A Report on WORKING CAPITAL FINANCING IN RETAIL SECTOR

A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MBA DEGREE OF BANGALORE UNIVERSITY. Submitted By ANITHA.V.MADLUR Reg.No-03XQCM6005

UNDER THE GUIDANCE OF Dr.T.V.Narasimha Rao INTERNAL GUIDE

M.P.BIRLA INSTITUTE OF MANAGEMENT ASSOCIATE BHARTIYA VIDYA BHAVAN 43, RACE COURSE ROAD, BANGALORE-560001

2003-2005

DECLARATION
I hereby declare that the research work embodied in this dissertation entitled WORKING CAPITAL FINANCING IN RETAIL SECTOR, has been carried out by me under the guidance and supervision of Dr.T.V.Narasimha.Rao, M.P.Birla Institute of Management, Bangalore (Internal Guide). I also declare that this dissertation has not been submitted to any other University/Institution for the award of any Degree/Diploma.

Place: Bangalore ANITHA.V.MADLUR Date: 17th June 2005 Reg No.03XQCM6005

PRINCIPALS CERTIFICATE
I hereby certify that this dissertation is an offshoot of the research work undertaken under and the completed guidance by of Ms.ANITHA.V.MADLUR.

Dr.T.V.NarasmihaRao, MPBIM, Bangalore.

Place: Bangalore Malavalli) Date: 17th June 2005. Principal

(Dr.

N.S.

ACKNOWLEDGEMENT
It gives me an immense pleasure to express my deep sense of gratitude to my internal guide Prof. T.V.Narsmiha Rao for his enormous guidance and assistance. He has been my mentor and guide, his continuous encouragement and valuable suggestions helped me at every stage of this project. I would like to express my thanks to Dr. N.S Malavalli,

Principal M.P.Birla Institute of Management Bangalore. I would like to thank Mr. P.S.Dinesh, Syndicate Bank, for his guidance and support in carrying out this project. Finally, I would like to thank my family and friends for their overwhelming support and encouragement

ANITHA.V.MADLUR

TABLE OF CONTENTS

Sl no. 1 2 3 4 5 6 7 8 9 10 11

CONTENTS ABSTRACT INTRODUCTION THEORITICAL FRAMEWORK FINANCING RETAIL SECTOR- A PROFILE REVIEW OF LITERATURE RESEARCH METHODOLOGY RESULTS AND ANALYSIS INTERPRETATION AND CONCLUSION ANNEXURE BIBLIOGRAPHY

Page No 01 02 03

GUIDELINES FOR WORKING CAPITAL 18 24 28 33 34 43 44 49

LIST OF TABLES Table no. Name

1 2 3 4 5 6 7 8 9 10 11 12 13 14 Major users of Bank finance for WCF Criteria for granting credit Methods followed for determining credit limit Granting long term loan for WCF The proportion of current assets to total assets The proportion of cash balance to current assets The debt collection period The credit payment period Operating cycle Bank loan to finance WC requirement Difficulty in getting bank finance Sources of WCF Sources of WCF Cost of WCF Advantages of bank finance

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34 34 35 36 37 38 38 39 39 40 40 41 41 42