PROJECT REPORT

ON
RATIO ANALYSIS
OF

SUBMITTED TO:

SUBMITTED BY:

PG Department Of Commerce

SUKHCHAIN AGGARWAL
B.com (Accounting & Finance) 2ND
9007

DECLARATION
I hereby declare that the project entitled RATIO ANALYSIS is bonafide record of work
done by Sukhchain Aggarwal a student of B.com (Accounting & Finance) and is submitted to PG
Department of Commerce in partial fulfillment of the requirement for the degree.

This work has never been submitted to any Educational Institution as per good of my
knowledge.

Sukhchain Aggarwal
B.com (Accounting & Finance)
9007

ACKNOWLEDGEMENT
With great pleasure we are presenting this report on the basis of our visit to the AXIS Bank.
We are highly grateful to Prof. Bikramjit Singh Sandhu & Prof Rohini Gupta for giving
us the time, encouragement and guidance and granting permission for the project. His critical and
detailed comments and full support helped and benefited us in carrying out the project.

Thanking you,
Sukhchain Aggarwal

CONTENTS

Sr. No.

TOPIC

Page No.

Introduction

History

Change in Name

Research Methodology

Products & Services

10

Shareholding Patterns

17

Board of Directors

19

Mission & Objectives

20

Financial Statement Analysis

21

10

Profit & Loss Account

22

11

Balance Sheet

24

12

Ratio Analysis

26

13

Financial Ratios

32

14

Conclusions

35

15

References

36

Introduction
Axis Bank India, the first bank to begin operations as new private banks in 1994 after the
Government of India allowed new private banks to be established. Axis Bank was jointly promoted
by the Administrator of the specified undertaking of the Unit Trust of India (UTI-I), Life Insurance
Corporation of India (LIC) and General Insurance Corporation Ltd. Also with associates viz.
National Insurance Company Ltd., The New India Assurance Company, The Oriental Insurance
Corporation and United Insurance Company Ltd.

Axis Bank in India today is capitalized with Rs. 282.65 Crores with 57.05% public holding other
than promoters. It has more than 574 branch offices and Extension Counters in the country with
over 2428 Axis Bank ATM proving to be one of the largest ATM networks in the country. It
commits to adopt the best industry practices internationally to achieve excellence. It has strengths in
retail as well as corporate banking.

By the end of June 2007, Axis Bank in India had over 60 lakhs debit cards. This is the first bank in
India to offer the AT PAR Cheque facility, without any charges, to all its Savings Bank customers
in all the places across the country where it has presence.

With the AT PAR cheque facility, customers can make cheque payments to any beneficiary at any
of its existence place. The ceiling per instrument is Rs. 50,000/-

The latest offerings of the bank is the Australian Dollar and Canadian Dollar variants of the
international Travel Currency Card along with the US Dollar, Euro and Pound Sterling variants.
The Travel Currency Card is a signature based pre-paid travel card which enables travellers global
access to their money in local currency of the visiting country in a safe and convenient way. Along
with this the bank has also launched the credit cards in silver and gold variants which can be
accessed in 60 cities across the country.

The bank has also raised its reach to 341 cities, towns and villages. The bank has the outstanding
deposit base of more than Rs. 61,000 crores with over 65 lakh accounts.
5

HISTORY
Established in 1994, the Axis Bank Ltd was the first private sector bank in the liberalization
era with its registered office at Ahmadabad and corporate office in Mumbai. The main promoters of
this bank were Unit Trust of India, LIC of India, GIC of India (General Insurance Corporation).
Within the span of 10 years, this bank has had a momentous growth .Today it has 350 branches and
extension counters across the country .Each branch is fully computerized with a centralized
database at Mumbai and disaster management backup at Bangalore. The branches are designed in
such a manner as to offer the full range corporate and retail banking, international banking, treasury
management, merchant and investment banking. All in all the clients are assured of efficient and
hassle free banking.

Axis Bank was formed as UTI when it was incorporated in 1994 when Government of India
allowed private players in the banking sector. The bank was sponsored together by the administrator of
the specified undertaking of the Unit Trust of India, Life Insurance Corporation of India (LIC) and
General Insurance Corporation ltd. and its subsidiaries namely National insurance company ltd., the
New India Assurance Company, the Oriental Insurance Corporation and United Insurance Company
Ltd. However, the name of UTI was changed because of the disagreement on terms and conditions of
the bank authority over certain stipulations including royalty charged over the name from UTI AMC.
The bank also wanted to have a new name from its pan-Indian as well as international business
perspective. So from July 30, 2007 onwards the UTI bank was named as Axis Bank.

Change in Name
UTI Bank decided to change its name to Axis Bank.

REASONS : The change in the bank's name follows a year-long tiff between UTI Mutual Fund and the
bank over the use of the brand name. UTI brand was given in 1994 by its promoters and UTI Bank
could use the brand only till January 2008 as per Govt directives. Many unrelated shareholder entities
like UTI Technological Services, UTI Investor Services and UTI Securities were carrying the UTI
brand. The board feels that the need for the change of name has arisen from the brand confusion that
the UTI brand generates

NEW LOGO: The bank has retained the burgundy color, but has changed the logo. The logo uses the
alphabet 'A' from the word Axis. The logo depicts a strong growth path for the bank supported by a
strong base, indicating that the bank is moving on from a position of strength. Earlier, the bank's logo
used the letters U, T and I.

The bank is likely to spend around Rs50 crore in the re-branding exercise.

UTI Bank: Now Axis Bank

The name of the country's third largest private sector lender UTI Bank has been officially
changed to the Axis Bank Ltd with effect from 31st July, 2007. Some reasons for change in name of
'UTI Bank to Axis Bank' - are:

1) The UTI brand is owned by UTI Asset Management Company.

2) UTI Bank to shed its brand name after the split of the erstwhile UTI. Though UTI was a government
institution, its subsidiary UTI Bank has been categorized as a private sector bank, according to RBI
guidelines.

3) UTI Bank was started as a part of the entire UTI (Unit Trust of India) Group. But, when there were
losses incurred by UTI ( due to failure of US 64 scheme probably ) because of other reasons, it was
decided by RBI that UTI Bank should be separated as private sector bank, as several unrelated
entities were using the UTI brand.

4) The change of name to Axis Bank has been cleared from shareholders and regulators.

5) The government still has a 26% stake in UTI Bank. This stake is up for sale.

Regarding the re-branding strategy, Executive director (corporate strategy) of the bank R Ashok
Kumar said the bank had hired advertising firm O&M to help in creating awareness of the new brand
across the country. The bank would change logo and color of logo, he had said, adding, the bank is
likely to spend around Rs 50 crore (Rs 500 million) in the re-branding exercise

Research Methodology
For the purpose of study secondary data has been used for this purpose various articles, journals
and annual reports of the bank has been studied. In this project various ratios were studied to find out
the financial position of bank. These ratios are as follows:

1. Capital Adequacy Ratio

Capital
Risk

2. Debt Equity Ratio

Debit
Equity Funds

3. Net Turnover Margin Ratio :

Net Profit
Net Sales (Operating Income)

4. Assets Turnover Ratio

Net Sales (Operating Income)

Total Assets

5. Return on Equity

Net Income
Equity Share Capital

6. Return on Assets Ratio

Net Profits
Average Total Assets

7. Price Earnings Ratio

Market Price of Shares

Earnings per Share

8. Debt Assets Ratio

Debit
Total Assets
9

PRODUCTS AND SERVICES

Facilities
1) Axis Bank is fully computerized. Which gives less possibility of errors and accuracy is increased.
Computerization also saves time which in turn improves customer service also.

2) Axis bank have also introduced Internet banking and Telebanking

Wherein you can do all your normal banking transactions sitting at home. Like in telebanking you can
inquire balances on phone. Give cheque book request on phone, etc. In internet banking you can view
your balances and statement on net. Transfer funds from one account to another through net. Do on line
shopping. Pay your Axislity bills, LIC premium through net. Do railway reservations on net. Your bank
gets debited for the same. These facilities are password protected. So that security is maintained and no
one can misuse the same.

3) One of the major breaks through in Axis banking is ATM facility. ATM gives you access to your
banking needs like withdrawal and deposits, balance inquiry, 24 hrs, 365 days of the year. Irrespective
of wherever you are you can transact from any of the ATMs. Axis bank have tie up with service
providers like Visa and MasterCard wherein customer holding ATM card of Axis bank can withdraw
from any other bank ATM also.

4) Now Online Banking or anywhere banking has also started in India. Wherein all the branches of a
particular bank are networked across the Country having one centralized database. This gives
advantage to the Customer of one branch to transit in any of the branches of that bank. For e.g.
Customer having an account in Mumbai branch of Axis Bank can also operate his account from Delhi
or Chennai branch of Axis Bank.

5) Mobile banking facilities with SMS alerts.

6) NRI services

10

7) Depositary services (Demat account).

8) Financial advisory services like sales of various Mutual funds, RBI bonds, Infrastructure bonds.

9) Retail loans like personal, housing, vehicle, consumer loans, etc.

Hassle-free Current Account for a lifetime:

After completing the necessary paperwork activity the client with a current account can look
forward to the following facilities:-

ATM Network:
Proprietary concerns are given free ATM cards to enable them to access their account at
anytime at the various ATM centres across the country. In addition cash can be withdrawn from any of
the ATMs against the MasterCard {domestic /international}

Overdraft facility:
The current account holder can avail of overdraft facility against fixed deposits, Axis Schemes
and Demat shares.

Foreign Remittances.
The account holder can make remittances abroad with ease.

Instantaneous Transfers
Funds can be transferred with great speed across the various Axis branches spread across the
country.

7 Day banking
At select branches, the account holder can do his banking on all 7 days of the week .Thus the
customer is assured of non-stopnking and smooth running of business transactions.

11

Tele banking
Tele banking is another innovative service for the convenience of the client. This allows him
instant access to his account. It involves a wide range of services over the phone. The account holder
can get account information, give instructions for stop payment, make a request for cheque book
inquire about interest rates and foreign exchange rates.

Connect Net Banking

This is another revol Axis nary feature that brings the bank right up to the desktop of the holder.
He can look up the status of the account, query and undertake a wide range of financial transactions.
All this with a simple click of the mouse!

A world of convenience at no extra charges!

No wonder then that the holder finds himself laughing all the way up to the Bank!

Retail Loans
Personal Loans from Axis Bank
Want to go on your dream holiday or want to buy the latest lifestyle gizmo. Want to gift your wife a
lovely diamond ring or have a wedding in the family. Maybe your house needs renovation or your
daughter / son has obtained admission to a medical college. These are moments in life when you may
need a helping hand. That's when you can rely on Axis Bank Personal Loan. We offer personal loans to
meet all your personal requirements.

12

Cash Management Services

Our Offering
In today's competitive marketplace, effectively managing cash flow can make the difference
between success and failure. The cash flow solAxisons of the Axis give you maximum control over
this vital asset. Whether you do business locally or throughout India, they can provide you with
innovative, integrated cash management solAxisons tailored to your specific needs. Cash
Management enables the efficient Axislization of your receivables through coordinated
management of payments, collections and balances in your accounts. The objectives are to reduce
costs, enhance control and optimize returns by leveraging Banking expertise for mutual gains.

Managing Receivables: Collections

Managing Payables: Payments

Managing Taxes: CDBT / CBEC Collections

Managing Information: MIS, IT Support & Services

Managing Resources: Liquidity Management

Axis Bank's Cash Management Services is based on an extremely robust technology capable to
cater to collections or payment's requirements of: Corporate, Banks and Axislity Service providers.

Collection SolAxisons:
Managing Receivables: Collections
Axis Bank facilitates faster collections by enabling quick realization of local and upcountry
cheques and pooling the funds in a central account. We provide the following collection products:
Local Cheque Collections (LCC):
LCC enables you to realize funds (on an assured day) through local cheques payable within the
purview of local clearing. The bank provides these services at

13

Axis Bank Network: 171 Locations with Courier Pickup facility

Co-Ordinator Network: Locations with Courier Pickup facility can be added as per your
business requirements

Upcountry Cheque Collection (UCC) :

As collecting bankers, they provide you service relating to:

Public/Rights Issues

Private Placements

Buyback offers

In this current scenario of cut-throat competition, Axis Bank has designed its products to
minimize the issues faced by you in the area of fund management and reconciliation. Our aim is to
reduce the cost, time and efforts faced by corporate in collection and payment issues. The bank
provides you complete solAxisons to all your CMS needs to enable you to devote more time and
effort towards improving your business.
Bulk Collections - Axislity Bills / PDCs Management

Axis Bank, also offers a solAxison to meet Bulk Collection Requirements i.e. Post Dated
Cheques, Bulk Collections through Cheque clearing or ECS debit services, etc. The Bank processes
collections in a convenient and efficient way to avoid any reconciliation issues.

Payment SolAxisons
Payable at Par cheque:
Local cheques can be deposited at all Axis Bank locations, absolutely free of cost. This
makes us a universal customer of Axis Bank and eliminates the need for opening and tracking
separate accounts. Bulk Payments with Remote Printing & Dispatch Facility.
This enables you to avail bulk Demand drafts at all Axis Bank locations. You can also avail
online paid / unpaid status DDs purchased from any of its branches.
14

Statutory Payments
You can make statutory payments like taxes, Axislity bills, etc. within a committed time
frame at any of our branches on a regular basis which is executed through our dedicated HUB
/Dividends / Interest / Principal / Refund Order Payments
Dividends / Interest / Refund Order Payments / Redemption
AXIS Bank has launched its Centralized Bulk Payment Module that offers the following value:

Centralized maintenance of Master data for every client

Real-time clearing activity.

Online Validation with Master Data

Daily Paid - Unpaid data.

Comprehensive MIS.

Prevention of Fraudulent Payments.

Electronic Clearing Services

Credit ECS: The bank undertakes electronic clearances of credit for dividend, interest,
salary, pension, I-T Refund orders and other payments.
Debit ECS: They ensure faster clearance of telephone and electricity billings, loan
installments, PF subscriptions, etc.
You can enjoy the benefits of reduced administration costs, avoid loss of instruments and
enhanced customer service they ensure efficient fund management, reduced delays and easy
assessment of your funds position.

15

Managing Taxes - CBDT / CBEC Collections

AXIS Bank is authorized by Reserve Bank of India to conduct Government Business i.e.
collection of Income Tax, Corporation Tax, etc through 199 designated branches across the country.
They are also authorized to collect Excise and Service Tax through various designated branches in
Delhi, Mumbai and Bangalore.

Issue Management
Managing Resources: Liquidity Management
The Bank lets you achieve maximum returns on excess liquidity and optimize overdraft
charges on your account. It comprises of the Auto Sweep, which allows movement of debit and
credit balances of your various Current Accounts. They also have Financial Advisory Services to
make your money work for you.

Your Benefits
Cash flow management: Provides better management and forecasting of cash flow through the
host of services.
Optimized returns: Through the coordinated management of payments, receivables and cash
balances, you are able to reduce interest charges and optimize returns on your deposits and
investments.
Increased efficiency and productivity: Offers easy and convenient means to perform online
banking (such as cheque services and funds transfer), bulk payments and collections, etc. - leaving
your staff with more time for other tasks.
Better control: Empowered by our CMS, you now enjoy greater control over your transactions,
funds placement and the management of your various bank accounts.
Enhanced security: Advanced security features are built into our systems to ensure end-to-end
security and confidentiality, as well as control over payment processing.

16

Shareholding Patterns
Distrib Axison of Shareholding as on 30th June, 2005
As per clause 35 of Listing Agreement
Sr.

Category

No. of Equity

No.

% To Total

Shares

Promoter's Holding

Promoters

77245070

27.77

77245070

27.77

Indian Promoters (including CoPromoters)

(i)

Administrator of the specified

undertaking of the Unit Trust of India
Co-promoters

(i)

Life Insurance Corporation of India

29222936

10.51

(ii)

General Insurance Corporation of

15397679

5.54

0.00

44620615

16.05

121865685

43.82

India & GIC Susidiaries

Foreign Promoters
Sub Total
Total

Non- Promoter's Holding

InstitAxisonal Investors

Mututal Funds

7953100

2.86

Banks, Financial InstitAxisons,

2012792

0.72

Insurance Companies (Central/State

Govt. InstitAxisons/ Non-Govt.
InstitAxisons)
17

FIIs

57320702

20.61

Sub Total

67286594

24.19

4151658

1.49

16666136

6.00

289473

0.10

67864319

24.40

88971586

31.99

Total ( 2 + 3 )

156258180

56.18

Grand Total (A + B)

278123865

100.00

Others

Private Corporate Bodies

Indian Public

NRIs/OCBs

Any Other(please specify)-FDI

I. HSBC Asia Pacific (UK) Limited
33950000
II. The Bank of New York - 33914319
(Depositary for the equity shares
representing the underlying shares to
the Global Depositary Receipts
(GDRs) issued to the investors
overseas)
Sub Total

18

Board of Directors
The Bank has 9 members on the Board. Dr. P. J. Nayak is the Chairman and Managing
Director of the Bank.

The members of the Board are:

Dr. P. J. Nayak

Chairman & Managing Director

Shri Surendra Singh

Director

Shri N.C. Singhal

Director

Shri A.T. Pannir Selvam

Director

Shri J.R. Varma

Director

Dr. R. H. Patil

Director

Smt. Rama Bijapurkar

Director

Shri R B L Vaish

Director

Shri S. Chatterjee

ExecAxisve Director

Office Timings:
Except for the IT department which works for 24 hours in shifts all the remaining
departments and branches work from Monday-Saturday in 9.00am-5.00pm single shifts.

Division of work, authority and responsibility:

The corporate head office in Mumbai is the central controlling authority. The different
departments in any branch are accountable to their respective heads, who are in turn under the head
office. There is a systematic co-ordination between the various activities of each branch and also a
trouble-shooting mechanism to attend to unforeseen problems. Besides there is the Public Relations
Department to address the problems of the general public.

19

MISSION, POLICIES & OBJECTIVES

Mission and policies:

Customer services and product innovation to meet the diverse needs of the individual

and

corporate clientele.

Continuous up gradation of technology while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness based on ethical practices.

Objectives:
The main objective of Axis Bank is to understand the financial needs of each client.
Investing money is always a complicated decision .This is where the Axis bank offers Financial
Advisory Services. They tailor their sol Axis on according to the needs of each individual. They
diversify and spread the risk of the investment portfolio to ensure that the client spends the rest of
his life comfortably free of worries.

The main objective is to explain to the client what his money can do for him. They help in
profiling the investment horizon, risk tolerance and investment objectives. Thus investing in Axis
means investing in total peace of mind.

20

Financial Statement Analysis

A financial statement analysis consists of the application of analytical tools and techniques to
the data in financial statements in order to derive from them measurements and relationships that are
significant and useful for decision making.

Uses of Financial Statement Analysis:

Financial Statement Analysis can be used as a preliminary screening tool in the selection of
stocks in the secondary market. It can be used as a forecasting tool of future financial conditions and
results. It may be used as process of evaluation and diagnosis of managerial, operating or other problem
areas.

Sources of Financial Information:

The financial data needed in the financial analysis come from many sources. The primary
source is the data provided by the company itself in its annual report and required disclosures. The
annual report comprises of the income statement, the balance sheet, and the statement of cash flows.

Tools of Financial Analysis:

In the analysis of financial statements, the analyst has a variety of tools available to choose the
best that suits his specific purpose. In this report we will confine ourselves to Ratio Analysis based on
information provided from financial statements such as Balance Sheet and Profit & Loss Account.

21

PROFIT AND LOSS ACCOUNT

Profit & Loss account of Axis Bank

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

Mar '11

Mar '10

Mar '09

Mar '08

Mar '07

12 mths

12 mths

12 mths

12 mths

12 mths

Interest Earned

15,154.81

11,638.02

10,835.49

7,005.32

4,560.40

Other Income

4,632.13

3,945.78

2,896.88

1,750.59

986.49

Total Income

19,786.94

15,583.80

13,732.37

8,755.91

5,546.89

Interest expended

8,591.82

6,633.53

7,149.27

4,419.96

2,993.32

Employee Cost

1,613.90

1,255.82

997.66

670.25

381.35

Miscellaneous Expenses

3,496.55

2,502.55

2,008.57

1,483.94

812.03

0.00

0.00

0.00

0.00

0.00

Operating Expenses

5,734.55

5,066.76

3,590.42

2,454.03

1,387.06

Provisions & Contingencies

2,072.08

1,368.98

1,177.31

810.88

507.49

16,398.45

13,069.27

11,917.00

7,684.87

4,887.87

Mar '11

Mar '10

Mar '09

Mar '08

Mar '07

12 mths

12 mths

12 mths

12 mths

12 mths

3,388.49

2,514.53

1,815.36

1,071.03

659.03

0.00

0.00

0.00

0.00

-31.80

Profit brought forward

3,427.43

2,348.09

1,553.87

1,029.07

731.04

Total

6,815.92

4,862.62

3,369.23

2,100.10

1,358.27

0.00

0.00

0.00

0.00

0.00

670.36

567.45

420.52

251.64

148.79

0.00

0.00

0.00

0.00

0.00

82.54

62.06

50.57

29.94

23.40

Income

Expenditure

Preoperative Exp Capitalised

Total Expenses

Net Profit for the Year

Extraordinary Items

Preference Dividend
Equity Dividend
Corporate Dividend Tax
Per share data (annualized)
Earning Per Share (Rs)

22

Equity Dividend (%)

140.00

120.00

100.00

60.00

45.00

Book Value (Rs)

462.77

395.99

284.50

245.13

120.80

Transfer to Statutory Reserves

836.95

867.43

600.62

294.60

180.40

Transfer to Other Reserves

338.84

0.31

0.00

-0.01

0.00

670.36

567.45

420.52

251.64

148.79

Balance c/f to Balance Sheet

4,969.77

3,427.43

2,348.09

1,553.87

1,029.07

Total

6,815.92

4,862.62

3,369.23

2,100.10

1,358.26

Appropriations

Proposed Dividend/Transfer to
Govt

23

BALANE SHEET

Balance Sheet of Axis Bank

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

Mar '11

Mar '10

Mar '09

Mar '08

Mar '07

12 mths

12 mths

12 mths

12 mths

12 mths

Total Share Capital

410.55

405.17

359.01

357.71

281.63

Equity Share Capital

410.55

405.17

359.01

357.71

281.63

Share Application Money

0.00

0.17

1.21

2.19

0.00

Preference Share Capital

0.00

0.00

0.00

0.00

0.00

18,588.28

15,639.27

9,854.58

8,410.79

3,120.58

0.00

0.00

0.00

0.00

0.00

18,998.83

16,044.61

10,214.80

8,770.69

3,402.21

189,237.80

141,300.22

117,374.11

87,626.22

58,785.60

Borrowings

26,267.88

17,169.55

10,185.48

5,624.04

5,195.60

Total Debt

215,505.68

158,469.77

127,559.59

93,250.26

63,981.20

8,208.86

6,133.46

9,947.67

7,556.90

5,873.80

242,713.37

180,647.84

147,722.06 109,577.85

73,257.21

Mar '11

Mar '10

Mar '09

Mar '08

Mar '07

12 mths

12 mths

12 mths

12 mths

12 mths

13,886.16

9,473.88

9,419.21

7,305.66

4,661.03

7,522.49

5,732.56

5,597.69

5,198.58

2,257.27

142,407.83

104,343.12

81,556.77

59,661.14

36,876.48

Investments

71,991.62

55,974.82

46,330.35

33,705.10

26,897.16

Gross Block

3,426.49

2,107.98

1,741.86

1,384.70

1,098.93

Accumulated Depreciation

1,176.03

942.79

726.45

590.33

450.55

Capital and Liabilities:

Reserves
Revaluation Reserves
Net Worth
Deposits

Other Liabilities & Provisions

Total Liabilities

Assets
Cash & Balances with RBI
Balance with Banks, Money at
Call
Advances

24

Net Block

2,250.46

1,165.19

1,015.41

794.37

648.38

22.69

57.24

57.48

128.48

24.82

Other Assets

4,632.12

3,901.06

3,745.15

2,784.51

1,892.07

Total Assets

242,713.37

180,647.87

147,722.06 109,577.84

73,257.21

Contingent Liabilities

429,069.63

296,125.58

104,428.39

78,028.44

55,993.04

57,400.80

35,756.32

29,906.04

16,569.95

11,751.83

462.77

395.99

284.50

245.13

120.80

Capital Work In Progress

Bills for collection

Book Value (Rs)

25

Ratio Analysis

Capital Adequacy Ratio:

A measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit
exposures.

Table:
Mar 06

Mar '07

Mar '08

13.12

13.56

12.09

1.1

Mar '09

Mar '10

13.93

15.21

Capital adequacy ratio (CAR) is a ratio of a bank's capital to its risk. National regulators track a
bank's CAR to ensure that it can absorb a reasonable amount of loss and are complying with their
statutory Capital requirements. Capital adequacy ratio is the ratio which determines the capacity of the
bank in terms of meeting the time liabilities and other risks such as credit risk, operational risk, etc.
Here, in case of AXIS Bank we can see that its CAR showed a sudden dip in the year 2008 but after
that it has shown a steady rise for the next 2 years which is a good sign for its depositors and investors.
26

Debt-Equity Ratio:
A

measure

of

company's

financial

leverage

calculated

by

dividing its

total

liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using
to finance its assets.

Table: 1.2
Mar 06
70.93

Mar 07

Mar 08

Mar 09

Mar 10

85.22

103.11

187.19

235.24

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of
shareholders' equity and debt used to finance a company's assets. Here, in case of AXIS Bank we can
see that the Debt-Equity ratio has increased over the years. This is because its equity capital showed no
growth from the year 2006 to 2008 and it decreased by around Rs250 crore in 2009 and remained the
same for the year 2010. But its debt capital has shown a steady increase over the past 5 years. From this
we can infer that since AXIS Bank is a public sector undertaking it depends much more on debt capital
rather than equity capital.
27

CURRENT RATIO:
Current Ratio may be defined as the relationship between current assets and current liabilities.

Table: 1.3
Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

46.17

86.27

95.16

146.22

255.24

(Source: Calculated from the annual report of AXIS Bank.)

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its
current obligations in time as and when they become due. An increase in the current ratio represent
improvement in the liquidity position of the firm while a decrease in the current ratio indicates that there has
been deterioration in the liquidity position of the firm.

28

QUICK RATIO:
Quick ratio also known as Acid test or Liquid Ratio is more rigorous test of liquidity than the
current ratio.

Table: 1.4
Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

56.16

76.37

91.14

173.46

248.26

Usually, a high test ratio is an indication that the firm is liquid and has the ability to meet its current
or liquid liabilities in time and on the other hand a low quick ratio represent that the firms liquidity position
is not good.

29

Advances to Assets:
A high ratio of Advances to Assets would mean that the chances of Non Performing Assets
formation are also high, which is not a good scenario for a bank.

Table: 2.1
Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

1.60

1.63

1.61

1.62

1.60

Advances to Asset is also a good indicator of a firms Capital Adequacy. A high ratio of
Advances to Assets would mean that the chances of Non Performing Assets formation are also high,
which is not a good scenario for a bank. This would mean the credibility of its assets would go down.
In case of AXIS Bank we can see that it is able to maintain a pretty steady ratio of its Advances to
Assets which means the credibility of its assets is good.

30

Government Securities to Total Investments:

The ratio of Government Securities to Total investments shows how safe are the companys
investments.

Table: 2.2
Mar 06

Mar 07

Mar 08

Mar 09

Mar 10

1.81

1.83

1.83

1.86

1.86

The ratio of Government Securities to Total investments shows how safe are the companys
investments. Here, in case of AXIS Bank we can see that its ratio of investments in Government
Securities to Total Investments is very high and it has remained quite steady over the years with
minimal fluctuations. The high ratio tells that AXIS Banks investment policy is conservative and their
investments are safe.

31

FINANCIAL RATIOS

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

Financial Ratios
Mar '11

Mar '10

Mar '09

Mar '08

Mar '07

Face Value

10.00

10.00

10.00

10.00

10.00

Dividend Per Share

14.00

12.00

10.00

6.00

4.50

129.26

97.29

83.56

56.88

42.36

471.17

380.27

377.46

244.63

193.93

373.06

325.87

230.47

208.03

86.60

--

--

--

--

--

3.73

3.95

4.24

3.77

3.27

Adjusted Cash Margin(%)

18.71

17.63

14.76

14.19

14.11

Net Profit Margin

17.20

16.10

13.31

12.22

12.01

72.29

66.34

97.35

71.17

119.74

17.83

15.67

17.77

12.21

19.37

17.87

15.69

17.85

12.38

19.45

462.77

395.99

284.50

245.13

120.80

462.77

395.99

284.50

245.13

120.80

Interest Income / Total Funds

9.14

9.38

10.53

9.57

8.88

Net Interest Income / Total

5.08

5.34

4.98

4.74

4.01

Investment Valuation Ratios

Operating Profit Per Share

(Rs)
Net Operating Profit Per Share
(Rs)
Free Reserves Per Share (Rs)
Bonus in Equity Capital
Profitability Ratios
Interest Spread

Return on Long Term

Fund(%)
Return on Net Worth(%)
Adjusted Return on Net
Worth(%)
Return on Assets Excluding
Revaluations
Return on Assets Including
Revaluations
Management Efficiency Ratios

32

Funds
Non Interest Income / Total

0.17

0.12

0.06

0.02

0.03

4.06

4.04

5.56

4.83

4.87

2.57

2.94

2.64

2.51

2.07

2.54

2.38

2.25

2.07

1.79

Net Profit / Total Funds

1.60

1.53

1.41

1.17

1.07

Loans Turnover

0.16

0.17

0.19

0.18

0.18

9.30

9.51

10.60

9.59

8.92

4.06

4.04

5.56

4.83

4.87

Total Assets Turnover Ratios

0.09

0.09

0.11

0.10

0.09

Asset Turnover Ratio

5.65

7.31

7.78

6.32

4.97

56.69

57.00

65.98

63.09

65.64

1.78

1.30

0.60

0.16

0.39

27.65

30.96

24.95

26.20

23.26

0.40

0.30

0.34

0.85

0.54

Capital Adequacy Ratio

12.65

15.80

13.69

13.73

11.57

Advances / Loans Funds(%)

76.16

72.96

73.87

75.89

69.07

Credit Deposit Ratio

74.65

71.87

68.89

65.94

59.85

Investment Deposit Ratio

38.71

39.55

39.04

41.39

48.96

Funds
Interest Expended / Total
Funds
Operating Expense / Total
Funds
Profit Before Provisions /
Total Funds

Total Income / Capital

Employed(%)
Interest Expended / Capital
Employed(%)

Profit And Loss Account Ratios

Interest Expended / Interest
Earned
Other Income / Total Income
Operating Expense / Total
Income
Selling Distribution Cost
Composition
Balance Sheet Ratios

Debt Coverage Ratios

33

Cash Deposit Ratio

7.07

7.30

8.16

8.17

7.17

Total Debt to Owners Fund

9.96

8.81

11.49

9.99

17.28

0.66

1.62

1.43

1.46

1.41

1.43

1.41

1.28

1.28

1.26

0.02

0.03

0.03

0.03

0.03

19.60

19.19

9.52

9.23

7.39

19.78

22.56

23.16

23.49

22.57

18.22

20.64

20.98

20.47

19.30

Earning Retention Ratio

80.26

77.47

76.94

76.84

77.53

Cash Earning Retention Ratio

81.81

79.39

79.11

79.78

80.78

AdjustedCash Flow Times

51.35

51.33

58.33

70.42

75.97

Mar '11

Mar '10

Mar '09

Mar '08

Mar '07

82.54

62.06

50.57

29.94

23.40

462.77

395.99

284.50

245.13

120.80

Financial Charges Coverage

Ratio
Financial Charges Coverage
Ratio Post Tax
Leverage Ratios
Current Ratio
Quick Ratio
Cash Flow Indicator Ratios
Dividend Payout Ratio Net
Profit
Dividend Payout Ratio Cash
Profit

Earnings Per Share

Book Value

34

CONCLUSION
The purpose our project report at a organization was to help us attain knowledge about the
working pattern in a organization.

Applying theoretical knowledge into practice helps in gaining additional knowledge. We learnt the
skill of planning, organizing and completing the assignment within the stipulated time.
Ratio analysis of financial statement shows that banks current ratio is better than the quick ratio
and fixed/worth ratio. It means bank has invested more in current assets than the fixed assets and liquid
assets. The cash flow statement shows that net increase in cash generated from operating and financing
activities is much more than the previous year but cash generated from investing activities is negative
in both years. Therefore analysis of cash flow statement shows that cash inflow is more than the cash
outflow in AXIS Bank. Thus, the ratio analysis and trend analysis and analysis of cash flow statement
show that AXIS Banks financial position is good. Banks profitability is increasing but not at high rate.
Banks liquidity position is fair but not good because bank invests more in current assets than the liquid
assets. As we all know that AXIS Bank is on the first position among the entire private sector bank of
India in all areas but it should pay attention on its profitability and liquidity. Banks position is stable.

35

References
Reports: Annual Reports of AXIS Bank.

Websites:
http://www.sharetermpapers.com/
http://money.rediff.com/companies/axis-bank-ltd/14030047
http://www.axisbank.com/
http://en.wikipedia.org/wiki/Axis_Bank
http://www.rupeetimes.com/compare/credit_cards/axis_bank.html
http://www.axisbank.hk/
http://ekikrat.in/Axis-Bank-Internet-Banking
http://www.microfinancefocus.com/axis-bank-bandhan-launch-program-poorest-families
http://www.winentrance.com/nift_entrance_exam/nift-axis-bank-branches.html
http://blog.arpitnext.com/indiatech/34/axis-bank-ewallet-virtual-credit-card
http://www.homeloanshub.com/axis-bank/

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