MASTER IN BUSINESS ADMINISTRATION

(Session 2009-2011)

Submitted By: Ridhi 9040

Submitted To: Ms Gaurvinder Kaur

PANIPAT INSTITUTE ENGINEERING & TECHNOLOGY KURUKSHETRA UNIVERSITY, KURUKSHETRA

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Particulars

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CHAPTER 1- INTRODUCTION OF THE BANK AND TOPIC Introduction of Axis and HDFC Bank Introduction of Comparative Financial Analysis Rationale of study CHAPTER 2-LITERATURE REVIEW CHAPTER 3- RESEARCH METHODOLOGY Research Problem Research Design Objectives of the study Methods of data collection Tools Used For Analysis CHAPTER 4- EXPECTED LIMITATIONS OF THE STUDY CHAPTER 5- FUTURE DIRECTION OF THE STUDY

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1.1Banking in India: Overview

Banking in India originated in the first decade of 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, both of which are now defunct. The oldest Bank in existence in India is the State Bank of India, which originated in the The Bank of Bengal in Calcutta in June 1806. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras. The presidency banks were established under charters from British East India Company. They merged in 1925 to form the Imperial Bank of India, which, upon Indias independence, became the State Bank of India. For many years the presidency banks acted as quasi-central banks, as did their successors. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After Indias independence in 1947, the Reserve Bank was nationalized and given broader powers.

Reserve Bank of India

Scheduled Cooperatives Bank Urban Cooperatives

NonScheduled Commercial Banks

Foreign Banks

State Cooperatives

Public Sector

Private Sector Regional Rural Banks

Other Nationalized Banks SBI & Associates

1.2 Introduction of Axis Bank

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Axis Bank, formally UTI Bank, is a financial services firm that had begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC), General Insurance Corporation Ltd., National Insurance Company Ltd., The New India Assurance Company, The Oriental Insurance Corporation and United India Insurance Company UTI-I holds a special position in the Indian capital markets and has promoted many leading financial institutions in the country. The bank changed its name to Axis Bank in April 2007 to avoid confusion with other unrelated entities with similar name. After the Retirement of Mr. P. J. Nayak, Shikha Sharma was named as the bank's managing director and CEO on 20 April 2009. The Bank today is capitalized to the extent of Rs. 406.94 crores with the public holding (other than promoters and GDRs) at 54.55%.

1.3 INTRODUCTION TO HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. 1.3.1Principal activities of HDFC BANK according to segments Retail banking segment: - It serves retail customers through a branch network and other delivery channels. This segment raises deposits from customers and makes loans and provides other services with the help of specialist product groups to such customers. Wholesale banking segment: - It provides loans, non-fund facilities & transaction services to public sector units, government bodies, financial institutions & medium-scale enterprises. Treasury segment: - It includes net interest earnings on investments portfolio of the Bank.

1.4 Introduction to comparative analysis of financial statement

Comparative financial statements are ones, which have been prepared in a systematic manner and provides statistical information about a particular event (financial transaction) or aspect, taking place on different dates or during different periods. The comparative financial statements are chalked out in a columnar form (in majority of the cases). One is also able to view comparative accounts of different companies. Comparative financial statements, like all other financial statements have the following types of financial statements:

Income statements Cash flow statements Balance sheet

It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Based on these reports, management may:

Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

1.5 Rationale of the study

This study is used to find out which bank is good on the basis of financial performance. This is done by Comparative analysis of financial statement of Axis VS HDFC Bank. On the basis of this I come to know about through which bank I run my business operation and in which bank I have to open my current account by analyzing their financial performance over a period of 4 years.

2.0 Literature Review

Financial analysis is an aspect of the overall business finance function that involves examining historical data to gain information about the current and future financial health of a company. 6

Financial analysis can be applied in a wide variety of situations to give business managers the information they need to make critical decisions. "The inability to understand and deal with financial data is a severe handicap in the corporate world," "In a very real sense, finance is the language of business. Goals are set and performance is measured in financial terms. Plants are built, equipment ordered, and new projects undertaken based on clear investment return criteria. Financial analysis is required in every such case."(Donnahoe, 1998) .Uses logit, probit and discriminant analysis to test for structural differences between the financial characteristics of interest-free banks and conventional banks. The analysis extends to various financial dimensions which evaluate performance, namely: liquidity, leverage, credit risk, profitability and efficiency. Covers 15 interest-free banks and 15 conventional banks. The statistical evidence suggests that the two groups of banks may be differentiated in terms of liquidity, leverage and credit risk, but not in terms of profitability and efficiency ( Metwally, 1997). It is to provide insights into the factors affecting the banks use of financial information in financial statements of small- and mediumsized enterprise (SME) which has implications for the governance of these important organizations. Specifically, this study assesses the views of bank lending officers on their demand for and use of financial information relating to SMEs ( Marriott, 2009). Discusses the analysis that financial ratios have won lots of attention in the accounting and financial literature. Demonstrates how financial ratios can be used in order to analyze certain aspects of a bank financial performance over a period of time ( Schneller, 1993). Using financial ratios obtained from banks financial statements, it helps to examine the profitability and solvency of banks and also help to know about their market share ( Guan, 2007).

3.0Research Methodology It includes:7

3.1 RESEARCH PROBLEM:The first step while conducting research is careful definition of Research Problem as a very good saying is there, A well defined problem is half solved The present project has been undertaken to do is Analysis of business and financial performance of HDFC Bank Vs AXIS Bank

3.2 Research Design

The research design of this project is descriptive in nature because it is concerned with describing the characteristics of a particular group. The research design is made from the provision for the protection against bias and must maximize reliability, with due concern for the economical completion of the research study.

3.3 Objectives of the study

Main objective is to analysis the financial performance of both Axis and HDFC Bank. This is essentially done through the analysis of various ratios such as LIQUIDITY, SOLVENCY, and TURNOVER & PROFITABILITY. Sub objectives:A. To comparatively study whether the current assets are sufficient to pay off the current liabilities. B. To know the proportion of liquid assets (cash and book debts) to current assets. C. To know whether the debenture-holders are secured by a floating charge on the current earnings. assets. D. To comparatively analyze the business prospects with reference to the future growth and

3.4 Types of Data Collection

Primary Data Secondary Data For this project I have used secondary sources of data such as:8

 Books, magazines. Reports, websites M.I.S of the company etc

3.5 Justification of the study This study is mainly focus is to find out financial ratio for evaluating the financial position and performance of company. The Methodology used in the making of this Report is the collection of the Primary as well as Secondary data. The Primary data is collected through Primary Resources i.e. Observation Method and Interview Method where as Secondary data is collected through Secondary Resources i.e. Companys Balance Sheet, Annual Reports and Other Relevant Records. Trend in operating cycle has been used to estimate the requirement of Working Capital. Lastly, performance evaluation was done to know how effectively and efficiently working capital and current assets have been managed and controlled. Tools used for analysis

3.6 Graphical and Tabular analysis

The tools used for the analysis of financial performance are as follows:Tables: Tables are used to represent the financial ratios of both the banks in a precise term so that it become easy to interpret the data collected. Graphs:-Graphs are nothing more than a graphical representation of the data collected in tabular form.

4.0 Expected limitation of the study

Many employees may give guarded answers to some crucial questions. The confidentiality of the system may create some problem in getting information. The time duration may not provide ample opportunity to study every detail of bank. 9

It may be possible that some of the executives may unaware of many terms related to the study while asking to them.

It may be possible that the concerned employees are busy and they may reluctant to give appointment.

5.0 Future Direction of the study

I have done this study to find out the financial performance of both Axis and HDFC Bank and find out which bank performance is good as compare to other bank. Now a day a comparative analysis

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of banks on the basis of Non Performing assets and net interest income is very essential. So a person should have to do is/her research work on both this topic further.

Bibiliography
Journals George Valiris, Michalis Glykas, (2004) "Business analysis metrics for business process redesign", Business Process Management Journal, Vol. 10 Iss: 4, pp.445 11

 480 Stefano Biazzo, (2000) "Approaches to business process analysis: a review", Business o Maqsood Sandhu, Petri Helo, (2006) "A network approach to project business analysis", Engineering, Construction and Architectural Management, Vol. 13 Iss: 6, pp.600 - 615 Lianzan Xu, (1993) "FINANCIAL STATEMENT ANALYSIS AND BETA AND SIZE EFFECT", International Journal of Commerce and Management, Vol. 13 Iss: 1, pp.103 122 Rhoda Brown, Mark Whittington, (2008) "Financial statement analysis and accounting policy choice: What history can teach us", Journal of Applied Accounting Research, Vol. 8 Iss: 3, pp.1 47 David Damant, (2003) "The revolution ahead in financial reporting: a new world what the income statement means to financial reporting", Balance Sheet, Vol. 11 Iss: 4, pp.10 - 18 Donal Byard, Fatma Cebenoyan, (2007) "Alternative evidence on financial analysts' use of financial statement information", Review of Accounting and Financ e, Vol. 6 Iss: 4, pp.442 - 459 Hanmei Chen, Kurt Pany, Jian Zhang, (2008) "An analysis of the relationship between accounting restatements and quantitative benchmarks of audit planning materiality", Review of Accounting and Finance, Vol. 7 Iss: 3, pp.236 - 251

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