A STUDY ON FINANCIAL EFFICIENY, COST AND

ASSET MANAGEMENT IN LVB

ABSTRACT

The main objective of this is to study the financial efficiency,

cost and asset management of Lakshmi Vilas Bank ltd., analyzing
the profitability, Financial performance of the bank.

The Financial analysis is the process of identifying the

financial strength and weakness of the bank by properly
establishing the relationship between the item of balance sheet
and profit and loss account.

The research design adopted in this study comes under

analytical design since the data collected from the financial
statements of the bank undergoes through various measures of
accounting principles and statistical tools. Secondary data are
based on the 10 years annual report from 1997-98 to 2006-07.

The financial performance is analyzed by percentage

analysis, arithmetic average, ratio analysis are used. The
financial efficiency is analyzed by standard deviation coefficient of
variance and annual compound growth rate, Correlation analysis
is the statistical tool used to describe the degree to which one
variable is linearly related to another.
 CHAPTER- I

INTRODUCTION TO THE STUDY

1.1 INTRODUCTION

A bank, which undertakes all kinds of ordinary

banking business, is called a commercial bank. It is so called
because it provides money and credit for commercial and trade
activities. They receive short and medium term deposits from the
public and credit for commercial and trade activities. They receive
short and medium term deposits from the public and grant short
term loans and advances. They supply working capital to
industries and enable them to carry on production and
manufacturing activities. They grant loans and advances on the
stock of agricultural commodities, industrial goods, etc. They also
discount internal and foreign bills and thereby finance the internal
trade. They also perform certain agency services such as
collection of cheques, dividends, interest on investment, issue of
drafts, letters of credit, travels cheques, investment advisory
services, etc.

1.2 INTRODUCTION TO THE STUDY

Role of Banking & Financial Service Sector in

Indian Economy. The Indian Banking and Financial Service Sector
(BFS) destroyed 22 paise of market value added (MAV) for every
rupee invested in it, which is really poor compared to the BFS
sector in the US, which created 92 percent of MVA per unit of
invested capital. The good news is that the performance of the
wealth creating Indian banks has been better than of the wealth
creating US banks.

But the really bad news is that the banks, which

destroy 59 paise of wealth for every rupee invested, consume
about 88 percent of the total capital invested in our BFS sector.
As a benchmark, the US economy invests 83 percent of its capital
in wealth creators. The sad tale of improper capital allocation in
the entire Indian economy is also played out in the BFS sector.

In the Banking and Financial Services sector too,

the winners on the MVA- scale are different from those on
traditional size-based measures such as Total Assets, Revenues,
Profit After Tax (PAT), and Market Value of Equity. Indeed, the
banks with the most assets such as State Bank of India (SBI) and
Industrial Development Bank OF India (IDBI) are amongst the
biggest wealth destroyers SBI tops on size-based measures like
Revenues, PAT, Total Assets, Market Value of equity, but appears
among the bottom ranks for wealth creators.

The difference between the Wealth creators and

Wealth destroyers in the sector is sustained economic
performance.
 1.3. INTRODUCTION TO THE BANK

A bank, which undertakes all kinds of ordinary banking

business, is called a commercial bank. It is so called because it
provides money and credit for commercial and trade activities.
They receive short and medium term deposits from the public and
credit for commercial and trade activities. They receive short and
medium term deposits from the public and grant short term loans
and advances. They supply working capital to industries and
enable them to carry on production and manufacturing activities.
They grant loans and advances on the stock of agricultural
commodities, industrial goods, etc. They also discount internal
and foreign bills and thereby finance the internal trade. They also
perform certain agency services such as collection of cheques,
dividends, interest on investment, issue of drafts, letters of credit,
travels cheques, investment advisory services, etc.

The commercial banks are classified in to two categories, viz

• Public sector banks, and

 • Private sector banks.

PROFILE OF THE BANK

The Lakshmi Vilas Bank Limited was founded eight

decades ago in (1926) by seven people of karur under the
leadership of shri V.S.N Ramalinga chettiar, mainly to cater to the
financial needs of varied customer segments. The bank was
incorporated on Nov 3, 1926. Under the Indian companies act,
1913 and obtained the certificate to commence business on Nov
10, 1926. The bank obtained its license from RBI in June 1958,
and it became a scheduled comm-ercial bank in August 1958. The
bank has its registered and administrative

Office in Salem road, Kathaparai, karur on September 11, 1991.

BRANCH NETWORK

During 1961-65 LVB took over nine banks and raised its
branch network considerably. To meet the emerging challenges in
the competitive business world, the bank started expanding its
boundaries beyond Tamilnadu from 1974 by opening branches in
the neighboring states of Andhra Pradesh, Karnataka, Kerela,
Maharastra, Madhya Pradesh, Gujarat, West Bengal, Delhi and
Pondichery. As on (2006-2007) the bank has 236 Branches.

BANK VISION STATEMENT

To become the bank of first choice in its chosen areas by

building beneficial and lasting relationship with customers
through a process of continuous improvement.

Corporate philosophy of the bank is to develop a range of

quality services for creating value for customers, share holders
and the society by motivating people to achieve excellence in
performance, leading to sustained profitable growth and in that
process built a learning organization.

NEW IDENTITY

The logo unit has the base of red color symbolizing

stability and goodness. The image goddess Lakshmi embossed on
a circle of ochre gold color represents richness on the foundation
and trusted values together with modernity and an ever-evolving
change. The graphical rendition of gold coins reflects prosperity in
a very modern form. The complete logo unit represents the deep
cultural values of the bank projecting an image of modernity,
strength and prosperity.

BOARD OF DIRECTORS

Shri R.M Nayak – Chairman and Chief

Executive Officer.
 Shri V.S Reddy – Managing Director

Shri S. Venkateswaran – Deputy General

Manager & Company Secretary.

Shri G. Suthakara Gupta – Director

THE CURRENT PROMOTORS OF THE BANK

Mr. A.R. Venkatraman

Mr. N. Malayalaramamirtham

Mr. C. Krishna Kumar

CORPORATE MISSION

• A logical extension of the vision statement is the

mission of the bank, which is to gain market recognition in the
chosen areas.
• To build a sizeable market shares in each of the
chosen areas of business through effective strategies in terms of
pricing, product, packaging and product in the market.
• To facilitate a process of restructuring of
branches to support a greater efficiently in the retail banking
field.
• To sustain the mission objective through
harnessing technology driven banking and delivery channels.
• To promote confidence and commitment among
the staff members, to address the expectations of the customers
efficiently and handle technology banking with ease.
MAIN ACTIVITIES OF THE BANK
• Term Deposit Accounts
• Recurring Deposit
• Opening of Savings Bank Account
• Opening of Current Account
• Issue of Cheque Books
• Payment of Cheques
• Stop Payment of Cheques
• NRO Accounts
• Non- Residential External accounts
• Loan against Deposit
• Loan against Jewels
• Bill Purchased Clean
• Bill Purchased Documentary
• Loan against Hypothecation of Vehicles
• Loan against Hypothecation of Machineries
• Advance against Warehouse receipt
• Advance against Supply bills
• Advance against Shares
• Advance against LIC Policy
• Advance to Chit Companies
• Advance against Government Securities
• Secured Over Draft against Properties
• Advance against immovable properties
• Lakshmi Car Loan & Two Wheeler Loan
• Lakshmi Business Credit
• Lakshmi Agri Bike Loan
• Lakshmi Consumer Credit
• Swana Lakshmi Credit
• Loans Advances to Agriculture and allied
activities Crop Loan and Agri Cash Credit
• Loan for Minor Irrigation
• Form Mechanization
• Financing of Diary, Poultry form, Island Fish
culture and Sericulture
• Remittances – Demand Draft/ Mail Transfer/
Telegraphic Transfer
• Cancellation Demand Drafts and Issue of
Duplicate Draft
• Inward Bills for Collection
• Outward Bills for Collection

TABLE NO: 1.1

NUMBER OF EMPLOYEES OF LAKSHMI VILAS

BANK

YEAR EMPLOYEES
1999-00 1930
2000-01 1936
2001-02 1933
2002-03 1983
2003-04 1946
2004-05 1928
2005-06 1873
2006-07 1926

TABLE NO: 1.2

NUMBER OF BRANCHES OF LAKSHMI VILAS
BANK

YEAR BRANCHES
1999-00 205
2000-01 209
2001-02 211
2002-03 215
2003-04 224
2004-05 225
2005-06 227
2006-07 236

PRODUCTS AND SERVICES

DEPOSITS

1. FIXED DEPOSITS

This type of deposit is suitable for planned

expenditure or savings. The deposits period ranges from
15days to 10 years with assured regular monthly 1 Quarterly
Income. Minimum Deposit Amount is of RS 100/- with no ceiling
for the Maximum amount.

2.RECURRING DEPOSITS
This type of deposit is suitable for Tax Planning,
Annual Payment Commitments, like insurance premium, long-
term requirements like purchase of consumer articles/durables,
house construction, children’s education etc. Minimum Deposit
Amount is of RS 100/- with no ceiling for the Maximum Amount.
3.DHANACHAKRA DEPOSITS
Main feature is the automatic compounding of
accrued interest which yield higher returns, and is ideal for
planning financial commitments for the future children’s higher
education/ Son’s Daughter’s Marriage/ celebration of festivals
etc. Deposit period ranges from 6 months to 10 years.
Minimum deposit amount is of RS 100/- with no ceiling for the
Maximum amount.

4.THIRUMAGAL THIRUVIZHA THITTAM

This scheme targets customers who have to
meet various demands at a stipulated time in the future and
save up for the same, over a period of time. Thirumagal
Thiruvizha Thittam takes away the burden from the customer
so that such demands are met with ease. Minimum deposit
amount is of RS 50/- with multiples there of. Deposit period
ranges from a minimum of 6 months to 12 months and is ideal
for saving money for a targeted festive activity, such as
Marriage etc.

5.LAKSHMI STAR DEPOSIT SCHEME

A novel, convenient and time saving scheme,
with an automatic renewal facility on maturity, suitable for
planning the short-term and long-term commitments. Minimum
deposit amount is RS 1000/- and multiples there of with
automatic renewal period of 15/36/46 days at the depositor.

6.LAKSHMI KRIPA DEPOSIT SCHEME

A unique scheme that combines ease of savings
with higher returns, suitable for long-term commitments like
 construction of house, son/daughter’s marriage, purchase of
high cost vehicles/ consumer durables etc. Deposit period
ranges from 6 years to10 years. The recurring deposit on
maturity is automatically converted into Dharmachakra deposit
with added benefit of cumulative interest thereafter, till final
maturity.

LOANS

1. LAKSHMI BUSINESS CREDIT

This is a convenient loan scheme designed to the
trading community to extend quick and hassle free loans to
meet the customer’s financial needs. Lakshmi business credit
can be avoided by departmental stores, wholesalers, retailers,
distributors, jewelers, grocery merchants and all kinds of
traders. Loan can be availed up to a maximum of RS 40 lakhs.
It is available either as demand loans repayable in monthly
installments or as secured overdrafts – renewable every year or
a combination of both.

2. LAKSHMI HOME LOAN

Individuals and HUFs ( operating through kartas)

having sufficient income and who can produce satisfactory
proof of such income by way of salary certificates, I.T.
Certificates etc. can avail loans under the scheme. The
maximum repayment period will be 15 years or the borrower
attaining the age of 65 years, whichever is early, including a
maximum holiday period of six months. Loan can be availed
under both fixed & floating rate options.
 3. LAKSHMI MULTIPURPOSE LOAN

This is a simple all-purpose personal loan against

mortgage of immovable properties, sanctioned to individuals having
regular income. The loan is available to individuals to meet personal
expenditures in connection with marriage, medical treatment,
holiday travel, foreign travel, etc. and for investment in business/
industry. (An all purpose loan). Individuals such as salaried persons
(Permanently employed in central or state government officers,
public sector undertakings / Corporations/ reputed private sector
Companies/ Organizations business establishments) and
professional, businessman, etc. Who have at least 3 years of
experience & standing in their respective profession or business are
eligible.

4. LAKSHMI PERSONAL VEHICLE LOAN

Personalized loan products for purchase of car/ van/

jeeps (New and used) and two wheelers maximum loan of RS 10
lakhs for new vehicles and RS 10 lakhs for used vehicles. For two
wheelers the maximum loan available is RS 50,000/-.

5. LAKSHMI EASY LOAN

Unique scheme aimed at individuals having sufficient

income to meet their domestic and personal expenses against
pledge of NSC, kisan vikas Patras. Maximum loan amount is RS 5
lakhs under the facility of demand loan and SODP.

6. SWARNA LAKSHMI LOAN

 Overdraft against pledge of jewels extended to
individuals to meet out personal/ business requirements.

7. VIDYA LAKSHMI LOAN

Recognizing the needs of student community for their

higher education, bank RS 7.50 Lakhs for domestic and RS
15.00 Lakhs for abroad studies.

8. LAKSHMI RENTAL LOAN

A unique product that takes care of your banking

needs from out of your rent receivables of your rented
property. Easy terms and attractive interest rates. Availability
across all the metro, urban and semi urban branches.

9. LAKSHMI CHANNEL FINANCE

Taking into consideration the ever increasing needs of

SME sector, the product has been designed to facilities enhanced
credit flow to the sector. The facility can be either by way of bill
finance, OCC/SOD (P), or by way of packing credit facility. The
product is available through a tripartite agreement between the
bank, the corporate and the dealer.

10. MUCCADAM ADVANCES

This is a facility for pawnbrokers under repledge of the

jewellery with them. It is mostly confined to the Tamilnadu state
only. The finance can be either by way of OCC or SOD (P) and the
sanctioning powers are vested with divisional offices so as to have
quick credit delivery.
11. IPO FINANCING

To take care of the individual demands for subscription

to initial public offer, the product is designed with customer
friendly nature like low interest rate, sanction documentation
process.

12. LAKSHMI COMPOSITE BUSINESS CREDIT

It is a term loan interest rates for extending finance for

working capital limits and for purchase of fixed assets of the
business. The product is designed with very liberal norms for
assessment and it basically giving emphasis to the cash flows of
the business for repayment of loan.

DISTRIBUTION OF FINANCIAL PRODUCTS

1. LIFE INSURANCE SEGMENT

The bank is the “corporate Agent” for “AVIVA Life

Insurance Company India (P) Limited” for distributing their Life
Insurance Products in India, through Bank’s select branches. LVB
has obtained the license for “Corporate Agency” FROM Insurance
Regulatory and Development Authority (IRDA) on 4/12/2002 for
distribution of AVIVA life insurance products without any risk and
equity participation. The distribution of AVIVA schemes is being
carried on to the clients of the bank as well other general public
through the trained &IRDA certified professionals of further 3
years from 04.12.2005

2. GENERAL INSURANCE SEGMENT

Bank had a General Insurance Pact with M/S Royal

Sundran Alliance Insurance Limited for distribution of General
Insurance Products & on mutual agreement, the tie up was
cancelled.

3. MUTUAL FUND

The Bank is enrolled as AMIFI registered mutual fund

advisor and has been assigned AMFI registered NO. AFN- 20626
ride the certificate of registration dated 01/07/2004. Bank is also
distributing the mutual fund products AMC’S VIZ, Franklin
Templeton, Prudential ICICI, chola MF as a corporate distributor.

WORKING CAPITAL FINANCE

Subject to the loan policy of the bank and RBI, Bank

provides fund based credit facilities such as cash credit, overdraft,
and discounting & purchasing of bills, export and import finance
etc. The Bank also provides non fund based credit facilities such
as letter of credit. Bank guarantees (performance/financial) etc.
TERM LOAN

Subject to loan policy of the bank and RBI, bank provides

fund based finance for capital expenditure / acquisition of fixed
assets towards setting up / capacity expansion of a business or
industrial unit. Bank also provides non-fund based finance in the
form of deferred payment guarantee (DPG) for acquisition of fixed
assets towards setting up of / capacity expansion.

OPERATIONS

In terms of overall size, the total assets of the bank increased

from RS 4053.38 Crores (as on March 31, 2005) to RS 4919.38
Crores (as on march 31, 2006). The deposits of the bank grow
from RS 3495.93 Crores to RS 4336.38 Crores during the same
period, registering a growth of 24.04% and the advances grew
from RS 2317.71 Crores to RS 2952.82 Crores registering a
growth of 27.40%. The net NPA’s of the bank decreased from
4.98% as on March 31, 2005 to 1.89% as on March 31, 2006.
Capital Adequacy ratio has marginally reduced from 11.32% as on
March 31, 2005 to 10.79% as on March 31, 2006 owing to credit
expansion.

FOREIGN EXCHANGE BUSINESS

The bank has a centralized International Banking division

at Mumbai to support International Trade business undertaken by
its branches. The branches as well equipped with sophisticated
infrastructure to efficiently handle transactions and are SWIFT
enabled for speedy contact and execution of transactions. The
bank arranges medium / long term foreign currency loans, short-
term finance through letters of credit, loans against foreign
currency liabilities etc.

BUSINESS STRATEGY

The business strategy of the bank has been designed in

view different aspects like historical performance, operation
limitations, economic scenario, competition, future environment,
industry perception and to ensure stability.

The Business Strategies to Optimize Profitability of

the Bank inter-alia:-

1. Focus on the growth of demand deposits under deposits

mix.
2. Ensure uniform performance by all branches. To avoid
dependence on select branches to attain the business
goals.
3. Quality credit growth for credit operations.
4. Expansion of clientele- base through focus on retail lending,
targeting identified well managed medium sized corporate
with sound financial for credit marketing, endeavoring
positive credit growth at all branches.
5. Prudential risk management practices in credit by timely
identification,
Management and mitigation of various risks associated with credit
marketing, endeavoring (portfolio shall receive greater attention).

6. Improve the average yield on advance by increasing share

of lending at relatively higher rate of interest to borrowers
in retail / personal segment and to small & medium
 segments borrowers who are less sensitive to interest rate
and will utilize the sanctioned limit to the maximum extent.
7. Branches to first target the known delinquent accounts and
ensure that these accounts are either recovered or
upgraded during the financial year.
8. Marketing of insurance products both life & non-life to
augment to revenue.
9. Explore new avenues of non interest to lessen the burden.
1.4. OBJECTIVES OF THE STUDY

1. To study the Financial Efficiency of wealth creators & wealth

destroyers of Lakshmi Vilas Bank.
2. To analyse the performance of the Deposits, Advances,
Investments and Profitability of the bank.
3. To analyse the effectiveness of Cost Management.
4. To analyse the effectiveness of Asset Management.
5. To study the present position & future prospects of bank. To
highlight the importance of the bank.
6. To suggest ways& means to improve the financial efficiency of
the bank.

1.5. PERIOD OF STUDY

The study is made for a period of ten years i.e. from

1997-’98 to 2006-’07, to study the financial performance. The
study cover the period of 6 years that is from 2001-’07, to study
the financial efficiency of wealth creators & wealth destroyers,
Cost and Asset Management.

1.6. IMPORTANCE& SCOPE OF THE STUDY

 The study highlights the strength and weakness of
Lakshmi Vilas Bank which in turn would facilitate the bank to
move in the right direction. The comparative study basically aims
to identifying and measuring the Assets Management and Cost
Management.

1.7. LIMITATION OF THE STUDY

1. The study has been undertaken with 10 years data only.

2. All such data are secondary in nature.
3. All published financial data are window dressing.
4. Limitation of financial statements and ratio analysis are
equally applicable to the present study.

1.8. CHAPTER SCHEME

The study consists of SEVEN chapters

CHAPTER ONE highlights the introduction, design and execution

of the study.

CHAPTER TWO exclusively deals with the methodology of the

study covering sample design, data source, and framework of
analysis including of the tools of analysis in conformity with the
respective objective.
CHAPTER THREE analyses the financial performance & financial
efficiency of Lakshmi Vilas Bank.

CHAPTER FOURTH is devoted to measure the effectiveness of

Cost Management of Wealth Creators and Wealth Destroyers.

CHAPTER FIFTH is devoted to measure the effectiveness of Asset

Management of Wealth Creators and Wealth Destroyers.

CHAPTER SIXTH recapitulation the key findings of the study and

offer suggestions to improve the financial efficiency.

CHAPTER – II

RESEARCH METHODOLOGY

2.1 RESEARCH AND DESIGN

The research design used is analytical. Because the

data are analyzed by ratio analysis, percentage analysis and
arithmetic average for highlighting the Financial Performance &
financial efficiency of Lakshmi Vilas Bank, Cost & Asset
Management of the bank.

2.2 DATA COLLECTION

The analysis was made with the help of the secondary

data. Secondary data was collected from Balance Sheet, of the
bank. The secondary data is used of the data collection where
reclassified and regrouped.
2.3 PERIOD OF STUDY

The study is made for a period of ten years i.e. from

1997-’98 to 2006-’07, to study the financial performance. The
study cover the period of 6 years that is from 2001-’07, to study
the financial efficiency of wealth creators & wealth destroyers,
Cost and Asset Management.

2.4 TOOLS USED

Financial efficiency is analyzed by the ratio analysis.

Percentage analysis and arithmetic average are the tools used in
the study.

2.5 FRAME WORK OF ANALYSIS

I To study the progress of the financial efficiency of the

bank the following variables have been used

1. Solvency Ratio

2. Return on Capital

3. Return on Equity

4. Return on Total Assets

The growth of the firm where studied and analysed with

the help of Arithmetic Mean, Standard Deviation, Coefficient of
Variance and Annual Compound Growth Rate.
 II The Contribution of cost Management is compound
with the help of following application

Cost Management

=(P.M.-AVE.PM)XAVE.ATO+0.50X(ATO-
AVE.ATO)X(PM-AVE.PM)

Where,

ATO = Asset Turnover

AVE.ATO = Average Asset Turnover ratio of

the companies

PM = Profit Margin

AVE.PM = Average PM of the companies

Assets Turnover Ratio = Operating of Income / Total Assets

PM = Profit before Dividend and Tax/ Operating

Income.

III The Contribution of Asset Management is compound

with the help of following application.

Asset Management

= (ATO-AVE.ATO)XAVE.PM.+0.5X(ATO-
AVE.ATO)X(PM-AVE.PM)

the above contribution of Asset Management and Cost

Management were analysed in the following three dimensions.
 1. Operating Income
2. Networth
3. Total Assets

CHAPTER-III

TO STUDY THE FINANCIAL EFFICIENCY OF

LAKSHMI VILAS BANK

INTRODUCTION

The objective of the firm is maximizing the wealth, the

financial efficiency of the bank is analysed to determine strength

and weakness of the bank and the ability of the bank to meet its
current obligation. And to find out overall efficiency &

performance of the bank and its growth.

In this chapter, financial performance of Lakshmi Vilas

Bank is analysed in the following pages, for a period of ten years

i.e., from 1997-98 to 2006-07. The deposits mobilized by the

bank, advances made by the bank, profitability of the bank and

investments made by the bank are analysed in detail. The

financial efficiency of the wealth creators & wealth destroyers of

the bank is analysed for a period of six years i.e., from 2001-02 to

2006-07.

TABLE NO: 3.1

DEPOSITS OF LAKSHMI VILAS BANK

YEAR DEPOSITS
(RS. IN CRORES)
1997-98 1418.93
1998-99 1591.01
 1999-00 1963.41
2000-01 2277.64
2001-02 2476.92
2002-03 2770.50
2003-04 3295.82
2004-05 3495.92
2005-06 4336.38
2006-07 5019.87
Total 28646.4
Average 2864.64

Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.1 shows, deposits of Lakshmi Vilas Bank. There

is an increasing trend in the mobilization of deposits during the period

of study. In 1997-98 the deposits of the bank was RS. 1418.93 crores

and it was RS. 5019.87 crores in 2006-07, where by increased by RS.

3600.94 crores. The average deposit of the bank is RS. 2864.64

crores during the period of study. On the basis of average, the

performance is better only during the last 4 years of the study i.e.

2003-04 to 2006-2007.
 CHART NO: 3.1

DEPOSITS OF LAKSHMI VILAS BANK

TABLE NO: 3.2

ADVANCES OF LAKSHMI VILAS BANK

YEAR ADVANCES
(RS. IN CRORES)
1997-98 757.91
1998-99 909.43
1999-00 1150.05
2000-01 1480.23
2001-02 1565.25
2002-03 1763.70
2003-04 2038.70
2004-05 2317.70
 2005-06 2952.82
2006-07 1309.30
Total 16245.1
Average 1624.51

Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.2 shows, advances of Lakshmi Vilas Bank.

There is an increasing trend in the case of advances made by the

bank during the period of study. In 1997-98 the advances of the

bank was RS. 757.91 crores and it was RS. 1309.03 crores in

2006-07, where it was increased by RS. 551.12 crores. The

average advance of the bank is RS. 1624.51 crores during the

period of study. On the basis of average, the performance is

better only during the last 4 years of the study i.e. 2001-02 to

2006-07.

CHART NO: 3.2

 ADVANCES OF LAKSHMI VILAS BANK

TABLE NO: 3.3

INVESTMENTS OF LAKSHMI VILAS BANK

YEAR INVESTMENTS
(RS. IN CRORES)
1997-98 494.06
1998-99 592.09
1999-00 767.57
2000-01 782.04
2001-02 904.21
2002-03 1036.57
2003-04 1338.17
2004-05 1180.86
2005-06 1279.87
2006-07 1309.30
 Total 9684.74
Average 968.474

Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.3 shows, investments of Lakshmi Vilas Bank.

There is an increasing trend in the investments during the period of

study. In 1997-98 the investments of the bank was RS. 494.06

crores and it was RS. 1309.30 crores in 2006-07, where it was

increased by RS. 815.24 crores. The average advance of the bank is

RS. 968.474 crores during the period of study. On the basis of

average, the performance is better only during the last 4 years of

the study i.e. 2001-02 to 2006-07.

CHART NO: 3.3

INVESTMENTS OF LAKSHMI VILAS BANK

 TABLE NO: 3.4

DEPOSIT PER BRANCH OF LAKSHMI VILAS

BANK

YEAR DEPOSITS NO OF DEPOSIT PER

(RS. IN BRANCHES BRANCH
CRORES) (RS. IN CRORES)
1997-98 1418.93 200 7.09
1998-99 1591.01 204 7.80
1999-00 1963.41 205 9.58
2000-01 2277.64 209 10.90
2001-02 2476.92 211 11.74
2002-03 2770.50 215 12.89
2003-04 3295.82 224 14.71
2004-05 3495.92 225 15.54
2005-06 4336.38 227 19.10
2006-07 5019.87 236 21.27
Total 28646.4 2156 130.62
Average 2864.64 215.6 13.062
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.4 shows, deposit per branch of Lakshmi

Vilas Bank. There is an increasing trend throughout the period of

study. The average deposit per branch during the period of study

is RS. 13.062 crores. On the basis of the average, the

performance is better during the last 5 years. The deposit per

branch in 1997-98 was RS. 7.09 crores, where as it was RS. 21.27

crores in 2006-07. It shows the productivity of the bank has

improved.

CHART NO: 3.4

DEPOSIT PER BRANCH OF LAKSHMI VILAS

BANK
 TABLE NO: 3.5

DEPOSIT PER EMPLOYEE OF LAKSHMI VILAS BANK

YEAR DEPOSITS NO OF DEPOSIT PER

(RS. IN CRORES) EMPLOYEES EMPLOYEE
(RS. IN CRORES)
1997-98 1418.93 1996 0.71
1998-99 1591.01 1957 0.81
1999-00 1963.41 1930 1.02
2000-01 2277.64 1936 1.18
2001-02 2476.92 1933 1.28
2002-03 2770.50 1983 1.40
2003-04 3295.82 1946 1.69
2004-05 3495.92 1928 1.81
2005-06 4336.38 1873 2.32
2006-07 5019.87 1926 2.61
Total 28646.4 19408 14.83
Average 2864.64 1940.8 1.483
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

 Table 3.5 shows, deposit per employee of

Lakshmi Vilas Bank. There is reduction in the man power during

the period of study. Deposit per employee is on the increasing

trend through out the study period.

The average deposit per employee is RS. 1.483 crores.

On the basis of average the performance is better during the last

4 years of the study. The performance during the last 4 years is

impressive. The deposit per employee in 1997-98 was RS. 0.71

crores where as it was RS. 2.61 crores in 2006-07. It shows that

the productivity of the bank has improved.

CHART NO: 3.5

DEPOSIT PER EMPLOYEE OF LAKSHMI VILAS BANK

 TABLE NO: 3.6

ADVANCE PER BRANCH OF LAKSHMI VILAS BANK

YEAR ADVANCES NO OF ADVANCE PER

(RS. IN CRORES) BRANCHES BRANCH
(RS. IN CRORES)
1997-98 757.91 200 3.79
1998-99 909.43 204 4.46
1999-00 1150.05 205 5.61
2000-01 1480.23 209 7.08
2001-02 1565.25 211 7.42
2002-03 1763.70 215 8.20
2003-04 2038.70 224 9.10
2004-05 2317.70 225 10.30
2005-06 2952.82 227 13.00
2006-07 1309.30 236 5.55
Total 16245.1 2156 74.51
Average 1624.51 215.6 7.451
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.6 shows, advance per branch of Lakshmi

Vilas Bank. There is an increasing trend throughout the period of

study. The average advance per branch during the period of study

is RS. 7.451 crores. On the basis of the average, the performance

is better during the 4 years of the study.

The advance per branch in 1997-98 was RS. 3.79 crores,

where as it was RS. 5.55 crores as on 31.3.2007. It shows that the

productivity of the bank has improved.

CHART NO: 3.6

ADVANCE PER BRANCH OF LAKSHMI VILAS BANK

TABLE NO: 3.7

ADVANCE PER EMPLOYEE OF LAKSHMI VILAS

BANK
 YEAR ADVANCES NO OF ADVANCE PER
(RS. IN CRORES) EMPLOYEES EMPLOYEE
(RS. IN CRORES)
1997-98 757.91 1996 0.38
1998-99 909.43 1957 0.46
1999-00 1150.05 1930 0.60
2000-01 1480.23 1936 0.76
2001-02 1565.25 1933 0.81
2002-03 1763.70 1983 0.89
2003-04 2038.70 1946 1.05
2004-05 2317.70 1928 1.20
2005-06 2952.82 1873 1.58
2006-07 1309.30 1926 0.68
Total 16245.1 19408 8.41
Average 1624.51 1940.8 0.841
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.7 shows, advance per employee of Lakshmi

Vilas Bank. An advance per employee is on the increasing trend

throughout the period of study. The average advance per

employee during the period of study is RS. 0.841 crores. On the

basis of the average, the performance is better during the 4 years

of the study.

The advance per employee in 1997-98 was RS. 0.38

crores, where as it was RS. 0.68 crores as on 31.3.2007. It shows

that the productivity of the bank has improved.

 CHART NO: 3.7

ADVANCE PER EMPLOYEE OF LAKSHMI VILAS

BANK

TABLE NO: 3.8

INVESTMENTS PER BRANCH OF LAKSHMI VILAS

BANK

YEAR INVESTMENTS NO OF INVESTMENT

(RS. IN CRORES) BRANCHES PER BRANCH
(RS. IN CRORES)
1997-98 494.06 200 2.47
1998-99 592.09 204 2.90
1999-00 767.57 205 3.74
2000-01 782.04 209 3.74
2001-02 904.21 211 4.29
2002-03 1036.57 215 4.82
2003-04 1338.17 224 5.97
2004-05 1180.86 225 5.25
2005-06 1279.87 227 5.64
 2006-07 1309.30 236 5.55
Total 9684.74 2156 44.37
Average 968.474 215.6 4.437
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.8 shows, investment per branch of Lakshmi

Vilas Bank. An investment per branch is on the increasing trend

throughout the period of study. The average investment per

branch during the period of study is RS. 4.437 crores. On the

basis of the average, the performance is better during the 4 years

of the study.

The investment per branch in 1997-98 was RS. 2.47

crores, where as it was RS. 5.55 crores as on 31.3.2007. It shows

that the productivity of the bank has improved.

CHART NO: 3.8

INVESTMENTS PER BRANCH OF LAKSHMI VILAS

BANK
 TABLE NO: 3.9

INVESTMENT PER EMPLOYEE OF LAKSHMI

VILAS BANK

YEAR INVESTMENTS NO OF INVESTMENT

(RS. IN CRORES) EMPLOYEES PER EMPLOYEE
(RS. IN CRORES)
1997-98 494.06 1996 0.25
1998-99 592.09 1957 0.30
1999-00 767.57 1930 0.40
2000-01 782.04 1936 0.40
2001-02 904.21 1933 0.46
2002-03 1036.57 1983 0.52
2003-04 1338.17 1946 0.69
2004-05 1180.86 1928 0.61
2005-06 1279.87 1873 0.68
2006-07 1309.30 1926 0.68
Total 9684.74 19408 4.99
Average 968.474 1940.8 0.499
Source:

Annual reports of Lakshmi Vilas Bank

 Balance Sheet of Lakshmi Vilas Bank

Table 3.9 shows, investment per employee of Lakshmi

Vilas Bank. An investment per employee is on the increasing

trend throughout the period of study. The average investment per

employee during the period of study is RS. 0.499 crores. On the

basis of the average, the performance is better during the 4 years

of the study.

The investment per employee in 1997-98 was RS. 0.25

crores, where as it was RS. 0.68 crores as on 31.3.2007. It shows

that the productivity of the bank has improved.

CHART NO: 3.9

INVESTMENT PER EMPLOYEE OF

LAKSHMI VILAS BANK

TABLE NO: 3.10

 NET PROFIT OF LAKSHMI VILAS BANK

YEAR NET PROFIT

(RS. IN LAKHS)
1997-98 2159.00
1998-99 1432.83
1999-00 2635.61
2000-01 2674.48
2001-02 3022.11
2002-03 3416.33
2003-04 4104.83
2004-05 3334.44
2005-06 2247.02
2006-07 1758.43
Total 26785.08
Average 2678.508
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.10 shows, net profit of Lakshmi Vilas Bank.

There is a mixed trend in the net profit during the period of study.

In 1997-98 the net profit of the bank was RS. 2159.00 lakhs and it

was RS. 1758.43 lakhs as on 31.3.2007, The average net profit of

the bank is RS. 2678.508 lakhs during the period of study.

CHART NO: 3.10

NET PROFIT OF LAKSHMI VILAS BANK

 TABLE NO: 3.11

NET PROFIT PER BRANCH OF LAKSHMI VILAS

BANK

YEAR NET PROFIT NO OF NET PROFIT PER

(RS. IN LAKHS) BRANCHES BRANCH
(RS. IN LAKHS)
1997-98 2159.00 200 10.80
1998-99 1432.83 204 7.02
1999-00 2635.61 205 12.86
2000-01 2674.48 209 12.80
2001-02 3022.11 211 14.32
2002-03 3416.33 215 15.89
2003-04 4104.83 224 18.33
2004-05 3334.44 225 14.82
2005-06 2247.02 227 9.90
2006-07 1758.43 236 7.45
Total 26785.08 2156 124.19
Average 2678.508 215.6 12.419
Source: Annual reports of Lakshmi Vilas Bank.

Balance sheet of Lakshmi Vilas Bank

Table 3.11 shows, net profit per branch of Lakshmi

Vilas Bank. A net profit per branch was reduced during the last

two years of the study. The average net profit per branch during

the period of study is RS. 12.419 lakhs. On the basis of the

average, the performance is better during the 4 years of the

study.

The net profit per branch in 1997-98 was RS. 10.80

lakhs, where as it was RS. 7.45 lakhs as on 31.3.2007.

CHART NO: 3.11

NET PROFIT PER BRANCH OF LAKSHMI VILAS

BANK
 TABLE NO: 3.12

NET PROFIT PER EMPLOYEE OF LAKSHMI

VILAS BANK

YEAR NET PROFIT NO OF NET PROFIT PER

(RS. IN LAKHS) EMPLOYEES EMPLOYEE
(RS. IN LAKHS)
1997-98 2159.00 1996 1.08
1998-99 1432.83 1957 0.73
1999-00 2635.61 1930 1.37
2000-01 2674.48 1936 1.38
2001-02 3022.11 1933 1.56
2002-03 3416.33 1983 1.722
2003-04 4104.83 1946 2.11
2004-05 3334.44 1928 1.72
2005-06 2247.02 1873 1.20
2006-07 1758.43 1926 0.91
 Total 26785.08 19408 13.782
Average 2678.508 1940.8 1.3782
Source: Annual reports of Lakshmi Vilas Bank

Balance sheet of Lakshmi Vilas Bank

Table 3.12 shows, net profit per employee of Lakshmi

Vilas Bank. The average net profit per employee during the

period of study is RS. 1.3782 lakhs. On the basis of the average,

the net profit per employee is decreasing during the 3 years of

the study.

The net profit per employee in 1997-98 was RS. 1.08

lakhs, where as it was RS. 0.91 lakhs as on 31.3.2007.

CHART NO: 3.12

NET PROFIT PER EMPLOYEE OF LAKSHMI

VILAS BANK
 TABLE NO: 3.13

INVESTMENT DEPOSIT RATIO OF

LAKSHMI VILAS BANK

YEAR INVESTMENTS DEPOSITS INVESTMENT

(RS. IN CRORES) (RS. IN CRORES) DEPOSIT
RATIO

1997-98 494.06 1418.93 34.82

1998-99 592.09 1591.01 37.21
1999-00 767.57 1963.41 39.09
2000-01 782.04 2277.64 34.33
2001-02 904.21 2476.92 36.50
2002-03 1036.57 2770.50 37.41
2003-04 1338.17 3295.82 40.60
2004-05 1180.86 3495.92 33.77
2005-06 1279.87 4336.38 29.51
2006-07 1309.30 5019.87 26.08
Total 9684.74 28646.4 349.32
Average 968.474 2864.64 34.932
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.13 shows, investment deposit ratio of

Lakshmi Vilas Bank. And the average investment deposit of

Lakshmi Vilas Bank. The average investment deposit ratio during

the period of study is RS. 34.932 crores. There is a mixed trend in

investment deposits ratio during the period of study.

The highest investment deposits ratio was in the year

2003-04 registering RS. 40.60 crores, where as the lowest

investment deposit ratio was RS. 26.08 crores in 2006-07.In the

last two year it has declined. It indicates that the bank is

employing its fund in more profitable avenue.

CHART NO: 3.13

INVESTMENT DEPOSIT RATIO OF LAKSHMI VILAS

BANK

TABLE NO: 3.14

RETURN ON ASSETS OF LAKSHMI VILAS BANK

YEAR RETURN ON ASSETS

(IN %)
1997-98 1.01
1998-99 0.97
1999-00 0.51
2000-01 0.29
2001-02 0.40
2002-03 0.71
2003-04 1.08
2004-05 1.22
2005-06 1.10
2006-07 0.84
Total 8.13
Average 0.813
Source:

Annual reports of Lakshmi Vilas Bank

Balance Sheet of Lakshmi Vilas Bank

Table 3.14 shows, return on assets of Lakshmi Vilas

Bank. There is a mixed trend in the return on assets during the
period of study. In 1997-98 the return on assets of the bank was
1.01% and it was 0.84% in 2006-07. There is a decreasing trend
in 1998-99 to 2000-01.

In 2001-02 onwards return on assets of the bank was

increased during the period of study. There is declining trend in
the return on assets in 2005-06 and 2006-07. The average return
on assets of the bank is 0.813 during the period of study on the
basis of average the performance is better only during the last 4
years of the study.

The highest growth rate was in the year 2004-05,

registering 1.22% where as the lowest growth rate was 0.29% in
2000-01.

CHART NO: 3.14

RETURN ON ASSETS OF LAKSHMI VILAS BANK

TABLE NO: 3.15

SOLVENCY RATIO OF WCS & WDS

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 8.3 4.25 3.8
 2002-03 5.5 7.06 4.7
2003-04 7.3 8.56 4.5
2004-05 5.1 11.67 4.6
2005-06 5.0 11.78 5.4
2006-07 5.3 10.11 4.4
Total 36.4 53.43 27.4
Mean 6.08 8.91 4.57
S.D 1.38 2.92 0.52
C.V 22.64 32.76 11.31
ACGR -7.20% 15.54% 2.47%
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

Table No: 3.15 shows that the growth rate of

solvency ratio of LVB proved to be the highest among the WCS as

well as WDS is about 15.54 %. The co-efficient of variations of

solvency ratio of wealth creators of other banks shows the C.V of

22.64 where as LVB is 32.76. It shows the year by year solvency

ratio is less consistency in LVB when compared to other WCS.

 CHART NO: 3.15

SOLVENCY RATIO OF WCS/WDS -S.D

SOLVENCY RATIO OF WCS/WDS -C.V

 SOLVENCY RATIO OF WCS&WDS -ACGR

TABLE NO: 3.16

RETURN ON CAPITAL EMPLOYED

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 12.3 11.2 8
2002-03 15.5 27.9 10.08
2003-04 19.8 28.52 12.0
2004-05 18.6 21.74 7.9
2005-06 21.9 14.17 9.4
 2006-07 17.0 14.22 6.4
Total 105.1 117.75 53.78
Mean 17.52 19.63 8.96
S.D 3.38 7.51 1.96
C.V 19.30 38.27 21.91
ACGR 5.54% 4.06% -3.65%
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

Table No: 3.16 shows that the growth rate of return

on capital employed of LVB proved to be the lowest among the

WCS is about 4.06%. The co-efficient of variations of return on

capital employed of wealth creators of other banks is 19.30 where

as LVB is 38.27. It shows the year by year on capital employed is

less consistency in LVB when compared to other WCS & WDS.

 CHART NO: 3.16

RETURN ON CAPITAL EMPLOYED OF WCS/WDS -S.D

RETURN ON CAPITAL EMPLOYED OF WCS/WDS -C.V

 RETURN ON CAPITAL EMPLOYED OF WCS&WDS -ACGR

TABLE NO: 3.17

RETURN ON EQUITY

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 17.3 12.59 15.7
2002-03 18.8 23.75 16.3
2003-04 19.3 22.39 16.8
2004-05 19.4 22.03 12.6
2005-06 24 14.64 13.3
2006-07 22.6 13.25 8.2
Total 121.3 108.65 82.8
Mean 20.23 18.11 13.82
S.D 2.53 5.13 3.22
C.V 12.51 28.33 23.32
ACGR 4.55% 0.86% -10.26%
Source:
Center of monitoring Indian Economy (Prowess Package)
2001-2007

Annual reports of Lakshmi Vilas Bank

Table No: 3.17 shows that the growth rate of

PAT/Net worth of LVB proved to be less than WCS of other banks

is about 0.86%. The co-efficient of variations of PAT/Net worth of

wealth creators of other banks is 12.51 where as LVB is 28.33.

That it shows the year by year return on net worth is less

consistency in LVB when compared to other WCS & WDS.

 CHART NO: 3.17

RETURN ON EQUITY OF WCS/WDS -S.D

RETURN ON EQUITY OF WCS/WDS -C.V

RETURN ON EQUITY OF WCS&WDS -ACGR

 TABLE NO: 3.18

RETURN ON TOTAL ASSETS OF WCS/WDS

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 3.0 0.17 4.7
2002-03 3.5 0.15 7.8
2003-04 3.7 0.14 5.4
2004-05 3.1 0.12 5.1
2005-06 3.2 0.11 6.4
2006-07 2.9 0.09 6.2
Total 199.4 0.78 35.5
Mean 3.23 0.13 5.93
S.D 0.31 0.03 1.12
C.V 9.52 22.29 18.88
ACGR -0.56% -10.06% 4.72%
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

Table No: 3.18 shows that the growth rate of

operating income of total assets of LVB proved to be the negative.

It shows deep decline in growth rate is about (-10.06) %. The co-

efficient of variations of operating income of total assets of wealth

creators of other WCS bank is 9.52 where as LVB is 22.29. It

shows the year by year operating income is more consistency in

LVB when compared to other WCS & WDS.

CHART NO: 3.18

RETURN ON TOTAL ASSETS OF WCS/WDS -S.D

 RETURN ON TOTAL ASSETS OF WCS/WDS -C.V

RETURN ON TOTAL ASSETS OF WCS&WDS -ACGR

TABLE NO: 3.19

THE OVERALL EFFECIENCY IS PRESENTED IN

THE

FOLLOWING TABLE

Conclusion:

VARIABLE SD CV ACGR IN %
 WCS WDS LVB WCS WDS LVB WCS WDS LVB

Solvency 1.38 0.52 2.92 22.64 11.31 32.76 -7.20 2.47 15.54
Ratio
PBDT/ 3.38 1.96 7.51 19.30 21.91 38.27 5.54 -3.65 4.06
CAPITAL
EMPLOYED
PAT/ 2.53 3.22 5.13 12.51 23.32 28.33 4.55 -10.26 0.86
Net worth
Operating 0.31 1.12 0.03 9.52 18.88 22.29 -0.56 4.72 -10.06
income/ Total
assets

The above table explains overall efficiency of WCS &

WDS of LAKSHMI VILAS BANK; it shows that LAKSHMI VILAS BANK
is less consistency in solvency ratio.

CHAPTER – IV

ANALYSIS OF COST MANAGEMENT

COST MANAGEMENT
The profit is the surplus available from the sales after
meeting all the cost
including financing cost and tax. This surplus is depending on
sales value which is function of selling price and cost, both fixed
and variable. The service sectors due to choice of technology
change in technology and other external events like competition
that affects the pricing structure. The performance of the firm in
cost management is assessed on their ability to maintain the
profit to operating income ratio of selected wealth creators and
wealth destroyer in banking and financial service sector differ
substantially on cost management and there was no correlation
between the performance in asset management and cost
management.

Contribution for Cost Management

= (Profit margin – Average profit margin) * Average

asset turnover ratio + (Asset turnover – Average asset turnover
ratio) * (Profit margin – Average profit margin)

TABLE NO: 4.1

CONTRIBUTION OF COST MANAGEMENT

BASED ON OPERATING INCOME OF WCS/WDS

 YEAR WEALTH WEALTH
CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 0.061 0.876 1.01
2002-03 0.066 0.1350 0.02
2003-04 0.067 0.0793 0.02
2004-05 0.043 0.0301 0.006
2005-06 0.039 0.0152 0.006
2006-07 0.028 0.0132 0.004
Total 0.303 0.3604 0.06
Mean 0.05 0.06 0.01
S.D 0.02 0.05 0.01
C.V 32.04 81.05 65.81
ACGR -12.17% -27.05% -14.06%
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

TABLE NO: 4.1 shows that over all cost

management based on operating income shows negative

contribution, in that LVB shows highest negative contribution (-

27.05) than the other WCS & WDS. The co-efficient of variation of

cost management based on operating income of LVB is 81.05,

where as other WCS 32.04 and was 65.81. This shows that LVB

was less consistency than other WCS and WDS.

 CHART NO: 4.1

CONTRIBUTION OF COST MANAGEMENT BASED ON

OPERATING INCOME OF WCS/WDS -S.D

CONTRIBUTION OF COST MANAGEMENT BASED ON

OPERATING INCOME OF WCS/WDS -C.V
 CONTRIBUTION OF COST MANAGEMENT BASED ON
OPERATING INCOME OF WCS&WDS -ACGR

TABLE NO: 4.2

CONTRIBUTION OF COST MANAGEMENT

BASED ON NETWORTH OF WCS/WDS

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 0.06 0.0783 0.026
2002-03 0.07 0.1672 0.040
2003-04 0.07 0.1052 0.019
2004-05 0.06 0.0325 0.015
 2005-06 0.05 0.0129 0.014
2006-07 0.04 0.158 0.002
Total 0.36 0.4139 0.120
Mean 0.06 0.6898 0.120
S.D 0.0005 0.00802 0.0007
C.V 0.7896 4.378 3.476
ACGR (-6.28) (-27.39) (-39.94)
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

TABLE NO: 4.2 shows that over all contribution of

cost management based on Net worth show negative value that is

decline growth. That LVB shows (-27.39) where as other WCS (-

6.28) & WDS (-39.64). The co-efficient of variation of cost

management based on Net worth of LVB is 4.378, where as other

WCS 0.79 and WDS 3.476. This shows that LVB was less

consistency than other WCS and WDS.

 CHART NO: 4.2

CONTRIBUTION OF COST MANAGEMENT BASED ON

NETWORTH

OF WCS/WDS -S.D

CONTRIBUTION OF COST MANAGEMENT BASED ON

NETWORTH
 OF WCS/WDS -C.V

CONTRIBUTION OF COST MANAGEMENT BASED ON

NETWORTH

OF WCS&WDS -ACGR

TABLE NO: 4.3

CONTRIBUTION OF COST MANAGEMENT

BASED ON TOTAL ASSETS OF WCS/WDS

 YEAR WEALTH WEALTH
CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 0.008 0.0013 0.013
2002-03 0.009 0.0013 0.002
2003-04 0.008 0.0006 0.0013
2004-05 0.005 0.0002 0.001
2005-06 0.005 0.0001 0.001
2006-07 0.003 0.0001 0.0004
Total 0.022 0.0036 0.018
Mean 0.01 0.00 0.00
S.D 0.00 0.00 0.00
C.V 36.92 95.45 156.25
ACGR -15.08% -34.79% -44.02%
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

TABLE NO: 4.3 shows that over all cost

management on total assets proved to be negative contribution

that is decline in growth rate. The co-efficient of variation of cost

management on total assets of LVB 95.45 where as other and

WDS 156.25. It shows that LVB is more consistency than WDS and

less consistency when compared to other WCS banks.

 CHART NO: 4.3

CONTRIBUTION OF COST MANAGEMENT BASED ON TOTAL

ASSETS

OF WCS/WDS -S.D

CONTRIBUTION OF COST MANAGEMENT BASED ON TOTAL

ASSETS
 OF WCS/WDS -C.V

CONTRIBUTION OF COST MANAGEMENT BASED ON TOTAL

ASSETS

OF WCS&WDS -ACGR

TABLE NO: 4.4

THE OVERALL CONTRIBUTION OF COST

MANAGEMENT OF WCS & WDS IN THE

FOLLOWING TABLE

VARIABLE SD CV ACGR IN %

WCS WDS LVB WCS WDS LVB WCS WDS LVB

 Contribution of 0.02 0.01 0.05 32.04 65.81 81.05 -12.2 -14.2 -27.1
Asset Management
based on operating
income
Contribution of 0.01 0.01 0.06 20.04 66.21 68.77 -6.53 -34.8 -27.39
Assets Management
based on Net worth
Contribution of - - - 36.92 156.3 95.45 -15.1 -44.0 -34.8
Asset Management
based on Total
Assets

TABLE NO: 4.4 shows that over all cost management of LVB,

it shows that LVB has negative contribution, contribution of cost

management on operating income (-27.1%); in contribution of

cost management on net worth (-27.39%) and in cost

management on total assets (-34.8%).

TABLE NO: 5.1

CONTRIBUTION OF ASSET MANAGEMENT

BASED ON OPERATING INCOME OF WCS/WDS

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 0.11 0.0104 0.0112
2002-03 0.065 0.0101 0.017
 2003-04 0.068 0.0056 0.10
2004-05 0.04 0.0056 0.10
2005-06 0.03 0.0009 0.006
2006-07 0.03 0.0001 0.004
Total 0.3 0.29 0.06
Mean 0.06 0.01 0.04
S.D 0.03 0.00 0.05
C.V 53.68 80.19 118.20
ACGR -19.47% -53.89% -15.77%
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

TABLE NO: 5.1 shows that growth rate of all the firm

have negative contribution in asset management based on

operating income, LVB had higher negative contribution of (-

53.89) where as other WCS is (-19.47) and WDS is (-13.77). The

co-efficient of variance of LVB is 80.19 where as WDS 118.20 and

WCS other 53.86. It shows the year by year asset management

based on operating income become less consistence than WDS

and more consistence and stable than WCS other banks.

 CHART NO: 5.1

CONTRIBUTION OF ASSET MANAGEMENT BASED ON

OPERATING INCOME OF WCS/WDS -S.D

CONTRIBUTION OF ASSET MANAGEMENT BASED ON

OPERATING INCOME OF WCS/WDS -C.V
 CONTRIBUTION OF ASSET MANAGEMENT BASED ON
OPERATING INCOME OF WCS&WDS –ACGR

TABLE NO: 5.2

CONTRIBUTION OF ASSET MANAGEMENT

BASED ON NET WORTH OF WCS/WDS

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 0.11 0.0092 0.03
2002-03 0.07 0.0125 0.04
2003-04 0.08 0.2274 0.02
2004-05 0.06 0.0020 0.15
2005-06 0.06 0.0009 0.14
2006-07 0.04 0.0008 0.002
Total 0.4 0.0328 0.12
 Mean 0.07 0.01 0.07
S.D 0.02 0.00 0.06
C.V 33.81 90.28 77.47
ACGR -15.52% -33.44% 12.86%
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007

Annual reports of Lakshmi Vilas Bank

TABLE NO: 5.2 shows that growth rate of all the

firm have negative contribution in asset management based on

net worth, LVB had higher negative contribution of (-33.44%) than

the others WCS (-15.52%). The co-efficient of variation of asset

management based on net worth of LVB shows (90.28) when as

other WCS 33.81 and WDS 77.47. It shows the asset management

of LVB has based on net worth is less consistency than other WCS

& WDS.
 CHART NO: 5.2

CONTRIBUTION OF ASSET MANAGEMENT BASED ON

NETWORTH OF WCS/WDS -S.D

CONTRIBUTION OF ASSET MANAGEMENT BASED ON

NWTWORTH OF WCS/WDS -C.V

CONTRIBUTION OF ASSET MANAGEMENT BASED ON

NWTWORTH OF WCS/WDS -ACGR
 TABLE NO: 5.3

CONTRIBUTION OF ASSET MANAGEMENT

BASED ON TOTAL ASSETS OF WCS/WDS

YEAR WEALTH WEALTH

CREATORS % DESTROYERS %

4 BANKS LVB 5 BANKS

2001-02 0.041 0.0013 0.013
2002-03 0.009 0.0013 0.002
2003-04 0.008 0.0006 0.0012
2004-05 0.005 0.0002 0.0007
2005-06 0.005 0.0001 0.0002
2006-07 0.003 0.001 0.0005
Total 0.044 0.0036 0.018
Mean 0.007 0.0006 0.003
S.D 0.0005 0.00001 0.0001
C.V 7.1 1.6667 0.33
ACGR (-26.45%) (-40.13%) (-49.49%)
Source:

Center of monitoring Indian Economy (Prowess Package)

2001-2007
Annual reports of Lakshmi Vilas Bank

TABLE NO: 5.3 shows that the overall asset management on

total assets are negative contribution in growth. In that LVB

shows highest negative contribution (-40.13%) when compound to

other WCS is (-26.45%). The co-efficient of variation of asset

management based on total assets of LVB is 1.67 where as other

WCS are 7.1 and WDS are 0.33. It shows the asset management

of LVB has based on total assets is more consistency than other

WCS & compared to WDS less consistence.

 CHART NO: 5.3

CONTRIBUTION OF ASSET MANAGEMENT BASED ON TOTAL

ASSETS OF WCS/WDS -S.D

CONTRIBUTION OF ASSET MANAGEMENT BASED ON TOTAL

ASSETS OF WCS/WDS -C.V

CONTRIBUTION OF ASSET MANAGEMENT BASED ON TOTAL

ASSETS OF WCS/WDS -ACGR
 TABLE NO: 5.4

THE OVERALL CONTRIBUTION OF ASSET

MANAGEMENT OF WCS & WDS IN THE

FOLLOWING TABLE

VARIABLE SD CV ACGR IN %

WCS WDS LVB WCS WDS LVB WCS WDS LVB

Contribution of 0.63 0.05 - 53.86 178.2 80.19 -19.2 -15.8 -53.9

Asset Management
based on operating
income
Contribution of 0.02 0.06 - 33.81 77.47 90.28 -15.5 12.96 -33.4
Assets Management
based on Net worth
Contribution of - - - 53.63 169.5 95.45 -22.6 -41.9 -34.8
Asset Management
based on Total
Assets

TABLE NO: 5.4 shows that over all asset

management of LVB, it shows that LVB has negative contribution

in overall asset management, contribution of asset management

on operating income (-53.9%), contribution of asset management

on net worth (-33.4%) and in cost management on total assets (-

34.8%).

CHAPTER- VI
 SUMMARY OF FINDINGS AND SUGGESTIONS

6.1 INTRODUCTION

The main objective of this study into analyse the

Financial Efficiency of Wealth Creators & Wealth Destroyers and
Financial Performance, Cost & Asset Management of Lakshmi
Vilas Bank. The study was based on Secondary Data. Analytical
tools such as Financial Ratios, Standard Deviation, Coefficients
Variation and Annual Compound Growth Rate, Percentage
Analysis and Arithmetic Average were employed wherever it was
found necessary. This chapter has been assigned to recapitulates
the key findings, and conclusion of the study and to make suitable
suggestions.

6.2 FINDINGS

1. DEPOSITS
There is an increasing trend in the mobilization of Deposit during
the period of study

2. ADVANCES
There is an increasing trend in the case of Advances made
by the bank.

3. INVESTMENTS
Investment of the bank is increasing throughout the period
of study.

4. DEPOSIT PER BRANCH

 There is an increasing trend in the case of Deposit per Branch
of the bank during the study period.

5. DEPOSIT PER EMPLOYEE

There is an increasing trend in Deposit per Employee of the
bank during the study period.

6. ADVANCES PER BRANCH

There is an increasing trend in Advance per Branch during the
study period.

7. ADVANCES PER EMPLOYEE

Advance per Employee is on the increasing trend throughout
the study period.

8. INVESTMENT PER BRANCH

There is an increasing trend in investment per Branch of the
bank throughout the period of the study.

9. INVESTMENT PER EMPLOYEE

There is an increasing trend in Advances per Employee of the
bank

throughout the period of the study.

10. NET PROFIT

Net Profit of the bank, Net profit per Branch& Net profit per
Employee was mixed trend throughout the period of the
study.

11. INVESTMENT DEPOSIT RATIO

There is a mixed trend in Investment Deposit Ratio of the
bank during the period of study.
12. RETURN ON ASSETS
There is a mixed trend in the Return on Assets during the
study period.

The Financial Performance of the bank was

satisfactory.

13. FINANCIAL EFFICIENCY

The Financial Efficiency represent the LVB show negative
compound growth rate in Return on Income (-4.50), and in
Operating Income/Total Assets (-10.06). This show they are
inefficient in Earning Income.

14. COST MANAGEMENT

The overall Cost Management contribution of LVB shows
negative contribution. The Cost Management based on Operating
Income (-27.1), Contribution of Cost Management on Net Worth
(12.41) and contribution of Cost Management based on Total
Assets (-34.8). This shows they are also not concentrate on Cost
Management, hence incurring more Operating Cost than the
Operating Income gained and Total Assets.

15. ASSET MANAGEMENT

The overall Asset Management contribution of LVB shows

negative contribution, contribution of Assets Management based
on Operating Income (-53.9) contribution of Asset Management
based on Net worth (-33.4) and contribution of Asset Management
based on Total Assets (-34.8). This shows that they are not
concentrating on Asset Management. This shows there is idle
money and this in balanced investment is the cause of sickness &
for lowering the profitability position of Lakshmi Vilas Bank.

6.3 SUGGESTIONS

1. To improve the Financial Performance &

Efficiency: The study explains that overall Financial

Efficiency & Performance of the bank was not in

encouraging in LVB. This is also due to in balanced

investment are the cause of sickness & lowering of

profitability. Hence they should concentrate on Asset

Management following Cost Management avoid all the

Sickness and lowering profitability.

2. To improve the Cost Management: This study

also reveals that the overall Cost Management was not

encouraging in LVB when compared to other WCS &

WDS. They should also concentrate to maintain profit to

Operating Income Ratio of the firm.

 3. To improve the Asset Management: The

study reveals that the yield of LVB was not encouraging

in respect to contribution compared to WCS & WDS.

Hence they should concentrate to maximize the yield

on Asset Management and avoid the idle Investments.

6.4 CONCLUSION

It is observed from the study that among Wealth

Creators and Wealth Destroyers LVB Financial Efficiency,

Cost & Asset Management LVB was not sound. Therefore

the study suggests that it should concentrate more on

Cost Management & Asset Management.

 6.5. BIBLIOGRAPHY

REPORTS

1. Annual Reports of Lakshmi Vilas Bank of

India.
2. Center of Monitoring Indian Economy
(Prowess Package) (1997-2007).

JOURNALS

1. IBA Bulletin Special Issue – (2002-2007).

2. Reserve Bank of India Bulletin (1997- 2007).

BOOKS

1. Sundaram & Varshney, “Banking Theory Law

& Practice”.
2. Agarwall N.P., Analysis of Financial
Statements, New Delhi, National Publishing
House, 2000.
3. Maheswari S.N., Principles of Financial
Management, New Delhi, Sultan Chand &
sons, 2005.
4. DR.S.P.Gupta, Statistical Methods, New Delhi
Sultan Chand & Sons- Educational Publishers,
New Delhi.