F.A ICICI & PNB

7/29/2019 F.A ICICI & PNB

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A STUDY OFCOMPARATIVE FINANCIAL STATEMENT & COMPARATIVE

ACCOUNTING POLICIES FOR 2011-2012 OF ICICI & PNB BANK

A PROJECT REPORT

Submitted to

University of Mumbai

In partial fulfillment of the requirement

For

M.Com. (Accountancy) Semester I

In the Subject

Advance Financial Accounting

By

ROHAN R. KAWALE

12- 7230

K. V. PENDHARKAR COLLEGE

NEAR VIJAY SALES, DOMBIVLI (E) 421 203

DIST. THANE

SEPTEMBER 2012


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DECLARATION

I Rohan Kawale, the student of M.com (Accountancy) Semester-I, (2012) Roll No.7230,

K.V.Pendharkar College, Dombivli, Affiliated to university of Mumbai, hereby declare that I

have completed the project on the topic A STUDY OF COMPARATIVE FINANCIAL

STATEMENT & COMPARATIVE ACCOUNTING POLICIES FOR 2011-2012 OF ICICI

& PNB BANK submitted by me to university of Mumbai for M.com Semester-I examination in

the subject Advance Financial Accounting is based on actual work carried by me.

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

PLACE: DOMBIVLI

DATE: 5-10-2012

Signature of the Student:

Name: ROHAN KAWALE

Roll No: 12- 7230


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ACKNOWLEDGEMENT

At the beginning I would like to thank god for his blessings. I am very much thankful to my

Teacher Professor and Coordinator Professor Limey for their guidance, support and

encouragement. I also take this opportunity to show my sincere gratitude to my parents. Finally I

would express my gratitude to all those who helped me directly and indirectly in completing this

project.

PLACE: DOMBIVLI

DATE: 5-10-2012

Name: ROHAN KAWALE

Roll No: 12- 7230

M.Com (Accountancy) Semester-I


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Chapter

No.

Topic Page No.

Certificate of the Institution 1

Declaration 2

Acknowledgement 3

Executive Summary 5

1 Introduction Of Bank 5-8

2 Objective of the study of ICICI bank 9-27

3 Accounting Policies 28-36

4 Objective of the Study of PNB bank 37-48

5 Advantages & Limitations 49-50

6 Conclusion 51

Bibliography and Webliography 52
http://www.google.co.in/url?sa=t&rct=j&q=bibliography+%26+webliography&source=web&cd=1&cad=rja&ved=0CCIQFjAA&url=http%3A%2F%2Fca3rsproject.org%2Fpdfs%2FResourceBibliography-Webliography.pdf&ei=cxmJUNC1OobJrQfv64GACA&usg=AFQjCNE0IAccN2-nyYUilzoGWoOGN3FGAAhttp://www.google.co.in/url?sa=t&rct=j&q=bibliography+%26+webliography&source=web&cd=1&cad=rja&ved=0CCIQFjAA&url=http%3A%2F%2Fca3rsproject.org%2Fpdfs%2FResourceBibliography-Webliography.pdf&ei=cxmJUNC1OobJrQfv64GACA&usg=AFQjCNE0IAccN2-nyYUilzoGWoOGN3FGAA


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EXECUTIVE SUMMARY

In any organization, the two important financial statements are the Balance sheet &

Profit and loss account of the business. Balance sheet is a statement of the financial

position of an enterprise at a particular point of time. Profit and loss account shows

the net profit or net loss of a company for a specified period of time. When these

statements of the last few year of any organization are studied and analyzed

significant conclusions may be arrived regarding the changes in the financial

position, the important policies followed and trends in profit and loss etc. Analysisand interpretation of the financial statement has now become an important

technique of credit appraisal. The investors, financial experts, management

executives and the bankers all analyze these statements. Though the basic

technique of appraisal remains the same in all the cases

butthe approach and the emphasis in analysis vary. A banker interprets thefinancial

statement so as to evaluate the financial soundness and stability, the liquidity

position and the profitability or the earning capacity of

borrowingconcern. Analysis of financial statement is necessary because it help ind

epicting the financial position on the basis of past and current records.

Analysis of financial statement helps in making the future decision andstrategies.

Therefore, it is very necessary for every organization whether it is a financial or

manufacturing etc. to make financial statement and to analyze it.


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CHAPTER: 1

INTRODUCTION OF BANK

The term bank comes from the French word Banco which means a bench. In theearlier days, European money- lenders or money changers used to display coins of

different countries in big heaps on benches or tables, for the purpose of lending or

exchanging. A bank is a financial institution which deals with deposits and

advances and other related services. It receives money from those who want to

save in the form of deposits and it lends money to those who need it. Oxford

Dictionary defines a bank as an establishment for custody of money, which it pays

out on customer s order.

Meaning

Bank is a lawful organization, which accepts deposits that can be withdrawn on

demand. It also lends money to individuals and business houses that need it. Banks

also render many other useful serviceslike collection of bills, payment of foreign

bills, safe-keeping of Jewellery and other valuable items, certifying the credit-

worthiness of business, and so on. Banks accept deposits from the general public as

well as from the business community. Any one who saves money for future can

deposit his savings in a bank. Businessmen have income from sales out of which

they have to make payment for expenses. They can keep their earnings from sales

safely deposited in banks to meet their expenses from time to time. Banks give two

assurances to the depositors

a) Safety of deposit, and

b) Withdrawal of deposit


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Role of Banking

Banks provide funds for business as well as personal needs of individuals. They

play a significant role in the economy of a nation. Let us know about the role of

banking.

It encourages savings habit amongst people and thereby makes funds available

for productive use.

It acts as an intermediary between people having surplus money and those

requiring money for various business activities.

It facilitates business transactions through receipts and payments by cheques

instead of currency.

It provides loans and advances to businessmen for short term and long-term

purposes.

It also facilitates import export transactions.

It helps in national development by providing credit to farmers, small -scale

industries and self-employed people as well as to large business houses which lead

to balanced economic development in the country.

It helps in raising the standard of living of people in general by providing loans

for purchase of consumer durable goods, houses, automobiles, etc.


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Functions of Commercial Bank

(A) Primary functions; and

(B) Secondary functions.

The following types of deposits are usually received by banks

i) Current deposit

ii) Saving deposit

iii) Fixed deposit

iv) Recurring deposit

v) Miscellaneous deposits


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CHAPTER : 2

OBJECTIVE OF THE STUDY OF ICICI BANK

The main objectives of this project are the following:

To study about ICICI BANK and its related aspects like itsproducts & services, history, organizational structure, subsidiary companies

etc.

To analyze the financial statement i.e. P&L account and Balance sheet ofICICI BANK.

To learn about Cash Flow, Capital Structure. To understanding the meaning and need of Balance Sheet and profit and loss

account.

The purpose is to portray the financial position of ICICI BANK with thehelp of Balance sheet and profit and loss account.

To evaluate the financial soundness, stability and liquidity of ICICI BANK.


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INTRODUCTION OF ICICI BANK

ICICI Bank is the largest private sector bank in India in terms of market

capitalization. It is also the second largest bank in India in terms of assets with a

total asset of Rs. 3,674.19 billion (US$ 77 billion) as on June 30,2009, the total

profit after tax has been Rs. 8.78 billion. Formerly known as Industrial Credit and

Investment Corporation of India, ICICI Bank has an extensive network of 1,544

branches with about 4,816 ATMS located across India and in 18 other countries.

ICICI Bank serves about 24 Million customers throughout the world. It is

considered as one of the Big Four Banks in India along with State Bank of India,

HDFC Bank and Axis Bank. ICICI Bank provides a wide range of banking

products and financial services to its retail and corporate customers. It has a widevariety of delivery channels and specialized affiliates and subsidiaries that ensure

the flow of its offerings in the areas like investment banking, venture capital, life

and non-life insurance and asset management. This bank is also Indias largest

credit card issuer. The equity share of ICICI Bank is listed on various stock

exchanges like NSE, BSE, Calcutta Stock Exchange and Vadodara Stock

Exchange etc. Its ADRs are also listed on the New York Stock Exchange.

ICICI Bank also has the largest international balance sheet among all the banks in

India. It is also expanding its business in the overseas market at an enviable pace.

In Q2 September 2008, ICICI Bank recorded a 1.15% growth in net profit over Q2

September 2007 to reach at Rs 1,014.21crores. The current and savings account

(CASA) ratio of bank also went up from 25% in2007 to 30% in 2008.


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HISTORY OF ICICI BANK

ICICI Bank was originally promoted in 1994 by ICICI Limited an Indian

financial institution, and was its wholly owned subsidiary. ICICI's shareholding in

ICICI Bank was reduced to 46% through a public offering of shares in Indiain

fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal

2000, ICICI Bank's acquisition of Bank of Madura Limited in an all

stock amalgamation in fiscal 2001, and secondary market sales by ICICI toinstituti

onal investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955at the

initiative of the World Bank, the Government of India and

representativesof Indian industry. The principal objective was to create a developm

entfinancial institution for providing medium-term and long-term projectfinancingto Indian businesses. In the 1990s, ICICI transformed its business from ad

evelopment financial institution offering only project finance to a diversified

financial services group offering a wide variety of products and services, both

directly and through a number of subsidiaries and affiliates like ICICI Bank.

In1999, ICICI become the first Indian company and the first bank or financial

institution from non-Japan Asia to be listed on the NYSE. After consideration of

various corporate structuring alternatives in the context of the emerging

competitive scenario in the Indian banking industry, and the move towardsuniversal banking, the managements of ICICI and ICICI Bank formed the view

that the merger of ICICI with ICICI Bank would be the

optimalstrategic alternative for both entities, and would create the optimal legalstru

cture for the ICICI group's universal banking strategy. The merger would enhance

value for ICICI shareholders through the merged entity's access to low-cost

deposits, greater opportunities for earning fee-based income and the ability to

participate in the payments system and provide transaction-banking services. The

merger would enhance value for ICICI Bank shareholders through a large capitalbase and scale of operations, seamless access to ICICI's strong corporate

relationships built up over five decades, entry into new business

segments,higher market share in various business segments, particularly fee-based

services, and access to the vast talent pool of ICICI and its subsidiaries. In 10

October 2001, the Boards of Directors of ICICI and ICICI Bank approved the


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merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI

Personal Financial Services Limited and ICICI Capital Services Limited, with

ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank

in January 2002, by the High Cist of Gujarat at Ahmadabad in March2002, and by

the High Cist of Judicature at Mumbai and the Reserve Bank of India in April2002. Consequent to the merger, the ICICI group's financing and banking

operations, both wholesale and retail, have been integrated in a single entity. ICICI

Bank has formulated a Code of Business Conduct and Ethics for its directors and

employees.


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COMPANY PROFILE OF ICICI BANK

ICICI Bank is Indias second-largest bank with total assets of 3,997.95 billion(US$

100 billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for they ear

ended March 31, 2008 ICICI Bank is the most valuable bank in India in terms of

market capitalization and is ranked second amongst all the companies listed on the

Indian stock exchanges.

In terms of free float market capitalization. The Bank has a network of about

1308Branches and 3,950 ATMs in India and presence in 18 countries. ICICI Bank

offers a wide range of banking products and financial services to corporate and

retail customer through a variety of delivery channels and through its specialized

subsidiaries and affiliates in the are as of investment banking, life and non-life

insurance, venture capital and asset management. The Bank currently has

subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore,

UnitedStates, United Arab Emirates, China, South Africa, Bangladesh, Thailand,

Malaysia and Indonesia. UK subsidiary has established a branch in Belgium.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange(BSE)

and the National Stock Exchange (NSE) of India Limited and its American

Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).


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STUDY OF PROFIT& LOSS A/C

MEANING

It is a financial statement, which shows net loss of a company for a specified

period. The accounting year means calendar year of 12months or less ormore than 12 months.

CONTENTS

This presents the revenues and expenses of a company and shows the excess

of revenues over expenses for profit and vice versa for a loss.

FORMAT

The Companies act does not provide any specific format for this account.However it is required to be prepared on the basis of the instructions given

in part ii of schedule (vi) of the companies act.

MAIN ITEMS OF PROFIT AND LOSS ACCOUNT

Turnover or sales:

The aggregate amount of sales and connected items with the sales such as

commission paid to sole-selling agents and other selling agents and

brokerage and discounts on sales other than usual trade discount.

Depreciation:

The amount of depreciation of fixed assets and the arrears of depreciation as

per section 205(2) shall be disclosed by way of foot-note.

Interest on loans and debentures:

Interest on loans and debentures has to be stated separately. It will include

the amount of interest paid as well as outstanding.


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Miscellaneous expenses:

In this head items such as rates and taxes, insurance premium etc., must be

stated separately.

Preliminary expenses:Such expenses include the costs of formation of a company and since their

amount is usually large, it is not desirable to write off them in one year.

Provision for taxation:

The profit and loss account of a company must be debited with the estimated

liabilities for tax on the current profits at current rates of taxation.

Unclaimed dividends:It is shown on the liabilities side of the balance sheet under the heading

current liabilities.

Interim dividends:

It is an item of appropriation. It is transferred to the debit side of the Profit

and loss appropriation account.

Final dividend as an item of the trial balance:

This is shown in the debit side of the appropriation section of the profit and

loss account.

Proposed dividend or final dividend proposed:

Since it is an adjustment item, it has to be shown at two places- In the debit

side of the profit and loss appropriation account and on the liabilities side of

the balance sheet under the head current liabilities and provisions

Dividend on interest income:

This item is transferred to the credit side of the profit and loss account.

Payment to auditors:

It must be stated separately.

This will include consultancy fee, auditing fees management services etc.


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Profit & Loss account of ICICI Bank ------------------- in Rs. Cr. -------------------

Mar '12 Mar '11 Mar '10 Mar '09 Mar

12 mths 12 mths 12 mths 12 mths 12 m

IncomeInterest Earned 33,542.65 25,974.05 25,706.93 31,092.55 30,7

Other Income 7,908.10 7,108.91 7,292.43 8,117.76 8,87

Total Income 41,450.75 33,082.96 32,999.36 39,210.31 39,6

Expenditure

Interest expended 22,808.50 16,957.15 17,592.57 22,725.93 23,4

Employee Cost 3,515.28 2,816.93 1,925.79 1,971.70 2,07

Selling and Admin Expenses 2,888.22 3,785.13 6,056.48 5,977.72 5,83

Depreciation 524.53 562.44 619.50 678.60 578.

Miscellaneous Expenses 5,248.97 3,809.93 2,780.03 4,098.22 3,53Preoperative Exp Capitalized 0.00 0.00 0.00 0.00 0.00

Operating Expenses 8,843.63 8,594.16 10,221.99 10,795.14 10,8

Provisions & Contingencies 3,333.37 2,380.27 1,159.81 1,931.10 1,17

Total Expenses 34,985.50 27,931.58 28,974.37 35,452.17 35,5



Net Profit for the Year 6,465.26 5,151.38 4,024.98 3,758.13 4,15

Extraordinary Items -0.43 -2.17 -0.09 -0.58 0.00

Profit brought forward 5,018.18 3,464.38 2,809.65 2,436.32 998.

Total 11,483.01 8,613.59 6,834.54 6,193.87 5,15

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1,902.04 1,612.58 1,337.86 1,224.58 1,22

Corporate Dividend Tax 220.35 202.28 164.04 151.21 149.

Per share data (annualized)

Earning Per Share (Rs) 56.09 44.73 36.10 33.76 37.3

Equity Dividend (%) 165.00 140.00 120.00 110.00 110.

Book Value (Rs) 524.01 478.31 463.01 444.94 417.

Appropriations

Transfer to Statutory Reserves 2,306.07 1,780.29 1,867.22 2,008.42 1,34

Transfer to Other Reserves 0.32 0.26 1.04 0.01 0.01

Proposed Dividend/Transfer to Govt 2,122.39 1,814.86 1,501.90 1,375.79 1,37

Balance c/f to Balance Sheet 7,054.23 5,018.18 3,464.38 2,809.65 2,43

Total 11,483.01 8,613.59 6,834.54 6,193.87 5,15


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STUDY OF BALANCE SHEET

MEANINGThe balance sheet is a financial snapshot of a company's condition at a

single point in time. A balance sheet contains a listing of the

company's asset, liability and Capital accounts. When someone, whether a

creditor or investor, asks you how your company is doing, you'll want to

have the answer ready and documented . The way to show off the success of

your company is a balance sheet. A balance sheet is a documented report of

your company's assets and obligations, as well

as the residual ownership claims against your equity at any given point in

time. It is a cumulative record that reflects the result of all recorded

accounting transactions since your enterprise was formed.

You need a balance sheet to specifically know what your company's net

worth is on any given date. With a properly prepared balance sheet, you can

look at a balance sheet at the end of each accounting period and know if

your business has more or less value, if your debts are higher or lower, and if

your working capital is higher or lower. By analyzing your balance sheet,

investors, creditors and others can assess your ability to meet short-term

obligations and solvency, as well as your ability to pay all current and long-term debts as they come due. The balance sheet also shows the composition

of assets and liabilities, the relative proportions of debt and equity financing

and the amount of earnings that you have had to retain. Collectively,

external parties to help assess your companys financial status.


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MAIN ITEMS OF ASSETS

Current assets:

Current assets include cash and other assets that in the normal course ofevents are converted into cash within the operating cycle. For example, a

manufacturing enterprise will use cash to acquire inventories of materials.

These inventories of materials are converted into finished products and then

sold to customers. Cash is collected from the customers. This circle from

cash back to cash is called an operating cycle. In a merchandising business

one part of the cycle is eliminated. Materials are not purchased for

conversion into finished products. Instead, the finished products are

purchased and are sold directly to the customers. It is conceivable thatalmost all of the assets that are used to conduct our business, such as

buildings, machinery, and equipment, can be converted into cash within the

time required to complete an operating cycle. However, your current assets

are only those that will be converted into cash within the normal course of

your business. The other assets are only held because they provide useful

services and are excluded from the current asset classification. If you happen

to hold these assets in the regular course of business, you can include them

in the inventory under the classification of current assets. Current assets areusually listed in the order of their liquidity and frequently consist

of cash, temporary investments, accounts receivable, inventories and prepaid

expenses.

Cash :

Cash is simply the money on hand and/or on deposit that is available for

general business purposes. It is always listed first on a balance sheet. Cash

held for some designated purpose, such as the cash held in a fund for

eventual retirement of a bond issue, is excluded from current assets.


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Marketable Securities:

These investments are temporary and are made from excess funds that you

do not immediately need to conduct operations. Until you need these funds,

they are invested to earn a return.

Accounts Receivable:

Simply stated, accounts receivables are theamounts owed to you and are evi

denced on your balance sheet by promissory notes. Accounts receivable are

the amounts billed to your customers and owed to you on the balance sheet's

date. You should label all other accounts receivable appropriately and show

them apart from the accounts receivable arising in the course of trade. If

these other amounts are currently collectible, they may be classified as

current assets.

Inventories:

Your inventories are your goods that are available for sale, products that you

have in a partial stage of completion, and the materials that you will use

to create your products.

The costs of purchasing merchandise and materials and the costs of

manufacturing your various product lines are accumulated in the accounting

records and are identified with either the cost of the goods sold during the

fiscal period or as the cost of the inventories remaining.

Prepaid expenses:

These expenses are payments made for services that will be received in the

near future. Strictly speaking, your prepaidexpenses will not be converted to

current assets in order to avoid penalizing companies that choose to pay

current operating costs in advance rather than to hold cash. Often your

insurance premiums or rentals are paid in advance.


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Investments:

Investments are cash funds or securities that you hold for a designated

purpose for an indefinite period of time. Investments include stocks or the

bonds you may hold for another company, real estate or mortgages that you

are holding for income-producing purposes. Your investments also includemoney that you may be holding for a pension fund.

Plant Assets:

Often classified as fixed assets, or as plant and equipment, your plant assets

include land, buildings, machinery, and equipment that are to be used in

business operations over a relatively long period of time. It is not expected

that you will sell these assets and convert them into cash. Plant assets simply

produce income indirectly through their use in operations.

Intangible Assets:

Your other fixed assets that lack physical substance are referred to as

intangible assets and consist of valuable rights, privileges or advantages.

Although your intangibles lack physical substance, they still hold value for

your company. Sometimes the rights, privileges and advantages of your

business are worth more than all other assets combined.

Other Assets:

During the course of preparing your balance sheet you will notice other

assets that cannot be classified as current assets, investments, plant assets, or

intangible assets. These assets are listed on your balance sheet as

other assets.


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MAIN ITEMS OF LIABILITIES

Current Liabilities:

On the equity side of the balance sheet, as on the asset side, you need

to make a distinction between current and long-term items.Your current liabilities are obligations that you will discharge within the nor

maloperating cycle of your business. In most circumstances your current

liabilities will be paid within the next year by using the assets you classified

ascurrent.The amount you owe under current liabilities often arises as a resul

t of acquiring current assets such as inventory or services that will be used in

current operations. You show the amounts owed to trade creditors that arise

from the purchase of materials or merchandise as accounts payable. If you

are obligated under promissory notes that support bank loans or otheramounts owed, your liability is shown as notes payable. Other current

liabilities may include the estimated amount payable for income taxes and

the various amounts owed for wages and salaries of employees, utility bills,

payroll taxes, local property taxes and other services.

Long-Term Liabilities:

Your debts that are not due until more than a year from the balance sheet

date are generally classified as long-term liabilities. Notes, bonds and

mortgages are often listed under this heading. If a portion of your long-term

debt is due within the next year, it should be removed from the long-term

debt classification and shown under current liabilities.

Deferred Revenues:

Your customers may make advance payments for merchandise or services.

The obligation to the customer will, as a general rule, be settled by delivery

of the products or services and not by cash payment.

Advance collections received from customers are classified as deferredreven

ues, pending delivery of the products or services.


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Owner's Equity:

Your owner's equity must be subdivided on your balance sheet: One portion

represents the amount invested directly by you, plus any portion of retained

earnings converted into paid-in capital. The other portioned presents your

net earnings that are retained. This rigid distinction is necessary because ofthe nature of any corporation. Ordinarily, stockholders, or owners, are not

personally liable for the debts contracted by a company. A stockholder may

lose his investment, but creditors usually cannot look to his personal assets

for satisfaction of their claims. Under normal circumstances, the

stockholders may withdraw as cash dividends an amount measured by the

corporate earnings. The distinction in this rule gives the creditors some

assurance that a certain portion of the assets equivalent to the owner's

investment cannot be arbitrarily withdrawn. Of course, this portion could bedepleted from your balance sheet because of operating losses. The owner's

equity in an unincorporated business is shown more simply. The interest of

each owner is given in total, usually with no distinction being made between

the portion invested and the accumulated net earnings.

The creditors are not concerned about the amount invested. If necessary,

creditors can attach the personal assets of the owners.


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BALANCE-SHEET STRUCTURE

Basis of balance-sheet: Assets = Liability + Equity

Balance Sheet of ICICI Bank ------------------- in Rs. Cr. -------------------Mar '12 Mar '11 Mar '10 Mar '09 Mar


Capital and Liabilities:

Total Share Capital 1,152.77 1,151.82 1,114.89 1,463.29 1,46

Equity Share Capital 1,152.77 1,151.82 1,114.89 1,113.29 1,11

Share Application Money 2.39 0.29 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 350.00 350

Reserves 59,250.09 53,938.82 50,503.48 48,419.73 45,3Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Net Worth 60,405.25 55,090.93 51,618.37 49,883.02 46,8

Deposits 255,499.96 225,602.11 202,016.60 218,347.82 244,

Borrowings 140,164.91 109,554.28 94,263.57 67,323.69 65,6

Total Debt 395,664.87 335,156.39 296,280.17 285,671.51 310,

Other Liabilities & Provisions 17,576.98 15,986.35 15,501.18 43,746.43 42,8

Total Liabilities 473,647.10 406,233.67 363,399.72 379,300.96 399,



Assets

Cash & Balances with RBI 20,461.29 20,906.97 27,514.29 17,536.33 29,3

Balance with Banks, Money at Call 15,768.02 13,183.11 11,359.40 12,430.23 8,66

Advances 253,727.66 216,365.90 181,205.60 218,310.85 225,

Investments 159,560.04 134,685.96 120,892.80 103,058.31 111,

Gross Block 9,424.39 9,107.47 7,114.12 7,443.71 7,03

Accumulated Depreciation 4,809.70 4,363.21 3,901.43 3,642.09 2,92

Net Block 4,614.69 4,744.26 3,212.69 3,801.62 4,10

Capital Work In Progress 0.00 0.00 0.00 0.00 0.00

Other Assets 19,515.39 16,347.47 19,214.93 24,163.62 20,5

Total Assets 473,647.09 406,233.67 363,399.71 379,300.96 399,

Contingent Liabilities 858,566.64 883,774.77 694,948.84 803,991.92 371,

Bills for collection 64,457.72 47,864.06 38,597.36 36,678.71 29,3

Book Value (Rs) 524.01 478.31 463.01 444.94 417


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STUDY OF CASH FLOW STATEMENT

MEANING:

Cash flow statement or statement of cash flows is a financialstatement that shows a company's incoming and outgoing money (sources

and uses of cash) during a time period

(often monthly or quarterly).

The statement shows how changes inbalance sheet andincome accounts aff

ectedcash and cash equivalents , and breaks the analysis down according to

operating, investing, and financing activities. As an analytical tool the

statement of cash flows is useful in determining the short-term viability of a

company, particularly its ability to pay bills.

PURPOSE:

The cash flow statement reflects a firms liquidity or solvency. The main

purpose to make cash flow statement are as follows:

1. provide information on a firm's liquidity and solvency and its ability to

change cash flows in future circumstances.

2. provide additional information for evaluating changes in assets, liabilities

and equity.

3. Improve the comparability of different firms' operating performance by

eliminating the effects of different accounting methods 4.indicate the

amount, timing and probability of future cash flows
http://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Income_accounthttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Market_liquidityhttp://en.wikipedia.org/wiki/Solvencyhttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Accounting_methodshttp://en.wikipedia.org/wiki/Accounting_methodshttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Solvencyhttp://en.wikipedia.org/wiki/Market_liquidityhttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Income_accounthttp://en.wikipedia.org/wiki/Balance_sheethttp://en.wikipedia.org/wiki/Moneyhttp://en.wikipedia.org/wiki/Financial_statementshttp://en.wikipedia.org/wiki/Financial_statements


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ACTIVITIES INVOLVED IN CASH FLOW

The cash flow statement is partitioned into cash flow resulting from

operating activities, cash flow resulting from investing activities, and cash

flow resulting from financing activities.

Operating activities:

Operating activities include the production ,sales anddelivery of the compan

y's product as well as collecting payment from itscustomers. This could

include purchasing raw materials, building inventory, advertising.

Investing activities:

Investing activities focus on the purchase of the long-term assets a companyneeds in order to make and sell its products, and the selling of any long-term

assets.

Financing activities:

Financing activities include the inflow of cash from

investorssuch as banksand shareholdersas well as the outflow of cash to

shareholders as dividendsas the company generates income.

Other activities which impact the longterm liabilities and equity of the

company are also listed in the financing activities section of the cash flow

statement. Analysis of cash flow statement is necessary for every

organization to depict its cash inflow and outflow.
http://en.wikipedia.org/wiki/Production%2C_costs%2C_and_pricinghttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Deliveryhttp://en.wikipedia.org/wiki/Long-term_assethttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Dividendhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Long-term_assethttp://en.wikipedia.org/wiki/Long-term_assethttp://en.wikipedia.org/wiki/Deliveryhttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Production%2C_costs%2C_and_pricing


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Cash Flow of ICICI Bank ------------------- in Rs. Cr. -------------------

Mar '12 Mar '11 Mar '10 Mar '09 Ma


Net Profit Before Tax 8803.42 6760.70 5345.32 5116.97 505

Net Cash From Operating Activities 9683.82 -6908.92 1869.21 -14188.49 -11

Net Cash (used in)/from

Investing Activities-12280.17 -2108.82 6150.73 3857.88 -17

Net Cash (used in)/from Financing Activities 3829.95 4283.20 1382.62 1625.36 299

Net (decrease)/increase In Cash and Cash

Equivalents2139.23 -4783.61 8907.13 -8074.57 683

Opening Cash & Cash Equivalents 34090.08 38873.69 29966.56 38041.13 373

Closing Cash & Cash Equivalents 36229.31 34090.08 38873.69 29966.56 380


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Capital Structure (ICICI Bank)

Period Instrument Authorized

Capital

Issued Capital - P A I D U P -

From To (Rs. cr) (Rs. cr) Shares (nos) Face Value C

2011 2012 Equity Share 1275 1152.71 1152714442 10 1

2010 2011 Equity Share 1275 1151.77 1151772372 10 1

2009 2010 Equity Share 1275 1114.85 1114845314 10 1

2008 2009 Equity Share 1275 1113.25 1113250642 10 1

2007 2008 Equity Share 1275 1112.69 1112687495 10 1

2006 2007 Equity Share 1000 899.27 899266672 10 8

2005 2006 Equity Share 1000 889.82 889823901 10 8

2004 2005 Equity Share 1550 616.39 616391905 10 6

2003 2004 Equity Share 1550 613.02 613021301 10 6

2001 2002 Equity Share 300 220.36 220358680 10 2

2000 2001 Equity Share 300 196.82 196818880 10 1

1999 2000 Equity Share 300 196.82 196818880 10 1

1997 1999 Equity Share 300 165 165000700 10 1

1995 1997 Equity Share 300 150 150000700 10 1

1994 1995 Equity Share 300 150 700 10 0


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CHAPTER : 3

ACCOUNTING POLICIES YEAR 2011-2012

OVERVIEW

ICICI Bank Limited (ICICI Bank or the Bank), incorporated in Vadodara,

India is a publicly held banking company engaged in providing a wide range of

Banking and financial services including commercial banking and treasury operations.

ICICI Bank is a banking company governed by the Banking Regulation Act, 1949.

Basis of preparation

The financial statements have been prepared in accordance with requirements

prescribed under the Third Schedule of the Banking Regulation Act, 1949.

The accounting and reporting policies of ICICI Bank used in the preparation

of these financial statements conform to Generally Accepted Accounting

Principles in India (Indian GAAP),

The guidelines issued by Reserve Bank of India (RBI) from time to time,

The Accounting Standards (AS) issued by the Institute of Chartered Accountants

of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006

(as amended) to the extent applicable and practices generally prevalent in the

banking industry in India. The Bank follows the accrual method of accounting,

except where otherwise stated, and the historical cost convention.


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The preparation of financial statements requires the management to make

estimates and assumptions that are considered in the reported amounts

of assets and liabilities (including contingent liabilities) as of the

date of the financial statements and the reported income and expenses

during the reporting period. Management believes that the estimates

used in the preparation of the financial statements are prudent and

reasonable. Future results could differ from these estimates.

1. Revenue recognition

a) Interest income is recognized in the profit and loss account as it

accrues except in the case of non-performing assets (NPAs) where it is

recognized upon realization, as per the income recognition and asset

classification norms of RBI.

b) Income from leases is calculated by applying the interest rateimplicit in the lease to the net investment outstanding on the lease

over the primary lease period.


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2. Investments

Investments are accounted for in accordance with the extant RBI

guidelines on investment classification and valuation as given below.

a) All investments are classified into ''Held to Maturity'', ''Available

for Sale'' and ''Held for Trading''.

b) ''Held to Maturity'' securities are carried at their acquisition cost

or at amortized cost, if acquired at a premium over the face value. Any

premium over the face value of fixed rate and floating rate securities

acquired is amortized over the remaining period to maturity on a

constant yield basis and straight line basis respectively.

c) Costs including brokerage and commission pertaining to investments,

paid at the time of acquisition, are charged to the profit and loss

account.

d) Equity investments in subsidiaries/joint ventures are categorized as''Held to Maturity'' in accordance with RBI guidelines. The Bank assesses

these investments for any permanent diminution in value and appropriate

provisions are made.

3. Provisions/write-offs on loans and other credit facilities

a) All credit exposures, including advances at the overseas branches

and overdue arising from crystallized derivative contracts, are

classified as per RBI guidelines, into performing and NPAs. Advances


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held at the overseas branches that are identified as impaired as per

host country regulations but which are standard as per the extant RBI

guidelines are identified as NPAs at borrower level. Further, NPAs are

classified into sub-standard, doubtful and loss assets based on the

criteria stipulated by RBI.

The Bank holds specific provisions against non-performing loans,

general provision against performing loans and floating provision taken

over from erstwhile Bank of Rajasthan upon amalgamation. The assessment

of incremental specific provisions is made after taking into

consideration the existing specific provision held. The specific

provisions on retail loans held by the Bank are higher than the minimum

regulatory requirements.

b) Provision on assets restructured/rescheduled is made in accordance

with the applicable RBI guidelines on restructuring of advances byBanks.

c) Amounts recovered against debts written-off in earlier years and

provisions no longer considered necessary in the context of the current

status of the borrower are recognized in the profit and loss account.

d) In addition to the specific provision on NPAs, the Bank maintains a

general provision on performing loans. The general provision covers the

requirements of the RBI guidelines.

4. Transfer and servicing of assets


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The Bank transfers commercial and consumer loans through securitization

transactions. The transferred loans are de-recognized and gains/losses

are accounted for only if the Bank surrenders the rights to benefits

specified in the underlying securitized loan contract. Recourse and

servicing obligations are accounted for net of provisions.

a) Depreciation on leased assets and leasehold improvements is

recognized on a straight-line basis using rates determined with

reference to the primary period of lease or rates specified in Schedule

XIV to the Companies Act, 1956, whichever is higher.

b) Assets purchased/sold during the year are depreciated on a pro-rata

basis for the actual number of days the asset has been put to use.

c) Items costing up to Rs 5,000/- are depreciated fully over a period of

12 months from the date of purchase.

d) Assets at residences of Banks employees are depreciated at 20% P.A

5. Transactions involving foreign exchange

Foreign currency income and expenditure items of domestic operations

are translated at the exchange rates prevailing on the date of the

transaction. Income and expenditure items of integral foreign

operations (representative offices) are translated at daily closing

rates, and income and expenditure items of non-integral foreign

operations (foreign branches and offshore banking units) are translated


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at quarterly average closing rates.

6. Accounting for derivative contracts

The Bank enters into derivative contracts such as foreign currency

options, interest rate and currency swaps, credit default swaps and

cross currency interest rate swaps.

7. Staff Retirement Benefits Gratuity

ICICI Bank makes contributions to five separate gratuity funds for employees.

Separate gratuity funds for employees inducted from erstwhile ICICI, erstwhile

Bank of Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan are

managed by ICICI Prudential Life Insurance Company Limited.

The gratuity fund for employees of ICICI Bank, other than employees inducted

from erstwhile ICICI, erstwhile Bank of Madura, erstwhile Sangli Bank anderstwhile Bank of Rajasthan is administered by Life Insurance Corporation of

India (LIC) and ICICI Prudential Life Insurance Company Limited.

Pension

The Bank purchases annuities from LIC and ICICI Prudential Life Insurance

Company Limited as part of master policies for payment of pension to retired

employees.

Actuarial valuation of pension liability is calculated based on certain


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assumptions regarding rate of interest, salary growth, mortality and

staff attrition as per the projected unit credit method.

Provident Fund

ICICI Bank is statutorily required to maintain a provident fund as a part of

retirement benefits to its employees. There are separate provident funds for

employees inducted from erstwhile Bank of Madura, erstwhile Sangli

Bank, erstwhile Bank of Rajasthan and for Other employees of ICICI Bank.

In-house trustees manage these funds. Each employee contributes 12.0% of

his or her basic salary (10.0% for certain staff of erstwhile Sangli Bank)

and ICICI Bank contributes an equal amount. The funds are invested

according to the rules prescribed by the Government of India.

Leave encashment

The Bank provides for leave encashment benefit, which is a long-term benefitscheme, based on actuarial valuation conducted by an independent actuary.

8. Income Taxes

Income tax expense is the aggregate amount of current tax and deferred

tax expense incurred by the Bank. The current tax expense and deferred

tax expense is determined in accordance with the provisions of the

Income Tax Act, 1961 and as per Accounting Standard 22 - Accounting for

Taxes on Income issued by ICAI, respectively. Deferred tax adjustments


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comprise changes in the deferred tax assets or liabilities during the year.

Deferred tax assets and liabilities are recognized on a prudent basis for the

future tax consequences of timing differences arising between the carrying

values of assets and liabilities and their respective tax basis, and carry forward

losses.

9. Impairment of Assets

Fixed assets are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount of an asset may not be

recoverable. Recoverability of assets to be held and used is measured

by a comparison of the carrying amount of an asset with future net

discounted cash flows expected to be generated by the asset. If such

assets are considered to be impaired, the impairment is recognized by

debiting the profit and loss account and is measured as the amount bywhich the carrying amount of the assets exceeds the fair value of the

assets.

10. Provisions, contingent liabilities and contingent assets

The Bank estimates the probability of any loss that might be incurred

on outcome of contingencies on the basis of information available up to

the date on which the financial statements are prepared. A provision is

recognized when an enterprise has a present obligation as a result of a


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past event and it is probable that an outflow of resources will be

required to settle the obligation, in respect of which a reliable

estimate can be made. Provisions are determined based on management

estimates of amounts required to settle the obligation at the balance

sheet date, supplemented by experience of similar transactions. These

are reviewed at each balance sheet date and adjusted to reflect the

current management estimates.

11. Earnings per share (EPS)

Basic and diluted earnings per share are computed in accordance with

Accounting Standard-20 - Earnings per share.

Basic earnings per share is calculated by dividing the net profit or

loss after tax for the year attributable to equity shareholders by the

weighted average number of equity shares outstanding during the year.

12. Cash and cash equivalents

Cash and cash equivalents include cash in hand, balances with RBI,

balances with other banks and money at call and short notice.

CHAPTER : 4


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OBJECTIVE OF THE STUDY OF

PUNJAB NATIONAL BANK

The main objectives of this project are the following:

To study about PUNJAB NATIONAL BANK and its related aspects like itsproducts & services, history, organizational structure, subsidiary companies etc.

To analyze the financial statement i.e P&L account and Balance sheet ofPNB BANK.

To learn about Cash Flow , Capital Structure. To understanding the meaning and need of Balance Sheet and profit and loss

account.

The purpose is to portray the financial position of PNB BANK with the helpof Balance sheet and profit and loss account.

To evaluate the financial soundness, stability and liquidity of PNB BANK.

INTRODUCTION TO PUNJAB NATIONAL BANK


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Punjab National Bank(PNB) was registered on May 19,1894 under the

Indian Companies Act with its office in Anarkali Bazaar Lahore. The Bank is the

second largest government-owned commercial bank in India with about4,904 branches across 764 cities. It serves over 37 million customers. The bank has

been ranked 248 th biggest bank in the world by Bankers Almanac, London. The

bank's total assets for financial year 2007 were about US$60 billion. Punjab

National Bank (PNB) has the distinction of being the first Indian bank to have been

started solely with Indian capital. The bank was nationalized in July 1969 along

with 13other banks.

PNB has a banking subsidiary in the UK, as well as branches in Hong Kong and

Kabul, and representative offices in Almaty, Dubai, Oslo, and Shanghai. From itsmodest beginning, the bank has grown in size and stature to become a front-line

banking institution in India at present. A professionally managed bank with

a successful track record of over 110 years. Strategic business area covers the

largeIndo-Gangetic belt and the metropolitan centers. Strong correspondent

banking relationships with more than 217 international banks of the world. More

than 50 renowned international banks maintain their Rupee Accounts with PNB.

Well equipped dealing rooms; 20 different foreign currency accounts are

maintained at major centers all over the globe.


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HISTORY OF PUNJAB NATIONAL BANK

1895:PNB commenced its operations in Lahore.PNB has the distinction of

being the first Indian bank to have been started solely with Indian capital that

has survived to the present. (The first entirely Indian bank, the Oudh CommercialBank, was established in 1881in Faizabad, but failed in 1958 .)PNB's founders

included several leaders of the Swadeshi movement such as Dyal Singh Majithia

and Lala HarKishen Lal, Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C.

Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala

Lajpat Rai was actively associated with the management of the Bank in its early

years.

1904 :PNB established branches in Karachi and Peshawar.

1940 PNB absorbed Bhagwan Dass Bank, a scheduled bank located in Delhi circle.

1947 : Partition of India and Pakistan at Independence.

PNB lost its premises in Lahore, but continued to operate in Pakistan.

1951: PNB acquired the 39 branches of Bharat Bank (est. 1942); Bharat

Bank became Bharat Nidhi Ltd.

1961: PNB acquired Universal Bank of India.

1963: The Government of Burma nationalized PNB's branch in Rangoon

(Yangon).

1965 : After the Indo- Pak war the government of Pakistan seized all the offices

in Pakistan of Indian banks, including PNB's head office, which may have moved

to Karachi.

PNB also had one or more branches in East Pakistan (Bangladesh).

1969 : The Government of India (GOI) nationalized

PNB and 13other major commercial banks, on July 19,1969 .

1976 : PNB opened a branch in London.


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1986: The Reserve Bank of India required PNB to transfer its London branch to

State Bank of India after the branch was involved in a fraud scandal.

1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a rescue. The

acquisition added Hindustan's 142 branches to PNB's network.1993:PNB acquired New Bank of India, which the GOI had nationalized in 1980 .

1998 :PNB set up a representative office in Almaty, Kazakhstan.

2003: PNB took over Nedungadi Bank, the oldest private sector bank in Kerala.

At the time of the merger with PNB, Nedungadi Bank's shares had zero value, with

the result that its shareholders received no payment for their shares.PNB also

opened a representative office in London.

2004 : PNB established a branch in Kabul, Afghanistan. PNB also opened a

representative office in Shanghai.PNB established an alliance with Everest Bank in

Nepal that permits migrants to transfer funds easily between India and Everest

Bank's 12 branches in Nepal.

2005 : PNB opened a representative office in Dubai.

2007 : PNB established PNBIL - Punjab National Bank (International) - in the

UK, with two offices, one in London, and one in South Hall. Since then it has

opened a third branch in Leicester, and is planning a fourth in Birmingham.

2008 : PNB opened a branch in Hong Kong.

2009: PNB opened a representative office in Oslo, Norway, and a second branch

in Hong Kong, this in Kowloon.


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COMPANY PROFILE OF PUNJAB NATIONAL BANK

With over 38 million satisfied customers and 4668 offices, PNB has continued to

retain its leadership position among the nationalized banks. The bank enjoys strong

fundamentals, large franchise value and good brand image. Besides being ranked

as one of India's top service brands, PNB has remained fully committed to

its guiding principles of sound and prudent banking. Apart from offering

banking products, the bank has also entered the credit card & debit card business;

bullion business; life and non-life insurance business; Gold coins & asset

management business, etc. Since its humble beginning in 1895 with the distinctionof being the first Indian bank to have been started with Indian capital, PNB has

achieved significant growth in business which at the end of March 2009 amounted

to Rs 3,64,463 crore. Today, with assets of more than Rs 2,46,900 crore ,PNB is

ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) and has

the 2nd largest network of branches ( 4668 including 238 extension counters

and 3overseas offices. PNB has always looked at technology as a key facilitator to

provide better customer service and ensured that its IT strategy follows the

Business strategy Along with the achievement of 100%branch computerization,one of the major achievements of the Bank is covering all the branches of the Bank

under Core Banking Solution (CBS), thus covering 100% of its business and

providing Anytime Anywhere banking facility to all customers including

customers of more than 2000 rural branches. The bank has also been offering

Internet banking services to the customers of CBS branches like booking of tickets,


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payment of bills of utilities, purchase of airline tickets etc .Towards developing a

cost effective alternative channels of delivery, the bank with more

than 2150 ATMs has the largest ATM network amongst Nationalized Banks.

With the help of advanced technology, the Bank has been a frontrunner in theindustry so far as the initiatives for Financial Inclusion is concerned. With

its policy of inclusive growth in the Indo- Gangetic belt, the Banks mission

is Banking for Unbanked. The Bank has launched a drive for biometric smart

card based technology enabled Financial Inclusion with the help of

Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the

last mile customer. The BC/BF will address the outreach issue while technology

will provide cost effective and transparent services. The Bank has started

several innovative initiatives for marginal groups like rickshaw pullers, vegetable

vendors, diary farmers, construction workers, etc. The Bank has already achieved

100% financial inclusion in 21,408 villages. Backed by strong domestic

performance, the bank is planning to realize its global aspirations. In order to

increase its international presence, the Bank continues its selective foray in

international markets with presence in Hongkong, Dubai, Kazakhstan, UK,

Shanghai, Singapore, Kabul and Norway. A second branch in Hongkong at

Kowloon was opened in the first week of April 09.Bank is also in the process of

establishing its presence in China, Bhutan, DIFC Dubai, Canada and Singapore.

The bank also has a joint venture with Everest Bank Ltd. (EBL),Nepal. Under thelong term vision, Bank proposes to start its operation in Fiji Island, Australia and

Indonesia. Bank continues with its goal to become a household brand with global

expertise. Amongst Top 1000 Banks in the World, The Banker listed PNB

at 250 th place. Further, PNB is at the 1166th position among 48 Indian firms

making it to a list of the worlds biggest companies compiled by the US magazine

Forbes. Financial Performance: Punjab National Bank continues to maintain its

frontline position in the Indian banking industry. In particular, the bank has

retained its NUMBER ONE position among the nationalized banks in terms ofnumber of branches, The impressive operational and financial performance has

been brought about by Banks focus on customer based business with thrust on

SME, Agriculture, more inclusive approach to banking; better asset liability

management; improved margin management, thrust on recovery and increased

efficiency in core operations of the Bank.


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Profit & Loss account of Punjab National

Bank------------------- in Rs. Cr. -------------------



Income

Interest Earned 36,428.03 26,986.48 21,466.91 19,326.16 14,2

Other Income 4,202.60 3,612.58 3,565.31 2,919.69 1,99

Total Income 40,630.63 30,599.06 25,032.22 22,245.85 16,2

Expenditure

Interest expended 23,013.59 15,179.14 12,944.02 12,295.30 8,73

Employee Cost 4,723.48 4,461.10 3,121.14 2,924.38 2,46

Selling and Admin Expenses 3,353.59 2,813.45 1,701.46 1,406.42 884.

Depreciation 292.26 255.85 222.83 191.06 170.

Miscellaneous Expenses 4,363.51 3,456.02 3,137.42 2,337.80 1,96

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Operating Expenses 9,405.85 8,367.96 5,761.36 5,026.81 3,90

Provisions & Contingencies 3,326.99 2,618.46 2,421.49 1,832.85 1,58

Total Expenses 35,746.43 26,165.56 21,126.87 19,154.96 14,2


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Net Profit for the Year 4,884.20 4,433.50 3,905.36 3,090.88 2,04

Extra ordinary Items 7.88 0.00 0.00 0.00 0.00

Profit brought forward 0.00 0.00 7.64 0.00 15.5

Total 4,892.08 4,433.50 3,913.00 3,090.88 2,06

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 746.19 696.99 693.67 630.61 409.

Corporate Dividend Tax 121.05 113.07 116.43 107.17 69.6

Per share data (Annualized)

Earnings Per Share (Rs) 144.00 139.94 123.86 98.03 64.9

Equity Dividend (%) 220.00 220.00 220.00 200.00 130.

Book Value (Rs) 777.39 632.48 514.77 416.74 341.

Appropriations

Transfer to Statutory Reserves 1,390.32 1,258.39 1,532.46 1,155.46 596.

Transfer to Other Reserves 2,634.53 2,365.05 1,570.44 1,190.00 988.

Proposed Dividend/Transfer to Govt. 867.24 810.06 810.10 737.78 479.

Balance c/f to Balance Sheet 0.00 0.00 0.00 7.64 0.00

Total 4,892.09 4,433.50 3,913.00 3,090.88 2,06


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Balance Sheet of Punjab National Bank ------------------- in Rs. Cr. -------------------



Capital and Liabilities:

Total Share Capital 339.18 316.81 315.30 315.30 315.

Equity Share Capital 339.18 316.81 315.30 315.30 315

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 26,028.37 19,720.99 15,915.63 12,824.59 10,4

Revaluation Reserves 1,449.53 1,470.76 1,491.99 1,513.74 1,53

Net Worth 27,817.08 21,508.56 17,722.92 14,653.63 12,3

Deposits 379,588.48 312,898.73 249,329.80 209,760.50 166

Borrowings 37,264.27 31,589.69 19,262.37 4,374.36 5,44

Total Debt 416,852.75 344,488.42 268,592.17 214,134.86 171,

Other Liabilities & Provisions 13,524.18 12,328.27 10,317.69 18,130.13 14,7

Total Liabilities 458,194.01 378,325.25 296,632.78 246,918.62 199,


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Assets

Cash & Balances with RBI 18,492.90 23,776.90 18,327.58 17,058.25 15,2

Balance with Banks, Money at Call 10,335.14 5,914.32 5,145.99 4,354.89 3,57

Advances 293,774.76 242,106.67 186,601.21 154,702.99 119,

Investments 122,629.47 95,162.35 77,724.47 63,385.18 53,9

Gross Block 5,265.08 4,981.60 4,215.21 3,930.36 3,69

Accumulated Depreciation 2,096.22 1,876.01 1,701.74 1,533.25 1,38

Net Block 3,168.86 3,105.59 2,513.47 2,397.11 2,31

Capital Work In Progress 0.00 0.00 0.00 0.00 0.00

Other Assets 9,792.88 8,259.42 6,320.07 5,020.20 4,38

Total Assets 458,194.01 378,325.25 296,632.79 246,918.62 199,

Contingent Liabilities 173,768.84 101,465.73 68,124.47 79,270.65 80,6

Bills for collection 50,981.22 37,449.53 33,215.78 31,941.43 23,4

Book Value (Rs) 777.39 632.48 514.77 416.74 341


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Cash Flow of Punjab National Bank ------------------- in Rs. Cr. -------------------

Mar '12 Mar '11 Mar '10 Mar '09 Ma

12 mths 12 mths 12 mths 12 mths 12

Net Profit Before Tax 7037.04 6563.72 5904.78 4766.92 329

Net Cash From Operating Activities -811.22 8045.67 1835.99 2105.16 175

Net Cash (used in)/from

Investing Activities-492.34 -1083.66 -409.41 -395.84 -44

Net Cash (used in)/from Financing Activities 440.38 -744.36 633.84 873.11 187

Net (decrease)/increase In Cash and Cash

Equivalents-863.18 6217.65 2060.42 2582.42 318

Opening Cash & Cash Equivalents 29691.21 23473.56 21413.14 18830.72 156

Closing Cash & Cash Equivalents 28828.03 29691.21 23473.56 21413.14 188


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Capital Structure (Punjab National Bank)

Period Instrument Authorized

Capital

Issued Capital - P A I D U P -

From To (Rs. cr) (Rs. cr) Shares (nos) Face Value C

2011 2012 Equity Share 3000 339.18 339178683 10 3

2010 2011 Equity Share 3000 316.81 316812157 10 3

2009 2010 Equity Share 3000 315.3 315302500 10 3

2008 2009 Equity Share 1500 315.3 315302500 10 3

2007 2008 Equity Share 1500 315.3 315302500 10 3

2006 2007 Equity Share 1500 315.3 315302500 10 3

2005 2006 Equity Share 1500 315.3 315302500 10 3

2004 2005 Equity Share 1500 315.3 315302500 10 3

2003 2004 Equity Share 1500 265.3 265302500 10 2

2002 2003 Equity Share 1500 265.3 265302500 10 2

2001 2002 Equity Share 1500 265.3 212241300 10 2


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49

CHAPTER : 5

ADVANTAGES & LIMITATIONS

Ratio analysis is an important and age-old technique of financial analysis. The

following are some of the advantages of ratio analysis:

1. Simplifies financial statements: It simplifies the comprehension of financial

statements. Ratios tell the whole story of changes in the financial condition of the

business.

2. Facilitates inter-firm comparison: It provides data for inter-firm comparison.Ratios highlight the factors associated with with successful and unsuccessful firm.

They also reveal strong firms and weak firms, overvalued and undervalued firms.

3. Helps in planning: It helps in planning and forecasting. Ratios can assist

management, in its basic functions of forecasting. Planning, co-ordination, control

and communications.

4. Makes inter-firm comparison possible: Ratios analysis also makes possible

comparison of the performance of different divisions of the firm. The ratios arehelpful in deciding about their efficiency or otherwise in the past and likely

performance in the future.

5. Help in investment decisions: It helps in investment decisions in the case of

investors and lending decisions in the case of bankers etc.


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50

LIMITATIONS

The ratios analysis is one of the most powerful tools of financial management.

Though ratios are simple to calculate and easy to understand, they suffer from

serious limitations.1.Limitations of financial statements: Ratios are based only on the information

which has been recorded in the financial statements. Financial statements

themselves are subject to several limitations. Thus ratios derived, there from, are

also subject to those limitations. For example, non-financial changes though

important for the business are not relevant by the financial statements.

2.Comparative study required: Ratios are useful in judging the efficiency of the

business only when they are compared with past results of the business. However,

such a comparison only provide glimpse of the past performance and forecasts for

future may not prove correct since several other factors like market conditions,

management policies, etc. may affect the future operations.

3.Problems of price level changes: A change in price level can affect the validity

of ratios calculated for different time periods. In such a case the ratio analysis may

not clearly indicate the trend in solvency and profitability of the company.

4. Lack of adequate standard: No fixed standard can be laid down for ideal

ratios. There are no well accepted standards or rule of thumb for all ratios which

can be accepted as norm. It renders interpretation of the ratios difficult.

5.Limited use of single ratios: A single ratio, usually, does not convey much of a

sense. To make a better interpretation, a number of ratios have to be calculated

which is likely to confuse the analyst than help him in making any good decision.

6. Personal bias: Ratios are only means of financial analysis and not an end in

itself. Ratios have to interpret and different people may interpret the same ratio in

different way.

7.Incomparable: Not only industries differ in their nature, but also the firms of

the similar business widely differ in their size and accounting procedures etc. It

makes comparison of ratios difficult and misleading.


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51

CHAPTER : 6

CONCLUSION

Ratios make the related information comparable. A single figure by itselfhas no meaning, but when expressed in terms of a related figure, it yields

significant interferences. Thus, ratios are relative figures reflecting the

relationship between related variables. Their use as tools of financial

analysis involves their comparison as single ratios, like absolute figures, are

not of much use.

Ratio analysis has a major significance in analysing the financialperformance of a company over a period of time. Decisions affecting

product prices, per unit costs, volume or efficiency have an impact on the

profit margin or turnover ratios of a company.

Financial ratios are essentially concerned with the identification ofsignificant accounting data relationships, which give the decision-maker

insights into the financial performance of a company.

The analysis of financial statements is a process of evaluating therelationship between component parts of financial statements to obtain a

better understanding of the firm position and performance.

The first task of financial analyst is to select the information relevant to thedecision under consideration from the total information contained in the

financial statements. The second step is to arrange the information in a way

to highlight significant relationships.

Ratio analysis in view of its several limitations should be considered only asa tool for analysis rather than as an end in itself. The reliability and

significance attached to ratios will largely hinge upon the quality of data on

which they are based. They are as good or as bad as the data itself.

Nevertheless, they are an important tool of financial analysis.


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BIBLIOGRAPHY & WEBLOGRAPHY

Web sites :

www.sbi.com www.icici.com www.pnb.com

Books referred :

Basic Financial Management - M Y Khan

P K Jain

Financial Management - Prasanna Chandra
http://www.google.co.in/url?sa=t&rct=j&q=WEBLOGRAPHY&source=web&cd=5&ved=0CDgQFjAE&url=http%3A%2F%2Fvamenro.blogs.uv.es%2Fpoetry%2F1-first-paper%2F1-6-weblography%2F&ei=rhiJUMnfFM_OrQf11ICwAw&usg=AFQjCNGivRukgku2LMFxfI-Aeg7rm72S5Ahttp://www.google.co.in/url?sa=t&rct=j&q=WEBLOGRAPHY&source=web&cd=5&ved=0CDgQFjAE&url=http%3A%2F%2Fvamenro.blogs.uv.es%2Fpoetry%2F1-first-paper%2F1-6-weblography%2F&ei=rhiJUMnfFM_OrQf11ICwAw&usg=AFQjCNGivRukgku2LMFxfI-Aeg7rm72S5Ahttp://www.sbi.com/http://www.icici.com/http://www.pnb.com/http://www.pnb.com/http://www.icici.com/http://www.sbi.com/http://www.google.co.in/url?sa=t&rct=j&q=WEBLOGRAPHY&source=web&cd=5&ved=0CDgQFjAE&url=http%3A%2F%2Fvamenro.blogs.uv.es%2Fpoetry%2F1-first-paper%2F1-6-weblography%2F&ei=rhiJUMnfFM_OrQf11ICwAw&usg=AFQjCNGivRukgku2LMFxfI-Aeg7rm72S5A

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