A STUDY ON FINANCIAL PERFORMANCE OF INDIAN OVERSEAS BANK

A PROJECT REPORT Submitted to the SRM SCHOOL OF MANAGEMENT

In partial fulfillment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATION BY ARUN BRITTO A Reg No.35080061 Under the Supervision and Guidance of Prof Mr. Dr. R. VELU (D.P. Tech, M.A, M. Phil, M.B.A, Ph .D) PROFESSOR OF MANAGEMENT STUDIES SRM UNIVERSITY

SRM SCHOOL OF MANAGEMENT

SRM UNIVERSITY
KATTANKULATHUR

CHENNAI 603203 MAY 2010

 SRM SCHOOL L OF MAN NAGEMEN NT SRM UNIVERSI ITY KATTAN NKULAT THUR CHE ENNAI-60 03203 BO ONAFIED D CERTIF FICATE
This is to t certify that this project re eport A STUDY ON

FINAN NCIAL PERFORM P MANCE OF IND DIAN OV VERSEAS S BANK K at

TAMBA ARAM CH HENNAI. Is I the bonaf fide work of o A.ARUN N BRITTO who carried d out

research h under my guidance. Certified C fu urther that to the best of o my know wledge the work w reported d does not form part of o any othe er project report r on dissertation d on the bas sis of which a degree or r award wa as conferred d on an ea arlier occas sion, on this or any other o candidat te.

ed for the examination e n held on: Submitte

Internal guide (Mr. . Dr. R.VELU):

(D.P. Tech, M.A, M. M Phil, M.B. .A, Ph .D)

Head of f the Departm ment:

External l examiner:

ABSTRACT In the era of globalization the utilization of finance is considered as the most important function of an organization. The firms are facing a stiff competition from the whole market, so the inflow and outflow of funds will be managed well. Financial analysis is the process of using financial statements to enable the users to take economic and investment decisions. The study of A STUDY ON FINANCIAL PERFORMANCE OF INDIAN OVERSEAS BANK is an attempt being made to find out the soundness of the firm in dealing with present market competition and in getting a view how the performance is going on for the last 5 years. The study begins with framing the objectives of the study and then devising a methodology for the fulfillment of the objectives. The purpose of this statement is to summarize for a given period the resources made available to finance the activities of enterprise and the uses to which such resources have been put. The statement is prepared to ascertain the performance of the bank. Ratio Analysis has been introduced to find the quantitative relationship between figures and groups of figures. Following are the four steps involved in the ratio analysis: Selection of relevant data from the financial statements depending upon the objectives of the analysis. Calculations of appropriate ratios from the data. Comparison of calculated ratios with the ratios of the same firm in the past. Interpretation of the ratios.

The method of Trend Percentage Analysis and Cash Flow Analysis has been used for the further analysis and interpretation of collected data.

ACKNOWLEDGEMENT

I offer my sincere thanks to Dr. (Mrs.) JAYASHREE SURESH, Dean, SRM UNIVERSITY Kattankulathur-603203 for giving us an opportunity to undergo a Project in A STUDY ON FINANCIAL PERFORMANCE OF INDIAN OVERSEAS BANK I grateful to our respected and our sincere thanks to my project guide Prof Mr. Dr. R. VELU (D.P. Tech, M.A, M.Phil, M.B.A, Ph .D) for providing me the valuable advices for the project. I express my gratitude to Mr. H.M.SIVASAMY, Chief Manager, Indian Overseas Bank- Tambaram Branch who has provided me the valuable facilities for the project. I am sincerely indebted to Mr. VEERABADHARAN, for his valuable advice and timely help throughout this work. I am so grateful to all the employees in Indian Overseas Bank- Tambaram Who have supported me in carrying out the project study. I am grateful to all the faculty members of MBA department, my friends and all others for their support in making this endeavor a success. I thank the almighty God for his blessings throughout the project study. I wish to thank my parents for their encouragement and support for doing this project.

ARUN BRITTO.A

DECLARATION

I, ARUN BRITTO.A, a Bonafide student of SRM School of management, SRM University, Kattankulathur, hereby declare that the project titled A STUDY ON FINANCIAL PERFORMANCE OF INDIAN OVERSEAS BANK at TAMBARAMCHENNAI, under the guidance of Prof Mr. Dr. R. VELU (D.P. Tech, M.A, M. Phil, M.B.A, Ph .D) during the period of two month (13.03.10 to 12.05.10) and submitted in partial fulfillment of the requirements of the Degree of Master of Business Administration of SRM University is his original work.

Date: Place: Chennai.

Name & signature

TABLE OF CONTENTS CHAPTER NO I. II. INTRODUCTION OBJECTIVE AND SCOPE OF STUDY 2.1 PRIMARY OBJECTIVE 2.2 SECONDARY OBJECTIVE 2.3 SCOPE OF THE STUDY III. IV. REVIEW OF LITERATURE RESEARCH METHODOLOGY 4.1 SOURCES OF DATA 4.2 RESEARCH DESIGN 4.3 LIMITATIONS OF THE STUDY V. PROFILE OF THE COMPANY 5.1 INDUSTY PROFILE 5.2 COMPANY PROFILE VI. DATA ANALYSIS AND INTERPRETATION 4.1 RATIO ANALYSIS 4.2 COMPARATIVE BALANCE SHEET 4.3 COMPARATIVE INCOME STATEMENT 4.4 COMMON SIZE BALANCE SHEET 4.5 CASH FLOW STATEMENT VII. VIII. IX. FINDINGS SUGGESTIONS CONCLUSION APPENDIX BIBLIOGRAPHY 76 80 82 84 95 28 17 6 14 TITLE PAGE NO

1 4

LIST OF TABLES

SL. NO 6.1.1 6.1.2 6.1.3 6.1.4 6.1.5 6.1.6 6.1.7 6.1.8

TITLE TABLE SHOWING CURRENT RATIO TABLE SHOWING QUICK RATIO TABLE SHOWING CASH POSITION TABLE SHOWING FIXED ASSET RATIO TABLE SHOWING DEBT EQUITY RATIO TABLE SHOWING PROPRIETARY RATIO TABLE SHOWING PROFITABILITY RATIOS TABLE SHOWING RETURNS ON EQUITY SHARE HOLDERS FUNDS TABLE SHOWING SOLVENCY RATIO TABLE SHOWING COMPARATIVE BALANCE SHEETOF THE YEAR 2004- 2005 TABLE SHOWING COMPARATIVE BALANCE SHEETOF THE YEAR 2005-2006 TABLE SHOWING COMPARATIVE BALANCE SHEETOF THE YEAR 2006-2007 TABLE SHOWING COMPARATIVE BALANCE SHEETOF THE YEAR 2007-2008 TABLE SHOWING COMPARATIVE BALANCE SHEETOF THE YEAR 2008-2009 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2004-2005 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2005-2006

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6.3.3

TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2006-2007 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2007-2008 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2008-2009 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2004-2005 TABLE SHOWING COMMON -SIZE BALANCE SHEET OF THE 2005-2006 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2006-2007 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2007-2008 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2008-2009 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/03/05 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/03/06 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/03/07 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/03/08 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/03/09 TABLE SHOWING CASH FLOW FROM OPERATING ACTIVITIES 2004-2009 TABLE SHOWING CASH FLOW FROM INVESTING & FINANCING ACTIVITIES 2004-2009

54

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LIST OF FIGURES

SL. NO 6.1.1 6.1.2 6.1.3 6.1.4 6.1.5 6.1.6 6.1.7 6.1.8

TITLE FIGURE SHOWING THE CURRENT RATIO FIGURE SHOWING THE QUICK RATIO FIGURE SHOWING THE CASH POSITION FIGURE SHOWING THE FIXED ASSET RATIO FIGURE SHOWING THE DEBT EQUITY RATIO FIGURE SHOWING THE PROPRIETARY RATIO FIGURE SHOWING THE PROFITABILITY RATIOS FIGURE SHOWING THE RETURNS ON EQUITY SHARE HOLDERS FUNDS FIGURE SHOWING THE SOLVENCY RATIO FIGURE SHOWING THE CASH FLOW FROM OPERATING ACTIVITIES 2004-2009 FIGURE SHOWING THE CASH FLOW FROM INVESTING & FINANCING ACTIVITIES 2004-2009

PAGE NO. 30 32 34 36 38 40 42 44

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CHAPTER I

INTRODUCTION

CHAPTER I FINANCIAL PERFORMANCE OF INDIAN OVERSEAS BANK

1.1 INTRODUTION

In the era of globalization the utilization of finance is considered as the most important function of an organization. The firms are facing a stiff competition from the whole market, so the inflow and outflow of funds will be manage well.

Finance is one of the most important aspects of business management. Without proper financial planning an enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization.

Finance is used by individuals personal finance, by governments public finance, by businesses corporate finance, as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

Financial analysis is the process of identifying the financial strengths and weakness of a firm by properly establishing relationships between the items of Balance Sheet and Profit and Loss Account. Analysis is the process of critically examining in detail accounting information given in the financial statements. Analyzing financial statement is a process of evaluating relationship between component parts of financial statements to obtain a better understanding of firms position and performance. The main aim of the financial statement analysis is to find out the profitability and financial position of the firm.

There are various methods used in analyzing financial statements such as Ratio analysis, Comparative statements, Trend analysis, Common statements, Fund flow statements and Cash flow statements. The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm.

The techniques of financial analysis serve as a tool for the management in determining the impact of financial decisions on financial conditions and the profitability of the enterprise. This can be used by the financial manager as the basis to plan future financial requirements by means of forecasting and budgeting procedures. With the help of tools of financial manager can rationalize his decision and reach the goal. Financial analysts often assess the firm's: 1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations. 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term, 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations, Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time. 4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of the income statement and the balance sheet, as well as other financial and non-financial indicators.

CHAPTER II

OBJECTIVE & SCOPE OF STUDY

CHAPTER II

2.1 Primary Objective: 1. The main aim of the study is to evaluate financial performance at Indian Overseas bank.

2.2 Secondary Objective: 1. To analyze the financial statements to find out the bank's financial position 2. To find the solvency, liquidity, profitability position of the bank for 5 years. 3. To highlight the nature of change influencing financial position and performance of the bank with aid of comparative balance sheet, comparative income statement and common size statement of the bank for 5 years. 4. To analyze the Cash flow of Indian Overseas Bank for 5 years 2.3 Scope of the Study The financial fund management is the essential function in every organization for the effective utilization of funds for making profits. The financial fund management influences the managerial decisions regarding the investment policies. Scope of the study is limited to the Financial Statement Analysis, the accounting years 2004-05 to 2008-09 have been taken as base. The process of Financial Statement Analysis involves compilation and study of financial and operating results and preparation and interpretation of measuring devices such as Ratio Analysis, Comparative Balance Sheet, Comparative Income Statement, and Common Size Balance Sheet & Cash Flow Statement.

CHAPTER III

REVIEW OF LITERATURE
CHAPTER III FINANCIAL STATEMENTS

I. RATIO ANALYSIS Ratio Analysis can be defined as the study and interpretation of relationships between various financial variables, by investors or lenders. It is a qualitative investment technique used for comparing a company's financial performance to the market in general. A change in these ratios helps to bring about a change in the way a company works. It helps to identify areas where the management needs to change. A number of ratios are calculated by companies for evaluating their short and long term performance and also to know liquidity and profitability. Ratios standardize numbers and facilitate comparisons. Ratios are used to highlight weaknesses and strengths. TYPES OF RATIOS USED FOR FINANCIAL ANALYSIS Ratio can be classified into three board groups. They are:1. 2. 3. Liquidity ratio Profitability ratio Solvency ratio

1) LIQUIDITY RATIO:The liquidity ratios measure the ability of a firm to meet its short term obligation and reflect the short term financial strength/ solvency of a firm. Its ability to maintain positive cash flow, while satisfying immediate obligations The ratios which indicate the liquidity of a firm are: Current ratio Acid test ratio/ quick ratio Cash position

1.1 CURRENT RATIO

The ratio of current assets to current liabilities is called current ratio. In order to measure the short-term liquidity or solvency of a concern, comparison of current assets and current liabilities is inevitable. Current ratio indicates the ability of a concern to meet its current obligations as and when they are due for payment. Current Ratio = Current assets / Current Liabilities Standard expected current ratio: internationally accepted current ratio is 2: 1, i.e., current asset shall be 2 times to current liabilities. 1.2 QUICK ASSETS RATIO A measure of companys liquidity and ability to meet its obligations. Quick ratio, often referred to as acid-test ratio, is obtained by subtracting inventories from current assets and then dividing by current liabilities. Quick ratio is viewed as a sign of companys financial strength or weakness (higher number means stronger, lower number means weaker). Quick Assets Ratio = Quick Assets / Current Liabilities The ideal liquid ratio or the generally accepted norm for liquid ratio is 1 1.3 CASH POSITION The ratio is also called Absolute Liquidity ratio or super quick ratio. This is a variation of quick ratio. This ratio is calculated when liquidity is highly restricted in terms of cash and cash equivalents. This ratio measures liquidity in terms of cash and near cash items and short-term current liabilities. Cash position = Cash and bank balance + Marketable securities / Current Liabilities An ideal cash position ratio is 0.75: 1.

2) SOLVENCY RATIO:-

These ratios measure the long-term solvency position of the firm. The leverage ratios explain the extent to which the debt is employed in the capital structure of the concern. All concerns use debt capital along with the equity capital. The basic facility of debt funds is that after tax cost of them will be significantly lower and which can be paid back depending upon their terms of issue. Further debt funds will not dilute the equity holders control position. The ratio which indicates solvency position of the firm is: Fixed Assets Ratio Debt Equity Ratio Proprietary Ratio 2.1 FIXED ASSET RATIO: The ratio establishes the relationship between fixed assets and long-term funds. The objective of calculating this ration is to ascertain the proportion of long-term funds invested in fixed assets. The ratio is calculated as given below: Fixed Turnover Ratio = Net Fixed Assets / Total Long Term Funds The ratio should not generally be more than 1. If the ratio is less than one it indicates that a portion of working capital has been financed by long-term funds. 2.2 DEBT EQUITY RATIO This ratio indicates the extent to which debt is covered by shareholders funds. It reflects the relative position of the equity holders and the leaders and indicates the companys policy on the mix of capital funds. The debt to equity ratio is called as follows: Debt Equity Ratio = Long Term Debt / Share Holders Fund The ideal ratio is 1

2.3 PROPRIETARY RATIO

The ratio compares the shareholders funds or owners funds and total tangible asset. In other words this ratio expresses the relationship between the proprietors funds and the total tangible assets. Proprietary ratio = Shareholders funds / Total Tangible assets The ratio below 0.5 is alarming for the creditors since they have to lose heavily in the event of companys liquidation. OVERALL SOLVENCY RATIO One of many ratios used to measure a companys ability to0 meet long-term obligations. The solvency ratio measures the size of a companys after tax income, excluding non-cash depreciation expenses, as compared to the firms total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations. Solvency Ratio = Total Debt / Total Tangible Assets 3) PROFITABILITY RATIO:The profitability of a firm can be measured by its profitability ratios. The profit is the difference between revenues and expenses over a period of time and it is the ultimate output of the company. A company must be earning profit to survive in the business. The profitability ratios can be determined on the basis of either sales or investments. There are calculated to measure the operating efficiency of the firm. The profitability ratios related to sales are: Earnings per Share (EPS) Return on Equity Shareholders Fund

3.1 EARNINGS PER SHARE (EPS)

Whatever income remains in the business after all prior claims, other than owners claims (i.e. ordinary dividends) have been paid, will belong to the ordinar76 shareholders who can then make a decision as to how much of this income they wish to remove from the noisiness on the form of a dividend, and how much they wish to retain in the business. The shareholders are particularly interested in knowing how much has been earned during the financial year on each of the shares held buy them. For this reason, an earnings per share figure much is calculated. Clearly then, the earning per share calculation will be: Earnings per Share = Net Profit after Tax Pref. Dividend / Number of Equity Shares 3.2 RETURN ON EQUITY SHAREHOLDERS FUND This ratio signifies the return on equity shareholders funds. The profit considered for computing the ratio is taken after payment of preference dividend. The ratio of return on equity shareholders funds is calculated as given below: Return on equity shareholders funds = Net profit after tax and pref. dividend / Equity Shareholders funds * 100 II. COMPARATIVE FINANCIAL STATEMENT Comparative financial statements are those statements, which have been designed in a way so as to provide time perspective to their consideration of various elements of financial position embodied in such statements. In these statements figures for two or more period are place side by side of facilities comparison. Both the income statement and balance sheet can be prepared in the form of comparative financial statements.

COMPARATIVE BALANCE SHEET Comparative balance sheet as on two or more different dates can be used for comparing assets and liabilities and findings out any increase or decrease in the items. Thus

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

COMMON SIZE BALANCE SHEET Common Size Balance Sheet indicates the relationship of various items with some common items, (expressed as percentage of the common item). In the income statement, the sales figure is taken as basis and all other figures are expressed as percentage of sales. Similarly, in the balance sheet the total assets and liabilities is taken as base and all other figures are expressed as percentage of this total.

COMPARATIVE AND COMMON SIZE FINANCIAL STATEMENTS ANALYSIS Comparative financial statements provide information to assess the direction of change in the business. To know whether the business is moving in a favorable or unfavorable direction, figures of the current year are compared with those of the previous years. The amount and percentage of increase or decrease is calculated and then compared. In common size statements, the sales figure is assumed to be 100 and all figures are expressed as a percentage of sales in the income statement. In the Balance Sheet, the total of the assets or liabilities is taken as 100 and all the figures are expressed as a percentage of this total. Using the past theory for comparison is called as trend analysis. Trend percentages are calculated only for some important items which can be logically connected with each other. Under this technique, information for a number of years is taken up and one year, which is usually the first year, is taken as the base year. Each item of the base year is taken as 100 and on that basis, the percentage for other years are calculated.

V. CASH FLOW STATEMENT Cash Flow includes Cash inflow & outflow-cash receipt and cash receiptsduring a period. A basic objective of Financial Management is to match the inflow and

outflow of cash in such a way that the numerous demands for cash are promptly managed without maintaining cash balances. The short-term liquidity and short-term solvency position of a firm are dependent on its cash flows. A Cash Flow statement is a statement which portrays the changes in the cash position between two accounting periods. The detailed analysis provided in such a statement provides a clear insight to the management about the different sources of cash inflows and the different uses or application for which cash is needed. It helps in taking short-term financial decisions and also in the preparation of cash budget for the next period. 5.1 Advantages: Historical analysis as guide to forecasting Effective cash management Formulation of financial policies Preparations of cash budgets Short-term financial decisions Liquidity position 5.2 Limitations The cash flow statement discloses inflow and outflow of cash alone. Cash flow statement reveals the cash balance but it can be easily altered by postponing payments for purchases or delaying collection of receivables etc. Since noncash items of expenses and incomes are excluded, it cannot provide a comprehensive picture of a firms financial position

CHAPTER IV

METHODOLOGY OF THE STUDY

CHAPTER IV METHODOLOGY OF THE STUDY

The study is descriptive in nature and this attempt is made to evaluate the performance of the bank through the financial data which are disclosed in accounting policies. Thus the study is based on the published accounts and annual reports of Indian Overseas Bank. The periods cover from 2004-05 to 2008-09. 4.1 SOURCES OF DATA Secondary Data The secondary data is collected from the financial statements and annual report from website of the bank. The financial statements of the company are collected from 2004-05 to 2008-09. 4.2 RESEARCH DESIGN Research design stands for the framework of research. The research design utilized in this study is descriptive. The following are major tools used in analysis and interpretation. Ratio Analysis Comparative Balance Sheet Comparative Income Statement Common Size Balance Sheet Cash Flow Statement

4.3 LIMITATIONS OF THE STUDY The financial statement analysis of the bank fully depends on the secondary data. The primary data were used only to throw light on the bank history & growth. Thus the following are the main limitations of the study.

 The company personnel do not reveal the trade secrets and some confidential financial information. The study records restricted to a period of 5 years. Ratio analysis has its own limitations. Since Annual general meeting is not undertaken statements for 2010 is not available. Although the time duration of the project is not up to the extent, the collection of fullfledged data could not be achieved.

CHAPTER V

PROFILE OF THE COMPANY

CHAPTER IV
5.1 INDUSTRY PROFILE A bank is a financial institution that accepts deposits and channels those deposits into lending activities. Banks primarily provide financial services to customers while enriching investors. Government restrictions on financial activities by banks vary over time and location. Banks are important players in financial markets and offer services such as investment funds and

loans. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu. In France, bancassurance is prevalent, as most banks offer insurance services (and now real estate services) to their clients. Traditional banking activities 1) Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. 2) Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending. 3) Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. 4) Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings Economic functions 1) Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash.

2) Netting and settlement of payments banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economize on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them. 3) Credit intermediation banks borrow and lend back-to-back on their own account as middle men. 4) Credit quality improvement banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to rise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position. 5) Maturity transformation banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).

Banking channels 1) A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers.

2) ATM is a computerized telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank. 3) Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers. 4) Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity). 5) Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website. 6) Mobile banking is a method of using one's mobile phone to conduct simple banking transactions by remotely linking into a banking network. 7) Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller machine), or via a videoconference enabled bank branch.

5.2 COMPANY PROFILE Established in 1937, Indian Overseas Bank (IOB) is a leading bank based in Chennai, India. IOB had the distinction of simultaneously commencing operations in three branches at Karaikudi, Chennai, and Yangon (Myanmar). Since IOB aimed to encourage

overseas banking and foreign exchange operations, it soon opened its branches in Penang and Singapore. Today, Indian Overseas Bank boasts of a vast domain in banking sector with over 1400 domestic branches and 6 branches overseas.

Indian Overseas Bank was the first bank to venture into consumer credit, as it introduced the popular Personal Loan scheme. In 1964, the Bank started computerization in the areas of inter-branch reconciliation and provident fund accounts. Indian Overseas Bank was one of the 14 major banks which were nationalized in 1969. After Nationalization, the Bank emphasized on opening its branches in rural parts of India. In 1979, IOB opened a Foreign Currency Banking Unit in the free trade zone in Colombo.

In the year 2000, Indian Overseas Band undertook an initial public offering (IPO) that brought the government's share in the bank's equity down to 75%. The equity shares of IOB are listed in the Madras Stock Exchange (Regional), Bombay Stock Exchange, and National Stock Exchange of India Ltd., Mumbai. Since its inception, IOB has absorbed various banks including the latest Bharat Overseas Bank in 2007.

The Bank's IT department has developed software, which is used by its 1200 branches to provide online banking to customers. Indian Overseas Bank also has a network of about 500 ATMs throughout India. Its International VISA Debit Card is accepted at all ATMs belonging to the Cash Tree and NFS networks. IOB also offers Internet Banking; it's one of the banks that the Govt. of India has approved for online payment of taxes.

Indian Overseas Bank offers investment options like Mutual Funds and Shares. It provides a wide range of consumer and commercial banking services, including Savings Account, Current Account, Depositary Services, VISA Cards, Credit Cards, Debit Cards, Online Banking, Any Branch Banking, Home Loans, NRI Account, Agricultural Loans, Payment of Bills / Taxes, Provident Fund Scheme, Forex Collection Services, Retail Loans, etc.

Corporate Vision "To emerge as the most competitive Bank in the Industry" Meaning of Logo

"Our logo aims at vertical growth with horizontal expansion of our customer base" Mission

IOB aims to become the most competitive Bank in the industry in the country during the next two years. If the Bank is competitive, it is also responsive to the challenges of the market force. In this process, it will also emerge as the most profitable bank by cutting cost and increasing revenue. Thus, by being competitive, the Bank would be able to achieve all the other desirable goals.

Pre-nationalization era (1947- 69) During the period, IOB expanded its domestic activities and enlarged its international banking operations. As early as in 1957, the Bank established a training centre which has now grown into a Staff College at Chennai with 9 training centers all over the country. IOB was the first Bank to venture into consumer credit. It introduced the popular Personal Loan scheme during this period. In 1964, the Bank made a beginning in

computerization in the areas of inter-branch reconciliation and provident fund accounts. In 1968, IOB established a full-fledged department to cater exclusively to the needs of the Agriculture sector.

At the time of Nationalization (1969) IOB was one of the 14 major banks that were nationalized in 1969. On the eve of Nationalization in 1969, IOB had 195 branches in India with aggregate deposits of Rs. 67.70 crores and Advances of Rs. 44.90 crores.

Post - nationalization era (1969-1992) In 1973, IOB had to wind up its five Malaysian branches as the Banking law in Malaysia prohibited operation of foreign Government owned banks. This led to creation of United Asian Bank Berhad in which IOB had 16.67% of the paid up capital. In the same year Bharat Overseas Bank Ltd was created in India with 30% equity participation from IOB to take over IOBs branch at Bangkok in Thailand. In 1977, IOB opened its branch in Seoul and the Bank opened a Foreign Currency Banking Unit in the free trade zone in Colombo in 1979. The Bank has sponsored 2 Regional Rural Banks viz. Pandyan Grama Bank, Neelachal Gramya Bank. The Bank setup a separate Computer Policy and Planning Department (CPPD) to implement the programme of computerization, to develop software packages on its own and to impart training to staff members in this field.

Post Reform Period - Unprecedented developments (1992 & after) IOB entered Web site during the month of February 1997. It got autonomous status during 1997-98. It had the distinction of being the first Bank in Banking Industry to obtain ISO 9001 Certification for its Computer Policy and Planning Department from Det Norske Veritas (DNV), Netherlands in September 1999. This Certification covers Design, Development, Implementation and Maintenance of software developed in-house, procurement and supply of hardware and execution of turnkey projects.

IOB started STAR services in December 1999 for speedy realization of outstation cheques. Now the Banks has 14 STARS centers and one Controlling Centre for providing this service. During 1999, IOB started tapping the potential of internet by enabling ABB card holders in Delhi to pay their telephone bills by just logging on to MTNL web site and by authorizing the Bank to debit towards the telephone bills.

A Voluntary Retirement Scheme was introduced in the Bank on the lines of IBA package with Boards approval. The scheme was offered to Officers/Employees from December 15, 2000.

The Bank made a successful debut in raising capital from the public during the financial year 2000-01, despite a subdued capital market. The issue opened on September 25, 2000 for raising Rs.111.20 crore and was oversubscribed by 1.87 times. The issue closed on September 29, 2000 - on the earliest closing day. The allotment was made in October 2000. Consequent to the public issue, the share of the Government in the Bank's capital came down to 75%. The shares of the Bank have been listed on the Madras Stock Exchange (Regional); Stock Exchange at Mumbai and the National Stock Exchange of India Ltd.

IOB bagged the NABARD's (National Bank for Agriculture and Rural Development) award for credit linking the highest number of Self Help Groups for 2000-2001 among the Banks in Tamil Nadu.

IDRBT (Institute for Development and Research in Banking Technology) conferred the Best Award under Banking Technology to IOB. The award was given for the innovative use of banking applications on INFINET (Indian Financial Network) for the year 2001. Mobile banking under SMS technology implemented in Ahmadabad and Baroda. Pilot run of Phase I of the Internet Banking commenced covering 34 branches in 5 Metropolitan centers. IOB was one among the first to join Reserve Bank of Indias negotiated dealing system for security dialling online.

The Bank has finalized an e-commerce strategy and has developed the necessary internet banking modules in-house. For the first time a Total Branch Automation package developed in-house has been customized in one of the Overseas Branches of the Bank.

Most software developed in-house. IOBNET connects Central Office with all Regional Office. The Bank has paid a maiden dividend of 10% p.a for 2000-01, followed by 12%

during 2001-02. International expansion 1937-38: As mentioned above, IOB was international from its inception with branches in Rangoon, Penang, and Singapore. 1941: IOB opened a branch in Malaya that presumably closed almost immediately because of the war. 1946: IOB opened a branch in Ceylon. 1947: IOB opened a branch in Bangkok and re-opened others. 1948: United Commercial Bank (see below) opened a branch in Malaya. 1949: IOB opened a branch in Bangkok. 1963: The Burmese government nationalized IOBs branch in Rangoon. 1973: IOB, Indian Bank and United Commercial Bank established United Asian Bank Berhad in Malaysia. (Indian Bank had been operating in Malaysia since 1941 and United Commercial Bank Limited had been operating there since 1948.) The banks set up United Asian to comply with the Banking Law in Malaysia, which prohibited foreign government banks from operating in the country. Also, IOB and six Indian private banks established Bharat Overseas Bank as a Chennai-based private bank to take over IOB's Bangkok branch. 1977: IOB opened a branch in Seoul. 1979: IOB opened a Foreign Currency Banking Unit in Colombo, Sri Lanka. 1992: Bank of Commerce (BOC), a Malaysian bank, acquired United Asian Bank (UAB). 2007: IOB took over Bharat Overseas Bank

Computerization IOB was perhaps the first bank in India to make a beginning in computerization when it acquired a Mainframe computer called the Unit Recorder Machine to process inter-branch reconciliation and provident fund accounts in 1964. The Bank has made rapid progress in computerization with accent on in-house development of software.

All branches are computerized with Core Banking Solution in more than 400 branches. Over 900 branches in 350 centers offer Any Branch Banking. The Bank has nearly 405 ATMs of our own apart from tie-up with 1800 ATMs of other banks. First onsite ATM of the bank was installed at Mahim branch in Mumbai (1997). First offsite ATM at kamakshi Hospital, Chennai (2007) International Debit VISA Cards and International Credit VISA Cards have been recently launched. Internet banking is available to answer customer queries, transfer funds and keep track of depository accounts. Other facilities include, Multicity Cheque Facility in all networked branches. Depository Services at nearly 40 branches. Online Tax Accounting Systems for IT collection and online payment of Excise Duty, Custom Duty and Service Tax. Forex remittance facilities including Fast track services for US based NRIs (Non-Resident Indians) and Real Time Gross Settlement (RTGS) and NEFT (National Electronic Funds Transfer) for instant funds transfer. Sports Promotion The Bank has been actively promoting sports much before nationalization when cricket and ball badminton teams were formed in 1964. Since nationalization, the Bank's sports activities have grown manifold. Besides cricket, the bank has full time teams in Basketball, Hockey, Volleyball, Badminton, etc. While the Bank's teams have won state and national colours on many occasions, a number of individuals have also represented the country. The Bank has also been a sponsor of major sports events.

Community Service The Bank's role in community services takes many forms covering cultural, religious, medical, and educational and disaster relief activities. The bank also contributes substantially at the national and regional levels towards relief and rehabilitation. The Sakthi IOB Chidambaram Chettyar Memorial Trust set up by the Bank jointly with the Bank's officers' association and employees' union offers facilities for developing skills by women. Milestones & Landmarks

Since the early 1990s when the financial and banking reforms were initiated, the Bank has crossed many milestones and grown from strength to strength by expanding the branch net work, enhancing and diversifying business, raising capital from the market and, in recent years, launching a series of new products and services. The achievements in recent years have been, truly, landmarks. 1996, Bank's profit crosses Rs. 100 Crores for the first time. 2000, the bank made a successful debut in raising capital from the public. The issue was oversubscribed 1.87 times despite a subdued market. 2005, launch of the Multicity Cheque facility. 2005, launch of the International Debit Card 2006, commercial and institutional branch, Chennai which was the 1000th branch crossed Rs. 1000 Crore mark in advances. 2006, launch of IOB Visa Card. 2006, the bank crossed the Rs. 1 lakh crore in total business. Overseas Expansion The bank has 6 fully operational branches overseas two in Hong Kong and one each in Singapore, South Korea (Seoul) and Sri Lanka (Colombo). The bank has representative offices in Guangzhou (China), Kuala Lumpur (Malaysia), Dubai and Abu Dhabi (UAE). The bank has an Extension Counter at New Kadhiresan Temple, Colombo and a remittance centre at Singapore. The bank plans to open a branch in New Zealand and representative office in Vietnam.

CHAPTER VI

ANALYSIS & INTERPRETATION

CHAPTER - VI DATA ANALYSIS AND INTERPRETATION

6.1 RATIO ANALYSIS
6.1.1 CURRENT RATIO

Current ratio may be defined as the relationship between current assets and current liabilities. This ratio also known as working capital ratio current assets include cash and these assets which can be converted in to cash with in a one year such as cash & bank, marketable securities, debtors, inventories, prepaid expenses include the represent the payments that will be made in future obligation like creditors, bills payable etc. Current ratio = Current Asset / Current Liabilities

6.1.1 TABLE SHOWING CURRENT RATIO

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 0.34 0.30 0.26 0.32 0.32

TREND 100 88 77 94 94

6.1.1

FIGURE

SHOWING THE CURRENT RATIO

INTERP PRETATIO ON: gram current t ratio shows s that 0.31 : 1 on an ave erage for the e period span nning From the diag from 200 04-05 2008 8-09 this rati io showed bo oth forward and downw ward trend be etween 0.34 times t in 2004-0 05 to 0.32 tim mes in 2007-08 & 2008-09. T bank ma The aintains a good g current t asset statu us to pay of ff the curre ent liability. It is inferred that the cur rrent ratio is below the eir standard ratio i.e. 2:1 it is concluded that their liquidity position is good. g

6.1.2 QU UICK RATI IO

This is the ratio of quick assets to current liabilities. It shows a firms ability to meet current liabilities. The assets is liquid if it can be converted in to cash immediately like cash or band & short investments & bills receivable. Liquid ratio = liquid (or) Quick Asset / Current Liabilities

6.1.2 TABLE SHOWING QUICK RATIO

YEAR 2004-2005 2005-2006 2006-2007

RATIO 8.97 8.00 8.07 11.32 11.46

TREND 100 89 91 126 128

2007-2008 2008-2009

6.1.2 FIGURE SHOWING THE QUICK RATIO

INTERP PRETATIO ON: Whe en we analyz ze the quick ratio we can n see that the e bank has maintained m a good liquidity. . The reason n for the fluc ctuations in quick ratio for f the 5 yea ars is due to the variatio ons in loans & advances a and d receivable es. T compan The ny has main ntained a go ood level of f quick asse ets to pay off o its short term payments s. Quick rati io varied Bet tween 8.97 to t 11.46 duri ing the perio od of 2004-0 05 to 2008-09 9.

6.1.3 CA ASH POSITION

Cash is the most liquid asset; a financial analysis may examine cash ratio and its equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash Therefore they may be included in the composition of cash ratio.

Cash position = Cash and bank balance + Marketable securities / Current Liabilities

6.1.3 TABLE SHOWING CASH POSITION

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 6.35 4.73 4.14 4.47 4.86

TREND 100 75 65 70 77

6.1.3 FIGURE SHOWING THE CASH POSITION

INTERP PRETATIO ON: When n we analyze e the Cash Position P has high h position n of 6.35 in the year 200 04-05 but slowl ly decreasin ng from the year y 2005-06 6 & 2006-07 7. And in the year 2007-08 & 2008-09 it has incre easing becau use of change es happen by y short-term m solvency. Cash C position n varied Bet tween 6.35 to 4.86 during th he period of f 2004-05 to 2008-09 yea ar.

XED ASSET T RATIO 6.1.4 FIX

The ratio establishes the relationship between fixed assets and long-term funds. The objective of calculating this ratio is to ascertain the proportion of long-term funds invested in fixed asset. The ratio is calculated as given below: Fixed asset ratio = Fixed Asset / Long-term funds

6.1.4 TABLE SHOWING FIXED ASSET RATIO

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 0.94 0.92 0.93 0.93 0.93

TREND 100 98 99 99 99

6.1.4 FIGURE SHOWING THEFIXED ASSET RATIO

FixedAssetRatio
0.945 0.94 0.935 0.93 0.925 0.92 0.915 0.91 200405 200506 200607 200708 200809 0.92 FixedAssetRatio 0.93 0.93 0.93 0.94

INTERPRETATION: The ratio should not generally be more than 1. If the ratio is less than 1 it indicates that a portion of working capital has been financed by long term funds. Fixed asset ratio of more than 1 implies that fixed assets are purchased with short term funds which are not prudent policy. But as it concerned to our company, they are very cautious about acquiring fixed assets and they have sufficient long term fund for the same. The bank maintains sufficient long term funs for the acquisition of fixed assts. Fixed asset ratio varied between 6.35 to 4.86 during the period of 2004-05 to 2008-09 years.

6.1.5 DEBT EQUITY RATIO

The debt equity ratio is determined to ascertain the soundness of the long-term financial policies of the company. It may be calculated as follows. The terms debt refers to the total outside liabilities that consists of both shortterm and long-term liabilities and the term equity refers to share holders funds that consists of the both preference capital and reserves and surplus. This ratio provides margin of safety to creditors. The desirable norm for the ratio is 1:2 or 1:1 Debt equity ratio = Total long-term debt / Shareholders funds OR = External equities / Internal equities

6.1.5 TABLE SHOWING DEBT EQUITY RATIO

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 0.28 0.23 0.51 1.04 1.07

TREND 100 82 182 371 382

6.1.5 FIGURE SHOWING THEDEBT EQUITY RATIO

INTERP PRETATIO ON: When W we an nalyze the Debt-Equity ratio r show th hat 0.63: 1 on n an average e value dur ring the period of 5 year rs spanning from f 2004-0 05 to 2008-09 9. The good position of debtd equity ra atio shows th hat the margi in of safety to t creditors. Debt-Equity y ratio varied d between 0. .28 to 1.07 during d the period of 5 yea ars.

6.1.6 PR ROPRIETAR RY RATIO O

The ratio compares the shareholders funds or owners funds and total tangible asset. In other words this ratio expresses the relationship between the proprietors funds and the total tangible assets. Proprietary ratio = Shareholders funds / Total Tangible assets 6.1.6 TABLE SHOWING PROPRIETARY RATIO

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 0.51 0.56 0.53 0.52 0.57

TREND 100 110 104 102 112

6.1.6 FIGURE SHOWING THEPROPRIETARY RATIO

INTERPRETATION: When we analyze the Proprietary Ratio is 0.54: 1 on an average value during the period of 5 years spanning from 2004-05 to 2008-09. In the year 2004-05, 2006-07& 2007-08 it shows the decreasing ratios. And in the year 2005-06 & 2008-09 it shows the increasing ratio. It shows the high ratio indicates safety to the creditors. If it below the 0.5 is alarming for the creditors since they have to los heavily in the event of banks liquidation. Proprietary ratio varied between 0.51 to 0.57 during the period of 2004-05 to 2008-09 years.

6.1.7 EARNINGS PER SHARES

The ratio highlights the overall success of the concern from owners point of view and it is helpful in determining market price of equity shares. It reflects upon the capacity of the concern to pay dividing to its equity shareholders. Earnings per shares = Net profit after tax and preference dividend / No. of equity shares

6.1.7 TABLE SHOWING PROFITABILITY RATIOS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 10.68 13.17 21.96 20.29 23.20

TREND 100 123 206 190 217

6.1.7 FIGURE SHOWING THE PROFITABILITY RATIOS

INTERPRETATION: Earnings per share help to determine the market price of the equity shares. In the figure it show the clear price rates which 10.68 in the 2004-05 and other two year it has an increasing trend, but in 2007-08 it has decreased due to net profit. And in 2008-09 the net profit has been increased so the price goes to 23.2. After that the situation has improved & in the years the EPS shows a higher increasing trend. Earnings per shares varied Between 10.68 to 23.2 during the period of 5 years.

6.1.8 RETURNS ON EQUITY SHARE HOLDERS FUNDS

The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. ROE is expressed as a percentage and calculated as: Return on equity share holders funds = Net profit after tax and pref. dividend / Equity Shareholders funds * 100

6.1.8 TABLE SHOWING RETURNS ON EQUITY SHARE HOLDERS FUNDS

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 25.00 24.94 33.38 24.99 21.04

TREND 100 100 133 100 85

6.1.8 FIGURE SHOWING THE RETURNS ON EQUITY SHARE HOLDERS FUNDS

INTERPRETATION: From the diagram it will be clearly shows the return on equity shareholders fund that the high return on 2006-07 but in the 2007-08 & 2008-09 it has been decreased due to the increase in the reserves and surplus. The return on equity shareholders fund varied Between 25.00 to 21.04 during the period of 5 years. .

6.1.9 OVER ALL SOLVENCIES

It is a ratio which relates the total tangible assets with the total borrowed funds. In a sense, it is the other side of the coin for proprietary ratio. Solvency ratio = Total debt / Total tangible assets In this ratio, total debt includes both short-term and long-term borrowings. It shows the proportion of assets needed to repay the debt. A higher ratio indicates greater risk and lower safety to the owners.

6.1.9 TABLE SHOWING SOLVENCY RATIO

YEAR 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

RATIO 0.086 0.094 0.113 0.130 0.127

TREND 100 109 131 151 148

6.1.9 FIGURE SHOWING THE SOLVENCY RATIO

YEAR PARTICULARS I / i

% /

INTERPRETATION: From the solvency ratio it shows the increasing trend from the 2004-05 to 2007-08 but in the 2008-09 it has been decreased because of increasing in the total debt it has slowly increasing from the year 2004-05 to 2007-08 and the changes happen in the year 2008-09 so it has decreasing in the ratio value.

6.2.1 TABLE SHOWING COMPARATIVE BALANCE SHEET OF THE YEAR 2004- 05

2004 Rs. in 000's LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL INTERPRETATION:

2005 Rs. in 000's % -------+32.16 +6.65 -19.03 +12.51

YEAR 544 80 00 1536 28 89 41482 57 98 729 47 45 3028 88 08

544 80 00 2030 38 96 44241 23 86 590 67 84 3407 93 56

-------+494 10 07 +2758 65 88 -138 79 61 +379 05 48

47322 02 40

50815 04 22

+3493 01 82

+7.38

4332 22 18 912 87 16 20171 63 79 20294 86 19 404 02 87 1206 40 21 47322 02 40

4175 43 65 778 51 91 19014 71 80 25205 18 81 452 34 20 1188 83 85 50815 04 22

-156 78 53 -134 35 25 -1156 91 99 +4910 32 62 +48 31 33 -17 56 36 +3493 01 82

-3.62 -14.72 -5.73 +24.19 +11.96 -1.45 +7.38

The company's fixed assets has increased by 11.96% and the current asset value decreased by 1.45% .The company's reserve & surplus value has increased by 32.16% .The company had repaid some part of Borrowings so the value had decreased by 19.03% and current liabilities has decreased by 12.51%. 6.2.2 TABLE SHOWING COMPARATIVE BALANCE SHEET OF THE YEAR 2005- 06

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL INTERPRETATION:

2005 2006 Rs. in 000's Rs. in 000's YEAR 544 80 00 2030 38 96 44241 23 86 590 67 84 3407 93 56 544 80 00 2632 64 01 50529 31 50 736 62 74 4914 42 92

Increase/ decrease

increase/ decrease % -------+29.66 +14.21 +24.71 +44.02

-------+602 25 05 +6288 07 64 +145 94 90 +1506 49 36

50815 04 22

59357 81 17

+8542 76 95

+16.81

4175 43 65 778 51 91 19014 71 80 25205 18 81 452 34 20 1188 83 85 50815 04 22

3077 95 84 629 28 28 18952 28 43 34756 20 19 457 73 83 1484 34 60 59357 81 17

-1097 47 81 -149 23 63 -62 43 37 +9551 01 38 +5 39 63 +295 50 75 +8542 76 95

-26.28 -19.17 -0.33 +37.89 +1.19 +24.86 +16.81

The company's fixed assets has increased by 1.19% and the current asset value decrease by 24.86% .The company's reserve & surplus value has increased by 29.66% .The company had repaid some part of Borrowings so the value had increased by 24.71% and current liabilities has increased by 44.02%. 6.2.3 TABLE SHOWING COMPARATIVE BALANCE SHEET OF THE YEAR 2006-07

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL INTERPRETATION:

2006 2007 Rs. in 000's Rs. in 000's YEAR 544 80 00 2632 64 01 50529 31 50 736 62 74 4914 42 92 544 80 00 3445 56 51 68740 41 49 2896 22 75 6629 82 09

Increase/ decrease

increase/ decrease % -------+30.88 +36.04 +293.17 +34.90

-------+812 92 50 +18211 09 99 +2159 60 01 +1715 39 17

59357 81 17

82256 82 84

+22899 01 67

+38.58

3077 95 84 629 28 28 18952 28 43 34756 20 19 457 73 83 1484 34 60 59357 81 17

4686 10 79 4293 19 47 23974 47 36 47060 28 60 510 65 72 1732 10 90 82256 82 84

+1608 14 95 +3663 91 19 +5022 18 93 +12304 08 41 +52 91 89 +247 76 30 +22899 01 67

+52.25 +582.24 +26.50 +35.40 +11.56 +16.69 +38.58

The company's fixed assets has increased by 11.56% and the current asset value increased by 16.69% .The company's reserve & surplus value has increased by 30.88% .The company had repaid some part of Borrowings so the value had increased by 293.17% and current liabilities has increased by 34.90%. 6.2.4 TABLE SHOWING COMPARATIVE BALANCE SHEET OF THE YEAR 2007-08

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL INTERPRETATION:

2007 2008 Rs. in 000's Rs. in 000's YEAR 544 80 00 3445 56 51 68740 41 49 2896 22 75 6629 82 09 544 80 00 4311 87 02 84325 58 29 6353 64 63 6323 83 98

Increase/ decrease

increase/ decrease % -------+25.14 +22.67 +119.38 +34.90

-------+866 30 51 +15585 16 80 +3457 41 88 -305 98 11

82256 82 84

101859 73 92

+19602 91 08

+23.83

4686 10 79 4293 19 47 23974 47 36 47060 28 60 510 65 72 1732 10 90 82256 82 84

9124 23 28 1217 08 84 28474 70 84 60423 84 40 558 57 75 2061 28 81 101859 73 92

+4438 12 49 -3076 10 63 +4500 23 48 +13363 55 80 +47 92 03 +329 17 91 +19602 91 08

+94.71 -71.65 +18.77 +28.40 +9.38 +16.69 +23.83

The company's fixed assets has increased by 9.38% and the current asset value increased by 16.69% .The company's reserve & surplus value has increased by 25.14% .The company had repaid some part of Borrowings so the value had increased by 119.38% and current liabilities has increased by 34.90%. 6.2.5 TABLE SHOWING COMPARATIVE BALANCE SHEET OF THE YEAR 2008-09

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL INTERPRETATION:

2008 Rs. in 000's

2009 Rs. in 000's

Increase/ decrease

increase/ decrease

544 80 00 4311 87 02 84325 58 29 6353 64 63 6323 83 98

544 80 00 6606 16 33 100115 88 96 6548 28 24 7258 26 34

-------+2294 29 31 +15790 30 67 +194 63 31 +934 42 36

-------+5.32 +18.72 +3.06 +14.78

101859 73 92

121073 39 87

+19213 65 65

+18.86

9124 23 28 1217 08 84 28474 70 84 60423 84 40 558 57 75 2061 28 81 101859 73 92

5940 44 42 4981 45 75 31215 43 87 74885 27 26 1709 85 96 2340 92 61 121073 39 87

-3183 78 86 +3764 36 91 +2740 73 03 +14461 42 86 +1151 28 21 +279 63 80 +19213 65 65

-34.89 +309.29 +9.62 +23.93 +206.11 +13.57 +18.86

The company's fixed assets has increased by 206.11% and the current asset value increased by 13.57% .The company's reserve & surplus value has increased by 5.32% .The company had repaid some part of Borrowings so the value had increased by 3.06% and current liabilities has increased by 14.78%. 6.3.1 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2004-05 Particular Year Increase/ %

2004

2005

Decrease

Increase/ Decrease

INTEREST EARNED Interest / discount on advances / bills Income on Investments Interest on Balances with Reserve Bank of India and Other InterBank Funds Others

1849 42 86 1819 13 42 85 53 93 0

2092 30 92 1771 97 96 81 25 40 5 50 48

+242 88 06 -47 15 46 -4 28 53 +5 50 48

+13.13 -2.59 -5.01 100

OTHER INCOME i) Commission, Exchange and Brokerage Profit on Sale of Investments (Net) Profit / (Loss) on Revaluation on investments (Net) Profit on sale of land, buildings & other assets (Net) Profit on exchange transactions (Net) Miscellaneous Income

239 18 27

280 16 22

+40 97 95

+17.13

ii) iii)

481 23 50 -79 30 11

373 04 61 -159 75 38

-108 18 89 -239 05 49

-22.48 +301.45

iv)

1 68 96

5 57 31

+3 88 35

+229.85

v) vi)

55 96 73 41 88 60 4494 76 16

71 91 05 68 86 52 4590 85 09

+15 94 32 +26 97 92 -62 51 29

+28.49 +64.41 -1.39

Total income INTERPRETATION:

From the above table comparative income statement shows the different income changes. And the total Income of the year 2004 2005 has been decreased to 1.39%.

6.3.2 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2005- 2006

Particular

Year 2005 2006

Increase/ Decrease

% Increase/ Decrease

INTEREST EARNED Interest / discount on advances / bills Income on Investments Interest on Balances with Reserve Bank of India and Other InterBank Funds Others

2092 30 92 1771 97 96 81 25 40 5 50 48

2629 10 70 1673 26 34 103 90 68 0

+536 79 78 -98 71 62 +22 65 28 +5 50 48

+25.65 -5.57 +27.88 100

OTHER INCOME Commission, Exchange and Brokerage Profit on Sale of Investments (Net) Profit on sale of land, buildings & other assets (Net) Profit on exchange transactions (Net) Miscellaneous Income

280 16 22 373 04 61 5 57 31 71 91 05 68 86 52 4750 60 47

315 02 12 233 67 69 43 52 09 65 75 09 70 24 12 5134 48 83

+34 85 90 -139 36 92 +37 94 78 -6 15 96 +1 37 60 +394 89 32

+12.44 -37.36 +680.91 +8.56 +2.00 +8.31

Total income INTERPRETATION:

From the above table comparative income statement shows the different income changes. And the total Income of the year 2005 2006 has been increased to 8.31%.

6.3.3 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2006- 2007

Particular

Year 2006 2007

Increase/ Decrease

% Increase/ Decrease

INTEREST EARNED Interest / discount on advances / bills Income on Investments Interest on Balances with Reserve Bank of India and Other InterBank Funds Others

2629 10 70 1673 26 34

3900 99 99 1703 30 48

+1271 89 29 +30 04 14

+48.38 +1.79

103 90 68 0

162 93 60 64 83 28

+59 02 92 +64 83 28

+56.81 +100

OTHER INCOME Commission, Exchange and Brokerage Profit on Sale of Investments (Net) Profit on Revaluation of Investments (Net) Profit on sale of land, buildings & other assets (Net) Profit on exchange transactions (Net) Miscellaneous Income

315 02 12

388 22 40

+73 20 28

+2.23

233 67 69 -187 08 15 43 52 09

237 36 89 -475 71 00 2 38 96

+3 69 20 -662 79 15 -41 13 13

+1.58 +354.28 +94.51

65 75 09 Total income 70 24 12 4947 40 68 INTERPRETATION:

85 63 88 149 13 69 6219 12 17

+19 88 79 +78 89 57 +896 55 19

+30.25 +112.32 +18.12

From the above table comparative income statement shows the different income changes. And the total Income of the year 2006 2007 has been increased to 18.12%.

6.3.4 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2007- 2008

Particular

Year 2007 2008

Increase/ Decrease

% Increase/ Decrease

INTEREST EARNED Interest / discount on advances / bills Income on Investments Interest on Balances with Reserve Bank of India and Other InterBank Funds Others

3900 99 99 1703 30 48 162 93 60 64 83 28

5521 99 77 2235 66 22 200 88 29 9 70 89

+1620 99 78 +532 35 74 +37 94 69 -55 12 39

+41.55 +31.25 +23.29 +85.02

OTHER INCOME Commission, Exchange and Brokerage Profit on Sale of Investments (Net) Profit on Revaluation of Investments (Net) Profit on sale of land, buildings & other assets (Net) Profit on exchange transactions (Net) Miscellaneous Income

388 22 40 237 36 89 -475 71 00 2 38 96 85 63 88 149 13 69 6219 12 17

498 71 66 229 60 93 -267 84 78 1 57 38 110 16 79 265 39 64 8775 86 79

+110 49 26 -7 75 96 -743 55 78 +81 58 +24 52 91 +116 25 95 +1436 95 78

+28.46 -1.58 +156.30 +34.14 +28.64 +77.95 +23.10

Total income INTERPRETATION:

From the above table comparative income statement shows the different income changes. And the total Income of the year 2007 2008 has been increased to 23.10%.

6.3.5 TABLE SHOWING COMPARATIVE INCOME STATEMENT OF THE YEAR 2008- 2009

Particular

Year 2008 2004 2009 %

Increase/ Decrease 2005 AMOUNT

RS. IN 000's

% Increase/ Decrease % +32.01 -3.55 -16.27 +181.55

INTEREST EARNED PARTICULARS

AMOUNT
RS. IN 000's

Interest / discount on advances / bills Income on Investments Interest on Balances with Reserve Bank of India and Other InterBank Funds Others

5521 99 77 2235 66 22 200 88 29 9 70 89

7289 55 32 2156 31 60 168 19 83 27 33 58

+1767 55 55 -79 34 62 -32 68 46 +17 62 69

OTHER INCOME Commission, Exchange and Brokerage Profit on Sale of Investments (Net) Profit on Revaluation of Investments (Net) Profit on sale of land, buildings & other assets (Net) Profit on exchange transactions (Net) Miscellaneous Income

498 71 66 229 60 93 -267 84 78 1 57 38 110 16 79 265 39 64

593 78 01 636 64 80 -117 23 89 68 50 40 157 34 36 256 79 40

+95 06 35 +407 03 87 -385 08 67 +66 93 02 +47 17 57 -8 60 24

+19.06 +177.27 +143.77 +425.78 +42.82 +77.95

Total income INTERPRETATION:

8775 86 79

11237 23 41

+1895 67 06

+21.60

From the above table comparative income statement shows the different income changes. And the total Income of the year 2007 2008 has been increased to 21.60%.

LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets 544 80 00 1536 28 89 41482 57 98 729 47 45 3028 88 08 2005 1.15 3.25 87.66 1.54 6.40 544 80 00 2030 38 96 44241 23 86 590 67 84 3407 93 56 2006 1.07 3.99 87.06 1.16 6.72

47322 02 40

100.00

50815 04 22

100.00

4332 22 18 912 87 16 20171 63 79 20294 86 19 404 02 87 1206 40 21

9.15 1.93 42.63 42.87 0.87 2.55

4175 43 65 778 51 91 19014 71 80 25205 18 81 452 34 20 1188 83 85

8.22 1.53 37.42 49.60 0.89 2.34

TOTAL 47322 02 40 100.00 50815 04 22 100.00 6.4.1 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2004-2005

INTERPRETATION: The company's fixed asset has been increased by 0.89% when compared to 2004 and current asset has been decreased by 2.34% and current liabilities also increased by 6.72%. 6.4.2 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2005-2006

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL

AMOUNT
RS. IN 000's

% 2006 1.07 3.99 87.06 1.16 6.72

AMOUNT
RS. IN 000's

% 2007 0.92 4.43 85.13 1.24 8.28

544 80 00 2030 38 96 44241 23 86 590 67 84 3407 93 56

544 80 00 2632 64 01 50529 31 50 736 62 74 4914 42 92

50815 04 22

100.00

59357 81 17

100.00

4175 43 65 778 51 91 19014 71 80 25205 18 81 452 34 20 1188 83 85 50815 04 22

8.22 1.53 37.42 49.60 0.89 2.34 100.00

3077 95 84 629 28 28 18952 28 43 34756 20 19 457 73 83 1484 34 60 59357 81 17

5.18 1.06 31.93 58.55 0.77 2.51 100.00

INTERPRETATION: The company's fixed asset has been decreased by 0.77% when compared to 2005 and current asset has been increased by 2.51% and current liabilities also increased by 8.28%. 6.4.3 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2006-2007

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL INTERPRETATION:

AMOUNT
RS. IN 000's

AMOUNT
RS. IN 000's

2007 544 80 00 2632 64 01 50529 31 50 736 62 74 4914 42 92 0.92 4.43 85.13 1.24 8.28

2008 544 80 00 3445 56 51 68740 41 49 2896 22 75 6629 82 09 0.66 4.19 83.57 3.52 8.06

59357 81 17

100.00

82256 82 84

100.00

3077 95 84 629 28 28 18952 28 43 34756 20 19 457 73 83 1484 34 60 59357 81 17

5.18 1.06 31.93 58.55 0.77 2.51 100.00

4686 10 79 4293 19 47 23974 47 36 47060 28 60 510 65 72 1732 10 90 82256 82 84

5.70 5.22 29.14 57.22 0.62 2.11 100.00

The company's fixed asset has been decreased by 0.62% when compared to 2006 and current asset has been decreased by 2.11% and current liabilities also decreased by 8.06%. 6.4.4 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2007-2008

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL INTERPRETATION:

AMOUNT
RS. IN 000's

AMOUNT
RS. IN 000's

% 2009

2008 544 80 00 3445 56 51 68740 41 49 2896 22 75 6629 82 09 0.66 4.19 83.57 3.52 8.06 544 80 00 4311 87 02

0.54 4.23 82.78 6.24 6.21

84325 58 29 6353 64 63 6323 83 98

82256 82 84

100.00

101859 73 92

100.00

4686 10 79 4293 19 47 23974 47 36 47060 28 60 510 65 72 1732 10 90 82256 82 84

5.70 5.22 29.14 57.22 0.62 2.11 100.00

9124 23 28 1217 08 84 28474 70 84 60423 84 40 558 57 75 2061 28 81 101859 73 92

8.96 1.19 27.95 59.32 0.55 2.03 100.00

The company's fixed asset has been decreased by 0.55% when compared to 2007 and current asset has been decreased by 2.03% and current liabilities also decreased by 6.21%. 6.4.5 TABLE SHOWING COMMON-SIZE BALANCE SHEET OF THE 2008-2009

PARTICULARS LIABILITIES: Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS: Cash & Balances with Reserve Bank of India Balances with Banks Investments Advances Fixed Assets Other Assets TOTAL

AMOUNT
RS. IN 000's

AMOUNT
RS. IN 000's

544 80 00 4311 87 02 84325 58 29 6353 64 63 6323 83 98

0.54 4.23 82.78 6.24 6.21

544 80 00 6606 16 33 100115 88 96 6548 28 24 7258 26 34

0.45 5.46 82.69 5.41 5.99

101859 73 92

100.00

121073 39 87

100.00

9124 23 28 1217 08 84 28474 70 84 60423 84 40 558 57 75 2061 28 81 101859 73 92

8.96 1.19 27.95 59.32 0.55 2.03 100.00

5940 44 42 4981 45 75 31215 43 87 74885 27 26 1709 85 96 2340 92 61 121073 39 87

4.91 4.11 25.78 61.85 1.42 1.93 100.00

INTERPRETATION: The company's fixed asset has been increased by 1.42% when compared to 2008 and current asset has been decreased by 1.93% and current liabilities also decreased by 5.99%. 6.5.1 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/3/2005
Rs. in 000's

Year ended 31.3.2004 Year ended 31.3.2005 CASH FLOW FROM OPERATING ACTIVITIES Income Interest earned Other Income Expenditure & Provisions Interest Paid Operating expenses & Provisions Net Increase of cash on operating activities prior to the effect of changes in operating liabilities and assets Add: Depreciation Cash Profit generated from operations (I) CASH FLOW FROM OPERATING LIABILITIES AND ASSETS Net Increase / decrease of operating liabilities i) Deposits from customers ii) Borrowings from banks & Financial iii) Other operating liabilities and provisions Net increase / decrease on operating assets i) Investments ii) Advances to customers iii) Other Assets Net increase in operating liabilities over operating assets (II) CASH FLOW FROM OPERATING ACTIVITIES (I+II) (A) CASH FLOW FROM INVESTING ACTIVITIES i) Sale / disposal of Fixed Assets ii) Purchase of Fixed Assets NET CASH FLOW FROM INVESTING ACTIVITIES (B)

37541021 7406595 44947616 21546945 18273094 39820039 5127577 394128 5521705

39510476 6398033 45908509 20955263 18439653 39394916 6513593 357715 6871308

47839888 3735092 3383063 54958043

27586588 -1387961 290548 26489175

-11569199 15686296 49103262 28478593 - 175635 37358428 -116467 44048422

10909621

-10869253

16431326 60434 1569714 203819 1044667

-3997945

-1509280

-840848

CASH FLOW FROM FINANCING ACTIVITIES i) Proceeds of Equity share issue

2400000

ii) Proceeds of Tier II Bonds iii) Redemption of Tier II Bonds iv) Reserves & Surplus v) Proposed Dividend (Including dividend tax) vi) Other adjustments vii) Others NET CASH FLOW FROM FINANCING ACTIVITIES (C) Total Cash flow during the year (A+B+C)

2000000 -1500000 -83363 -1229205 0 0

3500000 0 -88980 -1483606 0 0

1587432 16509478

1927414 -2911379 Rs. in 000's

Year ended 31.3.2004

Balances at the beginning of the year Cash & Balances with RBI Balances with Banks & Money at call Balances at the end of the year Cash & Balances with RBI Balances with Banks & Money at call Total cash flow during the year 43322219 9128716 52450935

Year ended 31.3.2005

26879431 9062026 35941457

43322219 9128716 52450935

41754365 7785191 49539556

16509478

-2911379

6.5.2 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/3/2006 Rs. in 000's

Year ended 31.3.2005 Year ended 31.3.2006 CASH FLOW FROM OPERATING ACTIVITIES Income Interest earned Other Income Expenditure & Provisions Interest Paid Operating expenses & Provisions Net Increase of cash on operating activities prior to the effect of changes in operating liabilities and assets Add: Depreciation Cash Profit generated from operations (I) CASH FLOW FROM OPERATING LIABILITIES AND ASSETS Net Increase / decrease of operating liabilities i) Deposits from customers ii) Borrowings from banks & Financial iii) Other operating liabilities and provisions Net increase / decrease on operating assets i) Investments ii) Advances to customers iii) Other Assets Net increase in operating liabilities over operating assets (II) CASH FLOW FROM OPERATING ACTIVITIES (I+II) (A) CASH FLOW FROM INVESTING ACTIVITIES i) Sale / disposal of Fixed Assets ii) Purchase of Fixed Assets NET CASH FLOW FROM INVESTING ACTIVITIES (B)

44062772 39510476 6398033 45908509 7282111 51344883 23390981 20955263 18439653 39394916 20120460 43511441 6513593 357715 6871308 7833442 553454 8386896

62880764 27586588 1459490 -1387961 5564936 69905190 290548 26489175

-624337 -11569199 95510138 49103262 - 175635 37358428 2955076 97840877 -10869253 -3997945 -27935687 -19548791

203819 1044667 -840848

190940 798356 -607416

CASH FLOW FROM FINANCING ACTIVITIES i) Proceeds of Equity share issue

ii) Proceeds of Tier II Bonds iii) Redemption of Tier II Bonds iv) Reserves & Surplus v) Proposed Dividend (Including dividend tax) vi) Other adjustments vii) Others NET CASH FLOW FROM FINANCING ACTIVITIES (C) Total Cash flow during the year (A+B+C)

3500000 0 -88980 -1483606 0 0

9500000 0 195796 1615141 0 0

1927414 -2911379

7689063 -12467144

Year ended 31.3.2005 Balances at the beginning of the year Cash & Balances with RBI Balances with Banks & Money at call Balances at the end of the year Cash & Balances with RBI Balances with Banks & Money at call Total cash flow during the year 41754365 7785191 49539556 -2911379 43322219 9128716 52450935

Rs. in 000's Year ended 31.3.2006

41754365 7785191 49639556

30779584 6292828 37072412 -12467144

6.5.3 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/3/2007
Rs. in 000's

Year ended 31.3.2006 Year ended 31.3.2007 CASH FLOW FROM OPERATING ACTIVITIES Income Interest earned Other Income Expenditure & Provisions Interest Paid Operating expenses & Provisions Net Increase of cash on operating activities prior to the effect of changes in operating liabilities and assets Add: Depreciation Cash Profit generated from operations (I) CASH FLOW FROM OPERATING LIABILITIES AND ASSETS Net Increase / decrease of operating liabilities i) Deposits from customers ii) Borrowings from banks & Financial iii) Other operating liabilities and provisions Net increase / decrease on operating assets i) Investments ii) Advances to customers iii) Other Assets Net increase in operating liabilities over operating assets (II) CASH FLOW FROM OPERATING ACTIVITIES (I+II) (A) CASH FLOW FROM INVESTING ACTIVITIES i) Sale / disposal of Fixed Assets ii) Purchase of Fixed Assets NET CASH FLOW FROM INVESTING ACTIVITIES (B)

44062772 7282111 51344883 23390981 20120460 43511441 7833442 553454 8386896

58320735 3870482 32712737 19394132

62191217

52106889 10084348 61181 10695529

62880764 1459490 5564936 69905190

182110999 21596001 6501317 210208317

-624337 95510138 2955076 97840877 -27935687 -19548791

50221893 123040841 2477630 175740364 34467953 45163482

190940 798356

588181 1728551

-607416

-1140370

CASH FLOW FROM FINANCING ACTIVITIES I. Proceeds of Tier I & Tier II Bonds

9500000

13230000

II. III. IV. V.

outflow Redemption of Tier II Bonds Reserves & Surplus Proposed Dividend (Including dividend tax) Others

0 195796 1615141 0

2577400 42932 1912166 0

NET CASH FLOW FROM FINANCING ACTIVITIES (C) Total Cash flow during the year (A+B+C)

7689063 -12467144

8697502 52720614

Year ended 31.3.2006 Balances at the beginning of the year Cash & Balances with RBI Balances with Banks & Money at call Balances at the end of the year Cash & Balances with RBI Balances with Banks & Money at call Total cash flow during the year 30779584 6292828 37072412 -12467144 41754365 7785191 49639556

Rs. in 000's Year ended 31.3.2007

30779584 6292828 37072412

46861079 42931947 89793026 52720614

6.5.4 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/3/2008
Rs. in 000's

Year ended 31.3.2007

Year ended 31.3.2008

CASH FLOW FROM OPERATING ACTIVITIES Income Interest earned Other Income Expenditure & Provisions Interest Paid Operating expenses & Provisions Net Increase of cash on operating activities prior to the effect of changes in operating liabilities and assets Cash Profit generated from operations (I) CASH FLOW FROM OPERATING LIABILITIES AND ASSETS Net Increase / decrease of operating liabilities i) Deposits from customers ii) Borrowings from banks & Financial iii) Other operating liabilities and provisions Net increase / decrease on operating assets i) Investments ii) Advances to customers iii) Other Assets Net increase in operating liabilities over operating assets (II) CASH FLOW FROM OPERATING ACTIVITIES (I+II) (A) CASH FLOW FROM INVESTING ACTIVITIES i ) Sale / disposal of Fixed Assets ii) Purchase of Fixed Assets NET CASH FLOW FROM INVESTING ACTIVITIES (B)

58320735 3870482 30457314 13266924

62191217

79682517 8110752 50383012 14101968

87793269

43724238

64484980

18443083 18443083

23308289 23308289

182110999 21596001 688050 204395050

155851679 34574188 -10942714

179483153

50221893 123040841 2477630 175740364 28654685 47097768

45002348 133635580 3291792

181929720 -24465667 20861722

569361 1728551

64916 1319375

-1159190

-1254459

CASH FLOW FROM FINANCING ACTIVITIES I. Proceeds of Tier I & Tier II Bonds outflow

13230000

II. III. IV.

Redemption of Tier II Bonds Reserves & Surplus Proposed Dividend (Including dividend tax)

2577400 2255423 1616141

1570000 2504911 1912166

NET CASH FLOW FROM FINANCING ACTIVITIES (C) Total Cash flow during the year (A+B+C)

6782036 52720614

-5987077 13620186 Rs. in 000's Year ended 31.3.2008

Year ended 31.3.2007 Balances at the beginning of the year Cash & Balances with RBI Balances with Banks & Money at call Balances at the end of the year Cash & Balances with RBI Balances with Banks & Money at call Total cash flow during the year 46861079 42931947 89793026 52720614 30779584 6292828 37072412

46861079 42931947 89793026

91242328 12170884 103413212 13620186

6.5.5 TABLE SHOWING STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31/3/2009
Rs. in 000's

Year ended 31.3.2008

Year ended 31.3.2009

CASH FLOW FROM OPERATING ACTIVITIES Income Interest earned Other Income Expenditure & Provisions Interest Paid Operating expenses & Provisions Net Increase of cash on operating activities prior to the effect of changes in operating liabilities and assets Cash Profit generated from operations (I) CASH FLOW FROM OPERATING LIABILITIES AND ASSETS Net Increase / decrease of operating liabilities i) Deposits from customers ii) Borrowings from banks & Financial iii) Other operating liabilities and provisions Net increase / decrease on operating assets i) Investments ii) Advances to customers iii) Other Assets Net increase in operating liabilities over operating assets (II) CASH FLOW FROM OPERATING ACTIVITIES (I+II) (A) CASH FLOW FROM INVESTING ACTIVITIES i) Sale / disposal of Fixed Assets ii) Purchase of Fixed Assets NET CASH FLOW FROM INVESTING ACTIVITIES (B)

79682517 8110752 50383012 14101968

87793269

96414033 15273268 111687301 64671374 18407523 83078897

64484980

23308289 23308289

28608404 28608404

157903068 155851679 1946361 34574188 -10942714 179483153 -10988545 148860884

45002348 133635580 3291792 181929720 -24465667 20861722

27407303 144834517 2796380 175038200 -26177316 2431088

64916 1319375

1420895 2321556

-1254459

-900661

CASH FLOW FROM FINANCING ACTIVITIES I. Proceeds of Tier I & Tier II Bonds outflow

9553000

II. III. IV.

Redemption of Tier II Bonds Reserves & Surplus Proposed Dividend (Including dividend tax)

1570000 2504911 1912166

0 3046761 2230861

NET CASH FLOW FROM FINANCING ACTIVITIES (C) Total Cash flow during the year (A+B+C)

-5987077 13620186

4275378 5805805 Rs. in 000's Year ended 31.3.2009

Year ended 31.3.2008 Balances at the beginning of the year Cash & Balances with RBI Balances with Banks & Money at call Balances at the end of the year Cash & Balances with RBI Balances with Banks & Money at call Total cash flow during the year 91242328 12170884 103413212 13620186 46861079 42931947 89793026

91242328 12170884 103413212

59404442 49814575 109219017 5805805

ANALYSIS OF CASH FLOW FROM OPERATING ACTIVITIES

The amount of cash flows arising from operating activities is a key indicator of the extent to which operations of the enterprise have generated sufficient cash flows to maintain the operating capability of the enterprise, pay dividends, repay borrowings, and invest without recourse to external sources of financing. Cash flows from operating activities are primarily derived from the principal revenue generating activities of the enterprise. Therefore, they result from the transactions and other events that are considered for ascertaining profit or loss.

6.5.6 TABLE SHOWING CASH FLOW FROM OPERATING ACTIVITIES 2004-2009

Year 2004 2005 2006 2007 2008 2009

Income from Operation 44947616 4750 60 47 4947 40 68 6219 12 17 8775 86 79 11237 23 41

Gross Profit 3982 00 39 4099 24 54 4164 06 26 5210 68 69 7573 53 22 9911 44 25

Net Profit 512 75 77 651 35 93 994 48 69 1008 43 48 1202 33 57 1325 79 16

6.5.6 FIGURE SHOWING THE CASH FLOW FROM OPERATING ACTIVITIES 2004-2009

12000000 10000000 80000000 60000000 40000000 20000000 0 2004 2005 2006 2007 2008 2009 IncomeFromOperation GrossProfit NetProfit

INTERPRETATION: From the graph we can see that the Income from Operation showing an upward trend since 2006. But when we analyze from 2004 gradual increase has happened. Gross profit also showing the upward trend like an income from the operation. The net profit of the bank shows a upward trend since 2005. When we analyze these three items together, they showing an upward trend. The graphs itself shows the consistent growth of the bank.

ANALYSIS OF CASH FLOW FROM INVESTING & FINANCING ACTIVITIES

CASH FLOW FROM INVESTING ACTIVITIES The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. CASH FLOW FROM FINANCING ACTIVITIES Disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds (both owners and leaders) to the firm.

6.5.7 TABLE SHOWING CASH FLOW FROM INVESTING & FINANCING ACTIVITIES 2004-2009

Year 2004 2005 2006 2007 2008 2009

Cash flow from Investing Activities (150 92 80) (84 08 48) (60 74 16) (115 91 90) (125 44 59) (90 06 61)

Cash flow from Financing Activities 158 74 32 192 74 14 768 90 63 678 20 36 (598 70 77) 427 53 78

6.5.7 FIGURE SHOWING THE CASH FLOW FROM INVESTING & FINANCING ACTIVITIES 2004-2009

10000000 8000000 6000000 4000000 2000000 0 2000000 4000000 6000000 8000000 2004 2005 2006 2007 2008 2009 CashflowfromInvesting Activities CashflowfromFinancing Activities

INTERPRETATION: When we analyze cash flow of investing activity through this graph, it shows a high fluctuating and inconsistent cash flow. It shows the poor bargaining power in purchase of fixed asset and lack of credibility. The banks investing activity shows an inconsistent cash flow. When we analyze the cash flow from financing activities, even though we can see a negative trend in availing loans from financial institutions but the fund through secured bonds and loan from directors makes the graph upward. It shows the strong financial backup for the firm. The graph shows that the company has strong financial backup.

CHAPTER VII

FINDINGS
CHAPTER VII SUMMARY OF FINDINGS
Based on the analysis and interpretation of the financial statements of Indian Overseas Bank, the researcher likes to offer the following findings are given below.

1. The short term solvency ratios measured the ability of a firm to meet its short-term obligation with the help of the current ratio, quick ratio and Cash position. The current ratio was 0.34 for the year 2004-05 and decreased to 0.32 for the year 2008-09. The quick ratio was 8.97 for the year 2004-05 and increased to 11.16 for the year 2008-09. The Cash position was 6.35 for the year 2004-05 and decreased to 4.86. Hence a satisfactory level of liquidity is maintained in the firm. 2. The long term solvency ratio measured the creditors return by the firm using proprietary ratio. The proprietary ratio was 2004-05 is 0.51 and increased to 0.57 in 2008-09. 3. The profitability ratio measures the profitability of the firm using EPS. The Earning per shares was 10.68 for the year 2004-05 and increased to 23.20 for the year 2008-09. 4. Fixed asset ratio was 0.94 in the year 2004-05 and decreased to 0.93 for the year 2008-09.in the fixed asset ratio it shows less than 1, it means part of working capital has been financed by long-term funds. 5. Debt equity ratio was 0.28 in the year 2004-05 and increased to 1.07 for the year 2008-09. Debt equity ratio provides margin of safety to creditors. 6. Return on equity share holders funds was 25.00 in the year 2004-05 and increased to 33.28 for the year 2006-07 but in the year 2008-09 it has decreased to 21.04,there are having changes in return on equity share holders funds. 7. Solvency ratio was 0.086 in the year 2004-05 and increased to 0.130 for the year 2007-08 but in the year 2008-09 it has decreased to 0.127. 8. In the comparative balance sheet bank's fixed assets has increased 11.96% in 2004-05, 1.19% in 2005-06, 11.56% in 2006-07, 9.38% in 2007-08, 206.11% in 2008-09 and the

current asset value decreased by 1.45% in 2004-05, 24.86% in 2005-06, 16.69% increased in 2006-07, 16.69% in 20207-08, 13.57% in 2008-09. 9. In the comparative balance sheet bank's reserve & surplus value has increased by 32.16% in 2004-05, 29.66% in 2005-06, 30.88% in 2006-07, 25.14% in 2007-08, 5.32% in 200809.The banks has Borrowings 19.03% in 2004-05, 24.71% in 2005-06, 293.17% in 2006-07, 119.38% in 2007-08, 3.06% in 2008-09 and Current liabilities has decreased by 12.51% in 2004-05, 44.02% increased in 2005-06, 34.90% in 2006-07, 34.90% in 2007-08, 14.78% in 2008-09. 10. In the comparative income statement total Income of the year 2004-05 has been decreased to 1.39%, in 2005-06 has been increased to 8.31%, in 2006-07 has been increased to 18.12%, in 2007-08 has been increased to 23.10%, and in 2008-09 has been increased to 21.60%. 11. The common size balance sheet shows the overall liquidity position of the firm year by year. The banks fixed asset has been increased by 0.89% when compared to 2004, it has been decreased by 0.77% when compared to 2005, it has been decreased by 0.62% when compared to 2006, it has been decreased by 0.55% when compared to 2007, it has been increased by 1.42% when compared to 2008.The Current asset has been decreased by 2.34% when compared to 2004, it has been increased by 2.51% when compared to 2005, it has been decreased by 2.11% when compared to 2006, it has been decreased by 2.03% when compared to 2007, it has been decreased by 1.93% when compared to 2008.and current liabilities also increased by 6.72% when compared to 2004, then it also increased by 8.28% when compared to 2005, then it also increased by 8.28% when compared to 2006, then it also decreased by 6.21% when compared to 2007, then it also decreased by 5.99% when

compared to 2008. From this common size balance sheet we infer the satisfactory liquidity position. 12. From the cash flow statement it shows the operating activities like Income from Operation, Gross Profit & Net Profit has increasing year by year, and have a good trend line. The other cash flow from investing & financing activities has some positive and negative trend lines in the cash flow statement.

CHAPTER VIII

SUGGESTIONS

CHAPTER VIII SUGGESTIONS

Based on the analysis and interpretation of the financial statements of Indian Overseas Bank, the researcher likes to offer the following suggestions for the improvement of financial performance. 1. Indian Overseas Bank is expected to decrease the level of quick ratio in the future period to standard norms 1:1. 2. Earnings per share are the owners earnings. So it should be given more importance. The earnings per share can be increased by increasing the net profit available for share holders. 3. In the Cash flow from Investing Activities it show the negative values due to Sale / disposal of Fixed Assets and Purchase of Fixed Assets it should be controlled. 4. Overall performance and effectiveness of the banks are satisfactory due to effective financial performance. Therefore this bank should concentrate on return on equity shareholder funds and it should be managed effectively, thereby optimum utilization of assets is possible.

CHAPTER IX

CONCLUSION
CHAPTER IX CONCLUSION

Financial analysis is the process of selection, relation and evaluation. The focus of financial analysis is on key figure in the financial statements and the significant relationship that exist between them. The analysis of financial statements is a process of evaluating the relationship between component part of financial statement to obtain a better understanding of the firms position and performance. This financial analysis is done uses the tools like Ratio Analysis, Comparative Balance Sheet, Comparative Income Statement, Common Size Balance Sheet & Cash Flow Statement. These tools show us the company position in terms of liquidity, profitability and stability. By using these tools we came to a conclusion that the bank has a good financial position and have a profitability & stability. Now dates all commercial banks improve by marketing technique like advertisement in newspaper, television, radio etc. so that it can gain goodwill and publicity. Even it should use the present new technology and improve the consumption of resource efficiently. On the whole, it can be concluded that the banks overall financial performance process is at desired level and the author has made the realistic recommendation for the improvement in operational and managerial efficiency of the company as to maintain and increase further by effective utilization and control of all the fixed assets.

APPENDICES

APPENDICES
BALANCE SHEET TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2004-2005

PROFIT & LOSS ACCOUNT TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2004-2005

BALANCE SHEET TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2005-2006

PROFIT & LOSS ACCOUNT TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2005-2006

BALANCE SHEET TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2006-2007

PROFIT & LOSS ACCOUNT TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2006-2007

BALANCE SHEET TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2007-2008

PROFIT & LOSS ACCOUNT TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2007-2008

BALANCE SHEET TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2008-2009

PROFIT & LOSS ACCOUNT TAKEN FROM THE ANNUAL REPORT OF INDIAN OVERSEAS BANK 2008-2009

BIBLIOGRAPHY
BIBLIOGRAPHY

REFERENCES

1. Pandey I.M (2000). FINANCIAL MANAGEMENT Vikas Publishing Pvt, New Delhi. 2. Reddy T.S & Hari Prasad Reddy Y (2008), FINANCIAL AND MANAGEMENT ACCOUNTING Margham Publications, Chennai.

3. Srivastava.R.M (2004),

FINANCIAL MANAGEMENT AND POLICY,

Himalaya Publishing House, Mumbai. 4. Muralidharan L (2006), MANAGEMENT ACCOUNTING & FINANCIAL ANALYSIS, Sultan Chand & Son Publishers, New Delhi.

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