CERTIFICATE OF GUIDANCE

This is to certify MR.KUMAR GAURAB BORAH, ROLL NO.106222, a bonafide student of

MANAGEMENT EDUCATION & RESEARCH INSTITUTE, NEW DELHI, has conducted a
project titled A STUDY ON THE IMPACT OF THE MERGER BETWEEN INDUSIND BANK
AND ASHOK LEYLAND FINANCE. This project report is submitted in the partial fulfillment
of the requirement or the summer internship project during the post graduate diploma in
business management, a prestigious PG DIPLOMA awarded by MANAGEMENT EDUCATION
&RESEACH INSTITUTE, new delhi.
PROJECT GUIDE:

MR. S.M. JHA

BRANCH MANAGER,
VEHICLE FINANCE DIVISION,
INDUSIND BANK, GUWAHATI, ASSAM

Student Declaration

I, Mr. KUMAR GAURAB BORAH, ROLL NO.106222, the undersigned, a

student of MANAGEMENT EDUCATION AND RESEARCH INSTITUTE,
NEW DELHI declare that this project report titled A STUDY ON
THE IMPACT OF MERGER BETWEEN INDUSIND BANK AND
ASHOK LEYLAND FINANCE, is submitted in partial fulfillment of
the requirement for the summer internship project during the Post
Graduate Diploma in Business Management, a prestigious Post
Graduate Diploma awarded by MANAGEMENT EDUCATION AND
RESEARCH INSTITUTE, NEW DELHI.
.

This is my original work and has not been previously submitted as a

part of another degree or diploma of another Business school or
University.
The findings and conclusions of this report are based on my
personal study and experience, during the tenure of my summer
internship.
Mr. KUMAR GAURAB BORAH, PGDBM 2006-08,
MANAGEMENT EDUCATION AND RESEARCH INSTITUTE
53-54, institutional area, Janak puri,
NEW DELHI-110058
Phone: 011-28522201-04

Preface
Knowledge without practice is incomplete. So if there is only theoretical knowledge it is
always incomplete without the practical knowledge. It helps us to clear our ideas in a better
way. Summer project is one of the ways of gaining practical knowledge. It helped me to clear
my concepts and better understand them. Summer project is always a good record a student has
made during his academics.

Acknowledgement

A project of this magnitude requires the cooperation of many

people. I would like to thank all the people whose professional and
personal assistance helped in successfully completing this project.
First of all I would like to thank MANAGEMENT EDUCATION AND
RESEARCH INSTITUTE, the institute as a whole where I am
pursuing my Post Graduate Diploma in Management .This report
would not have been possible without the continuous support and
in-depth knowledge of the project provided by the project guide
Mr.S.M. JHA, BRANCH MANAGER,VEHICLE FINANCE DIVISION,
INDUSIND BANK,GUWAHATI .I would like to express my sincere
thanks to Mr.DIPANKAR CHOUDHURY and Miss.BHANITA
TALUKDAR, EXECUTIVE TRAINEE, for their great help and
encouragement rendered by them in joining and doing this project.
I am also thankful to Mr.RANJIT, Mr.PANKAJ, Mr. SWAMINATHAN and
Mr.Ramesh ,ASSTT. MANAGER TRAINEE, INDUSIND BANK for
providing a comprehensive review and numerous suggestions on
improving
the content of this report.
Finally, I am very thankful to my Parents to share there personal
view with me, my all friends and the respondents who contributed
with excellent feedback and suggestions for drafting this report.

EXECUTIVE SUMMARY
Commercial vehicles influence the trade, commerce and industry of a country in a
major way. Vehicles falling under this category are buses, trucks, ambulance, jeeps
and many others. It comes in various uses such as transportation of goods, shipping
and handling of various commodities and so on. The future of companies
manufacturing these vehicles is very bright due to India's growing commercial
sector. The export of commercial vehicles has gone up to 72% breaking all previous
records.
The merger with the Bank in June 2004 of Ashok Leyland Finance Ltd., among the
largest leasing finance and hire purchase companies in India, set in motion a process
of consolidation through the combined customer base of the merged entity and its
increased geographical penetration. IndusInd Bank has become one of the fastestgrowing banks in the Indian banking sector today with its branch network expanding
from 61 as on March 31, 2004 to 137 as on March 31, 2006 reflecting an increase
in excess of 125% in 24 months.
My project deals with the analysis of the effect of the merger between INDUSIND
BANK AND ASHOK LEYLAND FINANCE. To know the financial position of the
organization and to compare the financial condition between pre and post merger
period, ratio analysis has done to know the condition. Questionnaire is prepared for
the purpose of taking the response from the customers and to analyze the merger
from the information given by them. Other important information is collected from
the employees through personal interview.
From the analysis part of view it is come to know that 2006 financial year was not a
good year for the bank as the performance is below average. It is also clear from the

analysis of vehicle finance division that customers who are having more than 3
vehicles are satisfied with bank but most of the new customers are not satisfied with
the services provided by bank because according to them the process is quite time
consuming.
The recommendation to GUWAHATI BRANCH is that to check the customers
viability and payment track record properly to decrease default cases .The company
should go for aggressive marketing and the company must look for increasing the
rate of new customers because old customers already near to reach their saturation
point.

OVERVIEW OF INDUSIND BANK

IndusInd Bank derives its name and inspiration from the Indus Valley civilization - a
culture described by National Geographic as 'one of the greatest of the ancient world'
combining a spirit of innovation with sound business and trade practices.
Mr. Srichand P. Hinduja, a leading Non-Resident Indian businessman and head
of the Hinduja Group, conceived the vision of IndusInd Bank - the first of the newgeneration private banks in India - and through collective contributions from the NRI
community towards India's economic and social development, brought our Bank into
being.
The Bank, formally inaugurated in April 1994 by Dr. Manmohan Singh,
Honorable Prime Minister of India who was then the countrys Finance Minister,
started with a capital base of Rs.1,000 million (USD 32 million at the prevailing
exchange rate), of which Rs.600 million was raised through private placement from
Indian Residents while the balance Rs.400 million (USD 13 million) was contributed
by Non-Resident Indians.
A NEW ERA

The merger with the Bank in June 2004 of Ashok Leyland Finance Ltd., among
the largest leasing finance and hire purchase companies in India, set in motion a

process of consolidation through the combined customer base of the merged entity
and its increased geographical penetration. IndusInd Bank has become one of the
fastest-growing banks in the Indian banking sector today with its branch network
expanding from 61 as on March 31, 2004 to 137 as on March 31, 2006 reflecting
an increase in excess of 125% in 24 months. The Bank has approximately 150
ATMs of its own, and has concluded multilateral arrangements with other banks with
a total network of 15,000 ATM outlets. All the outlets of the Bank, including its
branches and ATMs, are connected via satellite to its central database that operates
on the latest version of IBMs AS400-720 series hardware and Midas Kapiti (now,
Misys) software.
IndusInd Banks broad lines of business include Corporate Banking, Retail
Banking, Treasury and Foreign Exchange, Investment Banking, Capital Markets,
Non-Resident Indian (NRI) / High Net worth Individual (HNI) Banking, and
(through subsidiary) Information Technology.
Indus Ind Bank provides multi-channel facilities including ATMs, Net Banking,
Mobile Banking, Phone Banking, Multi-city Banking and International Debit Cards.
It was one of the first banks to become a part of RBIs Real Time Gross Settlement
(RTGS) system. It has implemented an enterprise-wide risk management system
encompassing global best practices in the area of Risk Management, with help from
KPMG. This has enabled the Bank to remain in the forefront in complying with the
requirements of Basel II. It is the first bank in India to receive ISO 9001:2000
certification for its Corporate Office and its entire network of branches.
With its roots in Indian tradition and emphasis on customer care, IndusInd Banks
service philosophy is well reflected in the communication tagline We Care Dil
Se.

Business Achievements
Year
2006-07

Net worth crossed a milestone figure of Rs. 1000 crores at Rs. 1056 crores
Successful completion of GDR issue of Rs. 145.96 crores
Business Turnover touched a figure of Rs 28,700 crores registering a growth
of 18.14% over the previous year.

Network of Branches increased to 170 along with 99 off-site ATMS,

thus having presence in over 141 geographical locations spread over 27 States
including Union Territories.
Highest A1+ rating for its Certificates of Deposits by ICRA and Highest P1+
rating for its FDs by CRISIL.
Bestowed with the prestigious IBA Award for technology implementation
(STP).
Added a number of new business and product lines, viz. the launch of Indus
GOLD Debit Card and Indus Gift Card, E-Remittance facility, tie-up with
number of Banks for ATM usage, tie-up with Religare Securities to extend
Portfolio Management services and Bancassurance tie-up with Aviva Life
Insurance

2005-06

Ranked among the top ten banks in the country in the ET500 list of leading
companies in India.
Rated as The best among the top 10 private-sector banks in a survey
covering 79 banks conducted by Business Standard in its November 2005
issue. Ranked sixth in the overall list, the Bank was also identified he Most
Efficient Bank among all banks in India.
Bestowed Indias Most Productive Bank status by a Business TodayKPMG Survey
Presented Outstanding Achiever of the Year 2005- Corporate (Runner upBanking Technology Award) by IBA, Finacle (from Infosys) and TFCI (Trade
Fair and Conference International).
Honored with the Award for Corporate Social Responsibility (CSR) at the
India Brand Summit 2005, Mumbai.

2004-05

Business Turnover crossed Rs. 22000 crores

Network grew to 115 branches, 9 extension counters and 195 ATMs, spread
over 95 geographical locations.
Bestowed with highest ratings for deposits from reputed rating agencies
Highest rating P1+ - on Fixed Deposits from CRISIL
Highest rating P1+ - on Certificate of Deposits from CRISIL
Highest rating F1+ - on Certificate of Deposits from Fitch Ratings India Pvt.
Ltd.

2003-04

Total business volume touches Rs. 19,000 crores.

Completes 10 years of banking excellence.
Ashok Leyland Finance merges with the Bank.
The first Indian Commercial Bank to achieve certification for its Entire
Network of Branches under the ISO 9001:2000 Quality Management System.
Launch of Debit Card- International Power Card.
Banks first International Representative Office in Dubai.
One of the first banks to go live on RTGS platform.

2002-03

One of the first banks to implement the RBI- Electronic Funds Transfer
scheme.

2001-02

Total business volume touches Rs. 14,000 crores. Highest productivity in the
Indian banking sector with Rs. 16 crores of business per employee.

2000-01

Total business volume crosses Rs. 10,000 crores.

1998-99

IndusInd again rated as one of the Top Performing Banks in various survey
reports, for the second year in succession.

1997-98
IndusInd rated as one of the Top Performing Banks in various survey reports.

1996-97
Pioneer in launching Internet Banking
1994-95
IndusInd Bank comes into existence. Completes first profitable year of operations

MISSION
To emerge as an international bank with traditional roots.
To acquire global capabilities
To provide world-class services
To maintain the highest standards of professionalism and integrity.
LOGOS & IMAGES

10

Trust, Clarity of vision, Calmness, Communication, Truth, Stability,

Harmony, Modernity.

Creativity, Imagination, Expression, Energy, Expansiveness,

Innovation, Warmth, Friendly, Approachability.
Strength, Power, Passion, Authority, Reliability, Dependability,
Efficiency

INTRODUCTION TO THE VEHICLE FINANCE

The British concept of hire-purchase has, however, been there in India for more than
6 decades. The first hire-purchase company is believed to be Commercial Credit
Corporation, successor to Auto Supply Company. While this company was based in
Madras, Motor and General Finance and Installment Supply Company were set up in
North India. These companies were set up in the 1920s and 1930s.
Development of Hire-purchase took two forms: consumer durables and automobiles.
Consumer durables hire-purchase was promoted by the dealers in the respective
equipment. Thus, Singer Sewing Machine company, or Murphy radio dealers would
provide installment facilities on hire-purchase basis to the customers of their
products.
The other side developed very fast - hire-purchase of commercial vehicles. The
dealers in commercial vehicles as well as pure financing companies sprang up. The
value of the asset being good and repossession being easy, this branch of financing
activity flourished fast, although until recently, most of automobile financing
business was in hands of family-owned businesses.
Essentially, asset-based financing in India particularly by non-banking financial
companies is split in two documentation modes - lease and hire-purchase. These two
are technically different instruments, but in essence, there is not much that differs
between the two, except for the caption. In spite of the substantive similarity,
historically, there has been a diametric separation between these two forms. The

11

assets usually subject matter of hire-purchase has been different from those generally
leased out. Leasing has been used mostly for plant and machinery, while hirepurchase has commonly been used for vehicles. Even the players have been
different.
The reasons for this diametric distinction are more historical than logical. Hirepurchase, essentially a British form, entered India during the Colonial era, and
thrived as almost the only form of external finance available for commercial
vehicles. For the financiers, as witnessed World-over, commercial vehicles were the
natural choice for several asset-features he loves: lasting value, ready secondary
market, self-paying feature, etc. Hence, the industry of hire-purchase became
synonymous with truck-financing. Besides, the motor vehicles laws gave the surest
legal protection any law could give to a financier: the financier would not have to
carry any of the operational risks of a motor vehicle, and yet, any transfer of the
vehicle would not be possible without the financier's assent.
Leasing, essentially a US-innovation, entered the country significantly in the early
80s, and was propagated as an alternative to traditional modes of industrial finance.
Besides, the early motivation (which continues with a number of players even now)
of leasing was capital allowances, more significantly the investment allowance,
which was not available for transport vehicles. Hence, the leasing form historically
clung to industrial plant and machinery.
For several years, there was no lease of vehicles, because the Motor Vehicles law
protection was not applicable to a lease, and there was no investment allowance on
vehicles, and for reciprocal reasons, there was no hire-purchase of industrial
machinery.
These reasons have vanished over time.

The Motor Vehicles law now treats leases and hire-purchase at par from the
viewpoint of financier-protection.
Investment allowance has been abolished, and hence, there are no
predominant tax-preferences to a lease.
The RBI treats lease and hire-purchase at par and has stopped giving a
distinctive classification to leasing and hire-purchase companies.
The accounting norms lead to the same effect on pre-tax income, as also
balance sheet values, be it a lease or hire-purchase transactions.

12

Therefore, income-tax and sales-tax treatment apart, there is not much that is
different between lease and hire-purchase. The choice between the two is by and
large open, subject to tax consequences.

Broadly, the following factors have been responsible for the growth of VEHICLE
FINANCE:

No entry barriers - any one could float a leasing entity, and even an existing
company not in leasing business can write a lease purely for tax shelters.
Buoyant growth in capital expenditure by companies - The post
-liberalization era saw a spate of new ventures and fresh investments by
existing venturers. Though primarily funded by the capital markets, these
ventures relied upon leasing as a source of additional or stand-by funding.
Most leasing companies, who were also merchant bankers, would have funded
their clients who hired them for issue management services.
Fast growth in car market: Needless to state with facts, the growth in car
leasing volume has been the highest over these years - the spurt in car sales
with the entry of several new models was funded largely by leasing plans.
Tax motivations: India continues to have unclear distinction between a lease
that will qualify for tax purposes, and one which would not. In retrospect, this
is being realized as an unfortunate legislative mistake, but the absence of any
clear rules to distinguish between true leases and financing transactions, and
no bars placed on deduction of lease tax breaks against non-leasing income,
propelled tax-motivated lease transactions. There was a growing market in
sale and leaseback transactions, which, if tested on principles of technical
perfection or financial prudence, would appear to be a shame on everyone's
face.
Optimistic capital markets: Data would establish a clear connection between
bullish stock markets and the growth in both number of leasing entities and
lease volumes. Year 1994-1995 saw the peak of primary market activity where
a company, even if a new entrant in business, could price itself on
unexplainable premium and walk out with pride.
Access to public deposits: Most leasing companies in India have relied, some
heavily, on retail public funds in the form of deposits. Most of these deposits
were raised for 1 year tenure, and on promise of high rates of interest, at times
even more than the regulated rate (which was lifted in 1996 to be reintroduced
in 1998).

13

A generally go-go business environment: At the backdrop of all this was a

general euphoria created by liberalisation and the economic policies of Dr.
Manmohan Singh.

The current problems of Indian VEHICLE FINANCE could be listed as follows,

again without any order of listing:
Asset-liability mismatch: Most non-banking finance companies in India
had relied extensively on public deposits -this was not a new development, as
the RBI itself was constantly encouraging and supporting the deposit-raising
activities of NBFCs. If the resulting asset-liability mismatch, to everybody's
agreement, is the surest culprit of all NBFC woes today, it must have been a
sudden realization, because over all these years, each Governor of the RBI has
passed laudatory remarks on the deposit-mobilization by NBFCs knowing
fully well that most of these deposits were 1-year deposits while the
deployment of funds was mostly for longer tenures. It is only the contagion
created by the CRB-effect that most NBFCs have realized that they were
sitting on gun-powder all these years. The sudden brakes put by the RBI have
only worsened the mismatch.
Generally-bad economic environment: Over past couple of years, the
economy itself has done pretty badly. The demand for capital equipment has
been at one of the lowest ebbs. Automobile sales have come down, corporate
have found themselves in a general cash crunch resulting into sticky loans.
Poor and premature credit decisions in the past: Most NBFCs have learnt
a very hard way to distinguish between a good credit prospect and a bad credit
prospect. When a credit decision goes wrong, it is trite that in retrospect, it
invariably seems to be the silliest mistake that ever could have been made, but
what Indian leasing companies have suffered are certainly problems of
infancy. Credit decisions were based on a pure financial view, with asset
quality taking a back-seat.
Tax-based credits: In most of the cases of frauds or hopelessly-wrong credit
decisions, there has been a tax motive responsible for the transaction. India
has something which many other countries do not- a 100% first year
depreciation on several assets. Apparently, the list of such assets is limited and
the underlying fiscal rationale quite holy and sound - certain energy saving
devices, pollution control devices etc qualify for such allowance. But that
being the law, it is left to the ingenuity of our extremely competent tax
consultants to widen the range with innovative ideas of exploiting these

14

entries in the depreciation schedule. Thus, there have been cases where
domestic electric meters have been claimed as energy saving devices, and the
captive water botanizer in a hotel has been claimed as water pollution control
device ! As leasing companies were trying to exploit these entries, a series of
fraudsters was successful in exploiting, to the hilt, the propensity of leasing
companies to surpass all caution and all lending prudence to do one such
transaction to manage its taxes, and thus, false papers for non-existing wind
mills and never-existing bio-gas plants were fabricated to lure leasing
companies into losing the whole of their money, to save the part that would
have gone as government taxes !
Extraneous problems - frauds, closures and regulation: As they say, it
does not rain, it pours. Several problems joined together for leasing companies
- the public antipathy created by the CRB episode and subsequent failures of
some good and several bad NBFCs, regulation by the RBI requiring massive
amount of provisions to be created for assets that were non-performing, etc. It
certainly was not a good year to face all these problems together.

Commercial Vehicles in India

Commercial vehicles influence the trade, commerce and industry of a country in a
major way. Vehicles falling under this category are buses, trucks, ambulance, jeeps
and many others. It comes in various uses such as transportation of goods, shipping
and handling of various commodities and so on. The future of companies
manufacturing these vehicles is very bright due to India's growing commercial
sector. The export of commercial vehicles has gone up to 72% breaking all previous
records.
Commercial Vehicles- Ambulance ,
Buses
Trucks
Tractors
Defence Vehicles
Construction Equipments

15

Ambulances- Force Motors, Hindustan Motors Ltd. Mahindra & Mahindra

Ltd. Maruti
Udyog Ltd. Swaraj Mazda.
Buses- Ashok Leyland, Eicher, Force Motors, Hindustan Motors Ltd. Mahindra
&
Mahindra Ltd. Swaraj Enterprise, Tata Motors, Volvo.
Trucks- Ashok Leyland, Eicher, Force Motors, Hindustan Motors Ltd.
Mahindra &
Mahindra Ltd. Swaraj Mazda, Tata Motors, Volvo
Tractors- Escorts ltd. Force Motors, Swaraj Enterprise
Defence Vehicles- Ashok LeylandMahindra & Mahindra Ltd. Tata MotorsConstr
Construction Equipments- Bharat Earth Movers Ltd , Eicher,TelconTerex,
Vectra,Volvo Motors

Commercial Vehicle Loan

Eligibility
> You or your guarantor should have at least 3 years experience in relevant transport
operations.
If you are new to this field, your guarantor should meet this criterion.
> You or your guarantor should own at least one free vehicle.
> You or your guarantor should have been a resident of that area at least for three
years.
> You or your guarantor should own immovable unencumbered property equivalent
to the amount
financed and a copy of the property deed and tax paid challan to be furnished.
> Cash generation potential from the vehicle should be at least 1.3 times of the
installment payable
after meeting all operational expenses.
> Your guarantor should be known to you and should preferably be our existing
customer.
He should not be your relative.

16

> For special purpose vehicle (eg. Tippers), you should have concluded contracts
covering at
least 50% of the proposed contract tenure.
Purpose:
For the purchase of new and used commercial vehicles of all manufacturers.
Documents
> Proof of residence - Ration card or Passport copy or Voter's ID
> Contract copies for special purpose vehicles/ vehicles deployed against specific
contracts
> Statement of earlier loans taken
> Copy of property deed for immovable property owned
> RC book photocopies for vehicles owned
> Copy of Income Tax and Wealth Tax returns for past two years
> Details of your guarantor - his business, net worth, IT returns & Wealth Tax term
copies

Partnership Firms
> Partnership Deed and authorization letter for partnership firms.
> Profit and Loss account and Balance Sheet for past 2 years.
> Registration Certificate
> Contract copies for special purpose vehicles/ vehicles deployed against specific
contracts
> Statement of earlier loans taken
> Copy of property deed for immovable property owned
> RC book photocopies for vehicles owned
> Details of your guarantor - his business, networth, IT returns & Wealth Tax term
copies.

17

INDUSIND BANK
VEHICLE FINANACE DIVISION:
Vehicle finance division in INDUSIND BANK is divided into two parts.

1) Commercial vehicle division (earns and pays)

2) Personal product division (use and pay)
For commercial vehicle loan the executive has to evaluate the customers
a) Viability
b) Repayment culture
In viability, the income source, property, market reputation of the customers has to
be calculated.

18

The repayment culture means how the customer is repaying his previous loans taken
from bank or financial institute (NBFC).For PPD, the customers permanent income
source is preferred.

PROCESS HEADINGS
1) Business sourcing
2) Viability
3) Customer identification
4) Credit appraisal
5) Proposal
6) Approval
7) Documentation
8) Administration
9) Collection
10) Repossession
11) Closing of deal by using form 35.

DETAILS ABOUT THE PROCESS

1) BUSINESS SOURCING:

Business sourcing can be

customers and dealers.
a) Direct (existing customers)
b) Dealers
c) Direct marketing associates

made by banks own approach, existing

70%-80%
10%-15%
5%-10%

2) VIABILITY:
In viability, the bank evaluates whether the customer who has taken loan is capable
of paying the EMIs regularly or not.
3) CUSTOMER IDENTIFICATION:

19

Customer identification is done by field investigators. Customers photo and

domicile profile is required.
4) CREDIT APPRAISAL:
For credit appraisal
a) Bank statement.
b) Balance sheet and profit & loss account.
c) RC book.
are required.
5) PROPOSAL:
The proposal is made by BRANCH HEAD at bank desire IRR and should be sent to
head office for approval.
6) APPROVAL:
If the head office finds the proposal suitable then the proposal is approved and sends
it back to branch office. If any rectification has to be made then the head office
informs branch office to rectify the errors.

7) DOCUMENTATION:
Documentation is to be collected for asset protection.
a) in-voice
b) RC book
c) Insurance
d) Tax challan.
8) ADMINISTRATION:
Administration is responsible for keeping the record properly in daily basis.
Administration also updates the knowledge about competitors market policies.

9) COLLECTION:
The EMIs has to be collected by collection executives. The collection executives
informs the customers regularly how much they have to pay for that period

20

10) REPOSSESION:
If any customer willingly or unwillingly not paying the installments then his vehicle
is reposed by bank through legal procedures. The customer has to pay repossession
charge with due EMIs within 3 months otherwise the vehicle can be sale bank in
market.
11) CLOSURE OF DEAL BY USING FORM 35:
The bank gives NOC with form 35 to the customer for submit in the transport office
state indicating the owner of the vehicle from then onward is the customer.

INDUSIND BANKSs EVALUATION CRITERIA OF CUSTOMER IN

VEHICLE FINANCE DIVISION

a) Experience
b) Market reputation
c) Nature of the product
d) Viability of the project.
e) Domicile
f) Repayment track record
g) Property
h) Fleet strength
i) Guarantor.

21

LEGAL PROCESSES OF INDUSIND BANK (VEHICLE FINANCE DIVISION):

a) Cash collection register is must in each branch.
b) CMS/CRA on a daily basis.
c) Demand list stored out by field officer/collection executives.
d) Branch incharge to decide when to repossess a vehicle.
e) Field officer prepares expense statements & branch has to ensure regularly.
f) Statement of account corrections must be initiated by branch.
g) NOC request to be made from branch.
h) Use sop (state office protocol) to post flag.

BUSINESS ROLE OF EMPLOYEES:

a) Business role of business executives:
1) Business executives should visit the dealer point daily.
2) Price list of all products should be available.
3) Monthly sales figure details has to be collected and the same has to be forwarded
to department head/hub head.
4) Collect details of competitors activities.
5) Develop reputation of bank.

b) Business role of field investigator:

1) Establish contact with customer/guarantor
2) Check the correctness of address.
3) meet the customer at his/her residence.
4) Collect the information about reputation of the customer.

22

c) Business role of branch head:

1) Branch head should visit dealerships once in a week.
2) Update knowledge about competitors movement.
3) Control of all business activities.

ABOUT THE
MERGER BETWEEN
INDUSIND BANK
23

&
ASHOK LEYLAND FINANCE

INTRODUCTION:

The Honorable High Courts of Mumbai and Chennai have cleared the merger, as has
Reserve Bank of India. The merger was effective from April 1, 2003.
The Board of Directors of IndusInd Bank 29 JUNE 2004 adopted the Audited
Financial results for the year ended March 31, 2004. The Audited results represent
the consolidated profit & loss accounts and balance sheets of IndusInd Bank Ltd.
(IBL) and Ashok Leyland Finance Ltd. (ALFL).

24

MERGER VALUE
IndusInd Bank: Buy
Ashok Leyland Finance: Hold
FRESH investments can be considered in the stock of IndusInd Bank. The earnings
per share works out to Rs 7.2 for the nine months ended December 2003 for the
combined earnings of IndusInd Bank and Ashok Leyland Finance on the expected
equity of the combine, post-merger. Given the IndusInd stock price of Rs 40, the
price-to-earnings multiple works out to about four on the likely earnings per share
for the year ended March 2004.
IndusInd is not one of the fastest growing private sector banks. It has had trouble
matching up to competition. The quality of its assets has also been inferior compared
with competition, and the situation is only now on the mend.

The mergers of the finance firms of the Hinduja group with the bank is also a
negative factor from a corporate governance perspective. The stock's valuation,
however, has factored in these negative aspects. Besides, the combination with
Ashok Leyland Finance gives the bank the impetus to achieve growth in future.
A picture of contrast
In line with past trend, the operating performance of Ashok Leyland Finance was
superior to that of IndusInd Bank for the three-month period ended December 2003.
The net interest income of Ashok Leyland Finance rose impressively by 20 per cent.
(Net interest income is the difference between interest income and interest
expenses.) In contrast, the net interest income of IndusInd Bank remained stagnant.
At the profit level, though, Ashok Leyland Finance reported a marginal decline while
IndusInd Bank reported a massive 200 per cent rise. Ashok Leyland Finance

25

attributed the sharp rise in operating expenses to the decrease in profit. In the case of
IndusInd, profit on sale of treasury securities boosted net profit. The fall in
provisions for bad loans also helped the growth in profit.
The performance of IndusInd Bank in the first six months of the year (that is, April
to September 2003) has also been impressive. Net interest income rose sharply by
more than 200 per cent. A combination of growth in interest income and reduction in
interest expenses led to the improvement.
In the first three months of 2003-04, IndusInd Bank merged with itself another nonbanking finance company (NBFC) belonging to the Hinduja group. The financial
performance in the first nine months appears to suggest that the merger has not been
detrimental to the interests of IndusInd Bank shareholders. In contrast, the profit
performance of Ashok Leyland in the first six months of the year has not been
impressive. Profits have remained stagnant.
Merger value
Considering the faster growth at Ashok Leyland Finance and the superior quality of
its assets, the merger did not appear to suit the interest of its shareholders. The shareswap ratio, however, appears to have taken care of these factors. The merger reduces
the earnings per share for the shareholders of IndusInd Bank.
In addition, the NBFC's profit growth in 2003-04 has not been impressive and the
stock of IndusInd Bank is as under valued as that of Ashok Leyland Finance. These
issues reduce the disadvantages associated with a merger for the shareholders of the
NBFC. In addition, it is highly likely that the dividend yield post-merger is likely to
be as much as what it was pre-merger. In this context, shareholders of Ashok
Leyland Finance can continue to hold.

IMAGE POST MERGER TO COME HERE:

The post-merger focus of the Bank will be the building up of relationships,
development of new products and services, further technology upgradation,
international footprinting, and increasing the number of branches as well as offsite
ATMs to service customers better. Technology has always been a cornerstone for the
Bank, and its technology subsidiary will be utilized to its fullest to help the Bank
attain technological excellence. ALFL, Indias largest NBFC (as per latest CRISIL
data) with assets of over Rs 3000 crore, a client base of 500,000, a large network of
offices spread across the country, and a demonstrated capability to generate good
quality retail assets, augurs well for IBL. Post merger, the results of the Bank

26

combined with ALFIN's assets/revenue/profit, should substantially enhance the

position of the consolidated entity in the banking sector.
According to Bhaskar Ghose, Managing Director & CEO the merger is beginning for
the new IndusInd Bank. The new emphasis on retail banking will see IndusInd Bank
scaling new heights in the years to come. At the same time, Indusind bank will focus
on the corporate side too. The SME segment remains a major growth driver for
Indusind bank. But the thrust will now be largely on retail banking, considering the
advantages that the bank have achieved through this merger. The synergies of the
two organizations will now be realized to help bank customers' access products and
services, which might not be available at other banks. The merger brings for
Indusind bank new customers, new businesses, and new geographical reach,.
Technology will remain a cornerstone in the growth momentum of the Bank, and a
differentiator from other players in the banking system.
S Nagarajan, Joint Managing Director, exuded optimism about the future of the
merged entity and said: "The merger is extremely synergistic for IndusInd Bank. The
erstwhile ALFL will now have access to a stable source of low cost funds, while
IndusInd Bank gets into areas hitherto unexplored by retail banks. The technological
prowess of ALFL also has a neat fit with the existing technological excellence
achieved by IndusInd Bank. We hope to take the Bank to newer heights in the days
to come."

Network
IndusInd Bank now has 62 branches, 12 extension counters and 80 offsite ATMs.
The Bank intends to convert 132 branches of ALFL into full-fledged Bank branches
in a phased manner. In its international operations too, IndusInd Bank has moved
forward. While its Dubai office was launched last October, IndusInd Bank's London
office has started operating from today.

Technology:

27

Technology has been a consistent strength of the Bank in its decade-long existence.
While Internet banking and mobile banking were features added to the Bank's
offerings way back in 1996 and 1997. IndusInd Bank notched up a new milestone by
becoming one of the very first banks to implement RTGS on its systems after RBI's
approval. Now, the Bank has installed and configured online real-time replication of
data software - both on its production and DRS Systems located in Mumbai and
Hyderabad respectively with effect from 20th June 2004.
Commenting on this, Bhaskar Ghose said: "We have completed the testing of these
systems under different conditions and are very pleased with the results. We have
now gone "live" with this facility. Currently all transactions - both customer and
internal - of the Bank originating from all its delivery channels like branches, ATMs,
Internet banking and other interface applications like BSE, NSDL, etc are replicated
on our DRS system on-line real-time."
IndusInd Information Technology Ltd., a subsidiary of IndusInd Bank, is the driving
force for technology in the Bank. Further, after the merger of ALFL with the Bank,
Alfin Wind Energy Ltd., Alfin Services and Solutions Pvt. Ltd. and ALF Insurance
Services Pvt. Ltd. - subsidiaries of ALFL - have now become contributors to the
Bank.

Post-Merger Developments
The performance of the Bank for the period under review reflects the significant
impact of the synergy of combined operations following the merger of the erstwhile
Ashok Leyland Finance with your Bank. There has been a marked improvement in
the financial position, geographic presence and asset portfolio both, in the
corporate and retail businesses of your Bank.
In the post-merger scenario, the network of the Bank has increased from 61 branches
and 12 extension counters as on 31st March 2004 to 115 branches and 9 extension

28

counters as on 31st March 2005.

It is against this background that I would like to briefly share with you an overview
of the Banks operations.

A)Operating Performance

There has been a distinct and positive shift in our Banks income streams. Added to
this, our Bank reduced its reliance on sale of investments as a major source of
earnings, thereby ensuring long-term growth and sustainability of earnings.
our Bank reported a lower operating profit of Rs. 446 cr and net profit of Rs. 210 cr
during 2004-05, compared to previous years figures of Rs. 481 cr and Rs. 262 cr
respectively, mainly on account of substantially lower profit from trading in
securities caused by the industry-wide hardening of interest rates - the profit from
trading on securities was about 58 cr in contrast to Rs. 227 cr in the previous year.
The total deposits as on March 31, 2005 aggregated to Rs. 13,114 cr a growth of
17% compared to the previous year. Net advances (net of securitisation) rose to Rs.
9000 cr as on March 31, 2005, compared to Rs. 7301 cr on March 31, 2004,
recording a growth of 23%.

B) Business Strategy
Our Bank in the post-merger scenario augmented its business in the retail segment.
Retail Banking now occupies center-stage in your Banks plans and strategies. This
is in line with the retail revolution that is currently sweeping across the country and
the huge surge that the retail segment of the Indian banking industry has witnessed
over the last few years.
Our Bank has built up a unique retail loan portfolio consisting of commercial vehicle

29

loans, car loans, two / three-wheeler loans etc. During the year, disbursements
aggregating Rs. 3710 cr (compared to Rs. 2620 cr in the previous year) were made
under this segment recording an increase of 42%.
Another focus area in retail lending is the Banks initiative in respect of commercial
loans to traders and small businesses, which have witnessed significant growth
during the year. our Banks outstanding loans to this sector as on March 31, 05 were
about Rs.725 crores. A separate Retail Credit Division has been setup at the
Corporate Office to handle this business (among other areas of retail banking
activity) so as to tap its potential to the full.
Small and Medium Enterprises (SMEs) have consistently been a key customer
segment for our Bank, and its potential for future growth remains high. our Bank has
continued to cater to the SME sector, but now with a reoriented strategy for growth
in this business, so as to ensure a more diversified credit portfolio and higher yields.
In the area of resources, the focus has been on mobilizing low-cost deposits
comprising current accounts and savings bank accounts. Efforts have also been
made to further strengthen the alternate delivery channels through Internet Banking
and ATMs. IN keeping with the times, various innovative products and services
including International Mahila Card, Mobile Top-ups, Utility Bill payment etc. have
been offered by your Bank to its clients.
The Bank has been focusing on technology based differentiated products to its
customers. The present IT infrastructure set-up of the Bank has the ability to handle
large volumes of retail business in an effective and responsible manner.
Our strategy will be to build a strong retail client base throughout the country.

C)Overseas Network
our Bank opened its second overseas office in London the representative offices in
Dubai and London have enhanced the Banks international presence by way of
providing services in areas of international trade and NRI business.

30

D)Human Resources
The Banks human resources department has been very active in supporting the
expansion plan of the organization through recruitment of skilled and experienced
human resources. To ensure the efficiency and effectiveness of manpower, the Bank
has been continuously endeavouring to impart necessary training. The Bank
continues to lay emphasis on evolving improvement in customer service standards
through highly mobilised human resources

E)Information

Technology

Integration of the IT systems of the erstwhile ALFL with the IT infrastructure of our
Bank was a major accomplishment during the year under review. our Bank also
successfully established a disaster recovery site at Hyderabad with on-line real-time
data replication capabilities (vis--vis, the main production server in Mumbai), to
ensure uninterrupted services to the Banks customers. our Bank is also in the
process of implementing a payment switch for handling e-commerce transactions for
its customers.
We are a front-runner in adopting various technology initiatives of Reserve Bank of
India and will be among the first ones to adopt technology such as cheque truncation
to facilitate faster clearance of cheques and instruments, prevention of money
laundering etc.

F) Corporate Governance
our Bank continues to adopt the best practices for corporate governance. It has set
up various Committees to take decisions and monitor the activities falling within
their terms of reference. It is your Banks strong belief that sound principles of
Corporate Governance are important keys to success.

G) Corporate

Social Responsibility

During the year 2004-05, your Bank donated Rs. 1.18 cr (including Rs. 1 cr to the

31

Prime Ministers National Fund for the Tsunami victims) towards various social and
philanthropic causes.
The unprecedented floods in large parts of Maharashtra, especially Mumbai, has left
many with loss of life and property. To create awareness about preventive and
protection measures and to avoid an epidemic, your Bank organized a public
awareness campaign in association with the Rotary Club, Lions Club and Hinduja
Hospital. Camps were held in different parts of Mumbai with provision for
medicines and consultation from doctors.

Performance highlights for the year ended 31st

March 2004:
ALFL, industry leader amongst NBFCs, with an asset base of Rs 4,200 crore,
merges with IndusInd Bank

32

Advances grew to Rs 7,812 crore, registered a sharp increase of 46% as against

the 14.8% credit growth among Scheduled Commercial Banks in the aggregate
Total Deposits during the year grew by 30% to Rs 11,200 crore as against the
16.9% deposit growth of Scheduled Commercial Banks in the aggregate
Total income stood at Rs 1,331.08 crore against Rs 1,000.7 crore in the previous
year - a growth of 33.01%
Profit After Tax stood at Rs 262.07 crore against Rs 90.17 crore in the previous
year, growing by 190.64%
The Bank reported an EPS of Rs 9.02 on the enhanced equity capital of Rs
290.42 crore
Net Interest Margins show a rise of 18.75% y-o-y from 2.24% in FY2003 to
2.66% in FY2004
Return on Assets has gone up 98.2% from 1.11% to 2.2% over the past year
Return on Equity over the year has improved from 15.49% to 37.37% over the
year - an increase of 141.25%
The customer base of the Bank increases to 800,000 and yearly potential of new
relationships to go up several times
Board of Directors has recommended a dividend of 17.5% (previous year 14%)
on the enhanced equity base, and a special dividend of 5% on the occasion of
the 10th anniversary of the Bank, resulting in a total dividend of 22.5% for the
year
Merger expands the network of the Bank in acquiring retail assets through the
erstwhile ALFL outlets spread over 750 locations
Bank's potential to leverage customer relationships increases with a range of
financial products in the geographically enlarged network
Bank emerges as a leader in financing commercial vehicles / 2-wheelers /
construction equipment
Gross NPA and Net NPA percentage as on 31st March 2004 were at 3.3% and
2.72% respectively

33

Capital Adequacy Ratio of the merged entity as on 31St March 2004 was
12.75% as against 12.13% in FY03
The net worth of the Bank grew by 32.9% to Rs 800.42 crore as against Rs
602.26 crore last year
The merged entity emerges as one of the largest new private sector banks with
its total asset base at over Rs 15,000 crore (augmented by Rs 4,200 crore
through the merger)
Performance highlight for the quarter ended 31st March 2004:
Total income stood at Rs 320.35 crore as against Rs 290.11 crore in the previous
corresponding quarter, registering a growth of 10.42%
Profit After Tax stood at Rs 48.73 crore against Rs 3.66 crore in the previous
corresponding quarter, registering a quantum jump of 1231.42%.

Performance highlights for the quarter ended

September 30, 2006 are:
- Total Income was Rs.429.01 crore as compared to Rs 352.03 crore in the

corresponding quarter of the previous year.

- Net Interest Income (NII) was Rs.65.75 crore as compared to Rs. 91.42 crore in
the corresponding quarter of the previous year.
- Other Fee Income comprising Commission, Exchange, and Brokerage for the
quarter stood at Rs.68.41 crore vis--vis Rs 48.14 crore in the corresponding
quarter of the previous year.

34

- Operating Profit for the quarter was Rs.49.09 crore as against Rs 62.51 crore
in the corresponding quarter of the previous year, and Rs 36.95 crore in Q1 of
this year.
Net Profit for the quarter was Rs.17.18 crore as against Rs 31.49 crore in the
corresponding quarter of the previous year and Rs 8.01 crore in Q1 of this year.
The profits were lower mainly due to the absence of profit on securitisation in
the quarter ended September 30, 2006 (The securitization profit in Q2 last year
was Rs.23.91 crores) and increase in cost of deposits.
- Net Interest Margin (NIM) for the current quarter was 1.34 % as against
2.24% in the corresponding quarter of the previous year. NIM was impacted on
account of higher interest cost and the absence of securitisation profit. NIM for
the Q1 of the current year was 1.22%.
- The quarterly EPS works out to Rs.0.59 (non annualised) on an equity
capital base of Rs 290.51 crore.
- Capital Adequacy Ratio as on September 30, 2006 was 10.31 % as against the
minimum requirement of 9%.

Performance highlights for the 6-month period

ended September 30, 2006 are:
- Total Income for the first half-year was Rs.819.15 crore as compared to Rs
701.89 crore in the corresponding period of the previous year.
- Net Interest Income (NII) was Rs.122.78 crore as compared to Rs. 162.42 crore
in the corresponding period of the previous year.
- Operating Profit for the half year period ended September 30, 2006 was
Rs.86.04 crore as against Rs 140.02 crore in the corresponding period of the
previous year.
Net Profit for the half year period ended September 30, 2006 was Rs.25.19 crore
as against Rs 71.85 crore in the corresponding period of the previous year.
Profits were lower due to lower bad debts recovery and the absence of profit on
securitization.
- Net Interest Margin (NIM) for the half year period was 1.28 % as against
2.06% in the corresponding period of the previous year.

35

- Total Advances as on September 30, 2006 were Rs.10,724 crore as compared to

Rs. 9,082 crore as on September 30, 2005, recording a growth of 18.07 %.
- Total deposits as on September 30, 2006 were Rs.15,986 crore as compared to
Rs.13,913 crore as on September 30, 2005, recording a growth of 14.90 %.
- The CASA (Current Accounts-Savings Accounts) ratio improved to 14.02 % of
total deposits against 11.82% in H1 FY06.

ABOUT THE PROJECT

36

Relevance of project
The Project made the Researcher to compare the performance of
INDUSIND BANK between pre and post merger scenarios (INDUSIND BANK
merged with ASHOK LEYLAND FINANCE IN 2004) . The Researcher also
came to know the changes in the process of vehicle finance division, customer
satisfaction,HR policies, ratio analysis from 2002-2006. Researcher had
improved his Marketing skill and planning capabilities specific to the Industry.

METHODOLOGY
Objectives of the Study
This is a study of impact of merger between INDUSIND BANK and ASHOK
LEYLAND FINANCE. This objective is met by using the following secondary
objectives:

37

 To identify the changes in vehicle finance division after merger between

INDUSIND BANK and ASHOK LEYLAND FINANCE.
To find the growth of INDUSIND BANK by comparing the balance sheet of
Indusind bank from 2002-2006(ratio analysis)
To find out the customers opinions about the vehicle finance division,
Indusind bank, GUWAHATI.
To identify the scope of improvement in vehicle finance division, Indusind
bank, guwahati.

Implications of the project

The Project will help the Organization in formulating the Sales Promotional
activities for its corporate clients .
The Project will help the Company in assessing the various needs for each client
separately.

Limitations of the Study

Temporal limitations

The study has been conducted in the period of May-July 2007 and the
data and analysis (QUESTIONNAIRE AND DIRECT INTERVIEW)
pertain to the information available during the period of study only.

38

Geographical limitations

The research was carried out with the Customers, employees,

corporate & Business Units in GUWAHATI only and is not be applicable to other
parts.
Specific limitations

Reluctance on the part of respondents to provide accurate data

regarding difficulties faced in Indusind Bank due to fear of exposing themselves to
unwanted reasons..

Procedural limitations
All data collected are generally limited by the method adopted. In the
current research, the method of data collection being questionnaire and personal
interviews of employees, limits the data to the extent of data generation available
through that method.

Research Methodology

Research Design

The research design states the conceptual structure within which the research
was conducted. The research design adopted here is descriptive.

39

Pilot Study

After preparing the interview schedule conducted a pretest with the

respondents. It was really helpful to find the sharpness and relevance of the schedule
to extract the correct answer from the respondents, so as to sense the purpose for
which it has been framed.
After conducting the pilot study was able to understand some flaws in the
schedule and the required alternatives were made, to facilitate the clear
understanding of the issue.

Nature of Data

The research has been made by the use of Primary data only and Secondary data was
not used for the purpose of research.
It was necessitated in order to obtain data relevant to the project. In order to
collect the primary data, survey method was chosen. Questionnaire was the tool used
for data collection. The sample size was chosen keeping in mind not only the time
factor but also the area of coverage. The sample size was limited to 100 customers.
The primary data was collected in the geographical limits of Guwahati , in ASSAM.
The questionnaire has been directly administered by the researcher and filled by the
respondents.

Sampling Procedure

The main aspects to be considered in sampling are:

Sampling technique

40

 Sampling unit
Sampling area
Sample size
Sampling Technique

The researcher adopted the Convenience Sampling technique for the

survey.
Sampling Unit

The researcher has met the customers of INDUSIND BANK, GUWAHATI

.The CUSTOMERS includes both person, travels pvt ltd of north-east of India.
Sampling Area

The sampling area considered for the current research was Guwahati
Sample Size

150 CUSTOMERS were surveyed during the study period of 45 days in the
months of MAY-JULY 2007.As the sample is scattered it is difficult to cover a large
no of sample.

Questionnaire Construction

The construction of the questionnaire is an important limiting criterion for

collecting primary data. Questionnaire was constructed for the purpose of
evaluating the corporate.
Tools for Analysis

The following tools were used for analysis of the project were:
1) Pie chart

41

2) Financial Ratio analysis

3) Bar diagram

42

ANALYSIS
AND
INTERPRETATION

43

INTERPRETATION:

44

Most of the customers (71%) associated with banks are having transportation
business and few customers (29%) are taking vehicle loan for personal use.

45

INTERPRETATION:
Most of the customers (63% of 71) are the customers having more than three years
experience in transportation business. Only 13% customers are having below one
year experience.

46

INTERPRETATION:
Majority of the customers (93%) prefers bank and NBFC for source of finance.

47

INTERPRETATION:
All the customers are familiar with the both INDUSIND BANK and ASHOK
LEYLAND FINANCE..

48

INTERPRETATION:
Only a few customers(5%) are not aware of the merger between Indusind bank and
Ashok Leyland FINANCE. Remaining 95% customers are aware of the merger.

49

INTERPRETATION:
36% customers are associated with the organization from more than three years. 43%
customers are new customers (less than 2 years).

50

INTERPRETATION:
30% customers are having one vehicle loan.45% customers are having three or more
than three loans.

51

INTERPRETATION:
Majority (70%) of the customers dont have any idea about the change in the process
.According to 30% customers ,no change occurs in the process.

52

INTERPRETATION:
According to majority(61%) of customers the processing time for granting finance is
reduced. 17% customers said that the processing time remain same.2% customers
are not satisfied with the time taken because they feel that processing time for
granting finance is increased now.

53

INTERPRETATION:
Majority of customers (80%) said that the infrastructure has improved after the
merger between IBL and ALFIN .Remaining 20% cant say whether the
infrastructure has improved or not because they are new customers.

54

INTERPRETATION:
According to 70% customers after merger the organization is providing quality
service.5% customers are not satisfied with the service provided by both pre and post
merger organization.20% customers are new customers so they cant give any
conclusion.

55

INTERPRETATION:
According to 70% customers the follow up procedure has improved after merger.
5% customers told that the follow up procedure remains same.5% customers gave
the view that the follow up procedure has deterioted .

56

FINDINGS

57

Findings of the Research.

Findings:
1.The infrastructure of bank has improved after merger.
2.Customers are not aware about the administrations vehicle finance
procedures.
3.The old customers are very much satisfied with the bank.
4. Most of the new customers are not satisfied with the bank.
5.Same process which is followed before merger is followed by bank in
vehicle finance division now.
6.Most of the customers who had deposited post dated cheque complains
that their cheque had not been released by bank in time and they have to
pay the penalty for that.
7.The facility of keeping the record of post dated cheque is not up to the
mark.
8.The customers contract files and keys of the vehicles are not properly
kept and there is a chance of missing those documents.
9.The follow up procedures are improved after merger.
10. The quality of service provided is improved after the merger.
11.The pay scale of INDUSIND BANK employees and ASHOK LEYLAND
FINANCE employees are different .So, there is a lack of mutual
understanding and cooperation between IBLs and ALFs employees.
12.The internet server of the Guwahati branch is very slow and due to
this, executives have to face trouble.

58

SUGGESTIONS

59

Suggestions:
1) The Guwahati branch of INDUSIND Banks vehicle finance division should
give interest to increase the number of new customers.
2) The record of the post dated cheques and the post dated cheque should
be kept properly in a appropriate manner.
3) The contract files of customers and duplicate keys of the vehicle should be
kept in a locker room.
4) The customers payment track record and viability should be properly
checked to decrease the number of default in repayment.
5) Action is necessary to increase the productivity of internet server.
6) There is a need of duplicate currency assorter machinery to reduce the
time taken by cashier at the time of deposit by customers.
7) The role of the back office employees should be specified to avoid conflict
and confusion.
8) Both the organization should take appropriate steps to enhance mutual
understanding and satisfaction between employees .

60

BALANCE SHEET
AND
RATIO ANALYSIS

61

Indusind Bank Ltd.

Balance Sheet (Rs.in Millions)

Period
Ended
Mar2006
(12
Mnts.)

Liabilities

Period
Ended
Mar2005
(12
Mnts.)

Period
Ended
Mar2004
(12
Mnts.)

Period
Ended
Mar2003
(12
Mnts.)

Period
Ended
Mar2002
(12
Mnts.)

Share Capital

2,905.10

2,905.10

2,904.17

2,192.71

1,590.28

Reserves & Surplus

5,755.49

5,387.32

5,099.96

3,829.91

4,028.96

Net Worth (1)

8,660.59

8,292.41

8,004.13

6,022.63

5,619.24

Secured Loans (2)

5,349.50

6,106.20

23,103.54

2,367.89

8,594.02

150,063.01

131,142.76

112,002.62

85,978.72

84,001.21

164,073.10

145,541.37

143,110.29

94,369.23

98,214.47

Unsecured Loans (3)

Total Liabilities (1+2+3)

Period
Ended
Mar2006
(12
Mnts.)

Assets

Period
Ended
Mar2005
(12
Mnts.)

Period
Ended
Mar2004
(12
Mnts.)

Period
Ended
Mar2003
(12
Mnts.)

Period
Ended
Mar2002
(12
Mnts.)

Fixed Assets
Gross Block

6,178.91

5,714.85

4,687.06

2,607.46

2,029.62

(-) Acc. Depreciation

2,813.99

2,481.64

2,288.96

1,506.45

1,163.50

Net Block (A)

3,364.91

3,233.21

2,398.10

1,101.02

866.12

30.97

11.75

585.82

0.00

0.00

54,099.04

40,691.71

39,716.86

25,350.70

24,848.95

Inventories

0.00

0.00

0.00

0.00

0.00

Sundry Debtors

0.00

0.00

0.00

0.00

0.00

Cash And Bank

14,805.04

11,545.94

22,536.18

11,507.22

14,929.73

103,925.23

100,737.45

85,627.61

61,051.66

61,400.65

118,730.28

112,283.39

108,163.79

72,558.88

76,330.38

Capital Work in Prgs. (B)

Investments (C)
Current Assets, Loans & Advs.

Loans And Advances

(i)

62

Current Liab. & Provs.

Current Liabilities
Provisions
(ii)
Net Curr. Assets (i - ii) (D)
Misc. Expenses (E)
Total Assets (A+B+C+D+E)

12,152.10

10,678.68

7,754.28

4,641.36

3,830.98

0.00

0.00

0.00

0.00

0.00

12,152.10

10,678.68

7,754.28

4,641.36

3,830.98

-1,331.49

61.24

-248.94

2,931.76

1,827.71

0.00

0.00

0.00

0.00

0.00

56,163.44

43,997.90

42,451.83

29,383.48

27,542.78

Data Source - Asian CERC IT Ltd.

Indusind Bank Ltd. (indb)
Annual Unaudited Results (Rs. in Millions)
Period Ended Period Ended
.

Mar2005
Mar2004
(12 Months) (12 Months)
Sales Turnover
1,1344.00
9861.50
Other Income
2507.50
3449.30
Total Income
1,3851.50
1,3310.80
Total Expenditure
4057.30
3911.50
Operating Profit
9794.20
9399.29
Interest
7188.90
6692.50
Gross Profit
2605.30
2706.80
Depreciation
0.00
0.00
Tax
503.80
86.10
ReportedPAT
2101.50
2620.69

% Change
+ 15.03
-27.30
+ 4.06
+ 3.73
+ 4.20
+ 7.42
-3.75
N/A
+ 485.13
-19.81

63

64

Indusind Bank Ltd. (indb)

Profit & Loss Accounts (Rs.in Millions)

.

Sales
Other
Income
Total
Income
Raw
Material
Cost
Excise
Other
Expenses

Period
%
Ended
Mar2006
(12
Mnts.)
1,2319.62 +95.68

Period
%
Ended
Mar2005
(12
Mnts.)
1,1978.17 +96.79

555.72 +4.32

397.34 +3.21

1,2875.34

1,2375.50

Period
%
Period
%
Period
%
Ended
Ended
Ended
Mar2004
Mar2003
Mar2002
(12
(12
(12
Mnts.)
Mnts.)
Mnts.)
1,2702.86 +96.36 9750.83 +97.90 8571.29 +95.83
480.10 +3.64
1,3182.96

209.25 +2.10
9960.08

373.02 +4.17
8944.31

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

1,1578.19 +89.93

9144.75 +73.89 1,0103.99 +76.64 8808.42 +88.44 6212.68 +69.46

65

Operating
Profit
Interest
Name

1297.14 +10.07

3230.75 +26.11

3078.97 +23.36 1151.65 +11.56 2731.62 +30.54

8731.91 +67.82

7188.93 +58.09

6692.52 +50.77 5584.76 +56.07 5472.30 +61.18

Gross Profit -7434.77 -57.74 -3958.18 -31.98 -3613.54 -27.41 -4433.11 -44.51 -2740.68 -30.64
Depreciation
359.88 +2.80
448.69 +3.63
367.20 +2.79 252.47 +2.53 206.81 +2.31
Profit Bef.
Tax
Tax
Net Profit
Other NonRecurring
Income
Reported
Profit
Equity Div

-7794.65 -60.54 -4406.87 -35.61 -3980.74 -30.20 -4685.58 -47.04 -2947.49 -32.95
223.70 +1.74

503.84 +4.07

86.07 +0.65

-4.11

-0.04

0.00

0.00

-8018.35 -62.28 -4910.71 -39.68 -4066.81 -30.85 -4681.47 -47.00 -2947.49 -32.95
-43.39

-0.34

-109.59

-0.89

157.75 +1.20

-1.16

-0.01

0.00

0.00

-8061.74 -62.61 -5020.30 -40.57 -3909.05 -29.65 -4682.64 -47.01 -2947.49 -32.95
0.00

0.00

522.57 +4.22

654.08 +4.96

308.32 +3.10

224.00 +2.50

Indusind Bank Ltd. (indb)

Ratios
Profitability
Ratios %

Period
Ended
Mar2006
(12
Months)

Period
Ended
Mar2005
(12
Months)

Period
Ended
Mar2004
(12
Months)

Period
Ended
Mar2003
(12
Months)

Period
Ended
Mar2002
(12
Months)

11.00

27.00

24.00

12.00

32.00

Gross Profit Margin

-60.00

-33.00

-28.00

-45.00

-32.00

Net Profit Margin

-65.00

-41.00

-32.00

-48.00

-34.00

Inventory Turnover
Ratio

0.00

0.00

0.00

0.00

0.00

Debtor Turnover
Ratio

0.00

0.00

0.00

0.00

0.00

Fixed Asset
TurnoverRatio

3.66

3.70

5.30

8.86

9.90

0.89

1.01

0.97

1.63

1.48

Operating Profit
Margin

Turnover Ratios

Solvency Ratio
Current Ratio

66

DebtEquity Ratio

0.00

0.00

0.00

0.00

0.00

Interest Covering
Ratio

0.15

0.45

0.46

0.21

0.50

2.00

7.00

7.00

4.00

11.00

-93.00

-59.00

-51.00

-78.00

-52.00

0.00

18.00

30.00

26.00

14.00

Performance Ratio %
Return On
Investment
Return On Networth
Dividend Yield

67

PROFITABILITY RATIOS:
a) OPERATING PROFIT RATIO:
( operating profit /net sales ) *100.

INTERPRETATION:

With the help of operating profit, the management will be able to know the operating
efficiency of the firm. Normally an operating profit ratio of 15 to 25 is preferred.
Before merger ,in the year 2002 it is pretty good i.e 32 but in the year 2003 it came
down to 12 which is not preferable. After merger ,in the year 2004 it raised to 24 and

68

in the year 2005 to 27 which are reasonably good. But in the year 2006 it came down
to 11 which is not a good sign.
B) GROSS PROFIT MARGIN :
( Gross profit / net sales )*100

INTERPRETATION:

The ratio establishes relationship between gross margin and sales. Generally a g/p
ratio of
20%-30% is desirable.
All the gross profit ratios from the year 2002 to 2006 are in negative. So it is very
poor performance by bank.

69

C) NET PROFIT RATIO:

( EBIT / sales )*100 = net profit ratio

INTERPRETATION:

The net profit ratio is regarded as the index of operational efficiency. Generally a net
profit ratio of 20 % is required.
The net profit ratios are all in negative from the year 2002 to 2006 which is very
poor.

70

TURNOVER RATIOS:
FIXED ASSET TURNOVER RATIO:

Sales / net fixed asset = fixed asset turnover ratio

INTERPRETATION:

The efficiency of utilizing the firms assets are reflected in assets turnover ratio.
Higher the turnover ratio ,the more efficient the management in utilising the assets.

71

Before merger,the fixed asset turnover ratio is above 8.But after merger ,it gradually
came down and in 2006 it is lowest i.e. 3.66.

SOLVENCY RATIO:
A) CURRENT RATIO:
Current assets/current liabilities = current ratio

INTERPRETATION:

Current ratio indicates availability of current assets per rupee of current

liabilities.Therev is the need for striking balance between profitability and liquidity

72

while deciding upon an ideal current ratio.It is customary to take 2;1 ratio as an ideal
ratio but we rarely find this in industry of present days.
In the year 2002 & 2003 the bank is maintaining current ratio near about 1.5.After
merger from 2004 the current ratio declines to near about 1 i.e. the amount blocked
in current asset is significantly decreased.

B) INTEREST COVERING RATIO:

profit before tax and interest / interest = interest covering ratio

INTERPRETATION:

73

The ratio measures the capacity of a firm to discharge their interest payment liability
on borrowed capital. It establishes the relationships between the interest charge and
the profit available to cover the interest.
In the year the 2002 bank is maintaining 0.5 interest covering ratio but it is
significantly decreased to 0.21 in the year 2003.After merger in the year 2004 and
2005 ,the bank is maintaining near about 0.45 but again in 2006 it came down to
0.15 which is very low and a matter of concern for creditors.

PERFORMANCE RATIO %:
A) RETURN ON INVESTMENT:
PAT / investment = return on investment

74

INTERPRETATION:

The ratio is the primary criteria to arrive at investment decision by the share holders
as well as by the management. It indicates the rate of return on the resources of the
firm that are invested.
Before merger ,in the year 2002 the return on investment is pretty high i.e.11 but in
the next year it came down to 4.After merger ,in the year 2004 and 2005 bank
maintained fair return on investment i.e. 7 but again in the year 2006 it came down
to 2 which is a poor return on investment.

B) RETURN ON NETWORTH:
PAT / NET WORTH(EQUITY) = RETURN ON NETWORTH

75

INTERPRETATION:

The ratio gives the productivity on equity shareholders fund or net worth.Since
preference share capital is excluded from net worth,the return on net worth is
computed taking profit after preference dividend which is available to equity
shareholders only.
The return on net worth is negative from the year 2002 to 2006 which reflects poor
productivity on equity shareholders fund.

76

C) DIVIDEND YIELD:
Dividend per share / market value = dividend yield

INTERPRETATION:

Dividend yield is a ratio between dividend and market price per equity share. The
actual yield of the investment on shares is shown by this dividend yield ratio.
The bank is maintaining a good dividend yield from 2002-2005 but in the year 2006
bank failed togive equity dividend.

77

BIBLIOGRAPHY AND ANNEXURE

78

Bibliography
Kothari, C.R.Research Methodology and Techniques, Vikas publishers, New
Delhi.
Harper, Ralph and Stanly, Marketing Research Text and cases, Richard D.
Irwin, INC New Delhi, 7th Edition.
Kotler, Philip, Marketing Management, Pearson Education (Singapore) Pvt
Ltd, New Delhi, 2003, 11th Edition.
Financial management ,ninth edition,I M PANDEY
Introduction to accountancy ;T.S. grewal
www.economic times.com
www.nseindia.com
www.moneycontrol.com
www.poweryourtrade.com
www.investinfo.com
www.google.co.in

Annexure

Questionnaire
NAME
:
OCCUPATION:
LOCATION :

DATE:

79

(PLEASE TICK WHEREVER APPROPRIATE)

1)Are you associated with transportation business?
YES
NO
2)How long have you been associated with transportation business?
0-1 years
1-3 years
3-5 years
more than 5 years
3)Which source of finance do you prefer?
Personal
Unorganized
NBFC
Bank
4)Which organization are you familiar with?
INDUSIND BANK
ASHOK LEYLAND FINANCE
Both
5)Are you aware of the merger between IBL &ALFIN?
YES
NO
6)For how long have you been associated with this organization ?
0-1 years
1-2 years
2-3 years
3-5 years
more than 5 years
7)How many vehicle loans have you taken from IBL/ALFIN?
1
2
3
MORE THAN 3
8)Has the merger between IBL & ALFIN brought any change in the business process of vehicle
finance division?
YES
NO
CANT SAY
9)After the merger between IBL & ALFIN,the processing time for granting finance has
Reduced
Increased
Remain same
cant say
10)Do you think the infrastructure of ALFIN after merger with IBL has improved?
YES
NO
Remain same
cant say
11)According to you which one of the following provides quality service?
ALFIN(PRE MERGER)
IBL/ALFIN(POST MERGER)
None
cant say
12)After merger between IBL & ALFIN the follow up [procedure has
Improved
Deterioted
Same
cant say
13)Do you think any further improvement is required?plese comment.
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80

81