PROJECT REPORT

ON

KCC BANK

Submitted To: Submitted By:

MR. MOHD ATIF SAPNA GOUR
DEPTT. OF FINANCE CUHP12MBA81

SCHOOL OF BUSINESS MANAGEMNT AND SCIENCES

CENTRAL UNIVERSITY OF HIMACHAL PRADESH
2013

1
 ACKNOWLEDGEMENT

No task is single man’s effort .Any job in this world cannot be accomplished without the
assistance of others. An assignment puts the knowledge and experience of an individual o
test. There is always a sense of gratitude that one likes to express towards the persons who
helped to change an effort in a success. The opportunity to express my indebtness to people
who have helped me to accomplish this task.

I would like to express my gratitude to the mentor MR.MOHD ATIF. My special thanks to
him for his kind co-operation and constant encouragement.

I would also like to extend my sincere thanks to Mr. Rakesh Sood (branch manager).
This project could not completed without the best and valuable guidance of him. He is not
only my project guide but also encouraged and motivated me.

Last but not the least, it would be unfair if I don’t express my indebtness to my parents and
all my friends for their active cooperation which was of great help during the course of my
training project.

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 CERTIFICATE
TO WHOM IT MAY CONCERN
This is to certify that the Project Report entitled “FINANCIAL ANALYSIS OF KCC Bank”
has been completed by MISS. SAPNA GOUR under my supervision. To the best of my
knowledge, this is his own work and he has not submitted the same elsewhere for the award
of any other degree or diploma.

I approve it for submission in the partial fulfillment of the requirement for the degree of
Master of Business Administration.

MR. RAKESH SOOD

BRANCH MANGER
KCC BANK

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 Declaration

I Sapna Gour here by declare that this project based on “FINANCIAL STATEMENT
ANALYSIS OF KCC BANK “, has been prepared by me under the valuable guidance and
supervision of
MR. MOHD ATIF ASSOCIATE PROFESSOR DEPTT. OF FINANCE in partial
fulfillment of the requirements for the award of the Master Degree in Business
Administration (MBA)

Signature:

Submitted By;
Mr. Mohd Atif Sapna Gour
Associate professor CUHP12MBA81
Deptt of finance

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 PREFACE

In any organization, the two important financial statements are the Balance Sheet and Profit & Loss
Account of the business. Balance Sheet is a statement of financial position of an enterprise at a
particular point of time. Profit & Loss account shows the net profit or net loss of a company for a
specified period of time. When these statements of the last few year of any organization are studied
and analyzed, significant conclusions may be arrived regarding the changes in the financial position,
the important policies followed and trends in profit and loss etc. Analysis and interpretation of
financial statement has now become an important technique of credit appraisal. The investors,
financial experts, management executives and the bankers all analyze these statements. Though the
basic technique of appraisal remains the same in all the cases but the approach and the emphasis in
the analysis vary. A banker interprets the financial statement so as to evaluate the financial
soundness and stability, the liquidity position and the profitability or the earning capacity of
borrowing concern. Analysis of financial statements is necessary because it helps in depicting the
financial position on the basis of past and current records. Analysis of financial statements helps in
making the future decisions and strategies. Therefore it is very necessary for every organization
whether it is a financial or manufacturing, to make financial statement and to analyze it.

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 TABLE OF CONTENTS
Cha PARTICULARS Page
pter no.
no.
Acknowledgement 2
Preface 5
1. Introduction Of Banking 7-21
a. Introduction of banking………………….
b. History of banking in India………………
c. Banks in India……………………………
d. Fact files of banks in India………………
e. Indian banking industry………………….

2. Company’s Profile 22-24

a. History KCC Bank……….…………
b. Organisation structure………………
3. Research Methodology 25-32
a. Objective of study……………………
b. Importance of study………………….
c. Meaning of research…………………
d. Research problem……………………
e. Research design……………………...
f. Data collection method………………
g. Analysis and interpretation of data…..
h. Limitation of study…………………..
4. Financial Analysis 33-52
a. Introduction of the topic……………….
b. Method/Tools of financial analysis…….
c. Balance sheet of KCC Bank…..
d. Profit and Loss Account of KCC
Bank……………………………..
e. Financial statement analysis……………
1) Comparative financial
statement………………………

5. Bar Charts 53-55

a. Deposits
b. Loans
c. + Profit

5. Conclusion 57

6. Bibliography 60

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 INTRODUCTION OF BANKING

Banking System in India

Without a sound and effective banking system in India it cannot have a healthy economy.The
banking system of India should not only be hassle free but it should be able to meet new
challenges posed by the technology and any other external and internal factors.
For the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only metropolitans
or cosmopolitans in India. In fact, Indian banking system has reached even to the remote
corners of the country. This is one of the main reasons of India's growth process.

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HISTORY OF BANKING IN INDIA

Banking in India has its origin as early or Vedic period. It is believed that the transitions
from many lending to banking must have occurred even before Manu, the great Hindu
furriest, who has devoted a section of his work to deposit and advances and laid down rules
relating to the rate of interest. During the mogul period, the indigenous banker played a very
important role in lending money and financing foreign trade and commerce.

During the days of the East India Company it was the turn of agency house to carry on the
banking business. The General Bank of India was the first joint stock bank to be established
in the year 1786. The other which followed was the Bank of Hindustan and Bengal Bank.
The Bank of Hindustan is reported to have continued till 1906. While other two failed in the
meantime. In the first half of the 19th century the East India Company established there
banks, The bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Bombay
in1843. These three banks also known as the Presidency banks were the independent units
and functioned well. These three banks were amalgamated in 1920 and new bank, the
Imperial Bank of India was established on 27th January, 1921.

With the passing of the State Bank of India Act in 1955 the undertaking of the Imperial Bank
of India was taken over by the newly constituted SBI. The Reserve Bank of India (RBI)
which is the Central bank was established in April, 1935 by passing Reserve bank of India
act 1935. The Central office of RBI is in Mumbai and it controls all the other banks in the
country.

8
The first bank in India, though conservative, was established in 1786. From 1786 till
today,the journey of Indian Banking System can be segregated into three distinct phases.
They areas mentioned below:

 Early phase from 1786 to 1969 of Indian Banks

 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

 New phase of Indian Banking System with the advent of Indian Financial & Banking
Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and Phase
III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and
Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay
(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established
which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913,
Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank
of Mysore were set up. Reserve Bank of India came in 1935.

9
During the first phase the growth was very slow and banks also experienced periodic failures
between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline
the functioning and activities of commercial banks, the Government of India came up with
The Banking Companies Act, 1949 which was later changed to Banking Regulation Act
1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested
with extensive powers for the supervision of banking in India as the Central Banking
Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence.
In1955, it nationalized Imperial Bank of India with extensive banking facilities on a large
scale especially in rural and semi-urban areas. It formed State Bank of India to act as the
principal agent of RBI and to handle banking transactions of the Union and State
Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th
July,1969, major process of nationalization was carried out. It was the effort of the then
Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country was
nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with
seven more banks. This step brought 80% of the banking segment in India under
Government ownership.

The following are the steps taken by the Government of India to Regulate
BankingInstitutions in the Country:

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  1949: Enactment of Banking Regulation Act.
 1955: Nationalization of State Bank of India.
 1959: Nationalization of SBI subsidiaries.
 1961: Insurance cover extended to deposits.
 1969: Nationalization of 14 major banks.
 1971: Creation of credit guarantee corporation.
 1975: Creation of regional rural banks.
 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set
up by his name which worked for the liberalization of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being put to
give a satisfactory service to customers. Phone banking and net banking is introduced. The
entire system became more convenient and swift. Time is given more importance than
money.

The financial system of India has shown a great deal of resilience. It is sheltered from any
crisis triggered by any external macroeconomics shock as other East Asian Countries suffere

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 BANKS IN INDIA

In India the banks are being segregated in different groups. Each group has their own
benefits and limitations in operating in India. Each has their own dedicated target market.
Few of them only work in rural sector while others in both rural as well as urban. Many even
are only catering in cities. Some are of Indian origin and some are foreign players.

All these details and many more is discussed over here. The banks and its relation with the
customers, their mode of operation, the names of banks under different groups and other
such useful information’s are talked about.

One more section has been taken note of is the upcoming foreign banks in India. The RBI
has shown certain interest to involve more of foreign banks than the existing one recently.
This step has paved a way for few more foreign banks to start business in India.

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 BANKING STRUCTURE IN INDIA

SCHEDULED BANKS IN INDIA

(1) Scheduled Commercial Banks

Public Sector Banks Private Sector Foreign Banks In Regional Rural

Banks India Banks

(26) (25) (29) (95)

 Nationalized  Old Private
Bank Banks
 Other Public  New Private
Sector Banks Banks
(IDBI)
 SBI And Its
Associates

(2) Scheduled Cooperative Banks

Scheduled Urban Cooperative Banks Scheduled State Cooperative Banks

PUBLIC SECTOR BANK

Public sector banks are those banks which are owned by the Government. The Govt. runs
these Banks. In India 14 banks were nationalized in 1969 & in 1980 another 6 banks were
also nationalized. Therefore in 1980 the number of nationalized bank 20. At present there are
total 26 Public Sector Banks in India (As on 26-09-2009). Of these 19 are nationalised
banks, 6(STATE BANK OF INDORE ALSO MERGED RECENTLY) belong to SBI &
associates group and 1 bank (IDBI Bank) is classified as other public sector bank. Welfare is
their primary objective.

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Nationalised banks Other SBI & its Associates
Public
 Allahabad Bank 
Sector State Bank of India
 Andhra Bank
 Bank Of Baroda Banks
 State Bank of Hyderabad
 Bank Of India
 Bank Of Maharastra IDBI
 State Bank of Mysore
 Canara Bank (Industrial
 Development
Central Bank Of India
Bank Of  State Bank of Patiala
 Corporation Bank
India)Ltd.
 Dena Bank  State Bank of Travancore
 Indian Bank
 Indian Overseas Bank  State Bank of Bikaner And Jaipur
 Oriental Bank Of
Commerce
 Punjab & Sind Bank
(State Bank of Saurastra merged with SBI in the
 Punjab National Bank year 2008 and State Bank of Indore In 2010)
 Syndicate Bank
 UCO Bank
 Union Bank Of India
 United Bank Of India
 Vijaya Bank

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PRIVATE SECTOR BANK
These banks are owned and run by the private sector. Various banks in the country such as
ICICI Bank, HDFC Bank etc. An individual has control over there banks in preparation to
the share of the banks held by him.

Private banking in India was practiced since the beginning of banking system in India. The
first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It
is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest
development bank in the world as Private Banks in India and has promoted world class
institutions in India.

The first Private Bank in India to receive an in principle approval from the Reserve Bank of
India was Housing Development Finance Corporation Limited, to set up a bank in the private
sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was
incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and
commenced operations as Scheduled Commercial Bank in January 1995. ING Vysya, yet another
Private Bank of India was incorporated in the year 1930

Private sector banks have been subdivided into following 2 categories:-

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Old Private Sector Banks New Private Sector Banks

 Bank of Rajasthan Ltd.  Bank of Punjab Ltd. (since merged

 Catholic Syrian Bank Ltd. with Centurian Bank)
 City Union Bank Ltd.  Centurian Bank of Punjab (since
 Dhanalakshmi Bank Ltd. merged with HDFC Bank)
 Federal Bank Ltd.  Development Credit Bank Ltd.
 ING Vysya Bank Ltd.  HDFC Bank Ltd.
 Jammu and Kashmir Bank Ltd.  ICICI Bank Ltd.
 Karnataka Bank Ltd.  IndusInd Bank Ltd.
 Karur Vysya Bank Ltd.  Kotak Mahindra Bank Ltd.
 Lakshmi Vilas Bank Ltd.  Axis Bank (earlier UTI Bank)
 Nainital Bank Ltd.  Yes Bank Ltd.
 Ratnakar Bank Ltd.
 SBI Commercial and International
Bank Ltd.
 South Indian Bank Ltd.
 Tamilnad Mercantile Bank Ltd.
 United Western Bank Ltd.

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Foreign Banks In India

 ABN AMRO Bank N.V.  HSBC (Hongkong &

 Abu Dhabi Commercial Shanghai Banking
Bank Ltd Corporation)
 American Express Bank  JPMorgan Chase Bank
 Antwerp Diamond Bank  Krung Thai Bank
 Arab Bangladesh Bank  Mashreq Bank
 Bank International  Mizuho Corporate Bank
Indonesia  Oman International Bank
 Bank of America  Shinhan Bank
 Bank of Bahrain & Kuwait  Société Générale
 Bank of Ceylon  Sonali Bank
 Bank of Nova Scotia  Standard Chartered Bank
 Bank of Tokyo Mitsubishi  State Bank of Mauritius
UFJ
 Barclays Bank
 BNP Paribas
 Calyon Bank
 ChinaTrust Commercial
Bank
 Citibank
 DBS Bank
 Deutsche Bank

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 Cooperative banks in India
The Cooperative bank is an important constituent of the Indian Financial System, judging by the role
assigned to co operative, the expectations the co operative is supposed to fulfil, their number, and the
number of offices the cooperative bank operate. Though the co operative movement originated in the
West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in
the world. The cooperative banks in India plays an important role even today in rural financing. The
businessess of cooperative bank in the urban areas also has increased phenomenally in recent years
due to the sharp increase in the number of primary co-operative banks.
Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative
bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act, 1965.

Rural banks in India

Rural banking in India started since the establishment of banking sector in India. Rural Banks in
those days mainly focussed upon the agro sector. Regional rural banks in India penetrated every
corner of the country and extended a helping hand in the growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBs. The rural banks of SBI is spread in 13
states extending from Kashmir to Karnataka and Himachal Pradesh to North East. The total number
of SBIs Regional Rural Banks in India branches is 2349 (16%). Till date in rural banking in India,
there are 14,475 rural banks in the country of which 2126 (91%) are located in remote rural areas.
Apart from SBI, there are other few banks which functions for the development of the rural areas in
India. Few of them are as follows.

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 Haryana State Cooperative Apex Bank Limited
The Haryana State Cooperative Apex Bank Ltd. commonly called as HARCOBANK plays a vital
role in rural banking in the economy of Haryana State and has been providing aids and financing
farmers, rural artisans, agricultural labourers, entrepreneurs, etc. in the state and giving service to its
depositors.

NABARD
National Bank for Agriculture and Rural Development (NABARD) is a development bank in the
sector of Regional Rural Banks in India. It provides and regulates credit and gives service for the
promotion and development of rural sectors mainly agriculture, small scale industries, cottage and
village industries, handicrafts. It also finance rural crafts and other allied rural economic activities to
promote integrated rural development. It helps in securing rural prosperity and its connected matters.

Sindhanur Urban Souharda Co-operative Bank

Sindhanur Urban Souharda Co-operative Bank, popularly known as SUCO BANK is the first of its
kind in rural banks of India. The impressive story of its inception is interesting and inspiring for all
the youth of this country.

United Bank of India

United Bank of India (UBI) also plays an important role in regional rural banks. It has expanded its
branch network in a big way to actively participate in the developmental of the rural and semi-urban
areas in conformity with the objectives of nationalisation.

Syndicate Bank
Syndicate Bank was firmly rooted in rural India as rural banking and have a clear vision of future
India by understanding the grassroot realities. Its progress has been abreast of the phase of
progressive banking in India especially in rural banks.

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  Fact Files of Banks in India
The first Bank in India to be given an ISO certification. Canara Bank

The first Bank in Northern India to get ISO 9002 certification Punjab and Sind
for their selected branches. Bank

The first Indian Bank to have been started solely with Indian capital. Punjab National
Bank

The first among the Private Sector Banks in Kerala to become South Indian
Scheduled Bank in 1946 under the RBI act. Bank

India’s oldest,largest and the most successful commercial bank offering State Bank of
the widest possible rang of domestic,international and NRI products and India
services,through its vast network in India and overseas.

India’s second largest Private Sector Bank and is now the largest The Federal Bank
scheduled commercial bank in India. Limited

Bank which started as Private Shareholders Banks,mostly European Imperial Bank of

shareholders. India

The first Indian Bank to open a branch outside India in London in 1946 Bank of India,
and the first to open a branch in continental Europe at Paris in 1974 founded in 1906 in
Mumbai.

The oldest Public Sector Bank in India having branches all over India Allahabad Bank
and serving the customers for the last 132 years.

The first Indian Commercial Bank which was wholly owned and Central Bank of
managed by Indians. India

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INDIAN BANKING INDUSTRY

The Indian banking market is growing at an astonishing rate, with Assets expected to reach
US$1 trillion by 2010. An expanding economy, middleclass, and technological innovations
are all contributing to this growth.
The country’s middle class accounts for over 320 million People. In correlation with the
growth of the economy, rising income levels, increased standard of living, and affordability
of banking products are promising factors for continued expansion.

The Indian banking Industry is in the middle of an IT revolution, Focusing on the expansion
of retail and rural banking. Players are becoming increasingly customer -centric in their
approach, which has resulted in innovative methods of offering new banking products and
services. Banks are now realizing the importance of being a big playerand are beginning to
focus their attention on mergers and acquisitions to take advantage of economies of scale
and/or comply with Basel II regulation.“Indian banking industry assets are expected to reach
US$1 trillion by 2010 and are poised to receive a greater infusion of foreign capital,” says
Prathima Rajan, analyst in Celent's banking group and author of the report. “The banking
industry should focus on having a small number of large players that can compete globally
rather than having a large number of fragmented players.

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 COMPANY PROFILE

HISTORY OF THE KANGRA CENTRAL CO-OPRATIVE

BANK:-

1. Came into existence on 17th March 1920.

2. Indora Banking Union was merged and 2nd Branch of the Bank opened at Nurpur in
Jan’1956
3. Palampur Banking Union was merged and 3rd Branch of the Bank opened at
Palampur in Jan’1957
4. Nanaon Banking Union was merged and 4th Branch of the Bank opened at Hamirpur
in Oct’1958
5. The Bank suffered losses because of the partition in 1947 to the tune of Rs.10.64
Lacs
6. In Mar 1962, the bank suffering from the setback of partition was granted Rs.4.09
Lacs by the Govt.
7. Govt also provided Interest Free Relief Loan of Rs.3.98 Lacs and Govt of India Loan
of Rs.4.97 Lacs @ 3.87% in 1962 In 1971-72
8. The Bank entered into the deposit mobilisation scheme of Pong Dam Area
aggressively and secured maximum share of Deposit Bank Deposits increased from
Rs. 256 Lacs in 1971-72 to Rs. 1054 Lacs in 1973-74.

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ORGANIZATION STRUCTURE

MANAGING DIRECTOR

GENERAL MANAGER

D. G.M D. G. M D.G.M D.G. M

A.G.M(ZONE WISE)

MANAGER(GRADE I)

MANAGER(GRADE II)

ACCOUNTANT(GRADE III)

(SENIOR CLERK)

JUNIOR CLERK

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 The kangra central co-op bank limited
KCCB, Jwalamukhi
The kangra central co-op bank limited kccb located in the state - Himachal Pradesh, area -
kangra. The branch is located at tehsil dehra distt. Kangra H.P. 176031, phone number and
contact info - sh. bhuri singh, IFSC Code - click here for ifsc code of the kangra central co-
op bank limited kccb - jwalamukhi branch (This is an 11 digit code with the first 4 alpha
characters representing the bank, and the last 6 characters representing the branch.)

Bank : The kangra central co-op bank limited kccb

State : Himachal Pradesh

District : Kangra

Branch : Jwalamukhi

IFSC Code :

MICR Code : 176850161

Branch Code : 000056 (last 6 characters of the ifsc code)

City : Jwalamukhi

Address : Tehsil dehra Distt. Kangra H.P. 176031

Contact : Sh. Bhuri Singh

24
 Research methodology
The procedure adopted for conducting the research requires a lot of attention as it has direct
bearing on accuracy, reliability and adequacy of results obtained. It is due to this reason that
research methodology, which we used at the time of conducting the research, needs to be
elaborated upon. It may be understood as a science of studying how research is done
scientifically. So, the research methodology not only talks about the research methods but also
considers the logic behind the method used in the context of the research study. Research
Methodology is a way to systematically study and solve the research problems. If a researcher
wants to claim his study as a good study, he must clearly state the methodology adapted in
conducting the research the research so that it way be judged by the reader whether the
methodology of work done is sound or not.

The Research Methodology here includes:-

 Objective of study

 Meaning of Research.

 Research Problem.

 Research Design.

 Data Collection method.

 Analysis and interpretation of Data

 Limitation of study

25
OBJECTIVE OF THE STUDY
Objectives are the ends that states specifically how goal be achieved. Every study must have
an objective for which all the efforts have been done. Without objective no research can be
conducted and no result can be obtained. On the basis of objective all the research process is
followed. Objectives are the main aspect of every study. The objective of the study
gives direction to go through the research problem. It guides the researcher and keeps him on
track. I have two objectives regarding my research project. These are shown below :-

1. Primary objective :-.

1) To analyse the financial statements of the KCC bank by using varios
techniques .

2. Secondary objective :-
1) To find out the shortcomings in KCC Bank.
2) To interpret the financial data in simplest form

IMPORTANCE OF THE STUDY

 By “FINANCIAL PERFORMANCE ANALYSIS OF KCC Bank” we would be able
to get a fair picture of the financial position of KCC Bank.

 By showing the financial performance to various lenders and creditors it is possible

to get credit in easy terms if good financial condition is maintained in the company
with assets outweighing the liabilities.

 Protecting the property of the business.

 Compliances with legal requirement.

26
  Meaning of Research:
Research is defined as “a scientific and systematic search for pertinent information on a
specific topic”. Research is an art of scientific investigation. Research is a systematized
effort to gain now knowledge. It is a careful investigation or inquiry especially through
search for new facts in any branch of knowledge. Research is an academic activity and this
term should be used in a technical sense. Research comprises defining and redefining
problems, formulating hypothesis or suggested solutions. Making deductions and reaching
conclusions to determine whether they if the formulating hypothesis. Research is thus, an
original contribution to the existing stock of knowledge making for its advancement. The
search for knowledge through objective and systematic method of finding solutions to a
problem is research.

 Research Problem
The first step while conducting research is careful definition of Research Problem. “To ERR
IS THE HUMAN” is a proverb which indicates that no one is perfect in this world. Every
researcher has to face many problemswhich conducting any research that’s why problem
statement is defined to know which type of problems a researcher has to face while
conducting any
study. It is said that,
“Problem well defined is problem half solved.”

Basically, a problem statement refers to some difficulty, which researcher

experiences in the context of either a theoretical or practical situation and
wants to obtain the solution for the same.

The problem statement here is:-

27
“TO MAKE A FINANCIAL ANALYSIS OF FINANCIAL
STATEMENTS OF KCC BANK”

 Research Design

A research designs is the arrangement of conditions for collection and analysis data in a
manner that aims to combine relevance to the research purpose with economy in procedure.
Research Design is the conceptual structure with in which research in conducted. It
constitutes the blueprint for the collection measurement and analysis of data. Research
Design includes and outline of what the researcher will do form writing the hypothesis and it
operational implication to the final analysis of data. A research design is a framework for the
study and is used as guide in collection and analyzing the data. It is a strategy specifying
which approach will be used for gathering and analyzing the data. It also include the time
and cost budget since most studies are done under these two cost budget since most studies
are done under theses tow constraints. The design is such studies must be rigid and not
flexible and most focus attention on the following:-

 What is the study about?

 Why is the study being made?
 Where will the study be carried out?
 What type of data is required?
 Where can be required data be found?
 What period of time will the study include?
 What will be sample design?
 What techniques of data collection will be used?
 How will the data be analyzed?
 In what style will the report be prepared?

28
TYPES OF RESEARCH DESIGN :

 EXPERIMENTAL RESEARCH DESIGN

 EXPLORATORY RESEARCH DESIGN
 DESCRIPTIVE& DIAGNOSTIC RESEARCH

Exploratory Research Design: This research design is preferred when researcher has a
vague idea about the problem the researcher has to explore the subject.

Experimental Research Design – The research design is used to provide a strong basis for
the existence of casual relationship between two or more variables.

Descriptive Research Design – It seeks to determine the answers to who, what, where,
when and how questions. It is based on some previous understanding of the matter.

Diagnostic Research Design It determines the frequency with which something occurs or its
association with something else.

RESEARCH DESIGN USED IN THE STUDY:

Descriptive research design is used in this study because it will ensure the minimization of
bias and maximization of reliability of data collected. Descriptive study is based on some
previous understanding of the topic. Research has got a very specific objective and clear cut
data requirements The researcher had to use fact and information already available through
financial statements of earlier years and analyse these to make critical evaluation of the
available material. Hence by making the type of the research conducted to be both
Descriptive and Analytical in nature. From the study, the type of data to be collected and
the procedure to be used for this purpose were decided.

29
  Data Collection Method

The process of data collection begins after a research problem has been
defined and research design ahs been chalked out. There are two types of
data –

PRIMARY DATA -
It is first hand data, which is collected by researcher itself. Primary data is collected by
various approaches so as to get a precise, accurate, realistic and relevant data. The main tool
in gathering primary data was investigation and observation. It was achieved by a direct
approach and observation from the officials of the company.

SECONDARY DATA - it is the data which is already collected by someone else.

Researcher has to analyze the data and interprets the results. It has always been important for
the completion of any report. It provides reliable, suitable, adequate and specific knowledge.

30
 TYPE OF DATA USED IN THE STUDY

The required data for the study are basically secondary in nature and the data are
collected from

 The audited reports of the company.

 INTERNET – which includes required financial data collected form KCC Bank’s
official website i.e WWW.KCCB.IN and some other websites on the internet for the
purpose of getting all the required financial data of the bank and to get detailed
knowledge about KCC Bank for the convenience of study.
 Brouchers of KCC Bank.
 The valuable cooperation extended by staff members and the branch manager of
KCC bank, Rajol contributed a lot to fulfill the requirements in the collection of data
in order to complete the project.

31
  Methods of data analysis

The data collected were edited, classified and tabulated for analysis. The analytical tools
used in this study are:

ANALYTICAL TOOLS APPLIED:

The study employs the following analytical tools:

1. Comparative statement.
2. Trend Percentage.
3. Ratio Analysis.
.

 Limitations of study
 Difficulty in data collection.
 Limited knowledge about the bank in the initial stages.
 Branch manager was reluctant for giving financial data of the bank.
 The analysis and interpretation are based on secondary data contained in the published
annual reports of KCC Bank for the study period.
 Due to the limited time available at the disposable , the study has been confined for a
period of 6 years (2006-2011).
 Ratio itself will not completely show the company’s good or bad financial position.
 Inter firm comparison was not possible due to the non availability of competitors data.
 The study of financial performance can be only a means to know about the financial
condition of the company and cannot show a through picture of the activities of the
company
.

32
 FINANCIAL ANALYSIS

INTRODUCTION OF THE TOPIC

Meaning Of Financial Statements

Financial statements refer to such statements which contains financial information about an
enterprise. They report profitability and the financial position of the business at the end of
accounting period. The team financial statement includes at least two statements which the
accountant prepares at the end of an accounting period. The two statements are: -

 The Balance Sheet

 Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors the
financial position on a particular date in terms of the structure of assets, liabilities and
owners equity, and so on and the Profit And Loss account shows the results of operations
during a certain period of time in terms of the revenues obtained and the cost incurred during
the year. Thus the financial statement provides a summarized view of financial positions and
operations of a firm.

33
Meaning of Financial Analysis

The term financial analysis is also known as ‘analysis and interpretation of financial
statements’ refers to the process of determining financial strength and weakness of the firm
by establishing strategic relationship between the items of the Balance Sheet, Profit and Loss
account and other operative data.
The first task of financial analysis is to select the information relevant to the decision under
consideration to the total information contained in the financial statement. The second step is
to arrange the information in a way to highlight significant relationship. The final step is
interpretation and drawing of inference and conclusions. Financial statement is the process of
selection, relation and evaluation.

Features of Financial Analysis

o To present a complex data contained in the financial statement in simple and

understandable form.

o To classify the items contained in the financial statement in convenient and rational
groups.

o To make comparison between various groups to draw various conclusions.

34
Purpose of Analysis of financial statements

 To know the earning capacity or profitability.

 To know the solvency.

 To know the financial strengths.

 To know the capability of payment of interest & dividends.

 To make comparative study with other firms.

 To know the trend of business.

 To know the efficiency of mgt.

 To provide useful information to mgt.

Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of

financial statements:-

 The analyst should acquaint himself with principles and postulated of accounting. He
should know the plans and policies of the management so that he may be able to find
out whether these plans are properly executed or not.

 The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is find out. Earning capacity of the enterprise then analysis of

35
 income statement will be undertaken. On the other hand, if financial position is to be
studied then balance sheet analysis will be necessary.

 The financial data be given in statement should be recognized and rearranged. It will
involve the grouping similar data under same heads. Breaking down of individual
components of statement according to nature. The data is reduced to a standard form.

 A relationship is established among financial statements with the help of tools &
techniques of analysis such as ratios, trends, common size, fund flow etc.

 The information is interpreted in a simple and understandable way. The significance

and utility of financial data is explained for help in decision making.

 The conclusions drawn from interpretation are presented to the management in the
form of reports.

 Types Of Financial Analysis

There are different ways of analysis the financial statements:

1. On The Basis Of Process Of Analysis

a) Horizontal Analysis: This is used when the financial statement of a number of years
are to be analysed. Such analysis indicates the trends and the increase or decrease in
various items not only in absolute figures but also in percentage form. This analysis
indicates the strengths and weaknesses of the firm. This analysis is also called as
dynamic analysis because it also shows the trend of the business.

36
b) Vertical Analysis : This is used when financial statements of a particular year or on
a particular date are analyzed. For this type of analysis we generally use common size
statements and the ratio analysis. It involves a study of quantitative relationship
among various items of balance sheet and profit and loss account. This type of
analysis is static analysis because this is based on the financial results of one year.
Vertical analysis is useful when we have to compare the performance of different
departments of the same company.

Among these two types of analysis, horizontal analysis is more useful because it brings
out more clearly the trends of working of a firm. This gives us more concrete bases for
future planning.

2. On The Basis Of Information Available

a) Internal Analysis: This analysis is based on the information available to the business
firm only .Hence internal analysis is made by the management. Internal analysis is
more reliable and helpful for financial decisions.

b) External Analysis : This analysis is made on the basis of published

statements,reports and informations. This analysis is made by external parties such as
creditors,investors,banks,financial analysis etc. external analysis is less reliable in
comparison to internal analysis because of limited and often incomplete information.

37
 3. On The Basis Of Number Of Firms

a) Inter-Firm Analysis : When financial analysis of two or more companies or firms

are analyzed and compared over a number of accounting period, it is called inter-firm
analysis.

b) Intra -Firm Analysis : intra-firm analysis is concerned with the analysis of financial
performance of different units or departments or segments of the same enterprise or
company. Similarly when financial statements of two or more years of the same firm are
analyzed and compared it is also called as intra-firm analysis.

4. On The Basis Of Objectives

a) Accounting Analysis: Accounting analysis is analysis of past financial performance and

involves examining how generally accepted accounting principles and conventions have
been applied in arriving at the values of assets, liabilities, revenues and expenses.

b) Prospective Analysis : Prospective analysis involves developing forecasted financial

statements keeping in view the changes that are likely to shape and affect the business given
the assumptions about these changes and the limitation of the forecasting technique used.
This is quite complicated analysis.

38
Methods/Tools Of Financial Analysis
A number of methods can be used for the purpose of analysis of financial statements. These
are also termed as techniques or tools of financial analysis. Out of these, and enterprise can
choose those techniques which are suitable to its requirements. The principal techniques of
financial analysis are:-

a. Comparative financial statements

b. Common-size statements
c. Trend analysis
d. Ratio analysis
e. Funds flow analysis
f. Cash flow analysis
g. Break even point analysis

39
a. Comparative Financial Statements:

When financial statements figures for two or mote years are placed side-side to facilitate
comparison, these are called ‘comparative Financial Statements’. Such statements not only
show the absolute figures of various years but also provide for columns to indicate to
increase ort decrease in these figures from one year to another. In addition, these statements
may also show the change from one year to another on percentage form. Such cooperative
statements are of great value in forming the opinion regarding the progress of the enterprise.

Objectives purpose or significance of comparative financial statements

1.To simplify data

2.To make inter period/inter-firm comparison
3.To indicate the trends
4.To enable forecasting
5.To indicate the strengths and weaknesses of the firm
6.To compare the performance
7.To analyse expenses
8.To analyse profits

40
Tools for comparison of financial statements

Comparative financial statement is a tool of financial analysis that depicts change in each
item of the financial statement in both absolute amount and percentage term, taking the item
in preceding accounting period as base.

Comparison and analysis of financial statements may be carried out using the following
tools:

1.Comparative Balance Sheet : The comparative balance sheet shows increase and
decrease in absolute terms as well as percentages ,in various assets ,liabilities and capital. A
comparative analysis of balance sheets of two periods provides information regarding
progress of the business firm.
The main purpose of comparative balance sheet is to measure the short- term and long-term
solvency position of the business.

2. Comparative Income Statement : Comparative income statement is prepared by taking

figures of two or more than two accounting periods,to enable the analyst to have definite
knowledge about the progress of the business.Compartative income statements facilitate the
horizontal analysis since each accounting variable is analysed horizontally.

b. Common- Size Statements:

Common size statements are such statements in which the items of financial statements are
covered into percentage of common base. In common-size income statement, by assuming
net sales as 100(i.e %)and other individual items are converted as percentage of this.
Similarly, in common –size balance sheet ,total assets are assumed to be 100 (i.e %) and
individual assets are expressed as percentage.

41
Objectives of common size statements

1. Presenting the change in various items in relation to total assets or total liabilities or
net sales.
2. Establishing a relationship.
3. Providing a common base for comparison.

Types of common size statements

1. Common-Size Balance Sheet : A common –size balance sheet is a statement in

which total of assets or liabilities is assumed to be equal to 100 and all the figures are
expressed as percentage of the total. That is why it is known as percentage balance
sheet.
Common-size balance sheet facilitate the vertical analysis since each item of the
Balance Sheet is analyzed vertically.

2. Common-Size Income Statement: Common-size income statement is a statement in

which the figures of net sales is assumed to be equal to 100 and all other figures of
“profit and loss A/c” are expressed as percentage of net sales.this statement facilitate
the vertical analysiss since each accounting variable is analyzed vertically. One can
draw conclusion, regarding the behaviour of expenses over period of time by
examining these percentages.

42
c. Trend Analysis:

Trend percentage are very useful is making comparative study of the financial statements for
a number of years. These indicate the direction of movement over a long tine and help an
analyst of financial statements to form an opinion as to whether favorable or unfavorable
tendencies have developed. This helps in future forecasts of various items. For calculating
trend percentages any year may be taken as the ‘base year’. Each item of bease year is
assumed to be equal to 100 and on that basis the percentage of item of each year calculated.

d. Ratio Analysis:

Meaning :

Absolute figures expressed in financial statements by themselves are meaningfulness. These

figures often do not convey much meaning unless expressed in relation to other figures.
Thus, it can be say that the relationship between two figures, expressed in arithmetical
terms is called a ratio.

“According to R.N. Anthony.”

“A ratio is simply one number expressed in terms of

another. It is found by dividing one number into the other.”

43
TYPES OF RATIOS

1. Proportion or Pure Ratio or Simple ratio.

2. Rate or so many Times.
3. Percentage
4. Fraction.

OBJECTS AND ADVANTAGES OR USES OF RATIO

ANALYSIS

1. Helpful in analysis of financial statements.

2. Simplification of accounting data.
3. Helpful in comparative study.
4. Helpful in locating the weak spots of the business.
5. Helpful in forecasting
6. Estimate about the trend of the business
7. Fixation of ideal standards
8. Effective control
9. Study of financial soundness.

44
LIMITATION OF RATIO ANALYSIS
1. False accounting data gives false ratios
2. Comparisons not possible of different firms adopt different
3. accounting policies.
4. Ratio analysis becomes less effective due to price level
5. change
6. Ratios may be misleading in the absence of absolute data.
7. Limited use of a single Ratio.
8. Window-Dressing
9. Lack of proper standards.
10. Ratio alone are not adequate for proper conclusions
11. Effect of personal ability and bias of the analyst.

CLASSIFICATION OF RATIOS

In view of the financial management or according to the tests satisfied,

various ratios have been classifieds as below:

Liquidity Ratios : These are the ratios which measure the short-term solvency or financial
position of a firm. These ratios are calculated to comment upon the short-term paying
capacity of a concern or the firm’s ability to meet its current obligations.
Long –Term Solvency and Leverage Ratios : Long-term solvency ratios convey a firm’s
ability to meet the interest cost and repayment schedules of its long-term obligation e.g.
Debit Equity Ratio and Interest Coverage Ration. Leverage Ratios.

Activity Ratios: Activity ratios are calculated to measure the efficiency with which the
resource of a firm have been employed. These ratios are also called turnover ratios because
they indicate the speed with which assets are being turned over into sales e.g. debtors
turnover ratio.

45
Profitablity Ratios: These ratios measure the results of business operations or overall
performance and effective of the firm e.g. gross profit ratio, operating ratio or capital
employed. Generally, two types of profitability ratios are calculated.
(a) In relation to Sales, and
(b)In relation in Investment

FUNCTIONAL CLASSIFICATION IN VIEW OF

FINANCIAL MANAGEMENT OR CLASSIFICATION
ACCORDING TO TESTS

Liquidity Ratios Long-term Activity Ratios Profitability

Solvency and Ratios
Leverage Ratios

-Current Ratio Financial Operating Inventory Turnover In Relation to Sales.

-Liquid Ratio Composite Ratio. Gross Profit Ratio.
(Acid) Test or -Debt. Equity Debtors Turnover Operating Ratio.
Quick Ratio. Ratio Ratio Operating Profit
-Absolute liquid or -Debt to Total Fixed Assets Turnover Ratio.
-Cash Ratio. Capital Ratio Ratio Net Profit Ratio.
-Debtors -Interest Total Asset Turnover Expenses Ratio
Turnover Ratio Coverage Ratio Ratio In relation to
-Creditors Turnover -Capital Gearing Ratio Working Capital investments
Ratio Turnover Ratio. Return on
-Inventory Turnover Payables Turnover Investments.
ratio Ratio Return on capital.
Capital Employed Return on Equity
Turnover Ratio Capital.
Return on total
Resources
Earning per share.
Price Earning Ratio.

46
BALANCE SHEET OF KCC BANK LTD.
As on 31st mar. 2007,2008,2009,2010,2011 Rs. in crores) .
2007 2008 2009 2010 2011

LIABILITIES:
Total Share 25582.00 21900.00 20550.00 20922.00 20999.00
Capital
Equity Share 25582.00 21900.00 20550.00 20922.00 20999.00
Capital
Share 0.00 0.00 0.00 0.00 0.00
Application
Money
Preference 0.00 0.00 0.00 0.00 0.00
Share Capital
Reserves and 5113872 5339420 5718469 6075552 6705936
surplus
Revaluation 0.00 0.00 0.00 0.00 0.00
Reserves
Net Worth 5139454.00 5361320.00 5739019.00 6096474.00 6726935.00
Deposits 24692381 28042529 32817774 38086362 43934586
Borrowings 929985 802907 752195 914548 1675397
Total Debt 30761820.00 34206756.00 39308988.00 45097384.00 52336918.00
Other Liabilities 1048814 1455049 1062050 1082527 1270733
And Provisions
Total Liabilities 31810634.00 35661805.00 40371038.00 46179911.00 53607651.00

ASSETS:
Cash And 249986.00 224359.00 257430.00 268531.00 803349.00
Balances With
RBI
Balances With 470374.00 625424.00 911434.00 1110753.00 554222.00
Banks and
Money At Call
and short notice
Advances 10955818.00 11504009.00 13282337.00 14973022.00 18256890.00
Investments 18529539.00 21544151.00 23587962.00 27394140.00 30491329.00
Fixed Assets 81607.00 91517.00 128492.00 116786.00 163258.00
Other Assets 1523310.00 1072345.00 2203383.00 2316679.00 3338603.00
Total Assets 31810634.00 35061805.00 40371038.00 46179911.00 53607651.00

Contingent 70614.00 110424.00 127175.00 0.00 0.00

Liabilities Bills
for Collection

47
PROFIT AND LOSS ACCOUNT OF KCC BANK LTD.
For The Year Ended Mar2007,Mar2008,Mar2009,Mar2010,Mar2011 (Rs. In Crores)
2007 2008 2009 2010 2011

INCOME:

Interest Earned 2271096.00 2706609.00 3155708.00 3452285.00 3817981.00

Other Income 47493.00 39992.00 44976.00 54927.00 43916.00

Total Income 2318589.00 2746601.00 3200684.00 3507212.00 3861897.00

EXPENDITURE:

Interest Expended 1400961.00 1865753.00 2203745.00 2433557.00 2607493.00

Operating Expenses 425188.00 545189.00 546062.00 602192.00 695952.00

Total Expenses 1826149.00 2410942.00 2749807.00 3035749.00 3303445.00

Operating Profit 492440.00 335659.00 450877.00 471463.00 558452.00

Other Provision And 0.00 0.00 0.00 0.00 0.00

Contigencies

Provision For Tax 0.00 0.00 0.00 0.00 0.00

Net Profit 492440.00 335659.00 450877.00 471463.00 558452.00

Extraordinary Items 0.00 0.00 0.00 0.00 (0.58)

Profit B/F 0.00 339377.00 232302.00 113387.00 584850.00

492440.00 675036.00 683179.00 584850.00 1143302.00

Total

48
 FINANCIAL STATEMENT ANALYSIS
Comparative Balance Sheet Of KCC Bank From 2007-2008 To 2010-11
(Rs. in crores)

PARTICULARS 2007-2008 2008-2009 2009-2010 2010-2011

Absolute % of Absolute % of Absolute % of Absolute % of

change change change change change change change chang
e
IABILITIES:

Capital (3612) (14.39) (1350) (6.16) 422 2.05 77 0.36

Reserves and 225548 4.41 379049 7.09 357083 6.24 630384 10.37
surplus
Deposits 3350148 13.56 4775245 17.02 5268588 16.05 5848224 15.35

Borrowings (127078) (13.66) (50712) (6.31) 162353 21.58 760849 83.19

Other Liabilities 406235 38.78 (392999) (27.00) 20477 1.92 188206 17.38
and Provisions

TOTAL 3851171 12.10 4709238 13.20 5808873 14.38 7427740 16.08

LIABILITIES

ASSETS:
Investments 3014612 16.26 2043811 9.48 3806178 16.13 3097189 11.30

Advances 548191 5.00 1778328 15.45 1690685 12.72 3283868 17.98

Fixed assets 9910 12.14 36975 40.40 (117060) (9.11) 46472 39.79

Current assets (321542) (14.33) 1450119 75.44 323716 9.59 1000211 27.06

TOTAL 3251171 10.22 5309233 15.14 5808873 14.38 7427740 16.08

ASSETS:

49
Interpretation
 The capital of bank firstly 14% in 2007-08 ,6.16% in 2008-09
and then increased by 2.05% in 2009-10 and 0.36 % in 2010-
11.This shows that there is fluctuation in the rate of
increase/decrease in the capital.

 There is a huge fluctuation in the rate of increase in reserves and

surplus also. This shows that bank is effectively utilizing its
reserves and surplus.As we see that in financial year 2010-11
reserves and surplus percentage change is 10.37%.

 In 2007-08 deposits increase by 13.56%,in 2008-09 it again

increased by 17.02%. As we see there is huge fluctuation in
the deposits also.

 The borrowings are also showing a fluctuating rate of

increase/decrease in the following years.Firstly the borrowings
have increased at a very low rate.this shows that bank has repaid
a large amount of borrowings in this year and thereby reducing
the dependence on outside debt. But As we see in financial year
2009-10 and 2010-11 again it relies on the outside funds.

 As we see in statements other liabilities and provisions are also

fluctuating. .

 The investments are also increasing but with lower rates

compared to the preceding years. Also there is fluctuation
in the rates.

 Similarly advances rose by 15.45% in 2008-09,an increase of

17% in 2010-11, and decrease by 5.00% in 2007-08.

 Thre has been a consistent decline in the fixed assets over

years.in 2007-08 it decreased by 12.14% and 2009-10 it
decreased by 9.11 % and then increased by 39.79% in 2010-11.

 A huge fluctuation is revealed from current assets.It firstly

decreased by 14.33% and then it increased by 75% in 2008-09,
the rate of increase rose to 9% in 2009-10 and then the it
increased at a much lower rate .this shows that the bank is
effectively ustilising its working capital
1. Comparative Income Statement Of KCC Bank From
2007-2008 To 2010-2011

50
 (Rs. in crores)
PARTICULAR 2007-2008 2008-2009 2009-2010 2010-2011
S
Absolute % of Absolute % of Absolute % of Absolute % of
change change change change change change change chan-
ge
INCOME:

428012 18.46 454083 16.53 306528 9.57 354685 10.11

Operating
income

EXPENDITURE:

Interest 464792 33.17 337992 18.11 229812 10.42 173936 7.14

expended
Operating 120001 28.22 873 0.16 56130 10.27 93760 15.56
expenses
Total expenses 584793 32.02 338865 14.05 285942 10.39 267696 8.81

Operating (156781) (31.83) 115218 34.32 20586 4.56 86989 18.45

profit
Provision and 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
contigencies
Net profit for (156781) (31.83) 115218 34.32 20586 4.56 86989 18.45
the year

Extraordinary 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

items
Profit brought 339377 0.00 (107075) (31.55) 118915 51.18 471463 415.79
forward
182596 37.07 8143 1.20 (98329) (14.39) 558452 95.48
TOTAL
PROFIT/(LOSS):

51
Interpretation:-

 The net profit shows a fluctuating trend that is it firstly decreased /fall by 31.83% in
2007-08 and then 34.32% increase in 2008-09 and then again increase slowly by
4.56% in 2009-10 and finally it increase by 18.45% in 2008-09.this may be due to
decline in operating income and inresed tax liability in the financial year .

 The interest expenses in 2010 -11 shows an increasing trend which is due to the huge
repayment of borrowing.

52
 DEPOSITS

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Deposits 1229.26 1475.34 1834.83 2074.69 2233.05 2287.39 2469.24 2804.72 3281.99 3808.99

53
 LOANS

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Loans 315.10 451.57 635.28 769.80 883.20 941.24 1095.58 1150.40 1328.23 1497.30

54
 PROFIT

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Profit 34.68 45.22 64.65 85.09 61.24 48.14 49.24 33.94 45.08 47.14

55
 Findings

 Dividend on equity shares

Since the dividend per share has shown a promising increase for the period under study.It
shows that the bank is following a sound dividend policy and is capable of distributing
higher dividends.in this way the investors will feel investing in capital of the bank a
much beneficial option and will be reluctant to withdraw capital for a long time.

 Earnings per share

The earnings per share for the period under study also shows a promising increase.it
suggests that bank has better profitability position and in future it can be a better or
attractive channel of investment for shareholders.

 Higher trends of credit deposits – A positive sign

High trends of credit deposit ratio reveals that bank has performed satisfactorily as
regard to granting loans and advances to generate income. It suggests that credit performance
is good and the bank is doing its business good by fulfilling its major objective as regards to
granting loans and accepting deposits.

56
 Conclusion

On the basis of various techniques applied for the financial analysis of ICICI Bank we can
arrive at a conclusion that the financial position and overall performance of the bank is
satisfactory. Though the income of the bank has increased over the period but not in the
same pace as of expenses. But the bank has succeeded in maintaining a reasonable
profitability position.

The bank has succeeded in increasing its share capital in the last 5 years. Individuals are the
major shareholders. The major achievement of the bank has been a tremendous increase in
its deposits, which has always been its main objective. Fixed and current deposits have also
shown an increasing trend.

Equity shareholders are also enjoying an increasing trend in the return on their capital.
Though current assets and liabilities (current liquidity) of the bank is not so satisfactory but
bank has succeeded in maintaining a stable solvency position over the years. As far as the
ratio of external and internal equity is concerned, it is clear that bank has been using more
amount of external equity in the form of loans and borrowings than owner’s equity. Bank’s
investments are also showing an increasing trend. Due to increase in advances, the interest
received by the bank from such advances is proving to be the major source of income for the
bank.

57
 Suggestions

 First of all company should have improve its working capital position.and also
Maintain it properly. Which ultimately depends upon current assets and current
liabilities.So atleast maintain double current assets as compared to the current
liabilities.

 The profitability of the bank for the period under study is not quite satisfactory.
Profits are increasing but not with same pace as of the expenditure due to higher
reliance on debt capital in the form of borrowings and loans for financing capital
structure. So in order to improve profitability, the bank should reduce its dependence
on external equities for meeting capital requirements. Consequently, the interest
expenses will decline and profits will increase which is good for the bank. Similarly
non productive expenses should be curtailed to improve profitability.

 Higher trend of credit deposit ratio reveals that the bank has performed satisfactorily
as regard to granting loans and advances to generate income. It suggests that the
credit performance of bank is good and it is performing its business well by fulfilling
the major objective of granting credit and accepting deposit. So in order to have more
creditability in the market the bank should maintain its credit deposit ratio.

 Though the bank has been successful in increasing it’s deposits but to further
improve upon such situation it can introduce some new and attractive schemes for
public. Such schemes can be in the form of higher rate of interest and shorter
maturity period for FD’s etc.

 Bank should try to finance more and more projects. Financing will help it to earn
higher amount of profits.

58
 The bank is having a greater reliance on debt capital. The increasing reliance on
external equities may prove hazardous in the long run. So in order to remedy this
situation bank should increase its focus on internal equities and other sources of
internal financing.

 Bank can also think for improving it’s day-to -day service to its clients. Such service
can be improved by providing prompt service and showing an attitude of co-
operation to its clients. It will help to give a kind of confidence to the public and
build a better public image.

 To achieve the objective of Rural development it should open more and more
branches in different rural areas of the country. It will facilitate in providing help to
rural poor farmers and other living below the poverty line. Bank can appoint
commission agents for different area who can encourage general public to invest in
the capital of the bank and make more deposits in KCC Bank.

 The bank should simplify the procedure of advances for quick disbursement.

 To achieve organizational success a proper independent working atmosphere should

be developed to achieve desired objective more effectively.

 Last but not least, bank should adopt branch automation experiment to control the
operational cost.

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BIBLIOGRAPHY

Books Reffered:

 Accountancy. R.K. Mittal,A.K.Jain.

 Financial Management- Theory and Practice. Shashi.K.Gupta , R.K. Sharma.

 Essentials of Corporate Finance 2nd edition ,Irwin /McGraw-Hill.Ross, S.A.,R.W.

Westerfield and B.D. Jordan.

 Basic Financial Management ,8th edition ,Prentice -Hall,Inc. Scott, D.F., J.D Martin,
J.W. Petty and A.Keown.

Internet websites:

 Www.kccb.in

 Www.Moneycontrol.Com

 WWW.Money.Rediff.Com

 Www.Wikipedia.Org

 Www.Google.Com

 Www.Managementparadise.Com

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