Background of the Company

Corporation Bank was started about 102 years ago in 1906, with an initial capital of just Rs.5000, and now is all
set to cross Rs. One Lakh Crore. It has around 2000 service outlets across the nation, and around 12000 plus
Employees. The Company was incorporated at Udipi. The undertaking of the was taken over by Government by
an Ordinance promulgated on 15th April, 1980 viz., Banking Companies (Acquisition and Transfer of
Undertakings) Ordinary, 1980 and vested in a new bank under the name Corporation Bank.
The Bank is a Public Sector Unit with 57.17% of Share Capital held by the Government of India. The Bank
came out with its Initial Public Offer (IPO) in October 1997 and 37.87% of Share Capital is presently held by
the Public and Financial Institutions. The Bank’s Net Worth stood at Rs.3,054.92 crores as on 31 March 2005.
Corporation Bank was nationalized in 1980 and in 1997 it became the Second Public Sector Bank in the country
to enter capital market. The IPO was over- subscribed by 13 times.

Corporation Bank is completing its centenary in 2006. On this occasion, the Bank has charted out a shared
vision. The Bank aims to achieve a total business of Rs. 55,000 crore comprising Rs. 32,000 Crore Deposits and
Rs.23,000 Crore Advances by 2005-06, the Centenary Year of the bank.

Registered office
Mangladevi Temple Road, Post Box No 88
Mangalore
Karnataka-5750071

Board of Directors
Sr. No. Director's Name Designation
1 B Sambamurthy Chairman and Managing director
2 Mukul Singhal Director
3 M A Srinivasan Director
4 Hanumantha Rao Director
5 D N Prakash Director
6 S Ravi Director
7 Sathish Goel Director
8 Suvarna Sanyal Director
9 C Ramakrishna Kamath Director
10 P M Sirajuddin Director
11 Hiren Mehta Director
12 Venkatrao Y Ghorpade Non Official PartTime Director
13 Thomas Mathew Director
14 Ajay Garg Director
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15 T Ramachandra Bhat Nominee Director

Product Line

• CorpShelter-Reverse Mortgage Loan

• Corp New Gen-Student SB account
• Sale of Gold Coins and Bars
• Corp Pragathi Account
• Corp Compassion-Saving Bank
• Corp 4-in-1 a/c (Current Account)
• Current Account
• Term Deposit
• ATM
• Loans
○ Corp Site Purchase Loan
○ Corp IPO Scheme
○ Corp Mitra
○ Corp Byte- Computer Loan
○ Corp Home Loan
○ Corp mobile – vehicle Loan
○ Corp housing Loan
○ Corp Education Loan

Future Prospect- The future prospect is very bright. The net profit has grew 37% in financial year 2008 and
Advances & Loans has also grew 31% during the year. Return on equity is 17.4% which is much higher as
compared to previous year which is 14.2%. The bank is successful in increasing its retail business, the bank has
added 10 lakhs new accounts, 80 branches and 28 ATMs. They are planning to set up 100 new branches and
175 ATMs by 2009. They have announced plans to aggressively cross sell financial products. They have set
there foot prints abroad in Dubai, China, Hong Kong and London. They has even launched mobile banking in
collaboration with Reliance network.

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The business Balance Sheet Look impressive. Total business has increased by 36% to Rs946.1 billion, advance
increased by 31% to Rs391.9 billion. Retail credit moved up by 15% to 88.1 billion accounting for 22% of total
disbursement.

The gross NPA ratio declined to 1.47%. The diagram is shown on the next page

Trends of the last five years

Operating Profit Generation (Rs Crores)

Year March 04 March 05 March 06 March 07 March 08

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Operating 1491.97 1160.40 1502.70 2303.11 3438.87
Profit

Here we can see that operating profit in the last five year have shown an increase except from 2004 to 2005 it
has decreased otherwise in the rest of the years it has increased.

Sales / Turnover- The turnover stood at Rs. 4516.55 crore in the current fiscal with a 60:40 credit-deposit ratio
and the bank is targeting a business of Rs one crore by next year.

Year March 04 March 05 March 06 March 07 March 08

Sale Turnover 2201.17 2249.80 2626.47 3430.16 4516.55
(Amount in crores)

So here we can see that the sale turn over continuously increases in the last five years.

Service Rendered-

• Mobile pay
• Payment system by ASBA for the IPOs
• LIC Premium Payment
• SMS Banking Facility
• Corp Bullet- RTGC Facilities
• Corp card to card transfer
• Corp Any Branch Banking
• Corp Multi City Cheque Facility
• Online Railway Reservation
• Corp Mediclaim
• Bill Payment
• Mobile Recharge
• Sale of Bonds of Government of India
• Sale of Stamp Paper
• Collection of Sale Tax
• Collection Of Direct Tax
• Premium Payment
• Collection of Central Excise and Sales Tax
• Insurance
• Mutual funds
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 • PPF Account
• Depository Services

Present Market share- Corporation Bank when started was not counted in any order but slowly they started
taking their market share still it is very small under certain organization in the same industry even then the
market share is much more than many players in the same industry. Say its competition with State Bank of
India at this present stage cannot be imagined but players like Dena Bank and Bank of Maharashtra are not up
to the mark of Corporation Bank

Earnings per share- The portion of a company's profit allocated to each outstanding share of common stock.
EPS serves as an indicator of a company's profitability.
Calculated as

Year March 04 March 05 March 06 March 07 March 08

Earnings per 35.15 28.04 30.99 37.38 51.24
share
(Amounts in Rs Crores)

The trend can be analyze from the following chart

Market Price of its share (in Secondary Market)- The market price of its share 383.08 Various trends can be
analyzed as follows

Date Market Price of Date Bank Nifty Price (Rs)

Corporation Bank(Rs)
31st March 2004 280.05 31st March 2005 2813.70
31st March 2005 373.30 31st March 2005 3536.54
31st March 2006 383.30 31st March 2005 4661.50
30st March 2007 293.60 31st March 2005 5308.50

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31st March 2008 283.63 30st March 2005 6655.00

So while comparing the market price of the bank with the bank nifty we can see that the price of corporation
bank has fallen continuously for the last three year on the closing date of the financial year whereas the Bank
Nifty is continuously increasing from the last five year on the same date that means corporation bank is not
doing well even when the market condition is suitable.

Strategic decision or achievement in the past or to be taken in the future for the growth, expansion,
diversification, others- Good teams and effective leaders make high quality decisions. But all too often the
process involves compromise, buck-passing, risk-aversion, private agendas and reliance on poor or insufficient
data but in case of Corporation Bank they have never faced it that is why starting with only Rs5000 they have
developed such a big business which will grow day by day various awards won by Corporation Bank can be
listed as follows

• One of the best 200 companies worldwide outside US having a turnover under a billion US$ ,-Forbes
Global Hong Kong
• India’s best public sector Bank- Business today
• Shiromani Award 1992
• Best Bank Award for Delivery Channel

Capital Size-

From year To year Class of Authorized Issued Paid up Paid up Paid up

share Capital Capital value capital
2007 2008 Equity 1500 143.44 143437800 10 143.44
2006 2007 Equity 1500 143.44 143440000 10 143.44
2005 2006 Equity 1500 143.44 143440000 10 143.44
2004 2005 Equity 1500 143.44 143440000 10 143.44
2003 2004 Equity 1500 143.44 143440000 10 143.44

Book value of outstanding shares

March 04 March 05 March 06 March 07 March 08

Book value of 193.03 212.98 235.28 262.51 294.79
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out standing sh

In the particular case we can see that the book value of outstanding shares is continuously increasing from the
last five years

Market Capitalization- A measure of a company's total value. It is estimated by determining the cost of buying
an entire business in its current state. It is obtained by multiplying the number of share outstanding by their
current price per share

The Market Capitalization rate on 31st March 2008 can be determined as follows

=number of share outstanding*current price per share

=159440000*283.63
=Rs 4522.2 cr

Dividend declared in the last years

Year March 04 March05 March06 March07 March08

Dividend 86.06 93.24 100.41 129.10 150.61
(Amount in Rs Crores)

Here we saw that the dividend declared by the bank is increasing continuously which means that the company is
in profit and the share holders are receiving regular profit on their equity shares

Ratio Analysis

1. Liquidity Ratios
• Current Ratio = Current Asset/ Current Liabilities

Year March 04 March 05 March 06 March 07 March 08

Current Ratio 0.35 0.37 0.59 0.54 0.66

The trend which we can see here is that the current ratio is increasing in most of the year except from 2006
to 2007 which means that the proportion of current asset and current liabilities are not appropriate that is

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 current assets are less than current liabilities which is not good for the bank they must immediately take
some steps to overcome this.

• Quick Ratio= Liquid Asset/Current Liabilities

Year March 04 March 05 March 06 March 07 March 08

Quick Ratio 9.99 9.58 10.46 9.30 7.56

Here we can see that the quick ratio is good where liquid asset is more the current liabilities and that is why that
the bank has to send their borrower empty hand the bank must try to invest the money and maintain this ratio
but it can be inferred from the table and the graph that in the recent year it has fallen down.

1. Profitability Ratios
• Gross profit Ratios= (GP/sale)*100

Year March 04 March 05 March 06 March 07 March 08

Gross profit 17.13 17.30 17.48 21.18 27.31
Ratio

• Operating profit Ratio

Year March 04 March 05 March 06 March 07 March 08

Operating profit 18.34 18.92 19.48 24.09 29.59
Ratio

Here we can clearly see that the operating profit is increasing continuously that means the main profit
generated is increasing in proportion more than the sales.

• Net profit margin=(Net profit/Sales)*100

Year March 04 March 05 March 06 March 07 March 08

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Net profit 14.41 14.01 14.90 16.37 18.89
margin

Here we can see that the net profit ratio is increasing except in one case that is during 2006 but the ratio in
all the cases are appropriate since the net profit is much more times than sales in terms of percentage so the
company should try to maintain this ratio and if possible the can even increase it.

1. Leverage Ratios
• Debt Equity Ratio= Total Debt/(Share Holder Fund/Net worth)

Year March 04 March 05 March 06 March 07 March 08

Debt Equity 13.11 11.25 9.74 8.91 8.38
Ratio

Here we can see that the debt equity ratio is not appropriate in any of the cases when the debt is more than
the equity bus as we can see from the graph that they are trying to overcome this from year to year and if
this trend is continued then they will definitely overcome it.
• Proprietors Ratios =Proprietors fund/Total Asset

Year March 04 March 05 March 06 March 07 March 08

Proprietors 7.08 8.16 9.30 10.08 10.66
Ratios

In this ratio we can see that the proprietor fund is more than total assets so it means that there are some
funds that was not utilize effectively and the trend shows that it is growing up in this situation the company
must try to lower this ratio on the other hand it can also be inferred that since the asset is less that means
there is no borrowing which is a good sign.

1. Investment Analysis Ratio

• Earning per shar ratio = (profit after tax-preference dividend)/outstanding no of equity share

Year March 04 March 05 March 06 March 07 March 08

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Earning per 42.19 29.17 26.09 23.60 32.42
share Ratio

Here we can infer that the earning per share ratio is reasonable good in all the year but the trend in first four
year is negative but in the fifth year it again becomes positive which the bank must continue.

• Dividend per share Ratio = (Dividend paid/payable to equity share holder)/Total no of outstanding
Shares

Year March 04 March 05 March 06 March 07 March 08

Dividend per 10.50 9.00 7.00 6.50 6.00
share Ratio

Here it can be in determined that if the company follows the same trend the one day they will have to put
lock on there gates it is supposed that the reason is high current liability, the reason can be any but the
company need to take certain action regarding this as soon as possible.

• Dividend Payout Ratio = (DPS/EPS)*100

Year March 04 March 05 March 06 March 07 March 08

Dividend 23.97 27.85 25.75 26.33 19.25
Payout Ratio

Name of close contenders and competitors (all figures in Rs Crores)

Name of close Market Capitalization Net Sale Net Profit

competitors
SBI 99076.23 48950.31 6729.12
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PNB 15728.27 14265.02 2048.76
Bank of India 15033.14 14200.74 2009.40
Canara Bank 10719.17 12355.22 1565.01
Bank of Baroda 9194.25 11813.48 1435.01
Union Bank 7571.72 9447.30 1387.03
Indian Overseas Bank 6468.52 8020.84 1202.34
Indian Bank 5898.59 7995.54 1008.74
Allahabad Bank 5181.05 7968.25 974.74
Syndicate Bank 4522.24 7906.31 848.07

Comment on size of Working Capital and Content of working Capital

Year March 04 March 05 March 06 March 07 March 08

Current Assets 1712.12 1353.58 1547.66 1279.53 1493.33
Current 4807.14 3577.29 2595.14 2337.88 2259.98
Liabilities
Working (3095.02) (2223.71) (1047.48) (1058.35) (766.65)
Capital

Here we can see that the current liabilities are more than current asset so working capital is negative which
means they are facing problem in daily management but since it is a bank they can run smoothly even if
there is negative working capital.

Source of data

1. Cost Accounting
By Basu and Das

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 2. www.corpbank.com
3. www.corpretail.com
4. www.indiahousing.com
5. www.nseindia.com
6. www.moneycontrol.com
7. www.cygnusindia.com

Acknowledgement – I am thankful to Dr Meenu Verma for giving us this project which has made me aware of
the structure of the financial structure of a company. I am also thankful to our computer lab in charge who
provided me with the login password for Cygnus from where I got the Banks Annual Report. Some of my
classmate has also helped me in this project and I am also grateful to my Parents who provided me with
necessary resource without which the project would not have been completed.

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