Research Project Report

ON

INTRA COMPANY ANALYSIS OF ICICI BANK

Submitted in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION (2008-2010)
Under the guidance of Mr. Chander Parkash Gupta Sem Submitted By: Raj Kamal M.B.A. 4TH

Dronacharya Institute of Management and Technology, Kurukshetra

(Dronacharya nstitut of Management & Technology)
(Affiliated to Kurukshetra University, Kurukshetra)

INDEX
ACKNOWLEDGEMENT PREFACE DECLARATION EXECUTIVE SUMMARY HISTORY OF ICICI BANK TIME LINE HISTORY OF ICICI BANK RESEARCH METHODOLOGY FINANCIAL ASPECTS OF ICICI BANK
Profi & loss Account B lance Sheet Capital Structure Quarterly Result Half Yearly Result Annually Result RATIO ANALYSIS Introduction Meaning of Ratio Analysis Objectives of Ratio Analysis Forms of Ratio Analysis Steps in Ratio Analysis Types of Comparison Pre-requisites to Ratio Analysis Classification of Ratio Analysis
Based on Financial Statements Based on Function Based on User

Dronacharya Instit t of Management and Technology, Kurukshetra

Liquidity Ratios
Current Ratio Liquid Ratio Absolute Ratio Working capital

Investment /Shareholder
Earning per Share Dividend per Share Dividend Payout Ratio

Gearing
Capital Gearing Ratio

Profitability
Gross Profit Ratio Net Profit Ratio Return on Capital Employed

Financial
Debtors Turnover Ratio (DTO) Solvency Ratios Debt Equity Ratio Interest Coverage Ratio (ICR) Reserves to Total Funds Market Based Return

Importance of Ratio Analysis Advantages & Disadvantages of Ratio Analysis Purpose of Ratio Analysis

DUPONT ANALYSIS INTRA COMPANY ANALYSIS STRATEGIC ANALYSIS SERVICE GAP ANALYSIS RECOMMENDATIONS SUGGESTION TO OTHER FINANCIAL INSTITUTIONS BIBLOGRAPHY

Dronacharya Institute of Management and Technology, Kurukshetra

Kurukshetra . guidance and support. I am the students of Dronacharya Institute of Management & Technology. Mr. PREFACE Dronacharya Institute of Management and Technology. Kurukshetra successfully completed my project and would like to thank Lect .ACKNOWLEDGEMENT It gives great pleasure in presenting my project work on ³ INTRA COMPANY ANALYSIS OF ICICI BANK´. Chander Parkash for his timely encouragement.

DECLARATION Dronacharya Institute of Management and Technology. In writing this report. I hope that the report has made the text interesting and lucid. Any suggestions to improve this report in contents or in style are always welcome and will be appreciated and acknowledged. I have benefited immensely by referring to many publications and articles. Kurukshetra .The primary objective of this report is to provide the readers the insight into the success of ICICI B NK.

analyzed and documented for the project is authentic possession. were amalgamated with ICICI Bank. As of March 31. ICICI Personal Financial Services and ICICI Capital Services.I hereby declare that all the information that has been collected. 2007 ICICI Bank is the largest private sector bank in India and the second Dronacharya Institute of Management and Technology. (Raj Gupta) Kamal EXECUTIVE SUMMARY ICICI Bank is a leading Indian private sector commercial bank offering a variety of products and services. and two of its subsidiaries. Kurukshetra . It was incorporated in India in 1994. ICICI. a nonbank financial institution. information already compiled in many sources has been utilized. I would like to categorically mention that the work here has neither been purchased nor acquired by any other unfair means. In 2002. for the purpose of the project. However.

ICICI Bank has the largest market capitalization among all banks in India.9% at year -end fiscal 2006 and 60. May 10. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. and the products and services offered to them include loan and deposit products and fee and commission-based products and services.8% of its total loans and advances compared to 62. the Government of India and Indian industry representatives.9% at year-end fiscal 2005. ICICI Bank offers a range of retail credit and deposit products and services to retail customers.0 million retail customer accounts. ICICI Bank remains focused on changes in customer needs and technological advances to remain at the forefront of electronic banking in India. retail finance represented 63. 2007. 45 extension counters and 3. With the liberalization of the financial sector in India in the 1990s.largest bank in India. in terms of assets. The implementation of its retail strategy and the growth in the commercial banking operations for retail customers has had a significant impact on its business and operations in recent years. ICICI Banks commercial banking operations span the corporate and the retail sector. ICICI primarily focused its activities on project finance. It offers a suite of products and services for both its corporate and retail customers. and seek to deliver high quality and effective services. providing long-term funds to a variety of industrial projects. Pursuant to the amalgamation of Sangli Bank with ICICI Bank. At year-end fiscal 2007. ICICI Bank offers its customers a choice of delivery channels. Kurukshetra . At year-end fiscal 2007 its principal network consisted of 710 branches. Until the late 1980s. HISTORY OF ICICI BANK ICICI was formed in 1955 at the initiative of the World Bank. and they use technology to differentiate there products and services from those of its competitors. Its corporate customers include India¶s leading companies as well as growth-oriented small and middle market businesses.271 automated teller machines. its network of branches and extension counters increased by 198. or ATMs. ICICI Bank has approximately 24. ICICI transformed its business from a development financial institution offering only project Dronacharya Institute of Management and Technology. across several Indian states.

The amalgamation was approved by ICICI Bank¶s and ICICI¶s shareholders at their extraordinary general meetings held on January 25. an old private sector bank. ICICI Bank¶s initial equity capital was contributed 75. ICICI . ICICI Bank identified a large capital base and size and scale of operations as key success factors in the Indian banking industry. Kurukshetra Besides funding from the World Bank and other multi-lateral agencies. ICICI Capital Services and ICICI Bank at their respective board meetings held on October 25. 1956: 1960: Dronacharya Institute of Management and Technology.0% by SCICI Limited. 2001. Mr. respectively. 2002.9% at December 1996. with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses.A. Conversion into a bank offered ICICI the ability to accept low-cost demand deposits and offer a wider range of products and services. both ICICI Bank and ICICI were publicly listed in India and on the New York Stock Exchange. along with its subsidiaries and other group companies. The amalgamation was approved by each of the boards of directors of ICICI. At the time of the merger. TIME LINE HISTORY OF ICICI BANK 1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative of the World Bank. Pursuant to the merger of SCICI into ICICI. offered a wide variety of products and services. ICICI Bank was incorporated in 1994 as a part of the ICICI group.finance to a diversified financial services provider that. in an all-stock merger. ICICI emerges as the major source of foreign currency loans to Indian industry. Effective March 10. 2001.0% by ICICI and 25.Ramaswami Mudaliar elected as the first Chairman : of ICICI Limited. ICICI Personal Financial Services. the Government of India and representatives of Indian industry. a diversified finance and shipping finance lender of which ICICI owned 19. ICICI Bank acquired Bank of Madura. and greater opportunities for earning non-fund based income in the form of banking fees and commissions. 2002 and January 30. ICICI Bank also considered various strategic alternatives in the context of the emerging competitive scenario in the Indian banking industry.. ICICI Bank became a wholly-owned subsidiary of ICICI.

First two regional offices in Calcutta and Madras were opened. ICICI first Indian Institution to receive ADB Loans. ICICI made its first debenture issue for Rs. ICICI announces merger with SCICI. Becomes the first ever Indian borrower to raise European Currency Units.also among the first Indian companies to raise funds from International markets. ICICI sets up ICICI Bank. ICICI promotes Shipping Credit and Investment Company of India Limited. ICICI sponsors the formation of Housing Development Finance Corporation. ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth Development Corporation (CDC). The first West German loan of DM 5 million from Kredianstalt was obtained by ICICI. : : ICICI commences leasing business. P. 1967: 1969: 1972: 1977: ICICI building at 163. First public issue by an Indian entity in the Swiss Capital Markets. ICICI becomes the first company in the Indian financial sector to raise GDR. Kurukshetra 1986: : 1987: 1988: 1993: : 1994: 1996: : : 1997: .5%. ICICI sets-up ICICI Securities and Finance Company Limited in joint venture with J. which was oversubscribed. the first loan by CDC for financing projects in India. 1982: Second entity in India to set-up merchant banking services. (SCICI) The Corporation made a public issue of Swiss Franc 75 million in Switzerland. Dronacharya Institute of Management and Technology.6 crore. Managed its first equity public issue. 1961: ICICI declared its first Dividend at 3. ICICI along with UTI sets up Credit Rating Information Services of India Limited.India's first venture capital company. ICICI sets up ICICI Asset Management Company. ICICI promotes TDICI . Morgan. Backbay Reclamation was inaugurated. the first public issue by any Indian equity in the Swiss Capital Market. (CRISIL) India's first professional credit rating agency.

the first-ever permanent aggregation and display of housing projects in the county. launched in Pune. ICICI becomes the first Indian Company to list on the NYSE through an issue of American Depositary Shares. house loans and loans for consumer durables. a self-service banking centre inaugurated in Pune. Dronacharya Institute of Management and Technology. ICICI Ltd merged with ICICI Bank Ltd to create India¶s secondlargest bank in terms of assets. ICICI launches retail finance . It was the first of its kind in India. ICICI announces takeover of ITC Classic Finance. : 1998: : 1999: : 2000: : 2001: ICICI Bank announces merger with Bank of Madura. The name "The Industrial Credit and Investment Corporation of India Limited" was changed to "ICICI Limited".K. Introduced the new logo symbolizing a common corporate identity for the ICICI Group. : 2003: 1100-seat Call Centre set up in Hyderabad ICICI Bank Home Shoppe. ICICI assigned higher than sovereign rating by Moody¶s. ICICI Bank launched Private Banking.car loans. ICICI Bank becomes the first commercial bank from India to list its stock on NYSE. ICICI announces takeover of Anagram Finance.: Mr.V. "E Lobby". Kurukshetra : : : : : : . ICICI Bank launched India¶s first CDO (Collateralised Debt Obligation) Fund named Indian Corporate Collateralised Debt Obligation Fund (ICCDO Fund).Kamath appointed the Managing Director and CEO of ICICI Ltd ICICI was the first intermediary to move away from single prime rate to threetier prime rates structure and introduced yield-curve based pricing. 2002: The Boards of ICICI Ltd and ICICI Bank approved the merger of ICICI with ICICI Bank.

: ATM-on-Wheels. launched. India¶s first multi-branded credit card with HPCL and Airtel launched. ICICI Bank introduced the concept of floating rate for home loans in India. ICICI Bank¶s representative office inaugurated in Dubai. Hardoi. low-cost ATMs in rural India launched. : ICICI Bank¶s UK subsidiary launched. : : ICICI Bank and CNBC TV 18 announced India¶s first ever awards recognizing the achievements of SMEs. : : : : : : : 2005: : . : Max Money. India¶s first ever "Visa Mini Credit Card".2% stake in ICICI Bank. to 8 p. introduced. Mobile banking service in India launched in association with Reliance Infocomm. : First rural branch and ATM launched in Uttar Pradesh at Delpandarwa. ICICI Bank introduced 8-8 Banking wherein all the branches of the Bank would remain open from 8a. "Free for Life" credit cards launched wherein annual fees of all ICICI Bank Dronacharya Institute of Management and Technology. launched in Mumbai. The first offshore banking unit (OBU) at Seepz Special Economic Zone. India¶s first mobile ATM. from Monday to Saturday. Mumbai. Kisan Loan Card and innovative. 2004: ICICI Bank became the market leader in retail credit in India. ICICI Bank opened its 500th branch in India. Temasek Holdings acquired 5.m. a pioneering initiative to encourage the contribution of Small and Medium Enterprises to the growth of Indian economy. a home loan product that offers the dual benefit of higher eligibility and affordability to a customer.m. : The first Integrated Currency Management Centre launched in Pune. : : : ICICI Bank subsidiary set up in Canada. ICICI Bank announced the setting up of its first ever offshore branch in Singapore. a 43% smaller credit card in dimensions launched. Kurukshetra Representative office set up in China.

: Credit Cards were waived off. Representative offices opened in Thailand. Kurukshetra : 2007: : : : : . This event is the largest domestic invitation amateur golf event conducted in India. financial planning and debt management services. : ICICI Bank¶s GBP 350 million international bond offering marked the inaugural deal in the sterling market from an Indian issuer and also the largest deal in the sterling market from Asia. Launched India¶s first ever jewellery card in association with jewelry major Dronacharya Institute of Management and Technology. Bhoomi puja conducted for a regional hub in Hyderabad. Andhra Pradesh. Acquired IvestitsionnoKreditny Bank of Russia. a nationwide Golf tournament for high networth clients of the private banking division launched. First Indian company to make a simultaneous equity offering of $1. Sangli Bank amalgamated with ICICI Bank.8 billion in India. ICICI Bank and Visa jointly launched mChq ± a revolutionary credit card on the mobile phone. ICICI Bank subsidiary set up in Russia. ICICI Bankµs USD 2 billion 3-tranche international bond offering was the largest bond offering by an Indian bank. ICICI Bank raised Rs 20.µNRI smart save Deposits¶ ± a unique fixed deposit scheme for nonresident Indians. 2006: : : : : : : ICICI Bank became the first Indian bank to issue hybrid Tier-1 perpetual debt in the international markets. : Private Banking Masters 2005. the United States and Japan.000 crore (approx $5 billion) from both domestic and international markets through a follow-on public offer. ICICI Bank became the largest bank in India in terms of its market capitalization. Indonesia and Malaysia. Financial counseling centre Disha launched. Disha provides free credit counseling. Introduced a new product .

Research is thus an original contribution to existing stock of knowledge making for its advancement. analyzing the facts and reaching certain conclusions either in form of solutions towards the concerned problem or in certain generalizations for some theoretical formulation. ICICI Bank signed a multi-tranche dual currency US$ 1. Foundation stone laid for a regional hub in Gandhinagar. finance and grow their business. The advanced Learner¶s Dictionary of Current English lays down the meaning of research as ³a careful investigation or inquiry especially through search for new facts in any branch of knowledge. to help small and medium enterprises start. observation. Research is defined as a scientific and systematic search for pertinent information on specific topic. ICICI Bank became the first private bank in India to offer both floating and fixed rate on car loans. Research is an art of scientific investigation. comparison and experiment. It is pursuit of truth with help of study. : : RESEARCH METHODOLOGY MEANING of RESEARCH: Research in common parlance refers to a search for knowledge. The systematic approach concerning generalization and formulation of theory is also research. Kurukshetra . Infect. Introduced SME Toolkit. formulating a hypothesis. ICICI Bank became the first bank in India to launch a premium credit card ± The Visa Signature Credit Card. As such the term µresearch¶ refers to the systematic method consisting of enunciating the problem.´ In short. Dronacharya Institute of Management and Technology. construction equipment loans and professional equipment loans. Gujarat. an online resource centre.5 billion syndication loan agreement in Singapore. the search of knowledge through objective and systematic method of finding solution to a problem is research.: : Gitanjali Group. collecting the facts or data. commercial vehicles loans.

Research Methodology includes: Research Problem Research Design Sampling Design Collection of Data Research Problem: There are two types of research problems. It may be understood as a science of studying how research is done scientifically. those that relate to state of nature and those. Dronacharya Institute of Management and Technology. Research Design: A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. The main purpose of such studies is that of formulating a problem for more precise investigation.e. and rephrasing the same into meaningful terms from an analytical point of view. it constitutes the blue print for the collection. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with logic behind them. TYPES of RESEARCH DESIGN:  Exploratory Research Design: Exploratory research studies are also termed as formulate research studies. It is necessary for the researcher to know not only the research methods but also the methodology.e. i. At the very outset the researcher must single out the problem he wants to study i. which relate to relationship between variables. Kurukshetra . measurement and analysis of data. the research design is the conceptual structure with in which research is conducted. The major emphasis in such studies is on the discovery of ideas and insights.Research Methodology is a way to systematically solve the research problem.e. he must decide the general area of interest or aspect of a subject matter that he would like to inquire into. Essentially two steps are involved in formulating the research problem i. understanding the problem thoroughly. Infect.

which are collected afresh and for the first time. Data is collected by methods: 1. Primary Data: The primary data are those. Methods: y Observation Method: the observation is the most commonly used method especially in studies relating to behavior sciences.  Experimental Research Studies: In this study researcher tests the hypothesis of casual relationship between variables.  Diagnostic Research Studies: Diagnostic research studies determine the frequency with which something occurs or its association with something else. Kurukshetra . but will permit drawing inferences about causality. RESEARCH DESIGN ± PROJECT Research design includes descriptive and diagnostic study of framework. Dronacharya Institute of Management and Technology. but this sort of information is not scientific observation. and thus happen to be original in character. through questionnaires and so on. In this way we observe for things around us. We select only a few items from the universe for our study purpose. These are several methods for primary data collection like Observation Method. The items so selected constitute what is technically called a sample. A complete enumeration of all items in the µpopulation¶ is known as census inquiry. Sampling Design: All the items under consideration in any field of inquiry constitute a µuniverse¶ or µpopulation¶. Interview Method. DATA COLLECTION METHOD The task of data collection begins after a research problem has been defined and research design plan chalked out. Descriptive Research Studies: Descriptive research studies are those which describing the characteristics of a particular individual or group. which is collected through observation or direct communication with the respondent in one form or another. Primary data is the data. Such studies require procedures that will not only reduce bias and increase reliability. through schedules.

particularly in case of big enquiries. which have been passed through the statistical process.  Study of secondary data that includes: 1) Magazines 2) Journal 3) Portails 4) Documents. when it serves a formulated research purpose is systematically planned and recorded and is subjected to checks and controls on validity and reliability. It is being adopted by private individuals. put to them the questions listed and record the replies in the space meant for the same in Performa. Kurukshetra . research works. This sort of interview may be in the foam of direct personal investigation or it may be indirect oral investigation. private and public organizations and even by governments. In this case a questionnaire is sent to persons concerned with request to answer the number of questions printed in a definite order on a form or set of forms. 5) Books Dronacharya Institute of Management and Technology. y Schedules: this method of data collection is very much like the collection of data through questionnaire. with little difference which lies in the fact the schedules are being filled by the enumerators who are specially appointed for the purpose. y Interview Method: the interview method of collecting data involves presentation of oral-verbal stimuli and reply in terms of oral-verbal responses personal interview method requires a person known as the interviewer asking questions generally in the face to face contact to other person or persons.y Observation becomes a scientific tool and the method of data collection for the researcher. y Questionnaire Method: this method of data collection is quite popular. The enumerators along with schedules go to respondents. 2) Secondary Data: These methods are those.

50 9.738.194.51 65.51 1. The term analysis refers to the computation of certain measures along with searching for patterns of relationship that exist among data groups.10 737.60 1.457.772.85 3.61 115.70 2.728.587.269.94 Other recurring income 330.078.07 4.58 309.21 1.25 6.706.73 3.475.557.18 Expenses capitalized Cost of sales 10.20 2.007.058.750.89 590.407.00 2.532. Statistical processors are used this complex data into some significant understandable form.28 -2.757.58 Reported net profit 3.88 522.24 16.31 2.13 17.793.110.092.39 39.33 Dronacharya Institute of Management and Technology.36 2.00 3.727.128.059.250.248.78 448.66 2.447.87 5.725.611.25 556.55 4.63 6.83 11.193.112.540.616.227.467.157.740. has to be analyzed in accordance will the outline laid for the time of developing the research plan.22 7.00 2.45 Depreciation 678.116.41 601.517.17 759.570.95 Non recurring items 17.54 10.96 Financial expenses 22.62 4.79 Other write offs Adjusted PBT 5.35 544. FINANCIAL ASPECTS OF ICICI BANK Profit & Loss Account Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Income Operating income 38.156.07 Earnigs before appropriation 6.32 4.53 Adjusted PAT 3.224.946.46 3.08 2.17 466.96 Expenses Material consumed Manufacturing expenses Personnel expenses 1.69 2.735.102.305.838.96 5.679.58 1.92 28.73 3.082.17 Tax charges 1.29 632.741.597.60 578.93 23.830.484.55 5.08 3.ANALYSIS OF DATA: Data.63 840.995.75 1.43 2.70 901.30 Equity dividend 1.45 Operating profit 5.971.73 984.91 5.90 1.95 3.82 8.12 Other non cash adjustments -0.650.56 3.02 Adjusted PBDIT 5.29 Selling expenses 669.005. Kurukshetra .12 2.64 65.98 Adminstrative expenses 7.43 4.358.403.276.71 1.22 2.78 623. Data presented in raw state appear unrecognized and complex.537. after collection.

87.454.280.227.39 5.91.639.362.07 Mar ' 08 149.55.10 2.90 6.551.34 91.73 1.642.228.62 7.09 3. loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total 34.497.26 2.718.67 3.18.16 736.Preference dividend Dividend tax Retained earnings Mar ' 09 151.298.384.92 889.75 0.862.88 11.29 Share application money Preference share capital 350.00 Reserves & surplus 48.335.349.375.63 Mar ' 07 153.96 1.813.00 21.10 1.77 42.923.525.34 350.694.038.173.487.19 1.419.46 Mar ' 05 90.347.487.16 1.44.56 31.818.20 Loan funds Secured loans Unsecured loans Total 2.396.058.00 2.797.03.65.113.108.927.39 Mar ' 06 106.04 96.85 3.79 25.968.115.57 1.251.53 899.02 350.778.036.00 11. Kurukshetra .03.21 4.31 1.68.818.30 50.16 -10.357.083.99 21.12.341.17 99.38 23.68 350.987.42 189.22 Balance Sheet Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Sources of funds Owner's fund Equity share capital 1.78 -9.06 43.71 147.56 2.090.64 15.30.980.75 Uses of funds Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-inprogress Investments 7.11 4.316.83 350.676.765.112.746.78 2.52 -11.11.62 -14.413.17 44.585.05 2.510.642.37 97.45 1.94 71.66 5.129.84 Net current assets Current assets.82 2.62 80.85 38.00 23.61 4.547.50 1.801.257.71 3.431.35 1.895.14 3.15 Dronacharya Institute of Management and Technology.09 66.230.84 2.00 45.65 1.443.43 -9.

36 196.113.16 Capital Structure From To Year Year 2008 2007 2006 2005 2005 2004 2004 2003 2001 2000 1999 1997 1995 2009 2008 2007 2006 2006 2005 2005 2004 2002 2001 2000 1999 1997 Class Of Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Authorized Capital 1.00 1.82 165.311.00 899266672 153844503 889823901 350000000 616391905 613021301 220358680 196818880 196818880 165000700 150000700 Dronacharya Institute of Management and Technology.Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs) - 8.000.25 1.39 616.84 889.02 220.00 300.000.25 1113250642 1.39 613.82 196.000.82 165.99.00 Issued Capital Paid Up Shares (Nos) Paid Up Paid Up Face Capital Value 10 10 10 10 10 10 10 10 10 10 10 10 10 1.27 153.112.550.00 300.920.39 613.00 1.00 150.69 899.07.40.00 300.00 300.00 1.00 1.99 1.00 300.00 616.550.112. Kurukshetra .113.00 150.82 196.00 1.82 350.46 11126.550.670.275.69 1112687495 899.63 4.87 11126.87 8992.275.771.24 7367.82 616.01.27 153.02 220.36 196.00 1.84 889.00 1.91 1.67 8898.114.00 1.34.41 1.

13 878.55 466.67 Stock adjustment Raw material Power and fuel Employee expenses 427.22 743.54 Depreciation Taxation 265.16 Net profit / loss 1.00 150.30 1. Kurukshetra .65 1.14 1.00 1.50 1.37 974.70 490.79 2.15 - Dronacharya Institute of Management and Technology.90 327.02 449.16 1.54 503.040.62 323.42 Excise Admin and selling expenses Research and development expenses Expenses capitalised Other expenses 935.00 150000000 7 105.002.88 1.084.323.63 Provisions made 1.071.272.98 1.76 Extra ordinary item Prior year adjustments 2.673.00 700 10 Share Quarterly Results in Details Dec ' 09 Sep ' 09 Jun ' 09 Mar ' 09 Dec ' 08 Other income 1.99 1.231.From To Year Year 1994 1994 Class Paid Up Authorized Issued Paid Up Paid Up Of Face Capital Capital Shares (Nos) Capital Share Value Equity 1995 300.514.11 1.089.00 Share Equity 1995 300.00 150.007.823.06 1.52 457.079.199.25 327.101.673.

Kurukshetra .113.53 1.15 3.21 960.67 1.00 64.00 61.89 9.716.913.74 2.04 10.015.95 651.742.64 100.95 11.08 9.31 3.60 11135.of non-prom.37 1.48 2.112.707.75 2.29 11132.430.92 1.19 10.24 818.91 1.29 11132.092.31 25.642.76 436.83 18.85 20.67 916.380.48 4.00 65.110.02 540.69 1.011.240.68 11126.777.834.51 1.83 461.00 65.07 2.49 100.45 21.022.42 Dronacharya Institute of Management and Technology.Half Yearly Results in Details Sep ' 09 Mar ' 09 Sep ' 08 Mar ' 08 Sep ' 07 Other income Stock adjustment Raw material Power and fuel Employee expenses Excise Admin and selling expenses Research and development expenses Expenses capitalised Other expenses Provisions made Depreciation Taxation Net profit / loss Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg.15 2.054.15 1.041.84 4.of non promotoholding (%) OPM (%) GPM (%) NPM (%) 3.113.415.12 100.66 11119.037.87 100.918.68 1.09 28.05 1.196.10 4.35 1. shares (Lacs) Agg.188.00 62.394.24 1.28 2.22 1.45 2.113.42 2.788.91 1.51 100.

15 100.758.34 8992.29 3.971.00 53.073.075.75 4.540.226.68 11126.082.810.51 100.81 2.07 889.06 9.594.24 100.416.38 23.53 2.80 522.82 3.74 428.90 24.14 737.113.00 64.00 65.83 8898.26 1.112.05 15.10 10.22 899.00 60.20 736.616.561. shares (Lacs) Agg.00 61.358.29 11132.073.09 23.08 20.157.28 2.13 1.67 100.31 10.929.Annual Results in Details Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Other income Stock adjustment Raw material Power and fuel Employee expenses Excise Admin and selling expenses Research and development expenses Expenses capitalized Other expenses Provisions made Depreciation Taxation Net profit / loss Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg.of non-prom.50 5.22 20.808.918.72 1.603.71 8.41 2.37 4.17 1.110.75 5.77 2.904.59 898.07 556.005.70 5.of non promotoHolding (%) OPM (%) GPM (%) NPM (%) 7.84 3.32 13.87 100.36 537.17 3.73 1.41 3.983.63 Dronacharya Institute of Management and Technology.86 1.078.90 6. Kurukshetra .14 1.78 7367.00 2.

15 335589655 Sub total 364710768 32.33 33.75 8661306 Others Direcctors/Employee 915614 0.00 No.00 9 6 184997587 16. Of Shares Sub total % % No.34 665820721 59.12 69419969 111412776 111355994 Grand total 100.14 33.60 6. Of No.59 100.93 6.23 % Holdin g - Banks Fin.84 2.78 0.00 10.39 35.62 404572215 36.66 193684224 Insurance FII's 405186131 36. Of Holdin Holdin Shares Shares g g Promoter's holding Non promoter's holding Institutional investors 17. and 196772204 17.15 666311911 Other investors Private Corporate 30683910 2.37 59.00 19780 326545246 374077085 73422082 111331988 100.73 377828066 General public 68131224 6.93 0.80 37174101 9403169 938988 3. Kurukshetra .37 393903476 Sub total 681285777 61.08 29.08 30.08 933488 s Govt 6760 7380 Others 324764614 29.34 0.00 10.00 8 Dronacharya Institute of Management and Technology. Inst.84 0.75 32640436 Bodies NRI's/OCB's/Foreign 8344069 0.Share Holding Share holding pattern as on : 31/12/2009 30/09/2009 30/06/2009 Face value 10.

It is simply the quotient of two numbers. Ratios look at the relationships between individual values and relate them to how a company has performed in the past. Ratio is express by dividing one figure by the other related figure. other companies. This means crunching and analyzing numbers from the financial statements.RATIO ANALYSIS INTRODUCTION: Fundamental Analysis has a very broad scope. which are related to each other and mutually interdependent. One aspect looks at the general (qualitative) factors of a company. If used in conjunction with other methods. Kurukshetra . Thus a ratio is an expression relating one number to another. It's comparing the number against previous years. and cash flow statement. The other side considers tangible and measurable factors (quantitative). or even the economy in general. the industry. income statement. MEANING OF RATIO: A ratio is one figure express in terms of another figure. and might perform in the future. Dronacharya Institute of Management and Technology. It can be expressed as a fraction or as a decimal or as a pure ratio or in absolute figures as ³ so many times´. Ratio analysis isn't just comparing different numbers from the balance sheet. quantitative analysis can produce excellent results. As accounting ratio is an expression relating two figures or accounts or two sets of account heads or group contain in the financial statements. It is a mathematical yardstick that measures the relationship two figures.

This technique is called cross-sectional analysis. By comparing the leverage ratios of two companies. Cross-sectional analysis compares financial ratios of several companies from the same industry. Ratio analysis can provide valuable information about a company's financial health. Ratio analysis is an attempt to derive quantitative measure or guides concerning the financial health and profitability of business enterprises. For example.MEANING OF RATIO ANALYSIS: Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed. determined and presented. OBJECTIVE OF RATIOS: Ratio is work out to analyze the following aspects of business organization A) Solvency1) Long term 2) Short term 3) Immediate B) Stability C) Profitability D) Operational efficiency E) Credit standing F) Structural analysis G) Effective utilization of resources H) Leverage or external financing FORMS OF RATIO: Dronacharya Institute of Management and Technology. you could use a ratio of a company's debt to its equity to measure a company's leverage. Ratio analysis can be used both in trend and static analysis. Kurukshetra . A company whose leverage ratio is higher than a competitor's has more debt per equity. A financial ratio measures a company's performance in a specific area. you can determine which company uses greater debt in the conduct of its business. There are several ratios at the disposal of an annalist but their group of ratio he would prefer depends on the purpose and the objective of analysis.

5 [30.Since a ratio is a mathematical relationship between to or more variables / accounting figures.00.00.00. such relationship can be expressed in different ways as follows ± A] As a pure ratio: For example the equity share capital of a company is Rs.000. then the gross profit may be described as 20% of sales [ 10.00. 12.000 & the preference share capital is Rs. 5. 20. The standard ratio may be the past ratio of the same firm or industry¶s average ratio or a projected ratio or the ratio of the most successful firm in the industry.00.00.000: 5. one item may be expressed as a percentage of some other item.00.000] or simply by saying that the credit sales are 2. the analyst cannot reach any fruitful conclusion unless the calculated ratio is compared with some predetermined standard.50.00. For example. the ratio of equity share capital to preference share capital is 20. The ratio analysis requires two steps as follows: 1] Calculation of ratio 2] Comparing the ratio with some predetermined standards.5 times that of cash sales.000 or simply 4:1.000] STEPS IN RATIO ANALYSIS.000 & credit sales are Rs.000 & the amount of the gross profit is Rs. net sales of the firm are Rs. C] As a percentage: In such a case.000/12.000.000/50.00. so the ratio of credit sales to cash sales can be described as 2. 10.00. TYPES OF COMPARISONS: The ratio can be compared in three different ways ± Dronacharya Institute of Management and Technology. In interpreting the ratio of a particular firm. Similarly. the cash sales of a firm are Rs. 30.00.000. Kurukshetra .00. B] As a rate of times: In the above case the equity share capital may also be described as 4 times that of preference share capital. The importance of a correct standard is oblivious as the conclusion is going to be based on the standard itself.

By comparing the present performance of a firm with the performance of the same firm over the last few years. So it involves the comparison of two or more firm¶s financial ratio at the same point of time. whereas the industry average has not shown any significant changes. The firms performance may be compared with the performance of the leader in the industry in order to uncover the major operational inefficiencies. then meaningful & comprehensive evaluation of the performance of the firm can definitely be made. 3] Combined Analysis: If the cross section & time analysis. The Time series analysis looks for (1) important trends in financial performance (2) shift in trend over the years (3) significant deviation if any from the other set of data. Time series analysis helps to the firm to assess whether the firm is approaching the long-term goals or not. over the years it has been declining for the firm. For example.1] Cross Section Analysis: One of the way of comparing the ratio or ratios of the firm is to compare them with the ratio or ratios of some other selected firm in the same industry at the same point of time. A trend of ratio of a firm compared with the trend of the ratio of the standard firm can give good results. both are combined together to study the behavior & pattern of ratio. Kurukshetra . an assessment can be made about the trend in progress of the firm. The cross section analysis is easy to be undertaken as most of the data required for this may be available in financial statement of the firm. about the direction of progress of the firm. the ratio of operating expenses to net sales for firm may be higher than the industry average however. The cross section analysis helps the analyst to find out as to how a particular firm has performed in relation to its competitors. Dronacharya Institute of Management and Technology. 2] Time Series Analysis: The analysis is called Time series analysis when the performance of a firm is evaluated over a period of time.

PRE RE UISITIES T RATIO ANAL SIS: In order to use the ratio analysis as de ice to make purposeful conclusions. Therefore. otherwise there is no purpose of calculating a ratio. only audited financial statements should be considered. If possible. The accounting figures are inacti e in them & can be used for any ratio but meaningful & correct interpretation & conclusion can be arri ed at only if the following points are well considered. Accounting policies followed by different firms must be same in case of cross section analysis otherwise the results of the ratio analysis would be distorted. which must be taken care of. Last but not least. It may be noted that these prerequisites are not conditions for calculations for meaningful conclusions. The dates of different financial statements from where data is taken must be same. Kurukshetra . but it is decreasing o er the years & is approaching the industry a erage. One ratio may not throw light on any performance of the firm.The combined analysis as depicted in the abo e diagram. a group of ratios must be preferred. which clearly shows that the ratio of the firm is abo e the industry a erage. This will be conducti e to counter checks. otherwise there must be sufficient e idence that the data is correct. there are certain pre-requisites. the analyst must find out that the two figures being used to calculate a ratio must be related to each other. Dronacharya Institute of Management and Technology.

It include Balance sheet ratio. Revenue ratio and Composite ratio. Dronacharya Institute of Management and Technology. Figures may be taken from Balance Sheet . P& P A/C. Kurukshetra . or both.CLASSIFICATION OF RATIO CLASSIFICATION OF RATIO BASED ON FINANCIAL USER STATEMENT BASED ON FUNCTION BASED ON 1] BALANCE SHEET TERM RATIO 2] REVENUE STATEMENT SHAREHOLDER RATIO 3] COMPOSITE MANAGEMENT RATIO 1] LIQUIDITY RATIO 1] RATIOS FOR SHORT 2] LEVERAGE RATIO 3] ACTIVITY RATIO 4] PROFITABILITY RATIO CREDITORS 2] RATIO FOR 5] COVERAGE RATIO 3] RATIOS FOR 4] RATIO FOR LONG TERM CREDITORS a) BASED ON FINANCIAL STATEMENT Accounting ratios express the relationship between figures taken from financial statements. One-way of classification of ratios is based upon the sources from which are taken.

they are called Balance Sheet Ratios. b) Other composite ratios e. and Proprietory ratio.g. There are to types of composite ratiosa) Some composite ratios study the relationship between the profits & the investments of the concern. Capital gearing ratio. debtors turnover ratios. Operating ratio. & debt service ratios. E. Net profit ratio.g. Kurukshetra . While calculating these ratios. Revenue ratios are Gross profit ratio. Debt equity ratio. Stock turnover ratio. Balance sheet ratios are Current ratio. These ratio study the relationship between the profitability & the sales of the concern. there is no need to refer to the Revenue statement. Liquid ratio. ratio of current assets to current liabilities or ratio of debt to equity.1] Balance Sheet Ratio: If the ratios are based on the figures of balance sheet. 3] Composite Ratio: These ratios indicate the relationship between two items. return on capital employed. Net operating profit ratio. solvency & capital structure of the concern. E. b) BASED ON FUNCTION Dronacharya Institute of Management and Technology. These ratios study the relationship between the assets & the liabilities. of which one is found in the balance sheet & other in revenue statement. of the concern. These ratio help to judge the liquidity. 2] Revenue Ratio: Ratio based on the figures from the revenue statement is called revenue statement ratios.g. return on equity capital etc. and Stock working capital ratio. creditors turnover ratios. return on proprietors fund. dividend payout ratios. Expense ratio.

Accounting ratios can also be classified according to their functions in to liquidity ratios. debt equity ratios. dividend payout ratios & debt service ratios. return on equity capital. expenses ratios It shows the relationship between profit & investment e. profitability ratios & turnover ratios. liquid ratios & current ratios. Kurukshetra . 2] Leverage Ratios: It shows the relationship between proprietors funds & debts used in financing the assets of the concern e. 1] Liquidity Ratios: It shows the relationship between the current assets & current liabilities of the concern e. It is also known as Turnover ratios & productivity ratios e. 4] Profitability Ratios: It shows the relationship between profits & sales e. 3] Activity Ratios: It shows relationship between the sales & the assets.g.g. capital gearing ratios. debtors turnover ratios. leverage ratios. activity ratios.g. & Proprietory ratios.g. 5] Coverage Ratios: It shows the relationship between the profit on the one hand & the claims of the outsiders to be paid out of such profit e. c) BASED ON USER Dronacharya Institute of Management and Technology. gross profit ratios. operating net profit ratios.g. operating ratios. return on investment. stock turnover ratios.g.

stock working capital ratios 2] Ratios for the shareholders: Return on proprietors fund. Kurukshetra . expenses ratios 4] Ratios for long-term creditors: Debt equity ratios. operating ratios. liquid ratios. proprietor ratios. turnover ratios. return on equity capital 3] Ratios for management: Return on capital employed.1] Ratios for short-term creditors: Current ratios. 1) LIQUIDITY RATIOS - Dronacharya Institute of Management and Technology. return on capital employed.

which indic``ate the liquidity of a company. The ratios. are Current ratio. Quick/Acid-Test ratio. Kurukshetra .Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year) obligations.These ratios are discussed below Current Ratio: This ratio compares the current assests with the current liabilities. The Liquidity ratios give a basic ability of a company to meet its short term liabilities. and Cash ratio. It is also known as µworking capital ratio¶ or µ solvency ratio¶. It is expressed in the form of pure ratio Dronacharya Institute of Management and Technology. They also give a picture of how the company has financed its short term assets. There are various ratios within these which provide information about a company¶s fundamentals.

not the worst thing in the world. The current assets comprise of the cash. Kurukshetra . The current ratio is calculated as: Current Ratio = Current Assets / Current Liabilities The current ratio in case of ICICI BANK can bee seen here: Year 2004-05 Current Ratio 0. Dronacharya Institute of Management and Technology. a current ratio of 2:1 or greater is normally sufficient to meet near-term operating needs. There is a possibility of window dressing in case of the current ratio. If current liabilities exceed current assets.51 2005-06 0. inventories and the sundry debtors.72 2008-2009 0. If the current assets of a company are more than twice the current liabilities. but potentially something that could impact long-term returns. A current ratio that is too high can suggest that a company is hoarding assets instead of using them to grow the business -.Current assets Current ratio = Current liabilities Current ratio is equal to current assets divided by current liabilities. then that company is generally considered to have good short-term financial strength. By taking inventories out of the equation. As a general rule.62 2006-07 0.78 Liquid Ratio: The quick ratio is simply current assets minus inventories divided by current liabilities.61 2007-08 0. you can check and see if a company has sufficient liquid assets to meet short-term operating needs. then the company may have problems meeting its short-term obligations.

94 Liquid Ratio 8 6 4 2 0 Liquid Ratio 2004-05 2005-06 Liquid Ratio 2006-07 2007-08 2008-09 Absolute Cash Ratio: The abo e ratio¶s still lea e a possibility of window dressing using the debtors to the company.30 2007-08 11.64 2008-2009 5.14 2005-06 17.81 2008-2009 11.45 Dronacharya Institute of Management and Technology.42 2006-07 6.The Liquid ratio is calculated as: Liquid Ratio = (Current Assets ± Inventory)/Current Liabilities The liquid ratio for the 5 years has been gi en below: Year Liquid Ratio 2004-05 4.98 2005-06 6. Kurukshetra .55 2006-07 12.04 2007-08 6. The Absolute cash ratio is calculated as: Absolute cash ratio = (Current Assets ± Inventory ± Debtors)/Current Liabilities The ACR for the 5 years has been listed below: Year Absolute Cash Ratio 2004-05 21. The ACR ensures that we get the exact cash present with the company to co er for its current liabilities.

then it is in good shape.78 2007-08 2008-2009 -11.17 2005-06 -9.09 2006-07 -14. Kurukshetra . fund its growth. Working capital is basically an expression of how much in liquid assets the company currently has to build its business. so the company lacks the ability to spend with the same aggressive nature as a working capital positive peer.362. If a company has negative working capital. If this value is negative.765.Working capital: The working capital is given by: Working capital = CA ± CL This gives a clear picture of how the assets have been financed by the company. All other things being equal.62 -9.37 2) INVESTMENT /SHAREHOLDER - Dronacharya Institute of Management and Technology. If this is a positive value. then its current liabilities are actually greater than their current assets. a company with positive working capital will always out perform a company with negative working capital.585. Year Working capital 2004-05 -10. then parts of the fixed assets have been financed by the current liabilities. with plenty of cash on hand to pay for everything it might need to buy.676. If a company has positive working capital. it indicates that the assets have been partly financed by current liabilities and partly by Long term debt. and produce shareholder value.280.

It is used in valuation of a company and to measure its performance. It is calculated by taking the weighted average of the shares outstanding.78 2008-09 33. DPS is calculated taking the interim and Dronacharya Institute of Management and Technology.62 Dividend Per Share: Dividend per share represents the amount of dividend each shareholder will receive for every share they own.Earnings Per Share: EPS is the net profit of loss to the share holders for each share.30 2007-08 36. of shares Year EPS 2004-05 27.47 2006-07 33.25 2005-06 28. EPS = Profit after Tax / No. PAT is used in the calculation of EPS because it is gives the amount available to the shareholders once the taxes are paid. Kurukshetra .

85 2005-06 27. * 100 Year Di idend Ratio 2004-05 Payout 27. of shares Year DPS 2004-05 8.08 2008-09 31.00 Di idend Payout Ratio: Di idend Pay-out Ratio shows the relationship between the di idend paid to equity shareholders out of the profit a ailable to the equity shareholders. Di idend per share Di idend Pay out ratio = Earning per share D/P ratio shows the percentage share of net profits after taxes and after preference di idend has been paid to the preference equity holders.84 2007-08 29.00 3) GEARING - Dronacharya Institute of Management and Technology. It is different from EPS as it indicates the amount paid to shareholders as compared to the amount a ailable.00 2008-09 11.50 2006-07 10.final di idend paid.36 2006-07 28. Kurukshetra . DPS= Total Dividend paid / No.00 2007-08 11.50 2005-06 8.

can comfortably meet its operating expenses and provide more returns to its shareholders. This is also known as leverage or trading on equity. 4) PROFITABILITY ± These ratios help measure the profitability of a firm. A firm. It is expressed as a pure ratio. Kurukshetra . Equity shareholders earn more when the rate of the return on total capital is more than the rate of interest on debts. The relationship between profit Dronacharya Institute of Management and Technology. which generates a substantial amount of profits per rupee of sales.Capital Gearing Ratio: Gearing means the process of increasing the equity shareholders return through the use of debt. The Capital-gearing ratio shows the relationship between two types of capital viz: .equity capital & preference capital & long term borrowings. Preference capital+ secured loan Capital Gearing Ratio = Equity capital & reserve & surplus Capital gearing ratio indicates the proportion of debt & equity in the financing of assets of a concern.

It is defined as the excess of the net sales over cost of goods sold or excess of revenue over cost. Gross Profit Ratio: This ratio measures the relationship between gross profit and sales. Dronacharya Institute of Management and Technology. It measures the efficiency of production as well as pricing. Kurukshetra . how productive the concern .and sales is measured by profitability ratios. purchase. This ratio shows the profit that remains after the manufacturing costs have been met. This ratio helps to judge how efficient the concern is I managing its production. how much amount is left to meet other expenses & earn net profit. There are two types of profitability ratios: Gross Profit Margin and Net Profit Margin. how good its control is over the direct cost. selling & inventory.

32 2005-06 14.Gross profit Gross Profit Ratio = Net sales * 100 Year Profit Margin Ratio 2004-05 17.41 2007-08 12.10 2006-07 11. Dronacharya Institute of Management and Technology.51 2008-09 9.36 Net Profit Ratio: Net Profit ratio indicates the relationship between the net profit & the sales it is usually expressed in the form of a percentage.74 Return on Capital Employed: The profitability of the firm can also be analyzed from the point of view of the total funds employed in the firm. The term fund employed or the capital employed refers to the total long-term source of funds.64 2005-06 15.81 2007-08 10. Alternatively it can also be defined as fixed assets plus net working capital.12 2006-07 10. It means that the capital employed comprises of shareholder funds plus long-term debts. Kurukshetra . NPAT Net profit ratio = Net sales * 100 Year Net Profit Rratio 2004-05 16.99 2008-09 12.

Kurukshetra . inventory/stock turnover ratio. It is the sum of long-term liabilities and owner's equity.Capital employed refers to the long-term funds invested by the creditors and the owners of a firm. They are also called efficiency ratios or asset utilization ratios as they measure the efficiency of a firm in managing assets. This ratio can be used to determine the profitability and efficiency of a company.40 2007-08 64. NPAT Return on capital employed = Capital employed *100 Year Return on Capital Employed 2004-05 31. These are described below: Dronacharya Institute of Management and Technology. average collection period.75 2006-07 67.75 5) FINANCIAL ± These ratios determine how quickly certain current assets can be converted into cash. In order to avoid reduction in shareholder¶s earnings. the rate of borrowing must be lower that ROCE. ROCE indicates the efficiency with which the long-term funds of a firm are utilized. A higher ratio indicates better returns for the company.64 2008-09 51. and total assets turnover ratio. fixed assets turnover ratio. These ratios are based on the relationship between the level of activity represented by sales or cost of goods sold and levels of investment in various assets. The important turnover ratios are debtors turnover ratio.29 2005-06 35. It indicates how well the company has utilized its capital employed.

It measures the liquidity of a firm's debts. The higher the DTO. from customers. Kurukshetra . the better it is for the organization. This ratio shows how rapidly debts are collected. if any. redit sales ebtors urnover atio = verage debtors In entory or Stock Turno er Ratio (ITR): Dronacharya Institute of Management and Technology.   ¡ et credit sales are the gross credit sales       minus returns. A erage debtors are the a erage of debtors at the beginning and at the end of the year.Debtors Turno er Ratio (DTO): DTO is calculated by di iding the net credit sales by a erage debtors outstanding during the year.

cost of goods sold) is related to a stock figure (inventories). A higher DER indicates that the assets are financed more by debt as compared to equity. averages may be used when a flow figure (in this case. The lower the solvency ratio. a high inventory turnover may also result from a low level of inventory. Solvency Ratios: Solvency ratios are an indicator of the ability of a company to meet its long term debt obligations. Debt Equity ratio= Debt / Ratio The debt equity ratios of the ICICI BANK are as follows: ¢ Table 10: Debt Equity Ratio Year Debt-equity ratio 2004-05 7.50 2007-08 5.27 2008-09 4. However. which may lead to frequent stock outs and loss of sales and customer goodwill. For calculating ITR. the more likely the company will default. Formula: COGS S ck T R i A ck ITR reflects the efficiency of inventory management. and vice versa. Some of the ratios used to test for solvency are: Debt-Equity Ratio: It is defined as the ratio between debt and equity. It indicates the proportion of debt and equity used to finance the assets. The higher the ratio. the average of inventories at the beginning and the end of the year is taken.45 2006-07 9. In general. the more efficient is the management of inventories.ITR refers to the number of times the inventory is sold and replaced during the accounting period.42 Dronacharya Institute of Management and Technology. Kurukshetra .98 2005-06 7.

12 2007-08 52.0183 2005-06 2006-07 2007-08 2008-09 Reserves to Total Funds: Dronacharya Institute of Management and Technology.34 20078-09 49.41 Debt to Total Funds: It gives an indication of the leverage and potential risk of the company in terms of debt-load.0201 0.0335 0. £ Year Interest coverage ratio 2004-05 38. Debt to total funds= Debt / Total Funds The debt to total funds ratio of the ICICI BANK are as follows: Year Debt to funds 2004-05 total 0.Interest Coverage Ratio (ICR): It is defined as the ratio between Profit Before Interest and Tax (PBIT) and interest This ratio can be used to determine the ease of a company to pay the interest on its outstanding debts. A higher debt ratio indicates that the company is financed more by debts as compared to capital.30 2006-07 65. Kurukshetra .0357 0.41 CR = PBIT / Interest The ICR¶s of the ICICI BANK are: Table 11: Interest Coverage Ratios 2005-06 52.0522 0.

It is usually expressed in the form of percentage. This ratio determines the long term or ultimate solvency of the company.1805 2005-06 2006-07 2007-08 2008-09 Proprietors Ratio: Proprietary ratio is a test of financial & credit strength of the business. Proprietary ratio compares the proprietor fund with total liabilities. Proprietary ratio determines as to what extent the owner¶s interest & expectations are fulfilled from the total investment made in the business operation. Kurukshetra .1557 0. It relates shareholders fund to total assets.1136 0. Total assets also know it as net worth.The reserves to total fund ratio indicates the proportion of reserves used to finance assets.0918 0. A higher ratio indicates that the reserves form a larger part of the overall funds. Proprietary fund Proprietary ratio = Total fund Creditors Turnover Ratio: Dronacharya Institute of Management and Technology. Reserves to total funds= Reserves/ Total funds The ratios of the BHEL Company are as follows: Year Reserves total funds 2004-05 to 0. In other words.1048 0.

by expecting the company to do well and hence increase value in turn increase the share value of the company equity shares.It is same as debtors turnover ratio. Kurukshetra .33 Market Capitalization to Net worth (Price to Book Ratio): Dronacharya Institute of Management and Technology. Low PE stocks indicate that the price of the stock represents a smaller multiple of the earnings for the previous year. of Shares issued. Years PE Price to Earnings ratio = Market Price / (Earnings per share) 2004-05 2005-06 2006-07 2007-08 2008-09 63.98 65. The stock holders generally value the price of a stock as a multiple of the earnings per share. It is a relation between net credit purchase and average creditors N C i T R i A c i c i p ch Market Based Returns: PE Ratio: This value is of most importance to shareholders of the company.35 62. It is the most common ratio used to value the company. It shows the speed at which payments are made to the supplier for purchase made from them.82 64.80 66. ±Although low PE stocks do indicate a possibility of growth. in today¶s world they have to be looked at closely. This is a clear indicator of how much value can be extracted from the company¶s share and gives shareholders an estimate of the returns that the share of this company can provide in return to their investment Price to Earnings ratio = Market Price / (Earnings per share) Earnings per share = PAT / No.

2] Long-term solvency. It could also mean that there is something wrong with the company fundamentally as book value is the value of all the tangible assets and liabilities. The importance of ratio analysis lies in the fact that it presents facts on a comparative basis & enables the drawing of interference regarding the performance of a firm. It could mean that the company share is undervalued and has scope of appreciation and hence providing returns over time. 4] Overall profitability. It is calculated as: Price to Book ratio = Stock Price * No. 5] Inter firm comparison 6] Trend analysis. Kurukshetra . Ratio analysis is relevant in assessing the performance of a firm in respect of the following aspects: 1] Liquidity position. IMPORTANCE OF RATIO ANALYSIS As a tool of financial management. of shares issued/ Net worth = Stock Price / Book value A low PB ratio could be interpreted in 2 ways. The liquidity position of a firm would be satisfactory if it is able to meet its current obligation when they become due. 1] Liquidity Position: With the help of Ratio analysis conclusion can be drawn regarding the liquidity position of a firm. 3] Operating efficiency. A firm can be said to have the ability to meet its short-term liabilities if it has sufficient liquid funds to pay the interest on its short maturing debt usually within a year as well as to repay the Dronacharya Institute of Management and Technology. ratios are of crucial significance.This ratio is used to compare the market value of the share to the Book value of the company equity share.

dependent upon the sales revenues generated by the use of its assets. 2] Long Term Solvency: Ratio analysis is equally useful for assessing the long-term financial viability of a firm. is that it throws light on the degree of efficiency in management & utilization of its assets. security analyst & the present & potential owners of a business. Kurukshetra . The long-term solvency is measured by the leverage/ capital structure & profitability ratio Ratio analysis s that focus on earning power & operating efficiency. relevant from the viewpoint of management. in the ultimate analysis. which are interested in one aspect of the financial position of a firm. Ratio analysis reveals the strength & weaknesses of a firm in this respect. The liquidity ratio are particularly useful in credit analysis by bank & other suppliers of short term loans. The various activity ratios measures this kind of operational efficiency. they are concerned about the ability of the firm to meets its Dronacharya Institute of Management and Technology. That is. will indicate whether a firm has a reasonable proportion of various sources of finance or if it is heavily loaded with debt in which case its solvency is exposed to serious strain. This respect of the financial position of a borrower is of concern to the longterm creditors. The leverage ratios.principal. In fact. for instance. the management is constantly concerned about overall profitability of the enterprise. 3] Operating Efficiency: Yet another dimension of the useful of the ratio analysis. the solvency of a firm is. This ability is reflected in the liquidity ratio of a firm.total as well as its components. 4] Overall Profitability: Unlike the outsides parties.

short term as well as long term obligations to its creditors, to ensure a reasonable return to its owners & secure optimum utilization of the assets of the firm. This is possible if an integrated view is taken & all the ratios are considered together.

5]

Inter ± Firm Comparison:
Ratio analysis not only throws light on the financial position of firm but also serves as

a stepping-stone to remedial measures. This is made possible due to inter firm comparison & comparison with the industry averages. A single figure of a particular ratio is meaningless unless it is related to some standard or norm. one of the popular techniques is to compare the ratios of a firm with the industry average. It should be reasonably expected that the performance of a firm should be in broad conformity with that of the industry to which it belongs. An inter firm comparison would demonstrate the firms position vice-versa its competitors. If the results are at variance either with the industry average or with the those of the competitors, the firm can seek to identify the probable reasons & in light, take remedial measures.

6]

Trend Analysis:
Finally, ratio analysis enables a firm to take the time dimension into account. In other

words, whether the financial position of a firm is improving or deteriorating over the years. This is made possible by the use of trend analysis. The significance of the trend analysis of ratio lies in the fact that the analysts can know the direction of movement, that is, whether the movement is favorable or unfavorable. For example, the ratio may be low as compared to the norm but the trend may be upward. On the other hand, though the present level may be satisfactory but the trend may be a declining one.

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ADVANTAGES OF RATIO ANALYSIS ±
Financial ratios are essentially concerned with the identification of significant accounting data relationships, which give the decision-maker insights into the financial performance of a company. The advantages of ratio analysis can be summarized as follows: Ratios facilitate conducting trend analysis, which is important for decision making and forecasting. Ratio analysis helps in the assessment of the liquidity, operating efficiency, profitability and solvency of a firm. Ratio analysis provides a basis for both intra-firm as well as inter-firm comparisons. The comparison of actual ratios with base year ratios or standard ratios helps the management analyze the financial performance of the firm.

DISADVANTAGES OF RATIO ANALYSIS ±
Ratio analysis has its limitations. These limitations are described below:

1] Information Problems:
Ratios require quantitative information for analysis but it is not decisive about analytical output. The figures in a set of accounts are likely to be at least several months out of date, and so might not give a proper indication of the company¶s current financial position.

2] Comparison of Performance over T ime;
When comparing performance over time, there is need to consider the changes in price. The movement in performance should be in line with the changes in price.

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When comparing performance over time, there is need to consider the changes in technology. The movement in performance should be in line with the changes in technology.

3] Inter-firm Comparison:
Companies may have different capital structures and to make comparison of performance when one is all equity financed and another is a geared company it may not be a good analysis. Selective application of government incentives to various companies may also distort intercompany comparison. comparing the performance of two enterprises may be misleading. Inter-firm comparison may not be useful unless the firms compared are of the same size and age, and employ similar production methods and accounting practices. Even within a company, comparisons can be distorted by changes in the price level. Ratios provide only quantitative information, not qualitative information.

PURPOSE OF RATIO ANLYSIS 1] To identify aspects of a businesses performance to aid decision making 2] Quantitative process ± may need to be supplemented by qualitative Factors to get a complete picture. 3] 5 main areas:Liquidity ± the ability of the firm to pay its way. Investment/shareholders ± information to enable decisions to be made on the extent of the risk and the earning potential of a business investment. Gearing ± information on the relationship between the exposure of the business to loans as opposed to share capital. Profitability ± how effective the firm is at generating profits given sales and or its capital assets. Financial ± the rate at which the company sells its stock and the efficiency with which it uses its assets.

Dronacharya Institute of Management and Technology, Kurukshetra

viz ROTA.94 2.61 2. 2004-05 31.15 2.56 4.22 2008-09 51. or RONW.19 5. This method is a very simple method which provides a clear understanding of how the company generates its return.955 Dronacharya Institute of Management and Technology. ROCE = Profit Margin *Asset Turnover * Asset to Capital Employed y y y Profit Margin = PBIT/Sales Asset Turnover = Sales /Total Asset Asset to Capital Employed = Total Asset/Capital Dupont Ratios ROCE Profit Margin Asset Turnover Asset to capital Emp. ROCE.44 2005-06 35. Kurukshetra .40 4.27 2007-08 64.75 5. We can undertake the DuPont analysis by taking any variation of ROI.75 4. To enable this. an effort is made to decompose ROI and go to the root cause of ROI.15 5. For our analysis.25 2.14 3.52 3. we are taking ROCE.14 1.DUPONT ANALYSIS DuPont analysis provides the framework to understand the drivers of ROI. In DuPont analysis.64 5. This analysis provides an insight into the importance of asset turnover as well as sales to overall return.29 4.93 2006-07 67. the DuPont model integrates the elements of Income statement and the balance sheet.

40 2007-08 64. In order to avoid reduction in shareholder¶s earnings.80 2008-09 7.40 2006-07 12.55 R 18 16 14 12 10 8 6 4 2 0 2004-05 2005-06 2006-07 ONW 2007-08 2008-09 ROCE: This ratio can be used to determine the profitability and efficiency of a company. It is a basic ratio that tells a stockholder what he is getting out of his investment in the company. A higher ratio indicates better returns for the company. the rate of borrowing must be lower that ROCE.64 2008-09 51. Y 2004-05 w 2005-06 11. It indicates how well the company has utilized its capital employed.99 2005-06 35.75 .INTRA COMPANY ANALYSIS RONW (Return on Net worth): This ratio shows the money available for the equity shareholders and Return on Net Worth (stockholders funds) is a valuable financial ratio for evaluating a company's efficiency and the quality of its management. Kurukshetra $ # !  " "  ¨   © § ¨§ ¨ ¦ ¥¤ !      h 15. ROCE= Profit before Income and Tax / Capital Employed Y 2004-05 c pi l mpl y R 31.31 2007-08 8.29 Dronacharya Institute of Management and Technology.75 2006-07 67.

It is calculated by taking the weighted average of the shares outstanding.47 2006-07 33.80 70 60 50 40 30 20 10 0 2004-05 2005-06 2006-07 EC 2007-08 2008-09 Earnings per Share: EPS is the net profit of loss to the share holders for each share.78 2008-09 33. EPS = Profit after Tax / No. of shares Years EPS 40 35 30 25 20 15 10 5 0 2004-05 27. Kurukshetra &% 2007-08 36.25 2005-06 28. PAT is used in the calculation of EPS because it is gives the amount available to the shareholders once the taxes are paid. It is used in valuation of a company and to measure its performance.62 2007-08 2008-09 .30 2004-05 2005-06 2006-07 EPS Dividend per share: Dronacharya Institute of Management and Technology.

Kurukshetra ( ' 2006-07 10. DPS= Total Di idend paid / No.Dividend per share represents the amount of dividend each shareholder will receive for every share they own. of shares Years DPS 12 10 8 2004-05 8.00 2008-09 11. DPS is calculated taking the interim and final dividend paid.50 2005-06 8.00 2007-08 11.50 6 4 2 0 2004-05 2005-06 2006-07 D S Dronacharya Institute of Management and Technology. It is different from EPS as it indicates the amount paid to shareholders as compared to the amount available.00 2007-08 2008-09 .

Pvt. W ± T Strategies Not Equal to International Threat: Increased Competition from others Threat: Entry of many Foreign Banks. E-Helps. DETAILED ANALYSIS - Dronacharya Institute of Management and Technology. S ± T Strategies T H R E A T S Strength: Low operating costs Weakness: Standards. W ± O Strategies Weakness: Workforce Responsiveness.Core Business. Strategy: Steps to Ensure Loyalty by old Strategy: Consider additional benefits Customers. Banks. Opportunity: Outsourcing of Non . Strategy: Deep Penetration into Rural Strategy: Outsource Customer Care & other Market. Opportunity: Market Expansion. Kurukshetra .STRATEGIC ANALYSIS TOWS MATRIX STRENGTHS O P P O R T U N I T I E S WEAKNESSES S ± O Strategies Strength: Large Capital base.

2. 3. it clearly states the expanding market for finance requirements and also the growth in surplus disposal income of Indian citizens has given a huge rise in savings deposits ± from the above point it is clear that there is a huge market expansion possible in banking sector in India. Strategy: From the analysis of Strength & Opportunity the simple and straight possible strategy for ICICI Bank could be . Strategy: To ensure that ICICI Bank keeps going on with low operation cost & have continuous business it should simply promote itself well & provide quality service so as to ensure customer loyalty.Opportunity Analysis: Strength: It is well know that ICICI Bank has the largest Authorised Capital Base in the Banking System in India i. Strength .000.Opportunity Analysis: Dronacharya Institute of Management and Technology. Threat: After showing a significant growth overall. 19. Banks from a great gap.1. India is able to attract many international financial & banking institutes. therefore guaranteeing continuous business. which are known for their state of art working and keeping low operation costs. having a total capacity to raise Rs.000.000 (Non ± Premium Value) Opportunity: Seeing the present financial & economic development of Indian Economy and also the tremendous growth of the Indian companies including the acquisition spree followed by them.e.to penetrate into the rural sector of India for expanding its market share as well as leading all other Pvt.Threat Analysis: Strength: ICICI Bank is not only known for large capital but also for having a low operations cost though having huge number of branches and services provided. Kurukshetra . Weakness . Strength .

SERVICE GAP ANALYSIS Dronacharya Institute of Management and Technology. ICICI Bank should come up with more additional benefits to its customer or may be even reduce some fees for any additional works of customers. Threat: In recent times. this same strategy should be implemented by ICICI Bank so as to have proper customer service without hindering customer expectations. though ICICI Bank has better responsible staff but it still lacks behind its counterparts like HSBC.sourcing of business process works and many more. ICICI Bank has not been able to keep up the international standards in providing customer service as well as banking works. Strategy: After having new entrants threat.Threat Analysis. Kurukshetra . CITI BANK.Weakness: It is well known that workforce responsiveness in banking sector is very low in Indian banking sector. Weakness . YES BANK etc. India is preferred one of the best places for out . Strategy: As international companies are reaping huge benefits after out-sourcing there customer care & BPO¶s. Opportunity: In the present world. India has witnessed entry of many international banks like CITI Bank. YES Bank etc which posses an external entrant threat to ICICI Bank ± as this Banks are known for their art of working and maintain high standards of customer service. 4. HDFC. Weakness: Though having a international presence.

Kurukshetra .DETAILED ANALYSIS GAP 1: No Strong R & D for finding hidden needs of customers. Dronacharya Institute of Management and Technology.

In such cases the final loser is not just the customers but the ICICI Group as whole as it effects all there businesses. as all banks in India are under the regulation of Reserve Bank of India.Though ICICI Bank has been investing in R&D. Though knowing some of the desired services of customers or having some innovative schemes all this schemes are not implemented by ICICI Bank. GAP 5: Services as promised by the agents are not delivered either on time or not at all provided. under such situations any problem or inconvenience faced by any customer of ICICI Bank spreads like rapid fire and effects the decision of old as well as new customer directly & indirectly. GAP 2: Not able to provide the desired services due to regulations. Improper Implementation by Employees. RECOMMENDATIONS 1. the agents of ICICI Bank usually give false promises to there customers regarding the quality of service or new schemes so as to lure them. GAP 3: Many schemes are launched by ICICI Bank to ensure old customer loyalty as well as new customer base after compiling with RBI approval. It is well noted in India that mouth to mouth publicity is the fastest way of publicity whether it is positive or negative. but the investments are not that high as well as the R&D of ICICI Bank is not strongly equipped so as to analysis the deep hidden needs of customers as well as employees. affecting the new customer decision. GAP 4: Problems faced by customers are spread rapidly. In order to get better pay. still these schemes are not implemented properly by the bank staff and mostly agents of banks because of less understanding of schemes or because of no faith in them. A Major Revamp of its Customer Care: Dronacharya Institute of Management and Technology. Kurukshetra .

therein affecting its name and Brand value of its self and also ICICI group as a whole. Kurukshetra . Introduction of Smart Cards for New as well as Old Credit Card Holders: ICICI Bank should come up with the concept of smart cards were the data regarding all the accounts & credit cards details of a individual customer is placed in a single cards hence reducing the burden of carrying all credit cards & other necessary items required for banking transaction. Concentrate on Building Brand Image: ICICI Bank is very well known institution for investing purposes and as well as for its practices involving anti ± social elements. 5.A complete over hauling of its customer care department is required so as to reduce complaints of customer in turn which may affect its working. but this step has to be taken up seriously and as soon as possible so as to tap the market the rural market easily and these services should be well equipped with E ± Commerce features mainly like Tele ± banking and ATM¶s etc. Penetration into Rural Market with E ± Commerce Facility: Though it is one of the strategies of ICICI Bank to enter deeply into rural sector. 2.Win Situation to Reduce Non Performing Assets: Dronacharya Institute of Management and Technology. Formulation of a Win . 4. 3.

Mutual funds etc ± this annoys the customer and creates a bad impression. Mutual Funds etc: It is usually seen the ICICI Bank branches are over crowded with ICICI staff though they don¶t belong to that branch or does not even belong to the ICICI Bank. BANKS 1. 8. Kurukshetra . they usually are the agents of its other businesses like Insurance. Reduction of Penalty Fees & Special Service Fees: The penalties & special service imposed by ICICI Bank is very high as compared to public sector banks. Dronacharya Institute of Management and Technology. 6.It has become a necessity for ICICI Bank to reduce its NPA¶s which have risen tremendously after the merger with ICICI Limited. SUGGESTION TO OTHER FINANCIAL INSTITUTIONS AND PVT. Its time for ICICI Bank to look into the matter and rework on its agents policies. Major re-look at Working of their Agents: The easiest way to reach to customers is through agents. Better flexibility in schemes should be provided as done by ICICI Bank to lure mass customer base. and the agents of ICICI Bank are highly skilled in this field but they do it at the cost of customer¶s innocence. this some times adds a negative perspective to ICICI Bank. Completely Separation of other alike Businesses like Insurance. There are many incidences where in the information provided by the agents is false. 7.

Better banking hours is need of the hour of Indian banking customer and in this race ICICI Bank has moved a step ahead. to ensure not to lose out all financial institutions and banks should extend there bank working hours.icicibank. CITI Bank etc in some cases. 4.google. BIBLOGRAPHY www. The availability of packaged schemes can become turning points for there business growth. Go for packaged schemes for accounts ± many banks in India are not providing package schemes for customers except few Banks like ICICI bank. self employed and other small & medium business.2. Kurukshetra . Concentration on small working groups rather than just corporate for business ± this suggestion is basically for Pvt.co. 3. Banks operational in India. as they focus more on corporate rather then huge base of small traders.com www.in Dronacharya Institute of Management and Technology.

News Papers Magazines Red herring prospectus of ICICI Bank 2009 Dronacharya Institute of Management and Technology. Kurukshetra .

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