Summer Training Project
Report
Role Of Working Capital
In MSME At HDFC BANK (EEG Chandigarh)
SUPERVISED BY : PRESENTED BY :
Dr. Anubha Vashisht Vishal Rathour
Introduction
The project was carried out for understanding how the bank provides
working capital finances to micro, small and medium sector
enterprises and its market potential. HDFC Bank was established in the
year of 1994, they are old player in banking sector.
The bank has two principle client segments- customer and asset
management. The bank follows values such as- Integrity, teamwork,
respect, professionalism, & Mission. The segment of bank we are
considering here is- Corporate banking and role of Working Capital in
MSME sector.
This research helps us in finding out the customers view regarding the
term limit, & cash credit limit offered by the HDFC Bank and also
identifying the potential of the product i.e. working capital offered by
the HDFC bank to the MSME sector.
HDFC Bank’s mission is to be a World-Class Indian Bank. The objective is
to build sound customer franchises across distinct businesses to be the
preferred provider of banking services for target retail and wholesale
customer segments and achieve healthy growth in profitability, consistent
with the bank’s risk appetite.
HDFC Bank’s business philosophy is based on four core values:
operational excellence, customer focus, product leadership, and people.
The products are backed by world-class service and delivered to
customers through the growing branch network. The bank is well-
positioned as a leader in various B2C opportunities, including a wide
range of internet banking services for fixed deposits, loans, and bill
payments.
Emerging Enterprise Group(EEG)
EEG Chandigarh is located at Plot No 28. Industrial Area Phase 1.
Chandigarh – 160002.
It handles Working Capital Facilities like Cash Credit, Overdrafts for
MSME sectors. It has various financing options like Cash
Credit/Overdraft, Letter of Credit, Bank Guarantee, Buyers Credit,
Short-term Finance/Working Capital Requirements, Structured Cash
flow financing and Bill discounting.
It helps in funding business inventory and receivables with cash credit
and overdraft. It helps to meet short-term business obligations with
letter of credit. Customers are also offered bill discounting to meet
short-term obligations.
HDFC BANK And MSME Sector
Funding
HDFC Bank is the second-largest lender to the MSME segment in India
and has been supporting this vital part of the economy during the
pandemic. The bank's loans have grown by 30 percent from
December 2019 to 2020 and stand at Pre-Covid levels.
HDFC Bank ranks amongst top banks in terms of extension of credit
under the ECLGS scheme, which stood at around Rs. 23,000 crore as
of December 31, 2020. The government had launched the Rs 3 - lakh
crore ECLGS Scheme to help MSMEs during the pandemic. At 30% loan
growth, the MSME book is the fastest-growing vertical for HDFC. Its
MSME portfolio that is spread across sectors like textiles, fabrication,
agro-processing, chemicals, consumer goods, hotels and restaurants,
auto components and pharma. It also includes the entire selling
chain ranging from wholesalers, retailers, distributors, stockists, and
supermarkets.
Need To Analyse Working
Capital
Every business needs funds for two purposes - for its
establishment and to carry out its day-to-day activities.
Long-term funds are required to create production
facilities by purchasing fixed assets such as plant and
machinery, land and building, furniture.
Working capital is the lifeblood and nerve centre of
business. It is essential to maintain the smooth running of
a business.
Working Capital
Working capital is the difference between current assets and current
liabilities of the firm/company/organization. In other words working capital is
the net cash inflow , generated from the excess of current assets over current
liabilities.
Working capital is a vital for any firm or organization as it is required for the
day to day activities of the business. Without working capital no business can
proceed with their activities.
TYPES OF WORKING CAPITAL
Components Of Working Capital
Working capital is a category of resources that includes cash,
inventory, and receivables, minus whatever a company owes in the
short term. It comes straight from the balance sheet of the company.
Working capital have two components:
1) CURRENT ASSETS: Cash and those assets which can be easily
converted into cash (within one year) are under this category. Current
assets are significant for a business as they are utilized for the conduct
of day-to-day business.
2) CURRENT LIABILITIES: Current liabilities are short-term liabilities,
which need to be liquidated and converted into cash generally within one
year
Objectives Of The Study
The main objective of this project was to study the role of working
capital in MSME Sector, cash credit of financing the project of a
businessmen but there are some more and they are as follows :-
1. To render a better understanding of the concept “Working Capital
finance of HDFC Bank”.
2. To understand the planning and management of working capital in
MSME Sector.
3. To measure the financial soundness of some companies by analysing
various ratios.
Research Design
DATA SOURCE
Primary Data:
The primary data was collected by means of a survey. Questionnaires were
prepared and employees of each company under study were approached to fill up
the questionnaires. The questionnaire contains 15 questions which reflects the
working capital requirements and business advices in pandemic situation.
Secondary Data:
In order to have a proper understanding of the working capital requirements
study was done from the various sources such as books, a lot of data is also
collected from the official websites of the banks and financial statements ,
balance sheets, RBI circulars and internal database.
Research Methodology
The research carried out for this study is purely descriptive and
analytical in nature.
The documents and information provided by the client and official
file data would require for the proper understanding of need for
working capital management and requirement.
This study includes the important points noted down from the various
client meetings during the project.
Analysis And Limitations
Analysis:-
➢Understanding the MSME Sector and its requirements
➢ Finding out the key financial ratios by analysis of audited financials
➢ challenges in Covid-19 era
➢ Assessment of working capital through MPBF or turnover method
➢ Market assessment
Limitations:-
➢ The study was limited to MSME sector
➢ The study was limited to working capital credit
➢ The study was limited to HDFC bank only
➢ The study was limited to Chandigarh
➢ Data is considered to be confidential for the bank so it was not included in the same
manner
➢ There was time constrain
MSME Companies Under Study :
We spoke to 4-5 employees in each company to reach at more accurate
understanding of the expectations and requirements of working capital in the
current scenario.
LEENATE PHARMA PVT LTD:
This business runs under the brand name Leenate Pharma which is owned by
Gurjot Singh located at SCF 446 First Floor Motor Market, Chandigarh.
DOLVIS BIOPHARMA PVT LTD:
This business runs under the brand name Dolvis Biopharma Pvt Ltd. , which is
owned by Mr Sanjay Garg and located at SCF -259, 2nd Floor, Motor Market,
Manimajra, Chandigarh, 160101, India.
AINGO PHARMA PRIVATE LIMITED:
This business runs under the brand name AINGO PHARMA which is owned by Mr
Sanjay Garg and Ram Gopal located at SCF 32, Ground Floor, M. Market,
Manimajra, Chandigarh, India.
JYDEM BIO PHARMA PRIVATE LIMITED:
This business runs under the brand name Jydem Bio Pharma which is owned by
Mr Sanjay Kumar Garg and Vishav Bhushan Verma and located at SCF 41, FIRST
FLOOR MOTOR MARKET, MANIMAJRA CHANDIGARH Chandigarh CH 160101 IN.
ERIKA REMEDIES PRIVATE LIMITED:
This business runs under the brand name Erika Remedies which is owned by Mr.
Sanjay Garg and Mr. Suresh Mittal located at SCF No. 44, Second Floor Motor
Market Manimajra Chandigarh CH 160101 India.
ANY QUERIES?
THANK YOU
