A

PROJECT REPORT ON A Comprehensive Study On Financial Analysis

OF H.D.F.C. BANK

Kurukshetra
SUBMITTED TO:

Kurukshetra University,Kurukshetra In partial fulfillment of the Requirement for award of the degree of
MASTER OF BUSINESS ADMINISTRATION (M.B.A.)
(SESSION: 2007-09)- MBA 3RD SEMESTER

Under the guidance of : MS. Rash ! "a#sa$ Fa)'$(*+MBA

Submitted by: M%%&' Bha(!a D,- M& Bh'sha# Bha(!a U#!.. R%/0. N- 03-M1-722 U#!.. R-$$ N-

TILAK RAJ CHADHA INSTITUTE OF MANAGEMENT & TECHNOLOGY(TIMT) (A33!$!a(%0 (- "'&'4sh%(&a U#!.%&s!(*+ "'&'4sh%(&a 5 A66&-.%0 7* AICTE) M.8.N.C-$$%/% E0')a(!-#a$ C- 6$%9+ amuna !agar " #$% &&#'()R )!)*

DEC8ARATION
I, M%%&' Bha(!a, hereby declare that this pro,ect entitled F!#a#)!a$ A#a$*s!s -3 :DFC Ba#4; at (-./ 0ank, Kurukshetra submitted by me for the award of 10)'.inal* of Kurukshetra University, Kurukshetra, is the original work conducted by me and data provided in the study authentic to the best of my knowledge2 3his report is not submitted to any other Institute or University for award or -egree of 10)2

MEERU B:ATIA MBA(F!#a$)

AC"NO<8ED=EMENT
!o task is single man4s effort2 )ny ,ob in this world however trivial or tough cannot be accomplished without the assistance of others2 )n assignment puts the knowledge and e5perience of an individual to litmus test2 3here is always a sense of gratitude that one likes it e5press towards the persons who helped to change an effort in a success2 3he opportunity to e5press my indebtedness to people who have helped me to accomplish this task2 I deem it a proud privilege to e5tend my greatest sense of gratitude to my guide MISS SONIA MITTA8 (ASSISTANT MANA=ER+ :DFC BAN" "URU"S:ETRA) for the keen interest, inspiring guidance, continuous encouragement, valuable suggestions and constructive criticism throughout the pursuance of this report2 1y sincere thanks are due to my MR. =OURA> S:ARMA (BRANC: MANA=ER) for their valuable support in helping me to gain this opportunity of being associated with an organi6ation of such esteem2 I am thankful to director sir DR. >I"AS DAR1A8+ MS. DEEPI"A "O:8I FACU8T1 TIMT (:OD)+ for granting me the permission to undertake the study2 I would like to convey thanks to MISS RAS:MI "ANSA8 FACU8T1 TIMT for ready assistance, keen interest and valuable suggestions2 7ast but not least it would be unfair if I don4t e5tend my indebtedness to my parents and all my friends for their active cooperation which was of great help during the course of my training pro,ect2

PREFACE
Using a new pattern based on proper integration of formal teaching and actual practice the 1202)2 program of Kurukshetra University, Kurukshetra has it course for si5 weeks industrial training, after the second semester, so as the students could begin to have the feeling of business environment right in the beginning2 9ractical training constitutes an integral part of management studies2 3raining gives an opportunity to the students to e5pose themselves to the industrial environment, which is quite different from the classroom teaching2 3he practical knowledge is an important suffi5 to the theoretical knowledge2 :ne cannot rely merely upon theoretical knowledge2 Is has to be coupled with practical for it to be fruitful2 3he training also enables the management students to themselves see the working conditions under which they have to work in the future2 )fter 7iberali6ation of Indian economy sense is changed because of 1ulti !ational /ompanies continuously coming with their technical e5pertise and improved management concepts2 Industrial activity in India has become a thing to watch and I really wanted to be a part of it and it is essential for me being a finance student2 I consider myself lucky to get my summer training in (-./ 0)!K KURUKS(;3R)2 I underwent si5 weeks of training2 It really helped me to get a practical insight into the actual business environment and provide me an opportunity to make my .inancial 1anagement concepts more clear2 3he advantage of this sort of integration which promotes guided ad,ustment to corporate culture, functional, social and other norms with formal teaching are:

 3o bridge the gap between theory and practice 3o install feeling of belongingness and acceptance 3o cultivate proper temperament < to generate much morale 3o help students identify their strong < weak points in the following < appreciating organi6ation activities 3o acquaints students with ,ob performance standards I believe that this knowledgeable endeavor of mine has prepared me slowly but surely for taking up new challenging opportunities in future2

E?ECUTI>E SUMMAR1
U#0%&(a4% s- %(h!#/ !s 0!33!)'$(+ I( @!$$ 0- *-' /--0+ U#$%ss *-' (&* (- 0- s- %(h!#/ B%*-#0 @ha( *-' ha.% a$&%a0* 1-' @!$$ #%.%& /&-@;. RONA8DE. OSBORN as(%&%0

I did my training in (-./ 0)!K KURUKS(;3R)2 3he concept of this pro,ect is to check whether (-./ 0)!K is performing well year after year or lacking in performance2 3he performance can be evaluated by doing .inancial )nalysis of .inancial Statements of 0ank2 3he purpose of this pro,ect is to evaluate the performance of (-./ 0)!K2 It primarily aims at learning the various factors that can help I evaluation process2 I have tried to find out the reasons or ground where it is lacking2 I have also tried to find out the areas of improvement2 In order to do financial analysis of co2 the various tools like RATIO ANA81SIS+ COMPARATI>E FINANCIA8 STATEMENT AND TREND PERCENTA=ES have been used2 In statistical tools, I4ve used CORRE8ATION+ TIME SERIES ANA8SIS (TREND >A8UES) 2In (ypothesis testing, I4ve used )!:>) 3;S32 3he pro,ect also includes ob,ective of study, Research 1ethodology, )nalysis and Interpretation, findings recommendations limitation of study conclusion bibliography and anne5ure2

INTRODUCTION OF BAN"IN=

MEANIN= AND DEFINITION:

0ank is an institution that deals in money and its substitutes and provides crucial financial services2 3he principal type of baking in the modern industrial world is commercial banking < central banking2 0anking 1eans @)ccepting -eposits for the purpose of lending or Investment of deposits of money from the public, repayable on demand or otherwise and withdraw by cheque, draft or otherwise2@ -Ba#4!#/ C- 6a#!%s (R%/'$a(!-#) A)(+A9B9

3he concise o5ford dictionary has defined a bank as @;stablishment for custody of money which it pays out on customers order2@ Infact this is the function which the bank performed when banking originated2 @0anking in the most general sense, is meant the business of receiving, conserving < utili6ing the funds of community or of any special section of it2@ -B* :.<!$$s 5 J. B-/a#

@) banker of bank is a person, a firm, or a company having a place of business where credits are opened by deposits or collection of money or currency or where money is advanced and waned2 -B* F!#0$a* Sh%&as

3hus A Ba#4 : )ccept deposits of money from public, 9ays interest on money deposited with it2 7ends or invests money Repays the amount on demand, )llow the money deposited to be with drawn by cheque or draft2

ORI=IN OF <ORD BAN": 3he origin of the word bank is shrouded in mystery2 )ccording to one view point the Italian business house carrying on crude from of banking were called banchi bancheri@ )ccording to another viewpoint banking is derived from Berman word @0ranck@ which mean heap or mound2 In ;ngland, the issue of paper money by the government was referred to as a raising a bank2

BAN"IN= S1STEM IN INDIA

A :ISTORICA8 PERSPECTI>E : De can identify there distinct phases in the history of Indian banking: #2 +2 ;arly phase from #?A=E#C=C2 !ationali6ation of banks and up to #CC# prior to banking sector reforms2 $2 !ew phase of Indian banking with the advent of financial banking2 0anking in India has its origin as early or >edic period2 It is believed that the transitions from many lending to banking must have occurred even before 1anu, the great (indu furriest, who has devoted a section of his work to deposit and advances and laid down rules relating to the rate of interest2 -uring the mogul period, the indigenious banker played a very important role in lending money and financing foreign trade and commerce2 -uring the days of the ;ast India /ompany it was the turn of agency house to carry on the banking business2 3he Beneral 0ank of India was the first ,oint stock bank to be established in the year #?A=2 3he other which followed was the 0ank of (industan and 0engal 0ank2 3he 0ank of (industan is reported to have continued till #C&=2 Dhile other two
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failed in the meantime2 In the first half of the #Cth century the ;ast India /ompany established there banks, 3he bank of 0engal in #A&C, the 0ank of 0ombay in #A8& and the 0ank of 0ombay in#A8$2 3hese three banks also known as the 9residency banks were the independent units and functioned well2 3hese three banks were amalgamated in #C+& and new bank, the Imperial 0ank of India was established on +?th Fanuary, #C+#2

Dith the passing of the State 0ank of India )ct in #C%% the undertaking of the Imperial 0ank of India was taken over by the newly constituted S0I2 3he Reserve 0ank of India 'R0I* which is the /entral bank was established in )pril, #C$% by passing Reserve bank of India act #C$%2 3he /entral office of R0I is in 1umbai and it controls all the other banks in the country2 In the wake of Swadeshi 1ovement, number of banks with the Indian management were established in the country namely, 9un,ab !ational 0ank 7td2, 0ank of India 7td2, 0ank of 0aroda 7td2, /anara 0ank2 7td2 on #Cth Fuly #C=C, #8 ma,or banks of the country were nationali6ed and on #%th )pril #CA&, = more commercial private sector banks were taken over by the government2

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FUNCTIONS OF BAN"S
PRIMAR1 FUNCTIONS )cceptance of -eposits 1aking loans < advances 7oans :verdraft /ash /redit -iscounting of bills of e5change

SECONDAR1 FUNCTIONS )gency functions /ollection of cheques < 0ills etc2 /ollection of interest and dividends2 1aking payment on behalf of customers 9urchase < sale of securities .acility of transfer of funds 3o act as trustee < e5ecutor2

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UTI8IT1 FUNCTIONS :

Safe custody of customers valuable articles < securities2 Underwriting facility Issuing of travellerGs cheque letter of credit .acility of foreign e5changes 9roviding trade information 9rovide information regarding credit worthiness of their customer2

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C8ASSIFICATION ON BASIS OF O<NERS:IP

:n the basis of ownership banks are of the following types :

A.

PUB8IC SECTOR BAN" 9ublic sector banks are those banks which are owned by the Bovernment2 3he Bovt2 runs these 0anks2 In India #8 banks were nationali6ed in #C=C < in #CA& another = banks were also nationali6ed2 3herefore in #CA& the number of nationali6ed bank +&2 0ut at present there are C banks are nationali6ed2 )ll these banks are belonging to public sector category2 Delfare is their principle ob,ective2

2.

PRI>ATE SECTOR BAN"S 3hese banks are owned and run by the private sector2 >arious banks in the country such as I/I/I 0ank, (-./ 0ank etc2 )n individual has control over there banks in preparation to the share of the banks held by him2

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3.

CO-OPERATI>E BAN"S /oEoperative banks are those financial institutions2 3hey provide short term < medium term loans to there members2 /oEoperative banks are in every state in India2 Its branches at district level are known as the central coEoperative bank2 3he central coEoperative bank in turn has its branches both in the urban < rural areas2 ;very state coEoperative bank is an ape5 bank which provides credit facilities to the central coE operative bank2 It mobili6ed financial resources from richer section of urban population by accepting deposit and creating the credit like commercial bank and borrowing from the money mkt2 It also gets funds from R0I2

!!

ACCORDIN= TO RESER>E BAN" OF INDIA ACT A93C

0anks are classified into following two categories son the basis of reserve bank )ct2 #C$82 A. SC:EDU8ED BAN" 3hese banks have paid up capital of at least Rs2 % lacks2 3hese are like a ,oint stock company2 It is a coEoperative organi6ation2 3hese banks find their mention in the second schedule of the reserve bank2 2. NON SC:EDU8ED BAN"

#%

3hese banks are not mentioned in the second schedule of reserve bank paid up capital of these banks is less then Rs2% lacs2 3he no2 such bank is gradually tolling in India2 !!! C8ASSIFICATION ACCORDIN= TO FUNCTION :n the basis of functions banks are classified as under :E A. COMMERCIA8 BAN"S 3he commercial banks generally e5tend shortEterm loans to businessmen < traders2 Since their deposits are for a shortEperiod only2 3hey cannot lend money for a long period2 3hese banks reform various types or agency ,ob for their customers2 3hese banks are not in a position to grant longEterm loans to industries because their deposits are only for a short period2 3he ma,ority of ,oint stock banks in India are commercial banks which finance trade < commerce only2

2.

SA>IN= BAN"S 3he principle function of these banks is to collect small saving across the country and put them into productive use2 3hese banks have shown marked development in Bermany < Fapan2 3hese banks are established in ()10URB /ity of Bermany in #?=%2 In India a department of post offices functions as a saving banks2

#=

3.

FOREI=N E?C:AN=E BAN"S 3hese are special types of banks which speciali6e in financing foreign trade2 3heir main function is to make international payments through purchase < sale of e5change bills2 )s it well known, the e5porters of a country prefer to receive the payments for e5ports in their own currency2 3hus these banks convert home currency into foreign currency and vice versa2 It is on this account that these banks have to keep with themselves stock of the currency of various countries2 )long with that, they have to open branches in foreign countries to carry on their business2

B.

INDUSTIRA8 BAN"S 3he industrial banks e5tends long term loans to industries2 In fact, they also help industrials firms to sell their debentures and shares2 Some times, they even underwrite the debentures < shares of big industrial concerns2

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C.

INDI=ENIOUS BAN"S 3hese banks found their origin in India2 3hese banks made a significant contribution to the development of agricultural and industries before independence2 1aha,ans, rural moneylenders have been the forerunner of these banks in India2

D.

CENTRA8 BAN" 3he central bank occupies a pivotal position in the monetary and banking structure of the country2 3he central bank is the undisputed leader of the money market2 )s such it supervises controls and regulates the activities of commercial banks affiliated with it2 3he central bank is also the higher monetary institution in the country charged with the duty < responsibility of carrying out the monetary policy formulated by the government2 IndiaGs central bank known as the reserve bank of India was set up in #C$%2

7.

A=RICU8TURA8 BAN" 3he commercial and the industrial banks are not in a position to meet the credit requirements of agriculture2 (ence, there arises the need for setting up special type of banks of finance agriculture2 3he credit requirement of the farmers are two types2 .irstly the farmers require

#A

short term loans to buy seeds, fertili6ers, ploughs and other inputs2 Secondly, the farmers require longEterm loans to purchase land, to effect permanent improvements on the land to buy equipment and to provide for irrigation works2 3here are two types of agriculture banks2 #2 +2 )griculture coEoperative banks, and 7and mortgage banks2 3he farmer provide shortEterm credit, while the letter e5tend longEterm loans to the farmers2

#C

PROFI8E OF T:E OR=ANISATIONA7

:OUSIN= DE>E8OPMENT FINANCE CORPORATION (:DFC BAN")

INTRODUCTION 3he housing development finance corporation limited '(-./* was amongst the first to receive an@inEprinciple@ approval from the reserve bank of India 'R0I* to set up a bank in the private sector, as part of R0I liberali6ation of Indian banking industry in #CC82 3he bank was in corporate in )ug2 #CC8 in the name of (-./ 0ank 7td2 Dith its registered office in 1umbai, India, (-./ 0ank commenced operations as scheduled commercial bank in Fanuary #CC%2 PROMOTOR (-./ is IndiaGs premier housing finance company and en,oys an impeccable track record in India as well as in international markets2 Since its inception in #CC?, the corporation has maintained a consistent and healthy growth in its operations to remain a market leader in mortgage2 Its outstanding loan portfolio covers well over a million dwelling units2 (-./ has developed significant e5pertise in retail

+&

mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities2 Dith its e5perience in the financial markets, a strong franchise, (-./ was ideally positioned to promote a bank in the Indian environment2

BUSINESS FOCUS (-./ bankGs mission is to be a world class Indian bank2 3he bank has aim to build sound customer franchises across district business so as to be the prefer provider of banking services in the segment that the bank operates in and to achieve healthy growth in profitability, consistent with the bankGs risk appetite2 3he bank is committed to maintain the highest level of ethical standards, professional integrity and regulatory compliance2 (-./ bankGs business philosophy is based on four core values: #2 +2 $2 82 :perational ;5cellence /ustomer .ocus 9roduct 7eadership 9eople2

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CAPITA8 STRUCTURE 3he authori6ed capital of (-./ bank is Rs2 8%&&& 7akhs2 3he issued, subscribed and paidEup capital is divided into A$=,8= lacks equity shares H Rs2#&IE each2

TIMES BAN"S AMA8=AMATION In a mile stone transaction in Indian banking industry, 3imes bank limited 'another new private sector bank promoted by 0ennett, /oleman < /o2 times group* was merged with (-./ bank ltd2, effective .ebruary +=, +&&&2 )s per the scheme of amalgamation approved by the share holders of both banks and Reserve bank of India2

DISTRIBUTION NET<OR" (-./ bank has its (eadqarters in 1umbai2 3he bank at present has an enviable network of %$%branches spread over $#+ cities across the country2 )ll branches are linked on an online real time basis2 /ustomer in #AC locations are also serviced through phone banking2 3he banks e5pansion plans take into account the need to have a presence in all ma,or industrial and commercial centers where its corporate customers are located as well as the need to build a strong retail customer base for

++

both deposits and loans products2 0eing a clearing settlement bank to various leading stock e5changes, the bank has branches in centers where the !S;I0S; have a strong and active member base2 3he bank also have a network of #$+$)31Gs across there cities2

TEC:NO8O=1 (-./ bank operates in a highly automated environment in terms of information technology and communication systems2 )ll the bankGs branches have connectivity which enables the bank to offer speedy funds transfer facility to its customers2 1ulti branch access is also provided to retail customers through the branch network and automated teller machines ')31s*

3he bank has made substantial efforts and investments in acquiring the best technology available internationally to build the infrastructure for a world class bank has prioriti6ed its engagement in technology and the internet as one of its key goals and has already made significant progress in web enabling its core business2 In each office its business, the 0ank has succeeded in leveraging its market position, e5pertise and technology to create a competitive advantage and build market share2

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BUSINESS PROFI8E (-./ 0ank caters to wide range of banking services covering both commercial and investment banking on the wholesale side and transactional branch banking on the retail side2 3he bank three key business areas

A.

<:O8ESA8E BAN"IN= SER>ICES 3he 0ankGs target is primary large blueEchip manufacturing companies in the Indian corporate sector and to a lesser e5tent, emerging mid si6ed corporate2 .or these corporate the 0ank provides a wide range of commercial and transactional 0anking services including working capital finance trade services, transactional services, cash management etc2 3he 0ank is also a leading provider of structure solution which combine cash management services with vendors and distributor finance for facilitating superior supply chain management for its corporate customers2 0ased on its superior product delivery service levels and strong customer orientation, the 0ank has made significant in roads into the 0anking consortia of a number of leading India corporate including 1ultinationals, /ompanies from the domestic business house

+8

and prime public sector companies2 It is recogni6ed as a leading provider of cash management and transactional 0anking solutions to corporate customers, 1utual .unds, Stock ;5change 1embers and 0ank2

2.

RETAI8 BAN"IN= SER>ICES: 3he ob,ective of retail bank is to provide its target market customer a full range of financial products and banking service, giving the customer a oneEstop window for all hisIher banking requirements2 3he products are backed by worldEclass services and delivered to the customers through the growing branch network as well as though alternative delivery channels like )31s, phone banking, net banking and mobile banking2 3he (-./ bank preferred programs for high net worth individuals, the (-./ bank plus and the investment advisory services program have been designed keeping in mind heads of customers who seek distinct financial solutions information and advice on various investment avenues2 3he also had a wide array of retail ban products including auto loans, loans against marketable securities, personal loans and loans for two wheelers2 It is also a leading provider of depository service to retail customers offering customers the facility

+%

to hold their investments in electronic form2 (-./ 0ank was the first bank in India to launch an international debit card in association with >IS) ' >isa election* and issue the master card 1aestro debit card as well2 3he debit card allows the use to directly debit his account at the point of purchase at a merchant establishment, in India and overseas2 3he bank launch its credit card in association with >IS) in !ovember +&&+2 3he bank is also one of the leading players in the @merchant acquiring@ business with +=,8&& point of sale 'pos* terminals for debitIcredit cards acceptance at merchant establishments2 3he bank is well positioned as a leader in various net based 0+/ opportunities including a wide range of interest banking services for fi5ed deposit, loans, bill payments etc2

3.

TREASUR1 OPERATIONS Dithin this business the bank has three main product areas foreign e5change and derivative, local currency, money market < debt securities and equities2 Dith the liberali6ation of the financial market in India, corporate need more sophisticated risk management information

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advice and product structure2 3hese and find pricing on various treasury product are provided through the bank treasury team2

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BOARD OF DIRECTOR 1r2 Fagdish kapoor, '/hairman* 1r2 )ditya 9uri, '1anaging -irector* 1r2 Keki 1istry -r2 >enkat Rao Badwal -r2 >ineet Fain 1rs2 Renu Karnad 1r2 )rvind 9ande 1r2 Ran,an Kapoor 'Resigned w2e2f2 +Cth 1arch, +&&=* 1r2 0obby 9arikh 'w2e2f2 Fan2 C, +&&8* 1r2 )shim Samanta >ICE PRESIDENT AND COMPAN1 SECRETAR1 1r2 San,any -ongre AUDITOR 1Is 92/ (ansotia < /o2 /hartered )ccountant RE=ISTERED OFFICE (-./ 0)!K (:US; Senapati 0apat 1art, 7ower 9arel, 1umbai 3el2 !o2 .a5 !o2 8&&#$ ==%+#&&& +8C=&?$?

Debsite : www2 hdfcbank2com

+A

S<OT ANA81SIS
STREN=:TS : J It has an e5tensive distribution network comprising of $#C branches in #== cities < one international office in -ubai this provides a competitive edge over the competitions2 J 3he 0ank has a strong retail depository base < has more than million customers2 J 0ank boasts of a strong brand equity2 J IS: C&&# certification for its depository < custody operations < for its backend processing of retail operation < direct banking operatiosn2 J 3he bank has a near competitive edge in area of operations2 J 3he bank has a market leader in cash settlement service for the ma,or stock e5changes in its country2 J (-./ 0ank is one of the largest private sector bank working in India2 J It has a highly automated environment in terms of information technology < communication system2 J Infrastructure is best2 J It has many innovative products like kids )dvantage scheme, !RI services2

+C

<EA"NESS : J )ccount opening and delivery of cheque book take comparatively more time2 J 7ack of availability of different credit products like // 7imit, 0ill discounting facilities2 OPPORTUNIT1 : J 0ranch e5pansion J -oor step services J Breater liberali6ation in foreign ownership via .-I in Indian 9vt2 Sector 0anks2 J //I :. .acilities2 J Infrastructure improvements < better systems for trading < settlement in the govt2 securities < foreign e5change markets2 T:REATS: J 3he bank has started facing competition from players like S0I, 9!0 0ank in the finance market itself2 3his reduce the profit margins in the future2 J Some 9vt2 0anks have ? days banking2

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JUSTIFICATION OF T:E STUD1

.inancial Statements are prepared primarily for decisionEmaking2 3hey play a dominant role in setting the framework of managerial decisions2 0ut the information in the financial statement is not an end in itself as no meaningful can be drawn from these statements alone2 3he information provided in the financial statement is of immense use in making decisions through analysis and interpretation of financial statements2 3he financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and 9<7 )I/2 3here are various methods or techniques used in analy6ing financial statement such as comparative statement, trend analysis, common si6e statement, schedule of changes in working capital, fund flow and cash flow analysis, cost volume profit analysis and KR)3I: )!)7 SISL2 Ratio analysis is one of the most powerful tool of financial analysis2 It is a process of establishing and interpreting various ratios that the financial statements can be analysed more clearly and decisions made from such analysis2 Fust like a -:/3:R e5amines his patient by recording his body temperature, blood pressure etc before making his conclusion regarding the

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illness and before giving his treatment, a financial analyst analysis the financial statement with various tools of analysis before commenting upon the financial health or weaknesses of an enterprise2 3he purpose of financial analysis is to diagnose the information contained in financial statements so as to ,udge the profitability and financial soundness of the firm2 .inancial statement analysis is an attempt to determine the significance and meaning of financial statement data so that forecast may be made of the future earning, ability to pay interest and debt maturities and profitability of a sound dividend policy2 ) financial ratio is the relationship between two accounting figures e5pressed mathematically ratio provide clues to the financial position of the concern2 3hese are the pointers and indicators of financial strength, soundness, position or weakness of an enterprise2 :ne can draw conclusions about the e5act financial position of a concern with the help of ratios2

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OBJECTI>E OF T:E STUD1

:b,ectives are the ends that states specifically how goal be achieved2 ;very study must have an ob,ective for which all the efforts have been done2 Dithout ob,ective no research can be conducted and no result can be obtained2 :n the basis of ob,ective all the research process is followed2 :b,ectives are the main aspect of every study2 3he ob,ective of the study gives direction to go through the research problem2 It guides the researcher and keeps him on track2 I have two ob,ectives regarding my research pro,ect2 3hese are shown below :E #2 +2 A. 9rimary ob,ective Secondary ob,ective P&! a&* -7E%)(!.% :#* 3o analyse the financial statements of the corporation to it4s true financial position by the use of ratios 2. S%)-#0a&* -7E%)(!.% :#* +* $* 8* 3o find out the shortcomings in (-./ 0ank 3o see whether (-./ is going well or not in different areas 3o inform the management about the financial condition of (-./ 3o inform the investor, enabling them to take the investment decision2

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8ITERARURE RE>IE<
#2

Kothari

/2R2, KMuantitative 3echniques#L ,9g#&E+&, KI have taken knowledge

about research design ,sample design < sampling2 In this I got what type of sample can be choosen and more about sample designL
+2

Khan

12 , Fain

92K

K1anagement )ccounting+L,9g =? , Ratios and there

formulationsL2
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0ruch 7ev, K.inancial Statement )nalysisE) new approach $L,pE##,+&&=, K(ow ratio can be analysed and about the interpretation of these ratios2L Bupta S292, K0usiness Statistics8L, 9g $?AE8#A K.rom here I found the

82

information regarding correlation , trend and statistical toolsL2

%2

Boel -2K2 K1anagement )ccounting and .inancial 1anagement %L,9g ?A KIn this I found the different types of ratios and there formulas and about thumb rule and all basic conceptL2 9andey , I21 K.inancial 1anagement=L 9gE#8$E#8% K(ow to prepare comparative balance sheet and how can we evaluateL2 1aheshwari ,S2! , N)dvanced )ccounting?L pg b8&Eb8A, KIt e5plains ratio analysis as a tool to analy6e the financial statements of organi6ation2 -ifferent ratios depict the position of firm in marketL2 1ittal R2K , K1anagement )ccounting< .inancial 1anagement AL pg +AE$& Kfrom this I have how to prepare comparative balance sheet and how to interpret itL Fain 32R2 , KStatistics for 10)CL 9g part / #$%E#$A, KInformation about the calculation of chi square testL2 0erry B2/2, K1arketing Research#&L pg#% KSome theoretical knowledge about the type of dataL2 S2/ Bupta, K.undamentals of Statistics##L pg##+, K.rom here I found the definitions that are the base for the statistical toolsL2 (ooda R292 KStatistics for 0usiness and ;conomics #+L pg+&CE+#+ K/alculation of trend analysis and its interpretationL2

=2

?2

A2

C2

#&2

##2

#+2

$8

#$2

(orne Fames2c2>an, K.undamental of .inancial 1anagement#$L pg#+%E#$& K.rom this I got how to analyse the financial conditionL /handra 9rasanna , K.undamental of .inancial 1anagement#8L, pg#&$E#&A Kthis book help me to analyse the balance sheet , how can we say that the firm is going well or notL2 /ooper R2-onald , K0usiness Research 1ethods#%L, pg#?=E#A& Kall about

#82

#%2

sampling design, its meaningL

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Boel -2K2, K)nlysis of .inancial Statements#=L , pg #E#% 2 .rom this I have taken theory of financial statements2 http:IIwww2hdfcbank2comIaboutusIdefault2htm #?
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INTRODUCTION OF T:E TOPICAD

MEANIN= OF FINANCIA8 STATEMENTS:.inancial statements refer to such statements which contains financial information about an enterprise2 3hey report profitability and the financial position of the business at the end of accounting period2 3he team financial statement includes at least two statements which the accountant prepares at the end of an accounting period2 3he two statements are: E A. 2. Th% Ba$a#)% Sh%%( P&-3!( A#0 8-ss A))-'#( 3hey provide some e5tremely useful information to the e5tent that balance Sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owners equity, and so on and the 9rofit )nd 7oss account shows the results of operations during a certain period of time in terms of the revenues obtained and the cost incurred during the year2 3hus the financial statement provides a summari6ed view of financial positions and operations of a firm2

MEANIN= OF FINANCIA8 ANA81SIS

3he first task of financial analysis is to select the information relevant to the decision under consideration to the total information contained in the financial statement2 3he second step is to arrange the information in a way to highlight significant relationship2 3he final step is interpretation and drawing of inference and conclusions2 .inancial statement is the process of selection, relation and evaluation2

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F%a('&%s -3 F!#a#)!a$ A#a$*s!s E 3o present a comple5 data contained in the financial statement in simple and understandable form2 E 3o classify the items contained in the financial statement in convenient and rational groups2 3o make comparison between various groups to draw various conclusions2 P'&6-s% -3 A#a$*s!s -3 3!#a#)!a$ s(a(% %#(s 3o know the earning capacity or profitability2 3o know the solvency2 3o know the financial strengths2 3o know the capability of payment of interest < dividends2 3o make comparative study with other firms2 3o know the trend of business2 3o know the efficiency of mgt2 3o provide useful information to mgt P&-)%0'&% -3 F!#a#)!a$ S(a(% %#( A#a$*s!s 3he following procedure is adopted for the analysis and interpretation of financial statements:E

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 3he analyst should acquaint himself with principles and postulated of accounting2 (e should know the plans and policies of the management so that he may be able to find out whether these plans are properly e5ecuted or not2 3he e5tent of analysis should be determined so that the sphere of work may be decided2 If the aim is find out2 ;arning capacity of the enterprise then analysis of income statement will be undertaken2 :n the other hand, if financial position is to be studied then balance sheet analysis will be necessary2 3he financial data be given in statement should be recogni6ed and rearranged2 It will involve the grouping similar data under same heads2 0reaking down of individual components of statement according to nature2 3he data is reduced to a standard form2 ) relationship is established among financial statements with the help of tools < techniques of analysis such as ratios, trends, common si6e, fund flow etc2 3he information is interpreted in a simple and understandable way2 3he significance and utility of financial data is e5plained for help in decision making2 3he conclusions drawn from interpretation are presented to the management in the form of reports2

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T1PES OF FINANCIA8 ANA81SIS

A)C$ass!3!)a(!-# -# (h% 7as!s -3 #a('&a$ 's%0 a) E9(%&#a$ A#a$*s!s
:utsiders, who don4t have access to the detailed internal accounting records of the business firm, do this analysis2 3hese outsiders parties are potential investor, creditors, agencies < general public2 government agencies, credit

b* I#(%&#a$ A#a$*s!s:
3he analysis conducted by person who has access to the internal accounting records of a business firm is known as internal analysis2
0*

O# (h% 7as!s -3

-0's -6%&a#0:

a) :-&!F-#(a$ A#a$*s!s:
(ori6ontal analysis refers to the comparison of financial data of a company for several years2 3he figures of this type of analysis are presented hori6ontally over a no2 of columns2 3his type of analysis is also called K-ynamic )nalysisL2

7) >%&(!)a$ A#a$*s!s:

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3his analysis refers to the study of relationship of the various items in the financial statements, of one accounting period2 It is also known as KStatic analysisL2

FUNCTIONS OF FINANCE DEPARTMENT

3he functions of finance department include the following areas: #* ;ffective management of financial resources of the company2 +* /oordinates < 1onitors the functions of accounts activities in the unitsImarketing offers2 $* ;stablish and maintain systems of financial control, internal check and render advice on financial < accounting matters including e5amination of feasibility report and detailed pro,ect reports2 8* ;stablish and maintain proper system of budgetary control, cost control and management reporting2 %* 1aintain financial accounts and compile annual periodical accounts in accordance with the companies )ct, #C%=, ensuring the audit of accounts as per lawIBovt2 directions2 =* 7ooks after overall funds management and arranges funds required for the capital schemes and working capital form govt2, banks and financial institutions etc2 ?* 3imely payment of all ta5es, levies < duties under the 7aw, 1aintenance of records and filing returns statements connected with
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such ta5es, levies and duties with the appropriate authorities , as per law2 )ll the power involving financial implications are to e e5ercised in prior consultation with head of concerned finance department2 In the event of any difference of opinion between the Beneral 1anger and the (ead of .inance -ept2, the matter shall be referred to 1anaging -irector who after consulting -irector '.inance* shall issue appropriate instruction after following the prescribed procedures2

MET:ODS OF FINANCIA8 ANA81SIS

) number of methods can be used for the purpose of analysis of financial statements2 3hese are also termed as techniques or tools of financial analysis2 :ut of these, and enterprise can choose those techniques which are suitable to its requirements2 3he principal techniques of financial analysis are: A. C- 6a&a(!.% F!#a#)!a$ S(a(% %#(s. 2. C-# G s!F% S(a(% %#(s

3. T&%#0 A#a$*s!s B. F'#0s F$-@ s(a(% %#(s %2 Cash F$-@ S(a(% %#(

COMPARATI>E FINANCIA8 STATEMENTS

Dhen financial statements figures for two or mote years are placed sideEside to facilitate comparison, these are called Ncomparative .inancial Statements42 Such statements not only show the absolute figures of various years but also

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provide for columns to indicate to increase ort decrease in these figures from one year to another2 In addition, these statements may also show the change from one year to another on percentage form2 Such cooperative statements are of great value in forming the opinion regarding the progress of the enterprise2

PURPOSE OR UTI8IT1 OR IMPORTANCE OF COMPARATI>E STATEMENTS

#2 3o make the -ata simpler and more understandable +2 3o indicate the 3rend $2 3o indicate the strong points weak points of the concern 82 3o compare the firms performance with the average performance of the industry %2 3o help in forecasting

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FORMS OF PRESENTIN= COMPARATI>E STATEMENTS

#2 3o show only the absolute data of various items or in other words to show only rupee amounts of various items2 +2 3o show the increases and decreases in data in terms of money values $2 3o show the increases and decreases in data in terms of percentages 82 /omparison e5pressed in ratios %2 Use of cumulative figures and averages

COMPARATI>E BA8ANCE S:EET

3he /omparative 0alance Sheet as on two or more different dates can be prepared to show the increase or decrease in various assets, liabilities and capital2 Such a comparative 0alance Sheet is very useful in studying the trends in a business enterprise2

AD>ANTA=ES OF COMPARATI>E BA8ANCE S:EET

#2 (elpful for comparison2 +2 (elpful in knowing changing in the si6e of items2 $2 (elpful in knowing trends2 82 7ink between income statement and 0alance sheet

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COMPARATI>E PROFIT 5 8OSS ACCOUNT

9rofit and loss account shows the net profit or net loss of a particular year whereas comparative profit and loss account for a number of years provides the following information #2 Rate of increase or decrease in gross profit2 +2 Rate of increase or decrease in operating profit2 $2 Rate of increase or decrease in cost of goods sales 82 Rate of increase or decrease in net profit %2 Rate of increase or decrease in sales2

TREND ANA81SISA2
3rend percentage are very useful is making comparative study of the financial statements for a number of years2 3hese indicate the direction of movement over a long tine and help an analyst of financial statements to form an opinion as to whether favorable or unfavorable tendencies have developed2 3his helps in future forecasts of various items2 .or calculating trend percentages any year may be taken as the Nbase year42 ;ach item of bease year is assumed to be equal to #&& and on that basis the percentage of item of each year calculated2

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RATIO ANA81SIS7
MEANIN= : )bsolute figures e5pressed in financial statements by themselves are meaningfulness2 3hese figures often do not convey much meaning unless e5pressed in relation to other figures2 3hus, it c an be say that the relationship between two figures, e5pressed in arithmetical terms is called a ratio2 A))-&0!#/ (- R.N. A#(h-#*.;

A &a(!-# !s s! 6$* -#% #' 7%& %96&%ss%0 !# (%& s -3 a#-(h%&. I( !s 3-'#0 7* 0!.!0!#/ -#% #' 7%& !#(- (h% -(h%&.; T1PES OF RATIOS
9roportion or 9ure Ratio or Simple ratio2 Rate or so many 3imes2 9ercentage .raction2

OBJECTS AND AD>ANTA=ES OR USES OF RATIO ANA81SIS

(elpful in analysis of financial statements2 Simplification of accounting data2

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 (elpful in comparative study2 (elpful in locating the weak spots of the business2 (elpful in forecasting ;stimate about the trend of the business .i5ation of ideal standards ;ffective control Study of financial soundness2

8IMITATION OF RATIO ANA81SIS

.alse accounting data gives false ratios /omparisons not possible of different firms adopt different accounting policies2 Ratio analysis becomes less effective due to price level change Ratios may be misleading in the absence of absolute data2 7imited use of a single Ratio2 DindowE-ressing 7ack of proper standards2 Ratio alone are not adequate for proper conclusions ;ffect of personal ability and bias of the analyst2
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C8ASSIFICATION OF RATIOS
In view of the financial management or according to the tests satisfied, various ratios have been classifieds as below

I2

8!H'!0!(* Ra(!-s: 3hese are the ratios which measure the shortEterm
solvency or financial position of a firm2 3hese ratios are calculated to comment upon the shortEterm paying capacity of a concern or the firm4s ability to meet its current obligations2

II2

8-#/ GT%&

S-$.%#)* a#0 8%.%&a/% Ra(!-s

7ongEterm

solvency ratios convey a firm4s ability to meet the interest cost and repayment schedules of its longEterm obligation e2g2 -ebit ;quity Ratio and Interest /overage Ration2 7everage Ratios2
III2

A)(!.!(* Ra(!-s: )ctivity ratios are calculated to measure the

efficiency with which the resource of a firm have been employed2 3hese ratios are also called turnover ratios because they indicate the speed with which assets are being turned over into sales e2g2 debtors turnover ratio2

I>2 P&-3!(a7$!(* Ra(!-s: 3hese ratios measure the results of business operations or overall performance and effective of the firm e2g2 gross profit ratio, operating ratio or capital employed2 Benerally, two types of profitability ratios are calculated2 (a) I# &%$a(!-# (- Sa$%s+ a#0 (7)I# &%$a(!-# !# I#.%s( %#(

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FUNCTIONA8 C8ASSIFICATION IN >IE< OF FINANCIA8 MANA=EMENT OR C8ASSIFICATION ACCORDIN= TO TESTS

8!H'!0!(* Ra(!-s ')* #2 /urrent Ration +2 7iquid Ration ')cid* 3est or Muick Ratio2 $2 )bsolute liquid or /ash Ratio2 82 Internal 1easure 'b* #2 -ebtors 3urnover Ratio +2 /reditors 3urnover Ratio $2 Inventory 3urnover Ratio 8-#/-(%& S-$.%#)* a#0 8%.%&a/% Ra(!-s .inancial :perating /omposite #2 -ebt2 ;quity Ratio +2 -ebt to 3otal /apital Ratio $2 Interest /overages 82 /ash .lowI -ebt %2 /apital Bearing A)(!.!(* Ra(!-s #2 Inventory 3urnover Ratio2 +2 -ebtors 3urnover $2 .i5ed )ssets 3urnover Ratio 82 3otal )sset 3urnover Ratio %2 Dorking /apital 3urnover Ratio2 =2 9ayables 3urnover Ratio ?2 /apital ;mployed 3urnover P&-3!(a7!$!(* Ra(!-s ')* In Relation to Sales2 #2 Bross 9rofit Ratio2 +2 :perating Ratio2 $2 :perating 9rofit Ratio2 82 !et 9rofit Ratio2 %2 ;5penses Ratio '0* In relation to investments #2 Return on Investments2 +2 Return on capital2 $2 Return on ;quity /apital2 82 Return on total Resources %2 ;arning per share2 =2 9rice ;arning Ratio2

Show the proportions of debt and equity in financing of the firm2 3hese ratios measure the contribution of financing by owner as compared to financing by outsiders2 3he leverage ratios can further be classified as: 'i* .inancial 7everages, 'ii* :perating 7everage, 'iii* /omposite 7everages

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CAS:-F8O< STATEMENTAD
) cash " flow statement is a statement showing inflows 'receipts* and outflows 'payments* of cash during a particular period2 In other words, it is a summary of sources and applications of each during a particular span of time2 O7E%)(!.%s -3 Cash F$-@ S(a(% %#( : Useful for ShortE3erm .inancial 9lanning2 Useful in 9reparing the /ash 0udget2 /omparison with the /ash 0udget2 Study of the 3rend of /ash Receipts and 9ayments2 It e5plains the -eviations of /ash from ;arnings2 (elpful in )scertaining /ash .low from various Separately2 (elpful in 1aking -ividend -ecisions2

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RESEARC: MET:ODO8O=1A
3he procedure adopted for conducting the research requires a lot of attention as it has direct bearing on accuracy, reliability and adequacy of results obtained2 It is due to this reason that research methodology, which we used at the time of conducting the research, needs to be elaborated upon2 Research 1ethodology is a way to systematically study and solve the research problems2 If a researcher wants to claim his study as a good study, he must clearly state the methodology adapted in conducting the research the research so that it way be ,udged by the reader whether the methodology of work done is sound or not2 Th% R%s%a&)h M%(h-0-$-/* h%&% !#)$'0%s. A. M%a#!#/ -3 R%s%a&)h. 2. R%s%a&)h P&-7$% . 3. R%s%a&)h D%s!/#. B. Sa 6$!#/ D%s!/#. C. Da(a C-$$%)(!-# %(h-0. D. A#a$*s!s a#0 !#(%&6&%(a(!-# -3 Da(a. M%a#!#/ R%s%a&)h: Research is defined as Ka s)!%#(!3!) a#0 s*s(% a(!) s%a&)h 3-& 6%&(!#%#( !#3-& a(!-# -# a s6%)!3!) (-6!);. Research is an art of scientific investigation2 Research is a systemati6ed effort to gain now knowledge2 It is a careful investigation or inquiry especially through search for new facts in any branch of knowledge2 Research is an academic activity and this term should

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be used in a technical sense2 Research comprises defining and redefining problems, formulating hypothesis or suggested solutions2 1aking deductions and reaching conclusions to determine whether they if the formulating hypothesis2 Research is thus, an original contribution to the e5isting stock of knowledge making for its advancement2 3he search for knowledge through ob,ective and systematic method of finding solutions to a problem is research2

R%s%a&)h P&-7$% 3he first step while conducting research is careful definition of Research 9roblem2 K3o ;RR IS 3(; (U1)!L is a proverb which indicates that no one is perfect in this world2 ;very researcher has to face many problems which conducting any research that4s why problem statement is defined to know which type of problems a researcher has to face while conducting any study2 It is said that, P&-7$% @%$$ 0%3!#%0 !s 6&-7$% ha$3 s-$.%0.; 0asically, a problem statement refers to some difficulty, which researcher e5periences in the conte5t of either a theoretical or practical situation and wants to obtain the solution for the same2 3he problem statement here is: Ta4% a F!#a#)!a$ A#a$*s!s -3 F!#a#)!a$ s(a(% %#(s -3 :DFC BAN" "URU"S:ETRA.

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R%s%a&)h D%s!/# ) research designs is the arrangement of conditions for collection and analysis data in a manner that aims to combine relevance to the research purpose with economy in procedure2 Research -esign is the conceptual structure with in which research in conducted2 It constitutes the blueprint for the collection measurement and analysis of data2 Research -esign includes and outline of what the researcher will do form writing the hypothesis and it operational implication to the final analysis of data2 ) research design is a framework for the study and is used as guide in collection and analy6ing the data2 It is a strategy specifying which approach will be used for gathering and analy6ing the data2 It also include the time and cost budget since most studies are done under these two cost budget since most studies are done under theses tow constraints2 3he design is such studies must be rigid and not fle5ible and most focus attention on the following2 #2 Dhat is the study aboutP +2 Dhy is the study being madeP $2 Dhere will the study be carried outP 82 Dhat type of data is requiredP %2 Dhere can be required data be foundP =2 Dhat period of time will the study includeP ?2 Dhat will be sample designP A2 Dhat techniques of data collection will be usedP C2 (ow will the data be analy6edP #&2In what style will the report be preparedP

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T1PES OF RESEARC: DESI=N: E?PERIMENTA8 RESEARC: DESI=N E?P8ORATOR1 RESEARC: DESI=N DESCRIPTI>E5 DIA=NOSTIC RESEARC: E96$-&a(-&* R%s%a&)h D%s!/#: 3his research design is preferred when researcher has a vague idea about the problem the researcher has to e5plore the sub,ect2 E96%&! %#(a$ R%s%a&)h D%s!/# G 3he research design is used to provide a strong basis for the e5istence of casual relationship between two or more variables2 D%s)&!6(!.% R%s%a&)h D%s!/# G It seeks to determine the answers to who, what, where, when and how questions2 It is based on some previous understanding of the matter2 D!a/#-s(!) R%s%a&)h D%s!/# It determines the frequency with which something occurs or its association with something else2 R%s%a&)h D%s!/# Us%0 !# (h!s P&-E%)( Research -esign chosen for this study is -escriptive Research -esign2 -escriptive study is based on some previous understanding of the topic2 Research has got a very specific ob,ective and clear cut data requirements2

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Sa 6$!#/ D%s!/#AC Sampling is necessary because it is almost impossible to e5amine the entire parent population 'i2e2 the entire universe* various factors such as time available cost, purpose of study etc2 make it necessary for the researchers to choose a sample2 It should neither be too small nor too big2 It should be manageable2 3(; sample si6e of past $ years is taken for present study due to time limitation2 DATA CO88ECTIONS A0 3he process of data collection begins after a research problem has been defined and research design ahs been chalked out2 3here are two types of data " MET:ODS OF PRIMAR1 DATA OBSER>ATION MET:OD INTER>IE< MET:ODS IUESTIONAIRE MET:OD SC:EDU8E MET:OD PRIMAR1 DATA It is first hand data, which is collected by researcher itself2 9rimary data is collected by various approaches so as to get a precise, accurate, realistic and relevant data2 3he main tool in gathering primary data was investigation and

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observation2 It was achieved by a direct approach and observation from the officials of the company2 SECONDAR1 DATA - it is the data which is already collected by someone else2 Researcher has to analy6e the data and interprets the results2 It has always been important for the completion of any report2 It provides reliable, suitable, adequate and specific knowledge2 I took data comprise annual reports and post records2 0ank has provided me annual reports from +&&8E&% to +&&?E&A by help of which, I prepared my report2 3he valuable cooperation e5tended by staff members contributed a lot to fulfill the requirements in the collection of data in order to complete the pro,ect2 >arious statistical tools are applied depending on the research problem2 In this study ratio analysis, comparative financial statements analysis, common si6e statements and 3rend )nalysis has been used for analy6ing and interpreting the result2

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COMPARATI>E PROFIT AND 8OSS23 OF :DFC BAN"

FOR T:E 1EAR ENDED 3AST MARC:+ 2007
COMPERATI>E INCOME STATEMENT 3-& (h% *%a& %#0%0 3As( a&)h 2002

PARTICU8ARS
I!3 I!/:1; 'E*/ost of sales B29')* :9;R)3I!B ;Q9 Selling ;5p )dm ;Q9 3otal :perating ;5p'0* :perating income')E0* 'R*:2Income 32Inc 'E*:2;5p !et income 'E*3a5 !et 9rofit

2007
A$&$2$8 +$?#2&= %C$+2+A ?82AA #%#C2$+ #%C82+ 8$$A2&A +A%%2?C ?#C$2A? $C%=2$# $+$?2%= 8C?2? +?$C2A=

2002 INC,DEC
#+$%828# $==$2%= A=C&2A% ##82?$ ++8?28A +$=+2+# =$+A2=8 $A8=2?? #&#?%28# =#AA28? $CA=2C8 =C&2C $+C=2&8 8&%#2&? #+C+2% +?%A2%? $C2A% ?+A2#= ?=A2&# #CC&2%= CC&2CA +CA#2%8 ++$+2#= ?8C2$A #C$2+ %%=2#A

JINC,DEC
8A2?A %82%# 8=2% %$2+# 8?2C+ 8A2#? 8%2AA $82? 8#288 %=28+ +$2#8 $A2A# +&2+C

I!3;R9R;3)3I:!
Since the profit of the bank has been inc2by +&2+CS during last fiscal so financial of bank is satisfactory2

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RATIO ANA81SIS3
>ARIOUS CA8CU8ATED RATIOS OF :.D.F.C BAN"

C'&&%#( Ra(!/urrent ratio may be defined as the relationship between current assets and current liabilities2

C'&&%#( &a(!- K C'&&%#( ass%(s,)'&&%#( $!a7!$!(!%s

ear /urrent Ratio +&&= #2#&
C.R 1.11 1.10 1.09 1.08 1.07 1.06 1.05 1.10 1.08 1.07

+&&? #2&?

+&&A #2&A

C.R

C.R

006

007 Years

008

I#(%&6&%(a(!-# If the /2R2 is less than + : #, it indicates lack of liquidity and shortage of working capital2 0ut a much higher ratio, even though it is beneficial to the shortEterm creditors, is not necessarily good for the company2 ) much higher ratio than + : # may indicate the poor investment policies of the management2 So liquidity of 0ank is satisfactory2
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I#(%&%s( )-.%&a/%,0%7( s%&.!)% &a(!K N%( 6&-3!( (7%3-&% !#(%&%s( a#0 (a9%s), F!9%0 !#(%&%s( )ha&/%
I!terest "#$era%e rat&#'t&(es) .5 .+ .* ICR . .1 1.9 1.8 005,06 006,07 Years 007,08 .09 I!terest "#$era%e rat&#'t&(es)

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I#(%&6&%(a(!-# : Since this Ratio indicates the interest paying capability of firm and ideal Ratio is = to ? times2 So interest paying capacity of the firm is moderate2

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O6%&a(!#/ &a(!-K (O6%&a(!#/ )-s( , N%( !#)- % )LA00

I#(%&6&%(a(!-# : :perating Ratio is a measurement of the efficiency and profitability of the business enterprise2 3he ratio indicates the e5tent of sales that is absorbed by the cost of goods sold and operating e5penses2 7ower the operating ratio, the better it is, because it will leave higher margin of profit on sales2

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R%('&# -# /&-ss )a6!(a$ % 6$-*%0K(N%( 6&-3!( , =&-ss )a6!(a$ % 6$-*%0) L A00 =&-ss )a6!(a$ % 6$-*%0K 3!9%0 ass%(s M )'&&%#( ass%(s
Retur! #! %r#ss "a-&ta. e(-.#/e0'1) Return on gross capital employed 9 8 7 6 5 + * 8 6 + Retur! #! %r#ss "a-&ta. e(-.#/e0'1)

005,06

006,07 Years

007,08

I#(%&6&%(a(!-# : Since profit is the overall ob,ective of a business enterprise, this ratio is a barometer of the overall performance of the enterprise2 It measures how efficiently the capital employed in the business is being used2

=&

R%('&# -# sha&%h-$0%&sK (N%( 6&-3!( , Sha&%h-$0%&s 3'#0s) LA00

Retur! #! shareh#.0ers'1) Return on S are olders !unds 0 15 10 5 0 005,06 006,07 Years 007,08 17.7+ 1*.8* Retur! #! shareh#.0ers'1)

16.+*

I#(%&6&%(a(!-# : 3his Ratio indicates what amount of return has been given to the Share holders of the firm which help in building the good will firm2

=#

I#(%&%s( %96%#s% &a(!-K (I#(%&%s( %96%#s% , !#)- %) L A00

I#(%&6&%(a(!-# : 3his Ratio indicates that what is the Ratio of 3otal Interest ;5penses to the Income2 So that we can know about profitability of firm2

=+

N%( 6&-3!( &a(!- K (N%( 6&-3!( , N%( !#)- %) L A00

2et -r#3&t rat&#'1) 5 0 N"R 15 10 5 0 005,06 006,07 Years 007,08 0.58 17 15.7 2et -r#3&t rat&#'1)

I#(%&6&%(a(!-# : 3his Ratio measures the rate of net profit earned on sales2 It helps in determining the overall efficiency of the business operations2 )n increase in the ratio over the previous year shows improvement in the overall efficiency and profitability of the business2 -uring last fiscal the net profit of the bank has been decreased due to interest e5penses2

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O6%&a(!#/ 6&-3!( &a(!-K (O6%&a(!#/ 6&-3!( , I#)- %) L A00

O-erat&!% -r#3&t rat&# '1) + +1 +0 O"R *9 *8 *7 *6 *5 005,06 006,07 Years 007,08 *8.57 *7. O-erat&!% -r#3&t rat&# '1) +0.98

I#(%&6&%(a(!-# : :perating Ratio and :perating 9rofit Ratio are interErelated and total of both these Ratio is #&&2 0oth Ratios indicated the profitability of firm2

=8

R%('&# -# #%( )a6!(a$ % 6$-*%0 K (N%( 6&-3!( , N%( )a6!(a$ % 6$-*%0) L A00 N%( )a6!(a$ % 6$-*%0 K T-(a$ ass%(s- C'&&%#( $!a7!$!(*

I#(%&6&%(a(!-# : 3his Ratio indicates how well the /apital employed is being use in business2 ;ven the performance of two dissimilar firms may be compared with the help of this Ratio2

=%

O6%&a(!#/ %96%#s%s &a(!-K (O6%&a(!#/ E96%#s%s ,I#)- %)

LA00
O-erat&!% e4-e!ses rat&#'1) +1 +0 *9 *8 *7 *6 *5 *+ *9.98

*6.+1

*7.0*

O-erat&!% e4-e!ses rat&#'1)

O#R

005,06

006,07 Years

007,08

I#(%&6&%(a(!-# : 3his Ratio indicates the how much e5penses has been spent on selling and administration use of organi6ation2 -uring last fiscal bank4s operating e5penses has been increased2 So, operating e5pense ratio is in increasing trend2

==

EPS K N%( 6&-3!( a3(%& !#(%&%s(+ (a9 5 6&%3%&%#)% 0!.!0%#0 , N-. -3 %H'!(* sha&%s

I#(%&6&%(a(!-# : 3his ratio is helpful in the determination of the market price of the equity share of the company2 3he ratio is also helpful in estimating the capacity of the company to declare dividends on equity shares2 In the last year ;9S has been increased due to increased profit2

=?

DPS K D!.!0%#0 6a!0 (- %H'!(* sha&%h-$0%&s , N-. -3 %H'!(* sha&%s

D5S 9.00 8.00 7.00 6.00 5.00 +.00 *.00 .00 1.00 0.00 8.50 7.0 5.50 D5S

D"S

006

007 Years

008

I#(%&6&%(a(!-# : 3his Ratio indicates how much profit has been given in hand to the equity share holders2 3his represents higher the ratio more is the good will of the firm2

=A

P.E Ra(!- K Ma&4%( 6&!)% 6%& sha&% , Ea&#!#/ 6%& sha&%

5.E Rat&#'1) 9 8.5 8 7.5 7 6.5 6 5.5 5 8.80 7.7+ 5.E Rat&#'1)

".# Ratio$%&

6. 9

006

007 Years

008

I#(%&6&%(a(!-# : 3his ratio shows how much is to be invested in the market in this company4s shares to get each rupee of earning on its shares2 3he ratio is used to measure whether the market price of a share is high or low2

=C

CAS: F8O< STATEMENT23 Cash F$-@ S(a(% %#(

3-& (h% *%a& %#0%0 Ma&)h 3A+2002
1%a& %#0%0 3A.03.2002 Cash 3$-@ 3&a)(!.!(!%s -6%&a(!#/ (Rs. I# N000) 1%a& %#0%0 3A.03.2007

!et profit before ta5es )d,ustment for: -epriciation and amortisation !et 'appreciation* I depriciation on investments 9rovision in respect of non performing assets 9rovision for contigencies < others Income from subsidiaries '9rofit* I 7oss on sale of fi5ed assets

%&,%=&,C??

$=,8A&,$C#

?,?##,&## #&,+?C,=&A +?,&&C,C+8 #,8#$,$%8 E#+,?A$,%CC E=%=,&=C A$,%$%,+&=

?,=$C,&&+ C,C#A,8#C +#,%C+,CCC +%#,$## E8,8A8,C#% E#,#%+,++8 ?&,+88,CA+

A0E's( %#( 3-& : 'Increase* I decrease in investments 'Increase* I decrease in advances Increase I 'decrease* in borrowings IncreaseI 'decrease* in deposits 'Increase* I decrease in other assets Increase I'decrease* in other liabilities and provisions E+%,&#%,C&A E#C,===,#%?

E$+&,A%&,$%% E%##,+%%,+=? 8$,#++,+C$ #+=,&?C,$$C E+?,#8C,%$$ ++,$$&,?#= E#A#,8A$,88A %?,&$C,C+? %%8,+?&,#8C E+A,?%A,CCC +=,AA=,#CC #?A,%#%,A%+ E#A,#8#,$#+

Refund I 'payment* of direct ta5es

E#A,$=$,+C+

?&

N%( )ash /%#%&a(%0 3&a)(!.!(!%s Cash 3$-@ 3&a)(!.!(!%s

-6%&a(!#/ (A) !#.%s(!#/ -BB+379+9A7 A2+723+799 -9+C92+B27 A+0DB+03C -AC+7C2+ADD B+B2B+9AC -B+92B+D23 B+3B7+300 -AAD+3AA+C3B 230+DA9+C22

I#.%s( %#(s !# s'7s!0!a&!%s I#)- % 3&s'7s!0!a&!%s

P'&)has% -3 3!9%0 ass%(s P&-)%%0s 3&sa$% -3 3!9%0 ass%(s a('&!(*

(P'&)has%) , sa$% -3 h%$0 (s%)'&!(!%s N%( )ash /%#%&a(%0 3&a)(!.!(!%s

-A3C+B2D+C79 -A7A+77D+A3B (B) -A7C+DAA+AB9 -A23+D2D+702

!#.%s(!#/

Cash 3$-@ 3&a)(!.!(!%s P&-)%%0s 3&-

3!#a#)!#/ A97+297+0D0 AA2+3AD+AD7 -A0+CDC+000 (C) (D) 299+DB2+227 -290+0DC 2+07B+BAB AD0+7A7+320 -2+DBD+02A ACB+ABC+77B -327+C27

!ss'% -3 sha&% )a6!(a$

N%( 6&-)%%0s , (&%6a* %#() -3 7-#0s D!.!0%#0 a#0 0!.!0%#0 (a9 6a!0 N%( )ash /%#%&a(!#/ 3&a)(!.!(!%s 3!#a#)!#/

E33%)( -3 %9)ha#/% 3$')('a(!-# -# (&a#s$a(!-# &%s%&.%

N%( !#)&%as% , 0%)&%as% !# )ash a#0 )ash %H'!.a$%#(s D+23C+B79 Cash a#0 )ash %H'!.a$%#( as a( A6&!$ A Cash a#0 )ash %H'!.a$%#( as a( Ma&)h3A 37A+2A3+2B7 372+0B2+72D 200+2AA+00A A70+B02+2BC 37A+2A3+2BD

C-

-# S!F% Ba$a#)% Sh%%( 23

?#

C-

-# S!F% Ba$a#)% Sh%%( :

2007 Ja/%

2002 Ja/%

CAPITA8 AND 8IABI8ITIES /apital Reserve and surplus -eposits 0orrowings :ther liabilities and provisions T-(a$ Ca6!(a$ a#0 8!a7!$!(!%s ASSETS /ash and balances with Reserve 0ank of India 0alances with banks and money at call and short notice Investments )dvances .i5ed assets :ther assets T-(a$ Ass%(s &2$= =2?C ==2AC #82A? ##2&C #&& &2$= ##2$8 =#2#8 #=28+ #&2?8 #&&

%28$ %2$8 +=28A %=2A$ #2#8 82?A #&&

?2$8 +2#? +?2AA %=28$ #2&$ %2#% #&&

STATISTICA8 TOO8SAA

?+

I#(&-0')(!-#:
)n educated citi6en needs an understanding of basic statistical tools to function in a world that is becoming increasingly dependent on quantitative information2

S(a(!s(!)s

%a#s #' %&!)a$ 0%s)&!6(!-# (-

-s( 6%-6$%

In fact the term statistics is generally used to mean numerical facts and figures such as agricultural production during a year, rate of inflation and so on2 (owever as a sub,ect of study, statistics refers to the body of principles and procedures developed for collection, classification, summari6ation and interpretation of numerical data and for the use of such data2

M%a#!#/: 0roadly speaking the term statistics has been generally used in
two senses:

S!#/'$a& S%#s% P$'&a$ s%#s%

3he term statistics in its P8URA8 SENSE, refers to the numerical data or statistical data2 In its SIN=U8AR SENSE, the term refers to a science in which we deal with the techniques or methods of collecting, classifying, presenting, analy6ing and interpreting the data2 In other words, the concept in its singular sense, refers to statistical methods2

P'&6-s%

?$

Dithout the assistance of statistical methods an organi6ation would find it impossible to make a sense of huge data2 3he purpose of statistics is toE E1anipulate ESummari6e EInvestigate 3he data so that useful making information results could be found out2 In fact every business manager needs a sound background of statistics2 Statistics is a set of -ecision 1aking 3echniques, Dhich aids businessmen in drawing inferences from the available data

STATISTICA8 TOO8S
Statistical tools are the basic measures, which help in defining the relation between different items, present, past and future trend of particular business etc2 ) wide variety of statistical tools are available and businessmen depending upon the nature of his trade can use any of them2 >arious statistical tools areE

A. C-&&%$a(!-# 2. T! % s%&!%s 3. Fa)(-& a#a$*s!s B. P&!#)!6a$ )- 6-#%#( a#a$*s!s C. M'$(!6$% R%/&%ss!-#

(ere I am using correlation statistical tool to define the relationship between Interest e5pense and Interest income of company, 3rend analysis in order to
?8

pro,ect future trend values and )!:>) 3;S3 as (ypothesis testing2 So, before using the tool one should have the knowledge about that statistical tool2 3herefore this tool is defined as underE

CORRE8ATIONB
/orrelation analysis is basically used to determine the degree of relationship between different variables2 It refers to the statistical technique that is used in measuring the closeness of relationship between two or more variables, with the help of correlation analysis we can measureE E3he degree of relationship in one figure E3he mutual relationship between two variables2 Eeconomic relationship between demand and supply E3he estimation of costs, sales, prices etc2 is possible for a trader with the help of correlation2

T1PES OF CORRE8ATION

?%

P-s!(!.% a#0 #%/a(!.% )-&&%$a(!-#

Dhen two variables Q and correlation2 move in same direction i2e2 positive correlation and when both variables move in opposite direction, which is negative

8!#%a& a#0 C'&.*-$!#%a& C-&&%$a(!-#

Dhen the ratio of change of two variables Q and remains constant throughout, then they said to be linearly correlated and when the ratio of change between the two variables is not constant but changing, then correlation is said to be curvyElinear2

S! 6$%+ Pa&(!a$ a#0 M'$(!6$% C-&&%$a(!-#

Dhen we study the relationship up to variables only, then it is called simple correlation2 Dhen three or ore variables are taken but relationship between any two of the variables as constant, then it is called partial correlation and when we study the relationship among three or more variables, it is called multiple correlation2

DE=REE OF CORRE8ATION
S&. N-. #2 +2 $2 82 D%/&%% -3 )-&&%$a(!-# P-s!(!.% N%/a(!.% 9erfect correlation R# E# (igh degree of correlation 0etween R&2?% to 0etween E&2?% to 1oderate degree R# E# of 0etween R&2+% to 0etween E&2+% to R&2?% E&2?% 0etween &R to 0etween R&2+% E&2+% & to

correlation 7ow degree of correlation

?=

%2

)bsence of correlation

&

&

<:1 TO USE CORRE8ATION

-ifferent types of statistical tools are available but for using specifically correlation is of having a ma,or reason i2e2 only this statistical tool was giving the satisfactory results2 I have to show the relationship between sales and profits, which can be purely defined with the help of this statistical tool only2 .urthermore, with the help of time series analysis we can define the further trends of business by using trend analysis2

CORRE8ATION BET<EEN INTREST INCOME 5 INTREST E?PENDITURE OF BAN"

6EAR 00+ 005 006 007 TOTA8 I2T.I2COME'7) I2T.E75'6) 1*+ 1*7 07 1+9 87* 80 +65 *58 11866 9 +

P%a&s-#Ns )-&&%$a(!-# )-%33!)!%#( (%s( (6a&a %(&!) (%s():

O'ser(ed (alue -.o/tailed p/(alue Alp a ).*+, ).),* ).)0

??

Scattergram o! t e data
300

250

200

1 50

1 00

50

0 0 500 1 000 1 500 s a le s 2000 2500 3000 3500

DECISION
A( (h% $%.%$ -3 s!/#!3!)a#)% A$6haK0.0C0 (h% 0%)!s!-# !s (- &%E%)( (h% #'$$ h*6-(h%s!s -3 a7s%#)% -3 )-&&%$a(!-#. I# -(h%& @-&0s+ (h% )-&&%$a(!-# !s s!/#!3!)a#(.

I#(%&6&%(a(!-#:
#23here is a high degree of correlation between int2income<int2e5p +23here is a positive correlation between2 int2income<int2e5p $23his shows that as the int2income increases int2e5p also moves in the same direction2

TREND ANA81SISB
TREND ANA81SIS OF NET PROFIT AFTER TA? OF :.D.FC BAN"
?A

6EAR 5RO9IT'M2) 6 00+ 1*7 005 1+9 006 80 007 *58 TOAT8 9 +

DE:IATIO2 9ROM 00* 7 1 * + 10

76 1*7 98 8+0 1+* 707

7; 1 + 9 16 *0

3he equation of the straight line is 1 K a M 7? Since T U !a R bTQ TQ U aTQ R bTQV Substituting the values, we get a U =%I% U #$, b U A%CI#& U A%2C 3hus the straight line trend is 1 K A3M2C.9?, :rigin U +&&$, Q unit U # year

;)R +&&8 +&&% +&&= +&&?

)/3U)7 >)7U; #$? #8C +A& $%A

3R;!- >)7U; #$%2? #C$2$ +%&2C $&A2%

?C

+&&A

$==2#

TREND ANA81SIS
400

350

300

250

200

1 50

1 00

50

0 2004 2005 2006 2007 2008

I#(%&6&%(a(!-#:
#2 3he pro,ection of profit for the year +&&?E&A is $==2# mn2 +2 In the year +&&$E&8 and +&&8E&%, company was not able to achieve its e5pected profits2 $2 In the year after +&&%, company was able to achieve more than its e5pected profits2 82 3he profits of the company show an increasing trend2

FACTOR ANA81SIS : .actor analysis is used to know the important factors that are most important for our study2
Years 00+ 005 006 007 "A60 .7 85*.6 1115.9+ 1*8 .5+ Interest #1p. 1 11.05 1*15.56 19 9.5 *179.+5 #mp.cost 0+.09 76.67 +86.8 776.86 Selling cost +*7.07 506.++ 9+*.0* 7 7.5* Dep. 1 5.7 1++.07 178.59 19.6 Op.#1p 988. 8 1 61.6 170.85 590.66 "ro(isions *7.8 *00.05 +7 .69 1 +6.61 -a1 c arges *00.0* *1+.07 *8*.0* +97.7

A&

008

1590.18

+887.1

1*01.*5

97+.79

71.7

*9*5. 8

1907.8

690.9

Ma!# F-)'s!#/ P!)('&%

2aria'les $a1es F, and F34 **.+5 %&
1

0.5

SELLING

OP ERA TIN DEP EM P .COST INT.EXP M IS.EXP. P ROV.

-0.5

-1 -1 -0.5 0 -- a xis F 1 (94.91 %) - - > 0.5 1

INTERPRETATION:
(ere I4ve taken sale as dependent variable while ? factors'independent variables* as important that will be used to forecast the profit but after applying 3a)(-& a#a$*s!s+ I found that only 8 factors are more important in my study to estimate the sale that are % 6$-*%% )-s(+ I#(%&%s( E96%#s%+ Ta9 Cha&/%s+ P&-.!s!-#s.

PRINCIPA8 COMPONENT ANA81SIS

9/) is used in the place of factor analysis for the same purpose but here I4ve used 9/) to further purify the factors2

A#

Years 00+ 005 006 007 008

"A60 .7 85*.6 1115.9+ 1*8 .5+ 1590.18

Interest #1p. 1 11.05 1*15.56 19 9.5 *179.+5 +887.1

#mp.cost 0+.09 76.67 +86.8 776.86 1*01.*5

"ro(isions *7.8 *00.05 +7 .69 1 +6.61 1907.8

-a1 c arges *00.0* *1+.07 *8*.0* +97.7 690.9

2aria'les $a1es F, and F34 **.*+ %&

1

0.5

P ROV. M IS.EXP. INT.EXP EM P .COST

-0.5

-1 -1 -0.5 0 -- a xis F 1 (99.65 %) - - > 0.5 1

INTERPRETATION:
9/) is used to know which factors are more important for my study2 (ere it shows that only two variables are more important for estimation of e5pected sale2 3hat are ;mployee /ost and Interest ;5penses2

MU8TIP8E RE=RESSION:
In 1ultiple regression, we study we study three or more variables and we consider variable as dependent variable and others as dependent variables2 1ultiple regression analysis is used to estimate the most probable value of the dependent variable for given values of the independent variables2

A+

6ears 00+ 005 006 007 008

5AT 60 .7 85*.6 1115.9+ 1*8 .5+ 1590.18

I!terest E4-. 1 11.05 1*15.56 19 9.5 *179.+5 +887.1

E(-."#st 0+.09 76.67 +86.8 776.86 1*01.*5

"A- 6 Standardi7ed residuals

1.5 1 0.5 0 -0.5 600 -1 PAT 1100 1600

Standardi7ed residuals
Obs5 Obs4 Obs3 Obs2 Obs1 -1.5 -0.5 0.5 1.5

S ta nda rdize d re s idua ls

I#(%&6&%(a(!-#:
.rom 9/) two factors that are most important have more impact on 9)3 in the +nd year i2e2 +&&%2

A$

:1POT:ESIS TESTIN=A
3he main ob,ect of sampling theory is the study of test of (ypothesis2 In many cases we are able to make decision about the population only on the basis of sample information2 .or e5ample: :n the basis of sample data a quality control manager is to determine whether a process is working properly, a drug chemist is to decide whether a new drug is really effective in curing the diseases etc2 3he theory of testing of hypothesis employs various statistical techniques to arrive such decisions on the basis of sample study2

C:I-SIUIRE TEST9
It is statistical measures used in conte5t of sampling analysis for testing the significance of a population variance2 )s a nonEparametric test, it can be used as a test of independence of attributes and goodness of fit2 Ch! sH'a&% (%s( -# %96%)(%0( -0%$) a#0 a)('a$ I#%&%s( I#)- %: N'$$ h*6-(h%s!s K!#0%6%#0%#)% 7,@ a)('a$ a#0 %96%)(%0 I#(%&%s( I#)- % Interest Income $actual& Interest Income $8odel&
98+*7+*6.000 91+89095+.000 +688681516.000 905 815*.000 98++8 77.7*6 910+5558 .*85 +688687 56.778 9096+69+ .101

Ch!-sH'a&% !#0%6%#0%#)% (%s(:

Ch&,s<uare '#=ser$e0 $a.ue) Ch&,s<uare '"r&t&"a. $a.ue) D9 O!e,ta&.e0 -,$a.ue A.-ha 1 .000 16.919 9 0. 1* 0.05

D%)!s!-#:
At the .e$e. #3 s&%!&3&"a!"e A.-ha>0.050 the 0e"&s&#! &s t# !#t re?e"t the !u.. h/-#thes&s #3 &!0e-e!0e!"e =et@ee! the a"tua. I!terest I!"#(e a!0 the e4-e"te0 &!terest I!"#(e. I! #ther @#r0sA the 0e-e!0e!"e =et@ee! the a"tua. I!terest I!"#(e a!0 the a"tua. I!terest I!"#(e &s !#t s&%!&3&"a!t.
A8

A#a$*s!s -3 .a&!a#)%(ANO>A)
ANA81SIS OF >ARIANCE is essentially a procedure for testing the
difference among different groups of data for homogeneity2 N'$$ h*6-(h%s!s K#- s!/#!3!)a#)% 0!33%&%#)% 7%(@%%# 6&-3!( a3(%& (a9 a#0 6&-3!( 7%3-&% (a9 years +&&$ +&&8 +&&% +&&= +&&? profit before ta5 CC #&? #?8 #A% $+? profit after ta5 A= C+ #$= #8A +A&

Summary !or t e dependent (aria'le4

:ar&a=.e -at T#ta. !#. #3 $a.ues 5 2#. #3 $a.ues use0 5 2#. #3 $a.ues &%!#re0 0 Su( #3 @e&%hts 5 Mea! 1+8.+00 Sta!0ar0 0e$&at&#! 78.**8

S'
5=t

a&* 3-& (h% H'a#(!(a(!.% .a&!a7$%s:

:ar&a=.e Mea! 178.+00 Sta!0ar0 0e$&at&#! 91.579

P&%0!)(!-#s+ &%s!0'a$s+ a#0 )-#3!0%#)% !#(%&.a$s:

O=ser$at&#!s O=s1 O=s O=s* O=s+ O=s5 Be&%hts 1 1 1 1 1 -=t 99.000 107.000 17+.000 185.000 * 7.000 -at 86.000 9 .000 1*6.000 1+8.000 80.000 -at 'M#0e.) 80.7*5 87.55 1++.650 15+.0 5 75.0*8 Res&0ua.s 5. 65 +.++8 ,8.650 ,6.0 5 +.96 Sta!0ar0&Ce0 res&0ua.s 0.67+ 0.569 ,1.107 ,0.771 0.6*5

A%

Data and regression line

350 300 250 200 1 50 1 00 50 0 0 50 1 00 1 50 pb t Observa !"#s P re$!% !" #s C"#&.'" #'(re$')*5.00+, C" #&.'" #'-ea#')*5.00+, 200 250 300 350

p't 6 Standardi7ed residuals

1

0.5

0 0 -0.5 50 1 00 1 50 200 250 300 350

-1

-1 .5

-2 pbt

A=

pat 6 Standardi7ed residuals

1

0.5

0 0 -0.5 50 1 00 1 50 200 250 300

-1

-1 .5

-2 pa t

Standardi7ed residuals

Obs5

Obs4

Obs3

Obs2

Obs1

-1 .5

-1

-0.5

0 S ta nda rdize d re s idua ls

0.5

1 .5

A?

s-'&)%s -3 .a&!a(!-# 7%(@%%# sa 6$% @!(h!# sa 6$%

SS

D-F 23A0.2 2-AKA C209B.B BMBK2

MS 23A0.2 72DA.2

/alculated valueU+$#&2AI?+=#2AU2$#A+ 3able valueU.'#,A*U%2$+

I#(%&6&%(a(!-#:
0ecause the calculated value is less than the tabulated value so the decision is to accept the null hypothesis i2e2 there is not so much variation bIw pat < pbt2 De can say that company is not paying so much ta52 3he value of . is accepted that there is not so much variation between 9)3 and 9032 3his simply means company is not paying so much ta52 It is very good for the company that there is a very low rate ta5es2

AA

T TEST ON OBSER>ED AND E?PECTED >A8UE OF PROFIT AFTER TA?: N'$$ h*6-(h%s!s (h0) K %H'a$!(* -3 .a&!a7$%s
-7s%&.%0 .a$'% 6&-3!( a3(%& (a9( #)
A37 AB9 220 3C2 D%s)&!6(!.% s(a(!s(!)s: Sa(-.e E4-e"t Sa(-.e s&Ce + Mea! 1.975 :ar&a!"e 5500.86* Sta!0ar0 0e$&at&#! 7+.168

%a#s 7%(@%%# (h% (@-

%96%)(%0 .a$'% -3 6&-3!( 7%3-&% (a9( #)

A3C.7 A93.3 2C0.9 302

S('0%#(Ns ( (%s( 3-& !#0%6%#0%#( sa 6$%s , (@--(a!$%0 (%s(: Th% (%s( !s )- 6'(%0 '#0%& (h% ass' 6(!-# (ha( (h% (@- (h%-&%(!)a$ .a&!a#)%s a&% %H'a$
t '#=ser$e0 $a.ue) t '"r&t&"a. $a.ue) D9 T@#,ta&.e0 -,$a.ue A.-ha De"&s&#!: 0.000 .++8 6 1.000 0.05

DECISION:
)t the level of significance )lphaU&2&%& the decision is to not re,ect the null hypothesis of equality of the means2 In other words, the difference between the means of e5pected and observed pat is not significant2

INTERPRETATION:
AC

It means that company is not paying so much ta5 out of pbt2 So it is beneficial from company point of view that ta5 rate is less2

8IMITATIONS OF T:E STUD1

(owever I have tried my best in collecting the relevant information yet there are always present some limitations under which research has to work2 .inancial analysis is a powerful mechanism to determining financial strength and weakness of a firm2 0ut, the analysis is based on the information available in the financial statements2 3hus, the financial analysis suffers from serious inherent limitations of financial statements, changes in accounting policies of the firm, accounting concepts < conventions and personal ,udgment etc2 (ere following are some limitations under which I had to work as show below:

Sa 6$% S!F%: 3he sample si6e analy6ed was limited over three year,
which may not be fully represented of the universe2 ) large sample si6e could not be taken due to time < cost constraints2

T! % a#0 R%s-'&)% C-#s(&a!#(s: I had a limited time for

conducting this analysis report, which was of = weeks only so some short falls may be present2 )long with the resource constraint also create limitation in study2

8a)4 -3 E96%&!%#)%: 3he lack of e5perience may have caused some

errors in administration of this research2

N-# )-.%&a/% -3 )%&(a!# as6%)(s: -ue to confidential nature of

some documents the same were not available for the study2

O#$* I#(%&!

R%6-&(: .inancial statements do not give a final

picture of the concern the data given in these statements in only

C&

appro5imately the actual position can only be determined when the business is solid or liquidated2

D-#O( /!.% %9a)( 6-s!(!-# : 3he financial statement are e5pressed

in monetary values so that they appear to give final and accurate position2 3he value of fi5ed assets in the balance sheet neither represent the value for which the fi5ed assets are shown at cost less depreciation2 So there statement doesn4t provide e5act position2

8a)4 -3 6&-6%& &%s6-#s% : Betting the information4s from the

employees is also a tedious task2 )s there are many employees that are not in a position to tell us correct information about the pro,ect or study and also sometimes they do not show any interest2

8a)4 -3 a0%H'a(% s(a#0a&0s: 3here are not accepted standards or

rules of thumb for all ratios which can be accepted as norms2 It renders interpretation of the financial statements difficult2

<!#0-@ 0&%ss!#/: .inancial statements can easily window dressed

to present a better picture of its financial profitability position to outsiders2 (ence one has to be very careful in making a decision from such financial statements2 0ut it is very difficult for me to know about the window dressing made by company2

C#

FINDIN=S
In the 7atest financial year in 1arch with whooping $C S growth in !et profit to nearly W8&& million above the strong pace of $# S annual growth over past last % years 2 !et revenue grow at ama6ing %&S to aboutW#2C billion !et interest margin of 828Sis nearly doubled that of its nearest competitor I/I/I 0ank2 :perating cost has risen at an annual rate of 8+S over last % years with %% S increase during fiscal +&&A 2 0ank has shown the competitive advantage in the key retail lending segment , rival I/I/I reported a partly $ S loan growth for it fiscal year comparing favourably to US bank 7ike 0ank of )merica and Dashington mutual funds 2 3otal balance sheets si6e increase by %C2% S from Rs2 #&%=C%2$ crores as on Fune $&,+&&? to Rs2 #=A%CA2? crores as on ,une Fune $&,+&&A2

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 3otal deposits were Rs2 #$& C#A, crores as in as an increase on =&28 S from ,une $&,+&&?2 2 .ees and commission and the main contribute to the income from this quarter and increase by$?2$ S 2 9ortfolio quality as on ,une $&,+&&A remain healthy with gross non performing assets at #2% S growth advances and non performing assets at &2% S of net advances 2 3he banks total /)R as at Fune +&&A stood at #+2+ S against minimum of C2& S 2 3ier # /)R was C2A S !et advance as at Fune $&,+&&A were Rs2 C=?C crores an increase of ?C2A S , over +&&?2 0anks total customer assets were Rs2 CC, %%8 crores2 )fter providing Rs2 +#A2?crores as ta5ation as bank earned a net profit on Rs2 8=828 crores an increase on 882= S over last year 2 Dith the recent W +28 billion acquisition of India4s centurian bank of 9un,ab , (-./ bank now has become the India4s largest private sector bank network of more than ##&& branches all over the world2 3he bank provisioning policies for specific loan loss provisions remained higher than regulatory requirements 2

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 3he share holders of /0:9 has been allotted =,CA,A$,C%= equity shares of Rs2 #&IE persuing to the share swap ratio of equity share of Rs2 #& each of (-./ ltd2

RECOMMENDATIONS

0ank should reduce the charging on services2 0ank try to reduce the non performing assets2 )t 1arch $#, +&&? the bank !292)2 constituted &CAS of consumer assets2 -ocumentations for loan should also reduce2 3he fi5ed assets are decrease #288S but reserve and surplus increased to C2A8S2 0ank try to invest and increase the fi5ed assets2 0ank should increase the macro financing2 0ank try to reduce the burden on employees2 3he total income is increased %=28%S but the total e5panses are increased =#2A=S2 So bank try to reduce the e5panses2 0ank try to focuses on fee based products as wall as services2 the bank ruler portfolio increased by $?S on a year basis to about RS2 +&#?8 crore2 So bank try to more focuses on ruler area2 3he bank try to e5tend its reach in the small and medium enterprises segment2

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 0ank should reduce the charging on services 0ank try to reduce the non performing assets2 )t 1arch $#, +&&? the bank !292)2 constituted &CAS of consumer assets2 1ore 9refer to Secured < Short 3erm 7oan /ontrol 3he /ollection ;5pences 3he fi5ed assets are decrease #288S but reserve and surplus increased to C2A8S2 0ank try to invest and increase the fi5ed assets Use Mualative 1anagement System 9roper /ollection System Use Muality /ontrol 0ank should increase the macro financing 1inimise the unwanted e5penses 9roper -ivision of .und Improve In /redit 9olicy Improve in ta5ation 9olicy Improve in Dorking /apital management 0ank try to focuses on fee based products as wall as services

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BIB8IO=RAP:1
B--4s:
#2 0aruch, 7ev2, K.inancial Statement )nalysis " ) new approach ;nglewood cliffsL, ed2E +&&=, !2F2, 9rentice (all of India +2 Kothari /2R2, KMuantitative 3echniquesL, ed +&&%, >ikas publishing house 9vt2 7td2, !ew -elhi $2 Bupta S292, K0usiness StatisticsL, $#st edition, +&&%, Sultan /hand < Sons 2 82 9andy, I212 K.inancial 1anagementL, $rd edition, >ikas 9ublication (ouse 9vt2 7td2, !ew -elhi %2 (ooda R292, KStatistics for 0usiness and ;conomicsL, 1acmilland India 7td2, !ew -elhi =2 1aheshwari, S2!2 K)dvanced )ccountingL, ed E+&&8, Sultan /hand < Sons 9ublication, !ew -elhi ?2 1ittal2 R2K2 K1anagement )ccounting < .inancial 1anagementL2 >2K2 'India* ;nterprises, !ew -elhi A2 /iaran Dalsh, KKey 1anagement RatiosL, ed #CCC, 1acmillan India 7td2, !ew -elhi C2 Bupta S2K2 K)ccounting for 1anagerial -ecisionsL, ed2 +&&8, Kalyani 9ublisher, !ew -elhi

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#&2Fain2 32R2, KStatistics for 10)L, second ed2 +&&=E&?, >2K2 'India* ;nterprises ##2Khan 12 2, Fain, 92K, K1anagement )ccountingL, ed +&&=, 31( 9ublishing 7td2, !ew -elhi #+2Boel -2K2 K1anagement )ccounting and .inancial 1anagementL, edE +&&+, )vichal 9ublishing /o2, !ew -elhi

JOURNA8S
#* 0usiness 3oday, KIndian 0est 0anksL, .ebruary +&&A, 9age no2 #+E#8 +* 0usiness 3oday, KIndian Richest Investment 0anksL, Fuly +&&A $* 0usiness 3oday, KIndia best banksL, 9age no2 C? 8* 0usiness 3oday " 3rend ,)pril +&&= 9age no #? %* Indian ,ournal of commerceEFun, +&&= =* /harter financial analysisE,an, +&&? ?* /harter financial analysisE,an, +&&?

<EBSITES
#2 +2 $2 82 %2

http:IIwww2hdfcbank2comIaboutusIdefault2htm www2hdfc2co2in www2icicibank2com http:IIwww2equitymaster2comI-;3)I72)S9PstoryU$<dateU?I?I+&$&&# http:IIwww2hdfcbank2comIpersonalIloansIdefault2htm

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www2frontline2in http:IIwww2hdfcbank2comIaboutusIcareersIdefault2htm, www2rbidocs2rbi2in, http:IIwww2hdfcbank2comIaboutusIcgI.inancialOInformation2htm

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Ba.a!"e sheet
8ar 9 )+ 8ar 9 ): S#ur"es #3 3u!0s O.ner9s !und *5+.+* *19.*9 , , , , 11A1+ .80 6A11*.76 8#a! 3u!0s , , 1A00A768.60 68A 97.9+ ,<,3<3;0.+= :5<:=,.)* Uses #3 3u!0s Fi1ed assets A*86.99 1A917.56 , , 1A 11.86 950.89 8ar 9 ); 8ar 9 )0 8ar 9 )5

E<u&t/ share "a-&ta. Share a--.&"at&#! (#!e/ 5re3ere!"e share "a-&ta. Reser$es D sur-.us Se"ure0 .#a!s U!se"ure0 .#a!s -otal

*1*.1+ 0.07 , +A986.*9 , 55A796.8 ;,<)*;.53

*09.88 0.+* , +A 09.97 , *6A*5+. 5 5)<+:5.0=

8+.79 1.+5 , A+07.09 , *0A+08.86 ==<,)3.,*

Er#ss =.#"k 8ess : re$a.uat&#! reser$e 8ess : a""u(u.ate0 0e-re"&at&#! 2et =.#"k Ca-&ta. @#rk,&!,-r#%ress I!$est(e!ts Curre!t assetsA .#a!s D a0$a!"es 8ess : "urre!t .&a=&.&t&es D -r#$&s&#!s T#ta. !et "urre!t assets M&s"e..a!e#us e4-e!ses !#t @r&tte! -otal B##k $a.ue #3 u!<u#te0 &!$est(e!ts

1A589.+7 , 7*+.*9 855.08 , 8A*9*.96 A 77.09 7A8+9.+9 ,5A57 .+0 , 3=<;:;.;5 ,

1A 90.51 , 58 .19 708.* , 19A*+9.81 1A**0.57 5A 6+.+6 ,*A9**.89 , ,;<,35.35 ,

1A061.** , +++.+ 616.91 , 19A 56.79 1A0*1. * 6A 96.98 ,5A 65.75 , ,5<;):.*0 ,

1A175.1* 966.67 , , +9A*9*.5+ *0A56+.80 2et "urre!t assets +A+0 .69 16A+*1.91 ,1 A0 9. , =+<0=*.50 , *A605.+8 1*A689.1* ,10A08*.65 , 3,<55:.+3 2#tes: ,

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Market $a.ue #3 <u#te0 &!$est(e!ts C#!t&!%e!t .&a=&.&t&es 2u(=er #3 e<u&t/ shares#utsta!0&!% '8a"s)

, 5A99A9 8.79 *5++.**

, A09A**8.61 *19*.90

, 1A++A1*7.86 *1*1.+

, 89A9 8.65 *098.75

, 8 A116.17 8+7.9

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5r#3&t .#ss a""#u!t
8ar 9 )+ I!"#(e: O-erat&!% &!"#(e Mater&a. "#!su(e0 Ma!u3a"tur&!% e4-e!ses 5ers#!!e. e4-e!ses Se..&!% e4-e!ses A0(&!strat&$e e4-e!ses E4-e!ses "a-&ta.&se0 C#st #3 sa.es O-erat&!% -r#3&t Other re"urr&!% &!"#(e A0?uste0 5BDIT 9&!a!"&a. e4-e!ses De-re"&at&#! Other @r&te #33s A0?uste0 5BT Ta4 "har%es A0?uste0 5AT 2#! re"urr&!% &te(s Other !#! "ash a0?ust(e!ts Re-#rte0 !et -r#3&t Ear!&%s =e3#re a--r#-r&at&#! E<u&t/ 0&$&0e!0 5re3ere!"e 0&$&0e!0 D&$&0e!0 ta4 Reta&!e0 ear!&!%s *A5 1 A*5+.+1 E4-e!ses , , 1A*01.*5 11+.7* A +7.+8 , *A66*.56 *A80*.7* +*.0+ *A8+6.77 +A887.1 71.7 , *A575.05 690.90 1A589.+8 0.70 ,0.06 1A590.1 .15 , 51. 0 *A169.68 *01. 7 , , 776.86 7+.88 1A519.* , +86.8 80.85 1A+ +.59 , , , , , 76.67 5+.95 785.9* , 1A117.55 1A 90.75 0.76 1A*11.51 1A*15.56 1++.07 188.06 979.*8 *1+.0* 665.*5 0. 1 ,0. 6 665.*0 1A070.6 1+0.07 , 19.6+ 910.91 1 .8 75 .76 , +.16 , , 0+.09 *7.06 6 1.+1 , 86 .56 896.5+ 59. 6 955.80 1A 11.05 1 5.7 9*. 7*6.86 10. 1 509.95 ,0.+5 , 509.50 865.6* 100.05 , 8A*0*.*+ 5A567.67 *A7 *.86 A970.15 8ar 9 ): 8ar 9 ); 8ar 9 )0 8ar 9 )5

A*71.06 1A99 . 6 A75 .8* 1A6+5.91 10 .96 *1.*8 A855.79 1A677. 9 *A179.+5 1A9 9.50 19.60 +1.09 +97.70 1A1+ .50 ,1.05 ,0.*5 1A1+1.10 A596.1 *.57 , *8.00 1A+7*.1 17 . * 178.59 +5.16 *8*.0* 870.51 0. 7 , 870.78

A*95.10 1A 5*.5+

A**+.55 1A 76.7*

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8IS.#>" O"#RA-IN "RO2. 50*.33 *++.3+ 3=:.+3 ;=5.5* ,3;,.;3 =)).)0 ,)=0., 3,:).+0 5:3.;* 3,,=.3+ 30*).;; ,35;.;, =3*0.33 =*=0.3+ ,*):.+

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