1.

INTRODUCTION INTRODUCTION ON BANKING

A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses. Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current sets of global bank capital standards are called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu. In Iceland banks had very light regulation prior to the 2008 collapse.

INTRODUCTION OF THE COMPANY

HDFC Life Insurance Company Limited. is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India's leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others. HDFC Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. To ensure this, we have concentrated our focus on expansion of branch network, organizing an efficient and well trained sales force, and setting up appropriate systems and processes with optimum use of technology. As all these areas form the basic infrastructure for establishing the highest possible customer service standards. Our core values are drilled down to all levels of employees, as these are inviolable. We continue to promote high integrity in business practices and shun short cuts and unethical practices, as we wish to be perceived as an institution with high moral standing. Since our inception in 2000, when the Indian insurance space was opened for private participation, we have consistently focused on setting benchmarks in all aspect on insurance business. Beingthe first private player to be registered with the IRDA and the first to issue a policy on December 12, 2000,

HISTORY OF THE COMPANY

The HDFC was established in 1977, for the purpose of providing the home loan for long term HDFC is rated as (AAA) by the CRISIL and ICRA. In the year 2004, it was awarded DREAM HOME AWARD. It has got 3rd rank in the investment management, in year 2006. One of the largest financial institution of India with more then 2 million satisfied customer base.

HDFC HAS FOLLOWING GROUP COMPANIES

HDFC Ltd. HDFC Standard life HDFC Mutual fund HDFC Securities HDFC Bank HDFC realty.com HDFC CIBIL HDFC Chubb General Insurance Co. Ltd. HDFC Centre For Housing Finance HDFC Distribution HDFC Intel net HDFC Securitization HDFC Deposits HDFC Home Loan

2. RESEARCH DESIGN
A. STATEMENT OF PROBLEM Financial ratio analysis is the calculation and comparison of main indicators. Ratios are derived from the information given in companies financial statements. It involves methods of calculating and interpreting financial ratios in order to asses a firms performance and status. To understand the relevance few accounting ratios have chosen for the study. B. OBJECTIVE OF THE STUDY
Objectives are the ends that states specifically how goal be achieved. The objective of the study gives direction to go through the research problem. To study the financial statements of the corporation to its true financial position. To provide suggestions and recommendations

C. SCOPE OF THE STUDY

This study covers an the financial analysis offered by HDFC Bank during the period 2010 and 2013

D. METHODOLOGY Data collection

Secondary data collection The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, balance sheets, books etc. secondary information collected through five years annual report of the company, supported by internet.

E. LIMITATIONS OF THE STUDY

Time was a major constraint in undertaking this project The findings may be inaccurate due to insufficiency of data Certain information was not available due to reasons of confidentiality

The study has been restricted to only few operational ratios

3. THEORITICAL BACKGROUND
FINANCIAL STATEMENTS
Financial statement is a collection of data organized as per logical & consistent accounting procedure. The end product of business transactions are financial statement. A financial statement is the basis of decision making by management. Its purpose is to convey an understanding of some financial aspects of business firm. Financial statement generally refers to the two statements. Balance sheet and profit & loss A/c.

FINANCIAL STATEMENT ANALYSIS.

Financial statement analysis is the process of identification of the financial strength and weakness of firm by properly establishing relationship between the items of balance sheet and profit & loss A/c

Definition
Metcalf & Titcard Financial statement analysis is the process of evaluating relationship between component part of financial statements to obtain better understanding of firms financial position & performance. Myers- Financial statement analysis is largely is study of relationship among the various financial factors in a business as disclosed by a single setup, statements and study of trend of these factors as shown in a series of statements.

Purpose of financial statement:

Weathering the profitability. Indicating the trend of achievement. Accessing the growth potential. Comparative position in relation to other firm. Access overall financial strength. Access solvency of firm

Types of financial Analysis

External analysis This analysis done by outsiders who do not have access to the internal a/c of business firm. Internal analysis- This analysis done by persons who have access to internal A/c of business firm. Horizontal analysis- It refers to comparison of financial data of a company horizontally over a number of columns for several years. Vertical Analysis- Vertical analysis refer to the study of relationship of various item in the financial statement of one accounting period be selecting a base figure from the same year statement. Parties Interested- Investors, management, trade creditors, lenders, suppliers, stock exchange, tax authority, researcher, employees, Govt., and their agencies.

4. BANK PROFILE
The housing development finance corporation limited (HDFC) was amongst the first to receive an in-principle" approval from the reserve bank of India (RBI) to set up a bank in the private sector, as part of RBI liberalization of Indian banking industry in 1994. The bank was in corporate in Aug.1994 in the name of HDFC Bank Ltd. With its registered office in Mumbai, India, HDFC Bank commenced operations as scheduled commercial bank in January 1995 HDFC Bank Ltd is a major Indian financial services company based in Mumbai. The Bank is a publicly held banking company engaged in providing a wide range of banking and financial services including commercial banking and treasury operations. The Bank at present has an enviable network of 2201 branches and 7110 ATMs spread in 996 cities across India. They also have one overseas wholesale banking branch in Bahrain, a branch in Hong Kong and two representative offices in UAE and Kenya. The Bank has two subsidiary companies, namely HDFC Securities Ltd and HDB Financial Services Ltd. The Bank has three primary business segments, namely banking, wholesale banking and treasury. The retail banking segment serves retail customers through a branch network and other delivery channels. This segment raises deposits from customers and makes loans and provides other services with the help of specialist product groups to such customers. The wholesale banking segment provides loans, non-fund facilities and transaction services to corporate, public sector units, government bodies, financial institutions and medium-scale enterprises. The treasury segment includes net interest earnings on investments portfolio of the Bank. The Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. The Bank's shares are listed

on the Bombay Stock Exchange Limited and The National Stock Exchange of India Ltd. The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) and the Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange. HDFC Bank Ltd Was incorporated on August 30, 1994 by Housing Development Finance Corporation Ltd. In the year 1994, Housing Development Finance Corporation Ltd was amongst the first to receive an 'in principle' approval from the Reserve Bank of India to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. In the year 1996, the Bank was appointed as the clearing bank by the NSCCL. In the year 1997, the launched retail investment advisory services. In the year 1998, they launched their first retail lending product, Loans against Shares. In the year 1999, the Bank launched online, real-time Net Banking. In February 2000, Times Bank Ltd, owned by Bennett, Coleman & Co. / Times Group amalgamated with the Bank Ltd. This was the first merger of two private banks in India. The Bank was the first Bank to launch an International Debit Card in association with VISA (Visa Electron). In the year 2001, they started their Credit Card business. Also, they became the first private sector bank to be authorized by the Central Board of Direct Taxes (CBDT) as well as the RBI to accept direct taxes. During the year, the Bank made a strategic tie-up with a Bangalore-based business solutions software developer, Tally Solutions Pvt Ltd for developing and offering products and services facilitating on-line accounting and banking services to SMEs. During the year 2001-02 the bank was listed on the New York Stock Exchange. Also, they made the alliance with LIC for providing online payment of insurance premium to the customers. During the year 2002-03, the Bank increased the number of branches from 171 Nos to 231 Nos and the size of the Bank's ATM network expanded from 479 Nos to 732 Nos. They also expanded their presence in the 'merchant acquiring' business. During the year 2003-04, the

Bank expanded the distribution network with the number of branches increased from 231 Nos to 312 Nos and the size of the Bank's ATM network increased from 732 Nos to 910 Nos. In September 2003, they entered the housing loan business through an arrangement with HDFC Ltd, whereby they sell HDFC Home Loan product. During the year 2004-05, the Bank expanded the distribution network with the number of branches increased from 312 Nos to 467 Nos and the size of the Bank's ATM network increased from 910 Nos to 1147 Nos. During the year 2005-06, the Bank launched the 'no-frills account', a basic savings account offering to the customer. Also, the distribution network was expanded with the number of branches increased from 467 Nos (in 211 cities) to 535 Nos (in 228 cities) and the number of ATMs from 1147 Nos to 1323 Nos. During the year 2006-07, the distribution network was expanded with the number of branches increased from 535 Nos (in 228 cities) to 684 Nos (in 316 cities) and the number of ATMs from 1323 Nos to 1605 Nos. They commenced direct lending to Self Help Groups. Also, they opened a dedicated branch for lending to SHGs, in Thudiyalur village (Tamil Nadu). In September 28, 2005, the Bank increased their stake in HDFC Securities Ltd from 29.5% to 55%. Consequently, HDFC Securities Ltd became a subsidiary of the Bank. During the year 2007-08, the Bank added 77 Nos new branches take the total to 761 Nos branches. Also, 372 Nos new ATMs were also added taking the size of the ATM network from 1605 Nos to 1977 Nos. HDB Financial Services Ltd became a subsidiary company with effect from August 31, 2007. In June 2, 2007, the Bank opened 19 branches in a day in Delhi and the National Capital Region (NCR). During the year 2008-09, the Bank expanded their distribution network from 761 branches in 327 cities to 1,412 branches in 528 Indian cities. The Bank's ATMs increased from 1,977 to 3,295 during the year. As per the scheme of amalgamation, Centurion Bank of Punjab Ltd was amalgamated with the Bank with effect from May 23, 2008. The appointed date for the merger was April 01, 2008. In October 2008, the bank opened their first overseas

commercial branch in Bahrain. The branch offers the bank's suite of banking services including treasury and trade finance products for corporate clients and wealth management products for Non-resident Indians. During the year 200910, the Bank expanded their distribution network from 1,412 branches in 528 cities to 1,725 branches in 779 cities. The Bank's ATMs increased from 3,295 Nos to 4,232 Nos during the year. During the year 2010-11, the Bank expanded their distribution network from 1,725 branches in 779 cities to 1,986 branches in 996 Indian cities. The Bank's ATMs increased from 4,232 to 5,471 Nos.

5 ANALYSIS AND INTERPRETATION

Generally research consists of two parts, namely the gathering of data an analysis of data. Financial analysis is the process of identifying strengths and weakness of firm by properly establishing relationship between the items of balance sheet and profit and loss account. This can also be known as analysis and interpretation of financial statement as it includes both Analysis and Interpretation. For the purpose of the study, only significant ratios have been considered for analysis. The following are the major ratios calculated from the information and figures obtained from the annual reports.

Ratio analysis
1. Current ratio:
CURRENT RATIO=

TABLE-1

YEAR 2013 2012 2011 2010 2009

CURRENT CURRENT RATIO ASSET LIABILITY % 27280 34864 0.78:1 20938 37432 0.56:1 29669 28993 1.02:1 29942 20616 1.45:1 17507 22721 0.77:1

current ratio
1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2013 2012 2011 2010 2009 0.78 0.56 1.02 0.77 current ratio 1.45

Analysis: In the year 2013, current ratio was 0.78 % of the total current ratio In the year 2012, current ratio was 0.56 % of the total current ratio In the year 2011, current ratio was 1.02 % of the total current ratio I In the year 2010, current ratio was 1.45 % of the total current ratio In the year 2009, current ratio was 0.77 % of the total current ratio

Interpretation: Current ratio of HDFC, has 0.78:1, it means it is less than 1 that indicates firms ability to meet current obligations & greater the safety of funds of shortterm creditors. It also indicates the sound solvency of the company is lower.

2. Return on investment
RETURN ON INVESTMENT =

TABLE-2
RESERVE CAPITAL AND SURPLUS ROI IN CR. IN CR. TOTAL EBIT (%) 550 35738 36288 11428 31.49 550 29455 30005 8204 27.34 550 24914 25464 6963 27.34 550 21065 21615 4487 20.76 550 14226 14776 3569 24.15

YEAR 2013 2012 2011 2010 2009

ROI
35.00 RETURN ON INVESTMENT 30.00 25.00 20.00 15.00 10.00 5.00 0.00 2013 2012 2011 2010 2009

Analysis: In the year 2013, the return on investment was 31.49% of the total investment In the year 2012, the return on investment was 27.34% of the total investment In the year 2011, the return on investment was 27.34% of the total investment In the year 2010, the return on investment was 20.76% of the total investment In the year 2009, the return on investment was 24.15% of the total investment

Interpretation The return on investment ratio of HDFC in 2013 was 31.49% and in 2012 is 27.34% there is increase in the return on investment over the year so company become a profitable over the year.

3. Quick ratio

Liquid assets = (Total current assets) (Inventories + Prepaid expenses) TABLE-3

YEAR 2013 2012 2011 2010 2009 LIQUID current QUICK ASSETS liability RATIO(%) 27280 34864 0.78 20938 37432 0.56 29669 28993 1.02 29942 20616 1.45 17507 22721 0.77

1.50 1.00 0.50 0.00 2013 2012 2011 0.78 0.56 1.02

1.45

0.77

2010

2009

QUICK RATIO

Analysis: In the year 2013, the quick ratio was 0.78:1of the total ratio In the year 2012, the quick ratio was 0.56:1 of the total ratio In the year 2011, the quick ratio was 1.02:1 of the total ratio In the year 2010, the quick ratio was 1.45:1 of the total ratio In the year 2009, the quick ratio was 0.77:1 of the total ratio

Interpretation Quick ratio of HDFC bank has 0.78:1 it means it is less than 1 that indicates firms ability to meet quick obligations & greater is the safety of funds of short-term creditors.

6. Conclusion
If properly analyzed and interpreted financial analysis can provide valuable insight into a firms performance. Analysis of financial analysis statements is of interest to lenders, investors, security analysts, managers and others. Financial analysis can be done for variety of purpose, which may range from a simple analysis of short term liquidity position of the firm to a comprehensive assessment of the strength and weakness of the firms in various areas. It is helpful in corporate excellent, judging credit worthiness, etc.., I have studied the balance sheet and profit and loss account of HDFC bank for the analysis and interpretation with a view to know the importance and implication of the ratios . Hence the study titled financial statement analysis through ratio conducted at HDFC

BIBLIOGRAPHY

Websites References
www.hdfclife.com/ http://economictimes.indiatimes.com/hdfc-bank-ltd/ www.wikipedia.org/financial-analysis www.wikipedia.org/bank/

ANNEXURES