Final Report - Jayanthi

8/6/2019 Final Report - Jayanthi

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CHAPTER I

INTRODUCTION

1.1 INTRODUCTION:

In our present day economy, finance is defined as the provision of money at the time

when it is required. Every enterprise, whether big, medium of small, needs finance to

carry its operations and to achieve its targets. In fact, finance is so indispensable today

that it is rightly said to be the lifeblood of an enterprise. Without adequate finance, no

enterprise can possibly accomplish its objectives.

Financial management is applicable to every type of organization, irrespective of its size

kind of nature. It is as useful to a small concern as to a big unit. A trading concern gets

the same utility from its application as a manufacturing unit may expect. This subject is

important and useful for all types of ownership organizations. Where there is a use of

finance. Financial management is helpful. Every management aims to utilize its funds in

a best possible and profitable way. So this subject is acquiring a universal applicability.

Financial performance analysis is largely a study of relationship among the various

financial factors in a business as disclosed by a single set of statements and statements. It

is a process of evaluating the relationship between component parts of a financial

statement to obtain a better understanding of a firm's position and performance.

Financial performance analysis is an attempt to determine the significance and meaning

of the financial statement data so that forecast may be made of the future earnings, ability

to pay interest and debt maturities a (both current and long term) and profitability of a

sound policy.

A number of methods or devices are used for the analysis the balance sheet and income

statements of the Indian Overseas of for a period of 5 years (2006-2010). The analysis

was done by using various financial tools, statistical tools. The graphs were used

accordingly to support the analysis.


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1.2 INDUSTRY PROFILE

OVERVIEW:

India has a strong and vibrant banking sector comprising state-owned Banks, private

sector Banks, foreign Banks, financial institutions and regional Banks including

cooperative Banks, rural Banks and local area Banks. In addition there are non-banking

financial companies (NBFCs), housing finance companies, Nidhi companies and chit

fund companies which play the role of financial intermediaries.

Without a sound and effective banking system in India it cannot have a healthy economy.

The banking system of India should not only be hassle free but it should be able to meet

new challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements

to its credit. The most striking is its extensive reach. It is no longer confined to only

metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even

to the remote corners of the country. This is one of the main reasons of India's growth

process.

The government'sregular policy for Indian bank since 1969 has paid rich dividends with

the nationalization of 14 major private Banks of India.

The first bank in India, though conservative, was established in 1786. From 1786 till

today, the journey of Indian Banking System can be segregated into three distinct phases.

They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reform

New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991
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Phase I:

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan

and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of

Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency

Banks. These three Banks were amalgamated in 1920 and Imperial Bank of India was

established which started as private shareholders Banks, mostly Europeans shareholders.

During the first phase the growth was very slow and Banks also experienced periodic

failures between 1913 and 1948. There were approximately 1100 Banks, mostly small.

To streamline the functioning and activities of commercial Banks, the Government of

India came up with The Banking Companies Act, 1949 which was later changed to

Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).

Reserve Bank of India was vested with extensive powers for the supervision of banking

in India as the

Central Banking Authority:During those days public has lesser confidence in the

Banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank

facility provided by the Postal department was comparatively safer. Moreover, funds

were largely given to traders.

Phase II:

Government took major steps in this Indian Banking Sector Reform after independence.

In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a

large scale specially in rural and semi-urban areas. It formed State Bank of India to act as

the principal agent of RBI and to handle banking transactions of the Union and State

Governments all over the country.

It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major

commercial Banks in the country were nationalized.


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Phase III:

This phase has introduced many more products and facilities in the banking sector in its

reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was

set up by his name which worked for the liberalization of banking practices.

The country is flooded with foreign Banks and their ATM stations. Efforts are being put

to give a satisfactory service to customers. Phone banking and net banking is introduced.

The entire system became more convenient and swift. Time is given more importance

than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any

crisis triggered by any external macroeconomics shock as other East Asian Countries

suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high,

the capital account is not yet fully convertible, and Banks and their customers have

limited foreign exchange exposure.

Indian banking sector comprising state-owned Banks, private sector Banks, foreign

Banks, financial institutions and regional Banks including cooperative Banks, rural Banks

and local area Banks.

State-owned Banks:

The Indian banking sector is dominated by 28 state-owned Banks which operate through

a network of about 50,000 branches and 13,000 ATMs. The State Bank of India (SBI) in

the largest bank in the country and along with its seven associate Banks has an asset base

of about Rs. 7,000 billion (approximately US$150 billion). The other large public sector

Banks are Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India and IDBI

Bank.

The public sector Banks have overseas operations with Bank of Baroda topping the list

with 51 branches, subsidiaries, joint ventures and representative offices outside India,
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followed by SBI (45 overseas branches/offices) and Bank of India (26 overseas

branches/offices). Indian Banks, including private sector Banks, have 171

branches/offices abroad.

SBI is present in 29 countries followed by Bank of Baroda (20 countries) and Bank of

India (14 countries).

Private sector Banks India has 29 private sector Banks including nine new Banks which

were granted licences after the government liberalized the banking sector. Some of the

well known private sector Banks are ICICI Bank, HDFC Bank and IndusInd Bank. Yes

Bank is the latest entrant to the private sector banking industry.

In terms of reach the private sector Banks with an asset of over Rs 5,700 billion (about

US$124 billion) operate through a network of 6,500 branches and over 7,500 ATMs.

Foreign Banks As many as 29 foreign Banks originating from 19 countries are operating

in India through a network of 258 branches and about 900 ATMs. With total assets of

more than Rs 2,000 billion (about 44 billion US dollars) they are present in 40 centers

across 19 Indian states and Union Territories. Some of the leading international Banks

that are doing brisk business in India include Standard Chartered Bank, HSBC Bank,

Citibank N.A. and ABN-AMRO Bank. In addition, 31 foreign Banks (as on September

15, 2006) belonging to 14 countries were operating in India through their representative

offices.

Regional Banks:

Rural areas in India are served through a network of Regional Rural Banks (RRBs),

urban cooperative Banks, rural cooperative credit institutions and local area Banks. Many

of these Banks are not doing well financially and the government is currently engaged in

restructuring and consolidating them. Local area Banks were of recent origin and as on

March 31, 2006 four such Banks were operating in the country.


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Financial institutions India has seven major state-owned financial institutions which

include Industrial Development Bank of India (IDBI), Industrial and Financial

Corporation of India (IFCI), Tourism Finance Corporation of India (TFCI), Exim Bank,

Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and

Rural Development (NABARD) and National Housing Bank (NHB). These institutions

provide term loans and arrange refinance. There are also specialised institutions like the

Power Finance Corporation (PFC), Indian Railway Finance Corporation (IRFC),

Infrastructure Development Finance Company (IDFC) and state-level financial

corporations. Non-banking financial companies

Recent developments:

State Bank of India has acquired 76 per cent stake in Giro Commercial Bank, a Kenyan

bank for US$7 million.

Bank of Baroda is planning to acquire a bank in Africa to consolidate its presence in the

continent.

Canara Bank is helping Chinese Banks recover their huge non-performing assets (NPA).

ICICI bank is in the process of taking over Sangli Bank, a private sector bank based in

Maharashtra.

The RBI has recently allowed the Commonwealth Bank of Australia, Banche Popolari

unite S.c.r.l. (based in Italy), Vneshtorgbank (Russian trade bank), Promsvyazbank

(Russian commercial bank), Banca Popolare di Vicenza (Italian bank), Monte Dei Paschi

Di Siena (Italian bank) and Zurcher Kantonalbank (Swiss bank) to set up representative

offices in India.


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1.3 COMPANY PROFILE

Indian Overseas Bank

Established in 1937, Indian Overseas Bank (IOB) is a leading bank based in Chennai,

India. IOB had the distinction of simultaneously commencing operations in three

branches at Karaikudi, Chennai, and Yangon (Myanmar). Since IOB aimed to encourage

overseas banking and foreign exchange operations, it soon opened its branches in Penang

and Singapore. Today, Indian Overseas Bank boasts of a vast domain in banking sector

with over 1400 domestic branches and 6 branches overseas.

IOB was the first bank to venture into consumer credit, as it introduced the popular

Personal Loan scheme. In 1964, the Bank started computerization in the areas of inter-

branch reconciliation and provident fund accounts. Indian Overseas Bank was one of the

14 major Banks which were nationalized in 1969. After nationalization, the Bank

emphasized on opening its branches in rural parts of India. In 1979, IOB opened a

Foreign Currency Banking Unit in the free trade zone in Colombo.

In the year 2000, Indian Overseas Band undertook an initial public offering (IPO) that

brought the government's share in the bank's equity down to 75%. The equity shares of

IOB are listed in the Madras Stock Exchange (Regional), Bombay Stock Exchange, and

National Stock Exchange of India Ltd., Mumbai. Since its inception, IOB has absorbed

various Banks including the latest Bharat Overseas Bank in 2007.

The Bank's IT department has developed software, which is used by its 1200 branches to

provide online banking to customers. Indian Overseas Bank also has a network of about

500 ATMs throughout India. Its International VISA Debit Card is accepted at all ATMs

belonging to the Cash Tree and NFS networks. IOB also offers Internet Banking; it's one

of the Banks that the Govt. of India has approved for online payment of taxes.


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Indian Overseas Bank offers investment options like Mutual Funds and Shares. It

provides a wide range of consumer and commercial banking services, including Savings

Account, Current Account, Depositary Services, VISA Cards, Credit Cards, Debit Cards,

Online Banking, Any Branch Banking, Home Loans, NRI Account, Agricultural Loans,

Payment of Bills / Taxes, Provident Fund Scheme, Forex Collection Services, Retail

Loans,etc.

Indian Overseas Bank (IOB; established 1937) is a major bank based in Chennai

(Madras), with 2018 domestic branches and six branches overseas. Indian Overseas Bank

has an ISO certified in house Information Technology department, which has developed

the software that 2018 branches use to provide online banking to customers; the bank has

achieved 100% networking status as well as 100% CBS status of branches with a total

number of 2018 CBS branches and Extension Counters. IOB also has a network of about

771 ATMs all over India and IOB's International VISA Debit Card is accepted at all

ATMs belonging to the Cash Tree and NFS networks. IOB offers internet Banking (E-

See Banking) and is one of the Banks that the Govt. of India has approved for online

payment of taxes. The bank's business more than doubled in the last four years.

According to "A profile of Banks (2009-10)" published by RBI, the bank's deposits

increased from Rs.50529 crore as on 31.03.06 to Rs.110795 crore as on 31.03.10 and

advances from Rs.34756 crore to Rs.79004 crore.

1937: Shri.M.Ct.M. Chidambaram Chettyarestablishes the Indian Overseas Bank

(IOB) to encourage overseas banking and foreign exchange operations. IOB

started up simultaneously at three branches, one each in Karaikudi, Madras

(Chennai) and Rangoon (Yangon). It then quickly opened a branch in Penang and

another in Singapore. The bank served the Nattukottai Chettiars, who were a

mercantile class that at the time had spread from Chettinad in TamilNadu state to

Ceylon (Sri Lanka), Burma (Myanmar), Malaya, Singapore, Java, Sumatra, and

Saigon. As a result, from the beginning IOB specialized in foreign exchange and

overseas banking (see below).
http://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Madrashttp://en.wikipedia.org/wiki/Chettyarhttp://en.wikipedia.org/wiki/Karaikudihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Yangonhttp://en.wikipedia.org/wiki/Penanghttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Nagaratharhttp://en.wikipedia.org/wiki/Chettinadhttp://en.wikipedia.org/wiki/Tamil_Naduhttp://en.wikipedia.org/wiki/Ceylonhttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/Burmahttp://en.wikipedia.org/wiki/Myanmarhttp://en.wikipedia.org/wiki/British_Malayahttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Java_(island)http://en.wikipedia.org/wiki/Sumatrahttp://en.wikipedia.org/wiki/Saigonhttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Madrashttp://en.wikipedia.org/wiki/Chettyarhttp://en.wikipedia.org/wiki/Karaikudihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Yangonhttp://en.wikipedia.org/wiki/Penanghttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Nagaratharhttp://en.wikipedia.org/wiki/Chettinadhttp://en.wikipedia.org/wiki/Tamil_Naduhttp://en.wikipedia.org/wiki/Ceylonhttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/Burmahttp://en.wikipedia.org/wiki/Myanmarhttp://en.wikipedia.org/wiki/British_Malayahttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Java_(island)http://en.wikipedia.org/wiki/Sumatrahttp://en.wikipedia.org/wiki/Saigon


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1960s: The banking sector in India was consolidating by the merger of weak

private sector Banks with the stronger ones; IOB absorbed five Banks, including

Kulitali Bank (est. 1933).

1969: The Government of India nationalized IOB. At one point, probably before

nationalization, IOB had twenty of its eighty branches located overseas. After

nationalization it, like all the nationalized Banks, turned inward, emphasizing the

opening of branches in rural India.

1988-89: IOB acquired Bank of TamilNadu in a rescue.

2000: IOB engaged in an initial public offering (IPO) that brought the

government's share in the bank's equity down to 75%.

2009: IOB took over Shree Suvarna Sahakari Bank, which was founded in 1969

and had its head office in Pune. In 2001 it acquired the Mumbai-based Adarsha

Janata Sahakari Bank, which gave it a branch in Mumbai. Shree Suvarna Sahakari

Bank has been in administration since 2006. It has nine branches in Pune, two in

Mumbai and one in Shirpur. The total employee strength is estimated to be little

over 100.

Indian Overseas Bank (IOB) is a one of the major bank based in Chennai, with over

1,400 domestic branches and 6 branches abroad.

India Overseas Bank was established in 1937 to encourage overseas banking and foreign

exchange operations. The Indian Overseas Bank started simultaneously with three

branches. They are:

Indian Overseas Bank Chennai

Indian Overseas Bank Rangoon

Indian Overseas Bank Singapore

From the beginning Indian Overseas Bank served Chettinad, Ceylon (Sri Lanka), Burma

(Myanmar), Malaya, Singapore, Java, Sumatra and Saigon.

In 1960 Indian Overseas Bank absolved five weaker private sector Banks including

Kulitali Bank. In the year 2000 India Overseas Bank India engaged in IPO which brought

the government's share in thebank'sequity down to 75%.
http://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/IPOhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Shirpurhttp://finance.indiamart.com/investment_in_india/indian_overseas_bank.htmlhttp://finance.indiamart.com/investment_in_india/indian_overseas_bank.htmlhttp://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/IPOhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Shirpurhttp://finance.indiamart.com/investment_in_india/indian_overseas_bank.html


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IOB International expansion

1937-38: As mentioned above, IOB was international from its inception with

branches Indian Overseas Bank Rangoon, Indian Overseas Bank Penang, and

Indian Overseas Bank Singapore.

1941: IOB opened a branch in Malaya that presumably closed almost immediately

because of the war.

1946: IOB opened a branch in Ceylon.

1947: IOB opened a branch in Bangkok and re-opened others.

1948: United Commercial Bank(see below) opened a branch in Malaya.

1949: IOB opened a branch in Bangkok.

1963: The Burmese government nationalized IOB's branch in Rangoon.

1973: IOB, Indian Bank and United Commercial Bank established United Asian

Bank Berhad. (Indian Bank had been operating in Malaysia since 1941 and

United Commercial Bank Limited had been operating there since 1948.) The

Banks set up United Asian to comply with the Banking Law in Malaysia, which

prohibited foreign government Banks from operating in the country. Also, IOBand six Indian private Banks established Bharat Overseas Bank as a Chennai-

based private bank to take over IOB's Bangkok branch. The Baharat Overseas

Bank is the only private bank that the Reserve Bank of India has permitted to

have a branch outside India. The ownership was: Indian Overseas Bank (30%),

Bank of Rajasthan (16%), Vysya Bank (14.66%), Federal Bank (19.67%), Karur

Vysya Bank (10%), South Indian Bank (10%) and Karnataka Bank (8.67%).

Bharat Overseas serves the Indian ethnic community in Thailand.

1977: IOB opened a branch in Seoul.

1991: Bank of Commerce (BCB), a Malaysian bank, acquired United Asian Bank

(UAB). In 1999 BCB merged with Bank Bumiputra Malaysia to form Bumiputra-

Commerce Bank Berhad.
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Indian Overseas Bank Credit Card

Indian Overseas Bank has a credit card with the name CANCARD-VISA. This card is

valid for use in India and Nepal only. Indian Overseas Bank Credit Card is acceptable in

more than 1 lakh member establishments for purchase of goods and services.

Indian Overseas BankEquity Shareholders

Indian Overseas Bank has been constituted as a Corresponding New Bank under the

Banking Companies (Acquisition and Transfer of Undertakings) Act 1970.

The Bank had offered for subscription 11,12,00,000 shares of Rs. 10 each for cash at par

aggregating Rs. 111.20 crores (including reservation of 1,11,20,000 equity shares of Rs.

10 each for cash at par to regular/permanent employees and working Director,

aggregating Rs. 11,12,00,000).

The issue which opened on September 25, 2000, closed before October 5, 2000. The

equity shares of the Bank are listed in The Madras Stock Exchange (Regional), The Stock

Exchange, Mumbai and National Stock Exchange of India Ltd., Mumbai.
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1.4 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES:

To study the financial performance of Indian Overseas Bank.

SECONDARY OBJECTIVES:

To identify the comparative and common size statement of the bank.

To know the liquidity position of the bank.

To know the changes in working capital of the bank.

To predict the net profit of the bank.


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1.5 SCOPE OF THE STUDY:

1. This analysis would help the organization to concentrate on the financial

performance of Indian Overseas Bank.

2. The financial statements are analyzed for finding out the various aspects ranging

from a simple analysis of a firm to a comprehensive assessment of the firm in

various areas.

3. This study would help the investors of share market to know the financial

soundness of the company.

4. The basis for financial planning and analysis is financial information, to predict,

compare and evaluate the financial ability.


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CHAPTER II

LITERATURE REVIEW

1. A study on the financial performance of the State Bank of India with reference to

camel model

Abstract:

The Analyst has come up with a special issue on the banking industry for a third

consecutive year. To assess Indian Banks, The Analyst adopted the world-renowned

CAMEL model (with minor modifications). The reason being, the CAMEL model is

simple and makes it easy to compare a wide range of Banks present in INDIA. CAMEL

Stands for Capital Adequacy, Asset Quality, Earnings Quality, and Liquidity. In theconsecutive banking special issues, The Analyst has ranked the Banks in each parameter,

based on the average individual rank a bank achieved for each ratio. Also, in this issue,

The Analyst has categorized the Banks into public sector Banks, private Banks and

foreign Banks. Apart from analyzing the Banks and foreign Banks on each of the ratios

based on the CAMEL model. The Analyst also provided additional information like Total

Assets on each of these Banks. Capital Adequacy reflects the overall financial condition

of the Banks and also the ability of the management to meet the need for additional

capital. it reflects a banks leverage. The prime motto behind measuring the asset quality

is to ascertain the component of non-performing assets as a percentage of the total assets.

In addition, the parameter also ascertains the NPA movement and the amount locked up

in investments as a percentage of the total assets. Management involves a subjective

analysis for measuring the efficiency of the management. To measure the efficiency of

the management we used parameters like profit per branch, business per employee and

advances to deposits.


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2. Financial performance in Hong Kong listed hotels: the effect of value-added

creation and cost-leadership seeking

University essay from Ume universitet/Handelshgskolan vid Ume universitet; Ume

universitet/Handelshgskolan vid Ume universitet

Author:Lin Zhang; Wai Fong Chow; [2010]

Abstract:

We structure a literature review which we provide with broader definitions of the major

concepts: value creation, cost efficiency (leadership), competitive strategies, financial

performance and statement analysis. The literature review focuses mainly on Hong Kongcontext and literatures supporting the similar business strategies among similar size of

companies from various industries. The study takes forms as a quantitative study with a

deductive approach. A set of financial performance data will be collected and examined,

to show how company performance is correlated to its strategies and what an outcome is.

We aim at providing another perspective of investment analysis approach to the potential

investors, so they could embrace the whole picture of available information. We develop

two groups of hypothesis; the first group is companys strategy measures that show no

effect on financial performance, the second group is companys strategy measures that

show some effect on financial performance. The result indicates while normally staff cost

and cost of sale are recognized as cost leadership measure under product industry, it

implies positive contribution to value creation financial performance in service industry,

instead of having influence on profitability. Also, the wealth generated from previous sale

revenue margin will have positive impact on companys competitiveness in the hotel

industry. Keywords: value creation cost leadership, competitive strategies, financial

performance and statement analysis.
http://www.essays.se/about/Lin+Zhang/http://www.essays.se/about/Lin+Zhang/http://www.essays.se/about/Wai+Fong+Chow/http://www.essays.se/about/Lin+Zhang/http://www.essays.se/about/Wai+Fong+Chow/


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3. The financial performance of ethical funds: A comparative analysis of the risk-

adjusted performance of ethical and non-ethical mutual funds in UK

University essay from Hgskolan i Jnkping/IHH, Nationalekonomi

Author:Elena Shloma; [2009]

Abstract:

The review of the ethical funds literature shows the significant growth of the Socially

Responsible Investments (SRI) in the last few decades. The increase of the interest

towards SRI indicates that ethical issues have become more essential for the investors.

However the number of surveys reveals that financial performance remains of animportant concern for the socially responsible investors. Therefore the benchmark

analysis of the expected returns and management fees of the ethical mutual funds is

chosen as a topic for this thesis research. The risk-adjusted measures are used to analyze

and compare the performance of the ethical and non-ethical mutual funds in United

Kingdom. The analysis does not indicate the significant difference in the expected returns

between the two groups of funds. However this study concludes that on average ethical

funds charge higher management fees. Thus investing in ethical funds is more costly but

gives about the same returns as investing in conventional funds.
http://www.essays.se/about/Elena+Shloma/http://www.essays.se/about/Elena+Shloma/http://www.essays.se/about/Elena+Shloma/


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4. A Comparison of Financial Performance in the Banking Sector:

Faculty of Business

Sohar University

Soha

Sultanate of Oman

Abstract

The purpose of this study is to classify the commercial Banks in Oman in cohesive

categories on the basis of their financial characteristics revealed by the financial ratios. A

total of five Omani commercial Banks with more than 260 branches were financially

analyzed, and simple regression was used to estimate the impact of asset management,

operational efficiency, and bank size on the financial performance of these Banks. The

study found that the bank with higher total capital, deposits, credits, or total assets does

not always mean that has better profitability performance.


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CHAPTER III

RESEARCH METHODOLOGY

3.1 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research. To make research

systematic the researcher has to adopt certain method. Data becomes information only

when a proper methodology is adopted. Thus, we can say methodology is a tool which

processes the data to reliable information.

3.2RESEARCH DESIGN

A research design is purely a framework or plan for a study that guides the collection and

analysis of data. It is a blue print that is followed in completing a study. Here, an

analytical study would be conducted to know the existing inventory system in the

company.

3.3TYPES OF RESEARCH

3.3.1Descriptive Research

Descriptive research includes surveys and fact-finding enquiries of different kinds. The

major purpose of descriptive research is description of the state of affairs as it exists at

present.

3.3.2Analytical research

In this type of research the researcher has to use facts or information already available

and analyze these to make a critical evaluation of the material.


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3.4 DATA COLLECTION

3.4.1 Primary data:

Primary data means data that are collected newly by the researcher.Primary data consistsof the original information collected for specific purpose. The primary data for this

research is collected through a structured questionnaire and observation method.

3.4.2 Secondary Data

Secondary data means data that are already available. They refer to the data which have

already been collected and analyzed by someone else and which have been passed

through the statistical process. The information about the company was collected frominternet which has been published by the Bank.

3.5 FINANCIAL TOOLS AND TECHNIQUES

o Comparative Statement

o Common size Statement

o Liquidity Ratio

o Profitability Ratioo Working capital Statement

o Trend analysis

3.5.1COMPARATIVE BALANCE SHEET:

Comparative balance sheet as on two or more different dates can be used for comparing

assets and liabilities and findings out any increase or decrease in the items. Thus while in

single balance sheet the emphasis is on present position, it is on change in the

comparative balance sheet.


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3.5.2 Common Size Balance Sheet:

A company balance sheet that displays all items as percentages of a common base figure.

This type of financial statement can be used to allow for easy analysis between

companies or between time periods of a company.

The values on the common size statement are expressed as percentages of a statement

component such as revenue. While most firms don't report their statements in common

size, it is beneficial to compute if you want to analyze two or more companies of

differing size against each other. Formatting financial statements in this way reduces the

bias that can occur when analyzing companies of differing sizes. It also allows for the

analysis of a company over various time periods, revealing, for example, what percentage

of sales is cost of goods sold and how that value has changed over time.

3.5.3 RATIO ANALYSIS:

A ratio is a mathematical relationship between two items expressed in a quantitative

form. Ratio can be defined as Relationship expressed kin quantitative terms between

figures which have cause and effect relationship which are connected with each other in

some manner or the other. Ratio analysis involves the process of computing determining

and presenting the relationship of items or groups of items of financial statements.

3.5.3.1 Liquidity Ratios:

Liquidity Ratios measure the firm's ability to pay off current dues i.e. repayable within a

year. Liquidity ratios are otherwise called as Short Term Solvency Ratios. The important

liquidity ratios are

1. Current ratio

2. Absolute Liquid Ratio


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1. Current ratio:

This ratio is used to assess the firm's ability to meet its current liabilities. The relationship

of current assets to current liabilities is known as current ratio. The ratio is calculated as:

Current assets

Current Ratio = -----------------------

Current liabilities

Current Assets are those assets, which are easily convertible into cash within one year.

This includes cash in hand, cash at bank, sundry debtors, bills receivable, short term

investment or marketable securities, stock and prepaid expenses.

Current Liabilities are those liabilities which are payable within one year. This includes

bank overdraft, sundry creditors, bills payable and outstanding expenses.

2. Absolute Liquid Ratio:

It is a modified form of liquid ratio. The relationship of absolute liquid assets to liquid

liabilities is known as absolute liquid ratio. This ratio is also called as 'Super Quick

Ratio'. The ratio is calculated as:

Absolute Liquid Assets

Liquid Ratio = -----------------------------

Liquid Liabilities

Absolute liquid assets mean cash, bank and short term investments. Liquid liabilities

means current liabilities less bank overdraft.

3.5.3.2 Profitability Ratios:

Efficiency of a business is measured by profitability. Profitability ratio measures the

profit earning capacity of the business concern. The important profitability ratios are

discussed below:


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1. Gross Profit Ratio

2. Net Profit Ratio

3. Operating Profit Ratio

1. Gross Profit Ratio:

This ratio indicates efficiency of trading activities. The relationship of Gross profit to

Sales is known as gross profit ratio. The ratio is calculated as:

Gross Profit

Gross Profit Ratio = ------------------------ * 100

Sales

Gross profit is taken from the Trading Account of a business concern. Otherwise Gross

profit can

be calculated by deducting cost of goods sold from sales. Sales means Net sales.

Gross profit = Sales Cost of goods sold

Cost of goods sold = Opening stock + Purchases Closing Stock

(Or)

Sales Gross Profit

2. Net Profit Ratio:

This ratio determines the overall efficiency of the business. The relationship of Net profit

to Sales is known as net profit ratio. The ratio is calculated as:

Net Profit

Net Profit Ratio = --------------- * 100

Sales

Net Profit is taken from the Profit and Loss account of the business concern or the gross

profit of the concern less administration expenses, selling and distribution expenses and

financial expenses.


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3. Operating Profit Ratio:

This ratio is an indicator of the operational efficiency of the management. It establishes

the relationship between Operating profit and sales. The ratio is calculated as:

Operating Profit

Operating Profit Ratio = --------------------- * 100

Sales

Operating profit = Net profit + Non-operating expenses Non-operating income.

(Or)

Gross Profit Operating expenses

Where, Non-operating expenses are interest on loan and loss on sale of assets.

Non-operating incomes are dividend, interest received and profit on sale of asset.

Operating expenses include administration, selling and distribution expenses. Financial

expenses like interest on loan excluded for this purpose.

3.5.5. Working Capital Statement:

The statement of change in working capital is concerned with the current assets and

current liabilities alone, as they are shown in the Balance Sheets of the current year and

the previous year. All non current assets and non current liabilities, profits and losses,

additional information available are completely ignored.

Each current asset and current liability in the periods Balance Sheet is compared with

those shown in the previous periods Balance Sheet. Increase or decrease in each of the

assets and liabilities is noted. The effect of such increase or decrease during the period in

each item individually on the working capital is recorded. Finally the overall change in

the working capital is calculated.


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3.5.6 Trend Analysis:

It can be helpful in determining unusual changes in balances from period to period. It

helps in understanding past behavior. By observing data over a period of time one can

easily understand what changes have taken place in the past. Such analysis will be

extremely helpful in predicting the future behavior.

Future can be predicted by using the trend line y=a+bx

Where,

a = Y/N

b=xy/X2

x= current year- assumed year.

3.6 DATA USED FOR THE STUDY:

The data used for analysis purpose are 5 years Financial Data like

Profit and loss account

Balance Sheet

3.6.1PERIOD OF THE STUDY:

The period of the study is 2006-2010.


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3.7 LIMITATION OF THE STUDY:

The data used are limited to the extent duo to confidentiality maintained with in

the bank.

The number of years used for analysis is very limited.

The study heavily depends on the secondary data and any shortcomings are bound

to be reflected. How ever such data are correct, when those were audited.

Any change in the methods or procedures of accounting systems limits the utility

of financial statements.


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CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

4.1COMPARATIVE BALANCE SHEET STATEMENT:

4.1.1 COMPARATIVE BALANCE SHEET FOR THE YEAR 2006-07:

(` in Crores)

Particulars 2006 2007 Increase/Decrease %

ASSETS:Other AssetsCurrent Assets & Advances:Cash & Balance with RBI

Balance with BanksAdvancesInvestmentsCurrent asset total

1484.35

3077.96

629.2834756.2018952.2857415.72

1732.11

4686.11

4293.1947060.2923974.4780014.06

247.76

1608.15

3663.9112304.095022.1922598.34

16.69

52.25

582.2435.4026.50696.39

Total 58900.07 81746.17 22846.1 38.79

Liabilities:Equity share capitalReservesDebts:Deposits

BorrowingsCurrent Liabilities:Other Liabilities & Provisions

544.802510.17

50529.32

736.63

4914.43

544.803327.59

68740.41

2896.23

6629.82

0.00817.42

18211.09

2159.6

1715.39

0.0032.56

36.04

293.17

34.91

Total 59235.35 82138.85 22903.50 38.67

Inference:

The above table shows that, the Banks other assets have been increased by 16.69% and

the current asset value have been increased by 696.39%. The deposits value increased to32.56% from the previous year and the borrowings value increased by 293.17%. Currentliabilities have been increased by 34.91% from the previous year.



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(` in Crores)


ASSETS:

Other AssetsCurrent Assets & Advances:Cash & Balance with RBIBalance with BanksAdvancesInvestmentsCurrent asset total

1732.11

4686.114293.1947060.2923974.4780014.06

2061.29

9124.231217.0960423.8428474.7188952.42

329.18

4438.12(3076.1)13363.554500.248938.36

19.00

94.71(71.65)28.4018.7770.23

Total 81746.17 101301.16 19554.99 23.92

Liabilities:Equity share capital

ReservesDebts:DepositsBorrowingsCurrent Liabilities:Other Liabilities & Provisions

544.80

3327.59

68740.412896.23

6629.82

544.80

4197.90

84325.586353.65

6323.84

0.00

870.31

15585.173457.42

(305.98)

0.00

26.15

22.67119.38

(4.61)

Total 82138.85 101745.77 19606.92 23.87

Inference:

The above table shows that, the Banks other assets have been increased by 19.00%and the current asset value have been increased by 70.23%. The deposits value increasedto 32.56% from the previous year and the borrowings value increased by 22.67%. Currentliabilities have been decreased by 4.61% from the previous year.


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(` in Crores)


ASSETS:Other AssetsCurrent Assets & Advances:Cash & Balance with RBIBalance with BanksAdvancesInvestmentsCurrent asset total

2061.29

9124.231217.0960423.8428474.7188952.42

2340.93

5940.444918.4674885.2731215.44116959.60

279.64

(3183.79)3707.3114461.432740.7328007.18

13.57

(34.89)304.1223.939.63302.79

Total 101301.16 119300.54 17999.38 17.77

Liabilities:

Equity share capitalReservesDebts:DepositsBorrowingsCurrent Liabilities:Other Liabilities & Provisions

544.804197.90

84325.586353.65

6323.84

544.805396.59

100115.896548.28

7258.26

0.001198.69

15790.31194.63

934.42

0.0028.55

18.733.06

14.78

Total 101745.77 119863.82 18118.05 17.81

Inference:

The above table shows that, the Banks other assets have been increased by 13.57%and the current asset value have been increased by 302.79%. The deposits valueincreased to 18.73% from the previous year and the borrowings value increased by3.06%. Current liabilities have been increased by 14.78% from the previous year.



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(` in Crores)


ASSETS:Other AssetsCurrent Assets & Advances:Cash & Balance with RBIBalance with BanksAdvancesInvestmentsCurrent asset total

2340.93

5940.444918.4674885.2731215.44116959.60

2917.70

7666.452158.1979003.9337650.56126479.1

576.77

1726.01(2760.27)4118.666435.129519.50

24.64

29.05(56.12)5.5020.62(0.95)

Total 119300.54 129396.83 10096.29 8.46

Liabilities:

Equity share capitalReservesDebts:DepositsBorrowingsCurrent Liabilities:Other Liabilities & Provisions

544.805396.59

100115.896548.28

7258.26

544.805804.18

110794.718982.20

3794.90

0.00407.59

10678.822433.92

(3463.36)

0.007.55

10.6737.17

(47.72)

Total 119863.82 129920.79 10056.97 8.39

Inference:

The above table shows that, the Banks other assets have been increased by 24.64%and the current asset value have been decreased by 0.95%. The deposits value increasedto 10.67% from the previous year and the borrowings value increased by 3.06%. Currentliabilities have been decreased by 47.72% from the previous year.


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4.2 COMMONSIZE BALANCE SHEET STATEMENT

4.2.1 COMMONSIZE BALANCE SHEET FOR THE YEAR 2006-07:

(` in Crores)

PARTICULARS 2006 PERCENTAGE 2007 PERCENTAGE

ASSETS:Other AssetsCURRENT ASSET,LOANS & ADVANCES:Cash & Balance with RBIBalance with BanksAdvancesInvestmentsCurrent asset total

1484.35

3077.96629.2834756.2018952.2

857415.72

2.52

5.231.0759.0132.1897.48

1732.11

4686.114293.1947060.2923974.4

780014.06

2.12

5.735.2557.5729.3397.88

Total 58900.07

100.00 81746.17

100.00

LIABILITIES:Equity share capitalReservesLOANS:Deposits

BorrowingsCURRENT LIABILITIES:Other Liabilities &Provisions

544.802510.17

50529.3

2736.63

4914.43

0.924.24

85.03

1.24

8.30

544.803327.59

68740.4

12896.23

6629.82

0.664.05

83.69

3.53

8.07

Total 59235.35

100.00 82138.85

100.00

Inference:

The above table shows that, the Banks other assets have been slightly decreased from

the previous year i.e. (2.52% to2.12%) and the current asset have been increased from97.48% to 97.88%. The deposits decreased to 83.69% from the previous year and theborrowings for the year 2007 are 3.53% which is higher than previous year 2006. Currentliabilities have been decreased to 8.07%.


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(` in Crores)


ASSETS:Other AssetsCURRENT ASSET,LOANS & ADVANCES:Cash & Balance with RBIBalance with Banks

AdvancesInvestmentsCurrent asset total

1732.11

4686.114293.19

47060.2923974.4780014.06

2.12

5.735.25

57.5729.3397.88

2061.29

9124.234293.19

47060.2928474.7188952.42

2.26

10.034.72

51.7131.2997.74

Total 81746.17

100.00 91013.7 100.00

LIABILITIES:Equity share capitalReserves

LOANS:DepositsBorrowingsCURRENTLIABILITIES:Other Liabilities &Provisions

544.803327.59

68740.412896.23

6629.82

0.664.05

83.693.53

8.07

544.804197.90

84325.586353.65

6323.84

0.544.13

82.886.24

6.22

Total 82138.85

100.00 101745.77

100.00

Inference:

The above table shows that, the Banks other assets have been increased from theprevious year i.e. (2.12% to2.26%) and the current asset posted a slight variation i.e. (-0.14%). The deposits decreased to 82.88% from the previous year and the borrowings forthe year 2008 are 6.24% which is higher than previous year 2007. Current liabilities havebeen decreased to 6.22%.


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(` in Crores)


ASSETS:Other Assets

CURRENT ASSET,LOANS & ADVANCES:Cash & Balance with RBIBalance with BanksAdvancesInvestmentsCurrent asset total

2061.29

9124.234293.1947060.2928474.7188952.42

2.26

10.034.7251.7131.2997.74

2340.93

5940.444918.4674885.2731215.44116959.6

1.96

4.984.1262.7726.1798.04

Total 91013.7 100.00 119300.54 100.00

LIABILITIES:Equity share capital

ReservesLOANS:DepositsBorrowingsCURRENT LIABILITIES:Other Liabilities &Provisions

544.80

4197.90

84325.586353.65

6323.84

0.54

4.13

82.886.24

6.22

544.80

5396.59

100115.896548.28

7258.26

0.45

4.50

83.525.46

6.06

Total 101745.77

100.00 119863.82 100.00

Inference:

The above table shows that, the above table shows that, the Banks other assets havebeen slightly decreased from the previous year i.e. (2.26% to1.96%) and the current assethave been increased from 97.74% to 98.04%. The deposits increased to 83.59% from theprevious year and the borrowings for the year 2009 are 5.46% which is lesser thanprevious year 2008. Current liabilities have been decreased to 6.06%.


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(` in Crores)

PARTICULARS 2009 PERCENTAGE

2010 PERCENTAGE

ASSETS:

Other AssetsCURRENT ASSET,LOANS & ADVANCES:Cash & Balance with RBIBalance with BanksAdvancesInvestmentsCurrent asset total

2340.93

5940.444918.4674885.2731215.44116959.6

1.96

4.984.1262.7726.1798.04

2917.70

7666.452158.1979003.9337650.56126479.1

2.25

5.921.6761.0629.1097.75

Total 119300.54 100.00 129396.83 100.00

LIABILITIES:Equity share capitalReservesLOANS:DepositsBorrowingsCURRENT LIABILITIES:Other Liabilities &Provisions

544.805396.59

100115.896548.28

7258.26

0.454.50

83.525.46

6.06

544.805804.18

110794.718982.20

3794.90

0.424.47

85.286.91

2.92

Total 119863.82 100.00 129920.79 100.00

Inference:

The above table shows that, the Banks other assets have been slightly decreased fromthe previous year i.e. (2.26% to1.96%) and the current asset have been increased from97.74% to 98.04%. The deposits increased to 83.59% from the previous year and the


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borrowings for the year 2009 are 5.46% which is lesser than previous year 2008. Currentliabilities have been decreased to 6.06%.

4.3 Liquidity Ratio:

Current Asset1. Current Ratio = -----------------------

Current Liabilities

4.3.1. Table showing Current ratio for the year 2005-2010

(` in Crores)

Year Current Assets Current Liabilities Current Ratio

2009-2010 2917.70 3794.90 0.76

2008-2009 2340.93 7528.26 0.32

2007-2008 2061.29 6323.84 0.32

2006-2007 1732.11 6629.82 0.26

2005-2006 1484.35 4914.43 0.30

4.3.1.1 Chart Showing Current ratio for the year 2005-2010


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Inference:

The Banks Current ratio position is stable from 2006-2008 and it posted a suddenincrease in the current ratio as 0.76% in the year 2009-2010 due to the decrease in currentliabilities.

Absolute Liquid Asset2. Absolute Liquid Ratio = ------------------------------

Liquid Liabilities

4.3.2. Table showing Absolute Liquid ratio for the year 2005-2010

(` in Crores)

Year Absolute Liquid Assets Liquid Liabilities Absolute Liquid Ratio

2009-2010 2158.19 3794.90 0.57

2008-2009 4981.46 7528.20 0.66

2007-2008 1217.09 6323.84 0.19

2006-2007 4293.19 6629.83 0.64

2005-2006 629.28 4914.43 0.13

4.3.2.1 Chart Showing Absolute ratio for the year 2005-2010


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Inference:

The Banks Absolute Liquid ratio position is fluctuating throughout the period of 2006-2010. The Absolute liquid ratio of the Bank ranges from 0.13% - 0.66%.4.4 Profitability Ratio:

Gross Profit

1. Gross Profit Ratio = ------------------- * 100Sales

4.4.1 Table Showing the Gross Profit ratio for the year 2005-2010

(` in Crores)

Year Gross Profit Sales Gross Profit Ratio

2009-2010 1844.62 10245.77 18.00

2008-2009 2455.22 9641.40 25.47

2007-2008 2001.78 7968.25 25.12

2006-2007 1560.04 5832.07 26.75

2005-2006 1533.82 4406.28 34.81

4.4.1.1 Chart Showing Gross Profit ratio for the year 2005-2010


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Inference:

The Gross Profit ratio of the bank tends to decrease from 34.81 to 18.00 for the period2006-2010. The gross profit ratio for the current year 2009-2010 is 18%.

Net Profit2. Net Profit Ratio = ----------------- * 100

Sales

4.4.2 Table Showing the Net Profit ratio for the year 2005-2010

(` in Crores)

Year Net Profit Sales Net Profit Ratio

2009-2010 706.96 10245.77 6.90

2008-2009 1323.79 9641.40 13.73

2007-2008 1202.34 7968.25 15.09

2006-2007 1008.43 5832.07 17.29

2005-2006 783.34 4406.28 17.78

4.3.2.1 Chart Showing Net Profit ratio for the year 2005-2010


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Inference:

Net Profit ratio of the Bank remains stable for the year 2006 & 2007 (i.e.) (17.78% &17.29%) and it tends to decrease in next two financial year, 2008 & 2009 i.e. (15.09% &13.73%) and for the current year the Net Profit ratio decreases almost 50% from thepreceeding year i.e. (6.90%).

Operating Profit

3. Operating Profit Ratio = ----------------------- * 100Sales

4.4.3. Table showing Operating Profit ratio for the year 2005-2010

(` in Crores)

Year Operating Profit Sales Operating Profit Ratio

2009-2010 6995.79 10245.77 68.28

2008-2009 7130.29 9641.40 73.95

2007-2008 6136.11 7968.25 77.01

2006-2007 4257.66 5832.07 73.00

2005-2006 2596.52 4406.28 58.93

4.3.1.1 Chart Showing Operating Profit ratio for the year 2005-2010


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Inference:

The operating profit of the Bank increases for the period 2005-2008 and then it decreasesdue to the increasing in operating expenses.

4.5 WORKING CAPITAL STATEMENT:

4.5.1 WORKING CAPITAL STATEMENT FOR THE YEAR 2006-07:

(` in Crores)

Particulars 2006 2007


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Current Assets:

Cash & Balance with RBIBalance with Banks

Advances

Total (A)

Current Liabilities:

BorrowingsOther Liabilities & Provisions

Total (B)

Working Capital (A-B)

3077.96629.28

34756.20--------------38463.44

--------------

736.634914.43

-------------5651.06

-------------

32812.38

4686.114293.19

47060.29-------------56039.59

-------------

2896.236629.82

-------------9526.05

-------------

46513.54

Inference:

The company's working capital position for the year 2006 was ` 32812 and it increased in

the year 2007 to ` 46513.54.


(` in Crores)



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Current Assets:


Advances

Total (A)



Total (B)


4686.114293.19

47060.29-------------56039.59

-------------

2896.236629.82

-------------9526.05

-------------

46513.54

9124.231217.09

60423.84-------------70765.16

-------------

6353.656323.84

-------------12677.49

-------------

58087.67

Inference:

The company's working capital position for the year 2007 was ` 46153.54 and it

increased in the year 2008 to ` 58087.67.


(` in Crores)



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Current Assets:


Advances

Total (A)



Total (B)


9124.231217.09

60423.84-------------70765.16

-------------

6353.656323.84

-------------12677.49

-------------

58087.67

5904.444981.46

74885.27------------85807.17------------

6548.287258.26

------------13806.54------------

72000.63

Inference:

The company's working capital position for the year 2008 was ` 55087.67 and increased

in the year 2008 to ` 72000.63.

4.5.4 WORKING CAPITAL STATEMENT FOR THE YEAR 2009-10

(` in Crores)


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Current Assets:

Cash & Balance with RBI

Balance with BanksAdvances

Total (A)



Total (B)


5904.44

4981.4674885.27------------85807.17------------

6548.287258.26

------------13806.54

------------72000.63

7666.45

2158.1979003.93-------------88820.57

-------------

8982.203794.90

------------12777.10

------------76051.47

Inference:

The company's working capital position for the year 2009 was ` 72000.63 and increasedin the year 2010 to ` 76051.47.

4.5. TREND ANALYSIS

4.5.1. Trend analysis for predicting net profit

(` In Crores)


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Year(X) Net Profit (y) x=(X-A) x2 xy

2010 706.96 -2 4 1413.92

2009 1323.79 -1 1 1323.79

2008 (A) 1202.34 0 0 0

2007 1008.43 1 1 -1008.432006 783.34 2 4 -1566.68

Total 162.60

a = y/n 5024.86/5 = 1004.972

b= xy/x2 162.60/10 = 16.2

y = a + bx

If x = 3 i.e. (2010-11)

y = 1004.972 + 16.20(3)

y = 1004.972+48.60

y = 1053.572

If x = 4 i.e. (2011-12)

y = 1004.972 + 16.20(4)

y = 1004.972+64.80

y = 1069.772

Net Profit for the year of 2010 11 is predicted as ` 1053.572

Net Profit for the year of 2011-12 is predicted as ` 1069.772

Inference:

From the trend analysis it is inferred that the net profit for the year 2010-11 & 2011-12 is

predicted as` 1053.572 and ` 1069.772

CHAPTER V

FINDINGS, SUGGESTION & CONCLUSION


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5.1 FINDINGS:

The Banks other assets have been increased by 16.69% and the current asset valuehave been increased by 696.39%. The deposits value increased to 32.56% fromthe previous year and the borrowings value increased by 293.17%. Currentliabilities have been increased by 34.91% from the previous year.

The Banks other assets have been increased by 19.00% and the current asset valuehave been increased by 70.23%. The deposits value increased to 32.56% from theprevious year and the borrowings value increased by 22.67%. Current liabilitieshave been decreased by 4.61% from the previous year.

The Banks other assets have been increased by 13.57% and the current asset valuehave been increased by 302.79%. The deposits value increased to 18.73% fromthe previous year and the borrowings value increased by 3.06%. Current liabilitieshave been increased by 14.78% from the previous year.

The Banks other assets have been increased by 24.64% and the current asset valuehave been decreased by 0.95%. The deposits value increased to 10.67% from theprevious year and the borrowings value increased by 3.06%. Current liabilitieshave been decreased by 47.72% from the previous year.

The Banks other assets have been slightly decreased from the previous year i.e.(2.52% to2.12%) and the current asset have been increased from 97.48% to97.88%. The deposits decreased to 83.69% from the previous year and theborrowings for the year 2007 are 3.53% which is higher than previous year 2006.Current liabilities have been decreased to 8.07%.

The Banks other assets have been increased from the previous year i.e. (2.12%to2.26%) and the current asset posted a slight variation i.e. (-0.14%). The depositsdecreased to 82.88% from the previous year and the borrowings for the year 2008are 6.24% which is higher than previous year 2007. Current liabilities have beendecreased to 6.22%.

The Banks other assets have been slightly decreased from the previous year i.e.(2.26% to1.96%) and the current asset have been increased from 97.74% to98.04%. The deposits increased to 83.59% from the previous year and theborrowings for the year 2009 are 5.46% which is lesser than previous year 2008.

Current liabilities have been decreased to 6.06%.

The Banks other assets have been slightly decreased from the previous year i.e.(2.26% to1.96%) and the current asset have been increased from 97.74% to98.04%. The deposits increased to 83.59% from the previous year and theborrowings for the year 2009 are 5.46% which is lesser than previous year 2008.Current liabilities have been decreased to 6.06%.


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The Banks Current ratio position is stable from 2006-2008 and it posted a suddenincrease in the current ratio as 0.76% in the year 2009-2010.

The Banks Absolute Liquid ratio position is fluctuating throughout the period of

2006-2010 (0.13% - 0.66%).

The Gross Profit ratio of the bank tends to decrease from 34.81 to 18.00 for theperiod 2006-2010.

Net Profit ratio of the bank remains stable for the year 2006 & 2007 and it tendsto decrease in next two financial year, 2008 & 2009 i.e. and for the current yearthe Net Profit ratio decreases almost 50% from the preceeding year i.e. (6.90%).

The Operating profit of the Bank increases for the period 2005-2008 and then itdecreases due to the increasing in operating expenses.

The company's working capital position for the year 2006 was ` 32812 and it


The company's working capital position for the year 2007 was ` 46153.54 and it


The company's working capital position for the year 2008 was ` 55087.67 and


The company's working capital position for the year 2009 was ` 72000.63 andincreased in the year 2010 to ` 76051.47.

The trend analysis is inferred that the net profit for the year 2010-11 & 2011-12 ispredicted as ` 1053.572 and ` 1069.772.

5.2 SUGGESTION:


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The profit position of the bank are decreasing in order to overcome from this

situation bank should take immediate recovery measures to retain their profit

position.

The bank should concentrate on increasing the current asset position. The bank

can provide short term loans and advances to increase its working capital position.

The bank should take preventive measures in order to retain their liquidity

position as it ranges to higher fluctuations.

Final Report - Jayanthi

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Transcript of Final Report - Jayanthi