TQM) including ISO 9000, ISO 22000, Hazard Analysis
and Critical Control Points (HACCP), Good Manufacturing Practices (GMP) and
Good Hygienic Practices (GHP) by the food processing industry offers several
benefits. It would enable adherence to stringent quality and hygiene norms and
thereby protect consumer health, prepare the industry to face global competition,

48
enhance product acceptance by overseas buyers and keep the industry technologically
abreast of international best practices.

Food Processing Companies in India

The Heritage Group was founded in 2092 by Mr

Nara Chandra Babu Naidu. It is one of the fastest
growing private sector enterprises in India, with five
business divisions, namely, Dairy, Retail, Agri,
Bakery and Renewable Energy, under its flagship Company Heritage Foods Ltd. The
annual turnover of Heritage Foods crossed Rs 1926.99 crore.

Introduced primarily for British settlers in India,

Kissan has been present in India since 2035. The UB
Group, under the Late Mr Vittal Malya then,
acquired Kissan from Mitchell Bros in the year
2050. However, in 2093, Hindustan Unilever Ltd
took it over from the UB Group. Since its launch, innovation has been the main
approach.

LT Foods employ around 900 employees in India

and abroad. The company’s flagship brand ‘Dawaat’
launched in 2080’s is now recognized as the leading
brand in the industry. The company has a strong
nationwide distribution network in the domestic
market that sells products such as branded rice, wheat and pulses.

Raindrops basmati rice comes from the house of REI

Agro Ltd – world’s largest basmati processing
company. REI Agro Ltd was established in the year
2094 with a vision to consolidate the fragmented

49
basmati rice industry. Today REI is India’s leading food major and is listed in
Bombay Stock Exchange (BSE), National Stock Exchange (NSE), London.

Modern Dairies is prestigious is an ISO:9001, ISO

22000, ISO 16001 (environment management) and
HACCP (food safety), certification to its credit. The
company manufactures a wide range of milk and
milk products. Strategically located at the centre of
milk rich belt in Karnal, on the National Highway No 1, just 156 Kms from North
Delhi.

The company was started in the year 2092 in

Calcutta (now Kolkata) as a biscuit factory with an
initial investment of just Rs 295 (US$ 4.76). From a
humble beginning, Britannia Industries Ltd is
presently one of India’s most popular food industries. The company's offerings are
spread across the spectrum with products ranging from the healthy ...

Nestle came to India when it set up its first factory

in Moga, Punjab in 2061. Presently, it has four
offices and around eight manufacturing facilities
across India. Nestlé has been a partner in India's
growth for over nine decades now and has built a
very special relationship of trust and commitment with the people of India. The
company's a...

Established in 2089, Kohinoor has presence in over

60 countries. The company owns one of the finest
basmati rice brands, also a wide assortment of food
products that include wheat flour, ready-to-eat
curries and meals, simmer sauces, cooking pastes to

50
spices, seasonings and frozen food. At present, the company has customers in the
USA, Canada.

Hatsun Agro Product Ltd is the largest private sector

dairy in India. It was established in 2070 and has
since been a pioneer in promoting dairy products.
Presently, Hatsun has chilling centres in more than 68
locations, over 1,348 contract vehicles, milk sheds
spread over 10 districts in Tamil Nadu and three districts in Karnataka, and over
300,00...

Parle Agro is the largest Indian food and beverage

company, which started in 2059 as Baroda Bottling
Company for carbonated beverages. The original
Parle company was started in the year 2029 and was
owned by the Chauhan family. Parle became popular
with the release of its products such as Frooti and Parle-G. Parle Agro, today, is a Rs
2,200 Cror...

Started in 2024 with the establishment of the MTR

restaurant, MTR Foods today stands tall as an Indian
heritage brand. A household name, MTR Foods has
consolidated its market leadership in the south of the
country and is all set for a strong pan-India presence,
beginning with forays into the northern, western and eastern regions. In February
200...

McCain Foods (India) is a wholly-owned subsidiary

of McCain Foods Limited in Canada. Since 2098,
the company has been engaged in agriculture
research and development (R&D) and in the
development of the frozen food market in India and
other countries of the subcontinent. The company's
products are used by leading fast food chains, hotels, restaura...

51
 Ruchi Soya Industries is among the top five FMCG
companies in India with a turnover of over Rs
26,000 crore. It is among the 50 fastest growing
FMCG companies in the world, and is the number
one cooking oil maker and palm plantation company
in India. Over the years, the company has forayed
into making soya foods, bakery fats and vanaspati produ...

Amul is an Indian dairy cooperative, based at Anand

in the state of Gujarat. Founded in 2046, the brand is
today managed by the Gujarat Co-operative Milk
Marketing Federation Ltd (GCMMF) which is
jointly owned by about 3 million milk producers in
the state. Amul the co-operative was formed as a response to the exploitation of
marginal milk prod...

With a 120 year heritage and an existence since

2089, KRBL Ltd is India’s first integrated rice
company with a comprehensive product chain.
KRBL today stands at the top slot of the Indian rice
industry, unmatched and unparalleled in every
aspect. It has an extensive and well-positioned brand presence in both, the domestic
and international mar...

Exports of processed food and related products

 During FY11–18, India's exports of processed food and related products

(inclusive of animal products) grew at a CAGR of 11.74 per cent, reaching
US$ 18.2 billion.
 Main export destinations for food products have been the Middle East and
Southeast Asia.
 In FY19* India’s exports stood at US$ 1.3 billion.

52
Food processing and its segments
 The food processing industry is one of the largest industries in India and ranks
fifth in terms of production, consumption and exports. As per the latest data
available, food processing sector is expected to reach US$ 258 billion in
FY17.
 In FY18* (till December 2018), food processing industry constituted 16 per
cent to India’s GDP through manufacturing.

53
3.2 COMPANY PROFILE
The Heritage Group, founded in the year 2092 by Mr. Nara Chandrababu Naidu, is
one of the fastest growing Public Listed Companies in India, with two-business
divisions-Dairy and Renewable Energy under its flagship Company Heritage Foods
Limited (Formerly known as Heritage Foods (India) Limited).The annual turnover of
Heritage Foods crossed Rs.2642.89 crores in financial year 2019-19.

Currently Heritage's milk and milk products have a market presence in Andhra
Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharastra, Odisha, NCR Delhi,
Haryana, Rajasthan, Madhya Pradesh, Punjab, Uttar Pradesh, Gujarat and
Uttarakhand.

In the year 2094, HFL went Public and was oversubscribed 54 times. HFL shares are
listed on BSE (Stock Code: 520552) and NSE (Stock Code: HERITGFOOD).

About the founder:

Mr. Nara Chandrababu Naidu
Heritage Foods Limited, India

Mr. Nara Chandrababu Naidu is one of the greatest dynamic, pragmatic, progressive
and visionary Leaders of the 21st Century.

With an objective of "Bringing prosperity into rural families through co-operative

efforts", he along with a few like minded, friends and associates promoted 'Heritage
Foods' in the year 2092 taking opportunity from the Industrial Policy, 2091 of the
Government of India to which end he has been successful.

At present, Heritage has a market presence in the states of Andhra Pradesh,

Telangana, Karnataka, Kerala, Tamil Nadu, Maharastra, Odisha, NCR Delhi,Haryana,
Rajasthan, Madhya Pradesh, Punjab, Uttar Pradesh, Gujarat and Uttarakhand.More
than three thousand villages and three lakh farmers are being benefited in these states.
On the other side, Heritage is serving millions of customers needs by, employing
more than 2400 people and generating indirect employment opportunities for more
than 10000 people. Beginning with a humble annual turnover of Rs.4.38 crores in

54
2093-94, the annual turnover of Heritage Foods crossed Rs 2642.89 crores in financial
year 2019-19.

Mr. Chandrababu Naidu was born on April 20, 2051 in Naravaripally Village,
Chittoor District, Andhra Pradesh, India. His late father Mr. N. Kharjura Naidu was
an agriculturist and his late mother Smt. Ammanamma was a housewife. Mr. Naidu
did his schooling in Chandragiri. He went on to study at the Sri Venkateswara Arts
College, Tirupati. He later also obtained his Masters in Economics from the Sri
Venkateswara University, Tirupati. Mr. Naidu is married to Mrs. Bhuvaneswari, the
daughter of Mr. N T Rama Rao, Ex-Chief Minister of Andhra Pradesh and a famous
star of Telugu Cinema. Mrs. N Bhuvaneswari is the Vice Chairperson & Managing
Director of the company.

Mr. Naidu held various positions of office in college and organised a number of social
activities. Following the 2077 cyclone, which devastated the Diviseema Taluk of
Krishna District, he actively organised donations and relief material from Chittoor
district for the cyclone victims. Mr. Naidu has always evinced keen interest in rural
development activities in general and the upliftment of the poor and downtrodden
sections of society in particular.

Mr. Naidu has held various coveted and honourable positions including Chief
Minister of Andhra Pradesh, Minister for Finance & Revenue, Minister for Archives
& Cinematography, Member of the A.P. Legislative Assembly, Director of A.P.
Small Scale Industries Development Corporation, and Chairman of Karshaka
Parishad.

Mr. Naidu has been honoured with numerous prestigious awards including "Member
of the World Economic Forum's Dream Cabinet" (Time Asia), "South Asian of the
Year" (Time Asia), "Business Person of the Year" (Economic Times), and "IT Indian
of the Millennium" (India Today).

Mr. Naidu was chosen as one of 50 leaders at the forefront of change in the year 2000
by the Business Week magazine for being an unflinching proponent of technology
and for his drive to transform the State of Andhra Pradesh.Mr. Naidu has been re-
elected as the Chief Minister of Andhra Pradesh in the 2016 elections.

55
Heritage Slogan
Bring Home Health & Happiness
When you are healthy, we are healthy
When you are happy, we are happy
Vision
 Delighting every home with Fresh & Healthy products and empowering the
Farmer

Mission
To be a nationally recognized brand for Healthy and Fresh products with a revenue of
INR 6000 Crore.(USD 1 Billion) by 2022We anticipate, understand and respond to
our Customers' needs by creating high quality products and making them available
through innovative and convenient channelsWe embrace the right technology to
delight our CustomersWe are a strong supporter of balancing Economic, Social and
Environmental aspects to create a better tomorrowWe are devoted to empowering the
Farmer community through our unique 'Relationship Farming' ModelWe aim to be the
Employer of Choice by nurturing Entrepreneurship and Promoting Empowerment,
alongside transparency.

BOARD OF DIRECTORS
Mr. Seetharamaiah Devineni
Chairperson,
Commerce graduate from Andhra University and a fellow member of the Institute of
Chartered Accountants of India. Senior partner of Brahmayya & Co., a leading
Chartered Accountancy firm and has been practicing for the last five decades. Has
held various coveted posts, which include Membership of the Southern Regional
Board of Reserve Bank of India, and Federation of Andhra Pradesh Chamber of
Commerce and Industry, Chairpersonship of the Tirumala Tirupati Devasthanams
Trust Board and Trusteeship of the NTR Memorial Trust. Is also on the Board of
several other companies.

Mr. Srivishnu Raju Nandyala

Director,

56
Holds a bachelors degree in Chemical Engineering from Osmania University, Andhra
Pradesh. Founder Chairperson and CEO of EXCIGA group, which consists of five
non banking finance companies. Founder and Past President of Entrepreneurs
Organization, Hyderabad. Past President of CII's (Confederation of Indian Industries)
Young Indians, Hyderabad Chapter and a past member on the state council of CII. Is a
Director in several Public and Private Companies.

Mr. Rajesh Thakur Ahuja

Director,
Graduate in Production Engineering from Pune University Engineering College.
Started Silver line Wire Products in 2093 as a manufacturer of plastic coated wire
products for household applications. In 2098, started marketing under the brand name
of Sleek. Presently he is Managing Director at M/s. Sleek International Private
Limited, which is a subsidiary company of M/s. Asian Paints Limited, Mumbai.
Currently pursuing Owner President Management Programme at Harvard University,
USA.

Dr. Nagaraja Naidu Vadlamudi

Director,
M. Com, M. Litt and a PhD. (Financial Management), Began his career from the
Administrative Staff College of India, Hyderabad in 2072. Has held various positions
in reputed Universities, like Professor, Dean, Director etc., and has taught in the fields
of Finance and Business Economics at Post Graduate and Doctorate levels for about
25 years. Has been the Registrar (Administrative Head) of the Dr B R Ambedkar
Open University for about 10 years. Has been associated with the company since it's
inception and has been able to utilize his intimate understanding of the rural socio-
economic scenario to strengthen milk procurement systems and strategies of Heritage,
which has contributed to the current status of Heritage as a leading player in South
India.

Mrs. Bhuvaneswari Nara

Vice-Chairperson & Managing Director,
B.A Graduate, Is a Director in several other Companies. Is a dynamic leader who has
extensive experience in business and has been successfully steering Heritage towards
growth and better prospects.

57
Mrs. Brahmani Nara
Executive Director,
Master's Degree in Business Administration from Stanford University, Bachelor of
Science degree in Electrical Engineering from Santa Clara University USA and
Bachelor of Engineering with specialization of Electronics and Communications from
Chaitanya Bharathi Institute of Technology. Investment Associate in Vertex Venture
Management Pvt Ltd between 2009-2011 in Singapore and was associated with the
Company as a Vice-President (Business Development).

Quality policy of HFIL:

We are committed to achieve customer satisfaction through hygienically processed
and packed Milk and Milk Products. We strive to continually improve the quality of
our products and services through upgradation of technologies and systems.

Heritage's soul has always been imbibed with an unwritten perpetual commitment to
itself, to always produce and provide quality products with continuous efforts to
improve the process and environment.

Adhering to its moral commitment and its continuous drive to achieve excellence in
quality of Milk, Milk products & Systems, Heritage has always been laying emphasis
on not only reviewing & re-defining quality standards, but also in implementing them
successfully. All activities of Processing, Quality control, Purchase, Stores, Marketing
and Training have been documented with detailed quality plans in each of the
departments.

Today Heritage feels that the ISO certificate is not only an epitome of achieved
targets, but also a scale to identify & reckon, what is yet to be achieved on a
continuous basis. Though, it is a beginning, Heritage has initiated the process of
standardizing and adopting similar quality systems at most of its other plants.

Commitments:
Milk Producers
Change in life styles of rural families in terms of
 Regular high income through co-operative efforts

58
  Women participation in income generation
 Protect the farmers from price exploitation by the un-organized sector
 Provide remunerative prices for milk
 Increase milk productivity through input and extension activities
 Supplementing agriculture with dairy farming
 Financial support for purchase of cattle; insuring cattle
 Establishment of Cattle Health Care Centers
 Supplying high quality Cattle feed
 Organizing 'Rythu Sadasu' and video programmes for educating the farmers in
dairy farming

Customers
 Timely supply of quality & healthy products
 Supply high quality milk and milk products at affordable prices
 Focus on nutritional foods
 More than 4 lakh happy customers
 High customer satisfaction24 hour help-lines ( <10 complaints a day)

Employees
 Enhancing the Technical and Managerial skills of employees through
continuous training and development
 Best appraisal systems to motivate employees
 Incentive, bonus and reward systems to encourage employees
 Heritage forges ahead with the motto "add value to everything you do"

Shareholders
Returns
 Dividend Payment since Public Issue (January 2095)

Service
 Highest importance to investor service; no notice from any regulatory
authority since 2001 in respect of investor service
 Very transparent disclosures

Suppliers

59
  Doehlar: technical collaboration for milk drinks, yogurt drinks and fruit
flavoured drinks
 Alaval: supplier of high-end machinery and technical support focusing on
Tetra pack association for products package

Society
 Potential Employment Generation
 more than 2400 employees are working with Heritage
 more than 11,097 procurement agents have found self employment in
rural areas
 more than 6300 sales agents are associated with the company
 Employment opportunities for the youth by providing financial and animal
husbandry support for establishing MINI DAIRIES
 Producing healthy products for society

Qualities of management principles:

1. Customer focus to understand and meet the changing needs and expectations
of customers.
2. People involvement to promote team work and tap the potential of people.
3. Leadership to set constancy of purpose and promote quality culture trough out
the organization.
4. Process approach to assess the efficiency and effectiveness of each process.
5. Systems approach to understand the sequence and interaction of process.
6. Factual approach to decision making to ensure its accuracy.
7. Continual improvement processes for improved business results.
8. Development of suppliers to get right product and services in right time at
right place.

AWARDS
 1st Prize in National Energy Conservation Awards-2019
 1st Prize in National Energy Conservation Awards-2018
 2nd Prize in National Energy Conservation Awards-2018
 National Energy Conservation Award 2016
 National Energy Conservation Award 2012

60
  National Energy Conservation Award 2010
 National Energy Conservation Award 2008
 Bagged the "Coca Cola Golden Spoon Award" 2018 & 2019 for its retail
business division. The annual 'COCA COLA Golden spoon awards' are well-
established and highly regarded within the industry as a mark of exceptional
performance.
 Listed among India's prestigious Top-500 companies list for the year 2015 &
2016, compiled by The Economic Times, on the basis of industry respect and
key financial parameters.
 Images Most Admired Retailer of the Year - 2016 (Category Food & Grocery)
Awarded the "Most Admired Retailer of the year - 2016" (Food & Grocery) at
India Retail Forum.
 Fortune List of 50 Most Powerful Business WomanN. Bhuvaneswari, Vice
Chairperson & Managing Director, was placed in the list of Fortune-50 Most
Powerful Business Women in India for the year 2015.

PRODUCTS
MILK

TONED MILK DOUBLE TONED MILK

61
FULL CREAM MILK STANDARDISED MILK

GOLDEN COW MILK SLIM MILK

FAMILY PACK

62
 CHAPTER – IV
DATA ANALYSIS
&
INTERPRETATION

63
RATIO ANALYSIS
1.CURRENT RATIO:
Theucurrent ratiocis. aqliquidity ratioethat. measureszwhether or.qnot a
firmdhas enoughlresources tojmeet itsxshort-term.zobligations.
It8thinks aboutman association's.opresent advantagesqfor
its0presentlliabilities, andjis communicatedeas pursues:
CurrentoAssets
Currentfratio =
CurrentkLiabilities
TABLE 4.1: SHOWING CURRENTfRATIO FROM THE YEAR 2018 TO 2023
CURRENTlRATIO

currentvassets(R in currentcliabilities( Rs in
Yearv s crores) crores ratiom

2018-19
3,282.59 2,429.73 1.35

2019-20
3,506.65 2861.79 1.23

2020-21
6,671.44 2,042.72 3.27

2021-22
8,658.67 2656.34 3.26

2022-23
15,683.23 2,417.52 6.49

ANALYSIS :
Fromjthe abovebtable current ratio is 1.35:1 in the year 2018-19, that means the
current assets are less compared to the standard ratio that is 2:1, That shows that
current liability was more. In the year 2020-21 the ratio of current assets over current
liabilities is increased to 3.27:1, that means the HERITAGEhas met the standard
current ratio. It was remain more or less same in the year 2016-17. In the year 2022-
23 the current ratio of HERITAGEis 6.49:1 . which states that the Bank has a
sufficient current assets over current liabilities.

64
GRAPH 4.1: SHOWING CURRENT RATIO FROM THE YEAR 2018 TO 2023

18,000.00
16,000.00
14,000.00
12,000.00
CURRENTlRATIO cur-
10,000.00 rentvassets(Rs crores)
CURRENTlRATIO in
8,000.00
CURRENTlRATIO cur-
6,000.00 rentcliabilities( Rs in
crores
CURRENTlRATIO ratiom
4,000.00
2,000.00
0.00
2018- 2019- 2020- 2021- 2022-
19 20 21 22 23

Interpretation:
So we can say that the DBS BANKs current assets are increased over a period of
time. In the base year 2018-19 the current ratio of Bank was 1.35:1 .Which was not
up to the standard ratio 2:1. In the year 2019-20 the current assets of Bank has been
decreased to 1.23. after the years like 2020-21, 2021-22and 2022-23 it has been
increased to 3.27:1 , 3.26:1, and 6.49:1 respectively. In the years 2020-21 and 2021-
22there was no much difference between the current assets ratio, it was more or less
same and it was up tohthe standardcratio. But inbthe year 2022-23 the current ratio of
HERITAGEhas been increased to 6.49:1, which shows that the current assets of
HERITAGEhas been increased much as compared to base year 2018-19.

65
 2.FIXEDiASSETS TOvNET WORTH 2RATIO
Fixedkassets toknet worthlis ahratio measuringnthe solvencykof azcompany.
Thisnratio indicatesnthe extentrto whichjthe owner’shcash isnfrozen invthe
formmof fixedlassets, suchras property, plantuand therextent toqwhich
fundsmare availablejfor theocompany’s operations.
FixedkAssets
Fixed assets to netsworthvratio = *100
Share holder’s fund

TABLE 4.2 : FIXED ASSETS TO NET WORTH RATIO

FIXED ASSET TO NET WORTH RATIO

currentvassets(R in currentcliabilities( Rs in
Yearv s crores) crores ratiom

2018-19
528.95 2,429.73 1.35

2019-20
566.64 2861.79 1.23

2020-21
1288.29 2,042.72 3.27

2021-22
1318.76 2656.34 3.26

2022-23
13021.48 2,417.52 6.49

Analysis:
From the above table the fixed assets to net worth is 8.98% in the base year 2018-19
and it has been increased to 9.20% in the year 2019-20. It has been increased to
17.40, 16.18 in the year 2020-21 , 2021-22respectively. But it has been decreased to
12.24 in the year 2022-23.

66
GRAPH 4.2: SHOWING FIXEDoASSETS TOjNET WORTHkRATIO
FROMrTHE YEAR 2018 TO 2023

12000

10000
PERCENTAGE

8000
RATIO

6000 SHARE HOLDERS FUND ( Rs. In

crore)
4000 FIXED ASSETS ( Rs in crore)

2000

0
2018-19 2019-20 2020-21 2021-22 2022-23

INTERPRETATION:
From the above graph we can say that there is increase in the percentage in the year
2022-23, that is 8.98% compared to the base year 2018-19. But it has been decreased
in the year
2022-23 compared to year 2016-17, that means in the year 2021-22it was 16.18% but
it has been reduced to 12.25% in the year 2022-23. In the year 2020-21 the
percentage of ratio was drastically increased that is 17.40% compared to the base year
2018-19 . so we can say that there is a fluctuation in the percentage of fixedoassets
tolnet worthkratio. Which indicates that the bank has been increased its investment in
fixed assets till 2020-21 but later the year it has been decreased.

67
 3.PROPRIETARY RATIO
The proprietary ratio is also known as equity ratio is the proportion of
shareholder’s equityjto totaldassets, andxas suchnprovides abrough estimaterof
theoamount ofhcapitalization currentlyvused toksupport albusiness.
share holders equity proprietarygratio =
*100 totalbassets
TABLE 4.3: SHOWING PROPRIETARY RATIO FROM THE YEAR 2018 TO
2023
PROPRIETARY RATIO

Share holder's fund ( Rs. In Total Asset ( Rs. In PER

YEAR crore) crore) CENTAGE

4.29
2018-19 5,887.92 1,37,358.61
4.32
2019-20 6,159.75 1,42,643.09

2020-21 7,404.72 1,45,408.74 5.09

2021-22 8,151.49 1,54,881.58 5.26

2022-23 10,627.20 1,77,632.05 5.98

Analysis:
From the above table proprietary ratio was 4.29% inkthe base yeark2018-19.
Itnhasobeen increased to 4.32% invthe yearl2019-20. It has been lincreased 5.09 ,
5.26 , 5.98 in the year 2020-21 , 2016-17, 2022-23 respectively.

68
GRAPH 4.3: SHOWING PROPRIETARY RATIO FROM THE YEAR 2018 TO
2023
16

14

12

10
CAPITAL ADEQUACY
8 RATIO(%)
CAPITAL ADEQUACY
6 RATIO(%)
CAPITAL ADEQUACY
4 RATIO(%)
2

0
9 0 1 2 3
AR -1 -2 -2 -2 -2
YE 1 8 1 9 2 0
02
1
2 2
20 20 20 2 20

Interpretation:
Hence, we can say that the proprietary ratio increased in the year2022-23 compared
to base year 2018-19. In the base year 2018-19 it was 4.29 and later on it has been
increased to 4.32 % in the year 2019-20that means there was a small number of
increase in ratio. After that years like 2020-21, 2021-22and 2022-23 the percentage of
changes in proprietary ratio was more or less same, that means it was nearly 5.09 to
5.98. Onkthe offechance. thatbthe proportion.nischigh, thisoshows anvorganization.
hascan adequatezmeasure. ofdvalue tohhelp the.eElements. ofkbusiness, andwto
mostplikely. hasxspace injits budgetaryastructure. tolassume extraiobligation, if
important. So we can say that the HERITAGEhas an adequate measure of value to
help. the capacity of. business.

69
 4.RETURNpON NET7WORTH RATIO
Returnpon Neth Worth isvused inifinance asva measurekof
abcompany’soprofitability. Itkreveals howgmuch profitba companybgenerates
withethe moneynthat thevequity shareholdersjhave invested.

Net profit
Return on Net Worth = *100
Net worth
TABLE 4.4: SHOWING RETURN ON NETWORTH RATIO FROM
THE YEAR 2018 TO 2023

RETURN ON NET WORTH RATIO

YEAR NET PROFIT NET WORTH RONW

2013-14 1,374.90 5,887.92 23.35

2014-15 1,373.68 6,159.76 22.30

2015-16 1,483.98 7,624.72 19.46

2016-17 2,087.73 8,151.50 25.61

2017-18 2,001.88 10,627.20 18.84

Analysis:
From the above table Return on Net Worth Ratio, the RONW ratio was 23.35% in the
base year 2018-19. It has been decreased to 22.30 in the year 2019-20 and 19.46 in
the year 201516. It has been increased in the year 2021-22that is 25.61. but later it
has been decreased to 18.84 in the year 2022-23. So we can say that the Return on
Net Worth ratio is fluctuating compared to base year 2018-19.

70
GRAPH 4.4: SHOWING RETURN ON NET WORTH RATIO FROM THE
YEAR 2018 TO 2023

Return on Net Worth

14,000.00

12,000.00

10,000.00 RETURN ON NET WORTH RATIO

RONW
8,000.00
RETURN ON NET WORTH RATIO
NET WORTH
6,000.00
RETURN ON NET WORTH RATIO
4,000.00 NET PROFIT

2,000.00

0.00
2018-19 2019-20 2020-21 2021-22 2022-23

Interpretation:
So we can say that there is a fluctuation in ratio’s when compared to base year 2018-
19. In the base year it was 23% but after the years like 2019-20 and 2020-21 it has
been decreased, which indicates that there is a decrease in the profitability of the
bank. In the year
2021-22it has been increased to 25%, which states that there is an improvement in the
bank’s profitability. In the year 2022-23 it was again reduced to 18%. By compared to
the whole 5 years percentage we can say that there is a fluctuation in the bank’s
profitability.

71
 5.CAPITAL0ADEQUACY RATIO
CapitallAdequacy Ratiokis otherwisemcalled Capital8to RiskvAssets Ratio,
iskthe proportionhof axbank's cash-flowjto. itsnhazard. Nationalccontrollers
trackvalbank's CARoto guaranteebthat itxcan retainpa sensiblehmeasure
ofwmisfortune and. conformsoto statutoryh Capital prerequisite.
TABLE 4.5: SHOWING CAPITAL ADEQUACY RATIO FROM THE
YEAR 2018 TO 2023.
CAPITAL ADEQUACY RATIO(%)

YEAR PERCENTAGE

2018-19 11

11
2019-20

13.00
2020-21

2021-22 13
14.00
2022-23

Analysis:
From the above table we can observe that the capital adequacy is 11% in the year
2018-19 and it was remain same in the year 2019-20. In the year 2020-21 it has been
increased to 13%. In the year 2022-23 it increased to 14%. So we can say that there is
gradually increasing in the capital adequacy ratio compared to base year 2018-19.

72
GRAPH 4.5: SHOWING CAPITAL ADEQUACY RATIO FROM THE YEAR
2018 TO 2023
16

14

12

10
CAPITAL ADEQUACY
8 RATIO(%) YEAR
CAPITAL ADEQUACY
6 RATIO(%) PERCENTAGE

0
1 2 3 4 5

Interpretation:
Thus, we can say that there is gradually increase in the capital adequacy of the
bank.
The capital adequacy measure the lbank’s capital. It is expressed as a
percentage of a bank’s riskpweighted credithexposures. In above graph wep
can say that theb DBS
Bank’s capital adequacy was 11% in the base year 2018-19 and it has been
increased to 13% in the year 2020-21. In the year 2022-23 it has been
increased to 14%. So this may states that the Bank is in the position of
intended to protect depositors and promote stability and efficiency of financial
system.

73
6.EARNINGoPER EQUITY SHARE
Earningpper sharej(EPS), alsokcalled netmincome perbshare, isla
marketkprospect ratiolthat measureskthe amountvof neteincome earnedyper
sharezof stocktoutstanding. Iniother words,wthis isnthe amountmof
moneyreach sharecof stockjwould receivebif allkof thegprofits
werefdistributed toythe outstandingishares atpthe endlof thepyear.

Net Profit after Tax & Preference Dividend

Earning per Eq. Share =
No. of Equity Share
TABLE 4.6: Showing EPS for the period of 2018 TO 2023

EARNINGS PER EQUITY SHARE RATIO

YEAR EPS

2018-19 6.83

2019-20 7.57

2020-21 4.44

2021-22 5.11

ANALYSIS:
From the above table the Earning Per Equity Share in the year 2018-19 was
6.83 per share. In the year 2019-20 it has been increased to 7.57 per share. But
in the next financial year 2020-21 it has been decreased to 4.44 per share. In
the year 2022-23 the earning per share has been increased to 7.64 per share.

74
GRAPH 4.6: Showing Earning Per Equity Ratio for the Period 2018 TO
2023

Chart Title
8
6
4
2
0
2 Series1
IO AR 19 20 21 -2
RAT YE 18- 19- 2 0- 21
E 20 20 20 20
HAR
S
UITY
EQ
ER
GSP
IN
A RN
E

INTERPRETATION:

Thus, we can say that the earnings per share of HERITAGEis fluctuating over
a period of 5 years . in the base year 2018-19 the EPS was 6.83 per share. In
the next year 2019-20 it has been increased to 7.57 per share . but in the year
2020-21 and 2021-22it has been decreased to 4.44 per share and 5.11per share
respectively, that means the equity share holder’s of HERITAGEgets low
earnings on their holdings. In the year 2022-23 it has been increased to 7.64
per share .
EPS tells how much. money the company. is making in profits. per every
outstanding .share of stock. The higher the. EPS of DBS BANK. tells that its
shares. are more worth.

75
7.EQUITYjRATIO
Equityoratio ispa financialyratio indicatingjthe comparativehproportion
ofhequity used tokeconomics aycompany’s assets. Thecequity ratiozis
anbinvestment leveragenor solvencyfratio thatumeasures theiamount ofeassets
thatkare financedlby owner’sifunds bypcomparing. theitotal equityvin
the.icompany toethe. totaljassets.
Shareholder’s Fund
Equity ratio =
Total Assets
TABLE 4.7: Showing Equity Ratio for the period 2018 TO 2023

EQUITY RATIO
SHARE HOLDER'S TOTAL EQUITY
YEAR EQUITY ASSETS RATIO

2018-19 5,887.92 13,269.20 0.44

2019-20 6,159.75 11,425.12 0.54

2020-21 7,404.72 14,579.28 0.51

2021-22 8,151.49 15,908.14 0.51

2022-23 10,627.20 21,954.95 0.48

ANALYSIS:

From the above table, the Equity Ratio says that the in the year 2018-19 it was
0.44. it has been increased to 0.54 in the year 2019-20. In the year 2020-21
and 2021-22it remains the same that is 0.51. In the year 2022-23 it has been
decreased to 0.48.

76
GRAPH 4.7: Showing Equity Ratio for the period of 2018 TO 2023

25000

20000

15000
EQUITY RATIO
SHARE HOLDER'S EQUITY
10000 EQUITY RATIO
TOTAL ASSETS
EQUITY RATIO
5000 EQUITY RATIO

0
9 0 1 2 3
AR -1 -2 -2 -2 -2
YE 18 19 20 2 1 2
20 20 20 20 2 02

INTERPRETATION:
Hence, the equity ratio tells that higher the debt equity higher the risk and Vic
versa., from the above graph we can say that there is no much changes from
the year 2018 TO 2023. In the year 2018 it was 0.44. in the year 2019-20 it
has been increased to 0.51.
In the year 2020-21 and 2021-22the equity ratio remains same 0.51. in the
year 2017-
18 it has been decreased to 0.48 . So we can say that the DBS BANK’s equity
ratio is decreased in the current year 2022-23 Which means the risk in equity
is less compared to base year 2018-19.

77
COMMON.jSIZEk BALANCEuSHEET
TABLE 4.8: SHOWING COMMON9SIZE BALANCEdSHEET -2015
COMMON SIZE BALANCE. SHEET FOR THE YEAR ENDING 31
MARCH 2015

PARTICULARS 2015
2014

Rs % Rs %

A. CURRENT.kASSETS 5,540.21 4.03 6,534.29 4.58

Cash and. Balance with RBI

Balance.with banks money.at call and.short notice 3,917.45 2.85 817.54 0.57

other assets 3,282.59 2.39 3,506.65 2.46

Total Current Assets 12,740.25 9.28 10,858.48 7.61

B. FIXED. ASSETS 528.95 0.39 566.64 0.40

Fixed assets

Investments 42,585.38 31.00 44,522.10 31.21

Advances 81,504.03 59.34 86,695.86 60.78

Total Fixed Assets (B) 124618.36 90.72 1,31,784.60 92.39

TOTAL ASSETS ( A+B) 1,37,358.61 100 1,42,643.08 100

LIABILITIES AND CAPITAL 2,429.73 1.77 2,861.79 2.01

C. CURRENToLIABILITY
OtheruLiabilities andpProvisions

TotalhCurrentmLiabilities © 2,429.73 1.77 2,861.79 2.01

D. LONG TERM LIABILITIES 5,887.92 4.29 6,159.75 4.32

Share Holder's Fund

Deposits 1,24,296.16 90.49 1,26,343.35 88.57

Borrowings 4,744.80 3.45 7,278.19 5.10
Total Long Term Liability (D) 1,34,928.88 98.23 1,39,781.29 97.99

TOTAL LIABILITIES AND CAPITAL ( C+D) 1,37,358.61 100 1,42,643.08 100

78
INTERPRETATION:
from the above common size balance sheet for the year ending 31 March 2015
we can say that the amount invested on fixed asset in the year 2014 to 2015 is
increased. In the year 2015 the current assets percentage has been decreased
around 2%. Which shows that the investment ion fixed assets in the year 2015
is increased. The bank has concentrating on investments and advances and
which decreases the working capital to meet its day today activities.
From the study of current liabilities we can say that current liabilities can
increased from the year 2014 to 2015, that is 1.77 in the year 2014 and 2.01 in
the year 2015. The bank has been decreased its long term obligations or
liabilities, that is 98.23 in the year 2014 and 97.99 in the year 2015.
So we can say that the bank is tries to increase its fixed assets and tries to
reduce its long term obligations.

79
 TABLE 4.9: COMMON7SIZE BALANCE5SHEET -2016
COMMONpSIZE BALANCEjSHEET FORkTHE YEAR ENDING 31
MARCH 2016

PARTICULARS 2015 2016

Rs % Rs %

A. CURRENT ASSETS 6,534.29 4.58 6,268.35 4.31

Cash and balance with RBI

Balance with banks money at call and short notice 817.54 0.57 351.2 0.24

Other assets 3,506.65 2.46 6,671.44 4.59

Total current assets(A) 10,858.48 7.61 13,290.99 9.14

B. FIXED ASSETS 566.64 0.40 1,288.29 0.89

Fixed assets

Investments 44,522.10 31.21 41,842.49 28.78

Barrowings 86,695.86 60.78 88,986.96 61.20

Total fixed assets(B) 131784.6 92.39 1,32,117.74 90.86

TOTAL ASSETS(A+B) 1,42,643.08 100 1,45,408.73 100

LIABILITIES AND CAPITAL 2,861.79 2.01 2,042.72 1.40

C. CURRENT LIABILITIES
Other Liabilities and Provisions

Total current liabilities© 2,861.79 2.01 2,042.72 1.40

D. LONG TERM LIABILITIES 6,159.75 4.32 7,404.72 5.09

Share holder's fund

Deposits 1,26,343.35 88.57 1,25,440.72 86.27

Barrowings 7,278.19 5.10 10,520.57 7.24

Total long term liabilities(D) 1,39,781.29 97.99 1,43,366.01 98.60

TOTAL LIABILITIES AND CAPITAL (C+D) 1,42,643.08 100 1,45,408.73 100

INTERPRETATION:

80
From the above common size balance sheet for the year 2016 we can analyse
that the bank’s current assets in the base year 2015 was 7.61% and in the year
2016 it has been increased to 9.14%. so we can say that there is a increase in
the current assets. And in the fixed assets it has been reduced compared to the
base year 2015, that means the percentage in the year 2015 was 92.39 but in
the year 2016 it has been reduced to 90.86%.
The other part of the balance sheet shows the current liabilities and long term
liabilities. For this analysis we can see that the percentage of current liabilities
has been decreased to 2 % to 1.40 %. It states that the bank’s current
obligation is reduced compared to the base year 2015. There was a increase in
the long term liabilities around 1%. In the base year it was 97.99 % and it has
been increased to 98.60% in the year 2016.

81
TABLE 4.10 : COMMONfSIZE BALANCE3SHEET -2017
COMMONiSIZE BALANCEkSHEET FORxTHE YEAR ENDING 31
MARCH 2017

PARTICULARS 2016 2017

Rs % Rs %

A. CURRENT ASSETS 4.31 5,770.42 3.73

Cash and balance with RBI 6,268.35

Balance with banks money at call and short notice 351.2 0.24 160.29 0.10

Other assets 6,671.44 4.59 8,658.67 5.59

Total current assets(A) 13,290.99 9.14 14,589.38 9.42

B. FIXED ASSETS 0.89 1,318.76 0.85

Fixed assets 1,288.29

Investments 41,842.49 28.78 44,424.55 28.68

Advances 88,986.96 61.20 94,548.89 61.05

Total fixed assets(B) 1,32,117.74 90.86 1,40,292.20 90.58

TOTAL ASSETS(A+B) 1,45,408.73 100 1,54,881.58 100

LIABILITIES AND CAPITAL 1.40 2,656.34 1.72

C. CURRENT LIABILITIES
Other Liabilities and Provisions 2,042.72

Total current liabilities© 2,042.72 1.40 2,656.34 1.72

D. LONG TERM LIABILITIES 5.09 8,151.49 5.26

Share holder's fund 7,404.72

Deposits 1,25,440.72 86.27 1,33,011.95 85.88

Barrowings 10,520.57 7.24 11,061.80 7.14

Total long term liabilities(D) 1,43,366.01 98.60 1,52,225.24 98.28

TOTAL LIABILITIES AND

CAPITAL

(C+D) 1,45,408.73 100 1,54,881.58 100

INTERPRETATION:

82
From the above table of common size balance sheet of 31 March 2017, we
can analyse that in the base year 2016 the total current asset is 9.14% and it
has been increased to 9.42% in the year 2017 . The fixed assets in the year
2016 was 90.86% and there is a slide decrease in the year 2017 that is 90.58 .
Which shows that the
HERITAGEhas been reduces it’s investment on fixed assets in small number .
By analysing the current Liabilities and long term Liabilities and capital of
HERITAGE, we can say that the current Liabilities in the year 2016 was 1.40
and it has been increased to 1.72 in the year 2017 .which says that the bank’s
current obligation increased . In the year 2016 the long term Liabilities of
Bank was 98.60 and it was reduced to 98.28 in the year 2017 .so there is no
much difference in the long term Liabilities .

83
 TABLE 4.11: SHOWING COMMON SIZE BALANCE SHEET -2018
COMMON SIZE BALANCE SHEET FOR THE YEAR ENDING 31
MARCH 2018

PARTICULARS 2017 2018

Rs % Rs %

A. CURRENT ASSETS 3.73 4,303.70 2.42

Cash and balance with RBI 5,770.42

Balance with banks money at call and short notice 160.29 0.10 666.54 0.38

Other assets 8,658.67 5.59 15,683.23 8.83

Total current assets(A) 14,589.38 9.42 20,653.47 11.63

B. FIXED ASSETS 0.85 1,301.48 0.73

Fixed assets 1,318.76

Investments 44,424.55 28.68 39,511.66 22.24

Advances 94,548.89 61.05 1,16,165.44 65.39

Total fixed assets(B) 1,40,292.20 90.58 1,56,978.58 88.37

TOTAL ASSETS(A+B) 1,54,881.58 100 1,77,632.05 100

LIABILITIES AND CAPITAL 1.72 2,417.52 1.36

C. CURRENT LIABILITIES
Other Liabilities and Provisions 2,656.34

Total current liabilities© 2,656.34 1.72 2,417.52 1.36

D. LONG TERM LIABILITIES 5.26 10,627.20 5.98

Share holder's fund 8,151.49

Deposits 1,33,011.95 85.88 1,57,287.54 88.55

Barrowings 11,061.80 7.14 7,299.79 4.11

Total long term liabilities(D) 1,52,225.24 98.28 1,75,214.53 98.64

TOTAL LIABILITIES AND

CAPITAL

(C+D) 1,54,881.58 100 1,77,632.05 100

INTERPRETATION:

84
From the above common size balance sheet for the year ending 31 March
2018 of DBS BANK, explains that the current Assets of the bank was 9.42%
in the year 2017 and it has been increased to 11.63% in the year 2018 .
Compared to the base year the current Assets increased by 3%. In the year
2017 the investment on fixed assets was 90.58% and it has been reduced to
88.37% in the year 2018.
In the year 2017 the current Liabilities of the bank was 1.72% and it has been
reduced to 1.36% in the year 2018 .in the year 2017 the long term Liabilities
of the bank was 98.28% and it has been increased to 98.63% in the year 2018.
There is a small change in this percentage .

85
 FINDINGSk
 Table 1 current ratio shows that the ratio was increasing every year.
 From the table 2 fixedfassets toynet wortharatio, the percentage of6ratio is
increasing from the year 2014 to 2018.
 In table 3 the proprietary ratio is also increasing and it shows upward move.
 Return on Net Worth was fluctuated over a period. It was decreased during the
year 2018-19 to 2020-21. but later on it increases in 2021-22.in 2022-23 it was
again decreased.
 From the analysis. of common size balance sheet we found that :
 The share holder’s fund may drastically increase over a period of time. That
means the Bank has collected a fund through equity shares.
 Increasing in share holder’s funds leads to increase in Bank’s liability .
 The DBS BANK’s deposits and barrowings also increases in the last 5 years.
 From the analysis of balance sheet we can find that, the cash balance with
Reserve Bank of India is increased from the year 2014 to 2016. But after that the
balance is decreased.
 The balance with Money. at Call and. Short Notice is decresed by the DBS BANK.
 The HERITAGEhas increasing it’s investment on fixed assets over a period of
time. In the year of 2014 to 2016 its is more or less similar but in the year 2017 it
invested double the amount in purchase of fixed assets.
 Investment in other assets may also increased .
 The HERITAGEis concentrating on Branch Expansion and which may lead to
employment generation.
 The Capital Adequacy of the HERITAGEis also increasing over the period of time.

86
 CHAPTER-VI
SUGGESTIONS AND
RECOMMENDATIONS
CONCLUSION

87
 SUGGESTIONS AND RECOMMENDATIONS

• Itjis suggestedgthat thexBank may increasecthe holders of current accounts to

thekpublic. These funds can be used by6the Bankcand increase7their
incomebwithout any8payment ofxinterest tonthe holdereof the currenthaccount.
• Net income and assets total positively correlated they should maintain the same
in the future.
• The Bank must make their major transaction with money, there must be
increased. Itris suggestedpthat therBank may reducewavoidable costs.
• Since the share capital ishincreasing . itlis apgood signdto the2Bank and it
should maintain the same. It should try to attract the more investments from the
public..

88
CONCLUSION

Asset Liability Management plays very important role in planning and managing the
Assets and Liabilities of Banks, against the risk exposed due to the changing
environment in the banking business. Banking regulators require a minimum capital
adequacy, net worth and capital deposit ratio. Thus, Banks today need to match their
assets and liabilities and at the same time balancing their objectives of profitability,
liquidity and risk. This attempt was to evaluate and matching asset and liability of the
DBS BANK.
It is evident that bank performing satisfactorily in terms of credit, deposits and
interest earn, other income etc., This analysis showing increasing trend from one year
to another year.
This study discloses. theufindings andjrecommendations. whichfwould be beneficial.
For0the expansion andd improvement tojthe Bank.

89
 BIBILOGRAPHY
Title of the Books:
 Khurana, S.K (2000)”Assets and Liability Management '',
GGskylarkpublications, New Delhi.
 Gurumoorthy T.R.(2004)”Analysis of income and expenditure in banks”,
Business and Economic facts for you ,june,pp27-31.
 Raghavan,R.S.(2005)”Risk ManagementAnoverview”,inS.B.Verma(ed.) Risk
Management, Deep and Deep publications Pvt.ltd.,NewDelhi,pp-321

JOURNAL
 KarinanR,Adityal Narayan and SaibalGhosh(2001),”Determinants of Net Interest
Margin under regulatory requirement ,anEconometricStudy, PW” VOI XXVI NO,
4Jan27., pp,337-334.
 Chaudhari,Sanmitra(2002) Some issues of Growth and Profitability in Indian Public
Sector Banks EPW VOI,XXXVII NO.22,June 1,2087,pp 2165-62.
 Mihir Dash, Journal of Applied Management and Investments ,vol 2,Issue
4,2013
 Journal of Economics and Finance, Volume 8, Issue 3 Ver. IV (May - June
2021), PP 09-15.
 The Jahangirnagar Journal of Finance & BankingVol 4, 5 & 6, June 2022
 Amit Kumar Meena, JoydipDhar International Journal of Social, Human
Science and Engineering Vol:8 No:1, 2015 .
 Prof. (Dr) Kanhaiya Singh Journal of Management & Research, May 2013,
Volume 7, Issue 2/4,

NEWSPAPERS:
 Agarwal,Som(2098),”Asset and Liabilities of Indian Banks-The Long and
Short Credit”, The Economic Times,Sep.28
 Bhat,Prasanna V.(2099),”A System for Asset Liability Management-System
for Matchmaking “,Hindustan Business Line,Aug 26 Chawal,O.P.
(2098),”Asset Liability Management in Banks”. The Financial Express,Feb.7.

Web sites :

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Www.Rbi.Org
Www.Amfiindia.
Www.heritagefoodsind.com

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