INTRODUCTION There is sweetness in co-operation; there is the one weak or strong among those who co-operate; each is equal

to others. -Mahatma Gandhi

Agriculture plays a vital role in Indian economy. It contributes approximately more than half of the national income. More than 70% of population depends on agriculture and 89% live with in villages But the economic position of these people is still not satisfactory and they are unable to meet their financial requirements for farming operations. Therefore they depend upon money lenders immensely for necessary financial requirements. According to a study conducted by the national institute for rural development, the credit supplied by the money lenders was 69.7% of the total loan supplied to the farmer in the year 1951-52 RBI report shows that the regional rural banks accounted for the highest share of 49.1% in the year 2002-03, due to the various illegitimate practices of the moneylenders and the wide spread illiteracy of the people. The debt went on increasing and became a crushing burden from which there seemed to be no escape with this process the farmers were losing their lands to pay the interest to the money lenders. Therefore, the Government of India has taken necessary steps to save the farmer from the clutches of moneylenders. In this context the idea of co-operative was mooted In India the co-operative has started officially in the year 1904 when the government of India passed the first co-operative act. The co-operative movement was introduced in India with the main objective of making a break through in the provision of credit to the poor classes. Especially for the vast majority of agriculturists who were suffering under the heavy weight of indebtedness. With the over whelming importance assigned to food production in our successive 5 year plans, the planners and pioneers of our country believed that co-operation is the most effective instrument for the economic growth and prosperity of our nation.

Co-operation has been defined as a form of organization however in persons voluntarily associate together as human beings on the basis of equality, for the promotion of the economic interest amongst themselves.

Co-operative has been defined as a form of organization where in persons voluntarily associated together as human beings on a basis of quality for the words of EM Hough. Co-operative may be voluntarily associated in a joint undertaking for mutual benefit. Co-operative society is a voluntary organization in which every one is welcomed to join with equal rights and equal responsibilities. Its main motive is to provide service to members and unlike private enterprises; it does not work to earn profit.

STRUCTURE OF INDIAN BANKING

BANKS

Public sector

Regional Rural Bank

Co-operative Bank

Private sector

Co- operative Co -operative Foreign banks Agricultural banks

Co-operative Industrial

Scheduled banks

Unscheduled banks

Urban banks

banks

Unit state co-ops

Multi state

Salary Earners Societies

Thrift & Credit Societies

ABOUT RURAL CO-OPERATIVE BANKS In India 196 regional rural banks were there at the end of the financial year (31st march 2005). The maximum numbers of banks were in Andhra Pradesh with 47 in first place and next followed by the Kerala with 43 banks and then followed by Maharashtra with 40 banks. Indian banking system can be classified into three board categories viz. 1. Commercial banks 2. Development banks 3. Co-operative banks While commercial banks mostly provide short-term finance and development banks provide long term finance to industries. Trade and commerce, co-operative banks on the other hand usually cater to the credit needs of lower and middle class borrowers in urban, semi rural and rural areas. The out standing deposits mobilized by regional rural banks registered an increase of 16.7% to Rs 43,220 cores in 2001- 2002 as compared with a. rise of 23.2% registered in previous year. RBI report says that there was a significant improvement in their performance. The credit structure of the co-operative banking system can be divided into two components viz. a) Agricultural credit, and b) Non agricultural credit Among 196 regional rural banks, 170 regional rural banks made operating profits of Rs 790 cores in 2000-01 with the net profit of Rs 676.48 cores. In the year 2001-02 196 regional rural banks made an operating profit of Rs 838 cores, with a net profit of Rs 699.93 cores. Non - agricultural credit component of the co-operative banking system is a 3tired pyramid structure primary credit society

State co-op Bank Central co- op bank

Primary credit societies

Co-operating credit structure

DEFINITION OF CO-OPERATION: Co-operation has been defined in slightly different ways in various sciences and by various scholars. In order to have a through understanding of the concept; some well known definitions are discussed below. According to C.R.Fay a protagonist, a co-operative society is an association for the purpose of joint trading organizing among the weak and conducted always in an unselfish sprit, on such terms that all who are prepared to assume the duties of membership may share in its rewards in proportion to the degree in which they made use of their association. The definition given by Paul Lambert, a well-known authority on co-operation seems to be more broad and liberal. According to him, a co-operative society is an enterprise formed and directed by association of users, applying with in it the rule of democracy and directly intended to Satisfy both its members and community, several factors contributed to spread of the movement, the most important was, the emergence of several independent states, particularly in Asia. The new states encouraged the spread of the co-operative movement as a part of their national strategy for planned development. As such, it spread to several countries round the globe that is apparent from the table.

Co-operative movement in various countries

S.No Type of co-operative 1 2 3 4 5 6 7 Consumer co-operatives Credit co-operatives Marketing co-operatives Land Mortgage credit Dairy co-operatives Farming societies Housing societies Country England,Russia&Sweden Germany, Italy& India Canada,USA,&Australia. Germany England& France Denmark & New Zealand. Russia, Yugoslavia, Palestine USA, Sweden & Israel.

G.D.H Cole highlighted the development of co-operative movement during 1940s in his book century of co-operative is a world wide movement. It exists in some form in every continent and nearly every considerable country although the needs of various types of co-operative organizations have been different in various countries, according to different historical circumstances and different environments in which they grow, yet there has been something common in them. It is co-operative objectives and principles which has been provided the common ground.

NEED FOR THE STUDY

Analysis is the process of critically examine accounting information given in the financial statements. The financial analysis provide valuable in sight in to a firms performance ,financial position and future earning. Their by themselves will not help a person to conclude whether the financial performance of the organization is good or not .The statement gives only the figures. Managers, investors and creditors use this form of analysis at the beginning point for their decision making .Investors use the financial analysis in making decisions about whether to buy or sell stock and creditors use them in deciding whether or not lend. They provide managers to measures how the company is doing in comparison to measures how the company is doing in comparison with its performance of the part competitors in the industry. The significance of financial statements lies not in their preparation, but their analysis and interpretation .It involves a study of relationship among various financial factors and to judge their meaning and significance. The financial analyst must understand the plans and policies, recognize data available as per requirements, establishment relationship among financial figures and make interpretation in a simple and unbiased way .The term financial analysis refers to the process of determining the financial strength and weakness of the firm by establishment strategic relationship between the items of balance sheet ,profit&loss account and other operative data.

OBJECTIVES OF THE STUDY:

The primary objective of this study is to analyses the financial performance of Mulkanoor co-operative rural bank and marketing society limited (MCRB &MSL). The following are its subsidiary objectives: To examine the liquidity and solvency position of the company over the period of study. To study the operational performance and efficiency of the company in terms of utilization of funds and other financial resources. To evaluate the profitability of the concern, to know the reasons and factors responsible for the study its way of profit allocation

SCOPE OF THE STUDY

The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. The analysis and interpretation of financial statements is essential to bring out the mystery behind the figures in financial statements. Financial statement analysis is an attempt to determine the significance and meaning of the statement data so that forecast may be made of the future earnings. TOOLS & TECHNIQUES The analysis and interpretation of financial statement is used to determine the financial position and results of operations as well. A number of Methods or devices are used to study the relationship between different statements. An effort is made to use those devices, which clearly analyze the position of the enterprise. The following methods of analysis are generally used. 1) Comparative statements. 2) Trend analysis 3) Common-size statements 4) Funds flow analysis 5) Cash flow analysis 6) Ratio analysis 7) Cost-Volume-profit analysis From the above methods the Comparative Statements, Trend analysis is discussed in the chapter. As this project work deals with the study of the following analysis are discussed.

FINANCIAL PERFORMANCE OF MCRB &MS LTD:

The purpose of this chapter is to examiner the performance of the MCRB &MS Ltd. In on overall manner with a view to comment on its successful performance during the period under review. The performances of the MCRB &MS Ltd Is evaluated in terms of the following. Firstly to examine the performance for the MCRB &MS Ltd. From the point of view of business management success as suggested by the samaikya. Secondly to study the over all profitability of MCRB &MS Ltd. By applying the concept of the return on investment and analyzing the variation, if any in the profitability from time with the help of profit margin and asset turnover ratio. Now it is proposed analyze the business success of the MCRB &MS Ltd. From time comparing the actual performance of the MCRB &MS LTD makes the analysis. With that of the standards given by the samakya for an ideal multi cooperative and to pain out the variations if any as well as to analyze the factors responsible for such variations.

FINANCIAL STATEMENT ANALYSIS FINANCIAL ANALYSIS:

Analysis is the process of critically examining in detail information given the financial statement. For the` purpose of analysis individual items are studied their relationship with other related figures established, the data is sometime rearranged to have better understanding of the information with the help of different techniques or tools for the purpose. Analyzing financial statements is a process of evaluation relationship between component parts of financial statement to obtain better understanding of firms position and performance.

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INTERPRETATION:
Analysis and interpretation and closely related interpretation is not possible without analysis and without interpretation analysis has no value.

Interpretation is that drawing of inference and stating what the figures in the financial statements really mean. Interpreter must have experience. Understanding and intelligence to draw correct conclusion for the analysis data.

USES OF FINANCIAL ANALYSIS:

Financial analysis is helpful in assessing the financial position and profitability of a concern this is done through compares on by ratios for the same concern over a period of years or for one concern against the predetermined standards or for one department of a concern against other department of the same concern.

OBJECTIVE OF FINANCIAL ANALYSIS:

Accounting ratios calculated for a number of years of the trend of the change of position the ascertainment of trend helps in making estimate for the future. The main objectives of financial analysis are to assess. 1. The present and future earning capacity of the concern. 2. The operational efficiency of the concern as a whole and of its various parts. 3. The short term and long term solvency of the concern for the benefit of the debenture holders and trade creditors. 4. To compare the performance of the company with that of another company or have the same company with previous performance. 5. The financial stability of the company.

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Types of the financial analysis may be:

1. The nature of the analyst and the material used by him. 2. The objective of analysis and 3. The modus operandi of the analysis

1. According to the nature of the analyst and the material used by him INTERNAL ANALYSIS:
The people who have assessed to the books of accounts make the internal analysis. They are members of the analysis. Analysis of the financial statement or other financial data for managerial is the internal type of analysis. The internal analyst can give more reliable result than the external analyst because every type of analysis. The internal type of analysis can give more reliable result than the external analyst because every type of information is at his disposal

EXTERNAL ANALYSIS:
It is made by those persons who arent connected with the enterprises they dont have the assess to the detailed record of the company and have to depend mostly on published statements such analysis is made by investors, credit agencies, government agencies and research scholars.

2. According to the objective of the analysis. A) LONG TERM ANALYSIS:

The analysis is made in order to study the long-term financial stability, solvency, profitability and earning capacity of a Company. The purpose of making

12

such type of analysis is to know whether in the long run the company will be able to earn a minimum amount, which will be sufficient to maintain a reasonable rate of return of the investment of the Company and to meet it cot of capital. This type of analysis help the long term financial planning which essential for the continued success of the company.

B) SHORT TERM ANALYSIS:

This is made to determine the short-term solvency and liquidity of the company. The purpose of this analysis is to know whether in the short run a company will have adequate funds readily available to meet its short-term requirements and sufficient borrowing capacity to meet contingencies in the near future. This analysis is made with reference to items of current assets and current liabilities (working capital analysis) to have fairly sufficient knowledge about the companys position, which may be helpful short-term financial planning.

3) According to the modus operand of the analysis: A) HORIZONTAL ANALYSIS:

This analysis is made to review and analysis financial statements of a number of years and therefore based on financial data taken from several years. This is very useful for long-term trend analysis and planning.

B) VERTICAL ANALYSIS:
This analysis is made to review and analyze the financial statement of one particular year only.

Procedure of Financial statement analysis:

There are three steps in the financial statement.

Selection:
Selection of Information (data) relevant to the purpose of analysis of financial statement.

Classification:
Methodical classification of the data.

Interpretation:
Drawing of Internees and conclusions.

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PROFILE OF THE MULUKANOOR CO-OPERATIVE RURAL BANK & MARKETING SOCIETY Ltd. HISTORY OF ORGANIZATION: Location:
General location can be defined as a firm located at a place where the inhabitants are interested in its success of the product can be sold profitably and the operation costs are minimum. Roper and well-planned location of a firm is an important managerial decision. The performance of an enterprise is considerably affected by its location. Unscientific and unplanned location is harmful to the organization. Location of the store at a convenient lace really achieves the customer satisfaction. Thus location of a firm is an important factor for any organization as it has its effect on sales and profitability of particular firm the MCRB is situated in mulkanoor and is established in the year 1956. It believes in the concept of ONE FOR ALL AND ALL FOR ONE and its logo (symbol) as HANDSHAKE and it symbolize this.

A HANDSHAKE SYMBOLIZES PROGRESS:A handshake is all it takes to bring hope in the lives of the enthusiastic and ambitious entrepreneur to bring that ray of hope from behind dark clouds. A handshake that promises a careful and secure future MCRB & MS ltd. works towards making that handshake possible. The MCRB & MS ltd. is like mother to a new entrepreneur who encourages the child to take the first step firmly that is what it does to the new business entrepreneur. Few institutions can claim the success MCRB & MS ltd. has achieved through is scheme the works on the principle of brotherhood and humanity; it contributes in realizing he dreams of its members for a quality life. It shares the problem of shareholders and assists to solve it, be it or marriage in the family. Every aspect of life is taken care of by the MCRB & MS ltd.

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REGISTRATION AND SHARE CAPITAL

The Mulukanoor co-operative rural bank ltd. was registered on 27th July 1956 at Mulukanoor.The area of operation of this co-operative is spread over the 14 revenue villages of Bheemadevarapally block in Bheemadevarapally taluka of Karimnagar district. It is the second biggest co-operative bank in Asia. It was registered as primary agriculture credit society under Hyderabad cooperative societal Act XVI of 1952. It was started with a paid up capital of Rs 2292 and authorized share capital. The authorized share of 1crores on 30th June 1994 and the paid up share capital in the year 1993-94 was Rs1crore .the initial membership of MCRB & MS was only 373 but it is increased to 5316 in the year 1993-94 according to data given by MCRB & MS it is having 6166 members up to 31st march 2005 and also it has share capital of Rs22195 up to 31st march 2005 and in the current year i.e., 31st March, 2006 it is having 6202 members and also it has share capital of Rs. 23805.

Villages The bank spread over 14: They are

1) Mulkanoor 2) Mutharam 3) Bheemadevarpalli 4) Gatlanarsingapoor 5) Kothapally 6) Errabelly 7) Gopalpoor 8) Mallaram 9) Kothakonda 10) Jeelugula 11) Kopur 12) Vangara 13) Rathnagiri 14) Musthafapoo All the villages are situated 10 km distance from the headquarters of the MCRB& MS ltd.

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STATEMENT

SHOWING

THE

MEMBERSHIP

OF

LAST

SEVENE YEARS
This is a co-operative they believe in the will of their Members, experience has shown, too that in 44 of the last 49 years. The decisions of the members have been on the whole, wise and reasonable. A constant increase in members is there in the bank year after year which is shown in the following table

STATEMENT SHOWING THE MEMBERSHIP FOR LAST FIVE YEARS SLNO 1) 2) 3) 4) 5) 6) 7) PERIOD 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 MEMBERS 6048 6077 6166 6202 6251 6410 6740 SHARECAPITAL 18210 19494 22195 23805 28001 34423 42010

SOURCE: Annual reports of MCRB &MS.

They have taken whole some decision pertaining to the bank in a democratic manner after discussions and deliberations and their decisions have proved reasonably correct according to the situations they faced.

STRUCTURE
Registered under A.P.Act 1964 in the year 1956. Converted to A.P.M.A.C.S Act 1995 in the year 1995. General body consists of 6410 members. Managing committee consists of 15. President. General Manager and employees-110.

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STAFF
Day to day work is carried out by the staff of 110 members all of whom are drawn from the area of operation of the co-operation the staff is headed by the general manager followed by assistant general manager, manager and officers of the concerned divisions in the society.

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ORGANIZATIONAL STRUCTURE OF MCRB&MS LTD

STRUCTURE OF THE RURAL BANKING

Board of directors

Chairman

General Manager-

Agriculture

Mill

Personal Dept

Accounts

Dairy

Business Dept

Govt

section Dept Dept

Assistant

Manager Business

Computer Assistant Casher

Marketing Executive

Executive

Lab our Lab our

Seed Section

Fertilizer Section

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OBJECTIVES
As a multipurpose co-operative its aim is to assist members 1. To become increasingly aware of the basic economics of the production and consumption by providing economic service. 2. The Achieve acceptable standards in terms of quality of his produce, by providing production services. 3. To find a fair and stable market for his produce. 4. To purchase quality consumer articles locally and at fare price by providing services. 5. To improve standards in health and education by providing welfare services. 6. To promote the economic interest of the members as per the co-operative principles. 7. To borrow or to raise funds to lend them to its members as per the cooperative principles. 8. To provide fertilizers seeds and other agricultural implements to the members. 9. To supply basic consumer goods and daily requirements such as sugar, kerosene, Rice, oil, clothes, cosmetics etc to the members. 10. To inculcate the habit of thrift self help co-operation among its members. 11. To arrange for the sale of agricultural produce, milk and milk products. 12. To help in the marketing of the Products of cottage and village industries of its members.

MCRB & MS LTD is fully aware that its existence is completely dependent upon the welfare of its shareholders who in turn make the bank stronger by their endeavors.

GENERAL BODY AND MANAGING COMMITTEE

As per the societies by laws all policy matters are decided by the managing committee, which is elected by the general members in their special general body meeting conducted once in 3 years. All A class members are eligible to vote and contest the election. The total strength of the committee is 11 members. In which 5 seats have been reserved for weaker sections. The president and vice president are elected by members of managing committee amongst themselves. The managing committee headed by the president, meets once in a month at least and all matters 19

related to the co-operative are discussed and policy decisions are taken at these meetings. The managing committee presents annual reports and accounts to the general body every year.

To facilitate smooth work there is also a village committee in each of the 14 villages, comprising of progressive members. These committees discuss the problems as and when the need arises, and suggests them to the managing committee for the action that has to be taken.

COMPOSITION OF BOARD OF DIRECTORS

The management of the co-operative shell vest in the board of directors consisting of 15 members as indicated below. Scheduled castes 2 Scheduled tribes 1 Backward classes 3 Women 2 Open to all 7

FINANCE
The society derives its working capital from the following sources. 1. Share capital. 2. Deposits. 3. Govt loans and subsidies. 4. Borrowings from the bank. The major part of working capital is taken care of by the bank. Till 1969-70, the Karimnagar dist co-operative central bank was the financier. At that time the reserve bank of India (RBI) decided to enlist the finance of commercial banks for the co-operative sector. Since then the SBH has been financier to the co-operative society. Main sources. Our members. State bank of Hyderabad. National co-operative development corporation. Government of Andhra Pradesh.

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The Members of the Cooperative are getting following financial Benefits individually & jointly from Cooperative & through Cooperative During the year 2010-11
1 2 3 4 Bonus Paid on Paddy & Paddy Seed, Cotton Purchase Funeral Expenses Paid towards the expired Members Amount paid for expired Members through welfare scheme Rs.1,86,51,318 Rs.2,75,925 Rs.12,62,500

Group Insurance premium paid to LIC to the Extent of Crop Rs.23,05,326 Loan

5 6 7

LIC paid to deceased members to the extent of Crop loan Life Insurance to members through LIC (sum Assured)

Rs.32,00,000 Rs.2,11,40,900

LIC paid to deceased members on their individual policies Rs.19,38,500 through society

8 9

Janatha Accidental Insurance policy for 5 years (Premium Paid) J.P.A. Claims

Rs.6,43,380 Rs.1,25,000 Rs.30000

10 Merit Scholarships paid to Children of Members

11 Received Subsidy and Margin Money from Water Management Rs.64,91,877 & other agencies towards Weaker Section Members 12 Insurance of Milk Animals and Sheep Premium for 3 years 13 Insurance claims towards death of Sheep and Milk animals 14 Insurance of Electric Motors Premium for 3 years 15 Insurance claimed towards failure of Electric Motors 16 Interest rebate- relief package for farmer members 17 Interest rebate- relief package from S.B.H 18 IFFCOI and Tokyo Insurance claims to members 19 JBY Scholar Ships to Students through LIC TOTAL Rs.8,29,437 Rs.10,75,787 RS.48,311 Rs.68,211 Rs.38,80,160 Rs.79,87,255 Rs.1,04,000 Rs.16,29,600 Rs.7,16,87,487

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CREDIT
The co-operative gives short term, medium term, and long term loans to its members for various purposes. Short-term loans are disbursed in the form of A and B components. A comprises of cash portion to meet the agriculture operations and B comprises of the portion to the cost of seeds, fertilizers, Pesticides etc. the short term loans are sanctioned for all types of crops, including local improved and high yielding varieties as per the scale of finance. The component B is distributed to members through the co-operative depots of seeds, fertilizers etc. To improve socio-economic conditions of weaker sections, and increase their incomes the society has introduced many schemes in the section of poultry, diary sheep and other allied agriculture activities in which district Rural Development agency and S.C/B.C co-operative societies have been involved by providing subsidy and margin money respectively which covers nearly 40% of the loan component, and which is a relief to the weaker section. Free technical services are provided from the technical staff of the society. Agriculture laborers and artisans are also receiving loans from the society to gain full time occupation. Long-term loans are sanctioned to eligible members to purchase tractor, which is repayable over a period of 7 years and in 14, half yearly installments.In 2010 year MCRB & MS has given short term loans of Rs.1,08,252 thousands and medium term loans of Rs.13512 thousands and long term loans of Rs.2529 thousands and the total loans amounted to Rs.1,99,992 thousands. All types of loans advanced in this year amounted to Rs.3,20,344 thousands. Loans for all purpose are recovered largely in kind, viz. in the form of paddy, jawhar, maize, eggs, cotton, seeds; etc which is appreciated by members and it also helps in effective recoveries.

DEPOSITS:
Deposits are mobilized from the members amounting on 31st march 2010 to a total of Rs.145535 thousands from compulsory thrift deposits, fixed deposits, saving deposits, cash, security deposits and current deposits. In case of some of the members their borrowings from the co-operative are now equal to their savings with the bank. 22

VARIOUS ACTIVITIES OF MCRB & MS LTD

The Co-operative purchases several inputs for supporting the agricultural production and keeps these inputs available for sale to its members. Different kinds of foundation and certified seeds procured by the co-operative itself are sold to its members as well as others farmers through sales counters situated at Mulkanoor and at Kothakonda The society has also taken leadership from several leading companies for sale of fertilizers, pesticides with an annual turnover of Rs.6552 lakhs. The B component of credit supplied is lifted by members in the shape of seeds, fertilizers, pesticides, from the co-operative other items kept readily available for sale of members include oil engine, electric motors, sprayer, dusters, electronic goods, spare parts, agricultural implements, pipelines etc.The poultry feed is being produced by the society through its feed mixing plant installed in the year 1973-74 with a capacity of one ton per hour. The MCRB & MSLTD also deals in shahbadstone, bricks, iron, wood, coal, bamboos, cements etc so as to meet thee local requirement for construction of poultry sheds cattle sheds small house etc.

SERVICES PROVIDED BY MCRB & MS LTD: MARKETING SERVICES:

Marketing services represent not only the sale of members produce but also include all the stages of storage processing etc. all India rural credit survey committee (after undertaking a through study of the credit pattern) has expressed its opinion that recovery of credit cannot be effective unless credit is linked with marketing. Marketing services not only help in effective recovery of loans, but also provide the farmer timely finance for succeeding seasons.

PURCHASES:
The society purchases food grains produced by members by paying extra Rs.15 than the Warangal market price and has storage facilities for 36,500 metric tones capacity through its 55 go downs. So as to make the vicarious operations easier it keeps trained staff members available, so that they can handle various machines,

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whenever members need them. The national co-operative development cooperation has provided financial assistance of about Rs.31, 86326 towards running these services.

CONSUMER SERVICES:
The MCRB & MS ltd. runs consumer stores at Mulkanoor and at Kothakonda though which it tries to supply members as well as the general public with essential house hold requirements such as food grains, sugar, refined oil, toiletries and kerosene, petrol, cement, iron goods, ropes etc at a reasonable price and supply of cooking gas of petroleums. The sales on these transitions were Rs.,32,11,033 in 2006 years.

DOOR DELIVERY SERVICES:

The essential commodities are being supplied at door steps of the consumer through delivery van as per scheduled programmed in area of operation.

WELFARE SERVICES:
The society as taken the agency of the life insurance corporation (LIC) India as well as general insurance corporation so that the lives of members as well as their assets such as cattle shed etc are insured. In 2010 the society was paid Rs.2,04,96,992 from LIC to its members who died in this year. The society also provided drinking water facilities in four villages by providing Rs.10, 000 to each village to have tube well in order to supply sufficient drinking water. The society has undertaken member education program in co-operation education with the financial assistance of MCRB & MS Ltd. 225 members have participated in this program. The society has also established A.K. Vishwanatha reddy rural development society registered and through this society it has proposed to start a junior college and Degree college it also gives scholarship to 7th and 10th students.

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2004-2005 Comparative Balance Sheet of March 31-03-2004 and 31-03-2005. Liabilities

S.No. 1 2 3 4 5 6 Liabilities Share Capital Deposits Reserves Borrowings Payables Profits Year ending March 31 I / D 2004 16957 178645 133830 20000 12388 10155 2005 18210 182289 142392 37464 12545 9813 I/D Amount Percentage 1253 3644 8562 17464 157 -342 7.38 2.03 6.39 87.32 1.26 3.36

Total liabilities 371975

402713

30738

8.26

Assets
1 Advances 2 Investments 3 Properties 4 Stocks 5 Receivables 125753 142677 48399 35902 18830 134977 134718 49449 54276 28730 563 149 9224 -7959 1050 18374 7.33 5.57 2.26 51.17 9900 52.57 35.99

6 Cash in Hand &Bank 414

Total Assets

371975 402713 30738

8.26

Interpretation of Year ending 2004 & 2005 based on above findings.

The borrowings have shown a tremendous increase of Rs. 17464 i.e., 87.32% it is not good to the society. Why because the society should pay more and more profits in the form of interest to the debtors. The absolute liquid assets(Cash & Bank Balance) has growth of 35.99 i.e., Rs. 149. The share capital, Reserves has shown a favorable increase than the previous year. The overall financial position of the society is not bad; it has growth by 8.26% than the previous year.

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2005-2006 Comparative Balance Sheet of March 31-03-2005 and 31-03-2006. Liabilities

S. No. 1 2 3 4 5 6 Liabilities Share Capital Deposits Reserves Borrowings Payables Profits Year ending March 31 I / D 2005 18210 182289 142392 37464 12545 9813 2006 19494 194020 164485 53858 12658 10555 1284 11731 22093 16394 113 742 I/D 7.05 6.43 15.51 43.75 0.9 7.56

Amount Percentage

Total Liabilities 402713 Assets

1 Advances 2 Investments 3 Properties 4 Stocks 5 Receivables 134977 134718 49449 54276 28730

455070

52357

13.00

146047 144331 52875 57676 52759 1382

11070 9613 3426 3400 24029 819

8.20 7.13 6.92 6.26 83.63 145.47

6 Cash in hand &Bank 563

Total Assets

402713 455070 52357 13.00

Interpretation of Year ending 2005 & 2006 based on the above findings.
The borrowings have shown a tremendous increase of Rs. 163.94 i.e., 43.75% it is not good to the society. Why because the society should pay more and more profits in the form of interest to the debtors. The absolute liquid assets(Cash & Bank Balance) has growth of 145.47i.e., Rs. 819. The share capital, Reserves has shown a favorable increase than the previous year. But the profit has shown an unfavorable than the previous year. The overall financial position of the society is not bad; it has growth by 13.00% than the previous year.

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2006-2007 Comparative Balance Sheet of March 31-03-2006 and 31-03-2007. Liabilities

S.No. 1 2 3 4 5 6 Liabilities Share Capital Deposits Reserves Borrowings Payables Profits Year ending March 31 I / D 2006 19494 194020 164485 53858 12658 10555 2007 33195 145535 189409 160694 21544 10973 2701 -48485 24924 106836 8886 418 I/D 13.85 -24.98 15.15 198.36 70.20 3.96

Amount Percentage

Total Liabilities 455070 Assets

1 Advances 2 Investments 3 Properties 4 Stocks 5 Receivables 146047 144331 52875 57676 52759

550350

95280

20.93

168315 153768 69307 81341 77171 448

22268 9437 16432 23665 24412 -934

15.24 6.53 31.07 41.03 46.27 -67.58

6 Cash in hand &Bank 1382

Total Assets

455070 550350 95280 20.93

Interpretation of Year ending 2006 & 2007 based on the above findings.
The borrowings have shown a tremendous increase of Rs. 106836 i.e., 198.36% it is not good to the society. Why because the society should pay more and more profits in the form of interest to the debtors. The absolute liquid assets(Cash & Bank Balance) has growth of (-) 67.58i.e., Rs.() 934. The share capital, Reserves has shown a favorable increase than the previous year. But the profit has shown decreasing than the previous year. The overall financial position of the society is not bad; it has growth by 20.93% than the previous year.

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2007-2008 Comparative Balance Sheet of March 31-03-2007 and 31-03-2008. Liabilities

S.No. 1 2 3 4 5 6 Liabilities Share Capital Deposits Reserves Borrowings Payables Profits Year ending March 31 I / D 2007 22195 145535 189409 160694 21544 10973 2008 23805 145498 216045 208818 21053 10431 I/D Amount Percentage 1610 -37 26636 48124 -491 542 7.25 -0.025 14.06 29.94 -2.27 -4.93

Total Liabilities 550350 Assets

1 Advances 2 Investments 3 Properties 4 Stocks 5 Receivables 168315 153768 69307 81341 77171

625650 75300

13.68

209200 143783 80303 136935 54219 1210

40885 -9985 10996 55594

24.29 -6.49 15.86 68.34

-22952 -29.74 762 170.08

6 Cash in hand &Bank 448

Total Assets

550350

62560 75300 13.68

Interpretation of Year ending 2007 & 2008 based on the above findings.
The borrowings have shown a tremendous increase or Rs. 48124 i.e., 29.94% its not good to the society. Why because the society should pay more and more profits in the form of interest to the debtors. The absolute liquid assets (Cash & Bank Balance) has registered a growth of 170.08% i.e., Rs. The Share capital, reserves have shown of favorable increase than the previous year. But the profit has shown a decreasing than the previous year. The overall financial position of the society is not bad; it has grown by 13.68% than the previous year.

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2008-2009 Comparative Balance Sheet of March 31-03-2008 and 31-03-2009 Liabilities

S. No. 1 2 3 4 5 6 Liabilities Share Capital Deposits Reserves Borrowings Payables Profits Year ending March 31 I / D 2008 23805 145498 216045 208818 21053 10431 2009 28001 160836 274015 198968 23463 12113 697396 I/D Amount Percentage 4196 15338 27970 -9850 2410 1682 71746 17.63 10.54 26.83 -4.72 11.45 16.13 11.47

Total Liabilities 625650

Assets
1 Advances 2 Investments 3 Properties 4 Stocks 5 Receivables 209200 238435 29235 13.97 143783 249131 105348 73.27 80303 98153 17850 -67831 22.23 -49.54

136935 69104 54219 41016 1557

-13.203 -24.35 347 28.68 11.47

6 Cash in hand &Bank 1210 Total Assets

625650 697396 71746

Interpretation of Year ending 2008 & 2009 based on the above findings.
The borrowings have shown a tremendous increases of Rs. -9850 i.e., 4.72% its not good to the society, why because the society should pay more and more profits in the form of interest to the debtors. The absolute liquid assets (Cash & Bank Balance) has growth of 28.68 i.e., Rs. 347 The share capital, reserves have shown a favorable increase than the previous year. But the profit has shown decreasing then the previous year. The overall financial position of the society is not bad. It has grown by 11.47% than the previous year.

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2009-2010 Comparative Balance Sheet of March 31-03-2009 and 31-03-2010. Liabilities

S. No. 1 2 3 4 5 6 Liabilities Share Capital Deposits Reserves Borrowings Payables Profits Year ending March 31 I / D 2009 28001 160836 274015 198968 23463 12113 2010 34423 160836 339091 257629 38303 13089 I/D Amount Percentage 6422 0 65076 58661 14840 976 22.93 0.00 23.75 29.48 63.25 8.06

Total Liabilities 697396 Assets

1 Advances 2 Investments 3 Properties 4 Stocks 5 Receivables 238435 249131 98153 69104 41016

843371

145975 20.93

282700 339599 108527 71897 38337 2311

44265 90468 10010 2793 -2315 754

18.56 36.31 10.56 4.04 -5.64 48.42

6 Cash in hand &Bank 1557

Total Assets

697396 843371 145975 20.93

Interpretation of Year ending 2009 & 2010 based on the above findings.
The borrowings have shown a tremendous increases of Rs. 58661 i.e., 29.48% its not good to the society, why because the society should pay more and more profits in the form of interest to the debtors. The absolute liquid assets (Cash & Bank Balance) has growth of 48.42 i.e., Rs. 754. The share capital, reserves have shown a favorable increase than the previous year. But the profit has shown decreasing then the previous year. The overall financial position of the society is not bad. It has grown by 20.93% than the previous year.

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2010-2011 Comparative Balance Sheet of March 31-03-2010 and 31-03-2011. Liabilities

S. No. 1 2 3 4 5 6 Liabilities Share Capital Deposits Reserves Borrowings Payables Profits Year ending March 31 I / D 2010 28001 160836 274015 198968 23463 12113 2011 42010 180892 382921 352192 40123 14356 I/D Amount Percentage 14009 20056 108906 153224 16660 2243 50.03 12.46 39.74 77.00 71.00 18.51

Total Liabilities 697396 Assets

1 Advances 2 Investments 3 Properties 4 Stocks 5 Receivables 238435 249131 98153 69104 41016

1012494

315098 45.18

382430 370174 132161 82498 40000 5231

143995 121043 34008 13394 -1016 3674

60.39 48.58 34.64 19.38 -2.47 235.96

6 Cash in hand &Bank 1557

Total Assets

697396 1012494 315098 45.18

Interpretation of Year ending 2010 & 2011 based on the above findings.
The borrowings have shown a tremendous increases of Rs. 153224 i.e., 77.00% its not good to the society, why because the society should pay more and more profits in the form of interest to the debtors. The absolute liquid assets (Cash & Bank Balance) has growth of 235.96% i.e., Rs. 3674. The share capital, reserves have shown a favorable increase than the previous year. But the profit has shown Increase then the previous year. The overall financial position of the society is not bad. It has grown by 45.18% than the previous year.

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TREND IN SHARE CAPITAL

Trends in share capital are computed to know the increase/decrease in the period of study.

Trend Percentages:
Trends in advances are computed to know the increase/decrease in the period of study.

Trends in share capital (Base Year 2004)

Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Share Capital Trends Inc /Decrease (Rs. In 000) (Percentage) (Base Year) 18210 19494 22195 23805 28001 34423 42010 100 107.05 121.88 130.72 153.77 189.03 230.60 7.05 21.88 30.72 53.77 89.03 130.6 I/D (Previous Year) 7.05 14.83 8.84 23.04 35.27 41.6

Here:
1) Increase/Decrease (Base Year) = Increase / Decrease in Trend % from the Base Year. 2) Increase / Decrease (Previous Year) = Increase / Decrease in Trend % from the previous Year.

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45000 40000 35000 30000 25000 20000 15000 10000 5000 0 Year 2004- 2005- 2006- 2007- 2008- 2009- 201005 06 07 08 09 10 11

INTERPRETATION OF SHARE CAPITAL BASED OF TREND PERCENTAGE

Share Capital has registered on increasing trend throughout the period of study the authorized share capital is Rs. 3.5 Crores. There has been a steady increase the share capital has increased by 21.88 &130.6 in the year 2004-2005 & 2010-11 respectively. The average trend percentages of the period is 133.74 MCRB & MS has registered maintaining the average trend percentage from the 2004-2005 and the share capital has increased from Rs. 194.94 to 344.23 it means those members are enrolling to avail the benefits of the MCRB & MS Ltd. There has been grading increase in the enrollment of members it has highest enrollment in the year 2004-05 of 7.84 % (7.84 more than Base Year)

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TRENDS AND RESERVES

Trends in advances are computed to know the Increase / Decrease. In the period of study.

Trends in share capital (Base Year 2004)

Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Share Capital (Rs. In 000) 142392 164485 189409 216045 274015 339091 382924 Trends (Percentage) 100 115.52 133.02 151.73 192.44 238.14 268.92 Inc/Decrease (Base Year) 15.52 33.02 51.73 92.44 138.14 168.92 I/D (Previous Year) 15.52 17.50 18.71 40.71 45.70 30.78

Here:
1) Increase / Decrease (Base Year) = Increase / Decrease in Trend % from the Base Year. 2) I / D (Previous Year) = I / D in Trend % from the previous year.

34

450000 400000 350000 300000 250000 200000 150000 100000 50000 0 Year 2004- 2005- 2006- 2007- 2008- 2009- 201005 06 07 08 09 10 11

INTERPRETATION OF RESERVES BASED ON TREND %

The average trend percentage of Reserves 171.39 There has been identical in the reserves from the previous year of around 115.52 and highest being 268.92 in the year 2010-11 MCRB & MS is maintaining growth rate as per RBI Norms

35

TRENDS IN NET PROFIT

Trends in Advances are computed to know the Increase/Decrease in the period of Study.

Trends percentage (Base Year 2004)

Net Profit (Rs. In 000) Trends (Percentage) I/D (Base Year) I/D (Previous Year)

Year

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 .

9813 10555 10973 10431 12113 13089 14356

100 107.56 111.82 106.30 123.44 133.38 146.29

7.56 11.82 6.30 23.44 33.38 46.29

7.56 4.27 -5.52 17.14 9.95 12.91

Here:
1. Increase/Decrease (Base Year) = Increase / Decrease in Trend % from the Base Year. 2. Increase / Decrease (Previous Year) = Increase / Decrease in Trend % from the previous year.

36

16000 14000 12000 10000 8000 6000 4000 2000 0 -2000 Year 2004- 2005- 2006- 2007- 2008- 2009- 201005 06 07 08 09 10 11

INTEROPERATION OF NET PROFIT BASED ON TRENDS PERCENTAGE

The Average Indices of Net Profit of MCRB & MS Ltd., throughout the period i.e. for 7 years is 118.39 The Profit have shown Increase of 0.3 times from the base years i.e. it has increased by 118.39 There has been fall in net profit in 2007-08. The decrease in net profit is a bad sign and unfavorable for the study as it lets to carry in operation for betterment of shareholders to service in market.

37

TREND IN DEPOSITS
Trends in Advances are computed to know the I/D in the period of Study Average = Average deposits by member + by Institution.

Trends percentages (Base Year 2004 = 100)

Year

Deposits (Rs. in 000)

Trends (Percentage)

I/D (Base Year)

I/D (Previous Year)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

182289 194020 145535 145498 160836 182350 180892

100 106.44 79.84 79.82 88.23 100.03 99.23

6.44 -20.16 -20.18 -11.77 0.03 -0.76

6.44 -20.60 -0.02 8.41 11.80 -0.7

Here:
1. 2. Increase / Decrease (Base Year) = I / D in Trend % from the Base Year. I/D (previous year) = Increase/Decrease in Trend % from the previous year.

38

250000 200000 150000 100000 50000 0 Year -50000 2004- 2005- 2006- 2007- 2008- 2009- 201005 06 07 08 09 10 11

INTERPRETATION PERCENTAGES

OF

DEPOSITS

BASED

ON

TREND

The average of Deposits of MCRB & MS Ltd., throughout the period of 7 years is 93.37 Deposits have shown increase of 2.5 times from the base year as shows the effort of the society to increase of deposits. Deposits have been doubling as compared to the base year 2005-06. Based on the trends. It reveals that the deposits have full faith in the societies and it policies followed by it to attract deposits. The Society has been successful in mobilizing the deposits by the various positive policies followed by it to attract depositors.

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TRENDS IN ADVANCES
Trends in Advances are computed to know the Increase 10 Decrease in the period of Study.

Trends percentage (Base Year 2004)

Year

Advances (Rs. In 000)

Trends (Percentages)

I/D (Base Year)

I/D (Previous Year)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

134977 146047 168315 209200 238435 293275 382430

100 108.20 124.70 154.99 176.65 217.28 283.33

8.20 24.70 54.99 76.65 117.28 183.33

8.20 16.50 30.29 21.66 40.63 66.05

Here:
1. Increase/Decrease (Base Year) = Increase/Decrease in Trend % from the Base Year. 2. Increase/Decrease (Previous year) = Increase/Decrease in Trend % from the Previous Year. 3. Advances = Outstanding loans at the end of the year.

40

450000 400000 350000 300000 250000 200000 150000 100000 50000 0 Year 2004- 2005- 2006- 2007- 2008- 2009- 201005 06 07 08 09 10 11

INTERPRETATION PERCENTAGES

OF

ADVANCES

BASED

ON

TREND

Advances have been increasing throughout the period and it increased by 283.33% from the base year. Profitability depends on Advance more Advances would collecting of more interest and that would lead to profitability of the Society. The Society should keep check on the loans it advances and sees that they are secured.

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TRENDS IN DEPOSITS Vs ADVANCES

Trends in deposits Vs advances are computed to know the Increase/Decrease in the period of the Study.

Trends percentages (Base Year 2004)

Year

Deposits (Rs. in 000)

Advances (Rs. in 000)

Percentages

Differences (100%)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

182289 194020 145535 145498 160836 182350 180892

134977 146047 168315 209200 238435 293275 382430 75.27 115.65 143.78 148.25 160.83 211.41

74.05

25.95 24.73 -15.65 -43.78 -48.25 -60.83 111.41

Here:
1. 2. Percentage = Advances / Deposits x 100 Difference = Differences of 100 Percentage derived.

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600000 500000 400000 300000 200000 100000 0 -100000 2004- 2005- 2006- 2007- 2008- 2009- 201005 06 07 08 09 10 11

Interpretation of Deposits Vs Advances Based on Trend Percentages:

It is natural that of growth rate of Advances depends on size of growth rate of deposits over the period of 7 years. The deposits have Inc by 2.5%. Percentages of Advances against deposits have been fluctuating. It has highest in the years 2007-08, 2008-09 and 2009-10 ,2010-11(i.e. around 143.78,148.25 ,160.83 and 211.41 of loans were advances against deposits. Respectively. The Society should maintain favorable percentages of advances against the deposits i.e., around 70-80%. So that it could use it resources it could be safe and earn considerable amount of profit.

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TRENDS IN RECOVERY PERCENTAGE OF ADVANCES

Trends in Recovery percentage of Advances are computed to know the Increase / Decrease in the period of study.

Trends percentage (Base Year 2004 = 100)

Year

Recovery percentage

Trends (Percentages)

I/D (Base Year)

I/D (Previous Year)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

40.40 41.23 76.64 65.18 64.98 64.24 68.25

40.4 41.23 76.64 65.18 64.98 64.24 68.25

100 100.83 136.24 124.78 124.58 123.84 168.93

0.83 36.24 24.78 24.58 23.84 45.09

Here:
1. 2. 3. I/D (Base Year ) = I/D in Trend % from the Base year. I/D (Previous Year ) = I/D in Trend % from the previous year. Recovery percentage = Loans collected at the end of the year / Total loans to member in a year x 100.

44

400 350 300 250 200 150 100 50 0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

INTERPRETATION

OF

RECOVERY

PERCENTAGES

OF

ADVANCES BASED ON TREND PERCENTAGES

The Average indices of recovery percentage of Advances during the period of the study are 68.25% There has been a fluctuation in the recovery % of loans of they are less than the base year during 2004-05 and 2010-11 During the years 2004-05 to 2010-11. The recovery percentage is less than the previous years. Over all recovery percentage is mixed, as in few years, it is better than base year and vice-versa The society should see that it should have good recovery percentage

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FINDINGS & SUGGESTIONS

In this chapter an attempt is made to offer some suitable suggestions to improve the financial performance of The Mulukanur Co-operative Rural Bank and Marketing Society Limited. They are as follows: The society should take some remedial measures to control its productive cost to increase its profits. The society should decrease; its unrecovered percentage of loans and advances. It should study the credit worthiness for the member and based on this should advance loans. If the society starts recording its non-performing asset (NPA). It could understand the current financial position of its at the end of the year and it could take necessary to control NPAS as these are productive. The society should decrease its long term borrowing (deposits) to decrease the interest payment as it pays more EPS. The ROI of society was recorded poor when compared to other financial institution. It is due to rendering services to its members, even then it has to increase the interest percentage slightly to survive and grow and serve its members.

46

CONCLUSIONS

The conclusions based on the study done are:

The enrollment of member is very good. There are 6740 shareholders during the year 2010-11. The authorized share capital 34423 and paid share capital in the year 2005-2006 was Rs. 18210. The share has increased by 89% than the first year of study i.e., in the year 2005-06. It reveals that society is following members beneficial oriented policies and that is leading to more enrollments. The reserves at the beginning of review period i.e., 2005-06 to 2010-11 the reserves were of 142392 and it increased to 382921 in the last year of study i.e., 2010-11 reserve have increased by 168.92%. As the reserves are source of long-term finance. It can meet its long-term obligations. As cooperative societies, main motive is to service its members set not to earn profits. Any how MCRB & MS Ltd., serving its members and earning considerable amount of profits. Without hindering its main motive of service. The net profits have increased by 67% from the first year of study increasing at the considerable rate. The society have been very much successful in mobilizing the deposits; it has been following positive policies by giving its member various options of depositing, their saving as discussed in earlier chapter, the present deposits are 180892. Profitability of a concern depends on its income generation as advances are source of income as they earn interest, more advances means more interest and that would mean more income generation, societys has advances in the year 2010-11 is 382430. As the among deposited by members in society are increasing, it is advancing loans for development purpose and the amount of loans has increased 2 times from the first year of study.

47

 The EPS of society is satisfactory. The average EPS throughout the period of study is 2.12 as the profits are less to main objective of society. To serve its members in comparison of above said EPS is very good and increasing slowly. The current ratio and quick ratio of the Bank is above the ideal ratios i.e., 2:1 and 1:1 indicating the bank maintain sufficient current assets to meet its current liabilities at a particular point of time and liquidity position is satisfactory. The return on total assets ratio was observed at very poor. The current assets are more than the shareholders funds. It indicates that the current assets at the bank are financed from the outsiders funds. The Bank has utilized the total assets effectively

LIMITATIONS OF THE STUDY

The study is mainly based on the secondary and primary data was used. While computing ratios, averages and percentages the figures are appropriated two decimal places, therefore sometimes the total may not exactly tally. The study is restricted to financial position of the bank. The study is mainly based restricted to only five years. The study is restricted to financial position of the book.

48

BIBLIOGRAPHY
Financial Management Financial Management Advance accounting Advance accounting R.P. Rustage R.K. Sharma Shashi. K. Gupta

S.N. Maheshwari V.K. Bhalla

Annual reports of MCRB & MS Ltd., for the period of 2004-05 to 2010-11 Co-operative banks in India R.B.I. Bulletin. Website: www.mcrbms.org Email: mcrbms@sancharnet.in

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