PROJECT REPORT ON

Ratio analysis on Banking sector SBI & ICICI

Submitted to
University of Mumbai
In Partial Fulfillment of the Requirement
For
M.Com (Accountancy) Semester III
In the subject
Advanced Financial Management
By
Name of the student : - Vivek ShriramMahajan
Roll No. : 15 -9672

Name and address of the college

K. V. Pendharkar College
Of Arts, Science & Commerce
Dombivli (E), 421203

NOVEMBER 2015

DECLARATION
I VIVEK SHRIRAM MAHAJAN Roll No. 15 9672, the student of
M.Com (Accountancy) Semester III (2015), K. V. Pendharkar College,
Dombivli, Affiliated to University of Mumbai, hereby declare that the
project for the subject Advanced Financial Management of Project report on
Ratio analysis on banking sector SBI & ICICI submitted by
me to University of Mumbai, for semester III examination is based on actual
work carried by me.

I further state that this work is original and not submitted anywhere else for
any examination.

Place: Dombivli
Date:

Signature of the Student

Name: - Vivek Shriram Mahajan

Roll No: - 15 -9672

ACKNOWLEDGEMENT

It is a pleasure to thank all those who made this project work

possible.
I Thank the Almighty God for his blessings in completing this task.
The successful completion of this project is possible only due to
support and cooperation of my teachers, relatives, friends and wellwishers. I would like to extend my sincere gratitude to all of them.
I am highly indebted to Principal A.K.Ranade, Co-ordinater
P.V.Limaye, and my subject teacher Prajakta Karmarkar for
their encouragement, guidance and support.
I also take this opportunity to express sense of gratitude to my
parents for their support and co-operation in completing this
project.
Finally I would express my gratitude to all those who directly and
indirectly helped me in completing this project.

Name of the student

Vivek Shriram Mahajan

Table of Contents:
CHAPTER No
CHAPTER 1

Topic
Introduction
Introduction to Subject..
Definition ...
Objectives of Financial Management.....................
Functions of Financial Management.......................

CHAPTER 2

13
16
22

Suggestions & Recommendations

Recommendations .
Suggestions ...............

CHAPTER 5

9
10
11

Observation
Programme Implementation
Programme Outcomes.........................................
Impact: Early Trends And Outcomes....................

CHAPTER 4

5
5
6
8

Literature Review
Rationale of Workfare Programmes......................
Conceptual Framework ................................
Amendments...............................................

CHAPTER 3

Page no

25
26

Conclusion
Conclusion..

28

Webiliography.

29

CHAPTER 1: Introduction
Introduction to Subject
Meaning of Financial Management
Financial Management means planning, organizing, directing and controlling the
financial activities such as procurement and utilization of funds of the enterprise. It
means applying general management principles to financial resources of the enterprise.
Definition:
James Van Morne defines Financial Management as follows:
Planning is an inextricable dimension of financial management. The term financial
management connotes that funds flows are directed according to some plan. Financial
managements can be said a good guide for allotment of future resources of an
organisation.
Preparing and implementation of some plans can be said as financial management. In
other words, collection of funds and their effective utilisation for efficient running of and
organization is called financial management. Financial management has influence on all
activities of an organisation. Hence it can be said as an important one.
Its main responsibility is to complete the finance function successfully. It also has
relations with other business functions. All business decisions also have financial
implications. According to Raymond Chambers, Management of finance function is the
financial management.
However, financial management shall not be considered as the profit extracting device. If
finance is properly utilised through plans, they lead to profits. Besides, without profits
there wont be finance generation. All these are facts. But this is not complete.
The implication of financial management is not only attaining efficiency and getting
profits but also maximising the value of the firm. It facilitates to protect the interests of
various classes of people related to the firm.
Hence, managing a firm for profit maximisation is not the meaning for financial
management. Financial management is applicable to all kinds of organisations. According
to Raymond Chambers, the word financial management is applicable to all kinds of
firms irrespective of their objectives.
5

Financial management refers to the efficient and effective management of money

(funds) in such a manner as to accomplish the objectives of the organization. It is the
specialized function directly associated with the top management. The significance of this
function is not seen in the 'Line' but also in the capacity of 'Staff' in overall of a company.
It has been defined differently by different experts in the field.
The term typically applies to an organization or company's financial strategy, while
personal finance or financial life management refers to an individual's management
strategy. It includes how to raise the capital and how to allocate capital, i.e. capital
budgeting. Not only for long term budgeting, but also how to allocate the short term
resources like current liabilities. It also deals with the dividend policies of the share
holders.
DEFINITION of 'Strategic Financial Management
Managing an organization's financial resources so as to achieve its business objectives
and maximize its value. Strategic financial management involves a defined sequence of
steps that encompasses the full range of a company's finances, from setting out objectives
and identifying resources, analyzing data and making financial decisions, to tracking the
variance between actual and budgeted results and identifying the reasons for this
variance. The term "strategic" means that this approach to financial management has a
long-term horizon.
Objectives of Financial Management:
The aims of financial management should be useful to the firms proprietors, managers,
employees and consumers. For this purpose the only way is maximisation of firms value.
The following aspects have place in maximising firms value:
1. Rice in profits:
If the firm wants to maximise its value, it should increase its profits and revenues. For
this purpose increase of sales volume or other activities can be taken up. It is the general
feature of any firm to increase profits by proper utilisation of all opportunities and plans.
Theoretically, firm gets maximum profits if it is under equilibrium. At that stage the
average cost is minimal and the marginal cost and the marginal revenues are equal. Here,
we cant say the sales because there must be suitable market for the increased sales.
Further, the above costs must also be controlled.

2. Reduction in cost:
Capital and equity funds are utilised for production. So all types of steps should be taken
to reduce firms cost of capital.
3. Sources of funds:
It should be decided by keeping in view the value of the firm to collect funds through
issue of shares or debentures.
4. Reduce risks:
There wont be profits without risk. But for this reason if more risk is taken, it may
become danger to the existence of the firm. Hence risk should be reduced to minimum
level.
5. Long run value:
It should be the feature of financial management to increase the long-run value of the
firm. To earn more profits in short time, some firms may do the activities like releasing of
low quality goods, neglecting the interests of consumers and employees.
These trials may give good results in the short run. But for increasing the value of the
firm in the long run, avoiding; such activities are more essential.

Functions of Financial Management

1. Estimation of capital requirements: A finance manager has to make estimation with
regards to capital requirements of the company. This will depend upon expected costs and
profits and future programmes and policies of a concern. Estimations have to be made in
an adequate manner which increases earning capacity of enterprise.
2. Determination of capital composition: Once the estimation have been made, the
capital structure have to be decided. This involves short- term and long- term debt equity
analysis. This will depend upon the proportion of equity capital a company is possessing
and additional funds which have to be raised from outside parties.
3. Choice of sources of funds: For additional funds to be procured, a company has many
choices like

Issue of shares and debentures

Loans to be taken from banks and financial institutions
Public deposits to be drawn like in form of bonds.

Choice of factor will depend on relative merits and demerits of each source and period of
financing.
4. Investment of funds: The finance manager has to decide to allocate funds into
profitable ventures so that there is safety on investment and regular returns is possible.
5. Disposal of surplus: The net profits decision have to be made by the finance manager.
This can be done in two ways:

Dividend declaration - It includes identifying the rate of dividends and other

benefits like bonus.
Retained profits - The volume has to be decided which will depend upon
expansional, innovational, diversification plans of the company.

6. Management of cash: Finance manager has to make decisions with regards to cash
management. Cash is required for many purposes like payment of wages and salaries,
payment of electricity and water bills, payment to creditors, meeting current liabilities,
maintainance of enough stock, purchase of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and utilize the
funds but he also has to exercise control over finances. This can be done through many
techniques like ratio analysis, financial forecasting, cost and profit control, etc.

Some of the important functions which every finance manager has to take are as
follows:
i. Investment decision
ii. Financing decision
iii. Dividend decision
A. Investment Decision
This decision relates to careful selection of assets in which funds will be invested by the
firms. A firm has many options to invest their funds but firm has to select the most
appropriate investment which will bring maximum benefit for the firm and deciding or
selecting most appropriate proposal is investment decision.
The firm invests its funds in acquiring fixed assets as well as current assets. When
decision regarding fixed assets is taken it is also called capital budgeting decision.
Factors Affecting Investment/Capital Budgeting Decisions
1. Cash Flow of the Project
2. Return on Investment
3. Risk Involved
4. Investment Criteria
B. Financing Decision
The second important decision which finance manager has to take is deciding source of
finance. A company can raise finance from various sources such as by issue of shares,
debentures or by taking loan and advances. Deciding how much to raise from which
source is concern of financing decision.
C. Dividend Decision
This decision is concerned with distribution of surplus funds. The profit of the firm is
distributed among various parties such as creditors, employees, debenture holders,
shareholders, etc. This decision is also called residual decision because it is concerned
with distribution of residual or left over income. Generally new and upcoming companies
keep aside more of retain earning and distribute less dividend whereas established
companies prefer to give more dividend and keep aside less profit.

10

CHAPTER 2: INDUSTRY PROFLE

STATE BANK OF INDIA (SBI)
The evolution of State Bank of India can be traced back to the first decade of the 19th
century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June
1806. The bank was redesigned as the Bank of Bengal, three years later, on 2 January
1809. It was the first ever joint-stock bank of the British India, established under the
sponsorship of the Government of Bengal. Subsequently, the Bank of Bombay
(established on 15 April 1840) and the Bank of Madras (established on 1 July 1843)
followed the Bank of Bengal. These three banks dominated the modern banking scenario
in India, until when they were amalgamated to form the Imperial Bank of India, on 27
January 1921.
An important turning point in the history of State Bank of India is the launch of the first
Five Year Plan of independent India, in 1951. The Plan aimed at serving the Indian
economy in general and the rural sector of the country, in particular. Until the Plan, the
commercial banks of the country, including the Imperial Bank of India, confined their
services to the urban sector. Moreover, they were not equipped to respond to the growing
needs of the economic revival taking shape in the rural areas of the country. Therefore, in
order to serve the economy as a whole and rural sector in particular, the All India Rural
Credit Survey Committee recommended the formation of a state-partnered and statesponsored bank.
The All India Rural Credit Survey Committee proposed the takeover of the Imperial Bank
of India, and integrating with it, the former state-owned or state-associate banks.
Subsequently, an Act was passed in the Parliament of India in May 1955. As a result, the
State Bank of India (SBI) was established on 1 July 1955. This resulted in making the
State Bank of India more powerful, because as much as a quarter of the resources of the
Indian banking system were controlled directly by the State. Later on, the
State Bank of India (Subsidiary Banks) Act was passed in 1959. The Act enabled the
State Bank of India to make the eight former State-associated banks as its subsidiaries.
The State Bank of India emerged as a pacesetter, with its operations carried out by the
480 offices comprising branches, sub offices and three Local Head Offices, inherited
from the Imperial Bank. Instead of serving as mere repositories of the community's
savings and lending to creditworthy parties, the State Bank of India catered to the needs
of the customers, by banking purposefully. The bank served the heterogeneous financial
needs of the planned economic development.

11

Standalone Profit & Loss

account

Income
Interest Earned
Other Income
Total Income
Expenditure
Interest expended
Employee Cost
Selling, Admin & Misc
Expenses
Depreciation
Preoperative Exp Capitalised
Operating Expenses
Provisions & Contingencies
Total Expenses

Net Profit for the Year

Extraordinary Items
Profit brought forward
Total
Preference Dividend
Equity Dividend
Corporate Dividend Tax
Per share data (annualised)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)
Appropriations
Transfer to Statutory
Reserves
Transfer to Other Reserves
Proposed Dividend/Transfer
to Govt
Balance c/f to Balance Sheet
Total

------ in Rs. Cr.

----Mar '15

152,397.07
22,575.89
174,972.96
97,381.82
23,537.07
39,836.01
1,116.49
0
38,677.64
25,811.93
161,871.39

13,101.57
0
0.32
13,101.89
0
2,557.28
520.65
17.55
350
172.04

10,023.64
0
3,077.93
0.32
13,101.89

12

Industrial Credit and Investment Corporation of India Bank (ICICI)

ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial
institution, in 1994. Four years later, when the company offered ICICI Bank's shares to
the public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank
offered made an equity offering in the form of ADRs on the New York Stock Exchange
(NYSE), thereby becoming the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired the
Bank of Madura Limited in an all-stock amalgamation. Later in the year and the next
fiscal year, the bank made secondary market sales to institutional investors.
With a change in the corporate structure and the budding competition in the Indian
Banking industry, the management of both ICICI and ICICI Bank were of the opinion
that a merger between the two entities would prove to be an essential step. It was in 2001
that the Boards of Directors of ICICI and ICICI Bank sanctioned the amalgamation of
ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. In the following
year, the merger was approved by its shareholders, the High Court of Gujarat at
Ahmedabad as well as the High Court of Judicature at Mumbai and the Reserve Bank of
India.
ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited. Overseas, its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008,
ICICI is India's second-largest bank, boasting an asset value of Rs. 3,744.10 billion and
profit after tax Rs. 30.14 billion, for the nine months, that ended on December 31, 2008.
ICICI Bank Limited (the Bank) is a banking company engaged in providing a range of
banking and financial services, including commercial banking and treasury operations. It
operates under four segments: retail banking, wholesale banking, treasury and other
banking. The Banks subsidiaries include ICICI Prudential Life Insurance Company
Limited, ICICI Lombard General Insurance Company Limited, ICICI Trusteeship
Services Limited, ICICI Prudential Pension Funds, Management Company Limited,
ICICI Home Finance Company Limited and ICICI Securities Limited.

13

14

Webilography

http://www.slideshare.net
http://www.nrega.nic.in
https://en.wikipedia.org
www.nrega.ap.gov.in

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