Study of Financial Report

7/28/2019 Study of Financial Report

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A

PROJECT REPORT

ON

COMPARATIVE STUDY OF FINANCIAL REPORT

OF

TOP THREE BANKS OF INDIA

SUBMITTED TO TILAK MAHARASHTRA UNIVERSITY

IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE

MASTER OF BUSINESS ADMINISTRATION

(MBA)

Submitted By:

KAAT RAFIK O.

(Batch 2008-09)

Guided By:

Prof.R.GANESHAN

MAHARASHTRA COSMOPOLITAN EDUCATION SOCIETY S

PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCECAMP- PUNE-411001

www.final-yearproject.com | www.finalyearthesis.com


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PAI INTERNATIONAL CENTRE

FOR

MANAGEMENT EXCELLENCE

Maharashtra Cosmopolitan Education Society

DECLARATION

I hereby declare that project titled COMPARATIVE STUDY OF FINANCIAL REPORT

OF TOP THREE BANKS OF INDIA is an original piece of research work carried out by meunder the guidance and supervision of prof. R Ganesan. The information has been collected from

genuine &authentic sources. The work has been submitted in partial fulfillment of the requirement

of MBA to our college.

Place: Signature:

Date: Name of the students:



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ACKNOWLEDGEMENT

Perseverance inspiration and motivation have always played a key role in success of any

venture . I hereby express my deep sense of gratitude to all the personalities involved directly and

indirectly in my project work.

I would thank to God for their blessing and my parents also for their valuable suggestion

and support in my project report.

I would also like to thank our friends and those who have helped us during this project

directly or indirectly.

Last but not the least; I would like to express my sincere gratitude to all the faculty members

who have taught me in my entire MBA curriculum and our Director Prof.R.GANESAN who has

always been a source of guidance, inspiration and motivation. However, I accept the sole

responsibility for any possible errors of omission and would be extremely grateful to the readers of

this project report if they bring such mistakes to my notice.

KAAT RAFIK O.



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INDEX

1. Introduction7

2. Bank Profile1

0

i. SBI1

1

ii. ICICI1

4

iii. PNB1

7

3. Products & Services2

1

4. Balance Sheet3

6

5. Ratio Analysis4

0

6. Objectives6

2

7. Importance6

4

8. Advantages, Limitations

Sr.No Pa eSub ects



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6

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9. Conclusion6

9

10

.

Bibliography7

1

INTRODUCTION



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INRTODUCTION

After preparation of the financial statements, one may be interested in knowing the position

of an enterprise from different points of view. This can be done by analyzing the financialstatement with the help of different tools of analysis such as ratio analysis, funds flow

analysis, cash flow analysis, comparative statement analysis, etc. Here I have done financial

analysis by ratios. In this process, a meaningful relationship is established between two or

more accounting figures for comparison.

Financial ratios are widely used for modeling purposes both by practitioners and

researchers. The firm involves many interested parties, like the owners, management, personnel, customers, suppliers, competitors, regulatory agencies, and academics, each

having their views in applying financial statement analysis in their evaluations. Practitioners

use financial ratios, for instance, to forecast the future success of companies, while the

researchers' main interest has been to develop models exploiting these ratios. Many distinct

areas of research involving financial ratios can be discerned. Historically one can observe

several major themes in the financial analysis literature. There is overlapping in the

observable themes, and they do not necessarily coincide with what theoretically might bethe best founded areas.

Financial statements are those statements which provide information about profitability and

financial position of a business. It includes two statements, i.e., profit & loss a/c or income

statement and balance sheet or position statement.

The income statement presents the summary of the income earned and the expenses incurred

during a financial year. Position statement presents the financial position of the business at

the end of the year.



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Before understanding the meaning of analysis of financial statements, it is necessary to

understand the meaning of analysis and financial statements .

Analysis means establishing a meaningful relationship between various items of the two

financial statements with each other in such a way that a conclusion is drawn. By financial

statements, we mean two statements- (1) profit & loss a/c (2) balance sheet. These are

prepared at the end of a given period of time. They are indicators of profitability and

financial soundness of the business concern.

Thus, analysis of financial statements means establishing meaningful relationship between

various items of the two financial statements, i.e., income statement and position statement

Parties interested in analysis of financial statements

Analysis of financial statement has become very significant due to widespread interest of

various parties in the financial result of a business unit. The various persons interested in the

analysis of financial statements are:-

Short- term creditors

They are interested in knowing whether the amounts owing to them will be paid as and

when fall due for payment or not.

Long term creditors

They are interested in knowing whether the principal amount and interest thereon will be

paid on time or not.

Shareholders

They are interested in profitability, return and capital appreciation.

Management

The management is interested in the financial position and performance of the enterprise as

a whole and of its various divisions.

Trade unions

They are interested in financial statements for negotiating the wages or salaries or bonus

agreement with management.



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Taxation authorities

These authorities are interested in financial statements for determining the tax liability.

Researchers

They are interested in the financial statements in undertaking research in business affairs

and practices.

Employees

They are interested as it enables them to justify their demands for bonus and increase in

remuneration.

You have seen that different parties are interested in the results reported in the financial

statements. These results are reported by analyzing financial statements through the use of ratio

analysis.



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1. STATE BANK OF INDIA

Type- Public (BSE, NSE: SBI) &

(LSE :SBID)

Founded- Calcutta, 1806 (as Bank of Calcutta)

Headquarters-

Corporate Centre,

Madam Cama Road,

Mumbai 400 021 India

Key people- Om Prakash Bhatt, Chairman

State Bank of India (SBI) (LSE: SBID) is the largest bank in India. It is also, measured by

the number of branch offices and employees, the second largest bank in the world. The bank traces

its ancestry back through the Imperial Bank of India to the founding in 1806 of the Bank of

Calcutta, making it the oldest commercial bank in the Indian Subcontinent. The Government of

India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60%

stake, and renamed it the State Bank of India. In 2008, the Government took over the stake held by

the Reserve Bank of India.

SBI provides a range of banking products through its vast network in India and overseas,

including products aimed at NRIs. With an asset base of $126 billion and its reach, it is a regional

banking behemoth. SBI has laid emphasis on reducing the huge manpower through Golden

handshake schemes and computerizing its operations.

The State Bank Group, with over 16000 branches, has the largest branch network in India. It

has a market share among Indian commercial banks of about 20% in deposits and advances.

http://en.wikipedia.org/wiki/Category:Types_of_companieshttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://www.londonstockexchange.com/en-gb/pricesnews/prices/Trigger/genericsearch.htm?bsg=true&ns=SBIDhttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Bhikaiji_Camahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://www.londonstockexchange.com/en-gb/pricesnews/prices/Trigger/genericsearch.htm?bsg=true&ns=SBIDhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Indian_Subcontinenthttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/NRIhttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/NRIhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Indian_Subcontinenthttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Bankhttp://www.londonstockexchange.com/en-gb/pricesnews/prices/Trigger/genericsearch.htm?bsg=true&ns=SBIDhttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Bhikaiji_Camahttp://en.wikipedia.org/wiki/Calcuttahttp://www.londonstockexchange.com/en-gb/pricesnews/prices/Trigger/genericsearch.htm?bsg=true&ns=SBIDhttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Category:Types_of_companies


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International presence

Regional office of the State Bank of India (SBI), India's largest bank, in Mumbai. The

government of India is the largest shareholder in SBI.

The bank has 52 branches, agencies or offices in 32 countries. It has branches of the parent

in Colombo, Dhakka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los Angeles,

Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore banking units

in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town.

SBI operates several foreign subsidiaries or affiliates. In 1990 it established an offshore

bank, State Bank of India (Mauritius). It has two subsidiaries in North America, State Bank of India

(California), and State Bank of India (Canada). In 1982, the bank established its California

subsidiary, which now has seven branches. The Canadian subsidiary was also established in 1982

and also has seven branches, four in the greater Toronto area, and three in British Columbia. In

Nigeria, it operates as INMB Bank. This bank was established in 1981 as the Indo-Nigerian

Merchant Bank and received permission in 2002 to commence retail banking. It now has five

branches in Nigeria. In Nepal SBI owns 50% of Nepal SBI Bank, which has branches throughout

the country. In Moscow SBI owns 60% of Commercial Bank of India, with Canara Bank owning

the rest. In Indonesia it owns 76% of PT Bank Indo Monex. State Bank of India already has a

branch in Shanghai and plans to open one up in Tianjin.

http://en.wikipedia.org/wiki/Colombohttp://en.wikipedia.org/wiki/Dhakkahttp://en.wikipedia.org/wiki/Frankfurthttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Johannesburghttp://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/Los_Angeleshttp://en.wikipedia.org/wiki/Malehttp://en.wikipedia.org/wiki/Maldiveshttp://en.wikipedia.org/wiki/Muscathttp://en.wikipedia.org/wiki/New_Yorkhttp://en.wikipedia.org/wiki/Osakahttp://en.wikipedia.org/wiki/Sydneyhttp://en.wikipedia.org/wiki/Tokyohttp://en.wikipedia.org/wiki/Bahamashttp://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Bhutanhttp://en.wikipedia.org/wiki/Cape_Townhttp://en.wikipedia.org/wiki/Torontohttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Tianjinhttp://en.wikipedia.org/wiki/Tianjinhttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/British_Columbiahttp://en.wikipedia.org/wiki/Torontohttp://en.wikipedia.org/wiki/Cape_Townhttp://en.wikipedia.org/wiki/Bhutanhttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Bahamashttp://en.wikipedia.org/wiki/Tokyohttp://en.wikipedia.org/wiki/Sydneyhttp://en.wikipedia.org/wiki/Osakahttp://en.wikipedia.org/wiki/New_Yorkhttp://en.wikipedia.org/wiki/Muscathttp://en.wikipedia.org/wiki/Maldiveshttp://en.wikipedia.org/wiki/Malehttp://en.wikipedia.org/wiki/Los_Angeleshttp://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/Johannesburghttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Frankfurthttp://en.wikipedia.org/wiki/Dhakkahttp://en.wikipedia.org/wiki/Colombo


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2. INDUSTRIAL CREDIT & INVESTMENT CORPORATION

OF INDIA (ICICI)ICICI was formed in 1955 at the initiative of the World Bank, the government of India and

Indian industry representatives. The principal objective was to create a development financial

institution for providing medium-term and long-term project financing to Indian businesses. Until

the late 1980s, ICICI primarily focused its activities on project finance, providing long-term funds

to a variety of industrial projects. With the liberalization of the financial sector in India in the

1990s, ICICI transformed its business from a development financial institution offering only project

finance to a diversified financial services provider that, along with its subsidiaries and other group

companies, offered a wide variety of products and services. As India s e conomy became more

market-oriented and integrated with the world economy, ICICI capitalized on the new opportunities

to provide a wider range of financial products and services to a broader spectrum of clients.

ICICI Bank was incorporated in 1994 as a part of the ICICI group. ICICI Bank s initial

equity capital was contributed 75.0% by ICICI and 25.0% by SCICI Limited, a diversified finance

and shipping finance lender of which ICICI owned 19.9% at December 1996. Pursuant to the

merger of SCICI into ICICI, ICICI Bank became a wholly- owned subsidiary of ICICI. ICICI s

holding in ICICI Bank reduced due to additional capital raising by ICICI Bank and sale of shares by

ICICI, pursuant to the requirement stipulated by the Reserve Bank of India that ICICI dilute its

ownership of ICICI Bank. Effective March 10, 2001, ICICI Bank acquired Bank of Madura, an old

private sector bank, in an all-stock merger.

The issue of universal banking, which in the Indian context means the conversion of long-

term lending institutions such as ICICI into commercial banks, had been discussed at length over the past several years. Conversion into a bank offered ICICI the ability to accept low-cost demand

deposits and offer a wider range of products and services, and greater opportunities for earning non-

fund based income in the form of banking fees and commissions. ICICI Bank also considered

various strategic alternatives in the context of the emerging competitive scenario in the Indian

banking industry. ICICI Bank identified a large capital base and size and scale of operations as key

success factors in the Indian banking industry. In view of the benefits of transformation into a bank

and the Reserve Bank of India s pronouncements on universal banking, ICICI and ICICI Bank decided to merge.



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3. PUNJAB NATIONAL BANK (PNB)

Punjab National Bank (PNB) was registered on May 19, 1894 under the Indian Companies

Act with its office in Anarkali Bazaar Lahore. The Bank, founded by Dyal Singh Majithia and Lala

Harkishen Lal, is the second largest government-owned commercial bank in India with about 4,500

branches across 764 cities. It serves over 37 million customers. The bank has been ranked 248th

biggest bank in the world by Bankers Almanac, London. Total Business of the bank for financial

year 2007 is estimated to be approximately US$60 billion. It has a banking subsidiary in the UK, as

well as branches in Hong Kong and Kabul, and representative offices in Almaty, Shanghai, and

Dubai.

We are a leading public sector commercial bank in India, offering banking products and

services to corporate and commercial, retail and agricultural customers. Our banking operations for

corporate and commercial customers include a range of products and services for large

corporations, as well as small and middle market businesses and government entities. We offer a

wide range of retail credit products including housing loans, personal loans and automobile loans.

We cater to the financing needs of the agricultural sector and have created innovative financing

products for farmers. We also provide significant financing to other priority sectors including small

scale industries. Through our treasury operations, we manage our balance sheet, including the

maintenance of required regulatory reserves, and seek to maximize profits from our trading

portfolio by taking advantage of market opportunities.

Our revenue, which is referred to herein and in our financial statements as our income,

consists of interest income and other income. Interest income consists of interest on advances

(including the discount on bills discounted) and income on investments. Income on investmentsconsists of interest and dividends from securities and our other investments and interest from

interbank loan and cash deposits we keep with the RBI. Our securities portfolio consists primarily

of Government of India and state government securities. We meet our statutory liquidity reserve

ratio requirements through investments in these and other approved securities. We also hold

debentures and bonds issued by public sector undertakings and other corporations, commercial

paper, equity shares and mutual fund units.

Our interest expense consists of our interest on deposits as well as borrowings. Our interest

http://en.wikipedia.org/wiki/1894http://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Dyal_Singh_Majithiahttp://en.wikipedia.org/w/index.php?title=Lala_Harkishen_Lal&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Lala_Harkishen_Lal&action=edit&redlink=1http://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Kabulhttp://en.wikipedia.org/wiki/Almatyhttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Dubaihttp://en.wikipedia.org/wiki/Dubaihttp://en.wikipedia.org/wiki/Shanghaihttp://en.wikipedia.org/wiki/Almatyhttp://en.wikipedia.org/wiki/Kabulhttp://en.wikipedia.org/wiki/Hong_Konghttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/w/index.php?title=Lala_Harkishen_Lal&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Lala_Harkishen_Lal&action=edit&redlink=1http://en.wikipedia.org/wiki/Dyal_Singh_Majithiahttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/1894


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BOARD OF DIRECTORS

1. Dr K.C Chakrabarty

2. Smt. Ravneet Kaur

3. Shri L.M.Fonseca

4. Shri. S.R.Khurana

5. Shri P.K. Nayar

6. Shri Mohan Lal Bagga

7. Shri Mushtaq A Antulay

8. Shri Gautam P. Khandelwal

9. Shri Vinod Kumar Mishra

10. Shri Tribhuwan Nath Chaturvedi

11. Shri G R Sundaravadivel

12. Shri Devinder Kumar Singla



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PRODUCTS

&SERVICES



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INTERNET BANKING

E-PAY

E-RAIL

RBIEFT

SAFE DEPOSIT LOCKER

GIFT CHEQUES

GOVERNMENT BUSINESS

State Bank of India's linkage with Government business is widespread. No wonder that out

of 9315 branches in India, about 7000 branches are conducting Government Business. The large

network of our branches provides easy access to the common man to deposit the

following Government dues and pension payments.

SME (small scale industries)

State Bank of India has been playing a vital role in the development of small scale industries

since 1956.The Bank has financed over 8 lakhs SSI units in the country. It has 55 specialised SSI

branches, 99 branches in industrial estates and more than 400 branches with SIB divisions.

The Bank finances for Small Business activities which are of special significance to a large

number of people as many of these activities can be started with relatively lower investment and

with no special skills on the part of the entrepreneurs.

http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,76http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,81http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,72http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,80http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,77http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,79http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,79http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,77http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,80http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,72http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,81http://www.sbi.co.in/viewsection.jsp?lang=0&id=0,10,76


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Our international strategy is focused on building a retail deposit franchise, diverse wholesale

funding sources and strong syndication capabilities to support our corporate and investment

banking business; achieving the status of a non-resident Indian (NRI) community bank in key

markets; and expanding private banking operations for India-centric asset classes. During fiscal

2008, we focused on deepening our presence in existing overseas locations and expanding our

operations in key markets. In line with our strategy to establish a presence in large markets with

significant savings pools, we entered into Germany through a branch established by ICICI Bank UK

PLC. We have been able to successfully leverage our technology advantage to create a growing

international deposit base. Total deposits of ICICI Bank UK PLC and ICICI Bank Canada increased

by 76.0% from Rs. 191.28billion at March 31, 2007 to Rs. 335.86 billion at March 31, 2008. Wealso received approval for and commenced branch operations in the United States.

We have established a strong franchise among NRIs by offering a comprehensive product

suite, technology enabled access, a wide distribution network in India and alliances with local banks

in various markets. Currently, we have over 500,000 NRI customers. We have undertaken

significant brand-building initiatives in international markets and have emerged as a well-

recognised financial services brand for NRIs. We continue to maintain a market share of 25% ininward remittances to India. During fiscal 2008, we launched innovative products like instant

money transfer and enhanced our focus on customer relationship management and process

automation. Additionally, we also undertook the development of low cost remittance products in

non-India geographies with correspondent tie-ups for disbursements in over 100 such geographies.

Through our international private banking services, we offer various products to mass

affluent and high net worth clients based on their financial needs and risk appetite. The offerings

range from simple deposits and loans to more sophisticated structured products, private equity and

products giving exposure to the real estate sector in India.

CORPORATE BANKING

Our corporate banking strategy is based on providing comprehensive and customised

financial solutions to our corporate customers. We offer a complete range of corporate banking products including rupee and foreign currency debt, working capital credit, structured financing,

syndication and transaction banking products and services.



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Our corporate and investment banking franchise is built around a core relationship team that

has strong relationships with almost all o f the country s corporate houses. The relationship team is

product agnostic and is responsible for managing banking relationships with clients. We have also

put in place product specific teams with a view to focus on specific areas of expertise in designing

financial solutions for clients. Through our relationship teams working in tandem with product

solution teams, we have deepened our client relationships across our product portfolio or esulting in

significant growth in income and wallet share among all our top corporate clients, as compared to

the previous year.

We have created an integrated Global Investment Banking Group, which is responsible for

working with the relationship team in India and our international subsidiaries and branches, for origination, structuring and execution of investment banking mandates on a global basis. We have

also restructured our delivery team for transaction banking products by creating dedicated sales

teams for trade services and transaction banking products. This has been done with the intent to

increase our market share from transaction banking products, which will translate into recurring fee

income for the Bank. We have also focused on increasing market share in trade finance by

leveraging and further strengthening correspondent banking relationships.

SME BANKING

During fiscal 2008, our small enterprises customer base increased by 26% to about 1.1

million accounts. We have introduced our service offerings in over 400 new branches, increasing

our coverage to over 1,000 branches. During the year, we have focused on product specialisation

including investment banking for SMEs. We have continued to focus on shaping the small and

medium enterprises sphere in India through initiatives such as the Emerging India Awards, theSME CEO Knowledge Series - a platform to mentor and assist SME entrepreneurs, and the SME

Dialogue - a weekly feature in a leading financial newspaper sharing SME best practices and

success stories. During the year, we have launched several new products and services like the SME

toolkit an online business and advisory resource for SMEs.



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RURAL BANKING AND AGRI-BUSINESS

We believe the rural economy has high growth potential and offers large credit growth

opportunities. Towards this end, our suite of products and services is targeted to address the needs

of both the farm and non-farm sectors. Our retail product suite encompasses loans for crop

production, purchase of farm equipment; commodity based finance as well as various savings,

investment and insurance products. We also offer micro-finance and jewel loans. We have also

focused on enhancing credit to farmers by leveraging on corporate partnerships. For example, we

have partnered with various dairies to provide financing to farmers for purchase of milch cattle. We

also provide credit and banking services to SMEs active in the agricultural value chain. To enhance

our service quality and product delivery capabilities we have developed a large network of rural

branches which is further augmented by non-branch channels.

Rural banking in India is still at a nascent stage and the deployment of technology channels

and modern banking methods for rural lending continues to be an evolving process. In line with our

learning from our rural banking operations, we undertook a comprehensive review of and realigned

our channel architecture, credit underwriting processes and account management systems. We have

put in place a robust risk management structure to Mitigate and manage credit, operational andfraud risks. Through this, we aim to create a strong foundation for scaling up of our rural business.



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BALANCE

SHEET



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1. STATE BANK OF INDIA

BALANCE SHEET

AS ON 31-MARCH-2008

Assets Rs(mn) %BT

Net Own Assets 33291.42 0.46

Net Lease Assets(After Lease Adj A/c) 443.39 0.01

Investment 1895012.71 26.26

Advances 4167681.96 57.76

Cash & Money at call 674663.35 9.35

Other Current Assets 443749.84 6.15

Balance Sheet Total(BT) 7215263.12 100.00

Liabilities Rs(mn) %BT

Equity Share Capital 6314.70 0.09

Reserves 484011.91 6.71

Deposits 5374039.41 74.48

Borrowings 517274.11 7.17

Other Cash liab/prov. 833622.98 11.55

Balance Sheet Total(BT) 7215263.12 100.00

Non Performing Assets(NPA) % 1.87 -

Capital Adequacy Ratio(CAR) % 13.47 -



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RATIO

ANALYSIS



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PROFITABILITY RATIO

A class of financial metrics that are used to assess a business's ability to generate earnings as

compared to its expenses and other relevant costs incurred during a specific period of time. For

most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a

previous period is indicative that the company is doing well.

Some examples of profitability ratios are profit margin, return on assets and return on

equity. It is important to note that a little bit of background knowledge is necessary in order to

make relevant comparisons when analyzing these ratios.

For instances, some industries experience seasonality in their operations. The retail industry,

for example, typically experiences higher revenues and earnings for the Christmas season.

Therefore, it would not be too useful to compare a retailer's fourth-quarter profit margin with

its first-quarter profit margin. On the other hand, comparing a retailer's fourth-quarter profit

margin with the profit margin from the same period a year before would be far more informative.

OPERATING MARGIN

A ratio used to measure a company's pricing strategy and operating efficiency. Operating

margin is a measurement of what proportion of a company's revenue is left over after paying for

variable costs of production such as wages, raw materials, etc. A healthy operating margin is

required for a company to be able to pay for its fixed costs, such as interest on debt. It Is Also

known as "operating profit margin."

Calculated as:



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Operating margin gives analysts an idea of how much a company makes (before interest and

taxes) on each dollar of sales. When looking at operating margin to determine the quality of a

company, it is best to look at the change in operating margin over time and to compare the

company's yearly or quarterly figures to those of its competitors. If a company's margin is

increasing, it is earning more per dollar of sales. The higher the margin, the better.

For example, if a company has an operating margin of 12%, this means that it makes $0.12

(before interest and taxes) for every dollar of sales. Often, nonrecurring cash flows, such as cash

paid out in a lawsuit settlement, are excluded from the operating margin calculation because they

don't represent a company's true operating performance.

RATIO AT 31-MARCH 2008

Sr.No. Name of Bank Percentage

1 SBI 22.69 %

2 ICICI 14.45 %

3 PNB 21.47 %



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BAR-GRAPH

INTERPRETATION

It shows that operating efficiency of SBI is better than PNB and ICICI. While operating

efficiency of ICICI is lower than PNB and SBI. So rank of operating efficiency of banks can be

given as SBI, PNB and ICICI.

GROSS PROFIT MARGIN

A financial metric used to assess a firm's financial health by revealing the proportion of

money left over from revenues after accounting for the cost of goods sold. Gross profit margin

serves as the source for paying additional expenses and future savings. It is also known as "gross

margin".

Calculated as:



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BAR-GRAPH

INTERPRETATION

This ratio is key performance indicators for business. Key performance means the profit

level of company; from above graph we can say that performance of PNB is better than SBI and

ICICI. So profit level of PNB is at first rank than comes SBI and ICICI.

RETURN ON NETWORTHReturn on Net worth (RONW) is used in finance as a measure of a company s profitability .

It reveals how much profit a company generates with the money that the equity shareholders have

invested. Therefore, it is also called Return on Equity (ROE)

It is expressed as:-

Net Income

RONW = ------------------------------------------- X 100

Shareholder s Equity

The numerator is equal to a fiscal year s net income (after payment of preference share

dividends but before payment of equity share dividends).The denominator excludes preference



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INTERPRETATION

This ratio is useful for comparing the profitability of a company to that of other firms in the

same industry. Here, profitability of PNB is more than SBI and PNB. So we can say that PNB is at

first rank by its profitability than comes SBI and ICICI.

LEVERAGE RATIO

Any ratio used to calculate the financial leverage of a company to get an idea of the

company's methods of financing or to measure its ability to meet financial obligations. There are

several different ratios, but the main factors looked at include debt, equity, assets and interest

expenses.

A ratio used to measure a company's mix of operating costs, giving an idea of how changes

in output will affect operating income. Fixed and variable costs are the two types of operating costs;

depending on the company and the industry, the mix will differ.

The most well known financial leverage ratio is the debt-to-equity ratio. For example, if a

company has $10M in debt and $20M in equity, it has a debt-to-equity ratio of 0.5 ($10M/$20M).

Companies with high fixed costs, after reaching the breakeven point, see a greater increase in

operating revenue when output is increased compared to companies with high variable costs. The

reason for this is that the costs have already been incurred, so every sale after the breakeven

transfers to the operating income. On the other hand, a high variable cost company sees little

increase in operating income with additional output, because costs continue to be imputed into the

outputs. The degree of operating leverage is the ratio used to calculate this mix and its effects onoperating income.

DEBT-EQUITY RATIO

A measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity.



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BAR-GRAPH

INTERPRETATION

This ratio indicates what proportion of equity and debt the company is using to finance its

assets. From above diagram we can say that PNB has a high debt-equity ratio means it is aggressive

in financing its growth with debt. Than after SBI has a low debt-equity ratio as comparison with

PNB and ICICI comes at third rank in debt-equity ratio.

FIXED ASSETS TURNOVER RATIO

Measure of the productivity of a firm, it indicates the amount of sales generated by each

dollar spent on fixed assets, and the amount of fixed assets required to generate a specific level of

revenue. Changes in the ratio over time reflect whether or not the firm is becoming more efficient in

the use of its fixed assets. Formula: Sales revenue average fixed assets.

http://www.businessdictionary.com/definition/measure.htmlhttp://www.businessdictionary.com/definition/productivity.htmlhttp://www.businessdictionary.com/definition/sales.htmlhttp://www.businessdictionary.com/definition/fixed-asset.htmlhttp://www.businessdictionary.com/definition/required.htmlhttp://www.businessdictionary.com/definition/revenue.htmlhttp://www.businessdictionary.com/definition/change.htmlhttp://www.businessdictionary.com/definition/ratio.htmlhttp://www.businessdictionary.com/definition/formula.htmlhttp://www.businessdictionary.com/definition/sales-revenue.htmlhttp://www.businessdictionary.com/definition/average-fixed-assets.htmlhttp://www.businessdictionary.com/definition/average-fixed-assets.htmlhttp://www.businessdictionary.com/definition/sales-revenue.htmlhttp://www.businessdictionary.com/definition/formula.htmlhttp://www.businessdictionary.com/definition/ratio.htmlhttp://www.businessdictionary.com/definition/change.htmlhttp://www.businessdictionary.com/definition/revenue.htmlhttp://www.businessdictionary.com/definition/required.htmlhttp://www.businessdictionary.com/definition/fixed-asset.htmlhttp://www.businessdictionary.com/definition/sales.htmlhttp://www.businessdictionary.com/definition/productivity.htmlhttp://www.businessdictionary.com/definition/measure.html


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INTERPRETATION

This ratio shows specific level of revenue by the amount of fixed assets. SBI has a high

level of revenue in comparison with ICICI and PNB. After SBI, ICICI has a high level of revenue

and than comes PNB at last.

LIQUIDITY RATIO

A class of financial metrics that is used to determine a company's ability to pay off its short-

terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of

safety that the company possesses to cover short-term debts.

Common liquidity ratios include the current ratio, the quick ratio and the operating cash

flow ratio. Different analysts consider different assets to be relevant in calculating liquidity. Some

analysts will calculate only the sum of cash and equivalents divided by current liabilities

because they feel that they are the most liquid assets, and would be the most likely to be used to

cover short-term debts in an emergency.

A company's ability to turn short-term assets into cash to cover debts is of the utmost

importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators

frequently use the liquidity ratios to determine whether a company will be able to continue as a

going concern.

CURRENT RATIO

This ratio is a rough indication of a firm's ability to service its current obligations.

Generally, the higher the current ratio, the greater the "cushion" between current obligations and

your Company's ability to pay them. The composition and quality of current assets is a critical

factor in the analysis of your Company's liquidity. It is calculated as Total current assets divided bytotal current liabilities.



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1 SBI 0.07 %

2 ICICI 0.10 %

3 PNB 0.02 %

BAR-GRAPH



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INTERPRETATION

Current ratio of ICICI is higher than SBI and PNB, means ICICI has a high ability to pay for

its liabilities, and than secondly comes SBI and PNB has a low ability to pay for liabilities in

comparison with ICICI and PNB.

QUICK RATIO

It is also known as the "Acid Test" ratio; it is a refinement of the current ratio and is a more

conservative measure of liquidity. The ratio expresses the degree to which your current Company's

current liabilities are covered by the most liquid current assets. Generally, any value of less than 1

to 1 implies a "dependency" on inventory or other current assets to liquidate short-term debt.

It is calculated as Cash plus trade receivables divided by total current liabilities.




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1 SBI 6.15 %

2 ICICI 6.42 %

3 PNB 9.40 %

BAR-GRAPH

INTERPRETATION



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IMPORTANCE



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ADVANTAGES

&

LIMITATIONS



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LIMITATIONS

The ratios analysis is one of the most powerful tools of financial management. Though ratios are

simple to calculate and easy to understand, they suffer from serious limitations.

1. Limitations of financial statements: Ratios are based only on the information which has been

recorded in the financial statements. Financial statements themselves are subject to several

limitations. Thus ratios derived, there from, are also subject to those limitations. For

example, non-financial changes though important for the business are not relevant by the

financial statements. Financial statements are affected to a very great extent by accounting

conventions and concepts. Personal judgment plays a great part in determining the figures

for financial statements.

2. Comparative study required: Ratios are useful in judging the efficiency of the business only

when they are compared with past results of the business. However, such a comparison only

provide glimpse of the past performance and forecasts for future may not prove correct since

several other factors like market conditions, management policies, etc. may affect the futureoperations.

3. Problems of price level changes: A change in price level can affect the validity of ratios

calculated for different time periods. In such a case the ratio analysis may not clearly

indicate the trend in solvency and profitability of the company. The financial statements,

therefore, be adjusted keeping in view the price level changes if a meaningful comparison is

to be made through accounting ratios.

4. Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There are nowell accepted standards or rule of thumb for all ratios which can be accepted as norm. It

renders interpretation of the ratios difficult.

5. Limited use of single ratios: A single ratio, usually, does not convey much of a sense. To

make a better interpretation, a number of ratios have to be calculated which is likely to

confuse the analyst than help him in making any good decision.

6. Personal bias: Ratios are only means of financial analysis and not an end in itself. Ratios

have to interpret and different people may interpret the same ratio in different way.



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7. Incomparable: Not only industries differ in their nature, but also the firms of the similar

business widely differ in their size and accounting procedures etc. It makes comparison of

ratios difficult and misleading.

CONCLUSION



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CONCLUSION

Ratios make the related information comparable. A single figure by itself

has no meaning, but when expressed in terms of a related figure, it yields significant

interferences. Thus, ratios are relative figures reflecting the relationship between related

variables. Their use as tools of financial analysis involves their comparison as single

ratios, like absolute figures, are not of much use.

Ratio analysis has a major significance in analysing the financial

performance of a company over a period of time. Decisions affecting product prices, per

unit costs, volume or efficiency have an impact on the profit margin or turnover ratios of

a company.

Financial ratios are essentially concerned with the identification of significant accounting data relationships, which give the decision-maker insights into the

financial performance of a company.

The analysis of financial statements is a process of evaluating the

relationship between component parts of financial statements to obtain a better

understanding of the firm s position and performance.

The first task of financial analyst is to select the information relevant to

the decision under consideration from the total information contained in the financial

statements. The second step is to arrange the information in a way to highlight

significant relationships. The final step is interpretation and drawing of inferences and

conclusions. In brief, financial analysis is the process of selection, relation and

evaluation.

Ratio analysis in view of its several limitations should be considered only

as a tool for analysis rather than as an end in itself. The reliability and significance



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BIBLIOGRAPHY

Web sites:

www.sbi.com www.icici.com www.pnb.com

Books referred:

Basic Financial Management - M Y Khan

P K Jain Financial Management -Prasanna Chandra

http://www.sbi.com/http://www.icici.com/http://www.icici.com/http://www.sbi.com/

Documents

Study of Financial Report