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of just Rs.5000, and now is all set to cross Rs. One Lakh Crore. It has around 2000 service outlets across the nation, and around 12000 plus Employees. The Company was incorporated at Udipi. The undertaking of the was taken over by Government by an Ordinance promulgated on 15th April, 1980 viz., Banking Companies (Acquisition and Transfer of Undertakings) Ordinary, 1980 and vested in a new bank under the name Corporation Bank. The Bank is a Public Sector Unit with 57.17% of Share Capital held by the Government of India. The Bank came out with its Initial Public Offer (IPO) in October 1997 and 37.87% of Share Capital is presently held by the Public and Financial Institutions. The Bank’s Net Worth stood at Rs.3,054.92 crores as on 31 March 2005. Corporation Bank was nationalized in 1980 and in 1997 it became the Second Public Sector Bank in the country to enter capital market. The IPO was over- subscribed by 13 times. Corporation Bank is completing its centenary in 2006. On this occasion, the Bank has charted out a shared vision. The Bank aims to achieve a total business of Rs. 55,000 crore comprising Rs. 32,000 Crore Deposits and Rs.23,000 Crore Advances by 2005-06, the Centenary Year of the bank.
Registered office Mangladevi Temple Road, Post Box No 88 Mangalore Karnataka-5750071 Board of Directors Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Director's Name B Sambamurthy Mukul Singhal M A Srinivasan Hanumantha Rao D N Prakash S Ravi Sathish Goel Suvarna Sanyal C Ramakrishna Kamath P M Sirajuddin Hiren Mehta Venkatrao Y Ghorpade Thomas Mathew Ajay Garg Designation Chairman and Managing director Director Director Director Director Director Director Director Director Director Director Non Official PartTime Director Director Director
T Ramachandra Bhat
Product Line • • •
• • •
• • • •
CorpShelter-Reverse Mortgage Loan Corp New Gen-Student SB account Sale of Gold Coins and Bars Corp Pragathi Account Corp Compassion-Saving Bank Corp 4-in-1 a/c (Current Account) Current Account Term Deposit ATM Loans ○ Corp Site Purchase Loan ○ Corp IPO Scheme ○ Corp Mitra ○ Corp Byte- Computer Loan ○ Corp Home Loan ○ Corp mobile – vehicle Loan ○ Corp housing Loan ○ Corp Education Loan
Future Prospect- The future prospect is very bright. The net profit has grew 37% in financial year 2008 and Advances & Loans has also grew 31% during the year. Return on equity is 17.4% which is much higher as compared to previous year which is 14.2%. The bank is successful in increasing its retail business, the bank has added 10 lakhs new accounts, 80 branches and 28 ATMs. They are planning to set up 100 new branches and 175 ATMs by 2009. They have announced plans to aggressively cross sell financial products. They have set there foot prints abroad in Dubai, China, Hong Kong and London. They has even launched mobile banking in collaboration with Reliance network.
The business Balance Sheet Look impressive. Total business has increased by 36% to Rs946.1 billion, advance increased by 31% to Rs391.9 billion. Retail credit moved up by 15% to 88.1 billion accounting for 22% of total disbursement. The gross NPA ratio declined to 1.47%. The diagram is shown on the next page
Trends of the last five years Operating Profit Generation Year March 04 March 05 March 06 (Rs Crores) March 07 March 08
Here we can see that operating profit in the last five year have shown an increase except from 2004 to 2005 it has decreased otherwise in the rest of the years it has increased.
Sales / Turnover- The turnover stood at Rs. 4516.55 crore in the current fiscal with a 60:40 credit-deposit ratio and the bank is targeting a business of Rs one crore by next year. Year Sale Turnover March 04 2201.17 March 05 2249.80 March 06 2626.47 March 07 3430.16 (Amount in crores) March 08 4516.55
So here we can see that the sale turn over continuously increases in the last five years. Service Rendered• • • • • • • • • • • • • • • • • • • • Mobile pay Payment system by ASBA for the IPOs LIC Premium Payment SMS Banking Facility Corp Bullet- RTGC Facilities Corp card to card transfer Corp Any Branch Banking Corp Multi City Cheque Facility Online Railway Reservation Corp Mediclaim Bill Payment Mobile Recharge Sale of Bonds of Government of India Sale of Stamp Paper Collection of Sale Tax Collection Of Direct Tax Premium Payment Collection of Central Excise and Sales Tax Insurance Mutual funds
PPF Account Depository Services
Present Market share- Corporation Bank when started was not counted in any order but slowly they started taking their market share still it is very small under certain organization in the same industry even then the market share is much more than many players in the same industry. Say its competition with State Bank of India at this present stage cannot be imagined but players like Dena Bank and Bank of Maharashtra are not up to the mark of Corporation Bank Earnings per share- The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability. Calculated as
Year Earnings share
March 04 per 35.15
March 05 28.04
March 06 30.99
March 07 37.38
March 08 51.24
(Amounts in Rs Crores) The trend can be analyze from the following chart
Market Price of its share (in Secondary Market)- The market price of its share 383.08 Various trends can be analyzed as follows Date 31st March 2004 31st March 2005 31st March 2006 30st March 2007 Market Price of Corporation Bank(Rs) 280.05 373.30 383.30 293.60 Date 31st March 2005 31st March 2005 31st March 2005 31st March 2005 Bank Nifty Price (Rs) 2813.70 3536.54 4661.50 5308.50
31st March 2008
30st March 2005
So while comparing the market price of the bank with the bank nifty we can see that the price of corporation bank has fallen continuously for the last three year on the closing date of the financial year whereas the Bank Nifty is continuously increasing from the last five year on the same date that means corporation bank is not doing well even when the market condition is suitable. Strategic decision or achievement in the past or to be taken in the future for the growth, expansion, diversification, others- Good teams and effective leaders make high quality decisions. But all too often the process involves compromise, buck-passing, risk-aversion, private agendas and reliance on poor or insufficient data but in case of Corporation Bank they have never faced it that is why starting with only Rs5000 they have developed such a big business which will grow day by day various awards won by Corporation Bank can be listed as follows
• • •
One of the best 200 companies worldwide outside US having a turnover under a billion US$ ,-Forbes Global Hong Kong India’s best public sector Bank- Business today Shiromani Award 1992 Best Bank Award for Delivery Channel
From year 2007 2006 2005 2004 2003
To year 2008 2007 2006 2005 2004
Class share Equity Equity Equity Equity Equity
of Authorized Capital 1500 1500 1500 1500 1500
Issued Capital 143.44 143.44 143.44 143.44 143.44
Paid up 143437800 143440000 143440000 143440000 143440000
Paid value 10 10 10 10 10
up Paid capital 143.44 143.44 143.44 143.44 143.44
Book value of outstanding shares March 04 Book value of 193.03 March 05 212.98 March 06 235.28 March 07 262.51 March 08 294.79
out standing sh
In the particular case we can see that the book value of outstanding shares is continuously increasing from the last five years Market Capitalization- A measure of a company's total value. It is estimated by determining the cost of buying an entire business in its current state. It is obtained by multiplying the number of share outstanding by their current price per share The Market Capitalization rate on 31st March 2008 can be determined as follows =number of share outstanding*current price per share =159440000*283.63 =Rs 4522.2 cr Dividend declared in the last years Year Dividend March 04 86.06 March05 93.24 March06 100.41 March07 129.10 (Amount in Rs Crores) March08 150.61
Here we saw that the dividend declared by the bank is increasing continuously which means that the company is in profit and the share holders are receiving regular profit on their equity shares Ratio Analysis 1. Liquidity Ratios • Current Ratio = Current Asset/ Current Liabilities Year Current Ratio March 04 0.35 March 05 0.37 March 06 0.59 March 07 0.54 March 08 0.66
The trend which we can see here is that the current ratio is increasing in most of the year except from 2006 to 2007 which means that the proportion of current asset and current liabilities are not appropriate that is
current assets are less than current liabilities which is not good for the bank they must immediately take some steps to overcome this.
Quick Ratio= Liquid Asset/Current Liabilities March 04 9.99 March 05 9.58 March 06 10.46 March 07 9.30 March 08 7.56
Year Quick Ratio
Here we can see that the quick ratio is good where liquid asset is more the current liabilities and that is why that the bank has to send their borrower empty hand the bank must try to invest the money and maintain this ratio but it can be inferred from the table and the graph that in the recent year it has fallen down. 1. Profitability Ratios • Gross profit Ratios= (GP/sale)*100 Year Gross Ratio March 04 profit 17.13 March 05 17.30 March 06 17.48 March 07 21.18 March 08 27.31
Operating profit Ratio March 04 March 05 18.92 March 06 19.48 March 07 24.09 March 08 29.59
Operating profit 18.34 Ratio
Here we can clearly see that the operating profit is increasing continuously that means the main profit generated is increasing in proportion more than the sales.
Net profit margin=(Net profit/Sales)*100 March 04 March 05 March 06 March 07 March 08
Here we can see that the net profit ratio is increasing except in one case that is during 2006 but the ratio in all the cases are appropriate since the net profit is much more times than sales in terms of percentage so the company should try to maintain this ratio and if possible the can even increase it. 1. Leverage Ratios • Debt Equity Ratio= Total Debt/(Share Holder Fund/Net worth) Year Debt Ratio March 04 Equity 13.11 March 05 11.25 March 06 9.74 March 07 8.91 March 08 8.38
Here we can see that the debt equity ratio is not appropriate in any of the cases when the debt is more than the equity bus as we can see from the graph that they are trying to overcome this from year to year and if this trend is continued then they will definitely overcome it. • Proprietors Ratios =Proprietors fund/Total Asset March 04 7.08 March 05 8.16 March 06 9.30 March 07 10.08 March 08 10.66
Year Proprietors Ratios
In this ratio we can see that the proprietor fund is more than total assets so it means that there are some funds that was not utilize effectively and the trend shows that it is growing up in this situation the company must try to lower this ratio on the other hand it can also be inferred that since the asset is less that means there is no borrowing which is a good sign. 1. Investment Analysis Ratio • Earning per shar ratio = (profit after tax-preference dividend)/outstanding no of equity share Year March 04 March 05 March 06 March 07 March 08
Earning per 42.19 share Ratio
Here we can infer that the earning per share ratio is reasonable good in all the year but the trend in first four year is negative but in the fifth year it again becomes positive which the bank must continue. • Dividend per share Ratio = (Dividend paid/payable to equity share holder)/Total no of outstanding Shares March 04 March 05 9.00 March 06 7.00 March 07 6.50 March 08 6.00
Dividend per 10.50 share Ratio
Here it can be in determined that if the company follows the same trend the one day they will have to put lock on there gates it is supposed that the reason is high current liability, the reason can be any but the company need to take certain action regarding this as soon as possible. • Dividend Payout Ratio = (DPS/EPS)*100 March 04 23.97 March 05 27.85 March 06 25.75 March 07 26.33 March 08 19.25
Year Dividend Payout Ratio
Name of close contenders and competitors Name of competitors SBI close Market Capitalization 99076.23 Net Sale 48950.31
(all figures in Rs Crores) Net Profit 6729.12
PNB Bank of India Canara Bank Bank of Baroda Union Bank Indian Overseas Bank Indian Bank Allahabad Bank Syndicate Bank
15728.27 15033.14 10719.17 9194.25 7571.72 6468.52 5898.59 5181.05 4522.24
14265.02 14200.74 12355.22 11813.48 9447.30 8020.84 7995.54 7968.25 7906.31
2048.76 2009.40 1565.01 1435.01 1387.03 1202.34 1008.74 974.74 848.07
Comment on size of Working Capital and Content of working Capital Year Current Assets Current Liabilities Working Capital March 04 1712.12 4807.14 (3095.02) March 05 1353.58 3577.29 (2223.71) March 06 1547.66 2595.14 (1047.48) March 07 1279.53 2337.88 (1058.35) March 08 1493.33 2259.98 (766.65)
Here we can see that the current liabilities are more than current asset so working capital is negative which means they are facing problem in daily management but since it is a bank they can run smoothly even if there is negative working capital.
Source of data 1. Cost Accounting By Basu and Das
2. 3. 4. 5. 6. 7.
www.corpbank.com www.corpretail.com www.indiahousing.com www.nseindia.com www.moneycontrol.com www.cygnusindia.com
Acknowledgement – I am thankful to Dr Meenu Verma for giving us this project which has made me aware of the structure of the financial structure of a company. I am also thankful to our computer lab in charge who provided me with the login password for Cygnus from where I got the Banks Annual Report. Some of my classmate has also helped me in this project and I am also grateful to my Parents who provided me with necessary resource without which the project would not have been completed.
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