CHAPTER basic objective of this project

CHAPTER 1INTRODUCTIONAs per the VTU ordinance students has to submit the project report during the fourth semester of the MBA program, here based on the specialization, students’ needs to be ascertain the definite problem in an individual organization and conduct the research on that by scrutinizing the financial data as well as arranging the questionnaire. The basic objective of this project work is in order to evaluate the issues and find the solution for the same. It also assistance to the students to understand by functioning in the organization. It disclosures the core as well as outward operation of a particular organization, so that students can learn the basic business practices as well as it support them to implements theoretical knowledge in practical way. In addition student will exposes them to the specific organization culture and assist them to learn organization disciplinary procedure. This project report is focuses on cash management system in NBFCs.This project report was undertaken at Mahindra Finance Mangalore from 15 January 2018 to 24th March 2018.

Report brief about the cash management system in Mahindra Finance by verifying the various years financial reports of the company. The information collected to this work is from direct interview, as well as ancillary statistics are collected by denoting annual report and company websites. Cash management system has evaluated by applying the different ratios as well as by estimating the cash flow statements of the company.1.1 Industry profileNon-Banking Financial Corporation or Asset Management Companies is one of the dominating and growing industry not only India but also worldwide. NBFCs are quietly different in process as compared with the traditional core banking transaction, where it satisfies the various needs of customer where a bank fails to do. Generally NBFCs do the banking transaction but it doesn’t comes under the finance parameter act more over it comes under the company’s act 1956.

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It not only plays major role in common people life but also contributes the economic development of the country. In India NBFCs working according to the RBI regulations, for the purpose of operation RBI notified the various norms in order to healthy practices and smooth function.1.1.1 Antiquity of NBFCs in IndiaNBFCs in India formulated based on the recommendation various committee, following are the two committees which plays major role in Indian NBFCs framework.James S. Raj CommitteeThis commission determined on the accomplishments which related to the chit endowment and additional non-banking activities.

Chakravarty CommitteeChakravarty Committee studied the financial and non-financial system which effects credit system of Indian economy. 1.1.

2 Forms of NBFC in India Asset Finance CompanyAsset Finance Companies provides the financial assistances to purchase tangible asset like equipment’s, machinery and vehicles etc.Investment CompanyInvestment Company is another part of NBFCs business where it deals with securities on behalf of its customers.Loan FirmLoan Corporation is one form of NBFCs, it carries business like advances and providing the financial assistances to the various activities but it differs from the asset investment company.Infrastructure Finance CompanyInfrastructure finance company mainly emphases on the invest in the infrastructure and its related activities.Infrastructure Obligation Reserve: Non-Banking Financial CorporationThese establishments run the monetary provision to the long term infrastructure developments.

Only infrastructure Finance Companies can involve debt funding.NBFC-FactorsNBFCs also do the activities like factoring where it provides the debt on the center of certain documentation. Golden Advance NBFCs in India Now a days golden credit is one portion of NBFCs where it does lots of transaction in gold like granting the advances for poor people by taking into the gold.Residuary Non-Banking CompaniesThese are the companies which are mainly concentrates on the getting deposits under the several schemes. These companies follow the RBI directives about the investments activities.

1.1.3 Market sizeThere is a huge potential to the NBFCs in India, the market size of the NBFCs or mutual fund business increasing continuously also foreign investment happening in a huge way.

Nearly 30 to 40 percent increase in the industry every year. In India NBFCs threatening to the public sector bank by in taking their market share, NBFCs providing additional loan and advance to the general public as compared to the public bank. The supreme market portion is nearly 49% it’s because of today NBFCs more focusing on the customer oriented financial products and quick delivery of services. After LPG (liberalization, privatization and Globalization) the NBFCs in India a drastic development had been happened, the regime and norms which has been implemented by the government before introducing LPG was substantial so that there was lot of restriction within an industry for advancement.1.1.

4 Problem faced by NBFC in India The main problem is regulatory norms which are issued by the RBI, where NBFC cannot act as bank and restricted to do several banking activities. The competition which is faced by the NBFCs recent is epic because of all private and public sector banks providing similar service which NBFCs provides. Due to the increase in the lending NBFCs facing NPA (Non-Performing Assets) Problems. Cost of the fund increases now days is another problem faced by the NBFC.1.2 Company Profile1.2.1 Promoters of Mahindra FinanceAlmost 51.

9% stake of Mahindra finance hold by the its promoter in that 51.2% portion goes to the its parent company Mahindra and Mahindra Ltd and remaining 0.7% hold by ESOP.

1.2.2 VisionTo be a leading financial services provider in semi-urban and rural India.1.2.3 MissionTo transform rural lives and drive positive change in the communities.1.2.

4 Product and Service profilea) Personal loansMahindra finance provides personal loans fir various purpose some of are: Wedding Children’s education Medical Treatment Working capitalb) Vehicle Financing Following are the list of the names for which Mahindra finance provides financial aids. Auto and Utility Vehicles Tractors Cars Commercial Vehicles Construction Equipmentc) Pr¬e-Owned vehicle Financing Cars Multi Utility Vehicles Tractors Commercial vehicled) Insurance broking Retail customers Corporatese) SME Financing Project Finance Equipment Finance and Working Capital Financef) Housing Finance New House House Renovation and improvementsg) Investments and Advisory Investment Products Fixed Deposits Advisory Services Investment Planningh) Mutual Fund Schemes Liquid Scheme Equity Linked Saving Scheme Equity Oriented Balanced Scheme Short Term Debt Scheme1.2.5 Area of operation Mahindra finance operates in 27 states and 4 union territories with 1181 offices.1.2.

6 Infrastructure Facilities Company has the entire basic infrastructure which required performing the day to day operation (like Computers, CC TV etc.) All the office of Mahindra finance linked to the integrated system of data operation in Mumbai. All the system of every branch is associated by the GPRS system of central based transaction. On time collection of customer feedback through SMS. Online gathering of Management Information System.1.

2.7 Competitors of Mahindra FinanceCompetitors of Mahindra finance are as follows…1. Reliance Capital Limited Reliance Capital Ltd is one of the companies related to the Reliance Group of companies.

It is started its financial service business in the year of 1986. Company spreads its wings to the several financial product i.e broking and distribution, asset management, commercial finance etc.2. L&T FinanceL&T provides all the financial services which normally NBFCs provides. Some of the financial services which provided by the L&T Finance are commercial vehicle loan, personal vehicle loan and corporate loans etc.

it’s also received company of the year award in 2010 which had been given by the Economic Times.3. Sundaram FinanceSundaram Finance also one of the leading companies in NBFC business in India.

The majority of the stake owned by the parent company TVS. Sundaram finance mainly concentrating on the funding commercial and business vehicles. Also company expert on general insurance, mutual fund activity as well as broking house.4. Bajaj Finance LimitedBajaj Finance Limited is famous with the name of Bajaj financial services it offers the various financial products and services to its customer some of the financial products are wealth management service, advisory, insurance etc. it spreads its business wing all over India and opened many branches in rural and urban areas to provide effective financial services.5. Muthoot Finance Ltd A Kerala based financial company now started its business all over India and focusing on spread its business division to abroad.

Currently company dealing in foreign exchange, gold loan, transfer of money, also in wealth management. Company has business head quarter in Kerala and opened several branches all over India.6. HDB Finance ServicesCompany provides so many kinds financial services to its customers. It has over 1000 branches all over India and other union territories. Company currently active in personal and business loans as well as provides vehicle loan and gold loan. Now firm concentrated to offer finances to consumer durable goods, old and new vehicles.

7. Cholamandalam Investment and Finance Company LtdCompany provide the loan facility to SME and other financial support like home loan, vehicle loan, loan on home equity, broking services, advisory services etc. company has more than 700 branches all over India and concentrating on huge investment in rural area. Initially company started providing the financial assistance to equipment later it started to provide the other financial support to its customers.8. Tata Capital Financial Services LtdTata Capital considers as one of the top financial service provider in India started business in 2007. It provides services to retail and corporate as well as institutional clients. It also provides financial assistance to all kinds of customers and deals with common financial products.

9. Aditya Birla Finance LtdCompany offers customized financial products for its entire client so it is named as largest private company which concentrates customer needs. It systematic business strategy and well marketing structure made its function more smooth and active than its competitors.10. LIC Housing Finance Ltd LIC Housing Finance Ltd is government owned company main finance provider for housing and other housing related finance need. At the beginning LIC focuses on the general life insurance later it concentrates other financial services because of more competition from other company.

1.2.8 SWOT Analysis of Mahindra FinanceFollowing points shows the SWOT analysis of Mahindra financea) Strength Mahindra finance is part of Mahindra group due to that enjoys huge brand value. Large number of assets. Huge number of distribution channel and branches in PAN India.

Considered and awarded as best place to work. Company expanding its operations by issuing the shares to public. Good connection with farmers. Prominent company in NBFC operation all over India.

Ranked 2nd in customer loyalty.b) Weakness Lack of awareness in remote area about company and its operation Company not providing any advertisement for its product.c) Opportunities Company can concentrate more on remote area and provide the required services. Expand its operation not only in India but also worldwide. It can diversify it’s by offering the different financial services. Technology implementation may help company to reach the ultimate customer.d) Threats New entry of foreign non-banking financial institutions. Tough competition from large banks like State Bank of India, ICICI etc.

Threats from different kind financial product which offered by the competitors.1.2.9 Future growth and prospectsThe operational activities of Mahindra mainly linked with Mahindra and Mahindra because 51.9% stakes held by the Mahindra and Mahindra. There will be the chance of reduce in the stake of Mahindra and Mahindra stakes on Mahindra finance in future it reflects that without support of Mahindra and Mahindra, Mahindra finance will raise the equity capital.

As portion of its growth strategy Mahindra finance concentrating more on providing the financial aid to other vehicle manufacturer than Mahindra and Mahindra. Mahindra finance now a days more engaged in providing the financial support to the commercial and UV vehicles. 1.2.10 Financial StatementsConsolidated Statement of Profit and Loss Rs. in LakhsParticulars Year ended March 31Revenue from operationsOther incomeTotal Revenue (A)Employee benefits expenseFinance costsDepreciation and amortization expenseLoan provisions and write offsOther expensesTotal Expenses (B)Profit before exceptional items and taxes (C =A-B)Exceptional items income / (expense) (D)Profit before extraordinary items and tax (E= C-D)Extraordinary items (F)Profit before tax (G= E-F)Tax expense (H) Current tax Deferred taxProfit/(Loss) for the period from the continuing operations(I=G-H)Minority interest (J)Profit /(Loss) for the period (K=I-J) 2017 2016 714620.


81636289.6383775.45———-83775.45———-83775.4546353.48(15548.01) 655386.



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15 1806.3151163.67 1510.7977229.36Consolidated Balance Sheet Rs in lakhsParticulars Year ended March 31I. Equity & Liabilities1. Shareholders fund a) Share capital b) reserves and surplus Minority interest 2. Non-current liabilities a) Long term borrowing b) Other long term liabilities c) Long term provisions 3.

Current Liabilities a) Short term borrowing b) Trade payables 1)M&S Enterprises 2)Other than M&S Enterprises c) Other current liabilities d) Short term provisions Total II. Assets1. Non-current assetsa) Fixed assets1) Tangible assets 2) Intangible assets 3) Capital work in progress 4)Intra assets underdevelopmentb) Non-current investmentsc) Deferred tax assets (net)d) Long term loans and advancese) Other non-current assets 2017 2016 11300.83684714.72 11292.

03635647.75 696015.55 646939.78 9980.112498492.3141741.

1062168.69 6752.752034120.5943263.9949171.91 2603402.10 2126558.49 721762.

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635236.44 2997774.81 2437932.01 CHAPTER 2CONCEPTUAL BACKGROUND AND LITERATURE REVIEWAny business or financial activity start with cash, cash is one form of liquidity where people do lot of activity in regular basis. Without cash any business activity will immovable.

Business will start with cash and also end up with cash, so cash is bloodline for every business. Any manufacture or service oriented form should hold optimum cash balances; it will help them manage the day to day happenings in well manner so that they can avoid future liquidity risk.The another factor is company should not hold too much cash as well as it should not hold too low because if it managing with too high the possibility of cash remains idle and too low might cause shortage in investment; so balancing the cash is a tricky as well as confidential matter, thus the key task of financial manager is maintaining the optimum cash balance forever.Cash is the liquidity where we use it immediate payment and collection purposes.

The cash normally include notes, coin and even Cheques, other than this saleable securities and deposits which are maintaining in bank also considered as cash. The marketable securities and advances are measured as cash because it is easily converted to cash.2.1 Motives for holding cashThe company should maintain enough cash for following motives: Transaction motive Precautionary motive Speculative motiveTransaction MotiveThe word itself says that the cash maintaining or holding for the transaction purpose is generally known as transaction motive. There is usually time duration in collection and payment of cash in business course but firm should able to maintain the enough cash even though it unable to collect the fund in time. For the purpose only company sometimes relay on the marketable securities where it can easily meets its cash requirements. Precautionary MotivePrecautionary motive is tells about the company should manage the cash balances to meets it emergency requirement. Where firm should maintain the optimum cash balances to prevent the uncertainty of future.

Each and every business should keep precautionary cash balance in order to avoid the several internal and external uncertain factors. Most of the tire companies invest these precautionary cash in marketable securities where it can sale it immediately whenever it feels that to avoid the future vagueness.Speculative MotiveCash which held by the firm for long period in order make the profit in future is generally called as a speculative motive. This could be done because to increase the inventory or something else. But most of the firm is concentrate on the transaction motive and precautionary motive than speculative motive.

2.2 Cash PlanningCash is valuable things which take place in every business activity and it must need to succeed firm’s business strategies. Every firm plan or forecast its current and future cash flows so that it manages the cash requirement in well mode. Cash planning is technique that helps company to manage and use of cash in effective way. Cash planning helps to the company to forecast the cash prerequisite and effective utilization as well as collection of funds from various sources.Any business success and failure also depends on the effective utilization cash. If company has surplus cash it should invest in other field instead of keeping the same; also whenever company feels that shortage of cash it should able to accumulate from various field then only cash planning will work in good way.

Cash planning not only deals about the current cash operation but also tells about the future cash necessity. For this purpose company needs to identify what are its weekly and monthly cash flows so that it can avoid future cash scarcity.2.

3 Cash Forecasting and BudgetingCash forecasting is identifying the cash outflows and cash inflow in advance. Basically most of the company forecast the cash requirement in monthly or weekly basis, it is also depends on the size of the company like medium, small and large sized companies. Cash budgeting is making cash arrangement in advance.

Cash budgeting is purely depends on the cash requirement analysis for future it includes cash inflow and cash outflow forecasting. Cash requirement is Changes Company to company and industry to industry it also rely on the cyclical changes.Generally two types of cash forecast we could see i.e Long term cash forecasting Short term cash forecastingLong term cash forecastingLong term cash forecasting are not like short term cash forecasting because short term cash forecasting rely on less than one year’s cash forecast but long term cash forecast is back on the near five years cash planning.

When company deals with big proposals or projects, it go for identify the long term cash outflows and cash inflows because in order to meet working capital requirement. The main purposes of long term cash forecast are: To identify the working capital financial needs. To appraise the cash flow from particular projects and its contribution to company development.

Also to identify the cash requirement for particular proposal and its outcome in the form of cash.Short term cash forecastingMost of the short term cash forecasting is between one year and less than one year. It depends on the cash requirement to the operating activity its expectation.

The main purpose of short term cash forecasting is identify the divisional cash movement in the organization and cash requirement to the various branch.Various benefits of short term cash forecasting It is an idea to decrease the both short term and long term liability. It helps to arrange the payment of various projects and business proposals. To find the correctness of long term and short term cash flows.

It is administrative elements to the credit policies.2.4 CASH MANAGEMENTCash management is comprehensive term that refers to gathering, absorption, and distribution of cash. It is company’s strategy that company adopt effective utilization of its available liquidity and investment in short term financial instruments.

But recent year technology development made every financial institution work in easy way, the collection and disbursement of cash not big challenges to the company. All the banking transaction now takes place in effective mode with help of technology so that NBFCs or any bank can do its day to day work in most efficient method. The ultimate purpose of cash management is to avoid the cost and advance the revenue, increasing the profit of the company.2.4.1 CASH MANAGEMENT IN INDIAIn India recent year we could see that effective implementation technology in banking and other financial sectors which changes the whole banking collecting and payment system also reduces the time span of collection and payment. Reserve Bank of India (RBI) had executed several banking electronic system in that RTGS (Real Time Gross Settlement), NEFT (National Electronic Fund Transfer) and ECS (Electronic Clearing Service) are one of the most popular and currently using systems.

These are systems not only helps bank but also to the people to do banking transaction in daily basis. RBI had issued several regulations in order manage and control the foreign exchange as well as it has bird eye detail on cash inflow and outflow from different countries. This made Indian financial institution to manage and control the cash in effective way.Several other factors which implemented by RBI and Government are: Government has implemented an integrated funds administration service which helps to control the cash outflow and inflow. Intra bank and inter-bank messaging services made banks and customer work simple and reduces the time as well cost.2.4.2 FACTS OF CASH MANAGEMENTManaging the cash is not as simple as managing the other assets because of the variability in the cash position, generally balancing the cash inflows and cash outflows is one complex function where financial manger needs to care and take necessary steps for the same in timely manner.

Most of the time company faces the challenges regarding cash because of sometimes payment more than receipts or vice versa, so maintaining enough cash without wasting is difficult one. For managing the cash company should concentrate on the basic two point i.e Cash inflow and outflow of the firm. Cash flows inside the company and cash balances in a particular time span.

2.4.3 FACETS OF CASH MANAGEMENTCash management has several feature or facets which helps the company to formulate the strategies based on that features, following are the numerous features which included in the cash management.1. Optimum utilization of operating cashRapid changes in the business operation make the cash transaction very speed and promptness and utilizing the cash in such way that which create quick growth in operating activity and should get the profit from the same. For this purpose company should regulate the cash transaction by implementing the guidelines and bylaws in the company.2.

Cash forecastingAny business or company its difficult analyze the what is future cash inflows and outflows for this purpose company just roughly forecast what is the future incoming and outgoing so that it can avoid the future cash complexity with help of prior cash forecast. Absence of cash planning may results the irregular cash flows.3. Cash management techniquesCash management is one technique that supports to the company to accumulate the fund from various sources it may be from the collection and from other sources. But normally company concentrates on its collections and payments. Organization always more thinks on the collection rather than payments because of the several reasons that if company fails to the collection of the fund which had been given by the company it may suffer the huge loss. From above reason company focuses on the some of the techniques.4.

Liquidity analysisAttaining the liquidity always in the financial transaction is difficult job for this purpose normally company focus on liquidity level for this company go for the liquidity analysis it evaluate the position of liquidity in the financial position. If company neglects liquidity position it may undergo financial crises. 5. Profitable deployment of surplus fundsIf the company’s cash inflows more than outflows then company enjoys the surplus of funds and it aids the company to utilize the available fund in efficient way. However its most of the time depends on the company’s financial healthiness and performance also it is not quite sure that company always enjoys the surplus fund it may undergo for deficit of funds, so managing the cash flows is complex in financial environment.6.

Economical borrowingAnother facet of cash management economical borrowing, when company suffers from deficit finance it can approach several field to get low cost finance. Economical borrowing is also same that company avoid the high cost financing sources and always go for the low cost financing availability some times within a country or from abroad.2.4.4 MODELS OF CASH MANAGEMENT1. Baumol model of cash managementThe Baumol model explains the way of maintaining the optimum cash balances in certainty. The model tells about the cost reducing technique while holding the cash and other saleable securities.

The model which is developed by the W.J. Baumol is related to the inventory management complications, for this purpose the model concentrates on the some of the basic things that is holding cost, transaction cost and total cost.Assumption of the Baumol’s Model The company estimates its cash requirements with certainty. The company’s cash payment arises consistently over a period of time. The company’s opportunity cost of having cash is to be identified and it will not change over the period.

Whenever company converts its saleable securities in to cash the firm enjoys the equal transaction cost.Let discuss the above model with help one exampleThe company selling its saleable securities in the market and company has its cash balances it considered as C rupees. When company employs its cash the availability of cash will start to decreases. If company continues the same the cash will slowly decreases once more. The average cash availability then considered as C/ 2. It presented with help of following diagram. C C/2 Average Time O T1 T2 T3Holding costWhen the company holds and preserves the cash balances and cost incurs for the same, then it’s called holding cost. It is also considered as opportunity cost (K).

Holding cost = k(C/2)Transaction costNormally cost incurs for the transaction purpose then it is considered transaction cost. Company experiences this cost while transforming the saleable securities into cash. Number of transaction takes place in a specific year is noted with (T), and that will be divided by the availability of cash (C) that is T/C.Transaction cost = c (T/C)Total costIt is the total sum of annual cost which is needed for cash.Total cost = k(C/2) + c (T/C)Optimum level of cash balancesOptimum cash balances (C*) that is the when the company demands for the cash the holding cost start rising, though the cost incurs for the transaction purpose will get reduces why because rise in the C, and quantity of transaction takes place will reduce. So there is a connection between the holding cost and transaction cost.The following diagram demonstrates the same: Cost Total cost Holding cost Transaction cost Cash balances C*Limitation of the Baumol model:1) There is no fluctuating in cash flow.

2) Overdraft is avoided and uncertainty in upcoming cash flow.2. Miller-Orr Model for Cash Management Generally company maintains the cash in hand in order to avoid the future discomfort in cash position but Baumol model doesn’t concentrate the daily cash flow but the Miller-Orr model overwhelms from some of the drawbacks of the Baumol models and permits the day-to-day cash flow variations. The Miller-Orr calculated the spread among the upper and lower cash flow restrictions.Formula for calculate the Miller-Orr Model isZ = (3/4 x Transaction Cost x Cash Flow Variance/ Interest per day) 1/3 Cash balances Upper Limits Purchase of Securities Return point Sale of Securities Lower limits Time MO model considered as more accurate because which agrees variation in cash remaining. The upper limits and lower limits also to be evaluated within the cash availability. The historical facts and figures of cash are to be measured.2.

4.5 PURPOSE OF CASH MANAGEMENTCash management maintained by the company several reasons but the main purpose of the cash management is to identify the sources and disbursement of cash so that avoid the future scarcity of cash. Some of the purposes of cash management as follow… To identify the remaining cash availability and effective utilization of cash, evaluation of different sources of cash and investment opportunities. To analyze the shortage of cash and efficient arrangement for the same. To collect the credits timely so that avoids the liquidity risk. Proper disbursement of cash in various fields by adopting the different cash management techniques.

To comparing the cash position in different financial years and future cash forecasting as well as cash budgeting.2.5 Literature ReviewDamson Kinyavipi, Dc David Kirager (2017) Cash management is mainly focus on the ideal cash management in business, so that it avoids / reduces the opportunity charge which relate to the when company holds high and less cost. The objective of cash management in firm to identify cash variability and its influence on financial performance.

The study evaluated the relationship between the cash management and capital structure as well as to the liquidity situation in small and medium enterprises. Study conducted over three hundred SME and found that there is arbitrating correlation between the cash management and capital structure.Pert suler (2016) Cash management is signs of firm’s movement in cash position and plays imperative role in decision making.

The study evaluated the cash flow from different activity of several companies and originated that the network of liquidity position towards the financial activity of companies and recommended firms should maintain the adequate financial structure always to avoid the financial risk.Ibrahim Danjama (2015) defines a cash management important aspect that needs both small and medium organization. It will help clear excessive capital construction and well-organized use of money. Study done by collecting the secondary data of some financial institution and found the in order to rid from the insolvency company need to manage the enough liquidity position which could help any time and any situation as well as make the firm’s financial fit in any difficult condition.Tamar Gamsakhardia (2016) explains cash flow is signifies the financial adequate of company. Its obligation is organized and control cash level all time.

The management of working capital constraint always assess through the cash, it is key aspect to increase income and avoid the emergency monetary necessities. The study focuses on the cash management system in the banks and operating techniques in order to avoid the monetary hazard, found that now a days banking industry more rely technology to best use of its availability of liquidity.Dr Belal Yousef AL Smirat (2016) cash is more appreciated things in current assets most of the time, its encounters the business compulsions. The keeping sufficient regulator over cash situation to keep the firm with necessary liquid and use it gainful way. Investigation evaluated the impact of cash management to financial performance of SME in Jordan, more than 300 open ended and close ended questions had been asked to the financial manager regarding cash management.

Ali Abdi Sheikhdon (2016) defines cash management plays the energetic role in order to get the confident financial performance. To attain the corporation’s goal cash management is important, the objective of the cash management in banks is studies the account receivable and payables. The study conducted in three commercial banks by interviewing more than 80 employees to evaluate the influence of liquidity management to financial performance in banks and suggested that commercial banks needs to evaluate the account receivable as well as account payables.Mungal Avika (2014) Cash management is harmonized activity between cash inflow and cash outflow. The balancing the receipts and payments of cash be treated in well manner also it pronounced as a cash management. Study reveals that its greatest challenge to SME to sustain in the market if it fails to maintain the cash requirement, it’s not only about cash management within the organization but also the way of managing the collecting the financial support given to the others.Abioro Matthew (2013) defines cash management is achieving the profitability by using the ideal cash and making financial activity stronger so that it can avoid the future liquidity threat, it is challenging task to firm to maintain the cash position in a positive way that always strong enough therefore company should follow cash forecast and cash budgeting technique.Ogheneterijiri Aren Augustine, Sibindi (2014) describes cash flow management plays vibrant character in small and medium business enterprises because the success and failure of SME be governed by the proper cash flow management since cash is king of business activity.

Cash is the amount of money a corporation partakes on hand and the capitals on deposit in bank inspection accounts. Cash is the intermediate of interchange that allows administration to convey on the numerous purposes of the corporate association.Ebben J Jay and Johnson (2011) states cash management is accurate documentation of correlation between the cash and business movement, it may be inverse or direct firm’s need to be identified and take correct decision. The research found the results of cash management to manufacturing company in United States, for this nearly eight hundred US manufacturing company ware analyzed.

Kakeeto Francis, Micheal, Pastor, Osunsan (2017) Cash management is required tool of financial management because to identify the disparities between the payment and the obtainability of cash. Active cash management helps to the flat execution of the functional and investment aims. The research adopted probability and non-probability sampling as well as interviewed the 181 employees of cooperative enterprises and discovered that cash management system absolutely effected to the profitability of the company.O.

Agbeja, Afolabi C (2016) Cash flows management is a significant subject in the progress and persistence of business and the capacity to manage the trade-off among liquidity and effectiveness is a basis of concern for financial managers. Sample were collected for this research from different manufacturing companies and its deposit system in banks and used several statistical tool like ANOVA as well as Altman Z score and result revealed that to get great financial wellbeing cash management plays important role. Munchi N Fungai, Nzaro, Njanike, Nyarandsi (2011) the research evaluated the cash management system and its impact on the profitability of the company. Data were collected through questionnaire, interviewing as well as observation of forty respondents, the research found that there is an optimistic connection between the level of cash flow and the profitability of the business. The study concluded that, cash management is a value that practices part of the tactic of companies and be determined by more on managers themselves than the appearances of companies. Zimmerer et al (2008) cash management is the procedure of predicting, gathering, expending, capitalizing, and arrangement for cash a company wants to activate smoothly way.

They further added that cash management is a vigorous mission because it is the utmost important yet least dynamic asset that a small business owns. A commercial must have sufficient cash to encounter its commitments or it will be professed insolvent. Creditors, employees and lenders supposed to be paid on time and cash is the obligatory intermediate of exchange.Waltson and Head (2007) elucidated Cash management as the idea which is worried with optimizing the amount of cash presented, exploiting the attention received by additional funds not required immediately and dropping losses caused by suspensions in the spread of funds. In adding the Net cash flow is then planned as entire cash earnings subtract whole cash payments. The initial cash equilibrium is following auditioned to net cash flow in order to attain at the final cash balance.

Adventurously, if the final cash balance is optimistic, then additional cash may be capitalized in merchantable securities. If the final cash balance is undesirable, then supplementary funding may be essential.Mclaney (2000) cash is considerably more than just one component of working capital.

As the intermediate of conversation and accumulation of value, cash delivers the connection among all monetary phases of the firm. More precisely it associates short-and long-term financing judgments with one another, with assessments involving speculation mutually in immovable assets and working capital. It is accurately applied to accomplish and control the ideal level of cash mandatory for the corporate process and capitalized in saleable securities, which is appropriate for the environment of the business process series.Drury (1994) defined the purpose of the cash planning is to confirm that adequate cash is obtainable at all periods to encounter the stages of actions that are bounded in the numerous budgets.

He added proclaims that because cash budgeting is focus to vagueness, it is essential to deliver for more than the lowest aggregate of cash mandatory, to permit for some boundary of mistake in planning.Keynes (1973) explains the situations on the reason for allotment cash are purely transaction, precautionary and speculative reasons. Corporations maintain cash in order to channel the recess between the period of experiencing commercial charge and that of the receiving of the sale-proceeds. In other way, establishments maintain an assured amount of cash in order to encounter the consistent expenses of their movement. Hence, the developed firm’s aptitude to plan its cash flows, the weedier the transactions object for allotment cash would be one fact. The transaction intention demonstrates the cash allotment of organizations and thus more appropriate to SMEs.Weston and Copeland (2008) specified that businesses essential a cash backup in order to equilibrium its short term cash incomings and outgoing subsequently these are not exactly coordinated.

This they mentioned to as the transactions object for keeping the cash, where the estimated dimension of the cash can be projected by predicting cash inflows and outflows and by formulating cash plans. In adding to the cash backup held for daily working needs, cash may be made up to encounter substantial estimated cash outflows, for example rising from an investment venture or the redemption of debt.Dong and Tay Su (2010) also make an effort to scrutinize the affiliation prevailing among profitability, the cash conversion cycle and its mechanisms for registered firms in Vietnam stock market.

Via an expressive cross sectional project, their outcomes presented a robust undesirable connection among profitability, dignified over gross operating profit, and the cash exchange cycle and all of its mechanisms. This means that as the cash exchange cycle upswings, it will prime to lessening of productivity of a firm. Hence, the administrators can generate an optimistic worth for the shareholders by managing the satisfactory cash exchange cycle and maintaining both diverse element to a most favorable level. CHAPTER 3 RESEARCH DESIGN3.1. Problem StatementFinancial institution like bank and NBFC is always covenant with the cash and cash is bloodline system for NBFCs business.

Accumulating the fund and using it’s for the appropriate and valuable purpose is not only perplexing task but complex in nature. Managing the enough cash is multifaceted in NBFCs and in banking business. Capriciousness in cash position always makes financial operation more problematic and mysterious. If company flops to manage the enough cash balances it may undergo huge loss and possibility of termination of business activity.3.2 Need for the studyThe subject has been selected because cash management is very significant portion of any effective NBFC. Appropriate Cash Management will support NBFC to have liquid assets at any time required.

Liquid assets deliver low risk to the financial institution and client’s cash requirements can be encountered.3.3.The scope of the Study:The scope of the study is to recognize how a cash management mechanism operates in current NBFCs and any special procedures to manage the cash in NBFCs.

Study focuses on the cash management system and cash flows in Mahindra finance.3.4.

The objective of the Study: To understand how NBFCs maintains the optimum cash balances. To analyze the way of managing the liquidity risk. To identify the how disbursement cash will happen. To also understand any special cash management techniques being used.3.5. Research Methodology:In this project, I have used the expressive method of revealing the data which is related to the cash management of Mahindra Finance in different years. Furthermore, describing the each and every detail relating to cash management.

1. Primary data:Primary data are collected from the Mahindra finance Mangalore branch regarding the company business operation and management system as well as financial strategies used to the of managing the cash balances.2. Secondary dataSecondary data are collected from the company official websites and some of the information is gathered from the company’s annual report. The project topic related material is assembled by referring the internet and as well as text books.

3.6. Limitation of the cash managementThe limitations of “A Study on Cash Management Mahindra finance” are as follows The project is limited to the secondary research. The major limitation relating to the study is collecting primary information on cash management. The study limited to the two months of project period. Another limitation is collecting the primary and financial information of Mahindra finance Mangalore branch. 3.7.

HypothesisHypothesis formulated with help of co efficient correlation. Co efficient correlation will help to identify the relationship between the two variables and it also measurers the identical variation in the variables.H1: Null HypothesisH2: Alternative Hypothesis3.8 Chapter schemeChapter – 1 Introduction Industry profile Antiquity of NBFC in India Forms of NBFC in India Market size of NBFC Problems faced by NBFC in IndiaCompany profile Promoters of Mahindra Finance Vision Mission Product and service profile of Mahindra Finance Area of operation of Mahindra Finance Infrastructure of Mahindra Finance Competitors of Mahindra Finance SWOT analysis of Mahindra Finance Future growth and Prospects of Mahindra FinanceFinancial Statements of Mahindra FinanceChapter – 2 Conceptual Backgrounds and Literature Review Motives of holding cash Cash planning Cash management Cash management in India Facts of cash management Facets of cash management Models of cash management Purpose of cash management Literature reviewChapter – 3 Research Design Problem of the study Need of the study The scope of the study The objective of the study Research methodology Limitation of the study Hypothesis Chapter schemeChapter – 4 Analysis and Interpretation Ratio analysis Cash ratio Current ratio Net working capital ratio Quick ratio Cash turnover ratio Operating cash flow ratio Asset efficiency ratio Current liability coverage ratio Long term debt coverage ratio External finance index ratio Gross profit margin ratio Net profit ratio Return on asset ratio Return on equity ratio Debt to assets ratio Debt to equity ratio Receivable turnover ratio Asset turnover ratio Cash flow statementsChapter – 5 Suggestions, Recommendation and Conclusion CHAPTER 4ANALYSIS AND INTERPRETATIONRatio analysis There are many tools to measure the financial performance of the company which not only help the company but also help the investors to identify the organization position where it stands on and how company doing. Ratio analysis is one of the common methods of analyzing the financial statements of the company.

Ratio analysis shows the associations between the financial data and relative financial performance of the company. It represents the variability in the financial figure over the period of time.There are some of the standards in comparison while analyzing the financial statements Past ratio: past ratio calculated based on the company’s past financial figures.

Competitor’s ratio: Particular companies have to be selected and evaluate its financial performance and compare between each other. Industry ratio: Industry ratio expresses the development or slump in an industry. Projected ratio: It is to be finding out the projected results that company looking for.Importance of ratio analysis Investigates past financial performance Helps to formulate the budgets. Compare the company’s development and growth over the period of time. Articulate the organization efficiency; Comparison between the firms and its respective performance.Cons of ratio analysis The different ratio shows different results It analysis only past data of the company Economic condition of the country may affect the financial performance of the company. Same data interpreted in different way.

Only results no solution for the problem.4.1 Liquidity Ratios4.1.1 Cash RatioCash ratio is represents immediate payment stability of the company toward its current liability by using only cash and marketable securities.Cash ratio = Cash + Marketable securities / Current LiabilitiesTable no 4.

1.1 is showing cash ratio Amounts in lakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Cash + Marketable securities 36796.59 57043.28 49364.02 60593.65 60387.54Current Liabilities 809079.

88 986344.34 1512073.57 1720435.

35 2031259.39Cash ratio 0.045 0.057 0.

032 0.035 0.029Chart no 4.1.1 is showing cash ratio InterpretationNormally if the cash ratios 1 more than 1 are considered good for the company because it can meet its short term current liabilities quickly but in above data we could see that the calculated ratios are less than the 1 where it shows the company is struggling to meet its short term liabilities.

In the year of 2013-14 cash ratios 0.057 is comparatively higher than other years cash ratios. From 2014-15 onwards company’s cash ratio are decreasing it shows the company doesn’t have enough cash to meets its short term liabilities.4.1.2 Current RatioThe current ratios indicate the company’s ability to meet the debt commitments in a particular financial year.

Current Ratio, = Current assets, / Current Liabilities,Table no 4.1.2 showing the current ratios Amounts in lakh Year, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Current Assets, 1213608.10 1535809.63 1741213.77 2062752.

36 2342882.34Current Liabilities, 809079.88 986344.34 1512073.57 1720435.35 2031259.

39Current Ratio, 1.499 1.557 1.151 1.198 1.153Chart no 4.

1.2 showing the current ratios InterpretationIf the current ratio 2 or more is acceptable and it indicates that by using its current assets company can meet its current liabilities. But in the above chart ratios are less than 2 indicate that company doesn’t have enough current assets to pay its current liabilities. in the year of 2013-14 current ratio is 1.557 is relatively higher than the other years ratio it shows that company was quite capable to meet its current liabilities, but after that there is no such improvement in current ratios.

4.1.3 Net Working Capital RatioNet working capital ratios also represent the liquidity position of the company to fulfill its current obligations. Net Working Capital Ratio = Net working capital / Net assets Net working capital = Current assets – Current liabilities Table no 4.1.3 showing net working capital ratio Amounts in lakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Current assets-Current Liabilities 1213608.

10809079.88 1535809.63986344.34 1741213.771512073.57 2062752.361720435.35 2342882.342031259.39=Net working capital 404528.22 549465.29 229140.2 342317.01 311622.95Net current assets 2707079.11 3405749.46 3863314.02 4500684.37 5340657.15Net working capital ratio 0.14 0.16 0.63 0.070 0.058Chart no 4.1.3 showing net working capital ratio Interpretation High net working capital ratio is represents the enough assets and cash left after paying the current obligations. In 2014-15 there is high net working capital ratio so it interpret that in that year company has enough cash and assets left after repaying the all the liabilities. Later years there is decrease in the ratios shows lack of current assets availability. 4.1.4 Quick Ratio Quick ratio is to be calculated to evaluate the company’s liquidity position to its short term obligations by using cash marketable securities as well as receivables. Quick ratio = ((T)*Cash + ST marketable securities + A/C Receivable) / Current LiabilitiesTable no 4.1.4 shows quick ratio Amounts in lakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,(T)* 59955.71 93622.31 60267.97 117264.43 121923.32Current liabilities 809079.88 986344.34 1512073.57 1720435.35 2031259.39Ratio 0.07 0.09 0.03 0.06 0.06Chart no 4.1.4 shows quick ratio Amount in lakhs Interpretation It shows the liability coverage by the cash and other receivables. In the sense in the year 2012-13 the ratio 0.07 shows there was 7% coverage of liability from the cash and other receivable. There was lot of fluctuation in the quick over the period of time; in the year 2015-16 and 2016-17 there same ratio indicates that there was 6% coverage of liability from the cash and other immediate liquidity.4.1.5 Cash turnover ratioCash turnover ratio indicates the competence in use of cash in order to generate the revenue.Cash turnover ratio = Revenue / cash balancesTable no 4.1.5 shows the cash turnover ratio Amounts in lakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Revenue 411296.14 530055.28 606090.56 659744.99 720065.08Cash balances 36796.59 57,043.28 49,364.02 60,975.36 60,387.54Ratio 11.17 9.29 12.27 10.81 11.92Chart no 4.1.5 shows the cash turnover ratio InterpretationCash turnover ratio indicates that the effective use of cash to make revenue. In the year 2014-15 there was high cash turnover ratio specifies that company were capable to convert its cash to revenue and later year in 2015-16 slight decrease in the ratio later in 2016-17 again company moving in good way.4.2 Cash Flow Indicator RatioCash flow indicator ratio shows the cash created from different sources and what is the amount of cash generated from different sources.4.2.1 Operating cash flow ratio Operating cash flow ratio = Operating cash flow / RevenueTable no 4.2.1 showing operating cash flow ratio Amounts in LakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Operating Cash Flow 738769.65 644788.87 383064.74 495703.27 652795.02Revenue 411296.14 530055.28 606090.56 659744.99 720065.08OCF Ratio 1.796 1.216 0.632 0.751 0.90Chart no 4.2.1 showing operating cash flow ratio InterpretationFrom operating cash flow ratio, company can evaluate the liquidity position, if the company operating ratio shows more than 1 it reflects company has more cash to pay off the short term liabilities and vice versa. In the year 2012-12 to 2013-14 the ratio was more than 1 represents the company had enough cash to pay its short term liabilities but in 2014-15 there was decrease in OCFR shows less availability of cash as well as from 2015-17 there improvement in ratio reflect the company trying to improve its cash position in order pay its short term liabilities.4.2.2 Asset efficiency ratioAsset efficiency ratio shows the whether company effectively utilized its assets to create the cash flow.Asset efficiency ratio = Cash flow from operation / Total assetsTable no 4.2.2 shows the asset efficiency ratio Amounts in lakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Operating cash flow 738769.65 644788.87 383064.74 495703.27 652795.02Total assets 2707079.10 3405749.46 3863314.02 4500684.37 5340657.15Ratio 0.27 0.18 0.09 0.11 0.12Chart no 4.2.2 shows the asset efficiency ratio InterpretationRatio shows the active use of assets in order to generate the operating cash flow. The high ratio indicates the effective use assets, in the year of 2012-14 there high ratio as compared to other year so it indicate that company utilized assets in order to create operating cash flow. But later that there was decrease in the ratio indicates that company has not effectively used its assets in order to breed the cash flow.4.2.3 Current liability coverage ratioCurrent liability coverage ratio indicates company’s debt controlling techniques, and also shows company’s capacity to pay its current liabilities.Current liability coverage ratio = cash flow from operation / Current liabilityTable no 4.2.3 shows the current liability coverage ratio Amounts in lakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Operating cash flow 738769.65 644788.87 383064.74 495703.27 652795.02Current liability 809079.88 986344.34 1512073.57 1720435.35 2031259.39Ratio 0.91 0.65 0.25 0.28 0.32 Chart no 4.2.3 shows the current liability coverage ratio InterpretationThe ability of company to cover its current liability from operating cash flow is shown by the current liability coverage ratio. The higher ratio indicates better position of the company, in the year 2012-13 there was high current liability coverage ratio shows effective liability management but next continuous three year there is decrease in the ratio specifies lack of liability management practices. But in the year 2016-17 there was little improvement in the ratio designates company concentrating on the liability management process.4.2.4 Long term debt coverage ratioApart from the short term liability if company focuses in long term borrowing is it able to manage the long term payment by using only cash flow is to be identified. This ratio will help to identify the same.Long term coverage ratio = Cash flow from operation / Current liabilityTable no 4.2.4 shows long term debt coverage ratio Amounts in lakhYear, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17,Operating cash flow 738769.65 644788.87 383064.74 495703.27 652795.02Long term debt 1381540.40 1825376.57 1686524.66 2034120.59 2498492.31Ratio 0.54 0.35 0.22 0.24 0.26Chart no 4.2.4 shows long term debt coverage ratio InterpretationThe higher ratio represents the company needs need more cash from operation to pay its liabilities it we could see in the year of 2012-13. But later year that is 2013 to 2016 the ratio has been decreased it specifies company need raise more capital from outside in order to pay off the current obligation. Also in the year 2016-17 there slight upgrading in the ratio specifies the company refining in the long term debt coverage ratio.4.2.5 External finance index ratioThis ratio represents the company’s relationship with cash generation and its financing activitiesCash generating ratio = cash flow from financing activity / cash flow from operationTable no 4.2.5 shows external finance index ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Cash flow from financing activity 764215.42 698327.45 390707.00 543053.07 683048.66Operating cash flow 738769.65 644788.87 383064.74 495703.27 652795.02Ratio 1.03 1.08 1..01 1.09 1.04Chart no 4.2.5 shows external finance index ratio Interpretation The high ratio specifies the company highly dependent on the external money in order to cover up the business activity. In the year 2013-14 and 2015-16 there was high ratio indicates the company more dependent on external fund and in the year 2012-13, 2014-15 as well as 2016-17 there was decrease ratio shows company less reliant on external finance.4.3 Profitability RatiosProfitability ratios indicate company’s profitability position in various years. It shows the firms strength and capabilities to pay its liability and sustainability position.4.3.1 Gross profit margin ratio Gross profit margin ratio = Gross income / Net revenueTable no 4.3.1 shows gross profit margin ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Gross income 135265.81 146152.75 139986.86 122411.98 83775.45Net revenue 411296.14 530055.28 606090.56 659744.99 720065.08Ratio 0.32 0.27 0.23 0.18 0.11Chart no 4.3.1 shows gross profit margin ratio InterpretationThe high gross profit margin ratio specifies the company is in the good position in generating the profit. In the year 2012-13 there was high gross profit margin ratio shows the company was in good position in profitability but later year there was decrease in the gross profit margin ratio specifies the company needs improve it gross profit position. 4.3.2 Net profit ratioNet profit ratio measures the profitability position of the company, it shows the how company able to manage the profit year by year.Net profit ratio = Net profit / Net revenueTable no 4.3.2 shows the net profit ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Net profit 92,703.54 95,442.14 91,290.54 77229.36 51163.67Net revenue 411296.14 530055.28 606090.56 659744.99 720065.08Ratio 0.22 0.18 0.15 0.11 0.07Chart no 4.3.2 shows the net profit ratio InterpretationNet profit ratio drastically decreased over the period of time, the high net profit ratio good sign for the company but there was decrease in the ratio specifies the company needs improve the profitability position. In the year 2012-13 there was high net profit ratio as compared to other ratio shows company was in the good situation in profitability.4.3.3 Return on asset ratio Return on assets ratio measures the company ability to effective use of assets in order to generate the income.Return on assets ratio = Net income / Total assets Table no 4.3.3 shows return on assets ratio Amounts in LakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Net income 411296.14 530055.28 606090.56 659744.99 720065.08Total assets 2707079.10 3405749.46 3863314.02 4500684.37 5340657.15Ratio 0.151 0.155 0.156 0.146 0.134Chart no 4.3.3 shows return on assets ratio Interpretation Return on asset ratio represents the effective utilization of assets in order breed the income over the period of time. In the year 2012-13 and 2014-15 high ratio that is 0.156 indicates the company has effectively utilized its assets to increase the assets. But there was decrease in the ratio in the year 2016-17 reflects the inefficiency usage of the assets to contribute to the net income and company has to concentrate to effective utilization of assets.4.3.4 Return on equity ratioThis ratio measures the return for the company shareholder in return of their investment to the company.Return on equity ratio = net income / total shareholders’ equityTable no 4.3.4 return on equity ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Net income 411296.14 530055.28 606090.56 659744.99 720065.08Total shareholders’ equity 457955.55 529369.52 594271.69 646939.78 696015.55Ratio 0.89 1.00 1.01 1.01 1.03Chart no 4.3.4 return on equity ratio Interpretation Return on equity ratio measures the return ability of shareholder investment. In the year 2013 to 2017 there was improvement in the return on equity ratio shows shareholder getting huge return to their investment it is a positive sign for the company. But in the year 2012-13 there wasn’t enough return to the shareholder for their respective investment but after that there was improvement in the return on equity ratio reflects optimistic nature towards the shareholder.4.4 Solvency RatiosSolvency ratio indicates the company abilities to long term requirements and shows the capital structure.4.4.1 Debt to assets ratioDebt to assets ratio = total liabilities / total assetsTable no 4.4.1 shows the debt to assets ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Total Liabilities 2246756.39 2872732.11 3264112.73 3846993.84 4634661.49Total assets 2707079.11 3405749.46 5340657.15 4500684.37 3863314.02Ratio 0.82 0.84 0.61 0.85 1.19Chart no 4.4.1 shows the debt to assets ratio Interpretation The debt to assets ratio indicates the contribution of assets to acquire the assets. The high ratio specifies the company highly depends on the debt in order acquire the assets but it is risk to company because firm has to pay more interest when it depend on debt. In the year 2016-17 there was high debt asset ratio specifies company has more dependent on debt as compared to other year.4.4.2 Debt to equity ratioDebt to equity ratio shows the firm uses the its debt in order to capitalize its business. When companies rely on the debt to contribute capital it has to ready to pay the more and more interest to external finance provider. Debt to equity ratio = Total debt / total shareholders’ equityTable no 4.4.2 shows the debt to equity ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Total liabilities 2246756.39 2872732.11 3264112.73 3846993.84 4634661.49Total shareholders’ equity 457955.55 529369.52 594271.69 646939.78 696015.55Ratio 4.9 5.42 5.49 5.94 6.65Chart no 4.4.2 shows the debt to equity ratio InterpretationThe ratio indicates the company dependability on debt in order to fund the capital. The high ratio reflects firm more reliant on debt to finance to its capital but it is risky and increased the interest payments. Each and every year the company’s debt equity ratio increases continuously it shows the company dealing with risk and should manage the interest payment systems, 4.5 Activity RatioActivity ratio measures the how company effectively utilized the available assets in order to generate the income.4.5.1 Receivable turnover ratioIt shows the relationship between the account receivable and total revenue of the company.Receivable turnover ratio = Net revenue / Account receivableTable no 4.5.1 shows the receivable turnover ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Net revenue 411296.14 530055.28 606090.56 659744.99 720065.08Account receivable 1573.78 2289.90 1454.15 2000.45 2295.93Ratio 261.34 231.47 416.80 329.79 313.62Chart no 4.5.1 shows the receivable turnover ratio InterpretationThe high ratio shows the company is very rapidly collects the outstanding bills, in the year of 2014-15 the high ratio shows firm has effectively collected the receivable. But in the year 2015-17 there was decreases in the ratio represent the company does not able to collect the receivable which was outstanding,4.5.2 Asset turnover ratioAssets turnover ratio measures the company efficiency the way use of assets in order to generate the revenue.Asset turnover ratio = Net revenue / total assetsTable no 4.5.2 shows the assets turnover ratio Amounts in lakhYear 2012-13 2013-14 2014-15 2015-16 2016-17Net revenue 411296.14 530055.28 606090.56 659744.99 720065.08Total assets 2707079.11 3405749.46 5340657.15 4500684.37 3863314.02Ratio 0.15 0.15 0.11 0.14 0.18 Chart no 4.5.2 shows the assets turnover ratio InterpretationThe ratio shows the effective utilization of assets in order to generate the revenue. In the year 2012-13 the firm generates 0.15 revenue for every 1 assets it’s owned. The year the ratio 0.18 reflects the effective use of assets as compared to the other previous year. In the year 2012-13 to 2015-16 there was variability in the ratio shows the company not much sufficient and stability in asset utilization.4.6 Consolidated Cash Flow Statement AnalysisConsolidated Cash Flow Statement Amounts In lakh Particular Year ended marchA) Cash flow from operating activitiesProfit before taxes and contingencies and exceptional itemsAdd/(Less)Non-Cash ExpensesDepreciation and amortization expenseExchange FluctuationProvision for non-performing assets Bad Debts & Write offsGeneral provision for Standard assetsHigher provision & provision for diminution in the fair value of restructured advancesEmployee stock compensation costsAdd/(Less)Income considered separatelyIncome from investing activities(Profit)/Loss on sale of assets(Profit)/Loss on sale of InvestmentIncome from Assignment / Securitization transactionsOperating profit before working capital changes Less:(Increase)/Decrease in interest accrued on investment/others(Increase)/Decrease in Trade receivables(Increase)/Decrease in Loans & AdvancesAdd: Increase in Current liabilitiesCash generated from operationsAdvance taxes paidNet Cash Generated from / (used in) operating activities (A) 2017 2016 83775.455372.32(695.38) 49904.87 86325.81 2725.36(0.94) 879.82 144511.86 (6481.81) (9.76) (308.35)(11936.72)(18736.64)209550.67 5087.29 483.14 (897050.39)(891479.96) 82278.51 (809201.45)(599650.78) (53144.24) (652795.02)(652795.02) 122411.984569.781022.9556064.1651978.521775.750.641431.06116842.86(5218.58)(100.34)(20633.45) (25952.37) 213302.47901.85(86.84)(693673.76)(692858.75)49400.74(643458.01)(430155.54)(65547.73)(495703.27)(495703.27)B Cash flow from investing activitiesPurchase of Fixed Assets / SoftwareSale of fixed assetsPurchase of InvestmentsInvestments in / maturity of term deposits with banksSale of InvestmentsIncome received from investing activities(Increase) / Decrease in Earmarked balances with banksNet Cash Generated from / (Used In) Investing Activities (B)C Cash flow from financing activitiesIssue of Equity Shares (net of issue expenses)Increase/(Decrease) in Bank borrowings (net)Increase/(Decrease) in long term borrowings (net)Increase/(Decrease) in short term borrowings (net)Increase/(Decrease) in Fixed Deposits (net)Proceeds from Assignment / Securitization transactionsDividend paid (including tax on dividend)Net cash generated from / (used in) financing activities (C)Net increase / (decrease) in cash and cash equivalents (A+B+C)Cash and cash equivalents at the beginning of the yearCash and cash equivalents at the end of the yearCOMPONENTS OF CASH AND CASH EQUIVALENTSCash and cash equivalents at the end of the year Cash on handCheques and drafts on handBalances with bank`1s in current accounts (6283.46)118.61(533709.69)12452.00510175.367153.08(0.53)(10094.63)137.06(107685.09)663697.27148738.94(38680.21)45708.90(28868.21)683048.6620159.0123567.4343726.442426.021258.4940041.9343,726.44 (5538.04)236.85(234599.19)10913.77180074.804920.435.56(43985.82)796.64(122402.47)585673.701334.436777.9699463.75(28590.94)543053.073363.9820203.4523567.432390.69544.4920632.2523,567.434.7 Correlation:Correlation is well-defined as the “propensity of two or more collections or a sequence of objects to fluctuate together openly or in reverse. Correlation can be positive or negative. When the standards of two variables interchange in the same route correlation is said to be positive.Co-efficient of correlation:It is an arithmetical technique of computing the correlation. Under this method we measure the correlation by ruling a value known as the co-efficient of correlation. It shows the degree or extent of correlation between two variables.Karl Pearson’s Co-efficient of correlation:Several scientific methods of measuring correlation the Karl pearsons method, popularly known as Pearson’s co-efficient of correlation, is most widely used in practice. The pearsons co-efficient of correlation is denoted by the symbol “r”.Formula for calculating Karl Pearson’s Co-efficient of correlation:r=(n???xy-(???x*???y)???)/?((n??x^2 -(??x )^2)*(n???y^2-(???y^2))??)Where, r = Pearson r correlation coefficient N= number of observations ?xy = sum of the products of paired scores ?x = sum of x scores ?y = sum of y scores ?x2= sum of squared x scores ?y2= sum of squared y scores 4.7.1 Co efficient Correlation between the Cash and Net profitH1: There is no relation between the cash and net profit.H2: There is relation between the cash and net profit.Table No 4.7.1 Shows the Co efficient Correlation between Cash and Net ProfitYear Cash (X) Net profit(Y) XY X2 Y22012-13 36,796.59 92,703.54 3411174153 1353989036 85939463292013-14 57,043.28 95,442.14 5444332716 3253935793 91092020882014-15 49,364.02 91,290.54 4506468042 2436806471 83339626932015-16 60,593.65 77,229.36 4679608810 3671590420 59643740462016-17 60,387.54 51,163.67 3089648169 3646654987 2617721128Total 264,185.08 407,829.25 18041583721 14362976707 34619206284 r = -0.56394Since correlation value shows negative relation between the cash and net profit hence H1 (null) hypothesis are accepted and H2 (alternative) hypothesis rejected.4.7.2 Co efficient Correlation between the Cash and Total IncomeH1: There is no association between the cash and total income.H2: There is association between the cash and total income.Table No 4.7.2 Shows the Co efficient Correlation between Cash and Total IncomeYear Cash (X) Total income(Y) XY X2 Y22012-13 36,796.59 411,296.14 15134295432 1353989036 1.691652013-14 57,043.28 530,055.28 30236091753 3253935793 2.809592014-15 49,364.02 606,090.56 29919066526 2436806471 3.673462015-16 60,593.65 659,744.99 39976357013 3671590420 4.352632016-17 60,387.54 720,065.08 43482958821 3646654987 5.18494Total 264,185.08 2,927,252.05 1.58749 14362976707 1.77123r = 0.84685The value represents there is relation between cash and total income hence HI (null) hypothesis are rejected and H2 (alternative) hypothesis are accepted.4.7.3. Co efficient Correlation between the Cash and Total Expenses.H1: There is association between the cash and total expenses.H2: There is no association between the cash and total expensesTable No 4.7.3 Shows the Co efficient Correlation between Cash and Total ExpensesYear Cash(x) Total expenses(Y) XY X2 Y22012-13 36,796.59 2,79,082.60 10269288008 1353989036 778870976232013-14 57,043.28 3,83,902.53 21899059511 3253935793 1.47381E+112014-15 49,364.02 4,66,103.70 23008752369 2436806471 2.17253E+112015-16 60,593.65 537,333.01 32558968341 3671590420 2.88727E+112016-17 60,387.54 636,289.63 38423965483 3646654987 4.04864E+11Total 264,185.08 1,173,622.64 1.2616E+11 14362976707 1.13611E+12r = -1The value -1 show the that there is no relationship between the cash and total expenses hence H2(Alternative) hypothesis are accepted and H1 (Null) hypothesis rejected.4.7.4. Co efficient correlation between the Cash and Trade ReceivableH1: There is no connection between the cash and trade receivableH2: There is connection between the cash and trade receivable.Table No 4.7.4 Shows the Co efficient Correlation between Cash and Trade ReceivableYear cash (x) Trade receivable (y) XY X2 Y22012-13 36,796.59 2,295.93 84482394.88 1353989036 5271294.5652013-14 57,043.28 2,000.45 114112229.5 3253935793 4001800.2032014-15 49,364.02 1,454.15 71782689.68 2436806471 2114552.2232015-16 60,593.65 2,289.90 138753399.1 3671590420 5243642.012016-17 60,387.54 1,573.78 95036702.7 3646654987 2476783.488Total 264,185.08 9,614.21 504167415.9 14362976707 19108072.49r = -0.24Since correlation value shows negative relation between the cash and net profit hence H1 (null) hypothesis are accepted and H2 (alternative) hypothesis rejected. CHAPTER 5FINDINGS, SUGGESTIONS AND CONCLUSIONFindingsResults based on the ratio analysis are; Mahindra Finance’s liquidity ratio is not up to the mark, it shows it needs to improve its cash position in upcoming days in order to meet the short term and long term requirements. Cash flow indicator ratio shows Mahindra Finance’s cash flow not in healthy situation in the year of 2015 – 17 it may be impact of external forces. Although the Mahindra Finance’s profitability ratio decreased over the period of time continuously. Mahindra Finance’s solvency ratio reflects it more rely on debt financing in order to acquire assets it represents company paying more interest to the outsider year by year. Activity ratio displays, it is good position in effective utilization of available assets and generates the profit.Suggestions There is obligation of preserve the optimum cash level through out of the year. Solvency position is to be planned and footsteps to be occupied for enlightening it. Steps to be taken increase the profit because the profit of Mahindra Finance decreasing year by year. Mahindra Finance needs to focus on collection of out standings.ConclusionCash Management imperative part of the any organization as well as it plays vital role in financial institution like NBFC and Bank. Lack of control over cash system and inadequate cash management may generate huge problem and business may collapse, therefore active cash management is compulsion for businesses.