A

PROJECT REPORT
ON
A Comprehensive Study On
Financial Analysis

OF H.D.F.C. BANK
In partial fulfillment of the
Requirement for award of the degree of
MASTER OF BUSINESS ADMINISTRATION (M.B.A.)
(SESSION: 2009-11)- MBA 3RD SEMESTER
Under the Guidance of
Mr. Sanjay Gupta

Submitted to: Submitted by:

KURUKSHETRA UNIVERSITY, ROMY GOYAL
KURUKSHETRA Univ. Regd. No 06-GNK-568
Roll no. 15

BUDHA COLLEGE OF MANAGEMENT

Rambha, Karnal. (HARYANA)

PREFACE
1
Using a new pattern based on proper integration of formal teaching and actual practice the M.B.A.
program of Kurukshetra University, Kurukshetra has it course for six weeks industrial training, after
the second semester, so as the students could begin to have the feeling of business environment
right in the beginning. Practical training constitutes an integral part of management studies.
Training gives an opportunity to the students to expose themselves to the industrial environment,
which is quite different from the classroom teaching. The practical knowledge is an important suffix
to the theoretical knowledge.

I consider myself lucky to get my summer training in HDFC BANK, PANIPAT.

I underwent six weeks of training. It really helped me to get a practical insight into the actual
business environment and provide me an opportunity to make my Financial Management concepts
more clear. The advantage of this sort of integration which promotes guided adjustment to corporate
culture, functional, social and other norms with formal teaching are:

To bridge the gap between theory and practice

To install feeling of belongingness and acceptance
To cultivate proper temperament & to generate much morale
To help students identify their strong & weak points in the following & appreciating
organization activities
To acquaint students with job performance standards I believe that this knowledgeable
endeavor of mine has prepared me slowly but surely for taking up new challenging
opportunities in future.

DECLARATION

2
I, Romy Goyal declare that this summer training report FINANCIAL ANALYSIS OF HDFC
BANK PANIPAT assigned to me for the requirement of partial fulfillment of degree of MBA-III
Sem. From Kurukshetra University is the original work done by me and the information provided in
the study is authenticated to the best of my knowledge.
The study has not been submitted to any other institution or university for the award of any other
degree.

ROMY GOYAL
MBA III Sem.

ACKNOWLEDGEMENT
3
This project comes out to be a great source of learning and experience. It has helped me gain an
insight into the practical aspect of what was taught in theory. And not only this, but it also helped
me to have an exposure to the work life in the corporate world. Lot of efforts has been put by
various people to make this project a success. This has greatly enhanced my knowledge about the
Factoring services which is still a virgin area, yet to be explored, as well as another source of
working capital financing in the form of Business Credit.

I would like to thank my Institute Director Ms. Veenu Parida who has given me an opportunity to
show my skills & I am deeply grateful to Ms. Shweta (project guide) and all other faculty
members, for giving me their valuable time, continuous support and inputs at every step of this
project and Summer Internship Program.
Finally, I would like to dedicate this project to HDFC BANK Ltd.-Private Banking with special
thanks to Mr. Sanjay Gupta and all staff members for their constant support and valuable
guidance, who helped me throughout this project at different stages of the project and helped me
completing this project within time.

Romy Goyal
BUDHA COLLEGE OF MANAGEMENT
MBA (Batch 2009-11)

EXECUTIVE SUMMARY
4
 Undertake something is difficult,
It will do you good,
Unless you try to do something
Beyond what you have already mastered
You will never grow.
RONALDE. OSBORN

I did my training in HDFC BANK PANIPAT.

The concept of this project is to check whether HDFC BANK is performing well year after year or
lacking in performance. The performance can be evaluated by doing Financial Analysis of Financial
Statements of Bank. The purpose of this project is to evaluate the performance of HDFC BANK. It
primarily aims at learning the various factors that can help me evaluation process. I have tried to
find out the reasons or ground where it is lacking. I have also tried to find out the areas of
improvement.

In order to do financial analysis of co. the tools like RATIO ANALYSIS have been used. In
statistical tools. The project also includes objective of study, Research Methodology, Analysis and
Interpretation, findings recommendations limitation of study conclusion bibliography and annexure.

INDEX
5
 Preface 2
Declaration 3
Acknowledgement 4
Executive Summary 5
Company Profile 9
Introduction 10
Recent Development 11
Statistics 13
Distribution Network 14
Technology 14
Capital Structure 15
Business Profile 15
Organisation Structure 17
Intigrated Financial service 18
Swot analysis 19
Introduction to Project 21
Financial Statement 22
Financial Analysis 23
Features of Financial Analysis 23
Purpose 23
Procedure 24
Justification of Study 25
Ratio Analysis 26
Meaning 27

6
 Type 27
Objective 27
Classification 28
Research Methodology 29
Introduction 30
Statement of Problem 30
Litrature Review 31
Objective of Study 32
Nature of Study 32
Data Collection 33
Organisation of Study 33
Data Analysis and Interpretation 34
P&L a/c 35
Balance Sheet 36
Ratios 38
Various Calculated Ratios 42
Liquidity ratio 43
Current Ratio 43
Quick Ratio 44
Return on Share Holder Fund 45
Earning per Share 45
Dividend Per Share 46
Price-Earning Ratio 47
Dividend Payout Ratio 48
Profitibility Ratio 49

7
 Gross Profit Ratio 49
Operating Ratio 50
Net Profit Ratio 51
Finding 52
Limitations of study 54
Bibliography 56

8
COMPANY PROFILE

9
The Housing Development Finance Corporation Limited (HDFC) was amongstthe firstto
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, aspart of the RBI's liberalization of the Indian Banking Industry in 1994.The bank
was in corporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in
Mumbai, India. HDFC Bankcommenced operations as a Scheduled Commercial Bank in
January1995. HDFC is India's premier housing finance company and enjoys animpeccable track
record in India as well as in international markets.Since its inception in 1977, the Corporation has
maintained aconsistent and healthy growth in its operations to remain the marketleader in
mortgages. Its outstanding loan portfolio covers well over amillion dwelling units.HDFC has
developed significant expertise inretail mortgage loans to different market segmentsand also has
alarge corporate client base for its housing related credit facilities. With its experience in the
financial markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

HDFC Bank began operations in 1995 with a simple mission: to be a World Class Indian Bank
We realized that only a single minded focus on product quality and service excellence would help
us get there.Today, we are proud to say that we are well on our way towards that goal.

10
 RECENT DEVELOPMENT

The Reserve Bank of India has approved the scheme of amalgamation of

Centurion Bank of Punjab Ltd. with HDFC Bank Ltd.
With effect from May 23, 2008.

All the branches of Centurion Bank of Punjab will function as branches of HDFC Bank with effect
from May 23, 2008. With RBIs approval, all requisite statutory and regulatory approvals for the
merger have been obtained.

The combined entity would have a nationwide network of 1167 branches; a strong deposit
base of around Rs.1,22,000 crores and net advances of around Rs.89,000 crores. The balance sheet
size of the combined entity would be over Rs.1, 63,000 crores.

11
 Merger with Centurion Bank of Punjab Limited

On March 27, 2008, the shareholders of the Bank accorded their consent to a scheme of
amalgamation of Centurion Bank of Punjab Limited with HDFC Bank Limited. The shareholders
of the Bank approved the issuance of one equity share of Rs.10/- each of HDFC Bank Limited for
every 29 equity shares of Re. 1/- each held in Centurion Bank of Punjab Limited.

This is subject to receipt of Approvals from the Reserve Bank of India, stock exchanges and
Other requisite statutory and regulatory authorities. The shareholders Also accorded their consent
to issue equity shares and/or warrants convertible into equity shares at the rate of Rs.1,530.13
each to HDFC Limited and/or other promoter group companies on preferential basis, subject to
final regulatory approvals in this regard.

The Shareholders of the Bank have also approved an increase in the authorized capital from
Rs.450 crores to Rs.550 crores.

12
STATISTICS

13
DISTRIBUTION NETWORK

HDFC bank has its Headqarters in Mumbai. The bank at present has an enviable network of
535branches spread over 312 cities across the country. All branches are linked on an online
real time basis. Customer in 189 locations is also serviced through phone banking. The
banks expansion plans take into account the need to have a presence in all major industrial
and commercial centers where its corporate customers are located as well as the need to
build a strong retail customer base for both deposits and loans products. Being a clearing
settlement bank to various leading stock exchanges, the bank has branches in centers where
the NSE/BSE has a strong and active member base.
The bank also have a network of 1323ATM's across there cities.

TECHNOLOGY

HDFC bank operates in a highly automated environment in terms of information technology

and communication systems. The entire bank's branches have connectivity which enables
the bank to offer speedy funds transfer facility to its customers. Multi branch access is also
provided to retail customers through the branch network and automated teller machines
(ATMs)

The bank has made substantial efforts and investments in acquiring the best technology
available internationally to build the infrastructure for a world class bank has prioritized its
engagement in technology and the internet as one of its key goals and has already made
significant progress in web enabling its core business. In each office its business, the Bank
has succeeded in leveraging its market position, expertise and technology to create a
competitive advantage and build market share.

14
CAPITAL STRUCTURE

The authorized capital of HDFC bank is Rs. 45000 Lakhs. The issued, subscribed and paid-
up capital is divided into 836, 46 lacks equity shares @ Rs.10/- each.

BUSINESS PROFILE

HDFC Bank caters to wide range of banking services covering both commercial and investment
banking on the wholesale side and transactional branch banking on the retail side. The bank
three key business areas

1. WHOLESALE BANKING SERVICES

The Bank's target is primary large blue-chip manufacturing companies in the Indian
corporate sector and to a lesser extent, emerging mid sized corporate. For these corporate the
Bank provides a wide range of commercial and transactional Banking services including
working capital finance trade services, transactional services, cash management etc. The
Bank is also a leading provider of structure solution which combines cash management
services with vendors and distributor finance for facilitating superior supply chain
management for its corporate customers. Based on its superior product delivery service
levels and strong customer orientation, the Bank has made significant in roads into the
Banking consortia of a number of leading India corporate including Multinationals,
Companies from the domestic business house and prime public sector companies. It is
recognized as a leading provider of cash management and transactional Banking solutions to
corporate customers, Mutual Funds, Stock Exchange Members and Bank.

15
 2. RETAIL BANKING SERVICES:

The objective of retail bank is to provide its target market customer a full range of financial
products and banking service, giving the customer a one-stop window for all his/her banking
requirements. The products are backed by world-class services and delivered to the
customers through the growing branch network as well as though alternative delivery
channels like ATMs, phone banking, net banking and mobile banking. The HDFC bank
preferred programs for high net worth individuals, the HDFC bank plus and the investment
advisory services program have been designed keeping in mind heads of customers who
seek distinct financial solutions information and advice on various investment avenues. The
also had a wide array of retail ban products including auto loans, loans against marketable
securities, personal loans and loans for two wheelers. It is also a leading provider of
depository service to retail customers offering customers the facility to hold their
investments in electronic form. HDFC Bank was the first bank in India to launch an
international debit card in association with VISA (Visa election) and issue the master card
Maestro debit card as well. The debit card allows the use to directly debit his account at the
point of purchase at a merchant establishment, in India and overseas. The bank launches its
credit card in association with VISA in November 2002. The bank is also one of the leading
players in the "merchant acquiring" business with 26,400 point of sale (pos) terminals for
debit/credit cards acceptance at merchant establishments. The bank is well positioned as a
leader in various net based B2C opportunities including a wide range of interest banking
services for fixed deposit, loans, bill payments etc.

3. TREASURY OPERATIONS
Within this business the bank has three main product areas foreign exchange and derivative,
local currency, money market & debt securities and equities. With the liberalization of the
financial market in India, corporate need more sophisticated risk management information
advice and product structure. These and find pricing on various treasury products are
provided through the bank treasury team.

16
 Organizational Structure

Chairperson
(Jagdish kapoor)

Managing
Director
(Aditya
Puri)

Executive director Executive director

(Harish Engineer) (Paresh Sukthankar)

Director Director Director Director Director Director

(Keki (C.M (Pandit (Vineet (Arvind (Gautam
Mistry) Vasudev) Palande) Jain) Pande) Divan)

17
INTEGRATED FINANCIAL SERVICES

SECURITISATION

HDFC CHUBB GENERAL

INSURANCE CO. LTD.

FuturActivities

DISTRIBUTION

18
SWOT ANALYSIS

STRENGHTS:
It has an extensive distribution network comprising of 319 branches in 166 cities & one
international office in Dubai this provides a competitive edge over the competitions.
* The Bank has a strong retail depository base & has more than million customers.
* Bank boasts of strong brand equity.
* ISO 9001 certification for its depository & custody operations & for its backend processing
of retail operation & direct banking operatiosn.
* The bank has a near competitive edge in area of operations.
* The bank has a market leader in cash settlement service for the major stock exchanges in its
country.
* HDFC Bank is one of the largest private sector banks working in India.
* Infrastructure is best.
* It has many innovative products like kids Advantage scheme, NRI services.

WEAKNESS:
* Account opening and delivery of cheque book take comparatively more time.
* Lack of availability of different credit products like CC Limit, Bill discounting facilities.

OPPORTUNITY:
* Branch expansion
* Door step services
* Greater liberalization in foreign ownership via FDI in Indian Pvt. Sector Banks.
* CC/ OF Facilities.
* Infrastructure improvements & better systems for trading & settlement in the govt. securities
& foreign exchange markets.

19
THREATS:

* The bank has started facing competition from players like SBI, PNB Bank in the
finance market itself. This reduces the profit margins in the future.
* Some Pvt. Banks have 7 days banking...

20
INTRODUCTION TO
PROJECT

21
 INTRODUCTION OF THE TOPIC

MEANING OF FINANCIAL STATEMENTS:-

Financial statements refer to such statements which contains financial information about an
enterprise. They report profitability and the financial position of the business at the end of
accounting period. The team financial statement includes at least two statements which the
accountant prepares at the end of an accounting period. The two statements are: -
1. The Balance Sheet
2. Profit And Loss Account
They provide some extremely useful information to the extent that balance Sheet mirrors the
financial position on a particular date in terms of the structure of assets, liabilities and owners
equity, and so on and the Profit And Loss account shows the results of operations during a certain
period of time in terms of the revenues obtained and the cost incurred during the year. Thus the
financial statement provides a summarized view of financial positions and operations of a firm.

22
MEANING OF FINANCIAL ANALYSIS

The first task of financial analysis is to select the information relevant to the decision under
consideration to the total information contained in the financial statement. The second step is to
arrange the information in a way to highlight significant relationship. The final step is interpretation
and drawing of inference and conclusions. Financial statement is the process of selection, relation
and evaluation.

Features of Financial Analysis

- To present a complex data contained in the financial statement in simple and

understandable form.
- To classify the items contained in the financial statement in convenient and rational groups.
To make comparison between various groups to draw various conclusions.

Purpose of Analysis of financial statements

To know the earning capacity or profitability.

To know the solvency.
To know the financial strengths.
To know the capability of payment of interest & dividends.
To make comparative study with other firms.
To know the trend of business.
To know the efficiency of mgt.
To provide useful information to mgt

23
Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of financial statements:-
The analyst should acquaint himself with principles and postulated of accounting. He should
know the plans and policies of the management so that he may be able to find out whether
these plans are properly executed or not.
The extent of analysis should be determined so that the sphere of work may be decided. If
the aim is find out. Earning capacity of the enterprise then analysis of income statement will
be undertaken. On the other hand, if financial position is to be studied then balance sheet
analysis will be necessary.
The financial data be given in statement should be recognized and rearranged. It will involve
the grouping similar data under same heads. Breaking down of individual components of
statement according to nature. The data is reduced to a standard form.
A relationship is established among financial statements with the help of tools & techniques
of analysis such as ratios, trends, common size, fund flow etc.
The information is interpreted in a simple and understandable way. The significance and
utility of financial data is explained for help in decision making.
The conclusions drawn from interpretation are presented to the management in the form of
reports.

24
JUSTIFICATION OF THE STUDY

Financial Statements are prepared primarily for decision-making. They play a dominant role in
setting the framework of managerial decisions. But the information in the financial statement is not
an end in itself as no meaningful can be drawn from these statements alone
The information provided in the financial statement is of immense use in making decisions
through analysis and interpretation of financial statements. The financial analysis is the process of
identifying the financial strength and weakness of the firm by properly establishing relationship
between the items of the balance sheet and P&L A/C.

There are various methods or techniques used in analyzing financial statement such as
comparative statement, trend analysis, common size statement, schedule of changes in working
capital, fund flow and cash flow analysis, cost volume profit analysis and RATIO ANALYSIS.

Ratio analysis is one of the most powerful tools of financial analysis. It is a process of
establishing and interpreting various ratios that the financial statements can be analysed more
clearly and decisions made from such analysis.

Just like a DOCTOR examines his patient by recording his body temperature, blood pressure
etc before making his conclusion regarding the illness and before giving his treatment, a financial
analyst analysis the financial statement with various tools of analysis before commenting upon the
financial health or weaknesses of an enterprise.

25
RATIO ANALYSIS

26
 RATIO ANALYSIS

MEANING:
Absolute figures expressed in financial statements by themselves are meaningfulness. These figures
often do not convey much meaning unless expressed in relation to other figures.
Thus, it c a be say that the relationship between two figures, expressed in arithmetical terms is
called a ratio.

According to R.N. Anthony.

A ration is simply one number expressed in terms of another. It is found by dividing one
number into the other.

TYPES OF RATIOS

Proportion or Pure Ratio or Simple ratio.

Rate or so many Times.
Percentage
Fraction.

OBJECTS AND ADVANTAGES OR USES OF RATIO ANALYSIS

Helpful in analysis of financial statements.

Simplification of accounting data.
Helpful in comparative study.
Helpful in locating the weak spots of the business.
Helpful in forecasting
Estimate about the trend of the business
Fixation of ideal standards
Effective control
Study of financial soundness. .

27
CLASSIFICATION OF RATIOS

In view of the financial management or according to the tests satisfied, various ratios have been
classifieds as below

I. Liquidity Ratios: These are the ratios which measure the short-term solvency or financial
position of a firm. These ratios are calculated to comment upon the short-term paying capacity
of a concern or the firms ability to meet its current obligations.
II. Long Term Solvency and Leverage Ratios: Long-term solvency ratios convey a
firms ability to meet the interest cost and repayment schedules of its long-term obligation e.g.
Debit Equity Ratio and Interest Coverage Ration. Leverage Ratios.
III. Activity Ratios: Activity ratios are calculated to measure the efficiency with which the
resources of a firm have been employed. These ratios are also called turnover ratios because
they indicate the speed with which assets are being turned over into sales e.g. debtors turnover
ratio.

IV. Profitablity Ratios: These ratios measure the results of business operations or overall
performance and effective of the firm e.g. gross profit ratio, operating ratio or capital
employed. Generally, two types of profitability ratios are calculated.
(a) In relation to Sales, and
(b) In relation in Investment

28
 RESEARCH
METHODOLOGY

29
RESEARCH METHODOLOGY:

Research methodology is a systematic way to solve the research problem. It is important to design
the methodology for solving the problem as the methodology may differ from problem to problem.
Research is defined as a scientific and systematic search for pertinent information on a
specific topic. Research is an art of scientific investigation. Research is a systematized effort to
gain now knowledge. It is a careful investigation or inquiry especially through search for new facts
in any branch of knowledge. Research is an academic activity and this term should be used in a
technical sense. Research comprises defining and redefining problems, formulating hypothesis or
suggested solutions. Making deductions and reaching conclusions to determine whether they if the
formulating hypothesis. Research is thus, an original contribution to the existing stock of
knowledge making for its advancement. The search for knowledge through objective and systematic
method of finding solutions to a problem is research

Statement of the Problem

The purpose of financial analysis is to diagnose the information contained in financial

statements so as to judge the profitability and financial soundness of the firm. Financial statement
analysis is an attempt to determine the significance and meaning of financial statement data so that
forecast may be made of the future earning, ability to pay interest and debt maturities and
profitability of a sound dividend policy. A financial ratio is the relationship between two accounting
figures expressed mathematically ratio provide clues to the financial position of the concern. These
are the pointers and indicators of financial strength, soundness, position or weakness of an
enterprise. One can draw conclusions about the exact financial position of a concern with the help
of ratios.

30
LITERARURE REVIEW

* Khan M.Y, Jain P.K Management Accounting2, Pg 67, Ratios and there formulations.
* Bruch Lev, Financial Statement Analysis-A new approach3, p-11, 2006, How ratio can be
analysed and about the interpretation of these ratios.
* Gupta S.P., Business Statistics4, Pg 378-418 From here I found the information
regarding correlation, trend and statistical tools.
* Goel D.K. Management Accounting and Financial Management5, Pg 78 In this I found
the different types of ratios and there formulas and about thumb rule and all basic concept.
* Pandey, I.M Financial Management6 Pg-143-145 How to prepare comparative balance
sheet and how can we evaluate.
* Maheshwari, S.N, Advanced Accounting7 pg b40-b48, It explains ratio analysis as a tool
to analyze the financial statements of organization. Different ratios depict the position of
firm in market.
* Mittal R.K, Management Accounting& Financial Management8 pg 28-30 from this I
have how to prepare comparative balance sheet and how to interpret it
* Jain T.R., Statistics for MBA9 Pg part C 135-138, Information about the calculation of
chi square test.
Berry G.C., Marketing Research10 pg15 Some theoretical knowledge about the type
of data.
S.C Gupta, Fundamentals of Statistics11 pg112, From here I found the definitions that
are the base for the statistical tools.
Hooda R.P. Statistics for Business and Economics 12 pg209-212 Calculation of trend
analysis and its interpretation.
Horne James.c.Van, Fundamental of Financial Management13 pg125-130 From this I
got how to analyse the financial condition
Chandra Prasanna, Fundamental of Financial Management14, pg103-108 this book
help me to analyse the balance sheet, how can we say that the firm is going well or not.
Cooper R.Donald, Business Research Methods17, pg176-180 all about sampling
design, its meaning

31
OBJECTIVE OF THE STUDY

Objectives are the ends that states specifically how goal be achieved. Every study must have an
objective for which all the efforts have been done. Without objective no research can be conducted
and no result can be obtained. On the basis of objective all the research process is followed.
Objectives are the main aspect of every study. The objective of the study gives direction to go
through the research problem. It guides the researcher and keeps him on track.
I have two objectives regarding my research project. These are shown below :-
1. Primary objective
2. Secondary objective

1. Primary objective:-
1) To analyse the financial statements of the corporation to its true financial position by the use
of ratios.
2. Secondary objective:-
1) To find out the shortcomings in HDFC Bank.
2) To see whether HDFC Bank is going well or not in different areas.
3) To provide information to investors for enabling them to take investment.

NATURE OF STUDY
The study is diagnosis in nature. It diagnosis the information of the financial statement of HDFC
Bank, so as to judge the company financial situation profitability and financial soundness of firm
which will help out in forecasting future earning ability to pay interest and debt maturities and
dividend policy.

32
DATA COLLECTION
In present study only secondary data has been taken into account. It is the data which is already
collected by someone else. Researcher has to analyze the data and interprets the results. It has
always been important for the completion of any report. It provides reliable, suitable, adequate and
specific knowledge.
Data comprises financial statement of last 3years of HDFC Bank which is collected from bank
website and newspapers. Further I took help of many books for analysis the financial situation.

DATA ANALYSIS AND INTERPRITATION

For analysis of data tools applied are calculation of various ratios, percentage Method and bar
Diagram.

ORGANISATION OF THE STUDY

Organization of the study is combination of various chapters i.e Company profit which details about
introduction, resent development, distribution network, technology capital structure, business
profile, organization structure SWOT analysis etc. Next chapter contain information of project
which details about financial statement, financial analysis, feature & purpose of financial analysis
etc. next chapter is of Ratio analysis then Research Methodology which provide information about
justification of the study, statement of the problem, literature ,review, objectives of the study, nature,
data collection etc. After then next chapter initials the data analysis and interpretation which provide
finding of the study and lastly bibliography.

33
DATA ANALYSIS
AND
INTERPRETATION

34
Profit loss account

Profit loss account Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Income
Operating income 19,958.76 19,770.72 12,354.41 8,303.34 5,567.67
Expenses
Material consumed - - - - -

Manufacturing expenses - - - - -

Personnel expenses 2,289.18 2,238.20 1,301.35 776.86 486.82

Selling expenses 83.12 108.68 114.73 74.88 80.85

Adminstrative expenses 4,936.73 4,583.86 2,247.48 1,519.32 1,424.59

Expenses capitalized - - - - -

Cost of sales 7,309.02 6,930.74 3,663.56 2,371.06 1,992.26

Operating profit 4,863.44 3,928.87 3,803.73 2,752.83 1,645.91

Other recurring income 17.72 - 43.04 102.96 31.38

Adjusted PBDIT 4,881.17 - 3,846.77 2,855.79 1,677.29

Financial expenses 7,786.30 8,911.10 4,887.12 3,179.45 1,929.50

Depreciation 394.39 359.91 271.72 219.60 178.59

Other write offs - - - 241.09 245.16

Adjusted PBT 4,486.77 3,568.97 3,575.05 2,395.10 1,253.54

Tax charges 1,340.99 1,054.92 690.90 497.70 383.03

Adjusted PAT 2,944.68 2,240.75 1,589.48 1,142.50 870.51

Non recurring items 4.02 4.19 0.70 -1.05 0.27

Other non cash adjustments -0.93 -0.59 -0.06 -0.35 -

Reported net profit 2,947.77 2,244.35 1,590.12 1,141.10 870.78

Earnigs before appropriation 6,403.33 4,818.98 3,522.15 2,596.12 1,473.12

Equity dividend 549.29 425.38 301.27 223.57 172.23

Preference dividend - - - - -

Dividend tax 91.23 72.29 51.20 38.00 24.16

Retained earnings 5,762.81 4,321.31 3,169.68 2,334.55 1,276.73

Balance sheet

35
Balance sheet Mar ' 10 Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06

Sources of funds
Owner's fund
Equity share capital 457.74 425.38 354.43 319.39 313.14
Share application - 400.92 - - 0.07
money
Preference share - - - - -
capital
Reserves & surplus 21,064.75 14,226.43 11,142.80 6,113.76 4,986.39
Loan funds
Secured loans - - - - -
Unsecured loans 1,67,404.44 1,42,811.58 1,00,768.60 68,297.94 55,796.82
Total 1,88,926.93 1,57,864.31 1,12,265.83 74,731.09 61,096.42
Uses of funds
Fixed assets
Gross block 4,707.97 3,956.63 2,386.99 1,917.56 1,589.47
Less : revaluation - - - - -
reserve
Less : accumulated 2,585.16 2,249.90 1,211.86 950.89 734.39
depreciation
Net block 2,122.81 1,706.73 1,175.13 966.67 855.08
Capital work-in- - - - - -
progress
Investments 58,607.62 58,817.55 49,393.54 30,564.80 28,393.96
Net current assets
Current assets, loans 5,955.15 6,356.83 4,402.69 3,605.48 2,277.09
& advances
Less : current 20,615.94 22,720.62 16,431.91 13,689.13 7,849.49
liabilities &
provisions
Total net current -14,660.79 -16,363.79 -12,029.22 -10,083.65 -5,572.40
assets
Miscellaneous - - - - -
expenses not written
Total 46,069.63 44,160.49 38,539.45 21,447.82 23,676.64
Notes:
36
Book value of - - - - -
unquoted investments
Market value of - - - - -
quoted investments
Contingent liabilities 4,87,176.37 4,14,533.93 5,99,928.79 2,09,338.61 1,44,137.86
Number of equity 4577.43 4253.84 3544.33 3193.90 3131.42
sharesoutstanding
(Lacs)

RATIOS OF HDFC BANK

Ratios

Mar ' Mar ' Mar ' Mar ' Mar '
10 09 08 07 06
Per share
ratios

Adjusted EPS 64.33 52.68 44.85 35.77 27.8

(Rs)
Adjusted cash 72.95 61.14 52.51 50.2 41.33
EPS (Rs)
Reported EPS 64.42 52.77 44.87 35.74 27.81

37
(Rs)

Reported cash 73.03 61.24 52.53 50.16 41.34

EPS (Rs)
Dividend per 12 10 8.5 7 5.5
share
Operating 106.25 92.36 107.32 86.19 52.56
profit per
share (Rs)
Book value 470.19 344.44 324.38 201.42 169.24
(excl rev res)
per share (Rs)
Book value 470.19 344.44 324.38 201.42 169.24
(incl rev res)
per share (Rs.)
Net operating 436.03 464.77 348.57 259.98 177.8
income per
share (Rs)
Free reserves 363.55 252.37 269.89 155.69 132.01
per share (Rs)
Profitability
ratios

Operating 24.36 19.87 30.78 33.15 29.56

margin (%)
Gross profit 22.39 18.05 28.58 30.5 26.35
margin (%)
Net profit 14.76 11.35 12.82 13.57 15.55
margin (%)
Adjusted cash 16.71 13.15 15.01 19.07 23.11
margin (%)
Adjusted 13.68 15.29 13.82 17.75 16.42
return on net
worth (%)
Reported 13.7 15.32 13.83 17.74 16.43
return on net
worth (%)

38
Return on long 56.08 83.31 62.34 74.91 60.06
term funds
(%)
Leverage
ratios

Long term - - - - -
debt / Equity
Total 7.78 9.75 8.76 10.62 10.53
debt/equity
Owners fund 11.39 9.3 10.24 8.6 8.67
as % of total
source
Fixed assets 4.24 5 5.18 4.33 3.5
turnover ratio
Liquidity
ratios

Current ratio 0.28 0.27 0.26 0.26 0.29

Current ratio 0.03 0.03 0.03 0.04 0.03
(inc. st loans)
Quick ratio 7.14 5.23 4.89 4.07 5.18
Inventory - - - - -
turnover ratio
Payout ratios

Dividend 21.72 22.16 22.16 22.91 22.55

payout ratio
(net profit)
Dividend 19.15 19.1 18.93 16.32 15.17
payout ratio
(cash profit)
Earning 78.25 77.79 77.83 77.11 77.44
retention ratio
Cash earnings 80.82 80.87 81.07 83.69 84.83
retention ratio
Coverage
ratios

39
Adjusted cash 50.13 54.91 54.14 42.6 43.11
flow time total
debt
Financial 1.63 1.44 1.79 1.9 1.87
charges
coverage ratio
Fin. charges 1.43 1.29 1.38 1.5 1.67
cov.ratio (post
tax)
Component
ratios

Material cost - - - - -
component (%
earnings)
Selling cost 0.41 0.54 0.92 0.9 1.45
Component
Exports as - - - - -
percent of
total sales
Import comp. - - - - -
in raw mat.
Consumed
Long term 0.91 0.9 0.91 0.89 0.92
assets / total
Assets

40
 VARIOUS
CALCULATED
RATIOS

41
 Liqudity Ratio
These are the ratios which measure the short-term solvency or financial position of a firm. These
ratios are calculated to comment upon the short-term paying capacity of a concern or the firms
ability to meet its current obligations.

Current Ratio

Current ratio may be defined as the relationship between current assets and current liabilities.
Current ratio = Current assets/current liabilities

Year 2008 2009 2010

Current Ratio 0.28 0.27 0.26

Interpretation
If the C.R. is less than 2: 1, it indicates lack of liquidity and shortage of working capital. But a
much higher ratio, even though it is beneficial to the short-term creditors, is not necessarily

42
 good for the company. A much higher ratio than 2: 1 may indicate the poor investment
policies of the management. So liquidity of Bank is satisfactory.

Quick ratio

This ratio help in measuring the firms ability to repay its current liabilities immediately and
calculated as follows:-
Quick ratio Quick ratio = Quick Assets / current liabilities

Year 2008 2009 2010

Quick ratio 7.14 5.23 4.89

Interpretation
A liquid Ratio of 1; 1 considered as a standard ratio.Higher ratio indicates toward goodliqudity ratio
of a company and vice-versa.

43
 Returnn on share holders fund
This ratio measure that how much profit is generated on amount invested by the share holders.

Earning per share ratio

This ratio indicates that how much amount is earned on a share.

EPS = Net profit after (interest, tax & preference dividend) / No. of equity shares

Year 2008 2009 2010

EPS (Rs) 73.03 61.24 52.53

Interpretation:
This ratio is helpful in the determination of the market price of the equity share of the company. The
ratio is also helpful in estimating the capacity of the company to declare dividends on equity shares.

44
Dividend per share ratio
Dividend is the amount distributed among shareholders out of total profits.
DPS = Dividend paid to equity shareholders / No. of equity shares

Year 2008 2009 2010

Dividend per share 12.00 10.00 8.50

Interpretation:
This Ratio indicates how much profit has been given in hand to the equity share holders. This
represents higher the ratio more is the good will of the firm.

45
Price-Earning ratio
This ratio establishes the relationship between market price of share and earning per share.
Earning ratio = Market price of share / EPS

Year 2008 2009 2010

Earning ratio 78.25 77.79 77.83

Interpretation:
This ratio indicates that to earn the earning per share how much amount is spent to purchasing that
share. It also include that weather the market price is low or high.

46
Dividend payout ratio
This ratio indicates that how much profit is distributed as dividendout of the total profit earned by a
company.
Dividend payout ratio = DPS / EPS * 100

Year 2008 2009 2010

Dividend payout 19.15 19.10 18.93
ratio (cash profit)

Interpretation:
This ratio is used by the share holders to know that how much return they will get on amount
invested by them. This ratio depe nd on the stage of the company.

47
 Profibility ratio
These ratios measure the results of business operations or overall performance and effective of the
firm e.g. gross profit ratio, operating ratio or capital employed.

Gross profit ratio

It establishes the relationship between gross profit and sales. Gross profit is resulteant of sales and
cost of good sold.
Gross profit ratio = Gross profit/ Net sales * 100

Year 2008 2009 2010

Gross profit 22.39 18.05 28.58

Interpretation:

48
Greater the ratio more profitable business will be. It is the indicator of the efficiency of the
management. A high ratio indicates that the business can survive even in case of rising costor
decreasing selling prise of the goods.

Operating ratio

The relationship between the operating expence and sales is called operating ratio.
Operating ratio = Operating cost/ net sales * 100

Year 2008 2009 2010

Operating ratio 24.36 19.87 30.78

Interpretation:
The lower the operating ratio, the more efficient the firm is because it means the operating cost are
lessin comparison to net sales. With the help of the ratio, inter firm comparison can bemade to
check the operating cost of one company with that of another.

49
Net Profit Ratio

This ratio depicts the relationship between net profit and sales. Net profit is calculated by adding
non operating income and deducting indirect expence in the gross profit.
Net profit Ratio = Net profit / Net Sales * 100

Year 2008 2009 2010

Net profit 14.76 11.35 12.82

Interpretation:
This ratio should be on lower side this ratio is very significant. If these are of very lower side, the
profitability of the company will be higher and vice-versa.

50
FINDINGS

51
FINDINGS

If the C.R. is less than 2: 1, it indicates lack of liquidity and shortage of working capital. But
a much higher ratio, even though it is beneficial to the short-term creditors, is not
necessarily good for the company. A much higher ratio than 2: 1 may indicate the poor
investment policies of the management. So liquidity of Bank is satisfactory.
A liquid Ratio of 1; 1 considered as a standard ratio.Higher ratio indicates toward
goodliqudity ratio of a company and vice-versa.
This ratio is helpful in the determination of the market price of the equity share of the
company. The ratio is also helpful in estimating the capacity of the company to declare
dividends on equity shares
This Ratio indicates how much profit has been given in hand to the equity share holders.
This represents higher the ratio more is the good will of the firm.
This ratio indicates that to earn the earning per share how much amount is spent to
purchasing that share. It also include that weather the market price is low or high.
This ratio is used by the share holders to know that how much return they will get on
amount invested by them. This ratio depe nd on the stage of the company.
Greater the ratio more profitable business will be. It is the indicator of the efficiency of the
management. A high ratio indicates that the business can survive even in case of rising
costor decreasing selling prise of the goods.
The lower the operating ratio, the more efficient the firm is because it means the operating
cost are lessin comparison to net sales. With the help of the ratio, inter firm comparison can
bemade to check the operating cost of one company with that of another.
This ratio should be on lower side this ratio is very significant. If these are of very lower
side, the profitability of the company will be higher and vice-versa.

52
Limitations of the Study

53
Limitations of the Study

As no person is perfect in this world, in the same way no study can be considered as fully reliable at
one glance. There are number of uncontrollable factors acting as limitations in conducting the study.
Some of such limitations encountered by me in this study are as follows: -
The most important factor, which limits the research, is the time factor. This study has not
been conducted over an extended period of time having both market ups and downs. The
market state has a significant influence on the buying patterns and preference of investors.
The study has not captured such situations.
Due to changing environment, what is relevant today may not be relevant tomorrow.
Confidential matters were not easily revealed.

54
Bibliography

55
Bibliography

Goyal Alok and Goyal Mridula. Accounting for Managers 3 rd edition, V.K. Publications,
New Delhi, 2010.
Kothari C.R Reaearch Methodology 2nd revised addition, New Age International
Publishers, New Delhi, 2009.
Kothari Rajesh, Godha Abhishek Management accounting Macmillan India Ltd., New
Delhi, 2010.
Berry G.C., Marketing Research . 2009.
S.C Gupta, Fundamentals of Statistics. 2010
Hooda R.P. Statistics for Business and Economics 2010.
Horne James.c.Van, Fundamental of Financial Management 2009 .
Chandra Prasanna, Fundamental of Financial Management 2009.
Cooper R.Donald, Business Research Methods 2010.
LIKNS USED :-
(http://www.hdfcbank.com/aboutus/default.htm)
(http://money.rediff.com/companies/hdfc-bank-ltd/14030055/balance-sheet)
( www.yahoofinance.com)

56