Description
Financial statement analysis consists of 1) reformulating reported financial statements, 2) analysis and adjustments of measurement errors, and 3) financial ratio analysis on the basis of reformulated and adjusted financial statements.
INTRODUCTION
MEANING OF FINANACIAL STATEMENTS: A financial statement is collection of data organized according to logical and consistent accounting procedures. The term financial analysis also known as analysis interpretation of financial statements refers to the process of determining financial strengths and weakness of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss a/c and other operative data. DEFINITION OF FINANACIAL STATEMENT ANALYSIS: According to “Metcalf and titard” “It is a process of evaluating the relationship between component part of a financial statement to obtain a better understanding of a firm’s position and performance. According to “Myer” “Financial statement analysis is largely a study of relationship among the various financial factors in a business as distinction by a single set of statements and a study of the trend of these factors as shown in a series of statements”. The term “financial statement analysis” includes both ‘analyses’ and ‘interpretations’. A distinction should therefore to make between these two terms. While the term analysis is used to mean the simplification of financial data by methodical classification of the data given in the financial statements
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‘Interpretation’ means explaining the meaning and significance of the data so simplified. NATURE OF STUDY The financial statements are prepared on the basis of recorded facts. The encored facts are those, which can be expressed, in monitory terms. The statements are prepared for a particular period, generally one year. The following points explain the nature of financial statements. (1). RECORDED FACTS: The term ‘recorded facts’ refers to the data taken out from the accounting records. The records are maintained on the basis of actual cost data. The original cost or historical cost is the basis of recording various transactions. (2). ACCOUNTING CONVENTIONS: Certain accounting conventions are followed while preparing financial statements. The use of accounting conventions makes financial statements comparable, simple and realistic. (3). POSTULATES: The accountant makes certain assumptions while making accounting records. One of these assumptions is that the enterprise is treated as a going concern.
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(4). PERSONAL JUDGMENT: Even though certain standard accounting conventions are followed in preparing financial statements but still personal judgment of the accountant plays an important. OBJECTIVES OF THE STUDY Financial statements are the sources of information on the basis of which conclusions drawn about the profitability and financial position of a concern. The following are the objectives of this study. ? To study the performance ANDHRA PRADESH GRAMEENA VIKAS
BANK, NALGONDA. ? To provide reliable information about economic resources and
obligations of a Bank. ? To provide other needed information about changes in such economic
resources and obligations. ? To provide reliable information about changes in net resources arising
out of Bank. ? To provide financial information that assists in estimating the earning
potentials of Bank. ? ? ? To expand market area, to increase the depth of market and enhance the
market share. To pool and use manpower resources efficiently. To create a strong market leader and force to be reckoned with in the
eight districts of AP
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IMPORTANCE OF THE STUDY: The financial statements are mirror, which reflects the financial position and operating strength or weakness of the concern. The following uses of financial statement analysis ? ? ? ? ? As a basis for granting of credit As information for prospective investor in an enterprise As an aid to government supervision As a basis for rate regulation As a basis of taxation
The utility of financial statements to different parties: (1). MANAGEMENT: The financial statements are useful for assessing the efficiency for different cost centers. The management is able to exercise cost control through these statements. (2). INVESTORS: The Investors both short-term and long-term investors. The investors will study the long-term solvency of the concern with help of financial statement analysis. (3). BANKERS: The banker is interested to see that the loan amount is secure and customer is also able to pay the interest regularly. The banker will analyze the balance sheet to determine financial strength of the firm.
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(4). GOVERNMENT: The financial statements are used to assess tax liability of business enterprise. The government studies economic situation of the country from these statements. These statements also become a base for forming and amending various laws for the regulation of business. (5). TRADE ASSOCIATIONS: These associations provide service and protection to the members they may analyze financial statements for the purpose of providing facilities to these members. (6). STOCK EXCHANGE: The stock exchange deals in purchase and sale of securities of different companies. The fixation of prices for securities etc. is also based on these statements.
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INTRODUCTION:
Government of India decided in 2006 for amalgamation of RRB’s sponsored by some bank in the same state. Accordingly vide their notification dated 31-3-2007 notified formation of Andhra pradesh Grameena vikas bank by amalgamation of the following five RRB’s sponsored by State Bank of India in AP.
Name of the RRB
Date of establishment
Area of operation
Nagarjuna Grameena Bank
30-04-76
Khammamand Nalgonda districts
Sri Visakha Grameena Bank
30-09-76
Srikakulam, Vizianagara and Visakapatnam districts
Sangameshwara Grameena Bank
31-03-82
Mahabubnagar district
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Manjira Grameena Bank Kakathiya Grameena Bank
31-03-82 28-06-82
Medak district Warangal district
All the transferor RRB’s were earning profits and possess commonality in composition of their clientele mainly comprising of farmers and rural artisans with a sprinkling of traders and businessmen. The loans disbursed by these RRB’s are strikingly similar in activities, crops financed etc. The Nagarjuna Grameena Bank was established on 30th April 1976 under RRB’s Act, 1976. It has the privilege of being the 1 st RRB in the State of Andhra Pradesh. Sponsored by State Bank of India. The Bank, with its Head Office at Khammam. And the Branch at Nalgonda
DIRECTORS:
The company shall have not less than 2 and not more than 9 directors including special, technical Additional, Alternate, and Director, if any. They shall hold such office for life or till they decide to resign on there own and such resignation is accepted at a meeting the Board. MEMBERS OF ERSTWHILE RRB’s BOARD AS ON THE DATE OF AMALGAMATION
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SRI VISAKHA GRAMEENA BANK. SRIKAKULAM
Sno.
Name of the Director
Representing Office & Designation
1 2 3 4
Shri A. Anantha Krishna Shri D. Ravindra Babu Shri C.V. Subba Rao Shri G.J.P. Varakumar
Chairman Nominee Director of Central Govt. Nominee Director of Central Govt. DGM, RBI. Hyderabad, (Nominee Director of RBI)
5
Shri D. Nageshwar Rao
AGM, DDM, NABARD (Nominee Director NANARD)
6
Shri S.K. Chaudhuri
DGM, SBI, Zonal Office (Nominee Director of SBI)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI LHO,
Hyderabad (Nominee Director of Sponsor Bank) 8 Dr. A.V.V.S Prasad
8
P.D., D.R.D.A. Vizianagaram
(Nominee Director of Govt. of A.P.) 9 Shri D. Dakshina Murthy P.D., D.R.D.A. Srikakulam (Nominee Director of Govt. of A.P.)
NAGARJUNA GRAMEENA BANK, KHAMMAM
Sno. 1 2 3 4
Name of the Director Shri V. Vishwanadha Rao Shri K. Laxman Rao Shri B.Somi Reddy Shri M. Chandrasekharan
Representing Office & Designation Chairman Nominee Director of Central Govt. Nominee Director of Central Govt. DGM, RBI. Hyderabad, (Nominee Director of RBI)
5
Shri M.J. Srinivasulu
AGM, DDM, NABARD (Nominee Director of NABARD)
6
Shri M. Bhagavantha Rao
DGM, SBI, Zonal Office (Nominee Director of SBI)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI LHO,
Hyderabad (Nominee Director of Sponsor Bank) 8 Shri H. Arunkumar
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P.D., D.R.D.A. Khammam
(Nominee Director of Govt. of A.P.) 9 Smt. Sunitha M Bhagawath P.D., D.R.D.A. Nalgonda (Nominee Director of Govt. of A.P.)
SANGAMESHWARA GRAMEENA BANK, MAHABUBNAGAR.
Sno. 1
Name of the Director Shri M. Krishna Rao
Representing Office & Designation Chairman
2
Shri K. Anjaneyulu
Nominee Director of Central Govt.
3
Shri G. Padmaja Reddy
Nominee Director of Central Govt.
4
Shri P.V. Ratnam
AGM, Estate Dept. RBI, Hyderabad, (Nominee Director of RBI)
5
Shri D. Ravindar
AGM, DDM, NABARD, Mahabubnagar (Nominee Director of NANARD)
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6 Hyderabad
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI LHO,
(Nominee Director of Sponsor Bank)
7
Shri K. Raghunandan
AGM, RBO, SBI, Mahabubnagar (Nominee Director of Sponsor Bank)
8
Shri Nawab
P.D., D.R.D.A. Mahabubnagar (Nominee Director of Govt. of A.P.)
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Smt. P. Janardhan Reddy
Executive Director, Dist, SCSCS Ltd.,
Mahabubnagar (Nominee Director of Govt. of A.P.) MANJIRA GRAMEENA BANK, SANGAREDDY (MEDAK) Sno. 1 Name of the Director Shri V.V. Govardhan Rao Representing Office & Designation Chairman
2
Shri K.Rama Krishna, I.A.S (Retd) Nominee Director of Central Govt.
3
Shri A. Vishnuvardhan Reddy
Nominee Director of Central Govt.
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4
Shri G. Mohan
AGM, FE Dept. RBI, Hyderabad, (Nominee Director of RBI)
5
Shri C.V. Krishna Murthy
AGM, DDM, NABARD, (Nominee Director of NANARD)
6
Shri M. Dakshina Murthy
AGM, Region-III, SBI Sangareddy (Nominee Director of Sponsor Bank)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI, LHO
Hyderabad (Nominee Director of Sponsor Bank)
8
Dr. Vani Mohan, I.A.S
P.D., D.R.D.A. Sangareddy (Nominee Director of Govt. of A.P.)
9 Ltd.,
Smt. Satyanarayana
Executive Director, Dist, SCSCS
Sangareddy (Nominee Director of Govt. of A.P.)
KAKATHIYA GRAMEENA BANK, WARANGAL
Sno. 1
Name of the Director Shri T.L. Hariharan
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Representing Office & Designation Chairman
2
Shri K. Dasharatham
Nominee Director of Central Govt.
3
Shri Ch. Ratnakar Reddy
Nominee Director of Central Govt.
4
Smt. Anitha Srinivasan
AGM, DAPM, RBI, Hyderabad, (Nominee Director of RBI)
5
Shri G. Nagabhushanam
AGM, DDM, NABARD, (Nominee Director of NANARD)
6
Shri V.Venkata Ramana Reddy
AGM, RBO, SBI, Warangal (Nominee Director of Sponsor Bank)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI, LHO
Hyderabad (Nominee Director of Sponsor Bank)
8
Shri M. Udaya Bhaskar
P.D., D.R.D.A. Warangal (Nominee Director of Govt. of A.P.)
9 Ltd.,
Shri Krishna Reddy
Executive Director, Dist, SCSCS
Warangal
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(Nominee Director of Govt. of A.P.) BOARD OF DIRECTORS Chairman 1. I A. Anantha Krishna (DGM on deputation from State Bank of India) Nominees of Central Government under Section 9(1) (a) of Regional Rural Bank Act, 1976 Nominees of Reserve Bank of India under Sekharan Section 9 (1) (b) Of the Regional Rural Bank’s Act, 1976 Deputy General Manager Urban Banks Department Reserve Bank of India Regional Office, Secretariat Road Hyderabad.
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: 2. Yet to be appointed :3.Yet to be appointed
: 4. Shri. M. Chandra
Nominees of NABARD under Section 9 (1) (c) of the Regional Rural Bank Act, 1976 and Rural
: 5. Shri. R.S Jagdale Deputy general Manager National Bank for Agriculture
Development, 1-1-61, RTC ‘X’ Roads, Musheerabad, Hyderabad Nominees of State Bank of India under Section 9 (1) (d) of the Regional Rural (ABU) Bank’s Act, 1976 State Bank of India Local Hyderabad 7. Shri G.Y.R.S.K. Acharyulu, Asst. General Manager (LB & RRBs)
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: 6. Shri Ch. H Narsimha Rao Deputy General Manage
Head
Office,
Regional Department
Rural
Banks
Local Head Office, Hyderabad Nominees of State Government under Section 9 (1) (e) of Regional Rural Bank’s institutional Finance Act, 1976 Hyderabad. 9. Smt. K. Damayanthi, IAS Collector Magistrate, Warangal CHAIRMEN: The Board of Directors shall elect Chairmen from amongst them selves once in a year. The Chairmen shall preside over the meetings of the Board of Directors. In the absence of the Chairmen, the managing director if any or any Director elected for the purpose shall preside over the meetings of the Board of the Directors.
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: 8. Shri A. Giridhar, IAS Commissioner for
Deportment, AP Secretariat,
and
District
ANANTHA KRISHNA (Chairman)
THE OBJECTIVES OF THE BANK: The primary objective of the amalgamation of these RRBs is the synergy that will be created by effecting economy in administration and reduction in cost of marketing products over a wide area. The objectives are summarized as under: ? To expand market area, to increase the depth of market and enhance the market share ? To obtain higher rate of growth ? To facilitate economies of scale ? To pool and use manpower resources efficiently ? To create a strong market leader and force to be reckoned with in the eight districts of AP. CORPORATE VALUATION: The Govt. of India and provisions perceive the amalgamation concept of RRBs for such amalgamation has been incorporated in sub section (1) of section 23A of the Regional Rural Banks Act.1976 (21 of 1976). The share holders of RRBs, Viz. Government of India, Sponsor Bank and the respective State
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Government contribute to the subscribed and paid up share capital in the pattern of 50:35:15. Capital structure: In terms of section 5 of the RRB Act 1976, the authorized capital of the transferee RRB (amalgamated RRB) shall be Rs 5 crores divided in 5 Lakh number of fully paid share of Rs 100 each. The subscribed share capital of the amalgamated 5 RRBs shall be equal to the subscribed share capital of transferor RRBs. Name of the amalgamated RRB: Considering all aspects, the Local Head Office, State Bank of India, Hyderabad has recommended that the amalgamated RRB shall be called as “Andhra Pradesh Grameena Vikas Bank” with its Head Quarters at Warangal. Operational Area: The five RRBs sponsored by SBI in Andhra Pradesh cover 8 districts, viz., Warangal (KGB), Medak (MGB), Khammam and Nalgonda (NGB), Mahabubnagar (SGB) and Srikakulam, Vizianagaram and Visakhapatnam (SGVB). The amalgamated RRB will cover all the 8 districts with geographical
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area of 94,700 sq kms. With a larger network of 483 branches and aggregate owned funds of Rs 197.07 crores. The amalgamated RRB (APGVB) will become stronger and competent to enhance business comprehensively. ? Srikakulam district located in northeastern part of Andhra Pradesh with a total area of 5837 sq kms divided into 3 divisions, with a population of 25.38 lakhs. ? Vizianagaram district extends over an area of 6539 sq kms with the population of 22.45 lakhs. ? Visakhapatnam district is located in north coastal of the state with a geographical area of 11161 sq kms having 38.32 lakhs population. ? Khammam district population is 25.65 lakhs and the geographical area is
16.029 sq kms. ? Nalgonda district population is 32.43 lakhs as per 2001 census and the
total area of the district is 13662 sq kms. ? Mahabubnagar district the area is 18432 sq kms, predominantly a
drought prone area. The river Tungabhadra and Krishna flow through the district. ? Medak district geographical area is 9699 sq kms, adjacent to twin cities
of Hyderabad and Secunderabad.
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?
Warangal district geographical area is 12746 sq kms with dry
temperature ranging between 50 and 10 degrees centigrade. Organizational Structure: The amalgamated RRB (APGVB) consists of a three-tier structure, viz., Head Office, Controlling Office and branches. The Controlling Office in the middle tier will cover 50 to 100 branches and will be headed by General manager (SMGS-V- AGM) deputed from the Sponsor Bank. HEAD OFFICE
Controlling Offices
Branches
Personnel Policy: The service Regulations of RRBs were implemented in 1981 and the RRB staff is governed by the Appointment and Promotions Rules 1998. The staff of the amalgamated RRB will also be governed by the same regulations and rules subject to any changes and amendments to be made by the Government of India.
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Human Resources: The Bank has total staff strength of 2272 as on 31st March 2006. Of these 1314 were Officers, 641 Clerical staff and the remaining 317 belong to sub staff cadre. Sponsor Bank Staff: Chairman Scale TEG-VI 1 5 (V) 1 (IV) 1 (III) 1 (III) 9 General Managers Chief Inspector Manager (Vig & DP) TOTAL
RRB Staff:
MMG-III MMG-II O 57 369
OJM-I 888
Clerk/Cashier 641
Sub StaffTOTAL 317 2272 2 1314 4.70
fficers on cross deputation from other RRBs (Internal Auditors) Total officers Per Branch Staff Position
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Promotions: As a part of human resources management, to motivate the staff members to work zeal and enthusiasm, to face the emerging challenges, and recognizing the performance the promotions have been effected in all cadres during the year as per the approvals accorded by the Sponsor Bank. The Bank has followed reservation policies advised by NABARD, Sponsor Bank with the approval of Government of India. In respect of promotions effected for various cadres are furnished below. Sl No Promoted as Total No. of staff promoted 2007 1 2 3 4 5 SCALE-I SCALE-II SCALE-III CLERKS TOTAL 55 88 9 18 170 2008 56 58 13 13 140 SC 30 17 2 13 62 ST 8 7 2 17 SC 19 11 7 18 15 ST 5 11 2 4 No. of employees Percentage belong to
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BUSINESS PROFILE: (Rscrores) Sl No Particulars KGB MGB NGB SGB SVGB RRB (APGVB) 1 2 3 4 Deposits Advances CD Ratio Productivity i) Per Branch ii) Per Employee 5 Recovery performance% 6 Gross NPA (%) 7 8 Profit Accumulated losses -2.69 18.31 5.88 3.74 7.60 8.53 23.06 4.62 8.76 3.65 5.33 6.99 6.05 60 80 76 94 93 77.13 9.51 2.19 11.39 2.20 7.52 1.60 9.16 2.22 7.06 1.45 8.28 1.76 197.12 182.86 93 420.59 308.53 73.3 637.61 460.91 72.3 351.08 290.48 82.7 582.54 568.95 97.6 2188.94 1811.73 82.8
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Bank’s Operations Deposits: Deposits being the important and main resource for Banking business, intensive thrust for expanding the stable base of individual deposits was given, in addition to focus on game ring of institutional deposits during the year. The steady growth in deposits has helped the Bank in improving its deposits portfolio comfortably. The total deposits of the Bank increased by Rs 313.67 crores with a growth of 16.72% for the year 2008-2009. The level of deposits stood at Rs 6698.94 crores as on 31.03.2009 surpassing the MOU targeted level of Rs 7677.91 crores with a market share of 10.43%. Institutional and non-institutional deposits: (Rs in lakh)
Segment Institutional Deposits Non-institutional Deposits
Mar 08 43328 144199
Percentage 23 77
Mar 09 48157 170737
Percentage 22 78
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Demand and time deposits:
(Rs in lakh)
Segment Demand Deposits Time Deposits
Mar 08 91208
Percentage 49
Mar 09 115541
Percentage 53
96319
51
103353
47
Types of Deposits: i. ii. iii. Saving Deposit Current Deposit Term Deposit Schemes
? Special term deposit scheme ? Short term deposit scheme ? Fixed deposit scheme ? Recurring deposits scheme
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Interest rates: The Bank adopted a policy of revising the interest rates to cope up with the market conditions, cost of funds, yield on advances and investments vis-àvis other market players enabled in improving performance and profitability. Since different interest rates are in vogue in each transferor RRB, a uniform interest rates structure adopted for Deposits and Advances as under. Deposits Period 15 days to 45 days 46 days to 179 days 180 days to less than 1 year 1 year to less than 2 years 2 years to less than 5 years 5 years and above Interest rate 5.25 5.75 6.00 6.25 6.50 7.00
Senior citizens are offered 1% more for term deposits for a period of one year and above
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Loans and Advances: The Bank has drawn up an ambitions action plan for increasing flow of credit to the Agriculture Sector besides rescheduling of agricultural loans and extending necessary relief measures to the affected farmers have been given top priority. The Bank has disbursed Rs 830.91 crore towards to the agricultural loans during Kharif 2007. The target fixed for doubling of credit to agriculture was fixed on the outstanding amount of Rs 547.16 crore on 31.03.2006 which multiplies to Rs 1094.32 crores as against the outstanding amount of Rs 1004.35
Total Advances Levels as on 31.03.2007 Levels as on 31.03.2008 MOU settled for 2007-2009 Growth achieved up to 31.03.2008 Percentage of growth achieved 18.26 153197 181173 186894 27976
NTG Advances 34677 38170 45620 3493
10.07
crores as on 31.03.08 with a credit gap of Rs 89.97 crores. The gap can be filled comfortably during the current year since the projections of
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agricultural advances is Rs200 crores. The Bank has recorded an unprecedented growth of Rs 279.76 crores in loans and advances taking of aggregate level of advances to Rs 1811.73 crores with a market share of 11.33%. The non-priority sector lending includes personal loans to public and commercial complexes,. Consumption, gold loans etc. the Non Target Group lending for 2007 – 08 stood at Rs381.70 crores as compared to Rs 346.77 crores in 2006– 2007, recording a growth of over 10%.
Types of Advances:
1. Personal Advances 2. Commercial and institutional advances ? Rent plus scheme ? Total package for financing traders ? O.D. cash credit to contractors. ? Vehicle loans to corporate ? Take over of advances other then trade and services ? Take over of advances trade and services
1. Small scale industries
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2. Small business finance 3. Agriculture advances
Interest rates:
The Bank adopted a policy of revising the interest rates to cope up with the market conditions, cost of funds, yield on advances and investments vis-àvis other market players enabled in improving performance and profitability. Since different interest rates are in vogue in each transferor RRB, a uniform interest rates structure adopted for Deposits and Advances as under. Advances SN Segment Up to Rs 25000 Rs 25001 to 50000 Up to Rs 50000 Above Rs 50000 3 Allied Agricultural Term loans Up to Rs 50000 Above Rs 50000 4 ISB-Cash credits, Term Loans and Composite Term Loans including Transport Operators. Up to Rs 200000 Above Rs 200000 Int. rates 10% 11% 11% 12% 11% 12% 12% 13%
1 Crop loans including AGL, RMG, KCC 2 Agricultural Term loans
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5 Self Help Groups
Direct to Groups Through MACS/VO
10% 11% 13%
6 Gold Loan-Personal Purpose 7 Consumer Durables and Personal Loans Up to Rs 50000 Above Rs 50000/(Up to max. Rs 1 lakh) 8 Mortgage Loans 9 Housing Loans Up to Rs 300000 Above Rs 300000 For Repairs and Up gradation (Maximum Rs 2 lakhs) 10 Education Loans Up to Rs 200000 Above Rs 200000 11 Demand Loans (Loans against KVP/NSCs) 12 Vehicle Loans New Vehicle Loans Old vehicle Loans (Not more than 5 years) 13 Small and Medium Enterprises (SME) Loans 14 Clean Overdrafts
14% 13.5%
12% 10% 11% 10% 10% 11% 12%
10% 12% 12% 15%
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Borrowings/refinance: Considering the high cost of borrowings/refinance and its adverse impact on the profitability, the Bank has adopted a judicious approach. The Bank has repaid a major portion of costly refinance, availed from NABARD and Sponsor Bank. (Rs in lakh) Investments: The Bank has invested entire funds meant for SLR in Government securities in accordance with the guidelines issued by the Reserve Bank of India. The investments to deposit ratio increased from 50% at the end of 2006 – 2007 to 52% in 2007 - 2008. Interest received on investments and balances with RBI and inters banks increased by 14.77% from Rs75.49 crores in 2006 – 07 to Rs86.64 crores in 2007 - 08.
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Purpose ST (SAO) ST (SAO-DTP) ST (OSAO) MT-SCH MTL TOTAL
NABARD 12493 1372 157 29338 11399 54759
SBI 5816 5816
Social responsibility:
The Bank in addition to its normal banking operations seeks to participate in various community welfare programmers to improve the quality of life to the poor and weaker sections of society camps and contribution of wages to the Prime Ministers relief Fund passing on to the victims of natural calamities. House Keeping: Encompassing the recent instructions of provisioning norms on unreconciled entries, the Bank has laid more emphasis towards internal house keeping, reconciliation of inter office entries on war footing.
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Self Help Groups: The Bank has given thrust to financing of SHGs during the year. Enthused by good recovery, the Bank has disbursed Rs 215.81 crores towards linkage of 128504 Self Help Groups during the year. Women Development cell: In accordance with the NABARD guidelines and with a view to increase credit flow to women, the Women Development cell is functioning in the Bank. The cell headed by a lady officer has been actively functioning and conducting several training and orientation programmes in tailoring, embroidery and other income generating activities to the members of SHGs besides facilitating the promotion and linkage. Kisan Credit Card Scheme: The Bank has issued 436546 cards for an aggregate limit of Rs 638.41 crores during the year with an increase of Rs 162.45 crores. Target for our Bank as per GOI directives i.e., @100 new farmers per branch has been surpassed during the last two years.
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Inspection and Audit: The revised inspection and Audit system conceived by the State Bank of India, Corporate Center, Mumbai was introduced w.e.f 1st May 2007. Timely and qualita tive closure of reports lay increased emphasis under the revised system. Necessary Inspection Report Formats (IRF) have been devised and customized with suitable changes and modifications for use and effective compliance by the branches both in computer and non-computer environment.Nature of Audit Regular inspection and Audit Snap Audit Income Audit Branches upgraded Branches downgraded Ratings Excellent GOOD 108 286 381 366 79 81 30 No. Of Branches
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Satisfactory Run Unsatisfactory Run TOTAL
83 06 483
Facilities offered by bank: 1. Nomination 2. Single and Joint accounts 3. Services such as payments to LIC and house rent at nominal costs 4. Free account transfer facility between branches. 5. Half-yearly payment of interest in computerized branches Safety Deposit Lockers: For the safety of your valuables we offer our customers safe deposit vaults or locker facilities at nominal annual charges depending on the size of the locker and the branch. Nomination facility also available INFORMATION TECHNOLOGY: An IT policy as a strategic initiative to meet the growing competition for business, achieve efficiency in internal operations and meet customer expectations, is under process of implementation. More than 50% of the
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Branches were computerized and the business handled by such branches constitutes 65% of Bank’s total business. In a phased manner the remaining branches will be computerized.
1. Total Number of Branches
483 294
2.
Total No. Of Branches computerized
Future plans: The Bank exhibited commendable performance by surpassing all the MOU targets set by the sponsor bank for the year under report despite difficulties and odds. The perfect planning and meticulous implementation of strategic action points enabled the Bank in achieving consistent growth with significant improvements in various parameters. The Bank has issued SHG
credit cards, first of its kind in the State and felicitated with the awards of “Best Banker” presented by the Chief Minister of Andhra Pradesh for active participation in Micro finance by linking Self Help Groups. In consonance with the directives of Government of India for doubling of credit to Agriculture, the Bank increased its Agricultural lending by 40%. The bank has set itself challenging goals for the future and progressing smoothly towards attaining them.
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Key Performance Indicator
(Rs. In 000’s)
S No Key performance Indicators 1 No. Of Districts covered 2 No. Of Branches a) Rural b) Semi Urban c) Urban d) Metropolitan 3 Total Staff (Excluding Sponsor Bank Staff) Of which Officers 4 Deposits Growth % 5 Borrowings Outstanding Growth %
2005-06 8 477 367 82 28 2315
2006-07 8 477 367 82 28 2296
2007-08 8 483 373 82 28 2272
1250
1287
1314
16850919 18752713 21889479 * 3222120 * 11.28 4067097 26.22 16.72 6057546 48.94
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6 Gross Loans & Advances Outstanding Growth % 7 CD Ratio 8 Investments Outstanding Growth % SLR Investment Outstanding Non- SLR Investment Outstanding AVERAGES 9 Average Deposits Growth % 10 Average Borrowings Growth % 11 Average Gross Loans & Advances Growth % 12 Average Investment Growth % 13 Average Working funds LOANS ISSUED DURING THE
12354933 15319788 18117323
* 73.32 9123405 * 4718200 4405205
23.99 81.69 9769610 7.08 4637113 5132497
18.26 82.76 11384662 16.53 4719752 6664910
15143150 16326037 18751263 * 3089690 * 7.81 3455547 11.84 14.85 5494708 59.01
11478906 10634533 16235888 * 7456436 * -7.35 6926931 -7.10 52.67 8102144 25.28
22183843 23860906 29893593
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YEAR 14 Loans issued during the year Growth % 9368807 * 11935252 17244200 27.39 44.48
Of 14 above, Loans to Priority 6970765 Sector Of 14 above, Loans to Non-target 2060564 Group Of 14 above, SF/MF/AL PRODUCTIVITY 15 Per Branch Per staff RECOVERY PERFORMANCE 16 Demand Recovery Over dues Recovery % (June Position) ASSET CLASSIFICATION 17 a) Standard b) Sub-Standard 10919370 619208 6992340 5016192 1976148 71.74 61100 12616 4141730
11205791 13147700
2394487
3038800
5642529
9051900
71281 14840
82830 17608
8626158 666507 196101 77.26
8804000 6791200 2012800 77.13
1436350 372286
12020663 483855
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c) Doubtful d) Loss Total
723478 92877 12354933
475553 107999 153188 93.76
488226 124579 18117323 93.94
18 Std. Assets as % to Gross Loans & 88.38 Adv. o/s PROFITABILITY ANALYSIS 19 Interest paid on a) Deposits b) Borrowings 20 Salary 21 Other Operating Expenses 22 Provisions made during the year a) Against NPAs b) Other provisions 23 Interest received on a) Loans & Advances b) Current A/C with SBI/Other Banks c) Investments 505155 1375191 312469 44962 31921 101270 228687 560158 159418
940691 206073 630038 199655
966738 332111 814502 255385
19815 88699
85350 27107
167276 193745
1701247 323271
561186
543151
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24 Other Incomes 25 Profit/Loss OTHER INFORMATION 26 Share capital Deposits received 27 Cumulative Provisions Against NPAs 28 Interest De-recognized Cumulative 29 Loans Written of during the year a) No. Of A/Cs b) Amount 30 Reserves/Accumulated profits
147632 295940
159509 531139
22486 230612
890850 384677
890850 379201
890850 464345
89680
55342
46111
15232 88392 376068
14854 57040 799739
4694 31080 1029851
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THEORITICAL STUDY OF THE FINANCIAL STATEMENTANALYSIS TYPES OF FINANCIAL STATEMENT: We can classify various types of financial analysis into different categories.
TYPES OF FINANCIAL
On the basis of material
On the basis of operandi
External analysis Internal analysis Horizontal analysis Vertical analysis
(1).ON THE BASIS OF MATERIAL USED: According to material used, financial analysis can be of two types: ? ? External analysis Internal analysis
EXTERNAL ANALYSIS: Outsiders who do not have access to the detailed internal accounting records of the business firm do this analysis. These outsiders include investors, creditors, potential creditors, govt agencies, credit agencies and general public. External analysis serves only a limited purpose. However the recent changes in
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the government regulations requiring business firms to make available more detailed information to the public. INTERNAL ANALYSIS: The analysis conducted by persons who have access to the internal accounting records of business firm is known as internal analysis. Such an analysis can therefore be performed by executives and employed of the organization as well as government agencies, which have statutory powers invested in them. ON THE BASIS OF MODUS OPERANDI: According to the method of operation followed in the analysis, financial analysis can also be of two types. ? Horizontal analysis ? Vertical analysis HORIZONTAL ANALYSIS: Horizontal analysis refers to the comparison of financial data of a company for several years. The figures for this type of analysis are presented horizontally over a number of columns. The figures of the various years are
43
compared with standard of base year. This type of analysis is also called ‘dynamic analyses. VERTICAL ANALYSIS: Vertical analysis refers to the study of relation ship of the various items in the financial statements of one accounting period. In this type of analysis the figures from financial statement of a year or compared with a base selected from the same years statement. It is also known as static analysis. PROCEDURE OF FINANCIAL STATEMENTS ANALYSIS Broadly speaking there are three steps involved in the analysis of financial statements, those are: Selection: this step involves selection of information relevant to the purpose of analysis of financial statements. Classification: this step involved the methodical classification of the data. Interpretation: this step includes drawing of interences and conclusions. The following procedure is adopted for the analysis and interpretation of financial statements.
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? The analyst should acquaint himself with the principles and postulated of accounting. The analyst 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. ? A relation ship is established among financial statements with help of tools and techniques of analysis such as ratios, trends, common size, funds flow etc. ? The information interpreted in a simple and understandable way. The significance and utility of financial data is explained for helping decisionmaking. ? The conclusions drawn from interpretation are presented to the management in the form of reports. METHODS OR DEVICES OF FINANCIAL ANALYSIS The analysis and interpretation of financial statements is used to determine the financial position and results of operations as well. A number of methods or devices are used to study the relationship between different statements. The following methods analyses are generally used. 1. Comparative statement analysis
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2. Common size statements 3. Funds flow analysis 4. Cash flow analysis 5. Ratio analysis 6. Trend analysis
1. Comparative statement analysis:
The comparative financial statements are statements of the financial position at different period of time. The elements of financial position are shown in comparative from as to give an idea of financial position as two or more periods. Any statement prepared in a comparative from will be covered in comparative statements. The comparative statement may show: 1. Absolute figures (rupees of amounts) 2. Change in absolute figures i.e. increase or decrease in absolute Figures. 3. Absolute data in terms of percentages (1) Increase or decrease in terms of percentages.
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The analyst is able to draw useful conclusions when figures are given in comparative position. Comparative figures will indicate the trend and direction of financial position and operating results. The financial data will be comparative only when same accounting principles are used in preparing these statements. The two comparative statements are ? Comparative balance sheet ? Comparative income statement
Comparative balance sheet:
The comparative balance sheet analysis is the study of the trend of the same items group of items in two or more balance sheets of the same business enterprise. The changes can be observed by comparison of the balance sheet at the beginning and at the end of date period and these changes can help in forming an opinion about the progress of an enterprise.
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The comparative balance sheet has two columns for the data of original balance sheets. A third column is used to show increase in figures. The fourth column may be added for giving percentages of increase or decrease. GUIDE LINE FOR INTERPRETATION OF COMPARATIVE BALANCESHEET While interpreting comparative balance sheet the interpreter is expected to study the following aspects ? The interpreter observes the current financial position and liquidity position. For that study he should see the working in the both the years. The excess of current assets over current liabilities will give the figures of working capital. The increase in working capital will mean improvement in the current financial position of the business. ? The long tem financial position of the concern can be analyzed by studying the changes in fixed assets. Long-term liabilities and capital. An increase in fixed assets should be compare to the increase in long-term loans and capital. If the increase in fixed assets is more than the increase in long-term securities then part of fixed assets has been financed from the working capital.
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? The next aspect to be studied in comparative balance sheet question is the profitability of the concern. The study of increase or decrease in retained earnings, various resources and surpluses etc. will enable the interpreter to see whether the profitability has improved or not. Comparative income statement: The income statement gives the results of the operations of a business. The comparative income statements give an idea of the progress of a business over a period of time. The changes in absolute data in money values and percentages can be determined to analyze the profitability of the business. The comparative income statement also has four columns. First two columns give figures of various items for two years. Third and fourth columns are used to show increase or decrease in figures in absolute amounts and percentages respectively. GUIDELINES FOR INTERPRETATION OF THE INCOME STATEMENT The year analyses and interpretation of income statement will involve the following steps: ? The increase or decrease in sales should be compared with the increase or decrease in cost or good sold. An increase in sales will not always
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mean an increase in profit. The profitability will improve it increase in sales it more than the increase in cost of good sold. ? The interpreter should study of operational profits. An increase in operating profit will result from the increase in sales position and control of operating expenses. A decrease in operating profit may be due to an increase in operating expenses or decrease in sales. ? The increase or decrease in net profit will give an idea about the overall profitability of the concern. An increase in per profit will gives us an idea about the progress of the concern. (2). Common size statements or analysis: The statement indicates the relation ship of various items with some common item. In the income statement the sale figure is taken as base and all other figures are expressed as percentage of sales. Similarly in the balance sheet the total of assets and liabilities is taken as base and all other figures are expressed as percentage to the total. (3). The funds flow statement: The term ‘fund’ normally meaning working capital. The funds flow statement reveals the sources from which funds are received and the uses to
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which these have been put. It is a valuable tool to analyze the changes in the financial condition of the business between two periods and helps the management in policy formulation and performance appraisal (4). The cash flow statement: The cash flow statement is the statement of changes in the financial position of a firm on ‘cash basis’. It is very helpful in the evaluation of current liquidity of a business concern. It helps the business executive of a cash business in the efficient cash management (5) Ratio analysis: It is done to develop meaningful relationship between individual items or group of items usually shown in the periodical financial statements published by the concern an accounting ratio shows the relationship between the two interrelated accounting figures as gross profit to sales, current assets to current liabilities etc. (6). Trend analysis: The analysis is an important tool of horizontal financial analysis. This method is immensely helpful in making a comparative study of the financial
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statements of several years. It helps in under taking the nature and rate of movement in various financial factors. However conclusions should not be drawn on the basis of single trend. Trends of related items should be careful studied The method of trend percentages is a useful analytical device or the management since by substitution of percentages for large amounts the brevity and readability are achieved. However trend percentages not calculated for all the items in the financial statements. They are usually calculated only for major items since the purpose is to highlight important changes. Steps in computation of trend values: ? Select one of the periods for which financial statements are available as the base period. The selected period should be a normal period. ? Every item is base period is taken as 100%. ? Trend values of each item for any other periods can be calculated as under. Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
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Points to be noted: ? The accounting policies for the entire period should be uniform. ? Trend values must be read along with absolute values. ? Non-financial factors should be considered while interpreting the trend. LIMITATIONS OF FINANCIAL ANALYSIS Financial analysis is powerful mechanism of determining financial strengths and weakness of a firm. But the analysis is based on the information available in the financial statements. The financial analyst has also to be careful about the impact price level changes. Window-dressing of financial statements changes in accounting policies of a firm, accounting concepts and conventions and personal judgment etc. Some of the important limitations of financial analysis are: ? It is only a study of interim reports. ? Financial analysis is based on monetary information and nonmonetary factors are ignored. ? It does not consider changes in price levels. ? As the financial statements are prepared on the basis of a going concern, it does not give an exact position.
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? Changes in accounting procedure by a firm may often make financial analysis misleading. ? The analyst has to make interpretation and draw his own conclusions. Different people may interpret the same analysis in different ways.
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ANDHRA PRADESH GRAMEENA VIKAS BANK COMPARATIVE BALANCE SHEET AS ON 2007-2008 Rs. (In thousand) Year Particulars 2007 Fixed assets Investments Current assets: Cash and balance with RBI Balance with bank and money at call and short notice Other assets 4751714 723564 6601026 669539 1849312 -54025 38.92 -7.47 1483110 1711839 228729 15.43 74645 5468161 2008 80721 5691605 in 2008 6076 223444 in 2008 Year Change
%Change
8.14 4.09
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Total current assets Advances Total
6958388 14924594 27425788
8982404 17606867 32361597
2024016 2682273 4935809
29.09 17.97 17.997
Capital Share capital deposits Reserves &surpluses
500,00 890850 799239
500,00 890850 1029851 230612 28.86
Current liabilities: Deposits i) Demand deposits ii) Savings bank iii) Term deposits Total deposits 1209126 7831242 9712345 18752713 4067097 1153549 10400645 10335285 21889479 6057546 55577 2569403 622940 3136766 1990449 4.596 32.81 6.41 16.73 48.94
Barrowings
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Other liabilities and provisions Total current liabilities Total 25685699 27425788 30390896 32361597 4705197 4935809 18.32 17.997 2865889 2443871 422018 -14.73
INTERPRETATION: The Comparative balance sheet interpretation also reveals many facts about the composition of assets and financial structure of the firm. ? The fixed assets have increased over the period by 8.14%. This is a little
improvement. But the other assets are decreased by -7.47%. ? Investments and Advances are increased by 4.09% and 17.87%
respectively. ? The current assets have increased by 29.09%. This is higher than the
current liabilities.
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? short ? ?
Cash and balance with RBI and balance with bank and money at call & notice also in increasing mode by 15.43 and 38.92 respectively. Share capital deposits and capital remains same. Reserves and surplus have increased by 28.22%. it means it is in
increasing. ? Current liabilities are increased by 18.32% but it is less than current
assets. ? ? The liquidation position is good. Deposits are also in increasing mode by 16.73% but in deposits the
demand deposits are decreased by –4.596%. ? ? At the same time Borrowings also increased a lot by 48.94%. The overall financial position is satisfactor
ANDHRA PRADESH GRAMEENA VIKAS BANK
COMPARATIVE INCOME STATEMENT FOR 2007-2008 Rs. (In thousand) YEAR 2007 YEAR 2008 CHANGE IN CHANGE PARTICULARS (Rs.) (Rs.) 2007 (Rs.) % IN
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2008 Income: Interest earned Other incomes Total (A) 2427667 2567669 159509 220486 140002 60977 200979 5.77 38.23 7.77
2587176 2788155
Expenditure: 1149409 1302255 829693 1069887 185401 152846 240194 108466 501506 13.29 28.95 140.98 24.39
Interest expended Operating expenses
76935 Provisionsand contingencies Total (B)
2056037 2557543
Net profit/loss: Profit (A – B) 531139 230612 300527 -56.58
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Excess provision written back 6793 Nil 498292 728904 -6793 442874 135554 -100 799.15 22.84
Profit/loss brought forward55418 Total Appropriations: Transfer to the statutory reserves 68848 593350
49135 14939
-19713 -11271
-28.63 -43.00
Transfer to other reserves 26210 Profit/loss carried over to balance sheet Total 498292 593350
664830 728904
166538 135554
33.42 22.84
INTERPRETATION: The total of incomes are increased but it is less than the increase in expenditure.
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? Other incomes have greatly increased by 38.23% and a marginal increase in interest earned. ? Provisions and contingencies are increased rapidly by 140.98%. ? The profit is also decreased when we compare with 2007 year but however the profit/loss brought forward compensated it mostly. ? The transfers to reserves are also rapidly decreased. ? The over all performance of firm is satisfactory. ANDHRA PRADESH GRAMEENA VIKAS BANK
COMMON SIZE BALANCE SHEET AS ON 2007-2008 Rs. (In thousand)
YEAR PARTICULARS 2007 (Rs)
YEAR 2008 (Rs)
Change %IN 2007 0.272 19.94
Change %IN 2008 0.249 17.59
Fixed assets Investments
74645 5468161
80721 5691605
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Current assets: Cash and balance with RBI Balance with bank and money at call and short notice Other assets Total current assets Advances Total 4751714 723564 6958388 14924594 27425788 6601026 669539 8982404 17606867 32361597 17.32 2.64 25.37 54.42 100 20.39 2.07 27.26 54.1 100 1483110 1711839 5.41 5.29
Capital Share capital deposits Reserves &surpluses
500,00 890850 799239
500,00 890850 1029851
0.182 3.25 2.91
0.155 2.75 3.18
Current liabilities:
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Deposits: i) Demand deposits ii) Savings bank iii) Term deposits Total deposits 1209126 7831242 9712345 18752713 4067097 1153549 10400645 10335285 21889479 6057546 4.41 28.55 35.41 68.38 14.82 3.56 32.14 31.94 67.64 18.72
Barrowings Other liabilities and provisions
2865889
2443871 30390896 32361597
10.45 93.65 100
7.55 93.91 100
Total current liabilities 25685699 Total 27425788
INTEPRETATION: ? In the year of 2007 the share of fixed assets in total assets is 0.272%.
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? In the year 2008 the share of fixed assets in total assets is 0.249%. If we compare these two figures we can observe that there is a reduction in fixed assets .it shows that the company has not rely in fixed assets. ? The investments are decreased to 17.59%. When we compare with previews year. ? The current assets are little increased in 2008 when we compare with previews year. ? The advances percentage of the firm remains same for two years in total assets share of both the years respectively. ? There is no change in capital and share capital deposits. ? The reserves and surpluses increased from Rs.7,99,239 to 10,29,851. It indicates that the transfer of profits to the reserves is made in this year. But the proportion of reserves and surpluses in total assets is 2.91% and 3.18% respectively for the year 2007 & 2008. ? The change in current liabilities is immaterial. It is same for the two years. ? Although there is a little decrement in deposits in 2008, to 67.64%. ? The Borrowings have little increment in 2008 to 18.72% and other liabilities and provisions are decreased.
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ANDHRA PRADESH GRAMEENA VIKAS BANK COMMONSIZE INCOME STATEMENT FOR 2007-2008 Rs. (In thousand) YEAR PARTICULARS 2007 (Rs.) Income: Interest earned Other incomes Total (A) Expenditure: 1149409 829693 1302255 1069887 44.43 32.07 46.71 38.37 2427667 159509 2587176 2567669 220486 2788155 93.83 6.16 100 92.09 7.91 100 YEAR %IN 2008 (Rs.) 2007 %IN 2008
Interest expended Operating expenses
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Provisions contingencies Total (B) Net profit/loss: Profit (A – B)
and 76935 2056037
185401 2557543
2.97 79.47
6.65 91.73
531139
230612
20.53
8.27
Excess provision written back Profit/loss forward Total 6793 brought 55418 593350 498292 728904 2.14 22.93 17.87 26.14 Nil 0.263 Nil
INTERPRETATION: ? The proportion of increase in other incomes is 6.16% and 7.91% respectively for the years 2007 and 2008.
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? The share of interest earned in total income in 2007 is 93.83%, and a little decrease in 2008 to 92.09. ? The share of operating expenses in total income is 32.07% and 38.37% respectively for the years 2007 and 2008. ? The percentage of profit in total income is only 20.53% in 2007and 8.27% in 2008. It is lesser than previews year. ? Provisions and contingencies are increased to 6.65% in 2008 when compared with previews year. INVESTMENTS (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF INVESTMENT ACCOUNT (Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousand) 9123405 9769610 11384662 % 100 107.08 124.79
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INTERPRETATION: ? The Investments have been continuously increased in all years up to 2007. ? During the period 2007 the Investments growth is more when compared with previews year.The increase in Investments quite satisfactory. THE INVESTMENTS IN GRAPH
Trend Ratio
124.79
100
107.08
2006
2007
2008
ADVANCES (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
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TREND ANALYSIS OF ADVANCES ACCOUNT (Base year 2006 = 100) Rs. (In thousand 12354933 14924594 17606867 % 100 120.79 142.51
YEAR 2006 2007 2008
INTERPRETATION: a. The Advances have been continuously increased in all the years up to 2008. b. There is a great increment in every year. c. The percentage the base year 2006 is 100% as compared to the year 2008 is 142.51%. d. And the increase in Advances quite satisfactory.
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THE ADVANCES IN GRAPH
Trend ratio
100 142.51 120.79
2006
2007
2008
RESERVES AND SURPLUSES (Data from 2006 -2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF RESERVES AND SURPLUSES ACCOUNT (Base year 2006 = 100)
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YEAR 2006 2007 2008
Rs. (In thousands) 376068 799239 1029851
% 100 212.53 273.85
INTERPRETATION: ? Reserves & surpluses are only Rs. 376068 thousands in 2006, but the same in 2008 Rs. 1029851 thousands. ? It is a very very higher increase in reserves and surplus. It fells the profitability of the firm and that profits transfer to reserves & surplus. ? The firm reinvesting the profits there by maximizing the wealth of the firm. ? Reserves & surpluses are quite satisfactory.
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RESERVES AND SURPLUSES ACCOUNT IN GRAPH
Trend ratio
273.85
100 212.53
2006
2007
2008
DEPOSITS (DATA FROM 2006-2008):
Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
TREND ANALYSIS OF DEPOSITS ACCOUT (Base year 2006 = 100)
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YEAR 2006 2007 2008
Rs. (In thousands) 16850919 18752713 21889479
% 100 111.28 129.91
INTERPRETATION: ? The deposits have been continuously increased in all the years up to 2008 year. ? There is a very high increase in 2007 by 111.28% when we compare with previews year. ? It indicates that the firm deposits are satisfactory. DEPOSITS IN GRAPH
Trend ratio
100
129.91
111.28
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2006
2007
2008
BORROWINGS (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = --------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF BORROWINGS ACCOUNT (Base year 2006 =100)
YEAR 2006 2007 2008
Rs. (in thousands) 3222120 4067097 6057546
% 100 126.22 187.99
INTERPRETATION: ? Here the base year is 2006 with Borrowings Rs. 3222120 thousands and 100%. ? But the same in 2008 is Rs. 6057546 thousands with 187.99%. ? It shows that the company raised funds through Borrowings to reduce the risk and increase the return to equity shareholders. ? The raising funds in Borrowings are quite satisfactory.
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BORROWINGS IN GRAPH
Trend ratio
187.99
100
126.22
2006
2007
2008
FIXED ASSETS (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
TREND ANALYSIS OF FIXED ASSETS ACCOUNT (Base year 2006 =100)
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YEAR 2006 2007 2008
Rs. (In thousands) 56765 74645 80721
% 100 131.49 142.20
INTERPREATION: ? The fixed assets are continuously increased every year. ? But it is not commensurate with the growth in reserve and surplus. ? It reveals that application of funds is not in fixed assets. ? The growth of fixed assets quite satisfactory. FIXED ASSETS IN GRAPH
Trend ratio
142.2 100 131.49
2006
2007
2008
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PROVISIONS AND CONTINGENCIES (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF PROVISIONS AND COTIOGENCIES ACCOUT (Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousands) 384677 379201 464345 % 100 98.58 120.71
INTERPRETAION: ? Provisions and contingencies are slightly decreased in 2007 to 98.58%. ? Provisions and contingencies have been increasing Rs.464345 ? So the provisions and contingencies are quite satisfactory.
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PROVISIONS AND CONTINGENCIESIN GRAPH
Trend ratio
100
120.71
98.58
2006 2007 2008
CURRENT ASSETS (DATA FROM 2006 -2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
TREND ANALYSIS OF CURRENT ASSETS (Base year 2006 = 100)
YEAR 2006 2007
Rs. (In thousands) 4592515 6958388
78
% 100 151.51
2008
8982404
195.59
INTERPRETATION: ? The current assets have been continuously increased. But the year of 2007 current assets increased by 151.51% as compared with last years. ? Current assets have been increasing every year. In 2006, Rs.4592515 thousands and in year 2008, Rs.8982404 thousands. ? Over all the current assets satisfactory.
CURRENT ASSETS IN GRAPH
Trend ratio
195.59 100
151.51
2006
2007 79
2008
CURRENT LIABILITIES (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF CURRENT LIABILITIES (Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousands) 15154348 25685699 30390896 % 100 169.49 200.54
INTERPRETATION: ? Current liabilities are slowly increasing every year in the year 2006 it is Rs.15154348 thousands and year 2008, Rs.30390896 thousands. ? Over all the liquidation position is satisfactory.
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CURRENT LIABILITIES IN GRAPH
Trend ratio
200.54 100 169.49
2006
2007
2008
INCOMES (DATA FROM 2006-2008) : Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF INCOMES (Base year 2006 = 100)
YEAR 2006 2007 2008
Rs. (In thousands) 2340447 2587176 2788155
% 100 110.54 119.13
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INTERPRETATION: ? The Incomes are increasing gradually in all years. ? During the year 2007-2008 very high Incomes earned. As compared the previews year. ? So the Incomes are satisfactory over all years GRAPH OF INCOME
Trend ratio
119.13 100
110.54
2006
2007
2008
ADMINISTRATIVE & OTHER EXPENSES (DATA FROM 2006-2008):
Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
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TREND ANALYSIS OF ADMINISTRATIVE & OTHER EXPENSES
(Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousands) 2037926 2084971 2481193 % 100 102.31 121.75
INTERPRETATION: ? The administrative and other expenses are continuously increased the base year 2006-2008. ? The expenses are growing to according to the firm income and organization developing. ? The administrative and other expenses quite satisfactory.
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ADMINISTRATIVE & OTHER EXPENSES IN GRAPH
Trend ratio
100
121.75
102.31
2006
2007
2008
PROFIT AND LOSS ACCOUNT (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF PROFIT AND LOSS (Base year 2006= 100) YEAR 2006 2007 2008 Rs. (In thousands) 295940 531139 230612
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% 100 179.47 77.92
INTERPRETATION: ? The Profits are increased greatly in the year 2007 to Rs 531139 thousand compared to last year. ? The profits are decreased in current year to 77.97%. ? The Profits of form are quit satisfactory. PROFIT AND LOSS ACCOUNT IN GRAPH
Trend ratio
100 77.92
179.5
2006
2007
2008
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SUGGESTIONS & CONCLUSIONS:
? Now it is the time of Electronic mean of exchange. So the Bank has to take steps for improving the Computer technology in all the Branches. ? The Bank must give the training to its staff on Computer, Other technical aspects, Rules and Regulations and Bank Goals. ? It must maintain a good relation with customers and must motivate them for Depositing in the Bank. ? The Interest rate on Advances and Others must be keep reasonable for smooth running business ? Through long study on “ANDHRA PRADESH GRAMEENA VIKAS BANK” found the following observations. 1. The balance of Deposits has come from 187527 lakhs to 218894 lakhs
with a growth of 31367 lakhs (16.72%). It is more than the MOU settled for the year 2007 – 2008. 2. The Interest received on investments and Balances with RBI & inter banks
increased by 14.77% from Rs. 75.49 crores in 2006 – 07 to Rs. 86064 crores in 2007 – 08.
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3.
The Bank has recovered a significant amount of Rs. 12.19 crores during
the year from the Written off bad debts account. 4. The Bank has to provide the ATM services to its customers. So the
customers can draw at any time and any place when ever he needs money 5. The Bank has to maintain a relation with out side India. with this it can
develop and Expand its market area. 6. The Bank has obtained corporate agent license for selling the SBI Life
Insurance products from the IRDA through SBI Life Insurance. The Schemes of Swarna Ganga and Super Suraksha are extended the staff members and their spouses apart from other products, to the clientele of he bank. 7. In future this will be going to double if it comes with attractive plans.
Already APGV has a good image in the society, mostly in rural areas. 8. So the Bank should maintain it and face the market competition
effectively.
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BIBLIOGRAPHY
ANNUAL REPORTS, BANK”.
“ANDHRA PRADESH GRAMEENA VIKAS
R.N. Anthony and G.A. Welsch, “Fundamentals of Financial Accounting” E.A. Helfert, “Techniques of Financial Analysis”, Richard D. Irwin Inc., Homewood III., 1977. C.F. Lee, “Financial Analysis and Planning”, Theory and Application, Addison-Wesley, Reading, Mass., 1985. G. Foster, “Financial Statement Analysis”, 3rd. ed., Prentice-Hall Inc., Englewood cliffs, N.j., 1990. M.Y. Khan, P.K. Jain, Publishing Ltd., 2004. “Management Accounting”, Tata Mc-Graw Hill
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doc_505936779.docx
Financial statement analysis consists of 1) reformulating reported financial statements, 2) analysis and adjustments of measurement errors, and 3) financial ratio analysis on the basis of reformulated and adjusted financial statements.
INTRODUCTION
MEANING OF FINANACIAL STATEMENTS: A financial statement is collection of data organized according to logical and consistent accounting procedures. The term financial analysis also known as analysis interpretation of financial statements refers to the process of determining financial strengths and weakness of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss a/c and other operative data. DEFINITION OF FINANACIAL STATEMENT ANALYSIS: According to “Metcalf and titard” “It is a process of evaluating the relationship between component part of a financial statement to obtain a better understanding of a firm’s position and performance. According to “Myer” “Financial statement analysis is largely a study of relationship among the various financial factors in a business as distinction by a single set of statements and a study of the trend of these factors as shown in a series of statements”. The term “financial statement analysis” includes both ‘analyses’ and ‘interpretations’. A distinction should therefore to make between these two terms. While the term analysis is used to mean the simplification of financial data by methodical classification of the data given in the financial statements
1
‘Interpretation’ means explaining the meaning and significance of the data so simplified. NATURE OF STUDY The financial statements are prepared on the basis of recorded facts. The encored facts are those, which can be expressed, in monitory terms. The statements are prepared for a particular period, generally one year. The following points explain the nature of financial statements. (1). RECORDED FACTS: The term ‘recorded facts’ refers to the data taken out from the accounting records. The records are maintained on the basis of actual cost data. The original cost or historical cost is the basis of recording various transactions. (2). ACCOUNTING CONVENTIONS: Certain accounting conventions are followed while preparing financial statements. The use of accounting conventions makes financial statements comparable, simple and realistic. (3). POSTULATES: The accountant makes certain assumptions while making accounting records. One of these assumptions is that the enterprise is treated as a going concern.
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(4). PERSONAL JUDGMENT: Even though certain standard accounting conventions are followed in preparing financial statements but still personal judgment of the accountant plays an important. OBJECTIVES OF THE STUDY Financial statements are the sources of information on the basis of which conclusions drawn about the profitability and financial position of a concern. The following are the objectives of this study. ? To study the performance ANDHRA PRADESH GRAMEENA VIKAS
BANK, NALGONDA. ? To provide reliable information about economic resources and
obligations of a Bank. ? To provide other needed information about changes in such economic
resources and obligations. ? To provide reliable information about changes in net resources arising
out of Bank. ? To provide financial information that assists in estimating the earning
potentials of Bank. ? ? ? To expand market area, to increase the depth of market and enhance the
market share. To pool and use manpower resources efficiently. To create a strong market leader and force to be reckoned with in the
eight districts of AP
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IMPORTANCE OF THE STUDY: The financial statements are mirror, which reflects the financial position and operating strength or weakness of the concern. The following uses of financial statement analysis ? ? ? ? ? As a basis for granting of credit As information for prospective investor in an enterprise As an aid to government supervision As a basis for rate regulation As a basis of taxation
The utility of financial statements to different parties: (1). MANAGEMENT: The financial statements are useful for assessing the efficiency for different cost centers. The management is able to exercise cost control through these statements. (2). INVESTORS: The Investors both short-term and long-term investors. The investors will study the long-term solvency of the concern with help of financial statement analysis. (3). BANKERS: The banker is interested to see that the loan amount is secure and customer is also able to pay the interest regularly. The banker will analyze the balance sheet to determine financial strength of the firm.
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(4). GOVERNMENT: The financial statements are used to assess tax liability of business enterprise. The government studies economic situation of the country from these statements. These statements also become a base for forming and amending various laws for the regulation of business. (5). TRADE ASSOCIATIONS: These associations provide service and protection to the members they may analyze financial statements for the purpose of providing facilities to these members. (6). STOCK EXCHANGE: The stock exchange deals in purchase and sale of securities of different companies. The fixation of prices for securities etc. is also based on these statements.
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INTRODUCTION:
Government of India decided in 2006 for amalgamation of RRB’s sponsored by some bank in the same state. Accordingly vide their notification dated 31-3-2007 notified formation of Andhra pradesh Grameena vikas bank by amalgamation of the following five RRB’s sponsored by State Bank of India in AP.
Name of the RRB
Date of establishment
Area of operation
Nagarjuna Grameena Bank
30-04-76
Khammamand Nalgonda districts
Sri Visakha Grameena Bank
30-09-76
Srikakulam, Vizianagara and Visakapatnam districts
Sangameshwara Grameena Bank
31-03-82
Mahabubnagar district
6
Manjira Grameena Bank Kakathiya Grameena Bank
31-03-82 28-06-82
Medak district Warangal district
All the transferor RRB’s were earning profits and possess commonality in composition of their clientele mainly comprising of farmers and rural artisans with a sprinkling of traders and businessmen. The loans disbursed by these RRB’s are strikingly similar in activities, crops financed etc. The Nagarjuna Grameena Bank was established on 30th April 1976 under RRB’s Act, 1976. It has the privilege of being the 1 st RRB in the State of Andhra Pradesh. Sponsored by State Bank of India. The Bank, with its Head Office at Khammam. And the Branch at Nalgonda
DIRECTORS:
The company shall have not less than 2 and not more than 9 directors including special, technical Additional, Alternate, and Director, if any. They shall hold such office for life or till they decide to resign on there own and such resignation is accepted at a meeting the Board. MEMBERS OF ERSTWHILE RRB’s BOARD AS ON THE DATE OF AMALGAMATION
7
SRI VISAKHA GRAMEENA BANK. SRIKAKULAM
Sno.
Name of the Director
Representing Office & Designation
1 2 3 4
Shri A. Anantha Krishna Shri D. Ravindra Babu Shri C.V. Subba Rao Shri G.J.P. Varakumar
Chairman Nominee Director of Central Govt. Nominee Director of Central Govt. DGM, RBI. Hyderabad, (Nominee Director of RBI)
5
Shri D. Nageshwar Rao
AGM, DDM, NABARD (Nominee Director NANARD)
6
Shri S.K. Chaudhuri
DGM, SBI, Zonal Office (Nominee Director of SBI)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI LHO,
Hyderabad (Nominee Director of Sponsor Bank) 8 Dr. A.V.V.S Prasad
8
P.D., D.R.D.A. Vizianagaram
(Nominee Director of Govt. of A.P.) 9 Shri D. Dakshina Murthy P.D., D.R.D.A. Srikakulam (Nominee Director of Govt. of A.P.)
NAGARJUNA GRAMEENA BANK, KHAMMAM
Sno. 1 2 3 4
Name of the Director Shri V. Vishwanadha Rao Shri K. Laxman Rao Shri B.Somi Reddy Shri M. Chandrasekharan
Representing Office & Designation Chairman Nominee Director of Central Govt. Nominee Director of Central Govt. DGM, RBI. Hyderabad, (Nominee Director of RBI)
5
Shri M.J. Srinivasulu
AGM, DDM, NABARD (Nominee Director of NABARD)
6
Shri M. Bhagavantha Rao
DGM, SBI, Zonal Office (Nominee Director of SBI)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI LHO,
Hyderabad (Nominee Director of Sponsor Bank) 8 Shri H. Arunkumar
9
P.D., D.R.D.A. Khammam
(Nominee Director of Govt. of A.P.) 9 Smt. Sunitha M Bhagawath P.D., D.R.D.A. Nalgonda (Nominee Director of Govt. of A.P.)
SANGAMESHWARA GRAMEENA BANK, MAHABUBNAGAR.
Sno. 1
Name of the Director Shri M. Krishna Rao
Representing Office & Designation Chairman
2
Shri K. Anjaneyulu
Nominee Director of Central Govt.
3
Shri G. Padmaja Reddy
Nominee Director of Central Govt.
4
Shri P.V. Ratnam
AGM, Estate Dept. RBI, Hyderabad, (Nominee Director of RBI)
5
Shri D. Ravindar
AGM, DDM, NABARD, Mahabubnagar (Nominee Director of NANARD)
10
6 Hyderabad
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI LHO,
(Nominee Director of Sponsor Bank)
7
Shri K. Raghunandan
AGM, RBO, SBI, Mahabubnagar (Nominee Director of Sponsor Bank)
8
Shri Nawab
P.D., D.R.D.A. Mahabubnagar (Nominee Director of Govt. of A.P.)
9
Smt. P. Janardhan Reddy
Executive Director, Dist, SCSCS Ltd.,
Mahabubnagar (Nominee Director of Govt. of A.P.) MANJIRA GRAMEENA BANK, SANGAREDDY (MEDAK) Sno. 1 Name of the Director Shri V.V. Govardhan Rao Representing Office & Designation Chairman
2
Shri K.Rama Krishna, I.A.S (Retd) Nominee Director of Central Govt.
3
Shri A. Vishnuvardhan Reddy
Nominee Director of Central Govt.
11
4
Shri G. Mohan
AGM, FE Dept. RBI, Hyderabad, (Nominee Director of RBI)
5
Shri C.V. Krishna Murthy
AGM, DDM, NABARD, (Nominee Director of NANARD)
6
Shri M. Dakshina Murthy
AGM, Region-III, SBI Sangareddy (Nominee Director of Sponsor Bank)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI, LHO
Hyderabad (Nominee Director of Sponsor Bank)
8
Dr. Vani Mohan, I.A.S
P.D., D.R.D.A. Sangareddy (Nominee Director of Govt. of A.P.)
9 Ltd.,
Smt. Satyanarayana
Executive Director, Dist, SCSCS
Sangareddy (Nominee Director of Govt. of A.P.)
KAKATHIYA GRAMEENA BANK, WARANGAL
Sno. 1
Name of the Director Shri T.L. Hariharan
12
Representing Office & Designation Chairman
2
Shri K. Dasharatham
Nominee Director of Central Govt.
3
Shri Ch. Ratnakar Reddy
Nominee Director of Central Govt.
4
Smt. Anitha Srinivasan
AGM, DAPM, RBI, Hyderabad, (Nominee Director of RBI)
5
Shri G. Nagabhushanam
AGM, DDM, NABARD, (Nominee Director of NANARD)
6
Shri V.Venkata Ramana Reddy
AGM, RBO, SBI, Warangal (Nominee Director of Sponsor Bank)
7
Shri G.Y.R.S.K. Acharyulu
AGM, LB&RRB Dept., SBI, LHO
Hyderabad (Nominee Director of Sponsor Bank)
8
Shri M. Udaya Bhaskar
P.D., D.R.D.A. Warangal (Nominee Director of Govt. of A.P.)
9 Ltd.,
Shri Krishna Reddy
Executive Director, Dist, SCSCS
Warangal
13
(Nominee Director of Govt. of A.P.) BOARD OF DIRECTORS Chairman 1. I A. Anantha Krishna (DGM on deputation from State Bank of India) Nominees of Central Government under Section 9(1) (a) of Regional Rural Bank Act, 1976 Nominees of Reserve Bank of India under Sekharan Section 9 (1) (b) Of the Regional Rural Bank’s Act, 1976 Deputy General Manager Urban Banks Department Reserve Bank of India Regional Office, Secretariat Road Hyderabad.
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: 2. Yet to be appointed :3.Yet to be appointed
: 4. Shri. M. Chandra
Nominees of NABARD under Section 9 (1) (c) of the Regional Rural Bank Act, 1976 and Rural
: 5. Shri. R.S Jagdale Deputy general Manager National Bank for Agriculture
Development, 1-1-61, RTC ‘X’ Roads, Musheerabad, Hyderabad Nominees of State Bank of India under Section 9 (1) (d) of the Regional Rural (ABU) Bank’s Act, 1976 State Bank of India Local Hyderabad 7. Shri G.Y.R.S.K. Acharyulu, Asst. General Manager (LB & RRBs)
15
: 6. Shri Ch. H Narsimha Rao Deputy General Manage
Head
Office,
Regional Department
Rural
Banks
Local Head Office, Hyderabad Nominees of State Government under Section 9 (1) (e) of Regional Rural Bank’s institutional Finance Act, 1976 Hyderabad. 9. Smt. K. Damayanthi, IAS Collector Magistrate, Warangal CHAIRMEN: The Board of Directors shall elect Chairmen from amongst them selves once in a year. The Chairmen shall preside over the meetings of the Board of Directors. In the absence of the Chairmen, the managing director if any or any Director elected for the purpose shall preside over the meetings of the Board of the Directors.
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: 8. Shri A. Giridhar, IAS Commissioner for
Deportment, AP Secretariat,
and
District
ANANTHA KRISHNA (Chairman)
THE OBJECTIVES OF THE BANK: The primary objective of the amalgamation of these RRBs is the synergy that will be created by effecting economy in administration and reduction in cost of marketing products over a wide area. The objectives are summarized as under: ? To expand market area, to increase the depth of market and enhance the market share ? To obtain higher rate of growth ? To facilitate economies of scale ? To pool and use manpower resources efficiently ? To create a strong market leader and force to be reckoned with in the eight districts of AP. CORPORATE VALUATION: The Govt. of India and provisions perceive the amalgamation concept of RRBs for such amalgamation has been incorporated in sub section (1) of section 23A of the Regional Rural Banks Act.1976 (21 of 1976). The share holders of RRBs, Viz. Government of India, Sponsor Bank and the respective State
17
Government contribute to the subscribed and paid up share capital in the pattern of 50:35:15. Capital structure: In terms of section 5 of the RRB Act 1976, the authorized capital of the transferee RRB (amalgamated RRB) shall be Rs 5 crores divided in 5 Lakh number of fully paid share of Rs 100 each. The subscribed share capital of the amalgamated 5 RRBs shall be equal to the subscribed share capital of transferor RRBs. Name of the amalgamated RRB: Considering all aspects, the Local Head Office, State Bank of India, Hyderabad has recommended that the amalgamated RRB shall be called as “Andhra Pradesh Grameena Vikas Bank” with its Head Quarters at Warangal. Operational Area: The five RRBs sponsored by SBI in Andhra Pradesh cover 8 districts, viz., Warangal (KGB), Medak (MGB), Khammam and Nalgonda (NGB), Mahabubnagar (SGB) and Srikakulam, Vizianagaram and Visakhapatnam (SGVB). The amalgamated RRB will cover all the 8 districts with geographical
18
area of 94,700 sq kms. With a larger network of 483 branches and aggregate owned funds of Rs 197.07 crores. The amalgamated RRB (APGVB) will become stronger and competent to enhance business comprehensively. ? Srikakulam district located in northeastern part of Andhra Pradesh with a total area of 5837 sq kms divided into 3 divisions, with a population of 25.38 lakhs. ? Vizianagaram district extends over an area of 6539 sq kms with the population of 22.45 lakhs. ? Visakhapatnam district is located in north coastal of the state with a geographical area of 11161 sq kms having 38.32 lakhs population. ? Khammam district population is 25.65 lakhs and the geographical area is
16.029 sq kms. ? Nalgonda district population is 32.43 lakhs as per 2001 census and the
total area of the district is 13662 sq kms. ? Mahabubnagar district the area is 18432 sq kms, predominantly a
drought prone area. The river Tungabhadra and Krishna flow through the district. ? Medak district geographical area is 9699 sq kms, adjacent to twin cities
of Hyderabad and Secunderabad.
19
?
Warangal district geographical area is 12746 sq kms with dry
temperature ranging between 50 and 10 degrees centigrade. Organizational Structure: The amalgamated RRB (APGVB) consists of a three-tier structure, viz., Head Office, Controlling Office and branches. The Controlling Office in the middle tier will cover 50 to 100 branches and will be headed by General manager (SMGS-V- AGM) deputed from the Sponsor Bank. HEAD OFFICE
Controlling Offices
Branches
Personnel Policy: The service Regulations of RRBs were implemented in 1981 and the RRB staff is governed by the Appointment and Promotions Rules 1998. The staff of the amalgamated RRB will also be governed by the same regulations and rules subject to any changes and amendments to be made by the Government of India.
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Human Resources: The Bank has total staff strength of 2272 as on 31st March 2006. Of these 1314 were Officers, 641 Clerical staff and the remaining 317 belong to sub staff cadre. Sponsor Bank Staff: Chairman Scale TEG-VI 1 5 (V) 1 (IV) 1 (III) 1 (III) 9 General Managers Chief Inspector Manager (Vig & DP) TOTAL
RRB Staff:
MMG-III MMG-II O 57 369
OJM-I 888
Clerk/Cashier 641
Sub StaffTOTAL 317 2272 2 1314 4.70
fficers on cross deputation from other RRBs (Internal Auditors) Total officers Per Branch Staff Position
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Promotions: As a part of human resources management, to motivate the staff members to work zeal and enthusiasm, to face the emerging challenges, and recognizing the performance the promotions have been effected in all cadres during the year as per the approvals accorded by the Sponsor Bank. The Bank has followed reservation policies advised by NABARD, Sponsor Bank with the approval of Government of India. In respect of promotions effected for various cadres are furnished below. Sl No Promoted as Total No. of staff promoted 2007 1 2 3 4 5 SCALE-I SCALE-II SCALE-III CLERKS TOTAL 55 88 9 18 170 2008 56 58 13 13 140 SC 30 17 2 13 62 ST 8 7 2 17 SC 19 11 7 18 15 ST 5 11 2 4 No. of employees Percentage belong to
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BUSINESS PROFILE: (Rscrores) Sl No Particulars KGB MGB NGB SGB SVGB RRB (APGVB) 1 2 3 4 Deposits Advances CD Ratio Productivity i) Per Branch ii) Per Employee 5 Recovery performance% 6 Gross NPA (%) 7 8 Profit Accumulated losses -2.69 18.31 5.88 3.74 7.60 8.53 23.06 4.62 8.76 3.65 5.33 6.99 6.05 60 80 76 94 93 77.13 9.51 2.19 11.39 2.20 7.52 1.60 9.16 2.22 7.06 1.45 8.28 1.76 197.12 182.86 93 420.59 308.53 73.3 637.61 460.91 72.3 351.08 290.48 82.7 582.54 568.95 97.6 2188.94 1811.73 82.8
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Bank’s Operations Deposits: Deposits being the important and main resource for Banking business, intensive thrust for expanding the stable base of individual deposits was given, in addition to focus on game ring of institutional deposits during the year. The steady growth in deposits has helped the Bank in improving its deposits portfolio comfortably. The total deposits of the Bank increased by Rs 313.67 crores with a growth of 16.72% for the year 2008-2009. The level of deposits stood at Rs 6698.94 crores as on 31.03.2009 surpassing the MOU targeted level of Rs 7677.91 crores with a market share of 10.43%. Institutional and non-institutional deposits: (Rs in lakh)
Segment Institutional Deposits Non-institutional Deposits
Mar 08 43328 144199
Percentage 23 77
Mar 09 48157 170737
Percentage 22 78
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Demand and time deposits:
(Rs in lakh)
Segment Demand Deposits Time Deposits
Mar 08 91208
Percentage 49
Mar 09 115541
Percentage 53
96319
51
103353
47
Types of Deposits: i. ii. iii. Saving Deposit Current Deposit Term Deposit Schemes
? Special term deposit scheme ? Short term deposit scheme ? Fixed deposit scheme ? Recurring deposits scheme
25
Interest rates: The Bank adopted a policy of revising the interest rates to cope up with the market conditions, cost of funds, yield on advances and investments vis-àvis other market players enabled in improving performance and profitability. Since different interest rates are in vogue in each transferor RRB, a uniform interest rates structure adopted for Deposits and Advances as under. Deposits Period 15 days to 45 days 46 days to 179 days 180 days to less than 1 year 1 year to less than 2 years 2 years to less than 5 years 5 years and above Interest rate 5.25 5.75 6.00 6.25 6.50 7.00
Senior citizens are offered 1% more for term deposits for a period of one year and above
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Loans and Advances: The Bank has drawn up an ambitions action plan for increasing flow of credit to the Agriculture Sector besides rescheduling of agricultural loans and extending necessary relief measures to the affected farmers have been given top priority. The Bank has disbursed Rs 830.91 crore towards to the agricultural loans during Kharif 2007. The target fixed for doubling of credit to agriculture was fixed on the outstanding amount of Rs 547.16 crore on 31.03.2006 which multiplies to Rs 1094.32 crores as against the outstanding amount of Rs 1004.35
Total Advances Levels as on 31.03.2007 Levels as on 31.03.2008 MOU settled for 2007-2009 Growth achieved up to 31.03.2008 Percentage of growth achieved 18.26 153197 181173 186894 27976
NTG Advances 34677 38170 45620 3493
10.07
crores as on 31.03.08 with a credit gap of Rs 89.97 crores. The gap can be filled comfortably during the current year since the projections of
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agricultural advances is Rs200 crores. The Bank has recorded an unprecedented growth of Rs 279.76 crores in loans and advances taking of aggregate level of advances to Rs 1811.73 crores with a market share of 11.33%. The non-priority sector lending includes personal loans to public and commercial complexes,. Consumption, gold loans etc. the Non Target Group lending for 2007 – 08 stood at Rs381.70 crores as compared to Rs 346.77 crores in 2006– 2007, recording a growth of over 10%.
Types of Advances:
1. Personal Advances 2. Commercial and institutional advances ? Rent plus scheme ? Total package for financing traders ? O.D. cash credit to contractors. ? Vehicle loans to corporate ? Take over of advances other then trade and services ? Take over of advances trade and services
1. Small scale industries
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2. Small business finance 3. Agriculture advances
Interest rates:
The Bank adopted a policy of revising the interest rates to cope up with the market conditions, cost of funds, yield on advances and investments vis-àvis other market players enabled in improving performance and profitability. Since different interest rates are in vogue in each transferor RRB, a uniform interest rates structure adopted for Deposits and Advances as under. Advances SN Segment Up to Rs 25000 Rs 25001 to 50000 Up to Rs 50000 Above Rs 50000 3 Allied Agricultural Term loans Up to Rs 50000 Above Rs 50000 4 ISB-Cash credits, Term Loans and Composite Term Loans including Transport Operators. Up to Rs 200000 Above Rs 200000 Int. rates 10% 11% 11% 12% 11% 12% 12% 13%
1 Crop loans including AGL, RMG, KCC 2 Agricultural Term loans
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5 Self Help Groups
Direct to Groups Through MACS/VO
10% 11% 13%
6 Gold Loan-Personal Purpose 7 Consumer Durables and Personal Loans Up to Rs 50000 Above Rs 50000/(Up to max. Rs 1 lakh) 8 Mortgage Loans 9 Housing Loans Up to Rs 300000 Above Rs 300000 For Repairs and Up gradation (Maximum Rs 2 lakhs) 10 Education Loans Up to Rs 200000 Above Rs 200000 11 Demand Loans (Loans against KVP/NSCs) 12 Vehicle Loans New Vehicle Loans Old vehicle Loans (Not more than 5 years) 13 Small and Medium Enterprises (SME) Loans 14 Clean Overdrafts
14% 13.5%
12% 10% 11% 10% 10% 11% 12%
10% 12% 12% 15%
30
Borrowings/refinance: Considering the high cost of borrowings/refinance and its adverse impact on the profitability, the Bank has adopted a judicious approach. The Bank has repaid a major portion of costly refinance, availed from NABARD and Sponsor Bank. (Rs in lakh) Investments: The Bank has invested entire funds meant for SLR in Government securities in accordance with the guidelines issued by the Reserve Bank of India. The investments to deposit ratio increased from 50% at the end of 2006 – 2007 to 52% in 2007 - 2008. Interest received on investments and balances with RBI and inters banks increased by 14.77% from Rs75.49 crores in 2006 – 07 to Rs86.64 crores in 2007 - 08.
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Purpose ST (SAO) ST (SAO-DTP) ST (OSAO) MT-SCH MTL TOTAL
NABARD 12493 1372 157 29338 11399 54759
SBI 5816 5816
Social responsibility:
The Bank in addition to its normal banking operations seeks to participate in various community welfare programmers to improve the quality of life to the poor and weaker sections of society camps and contribution of wages to the Prime Ministers relief Fund passing on to the victims of natural calamities. House Keeping: Encompassing the recent instructions of provisioning norms on unreconciled entries, the Bank has laid more emphasis towards internal house keeping, reconciliation of inter office entries on war footing.
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Self Help Groups: The Bank has given thrust to financing of SHGs during the year. Enthused by good recovery, the Bank has disbursed Rs 215.81 crores towards linkage of 128504 Self Help Groups during the year. Women Development cell: In accordance with the NABARD guidelines and with a view to increase credit flow to women, the Women Development cell is functioning in the Bank. The cell headed by a lady officer has been actively functioning and conducting several training and orientation programmes in tailoring, embroidery and other income generating activities to the members of SHGs besides facilitating the promotion and linkage. Kisan Credit Card Scheme: The Bank has issued 436546 cards for an aggregate limit of Rs 638.41 crores during the year with an increase of Rs 162.45 crores. Target for our Bank as per GOI directives i.e., @100 new farmers per branch has been surpassed during the last two years.
33
Inspection and Audit: The revised inspection and Audit system conceived by the State Bank of India, Corporate Center, Mumbai was introduced w.e.f 1st May 2007. Timely and qualita tive closure of reports lay increased emphasis under the revised system. Necessary Inspection Report Formats (IRF) have been devised and customized with suitable changes and modifications for use and effective compliance by the branches both in computer and non-computer environment.Nature of Audit Regular inspection and Audit Snap Audit Income Audit Branches upgraded Branches downgraded Ratings Excellent GOOD 108 286 381 366 79 81 30 No. Of Branches
34
Satisfactory Run Unsatisfactory Run TOTAL
83 06 483
Facilities offered by bank: 1. Nomination 2. Single and Joint accounts 3. Services such as payments to LIC and house rent at nominal costs 4. Free account transfer facility between branches. 5. Half-yearly payment of interest in computerized branches Safety Deposit Lockers: For the safety of your valuables we offer our customers safe deposit vaults or locker facilities at nominal annual charges depending on the size of the locker and the branch. Nomination facility also available INFORMATION TECHNOLOGY: An IT policy as a strategic initiative to meet the growing competition for business, achieve efficiency in internal operations and meet customer expectations, is under process of implementation. More than 50% of the
35
Branches were computerized and the business handled by such branches constitutes 65% of Bank’s total business. In a phased manner the remaining branches will be computerized.
1. Total Number of Branches
483 294
2.
Total No. Of Branches computerized
Future plans: The Bank exhibited commendable performance by surpassing all the MOU targets set by the sponsor bank for the year under report despite difficulties and odds. The perfect planning and meticulous implementation of strategic action points enabled the Bank in achieving consistent growth with significant improvements in various parameters. The Bank has issued SHG
credit cards, first of its kind in the State and felicitated with the awards of “Best Banker” presented by the Chief Minister of Andhra Pradesh for active participation in Micro finance by linking Self Help Groups. In consonance with the directives of Government of India for doubling of credit to Agriculture, the Bank increased its Agricultural lending by 40%. The bank has set itself challenging goals for the future and progressing smoothly towards attaining them.
36
Key Performance Indicator
(Rs. In 000’s)
S No Key performance Indicators 1 No. Of Districts covered 2 No. Of Branches a) Rural b) Semi Urban c) Urban d) Metropolitan 3 Total Staff (Excluding Sponsor Bank Staff) Of which Officers 4 Deposits Growth % 5 Borrowings Outstanding Growth %
2005-06 8 477 367 82 28 2315
2006-07 8 477 367 82 28 2296
2007-08 8 483 373 82 28 2272
1250
1287
1314
16850919 18752713 21889479 * 3222120 * 11.28 4067097 26.22 16.72 6057546 48.94
37
6 Gross Loans & Advances Outstanding Growth % 7 CD Ratio 8 Investments Outstanding Growth % SLR Investment Outstanding Non- SLR Investment Outstanding AVERAGES 9 Average Deposits Growth % 10 Average Borrowings Growth % 11 Average Gross Loans & Advances Growth % 12 Average Investment Growth % 13 Average Working funds LOANS ISSUED DURING THE
12354933 15319788 18117323
* 73.32 9123405 * 4718200 4405205
23.99 81.69 9769610 7.08 4637113 5132497
18.26 82.76 11384662 16.53 4719752 6664910
15143150 16326037 18751263 * 3089690 * 7.81 3455547 11.84 14.85 5494708 59.01
11478906 10634533 16235888 * 7456436 * -7.35 6926931 -7.10 52.67 8102144 25.28
22183843 23860906 29893593
38
YEAR 14 Loans issued during the year Growth % 9368807 * 11935252 17244200 27.39 44.48
Of 14 above, Loans to Priority 6970765 Sector Of 14 above, Loans to Non-target 2060564 Group Of 14 above, SF/MF/AL PRODUCTIVITY 15 Per Branch Per staff RECOVERY PERFORMANCE 16 Demand Recovery Over dues Recovery % (June Position) ASSET CLASSIFICATION 17 a) Standard b) Sub-Standard 10919370 619208 6992340 5016192 1976148 71.74 61100 12616 4141730
11205791 13147700
2394487
3038800
5642529
9051900
71281 14840
82830 17608
8626158 666507 196101 77.26
8804000 6791200 2012800 77.13
1436350 372286
12020663 483855
39
c) Doubtful d) Loss Total
723478 92877 12354933
475553 107999 153188 93.76
488226 124579 18117323 93.94
18 Std. Assets as % to Gross Loans & 88.38 Adv. o/s PROFITABILITY ANALYSIS 19 Interest paid on a) Deposits b) Borrowings 20 Salary 21 Other Operating Expenses 22 Provisions made during the year a) Against NPAs b) Other provisions 23 Interest received on a) Loans & Advances b) Current A/C with SBI/Other Banks c) Investments 505155 1375191 312469 44962 31921 101270 228687 560158 159418
940691 206073 630038 199655
966738 332111 814502 255385
19815 88699
85350 27107
167276 193745
1701247 323271
561186
543151
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24 Other Incomes 25 Profit/Loss OTHER INFORMATION 26 Share capital Deposits received 27 Cumulative Provisions Against NPAs 28 Interest De-recognized Cumulative 29 Loans Written of during the year a) No. Of A/Cs b) Amount 30 Reserves/Accumulated profits
147632 295940
159509 531139
22486 230612
890850 384677
890850 379201
890850 464345
89680
55342
46111
15232 88392 376068
14854 57040 799739
4694 31080 1029851
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THEORITICAL STUDY OF THE FINANCIAL STATEMENTANALYSIS TYPES OF FINANCIAL STATEMENT: We can classify various types of financial analysis into different categories.
TYPES OF FINANCIAL
On the basis of material
On the basis of operandi
External analysis Internal analysis Horizontal analysis Vertical analysis
(1).ON THE BASIS OF MATERIAL USED: According to material used, financial analysis can be of two types: ? ? External analysis Internal analysis
EXTERNAL ANALYSIS: Outsiders who do not have access to the detailed internal accounting records of the business firm do this analysis. These outsiders include investors, creditors, potential creditors, govt agencies, credit agencies and general public. External analysis serves only a limited purpose. However the recent changes in
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the government regulations requiring business firms to make available more detailed information to the public. INTERNAL ANALYSIS: The analysis conducted by persons who have access to the internal accounting records of business firm is known as internal analysis. Such an analysis can therefore be performed by executives and employed of the organization as well as government agencies, which have statutory powers invested in them. ON THE BASIS OF MODUS OPERANDI: According to the method of operation followed in the analysis, financial analysis can also be of two types. ? Horizontal analysis ? Vertical analysis HORIZONTAL ANALYSIS: Horizontal analysis refers to the comparison of financial data of a company for several years. The figures for this type of analysis are presented horizontally over a number of columns. The figures of the various years are
43
compared with standard of base year. This type of analysis is also called ‘dynamic analyses. VERTICAL ANALYSIS: Vertical analysis refers to the study of relation ship of the various items in the financial statements of one accounting period. In this type of analysis the figures from financial statement of a year or compared with a base selected from the same years statement. It is also known as static analysis. PROCEDURE OF FINANCIAL STATEMENTS ANALYSIS Broadly speaking there are three steps involved in the analysis of financial statements, those are: Selection: this step involves selection of information relevant to the purpose of analysis of financial statements. Classification: this step involved the methodical classification of the data. Interpretation: this step includes drawing of interences and conclusions. The following procedure is adopted for the analysis and interpretation of financial statements.
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? The analyst should acquaint himself with the principles and postulated of accounting. The analyst 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. ? A relation ship is established among financial statements with help of tools and techniques of analysis such as ratios, trends, common size, funds flow etc. ? The information interpreted in a simple and understandable way. The significance and utility of financial data is explained for helping decisionmaking. ? The conclusions drawn from interpretation are presented to the management in the form of reports. METHODS OR DEVICES OF FINANCIAL ANALYSIS The analysis and interpretation of financial statements is used to determine the financial position and results of operations as well. A number of methods or devices are used to study the relationship between different statements. The following methods analyses are generally used. 1. Comparative statement analysis
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2. Common size statements 3. Funds flow analysis 4. Cash flow analysis 5. Ratio analysis 6. Trend analysis
1. Comparative statement analysis:
The comparative financial statements are statements of the financial position at different period of time. The elements of financial position are shown in comparative from as to give an idea of financial position as two or more periods. Any statement prepared in a comparative from will be covered in comparative statements. The comparative statement may show: 1. Absolute figures (rupees of amounts) 2. Change in absolute figures i.e. increase or decrease in absolute Figures. 3. Absolute data in terms of percentages (1) Increase or decrease in terms of percentages.
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The analyst is able to draw useful conclusions when figures are given in comparative position. Comparative figures will indicate the trend and direction of financial position and operating results. The financial data will be comparative only when same accounting principles are used in preparing these statements. The two comparative statements are ? Comparative balance sheet ? Comparative income statement
Comparative balance sheet:
The comparative balance sheet analysis is the study of the trend of the same items group of items in two or more balance sheets of the same business enterprise. The changes can be observed by comparison of the balance sheet at the beginning and at the end of date period and these changes can help in forming an opinion about the progress of an enterprise.
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The comparative balance sheet has two columns for the data of original balance sheets. A third column is used to show increase in figures. The fourth column may be added for giving percentages of increase or decrease. GUIDE LINE FOR INTERPRETATION OF COMPARATIVE BALANCESHEET While interpreting comparative balance sheet the interpreter is expected to study the following aspects ? The interpreter observes the current financial position and liquidity position. For that study he should see the working in the both the years. The excess of current assets over current liabilities will give the figures of working capital. The increase in working capital will mean improvement in the current financial position of the business. ? The long tem financial position of the concern can be analyzed by studying the changes in fixed assets. Long-term liabilities and capital. An increase in fixed assets should be compare to the increase in long-term loans and capital. If the increase in fixed assets is more than the increase in long-term securities then part of fixed assets has been financed from the working capital.
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? The next aspect to be studied in comparative balance sheet question is the profitability of the concern. The study of increase or decrease in retained earnings, various resources and surpluses etc. will enable the interpreter to see whether the profitability has improved or not. Comparative income statement: The income statement gives the results of the operations of a business. The comparative income statements give an idea of the progress of a business over a period of time. The changes in absolute data in money values and percentages can be determined to analyze the profitability of the business. The comparative income statement also has four columns. First two columns give figures of various items for two years. Third and fourth columns are used to show increase or decrease in figures in absolute amounts and percentages respectively. GUIDELINES FOR INTERPRETATION OF THE INCOME STATEMENT The year analyses and interpretation of income statement will involve the following steps: ? The increase or decrease in sales should be compared with the increase or decrease in cost or good sold. An increase in sales will not always
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mean an increase in profit. The profitability will improve it increase in sales it more than the increase in cost of good sold. ? The interpreter should study of operational profits. An increase in operating profit will result from the increase in sales position and control of operating expenses. A decrease in operating profit may be due to an increase in operating expenses or decrease in sales. ? The increase or decrease in net profit will give an idea about the overall profitability of the concern. An increase in per profit will gives us an idea about the progress of the concern. (2). Common size statements or analysis: The statement indicates the relation ship of various items with some common item. In the income statement the sale figure is taken as base and all other figures are expressed as percentage of sales. Similarly in the balance sheet the total of assets and liabilities is taken as base and all other figures are expressed as percentage to the total. (3). The funds flow statement: The term ‘fund’ normally meaning working capital. The funds flow statement reveals the sources from which funds are received and the uses to
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which these have been put. It is a valuable tool to analyze the changes in the financial condition of the business between two periods and helps the management in policy formulation and performance appraisal (4). The cash flow statement: The cash flow statement is the statement of changes in the financial position of a firm on ‘cash basis’. It is very helpful in the evaluation of current liquidity of a business concern. It helps the business executive of a cash business in the efficient cash management (5) Ratio analysis: It is done to develop meaningful relationship between individual items or group of items usually shown in the periodical financial statements published by the concern an accounting ratio shows the relationship between the two interrelated accounting figures as gross profit to sales, current assets to current liabilities etc. (6). Trend analysis: The analysis is an important tool of horizontal financial analysis. This method is immensely helpful in making a comparative study of the financial
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statements of several years. It helps in under taking the nature and rate of movement in various financial factors. However conclusions should not be drawn on the basis of single trend. Trends of related items should be careful studied The method of trend percentages is a useful analytical device or the management since by substitution of percentages for large amounts the brevity and readability are achieved. However trend percentages not calculated for all the items in the financial statements. They are usually calculated only for major items since the purpose is to highlight important changes. Steps in computation of trend values: ? Select one of the periods for which financial statements are available as the base period. The selected period should be a normal period. ? Every item is base period is taken as 100%. ? Trend values of each item for any other periods can be calculated as under. Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
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Points to be noted: ? The accounting policies for the entire period should be uniform. ? Trend values must be read along with absolute values. ? Non-financial factors should be considered while interpreting the trend. LIMITATIONS OF FINANCIAL ANALYSIS Financial analysis is powerful mechanism of determining financial strengths and weakness of a firm. But the analysis is based on the information available in the financial statements. The financial analyst has also to be careful about the impact price level changes. Window-dressing of financial statements changes in accounting policies of a firm, accounting concepts and conventions and personal judgment etc. Some of the important limitations of financial analysis are: ? It is only a study of interim reports. ? Financial analysis is based on monetary information and nonmonetary factors are ignored. ? It does not consider changes in price levels. ? As the financial statements are prepared on the basis of a going concern, it does not give an exact position.
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? Changes in accounting procedure by a firm may often make financial analysis misleading. ? The analyst has to make interpretation and draw his own conclusions. Different people may interpret the same analysis in different ways.
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ANDHRA PRADESH GRAMEENA VIKAS BANK COMPARATIVE BALANCE SHEET AS ON 2007-2008 Rs. (In thousand) Year Particulars 2007 Fixed assets Investments Current assets: Cash and balance with RBI Balance with bank and money at call and short notice Other assets 4751714 723564 6601026 669539 1849312 -54025 38.92 -7.47 1483110 1711839 228729 15.43 74645 5468161 2008 80721 5691605 in 2008 6076 223444 in 2008 Year Change
%Change
8.14 4.09
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Total current assets Advances Total
6958388 14924594 27425788
8982404 17606867 32361597
2024016 2682273 4935809
29.09 17.97 17.997
Capital Share capital deposits Reserves &surpluses
500,00 890850 799239
500,00 890850 1029851 230612 28.86
Current liabilities: Deposits i) Demand deposits ii) Savings bank iii) Term deposits Total deposits 1209126 7831242 9712345 18752713 4067097 1153549 10400645 10335285 21889479 6057546 55577 2569403 622940 3136766 1990449 4.596 32.81 6.41 16.73 48.94
Barrowings
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Other liabilities and provisions Total current liabilities Total 25685699 27425788 30390896 32361597 4705197 4935809 18.32 17.997 2865889 2443871 422018 -14.73
INTERPRETATION: The Comparative balance sheet interpretation also reveals many facts about the composition of assets and financial structure of the firm. ? The fixed assets have increased over the period by 8.14%. This is a little
improvement. But the other assets are decreased by -7.47%. ? Investments and Advances are increased by 4.09% and 17.87%
respectively. ? The current assets have increased by 29.09%. This is higher than the
current liabilities.
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? short ? ?
Cash and balance with RBI and balance with bank and money at call & notice also in increasing mode by 15.43 and 38.92 respectively. Share capital deposits and capital remains same. Reserves and surplus have increased by 28.22%. it means it is in
increasing. ? Current liabilities are increased by 18.32% but it is less than current
assets. ? ? The liquidation position is good. Deposits are also in increasing mode by 16.73% but in deposits the
demand deposits are decreased by –4.596%. ? ? At the same time Borrowings also increased a lot by 48.94%. The overall financial position is satisfactor
ANDHRA PRADESH GRAMEENA VIKAS BANK
COMPARATIVE INCOME STATEMENT FOR 2007-2008 Rs. (In thousand) YEAR 2007 YEAR 2008 CHANGE IN CHANGE PARTICULARS (Rs.) (Rs.) 2007 (Rs.) % IN
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2008 Income: Interest earned Other incomes Total (A) 2427667 2567669 159509 220486 140002 60977 200979 5.77 38.23 7.77
2587176 2788155
Expenditure: 1149409 1302255 829693 1069887 185401 152846 240194 108466 501506 13.29 28.95 140.98 24.39
Interest expended Operating expenses
76935 Provisionsand contingencies Total (B)
2056037 2557543
Net profit/loss: Profit (A – B) 531139 230612 300527 -56.58
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Excess provision written back 6793 Nil 498292 728904 -6793 442874 135554 -100 799.15 22.84
Profit/loss brought forward55418 Total Appropriations: Transfer to the statutory reserves 68848 593350
49135 14939
-19713 -11271
-28.63 -43.00
Transfer to other reserves 26210 Profit/loss carried over to balance sheet Total 498292 593350
664830 728904
166538 135554
33.42 22.84
INTERPRETATION: The total of incomes are increased but it is less than the increase in expenditure.
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? Other incomes have greatly increased by 38.23% and a marginal increase in interest earned. ? Provisions and contingencies are increased rapidly by 140.98%. ? The profit is also decreased when we compare with 2007 year but however the profit/loss brought forward compensated it mostly. ? The transfers to reserves are also rapidly decreased. ? The over all performance of firm is satisfactory. ANDHRA PRADESH GRAMEENA VIKAS BANK
COMMON SIZE BALANCE SHEET AS ON 2007-2008 Rs. (In thousand)
YEAR PARTICULARS 2007 (Rs)
YEAR 2008 (Rs)
Change %IN 2007 0.272 19.94
Change %IN 2008 0.249 17.59
Fixed assets Investments
74645 5468161
80721 5691605
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Current assets: Cash and balance with RBI Balance with bank and money at call and short notice Other assets Total current assets Advances Total 4751714 723564 6958388 14924594 27425788 6601026 669539 8982404 17606867 32361597 17.32 2.64 25.37 54.42 100 20.39 2.07 27.26 54.1 100 1483110 1711839 5.41 5.29
Capital Share capital deposits Reserves &surpluses
500,00 890850 799239
500,00 890850 1029851
0.182 3.25 2.91
0.155 2.75 3.18
Current liabilities:
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Deposits: i) Demand deposits ii) Savings bank iii) Term deposits Total deposits 1209126 7831242 9712345 18752713 4067097 1153549 10400645 10335285 21889479 6057546 4.41 28.55 35.41 68.38 14.82 3.56 32.14 31.94 67.64 18.72
Barrowings Other liabilities and provisions
2865889
2443871 30390896 32361597
10.45 93.65 100
7.55 93.91 100
Total current liabilities 25685699 Total 27425788
INTEPRETATION: ? In the year of 2007 the share of fixed assets in total assets is 0.272%.
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? In the year 2008 the share of fixed assets in total assets is 0.249%. If we compare these two figures we can observe that there is a reduction in fixed assets .it shows that the company has not rely in fixed assets. ? The investments are decreased to 17.59%. When we compare with previews year. ? The current assets are little increased in 2008 when we compare with previews year. ? The advances percentage of the firm remains same for two years in total assets share of both the years respectively. ? There is no change in capital and share capital deposits. ? The reserves and surpluses increased from Rs.7,99,239 to 10,29,851. It indicates that the transfer of profits to the reserves is made in this year. But the proportion of reserves and surpluses in total assets is 2.91% and 3.18% respectively for the year 2007 & 2008. ? The change in current liabilities is immaterial. It is same for the two years. ? Although there is a little decrement in deposits in 2008, to 67.64%. ? The Borrowings have little increment in 2008 to 18.72% and other liabilities and provisions are decreased.
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ANDHRA PRADESH GRAMEENA VIKAS BANK COMMONSIZE INCOME STATEMENT FOR 2007-2008 Rs. (In thousand) YEAR PARTICULARS 2007 (Rs.) Income: Interest earned Other incomes Total (A) Expenditure: 1149409 829693 1302255 1069887 44.43 32.07 46.71 38.37 2427667 159509 2587176 2567669 220486 2788155 93.83 6.16 100 92.09 7.91 100 YEAR %IN 2008 (Rs.) 2007 %IN 2008
Interest expended Operating expenses
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Provisions contingencies Total (B) Net profit/loss: Profit (A – B)
and 76935 2056037
185401 2557543
2.97 79.47
6.65 91.73
531139
230612
20.53
8.27
Excess provision written back Profit/loss forward Total 6793 brought 55418 593350 498292 728904 2.14 22.93 17.87 26.14 Nil 0.263 Nil
INTERPRETATION: ? The proportion of increase in other incomes is 6.16% and 7.91% respectively for the years 2007 and 2008.
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? The share of interest earned in total income in 2007 is 93.83%, and a little decrease in 2008 to 92.09. ? The share of operating expenses in total income is 32.07% and 38.37% respectively for the years 2007 and 2008. ? The percentage of profit in total income is only 20.53% in 2007and 8.27% in 2008. It is lesser than previews year. ? Provisions and contingencies are increased to 6.65% in 2008 when compared with previews year. INVESTMENTS (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF INVESTMENT ACCOUNT (Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousand) 9123405 9769610 11384662 % 100 107.08 124.79
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INTERPRETATION: ? The Investments have been continuously increased in all years up to 2007. ? During the period 2007 the Investments growth is more when compared with previews year.The increase in Investments quite satisfactory. THE INVESTMENTS IN GRAPH
Trend Ratio
124.79
100
107.08
2006
2007
2008
ADVANCES (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
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TREND ANALYSIS OF ADVANCES ACCOUNT (Base year 2006 = 100) Rs. (In thousand 12354933 14924594 17606867 % 100 120.79 142.51
YEAR 2006 2007 2008
INTERPRETATION: a. The Advances have been continuously increased in all the years up to 2008. b. There is a great increment in every year. c. The percentage the base year 2006 is 100% as compared to the year 2008 is 142.51%. d. And the increase in Advances quite satisfactory.
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THE ADVANCES IN GRAPH
Trend ratio
100 142.51 120.79
2006
2007
2008
RESERVES AND SURPLUSES (Data from 2006 -2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF RESERVES AND SURPLUSES ACCOUNT (Base year 2006 = 100)
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YEAR 2006 2007 2008
Rs. (In thousands) 376068 799239 1029851
% 100 212.53 273.85
INTERPRETATION: ? Reserves & surpluses are only Rs. 376068 thousands in 2006, but the same in 2008 Rs. 1029851 thousands. ? It is a very very higher increase in reserves and surplus. It fells the profitability of the firm and that profits transfer to reserves & surplus. ? The firm reinvesting the profits there by maximizing the wealth of the firm. ? Reserves & surpluses are quite satisfactory.
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RESERVES AND SURPLUSES ACCOUNT IN GRAPH
Trend ratio
273.85
100 212.53
2006
2007
2008
DEPOSITS (DATA FROM 2006-2008):
Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
TREND ANALYSIS OF DEPOSITS ACCOUT (Base year 2006 = 100)
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YEAR 2006 2007 2008
Rs. (In thousands) 16850919 18752713 21889479
% 100 111.28 129.91
INTERPRETATION: ? The deposits have been continuously increased in all the years up to 2008 year. ? There is a very high increase in 2007 by 111.28% when we compare with previews year. ? It indicates that the firm deposits are satisfactory. DEPOSITS IN GRAPH
Trend ratio
100
129.91
111.28
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2006
2007
2008
BORROWINGS (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = --------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF BORROWINGS ACCOUNT (Base year 2006 =100)
YEAR 2006 2007 2008
Rs. (in thousands) 3222120 4067097 6057546
% 100 126.22 187.99
INTERPRETATION: ? Here the base year is 2006 with Borrowings Rs. 3222120 thousands and 100%. ? But the same in 2008 is Rs. 6057546 thousands with 187.99%. ? It shows that the company raised funds through Borrowings to reduce the risk and increase the return to equity shareholders. ? The raising funds in Borrowings are quite satisfactory.
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BORROWINGS IN GRAPH
Trend ratio
187.99
100
126.22
2006
2007
2008
FIXED ASSETS (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
TREND ANALYSIS OF FIXED ASSETS ACCOUNT (Base year 2006 =100)
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YEAR 2006 2007 2008
Rs. (In thousands) 56765 74645 80721
% 100 131.49 142.20
INTERPREATION: ? The fixed assets are continuously increased every year. ? But it is not commensurate with the growth in reserve and surplus. ? It reveals that application of funds is not in fixed assets. ? The growth of fixed assets quite satisfactory. FIXED ASSETS IN GRAPH
Trend ratio
142.2 100 131.49
2006
2007
2008
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PROVISIONS AND CONTINGENCIES (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF PROVISIONS AND COTIOGENCIES ACCOUT (Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousands) 384677 379201 464345 % 100 98.58 120.71
INTERPRETAION: ? Provisions and contingencies are slightly decreased in 2007 to 98.58%. ? Provisions and contingencies have been increasing Rs.464345 ? So the provisions and contingencies are quite satisfactory.
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PROVISIONS AND CONTINGENCIESIN GRAPH
Trend ratio
100
120.71
98.58
2006 2007 2008
CURRENT ASSETS (DATA FROM 2006 -2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
TREND ANALYSIS OF CURRENT ASSETS (Base year 2006 = 100)
YEAR 2006 2007
Rs. (In thousands) 4592515 6958388
78
% 100 151.51
2008
8982404
195.59
INTERPRETATION: ? The current assets have been continuously increased. But the year of 2007 current assets increased by 151.51% as compared with last years. ? Current assets have been increasing every year. In 2006, Rs.4592515 thousands and in year 2008, Rs.8982404 thousands. ? Over all the current assets satisfactory.
CURRENT ASSETS IN GRAPH
Trend ratio
195.59 100
151.51
2006
2007 79
2008
CURRENT LIABILITIES (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF CURRENT LIABILITIES (Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousands) 15154348 25685699 30390896 % 100 169.49 200.54
INTERPRETATION: ? Current liabilities are slowly increasing every year in the year 2006 it is Rs.15154348 thousands and year 2008, Rs.30390896 thousands. ? Over all the liquidation position is satisfactory.
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CURRENT LIABILITIES IN GRAPH
Trend ratio
200.54 100 169.49
2006
2007
2008
INCOMES (DATA FROM 2006-2008) : Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF INCOMES (Base year 2006 = 100)
YEAR 2006 2007 2008
Rs. (In thousands) 2340447 2587176 2788155
% 100 110.54 119.13
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INTERPRETATION: ? The Incomes are increasing gradually in all years. ? During the year 2007-2008 very high Incomes earned. As compared the previews year. ? So the Incomes are satisfactory over all years GRAPH OF INCOME
Trend ratio
119.13 100
110.54
2006
2007
2008
ADMINISTRATIVE & OTHER EXPENSES (DATA FROM 2006-2008):
Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period
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TREND ANALYSIS OF ADMINISTRATIVE & OTHER EXPENSES
(Base year 2006 = 100) YEAR 2006 2007 2008 Rs. (In thousands) 2037926 2084971 2481193 % 100 102.31 121.75
INTERPRETATION: ? The administrative and other expenses are continuously increased the base year 2006-2008. ? The expenses are growing to according to the firm income and organization developing. ? The administrative and other expenses quite satisfactory.
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ADMINISTRATIVE & OTHER EXPENSES IN GRAPH
Trend ratio
100
121.75
102.31
2006
2007
2008
PROFIT AND LOSS ACCOUNT (DATA FROM 2006-2008): Absolute value of the item for the period Trend value = ---------------------------------------------------------- *100 Absolute value of the item in the base period TREND ANALYSIS OF PROFIT AND LOSS (Base year 2006= 100) YEAR 2006 2007 2008 Rs. (In thousands) 295940 531139 230612
84
% 100 179.47 77.92
INTERPRETATION: ? The Profits are increased greatly in the year 2007 to Rs 531139 thousand compared to last year. ? The profits are decreased in current year to 77.97%. ? The Profits of form are quit satisfactory. PROFIT AND LOSS ACCOUNT IN GRAPH
Trend ratio
100 77.92
179.5
2006
2007
2008
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SUGGESTIONS & CONCLUSIONS:
? Now it is the time of Electronic mean of exchange. So the Bank has to take steps for improving the Computer technology in all the Branches. ? The Bank must give the training to its staff on Computer, Other technical aspects, Rules and Regulations and Bank Goals. ? It must maintain a good relation with customers and must motivate them for Depositing in the Bank. ? The Interest rate on Advances and Others must be keep reasonable for smooth running business ? Through long study on “ANDHRA PRADESH GRAMEENA VIKAS BANK” found the following observations. 1. The balance of Deposits has come from 187527 lakhs to 218894 lakhs
with a growth of 31367 lakhs (16.72%). It is more than the MOU settled for the year 2007 – 2008. 2. The Interest received on investments and Balances with RBI & inter banks
increased by 14.77% from Rs. 75.49 crores in 2006 – 07 to Rs. 86064 crores in 2007 – 08.
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3.
The Bank has recovered a significant amount of Rs. 12.19 crores during
the year from the Written off bad debts account. 4. The Bank has to provide the ATM services to its customers. So the
customers can draw at any time and any place when ever he needs money 5. The Bank has to maintain a relation with out side India. with this it can
develop and Expand its market area. 6. The Bank has obtained corporate agent license for selling the SBI Life
Insurance products from the IRDA through SBI Life Insurance. The Schemes of Swarna Ganga and Super Suraksha are extended the staff members and their spouses apart from other products, to the clientele of he bank. 7. In future this will be going to double if it comes with attractive plans.
Already APGV has a good image in the society, mostly in rural areas. 8. So the Bank should maintain it and face the market competition
effectively.
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BIBLIOGRAPHY
ANNUAL REPORTS, BANK”.
“ANDHRA PRADESH GRAMEENA VIKAS
R.N. Anthony and G.A. Welsch, “Fundamentals of Financial Accounting” E.A. Helfert, “Techniques of Financial Analysis”, Richard D. Irwin Inc., Homewood III., 1977. C.F. Lee, “Financial Analysis and Planning”, Theory and Application, Addison-Wesley, Reading, Mass., 1985. G. Foster, “Financial Statement Analysis”, 3rd. ed., Prentice-Hall Inc., Englewood cliffs, N.j., 1990. M.Y. Khan, P.K. Jain, Publishing Ltd., 2004. “Management Accounting”, Tata Mc-Graw Hill
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