Project Report

On
A study on Financial statement of SBI
Submitted by
Shaikh Imran masroor husain
Roll no. 33
Under the guidance of
Prof. Ramji Tiwari
Designation: Faculty
Department: Bachelors of management studies

Sinhgad college
Submitted in partial fulfillment of
MUMBAI UNIVERSITY

SINHGAD COLLEGE
BACHELORS OF MANAGEMENT STUDIES,
Plot no. 126 MHADA Colony , Chandivali ,
MUMBAI
2016 - 2017

DECLARATION

I, Mr. SHAIKH IMRAN MASROOR HUSAIN,

Of Sinhgad College Of Commerce &
Management of TYBMS [Semester V] hereby
declare that I have completed my project, titled
A study on Financial statement of SBI in the
Academic Year 2016-2017. The information
submitted herein is true and original to the best of my
knowledge.

_________________
Signature of Student

[Mr. Shaikh Imran masroor husain]

CERTIFICATE
This is to certify that i Mr. Shaikh Imran masroor husain,
Student of Sinhgad COLLEGE OF COMMERCE AND
MANAGEMENT has completed this project. The tittle A Study
On Financial Statement Of SBI as a part of T.Y.B.M.S course
2016-17 has collected the required information to reliable sources .
This project is complete and fit for submission.

___________________
_______________________
Signature Of the Principal

Signature of Project Guide &

Internal Examiner

_______________
(External Examiner)

ACKNOWLEDGEMENT

I sincerely acknowledge with a deep heartfelt gratitude to my Project

In charge PROF. RAMJI TIWARI for her valuable and faithful guidance,
encouragement & suggestions throughout the completion of the Project
work.
I would like to extend my sincere thanks to PROF. Ritika hemdev,
Sinhgad College Of Commerce & Management for his continuous
support and guidance.
Last but not the least gratitude to all those who extended their
guidance directly or indirectly in completion of this Project work.

Shaikh Imran mosroor husain

CHAPTERS
1. INTRODUCTION
A.

INTRODUCTION TO TOPIC-

B.

OBJECTIVES

C.

RESEARCH METHODOLOGY

D.

LIMITATIONS

2.

ORGANISATIONAL /COMPANY PROFILE

3.

DATA ANALYSIS AND INTERPRETATION

4.

OBSERVATION AND FINDINGS-

5.

CONCLUSIONS

6.

RECOMMENDATIONS
BIBLIOGRAPHY

INTRODUCTION TO
STATE BANK OF
INDIA

INTRODUCTION TO STATE BANK

OF INDIA
The origin of the State Bank of India goes back to the first decade of the
nineteenth century with the establishment of the Bank of Calcutta in Calcutta
on 2 June 1806. Three years later the bank received its charter and was redesigned as the Bank of Bengal (2 January 1809). A unique institution, it was
the first joint-stock bank of British India sponsored by the Government of
Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1
July 1843) followed the Bank of Bengal. These three banks remained at the
apex of modern banking in India till their amalgamation as the Imperial
Bank of India on 27 January 1921.
Primarily Anglo-Indian creations, the three presidency banks came into
existence either as a result of the compulsions of imperial finance or by the
felt needs of local European commerce and were not imposed from outside
in an arbitrary manner to modernise India's economy. Their evolution was,
however, shaped by ideas culled from similar developments in Europe and
England, and was influenced by changes occurring in the structure of both
the local trading environment and those in the relations of the Indian
economy to the economy of Europe and the global economic framework.

Bank of Bengal H.O.

Establishment
The establishment of the Bank of Bengal marked the advent of limited
liability, joint-stock banking in India. So was the associated innovation in
banking, viz. the decision to allow the Bank of Bengal to issue notes, which
would be accepted for payment of public revenues within a restricted
geographical area. This right of note issue was very valuable not only for the
Bank of Bengal but also its two siblings, the Banks of Bombay and Madras.
It meant an accretion to the capital of the banks, a capital on which the
8

proprietors did not have to pay any interest. The concept of deposit banking
was also an innovation because the practice of accepting money for
safekeeping (and in some cases, even investment on behalf of the clients) by
the indigenous bankers had not spread as a general habit in most parts of
India. But, for a long time, and especially upto the time that the three
presidency banks had a right of note issue, bank notes and government
balances made up the bulk of the investible resources of the banks.
The three banks were governed by royal charters, which were revised from
time to time. Each charter provided for a share capital, four-fifth of which
were privately subscribed and the rest owned by the provincial government.
The members of the board of directors, which managed the affairs of each
bank, were mostly proprietary directors representing the large European
managing agency houses in India. The rest were government nominees,
invariably civil servants, one of whom was elected as the president of the
board.

Business
The business of the banks was initially confined to discounting of bills of
exchange or other negotiable private securities, keeping cash accounts and
receiving deposits and issuing and circulating cash notes. Loans were
restricted to Rs.one lakh and the period of accommodation confined to three
months only. The security for such loans was public securities, commonly
called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a
perishable nature' and no interest could be charged beyond a rate of twelve
per cent. Loans against goods like opium, indigo, salt woolens, cotton, cotton
piece goods, mule twist and silk goods were also granted but such finance by
way of cash credits gained momentum only from the third decade of the
nineteenth century. All commodities, including tea, sugar and jute, which
began to be financed later, were either pledged or hypothecated to the bank.
Demand promissory notes were signed by the borrower in favour of the
guarantor, which was in turn endorsed to the bank. Lending against shares of
the banks or on the mortgage of houses, land or other real property was,
however,
forbidden.

Indians were the principal borrowers against deposit of Company's paper,

while the business of discounts on private as well as salary bills was almost
the exclusive monopoly of individuals Europeans and their partnership firms.
But the main function of the three banks, as far as the government was
concerned, was to help the latter raise loans from time to time and also
provide a degree of stability to the prices of government securities.

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal,
Bombay and Madras occurred after 1860. With the passing of the Paper
Currency Act of 1861, the right of note issue of the presidency banks was
abolished and the Government of India assumed from 1 March 1862 the sole
power of issuing paper currency within British India. The task of
management and circulation of the new currency notes was conferred on the
presidency banks and the Government undertook to transfer the Treasury
balances to the banks at places where the banks would open branches. None
of the three banks had till then any branches (except the sole attempt and that
too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although
the charters had given them such authority. But as soon as the three
presidency bands were assured of the free use of government Treasury
balances at places where they would open branches, they embarked on
branch expansion at a rapid pace. By 1876, the branches, agencies and sub
agencies of the three presidency banks covered most of the major parts and
many of the inland trade centres in India. While the Bank of Bengal had
eighteen branches including its head office, seasonal branches and sub
agencies, the Banks of Bombay and Madras had fifteen each.

Presidency Banks Act

The presidency Banks Act, which came into operation on 1 May 1876,
brought the three presidency banks under a common statute with similar
restrictions on business. The proprietary connection of the Government was,
10

however, terminated, though the banks continued to hold charge of the

public debt offices in the three presidency towns, and the custody of a part of
the government balances. The Act also stipulated the creation of Reserve
Treasuries at Calcutta, Bombay and Madras into which sums above the
specified minimum balances promised to the presidency banks at only their
head offices were to be lodged. The Government could lend to the
presidency banks from such Reserve Treasuries but the latter could look
upon them more as a favour than as a right.
The decision of the Government to keep the surplus balances in Reserve
Treasuries outside the normal control of the presidency banks and the
connected decision not to guarantee minimum government balances at new
places where branches were to be opened effectively checked the growth of
new branches after 1876. The pace of expansion witnessed in the previous
decade fell sharply although, in the case of the Bank of Madras, it continued
on a modest scale as the profits of that bank were mainly derived from trade
dispersed among a number of port towns and inland centres of the
presidency.
India witnessed rapid commercialisation in the last quarter of the nineteenth
century as its railway network expanded to cover all the major regions of the
country. New irrigation networks in Madras, Punjab and Sind accelerated the
process of conversion of subsistence crops into cash crops, a portion of
which found its way into the foreign markets. Tea and coffee plantations
transformed large areas of the eastern Terais, the hills of Assam and the
Nilgiris into regions of estate agriculture par excellence. All these resulted in
the expansion of India's international trade more than six-fold. The three
presidency banks were both beneficiaries and promoters of this
commercialisation process as they became involved in the financing of
practically every trading, manufacturing and mining activity in the subcontinent. While the Banks of Bengal and Bombay were engaged in the
financing of large modern manufacturing industries, the Bank of Madras
went into the financing of large modern manufacturing industries, the Bank
of Madras went into the financing of small-scale industries in a way which
had no parallel elsewhere. But the three banks were rigorously excluded
11

from any business involving foreign exchange. Not only was such business
considered risky for these banks, which held government deposits, it was
also feared that these banks enjoying government patronage would offer
unfair competition to the exchange banks which had by then arrived in India.
This exclusion continued till the creation of the Reserve Bank of India in
1935.

Presidency Banks of Bengal

The presidency Banks of Bengal, Bombay and Madras with their 70
branches were merged in 1921 to form the Imperial Bank of India. The triad
had been transformed into a monolith and a giant among Indian commercial
banks had emerged. The new bank took on the triple role of a commercial
bank, a banker's bank and a banker to the government.
But this creation was preceded by years of deliberations on the need for a
'State Bank of India'. What eventually emerged was a 'half-way house'
combining the functions of a commercial bank and a quasi-central bank.
The establishment of the Reserve Bank of India as the central bank of the
country in 1935 ended the quasi-central banking role of the Imperial Bank.
The latter ceased to be bankers to the Government of India and instead
became agent of the Reserve Bank for the transaction of government
business at centres at which the central bank was not established. But it
continued to maintain currency chests and small coin depots and operate the
remittance facilities scheme for other banks and the public on terms
stipulated by the Reserve Bank. It also acted as a bankers' bank by holding
their surplus cash and granting them advances against authorized securities.
The management of the bank clearing houses also continued with it at many
places where the Reserve Bank did not have offices. The bank was also the
biggest tendered at the Treasury bill auctions conducted by the Reserve Bank
on
behalf
of
the
Government.
The establishment of the Reserve Bank simultaneously saw important
amendments being made to the constitution of the Imperial Bank converting
it into a purely commercial bank. The earlier restrictions on its business were
12

removed and the bank was permitted to undertake foreign exchange business
and executor and trustee business for the first time.
Imperial Bank
The Imperial Bank during the three and a half decades of its existence
recorded an impressive growth in terms of offices, reserves, deposits,
investments and advances, the increases in some cases amounting to more
than six-fold. The financial status and security inherited from its forerunners
no doubt provided a firm and durable platform. But the lofty traditions of
banking which the Imperial Bank consistently maintained and the high
standard of integrity it observed in its operations inspired confidence in its
depositors that no other bank in India could perhaps then equal. All these
enabled the Imperial Bank to acquire a pre-eminent position in the Indian
banking industry and also secure a vital place in the country's economic life.
When India attained freedom, the Imperial Bank had a capital base
(including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14
crores and Rs.72.94 crores respectively and a network of 172 branches and
more than 200 sub offices extending all over the country.

First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of
rural India was given the highest priority. The commercial banks of the
country including the Imperial Bank of India had till then confined their
operations to the urban sector and were not equipped to respond to the
emergent needs of economic regeneration of the rural areas. In order,
therefore, to serve the economy in general and the rural sector in particular,
the All India Rural Credit Survey Committee recommended the creation of a
state-partnered and state-sponsored bank by taking over the Imperial Bank of
India, and integrating with it, the former state-owned or state-associate
banks. An act was accordingly passed in Parliament in May 1955 and the
State Bank of India was constituted on 1 July 1955. More than a quarter of
the resources of the Indian banking system thus passed under the direct
control of the State. Later, the State Bank of India (Subsidiary Banks) Act
was passed in 1959, enabling the State Bank of India to take over eight
13

former State-associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose
aided by the 480 offices comprising branches, sub offices and three Local
Head Offices inherited from the Imperial Bank. The concept of banking as
mere repositories of the community's savings and lenders to creditworthy
parties was soon to give way to the concept of purposeful banking sub
serving the growing and diversified financial needs of planned economic
development. The State Bank of India was destined to act as the pacesetter in
this respect and lead the Indian banking system into the exciting field of
national development.

STATE BANK OF INDIA

Old name : Bank of Calcutta (1809), Bank of
Bengal (1809) and Imperial Bank of India (1921)
Estd. In Year : 1806
Founder : Bengal Government
Nationalization : 1955
Head Office : Mumbai (Maharashtra)
Share Capital : 59.73 percent (RBI)
Capital : Rs. 4812 Crores

SBI ASSOCIATES
STATE BANK OF BIKANER AND JAIPUR
Old Name : The Govind Bank Private Limited
Nationalization : 1959
14

 Head Office : Jaipur ( Rajasthan)

Share Capital : 75 percent(SBI)
STATE BANK OF HYDERABAD
Old Name : Hyderabad
Estd. in Year : 1941
Nationalization : 1959
Head Office : Hyderabad (Andhra Pradesh)
Share Capital : 100 percent (SBI)

STATE BANK OF INDORE

Old Name: Bank of Indore Ltd.
Nationalization : 1959
Head Office : Indore (Madhya Pradesh)
Share Capital : 98.05 percent (SBI)
STATE BANK OF PATIALA
Old Name : Patiala State Bank
Estd. in Year : 1917
Founder : Maharaja Bhupinder Singh
Nationalization : 1959
Head Office : Patiala (Punjab)
Share Capital : 100 percent (SBI)

15

 STATE BANK OF SAURASTRA

Old Name : Saurastra state Bank
Estd. in Year : 1902
Nationalization : 1959
Head Office : Bhavnagar (Gujarat)
Share Capital : 100 percent (SBI)

STATE BANK OF MYSORE

Old Name: Bank of Mysore Ltd.
Estd. in Year : 1913
Founder : M. Visheshwaraiya

Nationalization : 1959

Head Office : Bangalore (Karnataka)

Share Capital : 92.33 percent (SBI)

STATE BANK OF TRAVANCORE

Old Name: Travancore Bank Ltd.
Estd. in Year : 1945
Nationalization : 1959

16

 Head Office : Trivandrum (Kerala)

Share Capital : 75 percent (SBI)

17

TOPIC & WORKING

IN STATE BANK OF
INDIA

18

TOPIC AND WORKING IN STATE

BANK OF INDIA
LIST OF PRODUCTS:-

Branch Code

4823

Branch Name

GOVINDPURA
PRODUCTS/SERVICES OFFERED

Personal Banking
Current Accounts
Savings Bank
Savings Plus
Term Deposits
Reinvestment Plan
Multi Option Deposits
Recurring Deposits
Public Provident Fund Scheme
Housing Loans
Car Loans
Education Loans
Consumer Durables Loans
Personal Loans
Property Loans
Loans to Pensioners
Loans against Shares And Debentures
Gold Loans
Demand Loans on Term Deposits
Demand Loans against Govt. Securities
NRI Banking
19

Non Resident External Rupee Accounts (NRE)

Ordinary Non Resident Rupee Accounts (NRO)
Non Resident Special Rupee Accounts
Corporate Banking
Cash Credits
Medium Term Loans
Small Scale Industries
Liberalised Scheme
Entrepreneur Scheme
Equity Fund Scheme
Small Business Finance
Retail Trade
Professionals and Self Employed
Business Enterprises
Transport Operators
Government Business
CBDT
Special Deposit Scheme
Posts
Central Civil Pensions
Defense Pensions
Telecom Pensions
State Govt. Pensions
Other Services
Safe Deposit Lockers
Safe Custody
Rupee Travellers Cheques
Gift Cheques
ATM Services
ATM Services
ATM Services
Demat Services
Demat Services
Demat Services
Other Services
20

Internet Banking
Miscellaneous Business
Demand Drafts
Telegraphic Transfers
STEPS (Electronic Transfers)
Collections (Cheques)

21

A.

INTRODUCTION TO TOPIC

Concept of financial statement:

Accounting is the process of identifying, measuring and communicating information to its
users. It involves recording, classifying various business transactions. The financial
statement used in accounting safes two statement profit & loss A/c or income statement
and Balance sheet or position statement. With the help of financial as well as the outsider
who are interested in affairs of the firms like creditors customers, supplies, financial
institution, encloses government, and public.
Definition:1.

In the words of john N. Myer :- the financial statement provides a summery

of the accounts of a business enterprise, the balance sheet is eating the assets,
liabilities and capital as on a creation date and the income statement showing the
result of operations during a certain period.

2.

According to Anthony :- financial statement essentially are interim reports,

presented annually and select a division of the life of an enterprise into more or
less arbitrary accounting reread more frequently a year.

1.3 : Importance of financial statement :

Financial statements constitute valuable piece of information to various uses in different
ways the utility of financial statement to different parties is discarded or follows :1.

For the management :- Management is interested in knowing the existing

profits, possibility of growth, relative performances, cost information etc. from
the financial statement, so that it can be suitable strategy for its entity.

2.

For the Creditors :- the creditors are to be paid in a short period the creditors
are interested in knowing entitys capability to repay the amount and interest
as and when repayment, becomes due, so they are interested in finding out
profitability, cash flows etc. of the entity,

3.

For the Manages :- Managers are interested in knowing the social image,
chances of promotion and the capacity of the entity to compensate them
Manager wants to know profitability and chances of grow the of the company.

4.

For the employees :- Employs are interested in job satisfaction, job security,
promotion, bonus declaration, employees welfare scheme etc. of these unit, so
they wants to information an profit ability and future prospects of the
company.
22

5.

For the bankers :-Bankers are interested in the security of the loan advanced,
firms capacity to repay the principal interact as per terms.

6.

For the customers :- Customers are interested in raw product resource, product
safety, and socially responsible policies of the entity, Information Statement
and reports.

7.

For the Society :- Society is interested in economic progress of the country

that depends upon the performance of individual economic entities.

8.

For the Investor :- the investor inducing both type of short term and long term
investor Investor mill not only analyses the present financial position but is
will also study in future planning they wants to know now to safe the
investment already made is and how safe the proposed investment will be.

9.

Share holder :- shareholders or proprietors of the business an interested in the

well being of the business, inky are likely to know the earning capacity of the
business and its prospects of the future growth.

10.

Debenture holder :- debenture holders are interested to know whether the

financial position of the company is sound or not.

Financial Analysis :Concept of financial Analysis :- F.A an enterprise or a firm is the process of
identifying the financial strength and weakness of the firm by properly establishing
the scale township between the ions of the Balance sheet and project & loss A/c. the
tern financial analysis extends to include the interpretation of financial statement.
Definition 1.5
According to Metcalf R.W and Tetrad P.L :Analyzing financial statements is a process of evaluating relationship between
component parts of financial statements to obtain a better understanding of forms,
position & performance.

23

Types of financial Analysis:Types of financial analysis

Basis of Material used

External Analysis

Basis of method adopted

Internal
Analysis

Horizontal Analysis
Retical Analysis

The analysis of financial statement for a firm car be undertaken in different ways,
different person or parties may be undertake the analysis of financial statement in the
analysis of financial state mint may be the shareholders, the creditors, the financial
institution the investor and the management itself. The analysis of financial statement can
be classified into different categories are as follows:
(i)

on the basis of Material used :- According to material used, financial Analysis

can be of 2 types

(a) External analysis

(a)

(b) Internal analysis

External Analysis :- This analysis is performed by outside parties such as trade

creditors , investor, supplies of long debts etc. this type of analysis is conducted for
measuring the operational and managerial efficiency at different level of the firm. This
group depends almost contritely on published financial statements, this type of analyses is
very quite comprehension and sellable it is curried out on the basis of published
information or by there who do not have the detailed seconds of the company.
(b)

Internal Analysis :- this analysis is performed by the corporate finance and

accounting department and is more detailed than external analysis. This is boned on
detailed information available to outsider this type of analysis for used of managerial
purpose and it can be effected depending upon the pus- pose to be ache cued. Its

24

conducted by the excite and emplaces of the enterprises as well as the governmental and
court agencies.
(ii) on the basis of Method adopted :- According to the method adopted, financial analysis
can also be of 2 types. :(a) Horizontal Analysis
(a)

(b) vertical analysis

Horizontal Analysis :- when financial statements for a number of years are

seaweed and analyses , this type of analysis is called Horizontal Analysis this analysis is
useful for long term trend analysis and planning. It is based on the data from year one
year to another are identified this to also known as the Dynamic Analysis. It cores a
period of more than I years. It compares the financial statement i.e. project & loss A/c and
Balance sheet of previous year along with the current year.
(b)

Recital Analysis :- this analysis convert each element of the information into a

percentage of a total amount of statement so or to established relationship with other

components of the same statements it is based on relationship among items in a single
period. It can be provided by a study conducted over a numbers of years, so that
comparison can be effected. It is also known as the vertical Analysis.
Significance of financial Analysis:1.

The main significance of financial Analysis

depends upon the management,

invertors, Bankers, debenture holders, Government etc.

2.

They want to know the capacity to meet the short term loans, financial soundness
in long run profitability or performance of one unit with other unit of the same
industry.

3.

they also wants to find out whether the target and goods are achieved. or not and
they valuate the performance of different depart mints, investors want to know the
their investment is safe.

4.

They are interested to know the financial portion of any concern.

5.

People are financial statements Analysis for satisfying their particular curiosity.

1.8

Meaning of financial statement Analysis:Financial statement Analysis is establishing the relationships and interpretation

there of to understand the working and the financial position firm. There analysis of
financial statement is the process of establishing and identifying the financial weakness
and strength of the firm. It is also known as the analysis of financial statement evaluating
the relationship between component parts of financial statement for getting a better
understanding of the firmer position and performance.
25

The basic tool of financial statement analysis is financial ratio analysis. It is

verified as follows:-

1.9

Types of Financial

Liquidity ratio

Turnover ratio

Leverages ratio

Profitability ratio

Growth ratio

Valuation ratio

Methods of financial statement Analysis:-

The following methods of analysis are generally used:A.

Comparative Method

B.

Trend Analysis

C.

Common size statement

D.

Ratio Analysis

A.

Comparative Statement:- The comparative financial statement are statement

of the financial position at different period; of time. The element of financial
position are shown in a comparative form so as to give an idea of financial
position at 2 or more periods. Any statement prepared in a comparative form
will be covered in comparative statement. Similarly, comparative figures will
indicate the trend & direction of financial position and operative results.

B.

Trend Analysis:- The financial statement may be analysis by computing

trends of series of information. This method determines the direction up words
or downwards and involves the computation of the percentage relationship that
each statement item bears to the same item in base year. The information for a
number of years is taken up and one year, generally the first year, is taken as a
base year the figures of the base year are taken as 100 and trend ratios for
other years are calculated on the basis of base year. The analyst is able to see
the trend of figures, whether upward or downward.

C.

Common size statement:- The Common size statement, balance sheet and
income statement, are shown in analytical percentages. The figures are shown
as percentage of total assets, total liabilities and total sales. The total assets are
taken as 100 and different assets are expressed as a percentage of the total.
Similarly, various liabilities are taken as a part of total liabilities.
26

D.

Ratio Analysis:- The ratio analysis is one of the most powerful tools of
financial analysis. It is the process of establishing and interpreting various
ratios. It is with the help of ratios that the financial statement can be analyzed
more clearly and decisions made from such analysis. Ratio analysis is not an
end in itself. It is only means of better understanding of financial strength.

METHOD OF FINANCIAL STATEMENT ANALYSIS

The analysis and interpretation of financial statements is used to explain the financial
position and result of operation as well there are different type of devices or methods are
used to study the relationship between different statements. Analysis of financial
statement is the process of establishing and identifying the financial weakness and
strength of the fire. The purpose of financial analysis is to diagnose the information
contained in financial statement so as to judge the profitability and financial soundness of
the firm. Financial statements analysis is an attempt to determine the significance and
meaning of the financial statement data. People use financial statement Analysis for
satisfying their particular curiosity. Most of the authors have used the term analysis only
to cover the meanings of both analysis and interpretation as the objective of analysis is to
study the relationship between various items of financial statements by interpreting we
have also used the term financial statement Analysis or simply financial Analysis to
cover the meaning of both analysis and interpretation.

27

Techniques of financial statement Analysis:

Ratios

(A)

(B)
(C)

Traditional

Functional

Significance
Classification

Classification

Ratios
1. Balance Sheet ratios
ratio
Position Statement ratios
ratios
2. Profit & Loss Ak ratio
Revenue/ Income Statement Raito
3. Composite/ Mixed Ratios
Inter Statement ratios.

1. Liquidity ratio

1. Primary

2. Leverages Ratio

2. Secondary

3. Actively ratio
4. Profitability ratio

28

1.
Limited
use of
single
Ratio

4.9 Limitation of ratio Analysis

29

TECHNIQUES OF FINANCIAL STATEMENTS

Comparative Statement
30

Common Size Statement

Trend Analysis

Fund Flow Statement

Cash Flow Statement

Ratio Analysis

Comparative statement:- The comparative financial statements are statement of the

financial position at different periods; of time. The elements of Financial position are
shown in a comparative from so as to give an idea of financial position at 2 or more
periods. Any statement prepared in a comparative form will be covered in comparative
statements. From practical point of view, generally, tow financial Statements are prepared
in comparative form for financial analysis purposes. Not only the comparison of the
figures of two periods but also be relationship between balance sheet and income
statement enables an in-depth study of financial position and operative results. The
financial data will be comparative only when same accounting principles are used in
preparing these statements. In case of any deviation in the use of accounting principles
this fact must be mentioned at the foot of financial statements and the analyst should be

31

careful in using these statement. The two comparative statements are (i) Balance sheet,
and (ii) Income Statement.
(i)
Comparative Balance sheet
(ii)
Comparative Income statement
Common-size statement:The common-size statements, balance sheet and income statements are shown in
analytical percentages. The figures are shown as percentages of total assets, total
liabilities and total sales. The total assets are taken as 100 and different assets are
expressed as a percentage of the total. Similarly various liabilities are taken as a pat of
total liabilities. These statements are also known as compound percentage or 100%
statement because every individual trend percentage where changes in items could not
be the analyst is able to assess the figures in relation to total values. The commonsize statement may be prepared in the following way: (1) The totals of assets or liabilities are taken as 100.
(2) The individual assets are expressed as a percentage i. e. 100 and different
liabilities are calculated in relation to total liabilities.
(i)
Common- size balance sheet
(ii)
Common size income statement
Trend Analysis:- The financial statements may be analyzed by computing trends of
series of information this method determines the direction upwards or downwards and
involves the computation of the percentage relationship that each statement item bars
to the same item in base year. The information for a number of years is taken up and
one year, generally the first year is taken as a base years. The figures of the base year
are taken as 100 and trend nations for other years are calculated on the basis of base
year. The analyst is able to see the trend of figures, whether upward or downward. For
examples if sales figures for the year 2011 to 2015 are to be studied, then sales of
2011 will be taken as 100 and the percentage of sales for all other years will be
calculated in relation to the base year, i-e, 2011.
Fund flow statement:- Fund flow statements is a method by which we study
changes in the financial position of a business enterprise between beginning and
ending financial statements dates. It is a statement showing sources and uses of funds
for a period of time. In other words the funds flow statement describes the sources
from which additional funds were derived and the use to which these sources were
put. Thus, funds flow statement is a statement which indicates various means by
which the finds have been obtained during a certain period and the ways to which

32

these funds have been used during that period. The term funds used have means
working capital, i-e, the excess of current assets over current liabilities.
Cash flow statement:- Cash flow statement is a statement which describes the
inflows and outflows of cash and cash equivalents in an enterprise during a specified
period of time. Such a statement enumerates net effects of the various business
transactions on cash and its equivalents and takes into account receipts and
disbursements the cash. A cash flow statement summaries the causes of changes in
cash position of a business enterprise between dates of two balance Sheets. Cash flow
statement should present it for each period for which financial statements are
prepared. This statement should report cash flows during the period classified by
operating, investing and financing activities. Thus, cash flows are classified into 3
main categories:(i)
Cash flow from operating activities.
(ii)
Cash flow from investing activities.
(iii)
Cash flow from financing activities.

33

Ratio Analysis:
Meaning:- Ratio Analysis is a technique of analysis and interpretation of financial
statements. It is the process of establishing and interpreting various ratios for helping in
making certain decision. Ratio Analysis is not an end in itself. It is only a means of better
understanding of financial strengths and weaknesses of a firm. It is one of the most
powerful tools of financial analysis. A ratio is known as a symptom like Blood pressure
the rules rate or the temperature of an individual. It is with help of ratios that the
financial statements can be analyzed more early and decisions made from such analysis.
Limitation of Ratio Analysis: 1. Limited use of a single ratio
2. Lack of Adequate standards
3. Ratios no substitute.
4. Change of Accounting procedure.
5. Window dressing
6. Incomparable
7. Personal bias
8. Price level changes

Classification of Ratios:
Various accounting ratios can be classified as follows:-

34

(A)
(1)

Traditional classification or statement ratios

Balance sheet ratios or position statement ratio:
Balance sheet ratios deal with the relationship between two balanced sheet items.
E.g. the ratio of current assets to current liabilities, or the ratio of proprietors funds
to fixed assets. The various balance sheet ratios have been named in the chart

(2)

classifying statements ratios.

Profit & loss a/c ratios or revenue/Income statement ratio :This ratio deal with the relationship between two profit & loss A/C items. E.g. the
ratio of gross profit to sales, or the ratio of Net profit to sales. The various profit &

(3)

loss A/ ratios, commonly used, are named in the chart classifying statement ratios.
Composite/mixed ratios or inter statement ratios:These ratios exhibit the relationship between a profit & loss A/c or Income
statement item and a balance sheet item, e.g. stock turnover ratio, or the ratio of
total assets to sales. The most Commonly used inter-statement ratios are given in

(B)
(1)

the chart exhibiting traditional classification or statement ratios.

Functional classification or Classification According to test
Liquidity Ratios: - These are the ratios which measure the short term solvency or

financial position of a firm the various liquidity ration are: current ratio, liquid ratio and
absolute liquid ratio.
(2)
Leverage Ratios:- Leverages ratio convey a firms ability to meet the interest cost
and repayments. Schedules of its long term obligations e.g. debt Equity Ratio and Interest
Coverage Ratio.
Activity Ratios:- Activity ratios are calculated to measure the efficiency with which the
resources of a firm have been employed. The various activity or turnover ratios have been
named in the chart classifying the ratios.

35

B.

OBJECTIVES

Objectives of the research study

Management of working capital is very essential in modern business.
Financial statement analysis of working capital is also very useful for short term
management of time.
The following are the main objectives of my research study.
i. To analyze the sources of financial analysis of STATE BANK OF INDIA
bank.
ii. To analyze the sources of financial management of STATE BANK OF
INDIA bank.
iii. To examine the overall financial management of STATE BANK OF INDIA
bank.

36

C.

RESEARCH METHODOLOGY

RESEARCH OBJECTIVES
The above mentioned review literature would have clearly indicated the two different
strategies adopted by the two competing brands in Singapore automobile market. In order
to understand the depth of the topic the research objectives have been set by the
researcher.

Research Design
According to Aaker, Kumar & Day (2001) descriptive research covers a large proportion
of marketing research. This being a quantitative research which is to decide of how one
variable affects another variable, there are three basic types of research design that is
exploratory, casual and descriptive research design. A descriptive research design is the
one that describes something such as demographic characteristics of consumers who uses
a product or a service. The descriptive study is typically concerned with determining
frequency with which something occurs or how two variables vary. Aaker and George
(2000), a descriptive study establishes only associations between variables. The purpose
is to provide an accurate snapshot of some aspect of the market environment.
There are three types of research designs, namely:
(a)

Exploratory

(b)

Descriptive,

(c)

Causative

Exploratory Research:
According to Rajan Saxena, Exploratory research is conducted when the researcher does
not know how and why a certain phenomenon occurs. In doing so, they used focus
groups. Since the prime goal of an exploratory research is to know the unknown, this
research is unstructured. Focus groups, interviewing key customer groups, experts and
even search for printed or published information are some common techniques.

37

Descriptive Research:
Descriptive research is carried out to describe a phenomenon or market characteristic.
Generally, descriptive research is carried out only when the researcher understands the
phenomena or behavioral characteristics.

Causative Research:
Causative research is done to establish a cause and effective relationship. Here the
researcher may like to see the effect of rising income and changing life style on
consumption of select products. In a causative research, unlike exploratory or descriptive,
hypotheses are tested. Hypothesis is a statement of predicted outcomes of the research. In
building up a hypothesis, it is important that the researcher understands the phenomena
thoroughly, or a body of research that exists on the subject matter
Descriptive research studies are those study which are concerned with describing the
character. It is move valuable because researcher has no control over the variables what
has happened or what is happening is considered so it is very accurate so we can say it is
more valuable.
In this study, for practical reasons, a descriptive approach would be used, considering the
proposed study would embrace the above characteristics of a descriptive study.
Types of Research
The object is comparing the brand equity of European and Asian automotive brands.
Simple way to find out the relative success of one of the two identical car sold in
Singapore. In a research when we talk of research methodology, we not only take
Research methodology, but also considered the logic behind the method we used in the
contest of our research study and explain why we are using a particular method. This way
we can be stated as under.
1.

It relies on empirical evidence

2.

it utilize relevant concepts

3.

it is committed to only objective consideration

4.

it result into probabilistic prediction

38

In a method particular research problem involve usually the consideration of the

followings means of obtaining the information
Explanation of the way in which related means of obtaining information will be
organized and the reasoning leading to the selection Investing the reasons for human
behavior i.e. people thinks or do certain thinks so we comes for quantitative reaches
Types of research are generally classified into two methodologies, qualitative and
quantitative. Malhotra (2004) defines qualitative research as An unstructured,
exploratory research methodology based on small samples that provides insights and
understanding of the problem setting and quantitative research as a research
methodology that seeks to
Quantify the data and, typically applies some form of statistical analysis. There are
merits and demerits of both methodologies (illustrated in following Table4.1).
Table 5.1 QUALITATIVE VERSUS QUANTITATIVE RESEARCH
Qualitative Research
Quantitative Research
"All research ultimately has "There's no such thing as
qualitative
a

aim

qualitative

data.

grounding" Everything is either 1 or 0"

- Donald Campbell
complete,
detailed
description.

- Fred Kerlinger
The aim is to classify
features, count them, and
construct

statistical

models in an attempt to
explain what is observed.
Researcher

may only know roughly

May clearly in advance

idea.
Recommended

Initially

of research

design

process
Come out in later stage
of dissertation.

Last phases of research

projects.
All aspects of the study
are carefully designed
before data is collected.

Researcher is the data

39

Researcher uses tools,

gathering instrument.

such as questionnaires or
equipment

to

collect

numerical data.
Data is in the form of

Data is in the form of

words,

numbers and statistics.

pictures

or

objects.
Subjective - individuals

Objective seeks precise

interpretation of events

measurement & analysis of

is important ,e.g., uses

target concepts, e.g., uses

participant observation,

surveys, questionnaires etc

in-depth interviews etc.

Qualitative data is more

Quantitative data is more

'rich', time consuming,

efficient, able to test

and less able to be

hypotheses,

generalized.

miss contextual detail.

Researcher
become

tends

to

subjectively

but

may

Researcher

tends

remain

objectively

immersed in the subject

separated

from

matter.

subject matter.

to
the

Descriptive research studies are those study which are concerned with describing the
character. It is move valuable because researcher has no control over the variables what
has happened or what is happening is considered so it is very accurate so we can say it is
more valuable.
. In a research when we talk of research methodology, we not only take Research
methodology, but also considered the logic behind the method we used in the contest of
our research study and explain why we are using a particular method. This way we can be
stated as under.
It relies on empirical evidence
40

it utilize relevant concepts

it is committed to only objective consideration
it result into probabilistic prediction
In a method particular research problem involve usually the consideration of the
followings

the means of obtaining the information

Explanation of the way in which related means of obtaining information

will be organized and the reasoning leading to the selection Investing the
reasons for human behavior i.e. people thinks or do certain thinks so we
comes for quantitative reaches

The research methodology used for this study was geared towards obtaining quantitative
data.

Collection of Secondary Data

According to Thorne (1990), Secondary data means data that is already available i.e., it
refers to the data, which have already been collected and analyzed by someone else.
Secondary data may either be published data or unpublished data. Although the researcher
has not used the secondary data for the purpose of analysis this has been extensively used
by the researcher to explore various theories attached with the topic that is brand strategy.

Limitation of the study

1. The study is based in published internal reports & data of the STATE BANK OF
INDIA BANK.
2. The study is limited to a period of 5 yrs
3. No comparison is made b/w the others.
RESEARCH DESIGN
Research Design is the plan and structure of the in ventilation to obtain answer to
research question the plan is the overall scheme, which will be done from writing of
the hypothecates to the final analysis.
Research design are often dependent on the steps which we referred as research
design. in research design the researcher decides hour his objectives will be revised
by the research. in research design we find answer of same question that we what
41

would be the study. Where would the study take place, which data to be studied,
what method should be adopted and how much should be collected of tells us how
the data will be collected Research Design start from the writing of hypothesis & it
ends to writing of report.
The significance of research design is so give maximum results and effectively
researches to be carried to avoid trial error. Thus preparation of the research design
should be done with great care as any error may affect the whole study.

Data Analysis
For any research the purpose of achieving the objectives is a very important criterion.
Unless the information drawn from the survey is properly interpreted and explained the
very purpose of a research cannot be served. Hence data analysis and interpretation is a
very important aspect in a project report. Analysis of data is the process of orderly
research objectives. The primary data collection is in accurate form that is not ready for
analysis. So the researcher must take some measures to bring the data to a form where it
can be easily analyzed. The various steps include editing (modifying, correcting the
collected data), coding and tabulation (arranging similar data together). The analysis is
carried using statistical tools like percentages. Percentage is a special kind of ratio.
Percentage is used in making comparison between two or more series of data. Thus the
analysis is totally based on frequency and percentage calculation. Finally meaningful
information is extracted from the analysis. The collected data is illustrated using pie
diagram and bar charts. The conclusions, findings and suggestions are given on the
inference drawn from the analysis.

42

Scope of the Research Study

The scope of this research study relates to working capital management of
STATE BANK OF INDIA bank. The analysis of working capital has been made
against the financial performance status in the present day world.
The important aspects of working capital management which have received
adequate attention are production policies, size of the business, length of
manufacturing cycle, credit policy, turnover of circulating capital, economics of
scale, current asset policies and other factors. A number of ratios have been
calculated to know the exact working capital position and a number of suggestion
have been made to improve the current efficiency of the management. On the
basis of above calculations any manufacturing company can analyze the working
capital position of their business.

43

D.

LIMITATIONS

Limitations of the research study

Every research study has to encounter some constraints. The major
constraints, which present day study had to face, are non-availability of
sufficient data. Also the study is based on the analysis of financial
statements for the last ten years only. The data used in this study have been
taken from published annual reports only ie, in this study secondary data
collection method is used. Hence the limitations of secondary data will be
the limitations of this research study.

44

COMPANY PROFILE

45

3.

COMPANY PROFILE

State Bank of India

Type

Traded as

Public
NSE: STATE BANK OF INDIA N
BSE: 500112
LSE: STATE BANK OF INDIA D

BSE SENSEX Constituent

Industry
Banking, Financial services
Founded
July 1, 1955
Headquarters Mumbai, Maharashtra, India
Area served Worldwide
Pratip
Chaudhuri
Key people
(Chairman)

Credit cards, Consumer banking,

corporate
Products

insurance,

banking,

finance

investment

and

banking,

mortgage loans, private banking,

Revenue
Profit
Total assets
Total equity
Owner(s)
Employees
Website

wealth management
US$32.44 billion (2011)[1]
US$2.34 billion (2011)[1]
US$369.56 billion (2011)[1]
US$18.71 billion (2011)[1]
Government of India
222,933 (2011)[1]
www.statebankofindia.com
46

State Bank of India (NSE: STATE BANK OF INDIA N, BSE: 500112, LSE: STATE
BANK OF INDIA D) is the largest banking and financial services company in India by
revenue, assets and market capitalization. It is a state-owned corporation with its
headquarters in Mumbai, Maharashtra. As of March 2011, it had assets of US$370 billion
with over 13,000 outlets including 150 overseas branches and

State Bank of India

State Bank of India (NSE: STATE BANK OF INDIA N, BSE: 500112, LSE: STATE
BANK OF INDIA D) is the largest banking and financial services company in India by
revenue, assets and market capitalization. It is a state-owned corporation with its
headquarters in Mumbai, Maharashtra. As of March 2011, it had assets of US$370 billion
with over 13,000 outlets including 150 overseas branches and agents globally. The bank
traces its ancestry to British India, through the Imperial Bank of India, to the founding in
1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian
Subcontinent. Bank of Madras merged into the other two presidency banksBank of
Calcutta and Bank of Bombayto form the Imperial Bank of India, which in turn became
the State Bank of India. The Government of India nationalized the Imperial Bank of India
in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State
Bank of India. In 2008, the government took over the stake held by the Reserve Bank of
India. STATE BANK OF INDIA is ranked #292 globally in Fortune Global 500 list in
2011.[2]
STATE BANK OF INDIA provides a range of banking products through its vast network
of branches in India and overseas, including products aimed at non-resident Indians
(NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch
network in India. STATE BANK OF INDIA has 14 local head offices situated at
Chandigarh, Delhi, Lucknow, Patna, Kolkata, Guwahati (North East Circle),
Bhuwaneshwar, Hyderabad, Chennai, Trivandram, Banglore, Mumbai, Bhopal &
Ahmedabad and 57 Zonal Offices that are located at important cities throughout the
country. It also has around 130 branches overseas.
STATE BANK OF INDIA is a regional banking behemoth and is one of the largest
financial institutions in the world. It has a market share among Indian commercial banks
47

of about 20% in deposits and loans.[3] The State Bank of India is the 29th most reputed
company in the world according to Forbes.[4] Also, STATE BANK OF INDIA is the only
bank featured in the coveted "top 10 brands of India" list in an annual survey conducted
by Brand Finance and The Economic Times in 2010.[5]
The State Bank of India is the largest of the Big Four banks of India, along with ICICI
Bank, Punjab National Bank and HDFC Bankits main competitors.[6]

History
The roots of the State Bank of India lie in the first decade of 19th century, when the Bank
of Calcutta, later renamed the Bank of Bengal, was established on June 2, 1806. The
Bank of Bengal was one of three Presidency banks, the other two being the Bank of
Bombay (incorporated on April 15, 1840) and the Bank of Madras (incorporated on July
1, 1843). All three Presidency banks were incorporated as joint stock companies and were
the result of the royal charters. These three banks received the exclusive right to issue
paper currency in 1861 with the Paper Currency Act, a right they retained until the
formation of the Reserve Bank of India. The Presidency banks amalgamated on January
27, 1921, and the re-organized banking entity took as its name Imperial Bank of India.
The Imperial Bank of India remained a joint stock company.
Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of
India, which is India's central bank, acquired a controlling interest in the Imperial Bank of
India. On April 30, 1955, the Imperial Bank of India became the State Bank of India. The
government of India recently acquired the Reserve Bank of India's stake in STATE
BANK OF INDIA so as to remove any conflict of interest because the RBI is the
country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, enabling
the State Bank of India to take over eight former state-associated banks as its subsidiaries.
On September 13, 2008, the State Bank of Saurashtra, one of its associate banks, merged
with the State Bank of India.
STATE BANK OF INDIA has acquired local banks in rescues. For instance, in 1985, it
acquired the Bank of Cochin in Kerala, which had 120 branches. STATE BANK OF

48

INDIA was the acquirer as its affiliate, the State Bank of Travancore, already had an
extensive network in Kerala.

International presence
As of December 31, 2009, the bank had 157 overseas offices spread over 32 countries. It
has branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Tehran,
Johannesburg, London, Los Angeles, Male in the Maldives, Muscat, Dubai, New York,
Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and
Singapore, and representative offices in Bhutan and Cape Town. It also has an ADB in
Boston, USA.
STATE BANK OF INDIA operates several foreign subsidiaries or affiliates. In 1990, it
established an offshore bank: State Bank of India (Mauritius).
In 1982, the bank established a subsidiary, State Bank of India (California), which now
has ten branches nine branches in the state of California and one in Washington, D.C.
The 10th branch was opened in Fremont, California on 28 March 2011. The other eight
branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park,
Fresno, San Diego, Tustin and Bakersfield.
The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven
branches, four in the Toronto area and three in British Columbia.
In Nigeria, STATE BANK OF INDIA operates as INMB Bank. This bank began in 1981
as the Indo-Nigerian Merchant Bank and received permission in 2002 to commence retail
banking. It now has five branches in Nigeria.
In Nepal, STATE BANK OF INDIA owns 55% of Nepal STATE BANK OF INDIA
Bank, which has branches throughout the country. In Moscow, STATE BANK OF INDIA
owns 60% of Commercial Bank of India, with Canara Bank owning the rest. In Indonesia,
it owns 76% of PT Bank Indo Monex.
The State Bank of India already has a branch in Shanghai and plans to open one in
Tianjin.[7]

49

In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it acquired for
US$8 million in October 2005.[8]..
The State Bank of India (with 74% of the total capital) alongwith the largest global
banking groupBNP Paribas (with 26% of the remaining capital) headquatered in Paris
formed a joint venture which established India's most reputed and trusted life insurance
company named STATE BANK OF INDIA Life Insurance company Ltd. in March 2001.

Associate banks
STATE BANK OF INDIA has five associate banks; all use the same logo of a blue circle
and all the associates use the "State Bank of" name, followed by the regional
headquarters' name:

State Bank of Bikaner & Jaipur

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

Earlier STATE BANK OF INDIA had only seven associate banks that constituted the
State Bank Group. Originally, the then seven banks that became the associate banks
belonged to princely states until the government nationalized them between October 1959
and May 1960. In tune with the first Five Year Plan, emphasizing the development of
rural India, the government integrated these banks into the State Bank of India system to
expand its rural outreach. There has been a proposal to merge all the associate banks into
STATE BANK OF INDIA to create a "mega bank" and streamline operations.[9]
\he first step towards unification occurred on August 13, 2008 when merged with STATE
BANK OF INDIA, reducing the number of state banks from seven to six. Then on June
19, 2009 the STATE BANK OF INDIA board approved the merger of its subsidiary, State
Bank of Indore, with itself. STATE BANK OF INDIA holds 98.3% in State Bank of
Indore. (Individuals who held the shares prior to its takeover by the government hold the
balance of 1.77%.)

50

The acquisition of State Bank of Indore added 470 branches to STATE BANK OF INDIA
's existing network of 12,448 and over 21,000 ATMs. Also, following the acquisition,
STATE BANK OF INDIAs total assets will inch very close to the 10 trillion marks. The
total assets of STATE BANK OF INDIA and the State Bank of Indore stood at 9,981,190
million as of March 2009. The process of merging of State Bank of Indore was completed
by April 2010, and the STATE BANK OF INDIA Indore branches started functioning as
STATE BANK OF INDIA branches on August 26, 2010.[11]

Non-banking subsidiaries
Apart from its five associate banks, STATE BANK OF INDIA also has the following nonbanking subsidiaries:
1. STATE BANK OF INDIA Capital Markets Ltd
2. STATE BANK OF INDIA Funds Management Pvt Ltd
3. STATE BANK OF INDIA Factors & Commercial Services Pvt Ltd
4. STATE BANK OF INDIA Cards & Payments Services Pvt. Ltd. (STATE BANK OF
INDIA CPSL)
5. STATE BANK OF INDIA DFHI Ltd
6. STATE BANK OF INDIA Life Insurance Company Ltd.
7. STATE BANK OF INDIA General Insurance

Current Board of Directors

After the end of O. P. Bhatt's reign as STATE BANK OF INDIA chairman on March 31,
2011, the post was taken over by Pratip Chaudhuri, who is the former deputy managing
director of the international division of STATE BANK OF INDIA. As of August 4, 2011,
there are twelve members in the STATE BANK OF INDIA board of directors, including
Subir Gokarn, who is also one of the four deputy governors of the Reserve Bank of India.
The complete list of the Board members is:
1. Pratip Chaudhuri (Chairman)
51

2. Hemant G. Contractor (Managing Director)

3. Diwakar Gupta (Managing Director)
4. A Krishna Kumar (Managing Director)
5. Dileep C Choksi (Director)
6. S. Venkatachalam (Director)
7. D. Sundaram (Director)
8. Parthasarathy Iyengar (Director)
9. G. D. Nadaf (Officer Employee Director)
10. Rashpal Malhotra (Director)
11. D. K. Mittal (Director)
12. Subir V. Gokarn (Director)[12]

Branches of STATE BANK OF INDIA

State Bank of India has 172 foreign offices in 37 countries across the globe.

STATE BANK OF INDIA has about 25,000 ATMs (25,000th ATM was
inaugurated by the then Chairman of State Bank Shri O.P. Bhatt on 31 March
2011, the day of his retirement); and STATE BANK OF INDIA group (including
associate banks) has about 45,000 ATMs.

STATE BANK OF INDIA has 21,500 branches, including branches that belong to
its associate banks.

STATE BANK OF INDIA includes 99345 offices in India.

India's number one ADB is in Bellary i e State bank of India Bellary ADB

Symbol and slogan

The symbol of the State Bank of India is a circle and not key hole and a small man
at the centre of the circle. A circle depicts perfection and the common man being
the centre of the bank's business.

Slogans : "Pure banking nothing else"

also includes : "With you - all the way" and : "a bank of common man"

Loan to NTPC
On July 8, 2011, STATE BANK OF INDIA agreed to give a loan of 100 billion to
NTPC (National Thermal Power Corporation), making it the largest loan STATE BANK
52

OF INDIA had ever given to any single customer in its entire 200 year history. The loan
had a "door-to-door" maturity period of 12 years, accompanied by a drawdown period of
four years. An NTPC press release said at the time of the declaration of the loan that:
"The loan shall be utilized for financing the capital expenditure of ongoing and new
projects."
NTPC chairman at the time, Arup Roy Choudhury clarified that the loan amount would
be used to add 128,000 MW capacity by the end of year 2032 (NTPC'c capacity at the
time of the declaration of the loan was 34,584 MW).[13]
This loan was offered amidst declining finance for power projects in India, which were a
direct result of the lending constraints placed by the Reserve Bank of India and the
increased risk awareness of power projects. It will also help minimize the shortfall of
around 4.51 trillion that the Power Ministry of India expected to incur in achieving the
objectives of the Eleventh Five Year Plan (This plan targeted an addition of 78,577 MW
or power generation capacity which would require an investment of 10.3 trillion).

Employees
STATE BANK OF INDIA has turned into the third-largest employer in India among
listed companies after Coal India Limited (383,347) and Tata Consultancy
Services(226,751).

Recent awards and recognitions

Best Online Banking Award, Best Customer Initiative Award & Best Risk
Management Award (Runner Up) by IBA Banking Technology Awards 2010

The Bank of the year 2009, India (won the second year in a row) by The Banker
Magazine

Best Bank Large and Most Socially Responsible Bank by the Business Bank
Awards 2009

Best Bank 2009 by Business India

The Most Trusted Brand 2009 by The Economic Times

Most Preferred Bank & Most preferred Home loan provider by CNBC

Visionaries of Financial Inclusion By FINO

Technology Bank of the Year by IBA Banking Technology Awards

53

SKOCH Award 2010 for Virtual corporation Category for its e-payment solution

The Brand Trust Report[16]: 11th most trusted brand in India.

54

55

56

3.

DATA ANALYSIS AND

INTERPRETATION

57

3.

DATA ANALYSIS AND INTERPRETATION

Assets
Assets
Cash & Balances with RBI
119,349.83
Balance with Banks, Money

82,195.58

74,161.07

74,817.26

45,066.10

at Call

35,977.62

39,653.42

51,100.63

14,211.16

27,410.76

Advances

1,006,401.55 869,501.64

750,362.38

603,221.94

487,285.96

Investments

419,066.45

402,754.13

372,231.45

273,841.72

216,521.05

Gross Block

17,543.26

15,886.95

14,063.96

12,641.08

11,274.90

Accumulated Depreciation

11,402.13

10,359.09

9,127.29

8,224.86

7,425.54

Net Block

6,141.13

5,527.86

4,936.67

4,416.22

3,849.36

Capital Work In Progress

345.7

486.03

286.81

246.57

150.02

Other Assets

60,615.96

50,025.30

51,746.73

56,514.65

34,891.16

Minority Interest

Group Share in Joint Venture

Total Asset

1,647,898.24 1,450,143.96

1,304,825.74

1,027,269.52

815,174.41

58

Capital and Liabilities

Capital and Liabilities:
Total Share Capital

635

634.88

634.88

631.47

526.3

Equity Share Capital

635

634.88

634.88

631.47

526.3

Share Application Money

Preference Share Capital

Init. Contribution Settler

Preference Share Application

Money

Employee Stock Option

Reserves

82,836.25

82,500.70

71,755.51

60,604.91

42,009.35

Revaluation Reserves

Net Worth

83,471.25

83,135.58

72,390.39

61,236.38

42,535.65

Deposits

1,255,562.48 1,116,464.56

1,011,988.33

776,416.52

636,272.88

Borrowings

142,470.77

64,591.64

66,023.17

48,661.83

Total Debt

1,398,033.25 1,238,539.13

1,076,579.97

842,439.69

684,934.71

Minority Interest

2,977.17

2,631.27

2,228.27

2,028.12

1,689.94

Policy Holders Funds

Group Share in Joint Venture

125,837.97

153,627.10

121,565.33

86,014.12

1,302,597.46

1,025,241.40

813,484.48

Other Liabilities & Provisions 163,294.96

Total Liabilities

122,074.57

1,644,799.46 1,447,512.68

59

Current Asset

Current Asset

Mar '15

Mar '14

Mar '13

Mar '12

Mar '11

1,647,898.24

1,450,143.96

1,304,825.74

1,027,269.52

815,174.41

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Current Liability

Current liability

Mar '15

Mar '14

Mar '13

Mar '12

Mar '11

1,644,799.46

1,447,512.68

1,302,597.46

1,025,241.40

813,484.48

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CURRENT RATIOS:
Current ratio
The current ratio is a financial ratio that measures whether or not a firm has enough
resources to pay its debts over the next 12 months. It compares a firm's current assets to
its current liabilities. It is expressed as follows:

For example, if WXY Company's current assets are 50,000,000 and its current liabilities
are 40,000,000, then its current ratio would be 50,000,000 divided by 40,000,000, which
equals 1.25. It means that for every dollar the company owes in the short term it has 1.25
available in assets that can be converted to cash in the short term. A current ratio of assets
to liabilities of 2:1 is usually considered to be acceptable (i.e., your current assets are
twice your current liabilities).
The current ratio is an indication of a firm's market liquidity and ability to meet creditor's
demands. Acceptable current ratios vary from industry to industry. If a company's current
ratio is in this range, then it is generally considered to have good short-term financial
strength. If current liabilities exceed current assets (the current ratio is below 1), then the
company may have problems meeting its short-term obligations. If the current ratio is too
high, then the company may not be efficiently using its current assets or its short-term
financing facilities. This may also indicate problems in working capital management.
Low values for the current or quick ratios (values less than 1) indicate that a firm may
have difficulty meeting current obligations. Low values, however, do not indicate a
critical problem. If an organization has good long-term prospects, it may be able to
borrow against those prospects to meet current obligations. Some types of businesses
usually operate with a current ratio less than one. For example, if inventory turns over
much more rapidly than the accounts payable become due, then the current ratio will be
less than one. This can allow a firm to operate with a low current ratio.

62

If all other things were equal, a creditor, who is expecting to be paid in the next 12
months, would consider a high current ratio to be better than a low current ratio, because
a high current ratio means that the company is more likely to meet its liabilities which fall
due in the next 12 months.

Current Ratio

Current Ratio

Mar '15

Mar '14

Mar '13

Mar '12

Mar '11

0.04

0.04

0.04

0.07

0.05

Interpretation : Current ratio is increasing from 2007 to 2010 so it is having stong

financial position

63

QUICK OR ACID TEST OR LIQUID RATIO

Quick ratio, also known as Acid Test or liquid Ratio, is a more rigorous test of
liquidity than the current ratio. Quick ratio may be defined as the relationship between
quick/liquid assets and current or liquid liabilities. The quick ratio can be calculated by
dividing the total of the quick assets by total current liabilities thus,
Quick/liquid or Acid test ratio =

Quick Ratio

Mar '15

Mar '14

Mar '13

Mar '12

Mar '11

1.4

1.47

1.24

1.08

1.03

Source: Calculations Based on Annual Reports of JP CEMENT from 2007 - 2011,

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Net Profit ratio

Mar '15

Net Profit Ratio

0.65

Mar '14

0.91

65

Mar '13

1.08

Mar '12

1.04

Mar '11

0.86

4.

OBSERVATION AND FINDINGS

1) The working capital of the bank which was Rs. 2446.07 crs. As on 31 st march

2012 & stood at Rs. 4269.81 On 31st march 2011 there was a marginal increase in
the banks working capital by 5057.18 Crs.
2) The borrowing had risen to 652.41 Crs.@8.2% rose from the year end 20052011.At present it is on a decline standing at 596.46 for the year ended 2012-13.
3)The loans and advanceof the which were at Rs. 2095.30 Crs. as on 31 st mar.2011
increase and stood at Rs. 2450.12 Crs. as on 31 st march, 2012 and as on 31st march
it is decreased with Rs. 2293.42 Crores as on 31st march 2013.
4) The deposit of bank were on its peaks of 1656.60Crs. On 2008-09. It decline on
2009-10 by 2% & again on the rise since 2009-10 and the deposits have increased
by Rs.482.31Crs. during the year and stood at Rs. 2923.31Crs. as on 31 st march
2013 as against Rs. 2440.90 Crs.as on 31st march, 2012.
5) The reserve funds and other funds of the bank which amounted to Rs. 458.48
Crs. as on 31st march 2012 & now it increased to 477.23 Crs. as on 31 st march
2013.
6) The authorised share capital of the bank is RS. 200.00.The paid up capital of the
bank which was at Rs. 110.93Crs. as on 31 st march 2012. Increased and stood at
Rs.122.02 Crores as on 31st march 2013.
7) The investment of bank have increased by Rs. 1068.02 Crs. as on 31 st march
2012 decreased and stood at Rs. 2293.42 Crs. as on 31st march 2013.
8) In STATE BANK OF INDIA Bank the working capital is managed where bills
for collection being bills (As per contra)receivables is deducted from assets and
liabilities side and fixed assets are also deducted from it then we find the accurate
working capial of the bank as shown in annual report of the bank that is 5057.18
which is increasing year by year.

66

5.

CONCLUSIONS

Every business need fund for two purposes- for its establishment and to carry out
its day to day operations. Fund which is needed for the short term period or to
carry out it day to day operations like for purchases of raw material, payment of
wages , etc. are known as

It should have neither redundant or excess nor

inadequate or shortage of working capital. The basic goal of working capital

management is to manage the current asset and current liabilities of a firm in such
a way that a satisfactory level of working capital is maintained, i. e. it is neither
inadequate nor excessive.
The requirement for working capital is increasing, by a very merger amount
which the bank is having proper management for its working capital
requirement.
The banks has reduced its borrowing which it built us its own resources.
The bank is mostly serve the agricultural loan to farmers.

The loans & advances of the bank were on the steady rise until 2007-08 but
On
2012-09n it has marginally reduced so the loans and advances are on
decline which reflects that the bank is not lending ample amount of money
in the market.

67

RECOMMENDATIONS
The following suggestions have made for the company to improve the present condition.
It is suggested that the financial manager must be very vigilant in the management of
working capital as it significantly affect the profitability of the firm. An immediate care is
to be given for the working capital management of the firm, as it is on the banks of
closure. Finance manager must consider the variables that affect the profitability of the
firm directly or indirectly and proper attention must be given to control these variables.
The management must control the variables like average payment period days and
average collection period days to reduce its time period of cash conversion cycle. The
management must conduct research studies on their workings and financial performance
at least once in every three financial years. Management must provide proper training to
its finance managers to strengthen their knowledge in managing the different areas of
working capital management like cash management, inventory management, receivable
management and marketable securities management etc. It is suggested that the
companies must give a better presentation of creditors for the relative period and for the
earlier periods separately. (It has found that current years purchase is too less but the
creditors for suppliers stood at a very large amount. That looks so frivolous.) Amounts in
the reserves and surpluses should be utilized for productive purposes which will not only
increase the earnings of the company but will also increase the reputation of the company
in the market. The companies must encourage and support the outside scholars who want
to conduct research studies on their companies financial performance and other relevant
areas of management. Lastly, it has also suggested the researchers should be provided
with proper and relevant information by the management for research studies. It has often
found that the management hesitates to provide detailed information regarding finance.
The following suggestions have made for the researchers who want to study further about
the working capital management.
It is suggested that comparison of the result of one industry with another similar industry
will help to bring proper conclusions of the study and also it adds effectiveness to the
results. A keen probe into the financial parameters of each public sector undertakings and
their difficulties in arranging the working funds will give a clear picture about the present
day condition of the in our state. It is suggested that further research is to be conducted on
the same topic with different companies by extending the years of the sample study. The
68

scope of further research can be extended to keen areas of working capital management
including cash, marketable securities, receivables and inventory. A further intense
exploration of the variables selected for this research study can be done to find out the
extend of deviations happen in the working capital of any firm so that the finance
managers can be very vigilant in their policies and can exercise a good control over all
those variables which directly or indirectly affect the life of the firm.

After interpretation and analysis, i am giving certain suggestion to the bank, which
i hope will be helpful for the banks:
(b) The Bank should try to increase its proportion of the fixed assets to net
worth.
(c) The proportion of current assets and current liabilities not maintain please try
to maintain it shows our financial position.
(d) The Bank should utilize its stock more efficiently.
(e) The Bank should pay attention towards proper and efficient utilization of
working capital.
(f) The Bank should improve its sales strategy.
(g) The Bank must increase its return.
(h) It should also pay attention in increasing its net profit margin, so that it can
survive in adverse condition also.
(i) The Bank should try reducing their expenses, so that the margin of can be
increase.
(j) There is not sitting arrangements for trainees pls try to maintain the facility.
(k) Please maintain the working capital of the bank.

69

BIBLIOGRAPHY

1. Agarwal J.K, Agrawal R.K: Management Accounting: Delhi: Ramesh Book Depo:
8th Edition: 1998
2. Agrawal N.K: Management Accounting of working Capital: Sterling Publishers
(P) Ltd, New Delhi: 1983.
3. Donald Cooper: Business Research Methods: New Delhi: Tata McGraw Hill
Edition: 1998
4. I.M Pandey: Financial Management: New Delhi: Vikas Publishing House (P)
Ltd.: 1983
5. James C. Van Horne: Financial Management Policy: Singapore: Pearson
Education Pvt. Ltd.: Twelfth Edition: 1998
6. K.V Smith: Management of Working Capital: New York: West Publishing
Company: 1994
7. Kothari C.R: Research Methodology: Methods and Techniques: New Delhi:
Vishwa Prakashan: 1999
8. Kulshreshtha N.K: Theory & Practice of Management Accounting: Aligarh:
Naveen Prakashan: 1985
9. M.A Sahaf: Management Accounting: Principles and Practices: New Delhi: Vikas
Publishing (p) Ltd: 2005
10. M.L Agrawal: Cost Accounting: Principles and Practice: Delhi: Sahitya Bhavan

70

WEBSITES :I.
II.

www.google.com
www.rbi.com

III.

www.statebankofindia.com

IV.

www.onlinesbi.com

V.

www.sbilife.co.in

PAMPLETS OF SBI

71