CHAPTER 3

REVIEW OF LITERATURE

3.1 Introduction

The review of the past studies in research means to note the

observations, search and many more things done in the past regarding
the question in the hand. It is base of natural and social sciences. It
provides introduction regarding the researches worked out in the past.
It provides details regarding the tool used, procedures adopted,
conclusion and observation made it also guides how to the
introduction and data should be collected and from where and how it
could be. All this information can be had from this type of study the
study of the past researches is useful to define the sphere of our
research. It saves time, energy and helps indirectly towards a
particular goal.

“The process of reading, analyzing, evaluating and summarizing

scholarly materials about a specific topic”

A review of literature is a part of scientific approach and has a large

importance in scientific research, however it also gives investigation
and understanding of previous work, which has been done, and which
has to be related to present developed in area of subject.

3.2 Meaning of Review of Literature

Study of related literature implies locating, regarding and evaluating

reports of research as well as report of causal observation and opinion
that are related to the individual‟s planned research project.

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 According to Walter R Borg, “the literature in any field forms the
foundations upon which all future work will be built”.

A literature of review discusses published information in a particular

subject area and sometimes information in a particular subject area
within a certain time period.

A literature review can be just a simple summary of the sources, but it

usually has an organizational pattern and combination both summary
and synthesis. A summary is a recap of the important information of
the sources, but a synthesis is a re-organization, or a re-suffering, of
that information. It might give new with old interpretation or it might
trace the intellectual trace of progression of the field, including the
major debates. And depending on the situation, the literature of review
may evaluate the sources and advice the reader on the most portent or
relevant.

3.3 Review of Literature

Mital Menapara & Dr. Vijay Pithadia (2010), “A study on financial

performance of selected companies during pre-post merger and
acquisition”. They probe as per current scenario corporate restructuring is
one of the most widely used strategic tools. In diurnal news we come across
frequently with the headlines of merger, acquisitions, takeover, joint
venture, demerger and so on. Since last two decades as especially after, the
liberalization and consequent globalization and privatizations have resulted
into robust competition not only in Indian business but globally as well. The
present study is mainly based on secondary data. In order to access financial
performance, Ratio analysis, Standard Deviation and„t‟ test have been
utilized as tools of analysis.

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Sarbapriya Ray (2011), studied on the financial performance of Indian
paper and paper product companies using data from CMIE over the period,
2000-01 to 2008-09.The dissection has been conducted from seven key
financial dimensions, namely, financial profitability, capital structure,
operational efficiency, fixed asset age, current asset efficiency and liquidity
position. The financial performance analysis recognizes financial strength
and weakness of the firms within paper industry. The study suggests that
liquidity position and profitability of the industry as a whole are sound and
strong ensuring good liquidity management and better profitability to both
investors as well as entrepreneurs. The study displays that high and
gradually increasing current asset turnover has been a contributing factor
liable for ensuring current asset efficiency which signifies that resources
like current assets of the firms of the industry are getting utilized more
efficiently. But, dividend payment being lower, the companies must have to
improve the quantum of dividend payment in order to satisfy the investors
without affecting the future expansion and modernization programmes of
the sector. Moreover, companies should make a concerted effort in
maximizing assets and minimizing liabilities so that overall financial
position could be rectified.

Dr. A. Vijayakumar &Sudhi S. Vijayan (2011), Studied and examined

that Information is an indispensable for human development as air is
inevitable for the survival of all living organisms on earth, including human
beings. The pace of change brought about by new information technologies
has a key effect on the way people live, work, and play worldwide. The
increasing role is played by information technology in the development of
library services for an active reaction to the challenges of the information
service providing. The paper makes an effort to discuss the fast
development of Information Technology and its application in the library
services. Today libraries are equipped to accomplish the newly Information
Technology based services. Information Technology enabled services fulfill

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the information needs of the users at the right time in the right place to the
right person.

Dr. Anurag B Singh & Ms. Priyanka Tandon (2012),they examine

Banking Sector performs an important role in economic development of a
country. The banking system of India is featured by a huge network of bank
branches, serving many kinds of financial services of the people. The State
Bank of India, popularly known as SBI is one of the leading banks of public
sector in India. SBI has 14 Local Head Offices and 57 Zonal Offices located
at important cities throughout the country. ICICI Bank is second largest and
leading bank of private sector in India. The Bank has 2,533 branches and
6,800 ATMs in India. The ultimate object of the study is to examine the
financial performance of SBI and ICICI Bank, public sector and private
sector respectively. The research is descriptive and analytical in nature. The
data used for the study was entirely secondary in nature. The present study
is conducted to compare the financial performance of SBI and ICICI Bank
on the basis of ratios such as credit deposit, net profit margin etc. The
period of study taken is from the year 2007-08 to 2011-12. The study has
detected that SBI is performing well and financially sound than ICICI Bank
but in context of deposits and expenditure ICICI bank has better managing
efficiency than SBI.

The study found that the mean of Credit Deposit Ratio in ICICI was higher
(89.302 %) than in SBI (76.184%). This reveals that ICICI Bank has
created more loan assets from its deposits as compared to SBI. The share of
interest expenses in total expenses higher in ICICI (63.36 %) as compare to
SBI (59.99 %) and the proportion of interest income to total income was
higher in case of SBI(84.49 % ) as compared to ICICI (78.84%), which
shows that people prefer ICICI to invest their savings and SBI to take loans
& advances. The Net Profit Margin of ICICI is higher (14.37 %) whereas in
SBI it was (10.99 %), which asserts that ICICI has shown comparatively

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better operational efficiency than SBI. The growth rate of net profit is
73.97% in SBI which is higher than ICICI which is 55.49%.

Arvind R, Dr.V.Srividya (2013), in this research paper provides the

Financial Statement and also a summary of the account of a business
enterprise. To savvy the financial performance and condition of a firm, its
stake holders look at the financial statements, viz., the balance sheet, the
profit and loss account. The analysis of the financial statement is a process
of evaluating the relationship between component parts of financial
statement top obtains a better understanding of the firms, position and
performance. This study tries to analyze the financial performance of Sakthi
Finance Limited, by using various stools.

Paghadar Amala Anilbhai (2013), has illuminated an article “A

Comparative Analysis of Financial Performance of Sail and JSW” in Indian
Journal of Applied Research in 2013-14. He would like to make an analysis
of financial performance of two selected units of steel Industry i.e. SAIL
and JSW. His study covers the five year period of both units. In the paper, it
has been tried to analyze the profitability, liquidity and management
efficiency of both units with various financial tools and techniques. The
paper has been also derived findings from the analysis.

Under the study he examines profitability position of SAIL is good as

compare to JSW. Liquidity or solvency position of SAIL is quite better in
comparison to JSW. This shows sound liquidity position of SAIL.
Statistically there is each significant difference between them as revealed by
T-Test. efficiency of asset utilization of SAIL is better than JSW. T-Test
revealed that there is significant difference between them.

Dr. K. Srinivas & I. Saroja (2013), germane their research paper on

“comparative financial performance of hdfc bank and icici bank” The
present research paper is aimed to analyze and compare the Financial

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Performance of HDFC and ICICI Bank and offer suggestions for the
improvement of efficiency in select banks. For the purpose of analysis of
comparative financial performance of the select banks, world-renowned,
CAMELS model with t-test is applied. CAMELS stand for Capital
Adequacy, Asset Quality, Management, Earning Quality, Liquidity and
Sensitivity.

They Found the capital adequacy and Tier I capital ratio of ICICI and
HDFC Bank is more than the Basel Accord norms but the average Tier II
capital ratio of HDFC and ICICI Bank is 1.29 per cent and 1.13per cent
only. We can state/note that both the banks are good with respect capital
adequacy because it is above the Basel norms.

The debt-equity ratio of ICICI Bank is less compared with HDFC bank;
hence long term solvency is wellin ICICI bank. The burden ratio of ICICI
Bank is good compared with HDFC Bank. But spread is more in HDFC
bank hence it earns more profits.

Dr. Srinivasa Rao chilumuri (2013), in their study “Financial

Performance Evaluation of APSRTC” The financial performance is an
emergent factor which influences the finances of the organization. It is
usually judged in terms of profits. The higher the profitability, the more
efficient the firm is. The objective of his research paper is to assess the
financial performance evaluation of APSRTC. Based on the secondary data,
collected from the APSRTC Head office Hyderabad and from RTC
websites this work was assessed. Based on different analyses of capital
structure and revenue and expenditure parameters the financial performance
of APSRTC was assessed in this paper and concluded with findings and
suggestions.

Dr. Vivek Singla (2013), he published research paper on “A comparative

study of financial performance of sail and Tata steel ltd” according to him

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Efficient management of finance is very important for the success of an
enterprise. The term financial performance is very dynamic term. The
subject matter of financial Performance has been changing very fast. In
existing time greater importance is given to financial performance. So, here
an attempt is made by me to compare the financial performance of the
selected units i.e. Steel Authority of India and TATA STEELLTD.

While analyzing the financial performance of the selected units, we include

the analysis of working capital and analysis of profitability.

He Concludes SAIL and Tata Steel Ltd. both the companies are major
players in steel manufacturing sector in India. After making the
comparative analysis of both the firms we come to know that performance
of Tata Steel Ltd. is better than the SAIL it is so because the Net profit of
Tata Steel Ltd. is greater than the SAIL similarly the inventory management
of the Tata Steel Ltd. is better than the SAIL.

Dr. Aditya Sharma & Gopi Nath Modi (2014), a research article headed
“A Comparative Study of Financial Performance of Syndicate Bank &
Canara Bank” by Dr. Aditya Sharma & Gopinath Modi, examine Analysis
of financial statement is needful because it helps in depicting the financial
position on the basis of past and current records. Analysis of financial
statement helps in making the future decision and strategies. Financial
performance analysis has now become an important technique of credit
appraisal. The investors, financial experts, management executives and the
bankers all analyze these statements. Research paper is initiated a
comparative study of financial performance of Syndicate bank and Canara
bank. The main objective of this study is to know the liquidity, profitability
and efficiency of Syndicate bank and Canara bank. Analytical tools used in
the study are ratio analysis and cash flow analysis. Final Result of his
research is Syndicate bank has overall better efficiency and has performed
better in the banking institution as compared to Canara bank.

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EPS and DPS of Syndicate bank are increasing due to increase in the use of
debt rather than the use of improved operations. The Average Sustainable
Earnings of Syndicate bank is high and the standard deviation is low so the
bank has its earnings would sustain and more robust in nature as compared
to Canara bank. The P/E Ratio of Syndicate bank is high as compared to its
industry and Canara bank which means that Syndicate Bank is using its
funds in a better manner and it is fundamentally sound in nature.

Dr. A. S. Hema (2014), studied on “An Appraisal of Financial Performance

of Tata Consultancy Services Limited (TCS)”, examined in the digital era,
the need for software development companies has increased to a greater
extent. As a result, the IT sector has eviction a mushroom growth of
software development and consultancy companies in the recent past. These
companies develop both readymade software and tailor-made software
according to the needs of their clients. They recruit employees mainly
through campus interviews conducted in educational institutions like
Engineering Colleges, Arts & Science Colleges and Polytechnics. They
provide attractive packages to their employees. The recent economic
slowdown has rocked the industry very much, following which many
companies have downsized their employees with a view to cutting costs. In
this context, the present study appraises the financial performance of one of
the leading companies in the IT sector, Tata Consultancy Services Ltd

Researcher found that both the short term and long term liquidity position
of Tata Consultancy Services have been found to be good which is a
positive note for the creditors and lenders that there is a security for their
funds. The company has been found to have efficiently managed its net
worth and total assets for maximizing the profits. The growth of the
company in terms of working capital and total assets has been found to be
satisfactory.

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Dr. G. Subramanian & K. Venkatachalam (2014), in this paper
researcher study large scale private sector paper unit in Tamilnadu-
Seshasayee Paper and Boards Limited. They found financial performance
analysis is vital for the success of an enterprise. Financial performance
analysis is an appraisal of the feasibility, solidity and fertility of a business,
sub-business or mission. The present study points out that the overall
position of the SPBL is satisfactory, but there is a requirement for
improvement in certain factors. A lot of funds invested in inventory and
receivables can be released for alternative uses. Finally liquidity and
profitability of the concern will be promoted. The Indian paper industry will
be witnessed an increase in the market share. The sector is poised not only
to take new challenge but to sustain the growth momentum of the past
decade.

Shenbagam & Kannappan (2015), under take their analysis of “A Study

on Financial Position and Performance Analysis with Special Reference to
Tata Consultancy Services” the present study covers financial position and
performance analysis of Tata Consultancy Services. According to author
financial analysis is an aspect of the overall business finance function that
involves examining historical data to get information about the current and
future financial health of a company. IT has great possible of becoming an
engine of accelerated economic growth, efficiency, improvement for all
sectors of the economy, developing India‟s position in export market,
improving trade insufficiency and means of efficient governance. It
enhances way in to information, protects consumers, provides access to
government services, makes skill creation and training more effective,
improves liberation of health services, and promotes simplicity. The present
study found that the “A study on financial position and performance
analysis with special reference to Tata Consultancy Services” for a period
of five years from 2010 -2011 to 2014 -2015. The data was collected from
the company‟s annual reports and other related information was gathered

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from the journals and books. To know the financial ratio in IT sector the
researcher have taken Tata Consultancy Services for their study. In this
research paper the data have been analyzed with the help of different
accounting and statistical techniques has used to know the financial
soundness of “Tata Consultancy Services”.

They concluded, the information technology (IT) industry has become of

the healthiest industries in the world. IT, more than any other industry or
economic side, has an improved productivity, particularly in the developed
in the world, and therefore is a key in importance of global economic
growth. The study concludes that “Tata Consultancy Services” liquidity and
solvency position are considered satisfactory.

K Kumutha Devi & C V Uma Maheswari (2015), they published research

paper on “A Study on Financial Performance of Cipla ltd& Aurobindo
Pharma ltd A Comparative Analysis” In this paper In India, pharmacy
sector is one the most promising & growing industry. This study attempts
basically to measure the financial performance of the Pharmaceutical
Industry taking top companies like Cipla ltd, Aurobindo Pharma ltd for the
study, for the period 2009-2010 to 2013-2014. In order to achieve our goals
in this paper we have measured the ratios of short term solvency ratio, long
term solvency ratio, profitability ratio. From the study we come to know
that Cipla ltd displays high profitability than Aurobindo Pharma ltd, higher
level of consistency is noticed in Cipla ltd.

Rooh Ollah Arab, Seyed Saadat Masoumi and Azadeh Barati (2015),
Examines the financial performance of identified units in the steel industry
in India in terms of financial ratios such as Liquidity, Solvency, Activity
and Profitability position. A group companies listed in the stock exchanges
in India namely, Tata Steel Ltd., Jindal Steel & Power Ltd., J S W Steel
Ltd., Bhushan Steel Ltd. and Steel Authority of India Ltd. are chosen for
this study. To appraise the impact of selected variables on the financial

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performance of identified units in the steel industry, ANOVA-Test analysis
is used.

Dr. Ashish k Desai (2015), They published research paper on “A

Comparative study of Financial Performance of Selected Listed Steel
Companies in the Stock Exchanges in India on the Bases on Functional
Ratio” for this study purpose secondary data have been collected from the
annual report of these companies for the period of five years starting from
2009-10 to 2013-14. Data has been analyzed by applying One-way
ANOVA. From the analysis, it has been concluded that there is a
statistically significant difference in financial performance of these
companies. It has been found from that Tata Steel Company remains at the
top position.

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1. A. Vijayakumar & Vijayan Sudhi S. (2011), Application Of Information

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(2015),Financial Performance of the Steel Industry in India: A Critical
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