meeru final files

8/12/2019 Meeru Final Files

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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 theRequirement for award of the degree of

MASTER OF BUSINESS ADMINISTRATION (M.B.A.)(SESSION: 2007-09)- MBA 3 RD SEMESTER

Under the guidance of : Submitted by:MS. Rash ! "a#sa$ M%%&' Bha !aFa '$ *+MBA D, M& Bh'sha# Bha !a

U#! . R%/ . N 03-M1-72U#! . R $$ N


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TILAK RAJ CHADHA INSTITUTE OFMANAGEMENT TECHNOLOGY(TIMT)

(A !$!a % "'&'4sh% &a U#! %&s! *+ "'&'4sh% &a 5A66& % * AICTE)

M.8.N.C $$%/% E ' a ! #a$ C 6$% +amuna !agar " #$% &'()R )!)*

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DEC8ARATION

I, M%%&' Bha !a, hereby declare that this pro ect entitled F!#a# !a$

A#a$*s!s DFC Ba#4; at (-./ 0ank, Kurukshetra submitted by me forthe 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$)

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AC"NO


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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 andimproved 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:

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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 E SUMMAR1

U# %& a4% s % h!#/ !s ! ! '$ +

I @!$$ * ' / +

U#$%ss * ' &* s % h!#/

B%* # @ha * ' ha % a$&%a * as %&%

1 ' @!$$ #% %& /& @;.

RONA8DE. OSBORN

I did my training in (-./ 0)!K KURUKS(;3R)2

3he concept of this pro ect is to check whether (-./ 0)!K is performingwell 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

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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 + 9 9

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* .

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@) 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!# $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


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BAN"IN= S1STEM IN INDIA

A ISTORICA8 PERSPECTI>E :

De can identify there distinct phases in the history of Indian banking:

#2 ;arly phase from #?A=E#C=C2

+2 !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 Oarious 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 93

0anks are classified into following two categories son the basis of

reserve bank )ct2 #C$82

. 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"

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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

. 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

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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

. 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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. 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

. 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

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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 )griculture coEoperative banks, and

+2 7and mortgage banks2 3he farmer provide shortEterm credit, while the

letter e5tend longEterm loans to the farmers2

#C


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PROFI8E OF T E OR=ANISATION 7

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

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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 perational ;5cellence

+2 /ustomer .ocus

$2 9roduct 7eadership

82 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#& E 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


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both deposits and loans products2 0eing a clearing settlement bank to

various leading stock e5changes, the bank has branches in centers

where the !S; 0S; 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

. < 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

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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 his her 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

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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

debit credit 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 +C th 1arch, +&&=*

1r2 0obby 9arikh 'w2e2f2 Fan2 C, +&&8*1r2 )shim Samanta

>ICE PRESIDENT AND COMPAN1 SECRETAR1

1r2 San any -ongre

AUDITOR

1 s 92/ (ansotia < /o2

/hartered )ccountant

RE=ISTERED OFFICE

(-./ 0)!K ( US;

Senapati 0apat 1art,

7ower 9arel,

1umbai 8&$

3el2 !o2 ==%+#&&&

.a5 !o2 +8C=&?$?

Debsite : www2 hdfcbank2com

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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 9rimary ob ective

+2 Secondary ob ective

. P&! a&* % ! % :-

#* 3o analyse the financial statements of the corporation to it4strue financial position by the use of ratios

2. S% # a&* % ! % :-

#* 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

(-./

8* 3o inform the investor, enabling them to take the investment

decision2

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8ITERARURE RE>IEan, .undamental of .inancial 1anagement #$L pg#+%E#$& .rom

this I got how to analyse the financial conditionL

#82 /handra 9rasanna , .undamental of .inancial 1anagement #8L, pg#&$E#&A this

book help me to analyse the balance sheet , how can we say that the firm is going

well or notL2

#%2/ooper R2-onald , 0usiness Research 1ethods #%L, pg#?=E#A& all about

sampling design, its meaningL

#=2 Boel -2K2, )nlysis of .inancial Statements #=L , pg #E#% 2 .rom this I have taken

theory of financial statements2

#?2 http: www2hdfcbank2com aboutus default2htm#?

#A2 www2hdfc2co2in#A

#C2 http: www2hdfcbank2com personal loans default2htm#C

+&2www2frontline2in+&

+#2 http: www2hdfcbank2com aboutus careers default2htm+#

++2 www2rbidocs2rbi2in++

+$2 http: www2hdfcbank2com aboutus cg .inancialOInformation2htm+$

$%
http://www.hdfcbank.com/aboutus/default.htmhttp://www.hdfc.co.in/http://www.hdfcbank.com/personal/loans/default.htmhttp://www.frontline.in/http://www.hdfcbank.com/aboutus/careers/default.htmhttp://www.rbidocs.rbi.in/http://www.hdfcbank.com/aboutus/cg/Financial_Information.htmhttp://www.hdfcbank.com/aboutus/default.htmhttp://www.hdfc.co.in/http://www.hdfcbank.com/personal/loans/default.htmhttp://www.frontline.in/http://www.hdfcbank.com/aboutus/careers/default.htmhttp://www.rbidocs.rbi.in/http://www.hdfcbank.com/aboutus/cg/Financial_Information.htm


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INTRODUCTION OF T E TOPIC

MEANIN= OF FINANCIA8 STATEMENTS:-

.inancial statements refer to such statements which contains financialinformation 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

. Th% Ba$a# % Sh%%

2. P& ! A# 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 andoperations 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 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% A#a$*s!s !#a# !a$ 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& % '&% 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

$A


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T1PES OF FINANCIA8 ANA81SISA)C$ass! ! a ! # # h% as!s #a '&a$ 's%

a) E %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, government agencies, creditagencies < general public2

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% as!s 's 6%&a# :

a) &! # 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 -ynamic )nalysisL2

) >%& ! 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 Static 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

units marketing 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 controland management reporting2

%* 1aintain financial accounts and compile annual periodical accounts in

accordance with the companies )ct, #C%=, ensuring the audit of

accounts as per law Bovt2 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:

. C 6a&a ! % F!#a# !a$ S a % %# s.

2. C # G s! % S a % %# s

3. T&%# A#a$*s!s

. F'# s F$ @ s a % %# s

%2Cash 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

8#


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FORMS OF PRESENTIN= COMPARATI>E STATEMENTS

#2 3o show only the absolute data of various items or in other words toshow 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 andcapital2 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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45/100


46/100

(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'! ! * 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# 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& ! a $! * 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#

( )I# &%$a ! # !# I# %s %#

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FUNCTIONA8 C8ASSIFICATION IN >IE< OF FINANCIA8MANA=EMENT OR C8ASSIFICATION

ACCORDIN= TO TESTS

8!H'! ! * Ra ! s 8 #/- %&S $ %# * a#8% %&a/% Ra ! s

A ! ! * Ra ! s P& ! a !$! * Ra

')* #2 /urrentRation

+2 7iquid Ration')cid* 3est orMuick Ratio2

$2 )bsolute liquid or/ash Ratio2

82 Internal 1easure'b* #2 -ebtors

3urnover Ratio+2 /reditors

3urnover Ratio$2 Inventory

3urnover Ratio

.inancial perating/omposite

#2 -ebt2 ;quityRatio+2 -ebt to 3otal/apital Ratio$2 Interest/overages82 /ash .low-ebt%2 /apitalBearing

#2 Inventory3urnover Ratio2

+2 -ebtors3urnover

$2 .i5ed )ssets3urnover Ratio

82 3otal )sset3urnover Ratio

%2 Dorking/apital3urnover Ratio2

=2 9ayables3urnover Ratio

?2 /apital;mployed

3urnover

')* In Relation toSales2

#2 Bross 9rofit Ratio+2 perating Ratio2$2 perating 9rofit

Ratio282 !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 totalResources

%2 ;arning per share2=2 9rice ;arning Rati

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< STATEMENT

) cash " flow statement is a statement showing inflows 'receipts* andoutflows '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

O % ! %s 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=1

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 $ /* h%&% !# $' %s.

. M%a#!#/ R%s%a& h.

2. R%s%a& h P& $% .

3. R%s%a& h D%s!/#.. Sa 6$!#/ D%s!/#.

. Da a C $$% ! # % h .

. A#a$*s!s a# !# %&6&% a ! # Da a.

M%a#!#/ R%s%a& h:

Research is defined as a s !%# ! ! a# s*s % a ! s%a& h & 6%& !#%

!# & a ! # # a s6% ! ! 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 ofknowledge 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& $%

3he first step while conducting research is careful definition of Research

9roblem2 3o ;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& $% @%$$ % !#% !s 6& $% ha$ s $ % .;

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:

T a4% a F!#a# !a$ A#a$*s!s F!#a# !a$ s a % %# s 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 inwhich 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

E 6$ &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

E 6%&! %# a$ R%s%a& h D%s!/# G3he 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!/# GIt 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% !# h!s P& %

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!/#

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 0

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

UESTIONAIRE 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 someoneelse2 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 8OSS 23 OF DFC BAN"

FOR T E 1EAR ENDED 3 ST MARC + 2007COMPERATI>E INCOME

STATEMENT& h% *%a& %# % 3 s a& h 200

PARTICU8ARS 2007 200 INC,DEC INC,DECI!3 I!/ 1; A$&$2$8 #+$%828# 8&%#2&? 8A2?A'E*/ost of sales +$?#2&= $==$2%= #+C+2% %82%#B29')* %C$+2+A A=C&2A% +?%A2%? 8=2%

9;R)3I!B ;Q9Selling ;5p ?82AA ##82?$ $C2A% %$2+#)dm ;Q9 #%#C2$+ ++8?28A ?+A2#= 8?2C+3otal perating ;5p'0* #%C82+ +$=+2+# ?=A2 8A2#?

perating income')E0* 8$$A2&A =$+A2=8 #CC&2%= 8%2AA' * 2Income +A%%2?C $A8=2?? CC&2CA $82?32Inc ?#C$2A? #?%28# +CA#2%8 8#288'E* 2;5p $C%=2$# =#AA28? ++$+2#= %=28+

!et income $+$?2%= $CA=2C8 ?8C2$A +$2#8'E*3a5 8C?2? =C&2C #C$2+ $A2A#

!et 9rofit +?$C2A= $+C=2&8 %%=2#A +&2+C

I!3;R9R;3)3I !

Since the profit of the bank has been inc2by +&2+C during last fiscal so financial of bank is satisfactory2

%=


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RATIO ANA81SIS 3

>ARIOUS CA8CU8ATED RATIOS OF .D.F.C BAN"

C'&&%# Ra !

/urrent ratio may be defined as the relationship between current assets andcurrent liabilities2

C'&&%# &a ! K C'&&%# ass% s, '&&%# $!a !$! !%s

ear +&&= +&&? +&&A/urrent Ratio #2#& #2&? #2&A

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

%?

C.R

1.10

1.071.08

1.051.061.07

1.081.091.101.11

006 007 008

Years

C . R C.R


58/100

I# %&%s %&a/%, % s%& ! % &a !K N% 6& ! ( % &% !# %&%s a# a %s), F! % !# %&%

ha&/%

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

%A

I!terest "#$era%e rat't&(es)

.09

.*8

1.8

1.9

.1

.

.*

.+

.5

005,06 006,07 007,08

Years

I C R I!terest "#$era%e

rat't&(es)


59/100

O6%&a !#/ &a ! K (O6%&a !#/ s , N% !# % )L 00

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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61/100

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

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

=#

Retur! #! shareh# ers' )

16.+*17.7+

1*.8*

0

5

10

15

0

005,06 006,07 007,08

Years

R e

t u r n o n

S a r e

o

l d e r s

! u n

d s

Retur! #!shareh# ers' )


62/100

I# %&%s % 6%#s% &a ! K (I# %&%s % 6%#s% , !# %) L 00

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

=+


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N% 6& ! &a ! K (N% 6& ! , N% !# %) L 00

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

=$

2et -r#3&t rat' )

0.5817 15.7

0

5

10

15

0

5

005,06 006,07 007,08

Years

N " R

2et -r#3&t rat' )


64/100

O6%&a !#/ 6& ! &a ! K (O6%&a !#/ 6& ! , I# %) L 00

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

O-erat&!% -r#3&t rat ' )

+0.98

*8.57

*7.

*5

*6

*7

*8

*9

+0

+1

+

005,06 006,07 007,08

Years

O " R

O-erat&!% -r#3&t rat ' )


65/100

R% ' # #% a6! a$ % 6$ *% K (N% 6& ! , N% a6! a$% 6$ *% ) L 00

N% a6! a$ % 6$ *% K T a$ ass% s- C'&&%# $!a !$! *

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

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O6%&a !#/ % 6%#s%s &a ! K (O6%&a !#/ E 6%#s%s ,I# %) L 00

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

==

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

*9.98

*6.+1*7.0*

*+*5*6*7*8*9+0+1

005,06 006,07 007,08

Years

O # R O-erat&!% e4-e!ses

rat' )


67/100

EPS K N% 6& ! a %& !# %&%s + a 5 6&% %&%# % ! ! %#N . %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

=?


68/100

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

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

D S

5.50

7.0

8.50

0.001.00

.00*.00+.005.006.007.008.009.00

006 007 008

Years

D " S

D S


69/100

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

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

.E Rat' )

7.7+

6. 9

8.80

55.5

66.5

77.5

88.5

9

006 007 008

Years

" . #

R a

t i o

$ % &

.E Rat' )


70/100


71/100

N% ash /%#%&a % & 6%&a !#/N% ash /%#%&a % & 6%&a !#/a ! ! !%sa ! ! !%s (A)(A) - +3 + 3- +3 + 3 230+ 9+230+ 9+

Cash $ @ & !# %s !#/Cash $ @ & !# %s !#/a ! ! !%sa ! ! !%s

I# %s %# s !# s' s! !a&!%sI# %s %# s !# s' s! !a&!%s - +379+9 7- +379+9 7 - +7 +- +7 +

I# % & s' s! !a&!%sI# % & s' s! !a&!%s 2+7 3+7992+7 3+799 ++ +

P'& has% ! % ass% sP'& has% ! % ass% s -9+ 92+ 7-9+ 92+ 7 - +92 +- +92 +

P& %% s & sa$% ! % ass% sP& %% s & sa$% ! % ass% s +0 +03+0 +03 +3 7++3 7+

(P'& has%) , sa$% h%$ a '&! *(P'& has%) , sa$% h%$ a '&! *s% '&! !%ss% '&! !%s - 3 + + 79- 3 + + 79 - 7 +77 +- 7 +77 +

N% ash /%#%&a % & !# %s !#/N% ash /%#%&a % & !# %s !#/a ! ! !%sa ! ! !%s (B)(B) - 7 + + 9- 7 + + 9 - 3+ 2 +- 3+ 2 +

Cash $ @ & !#a# !#/Cash $ @ & !#a# !#/a ! ! !%sa ! ! !%s

P& %% s & !ss'% sha&% a6! a$P& %% s & !ss'% sha&% a6! a$ 97+ 97+0 097+ 97+0 0 2+07 +2+07 +

N% 6& %% s , (&%6a* %# ) # sN% 6& %% s , (&%6a* %# ) # s 2+3 + 72+3 + 7 0+7 7+0+7 7+

D! ! %# a# ! ! %# a 6a!D! ! %# a# ! ! %# a 6a! - 0+ +000- 0+ +000 - + +- + +

N% ash /%#%&a !#/ & !#a# !#/N% ash /%#%&a !#/ & !#a# !#/

a ! ! !%sa ! ! !%s ( C )( C ) 299+ +227299+ +227 ++E % % ha#/% $' 'a ! # #E % % ha#/% $' 'a ! # #

&a#s$a ! # &%s%& %&a#s$a ! # &%s%& % (D)(D) - 90+0- 90+0 -327+-327+

N% !# &%as% , % &%as% !# ash a# ashN% !# &%as% , % &%as% !# ash a# ash%H'! a$%# s%H'! a$%# s

+ 3 + 79+ 3 + 79 200+ +200+ +

Cash a# ash %H'! a$%# as a A6&!$ Cash a# ash %H'! a$%# as a A6&!$ 37 +2 3+2 737 +2 3+2 7 70+ 02+70+ 02+

Cash a# ash %H'! a$%# as a Ma& h3Cash a# ash %H'! a$%# as a Ma& h3 37 +0 +7237 +0 +72 37 +2 3+37 +2 3+

C # S! % Ba$a# % Sh%%C # S! % Ba$a# % Sh%% 2323

?#


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C # S! % Ba$a# % Sh%% :C # S! % Ba$a# % Sh%% : 20072007 200200a/%a/% a/%a/%

CAPITA8 AND 8IABI8ITIESCAPITA8 AND 8IABI8ITIES

/apital/apital &2$=&2$= &2&2Reserve and surplusReserve and surplus =2?C=2?C ##2$##2$-eposits-eposits ==2AC==2AC =#2#=#2#0orrowings0orrowings #82A?#82A? #=28#=28

ther liabilities and provisionsther liabilities and provisions ##2&C##2&C #&2#&2T a$ Ca6! a$ a# 8!a !$! !%sT a$ Ca6! a$ a# 8!a !$! !%s #&&& #&

ASSETSASSETS

/ash and balances with Reserve 0ank/ash and balances with Reserve 0ankof Indiaof India %28$%28$ ?2$?2$0alances with banks and money at call0alances with banks and money at calland short noticeand short notice %2$8%2$8 +2#+2#InvestmentsInvestments +=28A+=28A +?2A+?2A)dvances)dvances %=2A$%=2A$ %=2%=2.i5ed assets.i5ed assets #2#8#2#8 #2&

ther assetsther assets 82?A82?A %2%2

T a$ Ass% sT a$ Ass% s

#&&&

#&

STATISTICA8 TOO8S

?+


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I# & ' ! #:

)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$ %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%

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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

E1anipulateESummari6e

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

. C &&%$a ! #

2. T! % s%&!%s

3. Fa & a#a$*s!s

. P&!# !6a$ 6 #%# a#a$*s!s

. 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


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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

CORRE8ATION

/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

?%


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%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


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Scattergram o! t e data

0

50

100

150

200

250

300

0 500 1000 1500 2000 2500 3000 3500sa l e s

DECISION

A h% $% %$ s!/#! ! a# % A$6haK0.0 0 h% % !s! # !s &% % h%

h*6 h%s!s a s%# % &&%$a ! #.I# h%& @ & s+ h% &&%$a ! #

!s s!/#! ! a# .I# %&6&% a ! #:

#23here is a high degree of correlation between int2income


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EAR RO IT'M2)

DE IATIO2

ROM 00* ;00+ 1*7 1 1*7 1005 1+9 98 +006 80 * 8+0 9007 *58 + 1+* 16

TOAT 9 + 10 707 *0

3he equation of the straight line is

1 K a ?

Since T !a bTQ

TQ aTQ bTQV

Substituting the values, we get

a =% % #$, b A%C #& A%2C

3hus the straight line trend is

1 K 3 .9? , rigin +&&$, Q unit # year

;)R )/3U)7 >)7U; 3R;!- >)7U;+&&8 #$? #$%2?+&&% #8C #C$2$+&&= +A& +%&2C+&&? $%A $&A2%

?C


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+&&A $==2#

TREND ANA81SIS

0

50

100

150

200

250

300

350

400

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 profits282 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 "A-Interest

#1p. #mp.costSelling

cost Dep. Op.#1p "ro(isions-a

c ar00+ 60 .7 1 11.05 0+.09 +*7.07 1 5.7 988. 8 *7.8 *00.0*005 85*.6 1*15.56 76.67 506.++ 1++.07 1 61.6 *00.05 *1+.07006 1115.9+ 19 9.5 +86.8 9+*.0* 178.59 170.85 +7 .69 *8*.0*007 1*8 .5+ *179.+5 776.86 7 7.5* 19.6 590.66 1 +6.61 +97.7

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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 %&

INT.EXP.EMP.COST

SELLING

DEP

M IS.EXP

OPERATIN

PROV.

-1

-0.5

0

0.5

1

-1 -0.5 0 0.5 1

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

INTERPRETATION:(ere I4ve taken sale as dependent variable while ? factors'independentvariables* as important that will be used to forecast the profit but afterapplying a & a#a$*s!s+I found that only 8 factors are more important in mystudy to estimate the sale that are % 6$ *%% s + I# %&%s E 6%#s%+ TCha&/%s+ P& !s! #s.

PRINCIPA8 COMPONENT ANA81SIS

9/) is used in the place of factor analysis for the same purpose but here I4veused 9/) to further purify the factors2

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Years "A-Interest

#1p. #mp.cost "ro(isions-a1

c arges00+ 60 .7 1 11.05 0+.09 *7.8 *00.0*005 85*.6 1*15.56 76.67 *00.05 *1+.07006 1115.9+ 19 9.5 +86.8 +7 .69 *8*.0*007 1*8 .5+ *179.+5 776.86 1 +6.61 +97.7

008 1590.18 +887.1 1*01.*5 1907.8 690.9

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

EMP .COSTINT.EXP.M IS.EXPPROV.

-1

-0.5

0

0.5

1

-1 -0.5 0 0.5 1

-- axis F 1 (99.65 %) -->

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 weconsider variable as dependent variable and others as dependent variables21ultiple regression analysis is used to estimate the most probable value of thedependent variable for given values of the independent variables2

A+


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ears ATI!terest

E4-. E(-."#st00+ 60 .7 1 11.05 0+.09005 85*.6 1*15.56 76.67006 1115.9+ 19 9.5 +86.8007 1*8 .5+ *179.+5 776.86

008 1590.18 +887.1 1*01.*5

I# %&6&% a ! #:

.rom 9/) two factors that are most important have more impact on 9)3 inthe +nd year i2e2 +&&%2

A$

"A- 6 Standardi7ed residuals

-1

-0.5

0

0.5

1

1.5

600 1100 1600

P A T

Standardi7ed residuals

-1.5 -0.5 0.5 1.5

Obs1

Obs2

Obs3

Obs4

Obs5

Standardized residuals


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1POT ESIS TESTIN=

3he main ob ect of sampling theory is the study of test of (ypothesis2 In manycases we are able to make decision about the population only on the basis ofsample information2.or e5ample: n the basis of sample data a quality control manager is todetermine whether a process is working properly, a drug chemist is to decidewhether a new drug is really effective in curing the diseases etc2 3he theory oftesting of hypothesis employs various statistical techniques to arrive suchdecisions on the basis of sample study2

C I-S U RE TEST 9 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 usedas a test of independence of attributes and goodness of fit2

Ch! sH'a&% %s # % 6% % ( %$) a# a 'a$ I#%&%s I# %:

N'$$ h*6 h%s!s K!# %6%# %# % ,@ a 'a$ a# % 6% % I# %&%s I# %Interest Income $actual& Interest Income $8odel&

98+*7+*6.000 98++8 77.7*691+89095+.000 910+5558 .*85

+688681516.000 +688687 56.778

905 815*.000 9096+69+ .101

Ch!-sH'a&% !# %6%# %# % %s :Ch&,s0.050 the e"&s! &s t# !#t re?e"t the!u h/-#thes&s #3 &! e-e! e!"e =et@ee! the a"tua I!terest I!"#(ea! the e4-e"te &!terest I!"#(e.I! #ther @#r s the e-e! e!"e =et@ee! the a"tua I!terest I!"#(ea! the a"tua I!terest I!"#(e &s !#t s&%!&3&"a!t.

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

ANA81SIS OF >ARIANCE is essentially a procedure for testing thedifference among different groups of data for homogeneity2

N'$$ h*6 h%s!s K# s!/#! ! a# % ! %&%# % % @%%# 6& ! a %& a6& ! % &% a

years profit before ta5 profit after ta5+&&$ CC A=+&&8 #&? C++&&% #?8 #$=+&&= #A% #8A+&&? $+? +A&

P&% ! ! #s+ &%s! 'a$s+ a# # ! %# %!# %& a$s:

O=ser$at!s e&%hts -=t -at -at 'M# e ) Res& ua sSta! ar &

res& uaO=s1 1 99.000 86.000 80.7*5 5. 65 0.67O=s 1 107.000 9 .000 87.55 +.++8 0.5O=s* 1 17+.000 1*6.000 1++.650 ,8.650 ,1.10O=s+ 1 185.000 1+8.000 15+.0 5 ,6.0 5 ,0.77O=s5 1 * 7.000 80.000 75.0*8 +.96 0.6

Summary !or t e dependent (aria'le4

ar&a= e T#ta !#. #3 $a ues 2#. #3 $a ues use2#. #3 $a ues

&%!#reSu( #3@e&%hts Mea!

Sta! ae$&a

-at 5 5 0 5 1+8.+00 78.

S' a&* & h% H'a# ! a ! % a&!a $%s:

ar&a= e Mea! Sta! ar e$&at!

=t 178.+00 91.579

A%


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Data and regression line

0

50

100

150

200

250

300

350

0 50 100 150 200 250 300 350

pb t

Obs erv a !" #s P re$!% !" #s C "#& . " # (re$ )*5.00+, C "#& . " # ea# )*5.00+,

p't 6 Standardi7ed residuals

-2

-1.5

-1

-0.5

0

0.5

1

0 50 100 150 200 250 300 350

pb t

A=


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pat 6 Standardi7ed residuals

-2

-1.5

-1

-0.5

0

0.5

1

0 50 100 150 200 250 300

pa t

Standardi7ed residuals

-1.5 -1 -0.5 0 0.5 1 1.5

Obs1

Obs2

Obs3

Obs4

Obs5

S tandardized residuals

A?


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s '& %s a&!a ! # SS D-F MS

% @%%# sa 6$% 23 0. 2- K 23 0.

@! h!# sa 6$% 09 . K 72 .

/alculated value +$#&2A ?+=#2A 2$#A+3able value .'#,A* %2$+ I# %&6&% a ! #:

0ecause the calculated value is less than the tabulated value so the decision isto accept the null hypothesis i2e2 there is not so much variation b w pat < pbt2De can say that company is not paying so much ta52

3he value of . is accepted that there is not so much variation between9)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


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T TEST ON OBSER>ED AND E?PECTED >A8UE OFPROFIT AFTER TA?:

N'$$ h*6 h%s!s (h0

) K %H'a$! * %a#s % @%%# h% @a&!a $%ss%& % a$'% 6& ! a %&

a ( #)% 6% % a$'% 6& ! % &%

a ( #)37 3 .7

9 93.32 0 2 0.93 30

D%s &!6 ! %s a !s ! s:

Sa(- eSa(- e

s& e Mea! ar&a!"eSta! ar

e$&at!E4-e"t + 1.975 5500.86* 7+.168

S ' %# s %s & !# %6%# %# sa 6$%s , @ - a!$% %s :Th% %s !s 6' % '# %& h% ass' 6 ! # ha h% @ h% &% ! a$

a&!a# %s a&% %H'a$

DECISION: )t the level of significance )lpha &2&%& the decision is to not re ect the nullhypothesis of equality of the means2In other words, the difference between the means of e5pected and observed

pat is not significant2

INTERPRETATION:

t '#=ser$e $a ue) 0.000t '"r&t&"a $a ue) .++8

D 6T@#,ta& e -,$a ue 1.000

A -ha 0.05De"&s!:

AC


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It means that company is not paying so much ta5 out of pbt2 So it is beneficialfrom 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 ofthe 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! %: 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# R%s '& % C #s &a!# s: I had a limited time forconducting 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 E 6%&!%# %: 3he lack of e5perience may have caused some

errors in administration of this research2

N # %&a/% %& a!# as6% s: -ue to confidential nature ofsome 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&


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FINDIN=S

In the 7atest financial year in 1arch with whooping $C growth in

!et profit to nearly W8&& million above the strong pace of $# annual

growth over past last % years 2

!et revenue grow at ama6ing %& to aboutW#2C billion

!et interest margin of 828 is nearly doubled that of its nearest

competitor I/I/I 0ank2

perating cost has risen at an annual rate of 8+ over last % years with

%% increase during fiscal +&&A 2

0ank has shown the competitive advantage in the key retail lending

segment , rival I/I/I reported a partly $ 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% 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

from une $&,+&&?2 2

.ees and commission and the main contribute to the income from this

quarter and increase by$?2$ 2

9ortfolio quality as on une $&,+&&A remain healthy with gross non

performing assets at #2% growth advances and non performing assets

at &2% of net advances 2

3he banks total /)R as at Fune +&&A stood at #+2+ againstminimum of C2& 2

3ier # /)R was C2A

!et advance as at Fune $&,+&&A were Rs2 C=?C crores an increase of

?C2A , 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= 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

C$


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3he share holders of /0 9 has been allotted =,CA,A$,C%= equity shares

of Rs2 #& E 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 &CA of consumer assets2

-ocumentations for loan should also reduce2

3he fi5ed assets are decrease #288 but reserve and surplus increased

to C2A8 2 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% but the total e5panses are

increased =#2A= 2 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 $? 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 &CA of consumer assets2

1ore 9refer to Secured < Short 3erm 7oan

/ontrol 3he /ollection ;5pences

3he fi5ed assets are decrease #288 but reserve and surplus increased

to C2A8 2 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, .inancial Statement )nalysis " ) new approach

;nglewood cliffsL, ed2E +&&=, !2F2, 9rentice (all of India

+2 Kothari /2R2, Muantitative 3echniquesL, ed +&&%, >ikas publishing

house 9vt2 7td2, !ew -elhi

$2 Bupta S292, 0usiness StatisticsL, $# st edition, +&&%, Sultan /hand ikas 9ublication

(ouse 9vt2 7td2, !ew -elhi

%2 (ooda R292, Statistics for 0usiness and ;conomicsL, 1acmilland India7td2, !ew -elhi

=2 1aheshwari, S2!2 )dvanced )ccountingL, ed E+&&8, Sultan /hand 2K2 'India* ;nterprises, !ew -elhi

A2 /iaran Dalsh, Key 1anagement RatiosL, ed #CCC, 1acmillan India

7td2, !ew -elhi

C2 Bupta S2K2 )ccounting for 1anagerial -ecisionsL, ed2 +&&8, Kalyani

9ublisher, !ew -elhi

C=


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=2 www2frontline2in

?2 http: www2hdfcbank2com aboutus careers default2htm ,

A2 www2rbidocs2rbi2in,

C2 http: www2hdfcbank2com aboutus cg .inancialOInformation2htm

0)7)!/; S(;;3

Ba a!"e sheet 8ar 9 )+ 8ar 9 ): 8ar 9 ); 8ar 9 )0 8ar 9 )5

S#ur"es #3 3u! sO ner9s !und

E


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Market $a ue #3


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Y#ARS "A- IN-.#>". #8".COS- S#??IN@ D#" 8IS.#>" O"#RA-IN "RO2.3))5 ;)3.:3 ,3,,.)0 3)5.)* 5=:.): ,30.:3 50*.33 *++.3+ 3=:.+33))0 +0=.;3 ,=,0.0; 3:;.;: 0);.55 ,55.): ;=5.5* ,3;,.;3 =)).)03)); ,,,0.*5 ,*3*.0 5+;.+3 *5=.)= ,:+.0* ,)=0., 3,:).+0 5:3.;*3)): ,=+3.05 =,:*.50 ::;.+; :3:.0= 3,*.; 3,,=.3+ 30*).;; ,35;.;,3))+ ,0*).,+ 5++:.,3 ,=),.=0 *:5.:* 3:,.:3 =3*0.33 =*=0.3+ ,*):.+

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