CHAPTER I CONCEPTUAL AND THEORITICAL FRAME WORK

1.1 Introduction and design of the study Finance holds the key to all human activity. It is guide for regulating investment decisions and expenditure and endeavors to squeeze the most out of every available rupee. The government too, treats it as a signpost, a beckon to responsibility that covers men, money, material, methods and management. Out of these finance is a resource and it has to be managed efficiently for the successful functioning of an bank. Financial management is that managerial activity which is concerned with the planning and controlling of the banks financial resources. The financial statement provides the basic data for financial performance analysis. Basic limitation of the traditional financial statement comprising the balance sheet and the profit and loss account is that they do not give all the information regarding the financial operations of a bank. Nevertheless, they provide some useful information to the extent the balance sheet mirrors the financial position on a particular date in terms of the structure of assets, liabilities and owners equity, and so on. The profit and loss account shows the results of operations during a certain period of time in terms of the revenues obtained and the incurred during the year. Thus, the financial statements provide a summarized view of the financial position and operations of a bank. Therefore, much can be learnt about a firm from a careful examination of its financial statements as invaluable documents / performance reports. The analysis of financial statements is, thus, an important aid to financial analysis. The focus of financial analysis is on key figures in the financial statements and the significant relationship that exists between them. The analysis of financial

Statements is a process of evaluating relationship between component parts of financial statements to obtain a better understanding of the banks position and performance. The first task of financial analyst is to select the information relevant to the decision under consideration from the total information contained in the financial statement. The second step involved in financial analysis is to arrange the information in a way to highlight significant relationships. The final step is interpretation and drawing of inferences and conclusions. In brief, financial analysis is the process of selection, relation, and evaluation.

1.2 Industry Profile Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955.

The origins of the cooperative banking movement in India can be traced to the close of nineteenth century when, inspired by the success of the experiments related to the cooperative movement in Britain and the cooperative credit movement in Germany, such societies were set up in India.

Now, Co-operative movement is quite well established in India. The first legislation on co-operation was passed in 1904. In 1914 the Maclagen committee envisaged a three tier structure for co-operative banking viz. Primary Agricultural Credit Societies (PACs) at the grass root level, Central Co-operative Banks at the district level and State Co-operative Banks at state level or Apex Level.

In the beginning of 20th century, availability of credit in India, more particularly in rural areas, was almost absent. Agricultural and related activities were starved of Organized, institutional credit. The rural folk had to depend entirely on the money lenders, who lent often at usurious rates of interest. The co-operative banks arrived in India in the beginning of 20th Century as an official effort to create a new type of institution based on the principles of co- operative organization and management, suitable for problems peculiar to Indian conditions. These banks were conceived as substitutes for money lenders, to provide timely and adequate short-term and long-term institutional credit at reasonable rates of interest.

The Anyonya Co-operative Bank in India is considered to have been the first cooperative bank in Asia which was formed nearly 100 years back in Baroda. It was established in 1889 with the name Anyonya Sahayakari Mandali Co-operative Bank Limited, with a primary objective of providing an alternative to exploitation by moneylenders for Baroda's residents.

In the formative stage Co-operative Banks were Urban Co-operative Societies run on community basis and their lending activities were restricted to meeting the credit requirements of their members. The concept of Urban Co-operative Bank was first spelt out by Mehta Bhansali Committee in 1939 which defined on Urban Co-operative Bank. Provisions of Section 5 (CCV) of Banking Regulation Act, 1949 (as applicable to Co-

operative Societies) defined an Urban Co-operative Bank as a Primary Co-operative Bank other than a Primary Co-operative Society was made applicable in 1966. With gradual growth and also given Philip with the economic boom, urban banking sector received tremendous boost and started diversifying its credit portfolio. Besides giving traditional lending activity meeting the credit requirements of their customers they started catering to various sorts of customers viz.self-employed, small businessmen / industries, house finance, consumer finance, personal finance etc The nationalization of 14 major banks with deposits of Rs. 50 crores or more in July 1969 was a historic and momentous event in the history of India. Small industrial and business units are continuously and consistently ignored and starved of funds, even though the Government policy was to encourage small, tiny and cottage and village industries. Agricultural credit was never seriously considered by banks. Public funds were used to support anti social and illegal activities against the interest of the general public. It was for these reasons that the Government took over 14 top commercial banks in July 1969. In 1980 again the Government took over another 6 commercial banks altogether there are 20 nationalized banks.

1.3 Company Profile After Bifurcation from Madurai District Central Cooperative Bank, Dindigul Central Co-operative Bank was formed and started its functions from 01-06-1991. Its area of operation consist of 7 Taluk and 14 Blocks. The central co-operative banks are located at the district headquarters or some prominent town of the district. These banks have a few private individuals also who provide both finance and management. The central cooperative banks have three sources of funds, Their own share capital and reserves Deposits from the public and

 Loans from the state co-operative banks

Main function of the banks are: To meet the credit requirements of member-societies To perform banking business To act as balancing centre for the PACS by diverting the surplus funds of some societies to those which face shortage of funds To undertake non-credit activities To maintain close and continuous contact with PACS and provide leadership and guidance to them To supervise and inspect the PACS and To provide a safe place for the investment of the resources of PACs There are 23 District Central Cooperative Banks in the State with 717 branches mostly in rural areas to serve the Primary Agricultural Cooperative Banks and the rural public. In addition, they meet the credit needs of dairy, handlooms, sugar and such other affiliated cooperatives. They also lend directly to the public for non-agricultural purposes within the area of operation of their branches.

1.3.1 Corporate Vision

To evolve into a strong, sound and globally competitive financial system, providing integrated services to customers from all segments, leveraging on technology and human resources, adopting the best accounting and ethical practices and fulfilling corporate and social responsibilities towards all stake holders.

1.3.2 Corporate Mission

To become a provider of World-Class financial services To meet the customer expectations through innovative and technological initiatives To emerge as a role model with distinct identity, ethical values and good corporate governance To enhance the shareholders wealth by sustained, profitable and financially sound with prudent risk management system To fulfill the national and social obligations as responsible corporate citizen To create environment, intellectually satisfying and professionally rewarding to the employees

1.3.3 Theoretical Framework

Co-operative bank performs all the main banking functions of deposit mobilization, supply of credit and provision of remittance facilities. Co-operative Banks belong to the money market as well as to the capital market. Co-operative Banks provide limited banking products and are functionally specialists in agriculture related products. However, cooperative banks now provide housing loans also. UCBs provide working capital loans and term loan as well.

1.3.4 Deposit Schemes of Cooperative Bank

The Corporation Bank will provide the different services with CARE approach to the customers. The service profile of the Corporation Bank is as follows:

 Demat Account: A Bank where its Head Office provides the facility of opening and conduct of Accounts through its branches, a Depository institution extends various services to the investors through its agents known as Depository Participant. In India, now there are two Depositories. They are CDSL and NSDL. Participant can be anybody who complies with the eligibility requirements. Participant (DP) can be a Bank also. All the various functions undertaken and enabled through Demat accounts are referred to as DP activity. Under the depository system, a demat account holder or holder/owner of securities who is entitled to all the benefits (such as dividend or interest/bonus or right shares etc), is known as a Beneficial Owner (BO) Corp Pragathi Account: The account can be opened with an initial deposit of Rs 10/- and will provide the account holder the basic banking facilities. No penalty will be levied even if the balance in the account drops below Rs 10.

Centenary Year Gold Coin: It is 8gm Centenary Year Gold coin of 999.9

purity, 24 carat. This gold coin is available at Corp Bank branches in select cities across India to individuals or retailers at a competitive price. Savings Bank: Corp Bank SB account holder will get the facilities like any Branch banking.Corp power cheque, Corp convenience card, Corp junior account, Corp senior account Kshemanidhi Cash Certificates: KCC is a money multiplier deposit. It is a reinvestment Term Deposit scheme that can be opened for a period ranging from 6 months to 10 years. The rate of interest depends on the period of deposit.

 Money Flex: The flexible term deposit- it allows the customer to withdraw

money whenever he/she wants. The deposit can be made for a period ranging from 6 to 120 months. The minimum deposit is Rs 5000.

Fixed Deposit: The deposit can be made for period ranging from 15 days to 10 years. The rate interest depends on the period of deposit. Corp classic: It is an innovative technology-based account that combines the hi-liquidity of a savings bank account and the high-returns of a Terms deposit. The account works simply by fixing by fixing your savings from a savings bank account to a term deposit and vice versa. Recurring Deposit: Best suite to the salaried class, the customer can save a fixed sum every month for a period ranging from 12 months to 120 months. Janatha Deposit: This deposit is for a period from 1 to 5. Our collection agent will call at customers place to collect your savings at regular intervals even daily. Current Account: "Current Account" means a form of demand deposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and will also include other deposit accounts which are neither Savings Deposit nor Term Deposit.

1.3.5 Importance of Co-operative Banks

Co-operative bank forms an integral part of banking system in India. This bank operates mainly for the benefit of rural area, particularly the agricultural sector. Co-

operative bank mobilize deposits and supply agricultural and rural credit with the wider outreach. They are the main source for the institutional credit to farmers. They are chiefly responsible for breaking the monopoly of moneylenders in providing credit to agriculturists. Co-operative bank has also been an important instrument for various development schemes, particularly subsidy-based programmes for the poor. Co-operative banks operate for non-agricultural sector also but their role is small. Though much smaller as compared to scheduled commercial banks, co-operative banks constitute an important segment of the Indian banking system. They have extensive branch network and reach out to people in remote areas. They have traditionally played an important role in creating banking habits among the lower and middle income groups and in strengthening the rural credit delivery system. 1.3.6 Features of Co-operative Banks for Customer Benefits

Customer's owned entities: In a co-operative bank, the needs of the customers meet the needs of the owners, as co-operative bank members are both. As a consequence, the first aim of a co-operative bank is not to maximize profit but to provide the best possible products and services to its members. Some co-operative banks only operate with their members but most of them also admit non-member clients to benefit from their banking and financial services. Democratic Member Control: Co-operative banks are owned and controlled by their members, who democratically elect the board of directors. Members usually have equal voting rights, according to the co-operative principle of "on person, one vote".

 Profit Allocation: In a co-operative bank, a significant part of the yearly profit, benefits or surplus is usually allocated to constitute reserves. A part of this profit can also be distributed to the co-operative members, with legal or statutory limitations in most cases. Profit is usually allocated to members either through a patronage dividend, which is related to the use of the co-operative's products and services by each member, or through an interest or a dividend, which is related to the number of shares subscribed by each member.

1.4 Need of the Study The study aim at assessing profitability and solvency position of the company. The liquidity and activity positions of the firm are analyzed using liquidity and turnover ratios involving current liabilities. The solvency position of the company is also analyzed using ratios.

1.5 Scope of the study

The scope of this study Is to provide an insight in to the concept of over all financial performance analyse from 2009 -2013. This study reveals the present financial position of the bank. The ratio analysis will help to revalue the assets. It contains summarized information of firms financial affairs, organized systematically. 1.6 Objectives of the Study

1.6.1 Primary Objective:

The Primary objective is to study the financial performance of Dindigul central co-operative bank Ltd, Dindigul.

1.6.2 Secondary Objective: To make an analysis on the financial performance of

Dindigul central co-

operative bank for 5 financial Years extending from 2007- 2008 to 2011- 2012 To calculate profitability turnover & financial ratio to assess the financial position of the bank. To study the efficiency and liquidity position using ratios. To suggest them to utilize the sources completely. To study the trend of financial performance of the bank. To asses individual financial segments and put forth the strength and weakness of the financial elements of balance sheet through trend analysis.

1.7 Limitations of the Study The reliability of the report depends upon the secondary data alone. The study is only for the period of five years ranging from 2008-2009 to 20122013. The results are derived from balance sheet figure.

1.8

Chapter Scheme Chapter I describes Introduction and Theoretical Framework Chapter II covers Review of Literature Chapter III Concentrates on Research Methodology Chapter IV titled towards Data Analysis and Interpretation Chapter V Explores Findings, Suggestions and Conclusion

CHAPTER-II REVIEW OF LITERATURE

2.1 INTRODUCTION Many researchers have given various suggestions regarding the financial performance of co operative banks. Some of those suggestions are given below from the year of 2000 to 2011, collected over 30 reviews from the journals and books : PrashantaAthma (2000), in his Ph D research submitted at Usmania University Hyderabad, Performance of Public Sector Banks A Case Study of State Bank of Hyderabad, made an attempt to evaluate the performance of Public Sector Commercial Banks with special emphasis on State Bank of Hyderabad. The period of the study for evaluation of performance is from 1980 to 1993-94, a little more than a decade. In this study, Athma outlined the Growth and Progress of Commercial Banking in India and. analyzed the trends in deposits, various components of profits of SBH, examined the trends in Asset structure, evaluated the level of customer satisfaction and compared the performance of SBH with other PSBs, Associate Banks of SBI and SBI. Statistical techniques like Ratios, Percentages, and Compound Annual rate of growth and averages are computed for the purpose of meaningful comparison and analysis. The major findings of this study are that since nationalization, the progress of banking in India has been very impressive. All three types of Deposits have continuously grown during the study period, though the rate of growth was highest in fixed deposits. A comparison of SBH performance in respect of resource mobilization with other banks showed that the average growth of deposits of SBH is higher than any other bank group. Profits of SBH showed an increasing trend indicating a more than proportionate increase in spread than in burden. Finally, majority of the customers have given a very positive opinion about the various statements relating to counter service offered by SBH.

Zacharias Thomas (2000) PhD Thesis, Performance effectiveness of Nationalized Bank- A Case Study of Syndicate Bank, submitted to Kochin University (1997), Thesis studied the performance effectiveness of Nationalized Bank by taking Syndicate Bank as case study in his Ph.D thesis. Thomas has examined various aspects like growth and development of banking industry, achievements of Syndicate Bank in relation to capital adequacy, quality of assets, Profitability, Social Banking, Growth, Productivity, Customer Service and also made a comparative analysis of 'the performance 34 effectiveness of Syndicate Bank in relation to Nationalized bank. A period of ten years from 1984 to 1993-94 is taken for the study. This study is undertaken to review and analyze the performance effectiveness of Syndicate Bank and other Nationalized banks in India using an Economic Managerial- Efficiency Evaluation Model (EMEE Model) developed by researcher. Thomas in this study found that Syndicate Bank got 5th Position in Capital adequacy and quality of assets, 15th in Profitability, 14th Position in Social Banking, 8th in Growth, 7th in Productivity and 15th position in Customer Service among the nationalized banks. Further, he found that five nationalized banks showed low health performance, seven low priority performance and eleven low efficiency performance in comparison with Syndicate Bank. Singla HK (2001), in his paper, financial performance of banks in India, in ICFAI Journal of Bank Management No 7, has examined that how financial management plays a crucial role in the growth of banking. It is concerned with examining the profitability position of the selected sixteen banks of banker index for a period of six years (2001-06). The study reveals that the profitability position was reasonable during the period of study when compared with the previous years. Strong capital position and balance sheet place, Banks in better position to deal with and absorb the economic constant over a period of time.

Das and Udaykumar Lal (2002),in his book Banking Reforms in Lead Bank Scheme, (Deep and Deep Publication, New Delhi) was the critical evaluation of the lead bank scheme in35 the light of banking sector reforms. Das in this book observed that high level of NPAs, large number of un-remunerative branches, low productivity, overstaff and archaic methods of operations have affected the profitability of public sector banks. Das sincerely felt that the whole banking sector in India is to be revolutionized to cope with the changing dimensions of the satellite one world. Further, he felt that the backward areas should be given more funds for investment in priority sectors and more and more people should be brought under its coverage and the procedures of extending credit should be simplified and there should be least hassle cost. Subramanian and Swami (2003) in their paper, Comparative performance of public sector banks in India Prjanan, Vol. XXII, have analyzed and compared the efficiency in six public sector banks, four private sector and three foreign banks for the year 1996-97. Operational efficiency is calculated in terms of total business and salary expenditure per employee. The analysis revealed that higher per employee salary level need not result in poor efficiency and business per employee efficiency co-efficient was also calculated. Among the PSBs, Bank of Baroda registered the high efficiency and operating profit per employee. Among the private sector banks Indus Bank followed by Citibank Registered highest and second highest operating profit per employee respectively. However, among the Nationalized Banks there existed wide variations in efficiency? Frequent changes are order of the day for the topics of this nature. Therefore, one should rely on latest information. Some organizations like, RBI, IBA, SBI and ICRA have carried out several research studies on various issues relating to banking and exclusive banking journals/periodicals like Bank Quest, The Bankers, RBI occasional papers, RBI bulletins and general magazines like Business Today, Business India, Finance India, have been publishing papers on various aspects like NPAs, capital adequacy, branch expansion, credit dispensation, deposit mobilization, service quality,

technology, performance evaluation, etc. Same studies and papers suitable to this study are being reviewed here. SBI Research Department in (2004), through its paper Performance analysis of 27 Public sector banks published in SBI monthly review performance, Vol XXXIX, was prepared by Economic Research Department of State Bank of India, is to analyze the Performance of the 27 Public Sector Banks for the year 1999-2000 vis-a-vis the preceding year. Selecting four different categories of indicators-Business Performance, Efficiency, Vulnerability and labor productivity indicators, carried out the analysis. Altogether, 39 indicators were selected for this purpose. For the purpose of analysis, 27 PSBs disaggregated into four groups, namely, the SBI, ABs (7), the SBGs (8), and the NBs (19). During 1999-2000, the PSBs exhibited better show in terms of several parameters studied above. Nevertheless, the problems of NPAs and capital adequacy remain to be taken care of. Researchers in this paper opinioned that greater operational flexibility and functionnal autonomy should be given to PSBs especially to strengthen their capital base. Further, they felt that since net interest margin will continue to remain compressed in a deregulated interest rate regime, a lot of effect would have to be made to mitigate this t far as NPAs are concerned, they believe' that, the outdated laws and regulations that pose hindrance to banks in getting back their dues need to be suitably amended. In a paper published in the Financial Express in (2005), titled Indias Best Banks has been doing for several years through its annual exercise to evaluate and rate Indian banks. They claim that this survey is a comprehensive one, which evaluates the performance of private, public, Indian and foreign Banks operating in India. With the objective of making the comparison more meaningful, Banks were categorized into Public Sector Banks, New Private Sector Banks and Foreign Banks. Financial information for the year ending March 31st, 2002 and March 31, 2003 relating to each of the banks falling into the aforesaid categories was collected from the data available from

RBI. Five major criteria were identified against which the banks were ranked. 'These criteria are (1) Strength and soundness (ii) Growth, (iii) Profitability, iv) Efficiency/Productivity, and (v) Credit quality. Considering the current banking, industrial and over-all economic scenario, pertinent weights were assigned to each of the major criteria. In the first category of "State-Run" 37 or Public Sector Banks, State Bank of Patiala and Andhra Bank is the top two. In the category of best old private sector banks, the magazine ranks the Jammu and Kashmir Bank and KarurVysya Bank as the first best and second best. In the category of 'New' Private Banks, HDFC as number one and ICICI Bank at number two. Finally, in the category of Foreign Banks, the magazine ranks Standard Chartered Bank and City Bank at the top two slots. Outlook Money (2005), titled The best in the business cover story, (March 2005), has announcing annual awards for the best performers in the personal finance universe. In the best bank award category, the magazine selected Corporation Bank among public sector banks and HDFC Bank among private sector banks and presented outlook money award 2004 to these two banks. A rigorous selection process was devised in consultation with Earnest and Young. The short listed contenders were mailed questionnaires seeking information on operational aspects like Number of Branches, Number of ATMs, Deposits, NPAs, CAR, and Return on Assets. They have taken two categories of Banks Public and Private Sector. All Public Sector Banks (except SB!, nominated for Hall of Fame Award), and Private Banks with deposit base of more than Rs. 2,000 Cr as on 31 March 2003 were selected. The jury-A.K. Purwar, Anu, Aga, Shitin Desai, Uma Shashikanth and Sandipan Debo-assigned weights to various parameters and choose the winner for 2005. Ram Mohan TT (2006), in his paper Long run performance of public and private sector bank stocks Vol 37, has made an attempt to compare the three categories of banks-Public, Private and Foreign-using Physical quantities of inputs and outputs, and comparing the revenue maximization efficiency of banks during 1992-2000. The findings

show that PSBs performed significantly better than private sector banks but not differently from foreign banks. The conclusion points to a convergence in performance between public and private sector banks in the post-reform era, using financial measures of performance. D'souza in his study evaluated the performance of Public sector(2007), private sector and foreign banks during the period 1991 to 1999-2000. The efficiency of the banking system was measured in terms of spread/working funds ratio and turnover / employees ratio. With reference to38the spread working funds ratio, the efficiency of the commercial banks as a whole has declined in the post-reform period. The Public Sector Banks have been responsible for this decline in efficiency, as the efficiency of the private and foreign banks has improved over the course of 1990s. Through the turnover/employee ratio has risen in the public sector banks, the turnover per employee in the private and foreign banks doubled relative to the ratio for public sector banks during this decade. However, the analysis revealed that the profitability of the public sector banks in late nineties improved relatively to that of private and foreign banks. Kusum W. Ketkar (2008),examined the efficiency and productivity growth in the Indian Banking Sector from 1990 to 1995 using the Data Envelopment Analysis methodology. Due to data availability problems at the individual bank level, the study includes only 39 banks. Several Conclusions stand out. First, for the sample, the overall technical inefficiency is about 31per cent and has remained stable over the examined period. Second, foreign banks showed the highest level of efficiency. Third, between 1990 and 1995, state and private banks experienced a reduction in pure technical efficiency, while for the nationalized and the foreign banks, it remained the same. Further, the size has found to be positively related to pure technical efficiency and to the number of branches negatively. Fifth, fewer branches and metropolitan location of foreign banks, perhaps partially explains their efficiency over domestic banks.

This paper finally concludes that Indian domestic banks need to greatly improve their efficiency through introduction of computer technology, improved management skills and through consolidation and merger of banks. Alamelu and Chidambaram emphasized (2008),the profiti1bility aspect in commercial banks. In this paper, the scholar analyzed and compared the performance of public and private sector bank on profitability angle. It was found that all the private sector banks have been registered both high profits and high rate of growth. Better customer service, technology, innovative products, good marketing strategies, proper monitoring of advances, regional orientation are some of factors responsible for the success of private sector banks in India. Ramachandra Reddy(2009) focused their attention on the seriousness of 39NPAs in public sector banks. They argued that with the introduction of international norms of Income Recognition, Asset Classification and Provisioning in the banking Sector, managing NP As has emerged as one of the major challenges facing the Public Sector Banks. They felt that total elimination of NPAs is not possible in the banking business owing to externalities but their incidence can be minimized. To reduce the seriousness of the problem, they suggest that the banks should adopt proper policy for appraisal, supervision and follow-up of advances; special recovery cells may be set-up at regional! zonal levels; Recovery Officers should be appointed at making necessary provisions and contingencies). Seven banks were operating in 'B' category (those banks, which after operating profits have not sufficient funds to provide for the provisions, thereby incurring net losses. And the remaining was placed in the 'e' category (those banks, which were unable to earn significant income to enjoy sufficient operating profits). Apart from studying the profitability of above-mentioned groups of banks, capital adequacy position and other balance sheet trends were also discussed. Moreover, same short-term and longterm strategies for enhancing the profitability level were suggested.

Ramasastri, A.S., Achamma Samuel and Gangadaram(2010), made an attempt to compare the behavior of interest and non interest income of scheduled commercial banks in India for the period from 1997-2003. This paper further tries to examine whether non-interest income has helped in stabilizing the total income of schedule commercial banks in the country. The major findings of the study are: (a) The average net interest income of SCBs. declined during the period 2003-2010, (b) The non-interest income of all SCBs exhibited an increase over a period of 7 years. It was also observed that interest income was more stable than that of non-interest income, and (c) In regard to the question about whether non-interest income has helped in stabilizing the total income of banks, it was seen that with respect to the State Bank Group, foreign banks and old private sector banks, non-interest income helped to stabilize total operating income. However, in the case of nationalized bank and new private 40 sector banks, it was seen that non-interest income has not helped in stabilizing their income appreciably. Nagarajan(2010), focused his attention on 'Other income of the banks' and analyzed the trend from 1999-2006 onwards in a wider perspective. He emphasized in this article that other income of the banks has been receiving focused attention mainly for two reasons. First, Banks are being urged to increase this source of income. Second, there was a spurt in other income of banks during 2007-2008. Main conclusions of this study are: (i) Since 1999-2000, banks other income has been increasing at a faster pace compared with interest earnings, (ii) Component-wise, income from commission, exchange and brokerage is most important, (iii) Income from exchange transactions is also relatively steady,

(iv) Private sector banks have logged rapid rate of growth, which may be attributed to the entry of new banks, (v) Foreign banks have retained their share, (vi) e cost of the public sector 'banks, and (vii) There is unusual increasing in 2001-02 in other income of banks.

Business India (2011), in its paper has been conducting the exercise of identifying Best Bank among the Scheduled Commercial Banks operating in India, for over 5 years now. Business India adopted the internationally renowned CRAMEL Model (with minor modifications) for evaluating banks. Basing on CRAMEL, Business India group constituted a panel of experts. After a thorough discussion, the panel came to a conclusion that ICICI was the best bank for the year 2003-04. ICICI Bank drew all round appreciation for its aggressive market and customer acquisition strategy.

Singh R (2011), in his paper Profitability management in banks under deregulate environment, IBA bulletin, No25, has analyzed profitability management of banks under the deregulated environment with some financial parameters of the major four bank groups i.e. public sector banks, old private sector banks, new private sector banks and foreign banks, profitability has declined in the deregulated environment. He emphasized to make the banking Sector competitive in the deregulated environment. They should prefer noninterest income sources.

CHAPTER-III RESEARCH METHODOLOGY

3.1 INTRODUCTION Research Methodology is a way to systematically solve the research problem. It may be understand as a science of studying as research is done scientifically in this we study various steps that are generally adopted by a researcher in studying the research problem along with logic behind them.

3.2 RESEARCH DESIGN The collected data were presented in tables and these tables were analyzed systematically. Ratio analysis, the vital financial tool was used to study the financial performance of DINDIGUL CENTRAL CO-OPERATIVE BANK, DINDIGUL . A chart and various diagrams are used to explain the analysis clearly. It is an undisputed truth that graphs and diagrams render any complicated discussion and any intricate subject, very simple to any casual reader of the thesis.

Common size financial statement is a tool to assess, in which figures reported are converted into percentages to some common base. Trend percentages are also taken as a tool which is immensely helpful in making a comparative study of the financial statement for several years. The method of calculating trend percentages involves the calculation of percentage relationship that each item bears to the same item in the base year.

3.3 DATA COLLECTION The study is based on secondary source of data. Secondary data have been mainly obtained from annual reports, records and books of DINDIGUL CENTRAL COOPERATIVE BANK, DINDIGUL. The secondary data were also collected from audited financial statements periodicals and other records maintained by DINDIGUL CENTRAL CO-OPERATIVE BANK, DINDIGUL. Collection of data is the process remuneration together with the proper record of research. Those data which are already been passed through the statistical process. In this study is based on the secondary sources. Secondary data is the data that have been already collected by and readily available from other sources. Such data are cheaper and more quickly obtainable than the primary data and also may be available when primary data cannot be obtained at all. It is economical It saves efforts and expenses It helps to make primary data collection more specific since with the help of secondary data, we are able to make out what are the gaps and deficiencies and what additional information needs to be collected It helps to improve the understanding of the problem It provides a basis for comparison for the data that is collected by the researcher

The secondary data for the study is mainly collected through: Annual Reports Audited financial statements Bank Records

3.3.1 PERIOD OF STUDY Data of 5 financial years are used for the purpose of study. The 5 years of study ranges from 2008- 2009 to 2012 2013.

3.4 RESEARCH FRAMEWORK The data which was collected is analyzed using the following tools which are as follows: Ratio Analysis Common size balance sheet

3.4.1 RATIO ANALYSIS: Ratio analysis is the process of determining and presenting the relationship of items and group of items in the statements. It is helpful to know about the liquidity, solvency, capital structure and profitability of an organization. It is helpful tool to aid in applying judgment, otherwise complex situations.

Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.

3.4.2 CURRENT RATIO

Current ratios one of the oldest of all financial ratios. It was first used in 1891. Even today; it is most common ratio for analyzing liquidity or short term financial position. Current ratio is defined as the ratio of current assets to current liabilities. It shows the relationship between total current assets and total current liabilities. Current ratio is also called working capital ratio or bankers ratio. It is calculated as follows. Current ratio = Current Assets Current Liabilities

3.4.3 LIQUID OR QUICK RATIO Liquid ratio is the ratio of liquid assets to current liabilities. It stabilities the relationship between quick assets and current liabilities. It is the measure of the instant debt paying ability of the business enterprises. It is also called acid test ratio. It is computed as follows:

Liquid ratio

Quick assets Current liabilities

Objective of quick ratio The objective of computing this ratio is to ability of the firm to meet its short term liabilities as and when due without depending upon the realization of stock.

3.4.4 ABSOLUTE PROPERIETARY RATIO Cash can be together with current ratio and acid test ratio so as to exclude even receivables from the current assets to find out the absolute liquid assets. This ratio considers only the absolute liquidity available with the firm. Total shareholder fund Total tangible asset

Absolute proprietary Ratio

3.4.5 DEBT EQUITY RATIO This ratio is also Known as external- internal equity ratio and is calculated to measure the relative claims of outsiders fund and the owners against the firms assets. This ratio is the basic and most common measure of studying the indebtedness of the firm. A ratio of 1:1 may be usually considered to be a satisfactory ratio although there cannot be any rule of thumb or slandered norm for all type of business. Debt Equity or

Debt Equity Ratio

Debt Equity Ratio

Outsiders Fund Shareholders Fund

3.4.6 Equity Ratio It is also known as proprietary ratio or shareholders to total equities or net worth to total asset ratio. This ratio establishes the relationship between shareholders fund to total assets of the firm. This ratio of proprietors fund to total fund is an important ratio for determining long term solvency of the firm. The components of the ratio are

shareholders fund and total assets. The shareholders funds are equity share capital, reference capital, undistributed profits, reserve fund and surpluses. Out o this amount, accumulated losses, should be deducted. Total asset on the other hand denote total resources of the concern. Shareholders Fund Total assets

Equity Ratio

3.4.7 NETWORKING CAPITAL RATIO: Net working capital represents the excess of current assets over current liabilities. Net working capital measures the firms potential reservoir of funds. Net working capital is a measures liquidity. Net working capital Capital employed

Net Working capital ratio

3.4.8 FIXED ASSETS TURNOVER RATIO It is also known as ratio of fixed assets to proprietors fund. This ratio establishes the relationship between fixed assets and shareholders funds. It indicates that the extent to which shareholders funds. It indicates that the extent to which shareholders funds are sunk in to fixed assets. There is no rule of thumb to interpret this ratio but 60 to 65% is considered as satisfactory. Fixed assets Shareholders Fund

Fixed Assets to net worth ratio

3.4.9 INVENTORY TURNOVER RATIO It is also known as stock turnover ratio. It measures how fast the inventory move through and out of a company and the effectiveness with which firm uses its resources. The computation is similar to the accounts receivables computation. Cost of goods Sold Average Inventory

Inventory turnover ratio

3.4.10 INVENTORY HOLDING PERIOD The average time taken for clearing the stock can be known by calculating inventory Conversion period. The inventory holding period for manufacturing company normally 30-40days. No. of Days Inventory Turnover Ratio

Inventory Holding period

3.4.11 DEBTORS COLLECTION PERIOD The average collection period represents the average number of days for which a firm has to wait before its receivables are converted in to cash. Average collection period for a manufacturing company is normally 30 days. No. of Days Debtors turnover ratio

Debtors collection period

3.4.12 GROSS PROFIT RATIO This is the ratio of gross profit to sales expressed as percentages. It is also known as gross margin. It is calculated as follows: Gross Profit Net sales

Gross profit ratio

x 100

3.4.13 NET PROFIT RATIO Another measure of profitability is net profit margin. This ratio gives a measure of net income by each unit of sales and often measured as percentages of sales.

Net Profit Ratio

Net profit Sales

x 100

3.4.14 NET WORKING CAPITAL TURNOVER RATIO Working capital turnover ratio indicates the velocity of utilization of net working capital. This ratio indicates the numbers of times the working capital is turned over in the course of a year. This ratio measures the efficiency with which the working capital is being used by a firm.

Net working capital turnover ratio

Sales Net working capital employed

3.4.15 RETURN ON TOTAL ASSETS The ROTA may also be called profit to asst Ratio. There are various approaches possible to define net profits and assets, according to the purpose and intent of the calculation of the ratio. The ROTA based on this ratio would be an under estimate as the interest paid to the creditors is excluded from the net profits.

ROTA

Net profit after Tax Total assets

x 100

3.4.16 RETURN ON INVESTMENT: The Conventional approach of calculating return on investment is to divide PAT by investment. Investment represent pool of funds supplied by shareholders ad lenders, while PAT represent reside income of shareholders therefore it is conceptually unsound to use PAT in the calculation of ROI. Operating profit Capital employed

ROI

x 100

3.4.17 RETURN ON EQUITY: In real sense, equity shareholders are the real owners of the company. They assume the highest risk in the company. Equity shareholders are getting residual claim after paying interest and performance dividend. Return on equity capital, which is the relationship between profits of a company an its equity capital, can be calculated as: Net profit after tax Net worth

Return on Equity

3.4.18 DEBORS TURNOVER RATIO It indicates the velocity of debt collection of a firm. I simple words it indicates the number of times average debtors (receivable) are turned over during a year. Credit sales Debtors

Debtors Turnover Ratio

3.4.19 WORKIG CAPITAL TURNOVER RATIO The working capital turnover ratio is used to analyze the relationship between the money used to fund operations and the sales generated from these operations. In a general sense, the higher the working capital turnover, the better because it means that the company is generating a lot of sales compared to the money it uses to fund the sales. This ratio represents the numbers of times the working capital is turned over in the course of year and is calculated as follows: Sales Net working capital

Working capital turnover ratio

3.4.20 EARNING YIELD RATIO: The earning yield may be defined as the ratio of earnings per share to the market value per ordinary share. The earning yield ratio is also called the earning price ratio. Earning per share Earning yield = Market price per share x 100

3.4.21 PRICE EARNIGS RATIO This ratio indicates the number of times the earning per share is covered by its market price. Price earnings ratio helps the investor in deciding whether to buy or not buy the shares of a company at a particular market price. Market price per share Earning per share

Price earnings ratio

3.4.22 EARNING PER SHARE Earning Per Share highlights the overall success of the concern from owners point of view and it is helpful in determining market price of equity share,

Earning per share

Net profit after tax Number of Equity Shares

3.4.23 WORKING CAPITAL MANAGEMENT Working Capital is the life blood and nerve centre of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. Working capital refers to that part of firm's capital which is required for financing short term or current assets such as cash, marketable securities, debtors, and inventories. In other words working capital is the amount of funds necessary to cover the cost of operating the enterprise. Meaning: Working capital means the funds (i.e.; capital) available and used for day to day operations (i.e.; working) of an enterprise. It consists broadly of that portion of assets of a business which are used in or related to its current operations. It refers to funds which are during an accounting period to generate a current income of a type which is consistent with major purpose of a firm existence.

Working capital= Current assets - Current liabilities Current assets include cash, stock, debtors etc. Current liabilities include creditors, loan payable, dividend payable etc. Decisions relating to working capital and short term financing referred to as working capital management. These involve managing the relationship a firm's short-term assets and its short-term liabilities.

Meaning of Working capital management The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash [low to satisfy both maturing short-term debt and upcoming operational expenses. The fundamental principles of working capital management art reducing the capital employed and improving efficiency in the areas of receivables, inventories, and payable. Concepts of Working capital Gross Working Capital Net working Capita Gross Working Capital Total Current assets Where Current assets are the assets that can be converted into cash within an accounting year & include cash, debtors etc., Referred as Economies Concept since assets are employed to derive a rate of return.

CHAPTER IV DATA ANALYSIS AND INTERPRETATION 4.1 CURRENT RATIO: Current assets Current liabilities

Current ratio

Table 4.1.1. Shows Current Ratio from the year 2009-2013 Year 2009 2010 2011 2012 2013 Current Assets 24086 35467 49933 64078 85400 Current Liabilities 22175 22250 31963 44973 41282 Ratio 1.08 1.59 1.56 1.42 2.06

(Source: Dindigul Central Co-operative Bank, Dindigul 2009-2013) Interpretation From the above table, it reveals with the current ratio from the year 2009-2013. Internationally accepted current ratio is 2:1 i.e., current assets shall be 2 time of current liabilities. The ability of the concern also depends on current asset position.

4.2

QUICK RATIO:

Quick ratio

Quick assets Quick liabilities

Table 4.2.1 Shows Quick Ratio from the year 2009-2013 Year 2009 2010 2011 2012 2013 Quick Assets 4578.12 4347.22 6226.40 10224.73 9703.93 Quick Liabilities 6538.15 8815.97 9656.73 11400.46 14703.38 Ratio 0.70 0.49 0.64 0.89 0.65

(Source: Dindigul Central Co-operative Bank, Annual Report year 2009-2013) Interpretation From the above table shows in 2009-2013 the ratio is less than the ideal ratio 1. Here, quick liabilities are twice when compared with quick assets. Hence, this position is not healthy for the soundness of the bank.

4.3

CASH RATIO:

Cash ratio

Cash Current liabilities

Table 4.3.1 Shows Cash Ratio from the year 2009-2013 Year 2009 2010 2011 2012 2013 Cash 10596.34 13539.17 19868.18 21651.46 13452.08 Current Liabilities 22175 22250 31963 44973 41282 Ratio 0.47 0.60 0.62 0.48 0.32

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table conclude an ideal cash ratio is 0.75:1. This ratio is more rigorous measure of a firms liquidity position. The table indicates from the year 2009 to 2013. For the 5years the companys cash position is not sufficient to meet its obligations. Because the five years it position is lower than ideal ratio.

4.4

DEBT-EQUITY RATIO:

Debt-equity ratio

Long-term debt Shareholders funds

Table 4.4.1 Shows Debt equity Ratio from the year 2009-2013 Long-Term Debt 5636.09 13350.09 22307.85 23573.05 26579.28

Year 2009 2010 2011 2012 2013

Shareholders Fund 365.53 365.53 392.81 412.38 422.52

Ratio 15.41 36.52 56.79 57.16 62.90

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above he table dealt with debt equity ratio from the year 2009 to 2013. The standard norm is 1:1. The company has borrowed more long-term debt for its operation. It is not healthy for the soundness of the firm. A high debt-equity ratio indicates that the claim of outsiders are greater than those of owners. Hence, this position affect the financial position of the concern.

4.5

PROPRIETARY RATIO:

Proprietary ratio

Total Shareholders Fund Total Tangible Assets

Table 4.5.1 Shows Proprietary Ratio from the year 2009-2013

Year 2009 2010 2011 2012 2013

Total Shareholders Fund 365.53 365.53 392.81 412.38 422.52

Total Tangible Assets 4578.12 4347.22 6226.40 10224.73 9703.93

Ratio 0.007 0.008 0.006 0.004 0.004

(Source: Dindigul Central Co-operative Bank, Dindigul Annual Report 2009-2013) Interpretation From the above table shows the proprietary ratio for the year 2010 is 0.008% and subsequently it decreased to (0.004 in 2012). The company fails to improve or retain its shareholder funds. Higher the ratio or the share of shareholders in the total capital of the bank, poor is the long term solvency position of the company.

4.6

FIXED ASSETS TURNOVER RATIO

Fixed asset turnover ratio

Cost of goods sold Fixed asset

Table 4.6.1 Shows Fixed asset turnover Ratio from the year 2009-2013 Cost of goods sold 12470.01 14740.86 20600.30 27064.47 31546.92

Year 2009 2010 2011 2012 2013

Fixed Asset 22584.64 27949.60 33735.67 40717.28 44948.18

Ratio 0.55 0.52 0.61 0.66 0.70

(Source: Dindigul Central Co-operative Bank, Dindigul Annual Report 2009-2013) Interpretation From the above table reveals with fixed assets turnover ratio. Higher the ratio, more is the efficiency in probability of a business concern. A lower ratio is the indication of under utilization of fixed assets in the year 2009-2012 is lower, is indicates lower utilization of fixed assets.

4.7

INVENTORY TURNOVER RATIO:

Stock turnover ratio

Cost of goods sold Average inventory

Inventory Holding period

12 months (or) 365 days Inventory Turnover ratio

Table 4.7.1. Shows Inventory Turnover Ratio from the year 2009-2013 Stock Turnover Ratio 2.98 3.36 3.00 2.74 2.06 Inventory holding period in pays 66 42 100 127 129

Year 2009 2010 2011 2012 2013

Cost of Goods Sold 12470.01 14740.86 20600.30 27064.47 31546.92

Average Inventory 4183 4385 6852 9856 15256

(Source: Dindigul Central Co-operative Bank, Dindigul Annual Report 2009-2013) Interpretation From the above table deals with inventory turnover ratio of the company. Inventory turnover ratio for the year 2009 -2012 were satisfactory. But very poor in 2013. A high inventory turnover indicates efficient management of inventory, because more frequently the stocks are sold.

4.8

INVENTORY HOLDING PERIOD:

Stock turnover ratio

Cost of goods sold Average inventory

Inventory Holding period

12 months (or) 365 days Inventory Turnover ratio

Table 4.8.1. Shows Inventory holding period from the year 2009-2013 Stock Turnover Ratio 2.98 3.36 3.00 2.74 2.06 Inventory holding period in pays 66 42 100 127 129

Year 2009 2010 2011 2012 2013

Cost of Goods Sold 12470.01 14740.86 20600.30 27064.47 31546.92

Average Inventory 4183 4385 6852 9856 15256

(Source: Dindigul Central Co-operative Bank, Dindigul Annual Report 2009-2013) Interpretation From the above table shows with inventory turnover ratio of the company. Inventory turnover ratio for the year 2009-2012 were satisfactory. But it was very poor in 2013. A high inventory turnover indicates efficient management of inventory, because more frequently the stocks are sold.

4.9

DEBTORS TURNOVER RATIO:

Debtors Turnover Ratio

Net credit sales Closing debtors

Table 4.9.1. Shows Debtors Turnover Ratio from the year 2009-2013 Debt Turnover Ratio 0.78 1.26 0.66 0.71 0.64

Year 2009 2010 2011 2012 2013

Net Credit Sales 3412 6455 3755 5286 6070

Closing Debtors 4341.68 5099.62 5671.28 7393.50 9409.31

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table conclude Debtors velocity indicates the number of times the debtors are turned over during a year. Generally higher the value of debtors turnover more efficiency the management of debtors. Similarly, lower debtor turnover implies inefficient management of debtor.

4.10

WORKING CAPITAL TURNOVER RATIO:

Working capital Turnover Ratio

Net sales Net working capital

Table 4.10.1. Shows capital Turnover Ratio from the year 2009-2013 Working capital turnover ratio 0.50 0.53 0.52 0.53 0.57

Year 2009 2010 2011 2012 2013

Net Sales 3412 6455 3755 5286 6070

Net working Capital 6776 12055 7086 9955 10525

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table deals with working capital turnover ratio. Current liabilities of the concern, exceeds the current assets, then net working capital was positive. A higher ratio indicates efficient utilization of working capital and a low ratio indicates otherwise. Comparatively, in the year 2009 the net sales were decreased more than that of earlier years.

4.11

GROSS PROFIT RATIO:

Gross Turnover Ratio

Gross profit Net sales

Table 4.11.1. Shows Gross Profit Ratio from the year 2009-2013 Working capital turnover ratio 0.80 0.43 0.74 0.64 0.59

Year 2009 2010 2011 2012 2013

Gross Profit 2757.66 2806.36 2809.19 3422.33 3630.62

Net Sales 3412 6455 3755 5286 6070

(Source: Dindigul Central Co-operative Bank, Annual Report 2009-2013) Interpretation From the above table highlight in the year 2009, the Gross Profit Ratio was 0.80% but then it decreased to 0.43%, which shows a not profit earning capacity of the business with reference to its sales. But in the year 2011, it increased to 0.74% which may be due to increase in cost of production or due to sales at lesser price. In the year 2012, the gross profit ratio was 0.64% decreased, and in the year 2013, the gross profit ratio 0.59% decreased as respectively.

4.12

NET PROFIT RATIO:

Net profit Ratio

Net profit after tax Net sales

x100

Table 4.12.1. Shows Net profit Ratio from the year 2009-2013 Net profit after tax 2227.20 3058.33 4241.68 5006.96 4480.72 Net profit ratio % 65.26 47.37 112.94 94.70 73.80

Year 2009 2010 2011 2012 2013

Net sales 3412 6455 3755 5286 6070

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table indicates in the year 2011 the Net Profit is 112.94%, but in the year 2013 the net profit was decreased to 73.80%, but in the year 2009-2010 the net profit was decreased 65.26-47.37%, and in the year 2011 the net profit was increased, Therefore the performance of the management should be appreciated. Thus an increase in the ratio over the previous periods indicates improvement in the operational efficiency of the business.

4.13

OPERATING RATIO:

Operating Ratio

Operating costs Net sales

x100

(Operating cost= Cost of sales + Operating Expenses) Table 4.13.1. Shows Operating ratio from the year 2009-2013 Operating Costs 3844.66 4711.23 5669.88 6727.59 5946.74 Operating ratio % 112.66 72.98 150.97 127.26 97.96

Year 2009 2010 2011 2012 2013

Net sales 3412 6455 3755 5286 6070

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table shows that in the year 2009 the operating Profit is 112.66%, but in the year 2010 the operating profit was decreased to 72.98%, but in the year 2011 the operating Profit was increased 150.97%, and in the year 2012 the operating profit was decreased 127.26%, and in the year 2013 the operating profit was decreased 97.96% as respectively.

4.14

EARNING PER SHARE:

Earning per share

Net profit after tax Number of Equity Share

Table 4.14.1. Shows Earning per share ratio from the year 2009-2013 Net profit after tax 2227.20 3058.33 4241.68 5006.96 4480.72 Earning per share 6.10 8.37 10.8 12.15 10.61

Year 2009 2010 2011 2012 2013

No. of equity shares 365.53 365.53 392.81 412.38 422.52

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table reflects the capacity of the concern to pay dividend to its equity shareholders. Comparatively it has heavy loss in the year 2012. Hence it degrade the reputation of the firm as well as interest of the share holders of the bank.

4.15

PRICE EARNING RATIO:

Price earning ratio

Market price per share Earnings per share

Table 4.15.1. Shows Price Earnings ratio from the year 2009-2013 Price Earnings Ratio 5.76 4.99 4.94 5.52 7.13

Year 2009 2010 2011 2012 2013

Market price per share 352.37 414.71 536.16 668.34 758.91

Earning per share (Rs.) 61.14 83.96 108.33 121.79 106.37

(Source: Dindigul Central Co-operative Bank, Annual Report 2009-2013) Interpretation From the above table shows Usually higher the Price earnings ratio, better it is. The Management should look into the causes that have resulted into the fall this ratio. Hence Price Earnings Ratio positive, it decreases in the year 2010 &2011 but it decreases in the year 2012 & 2013 .

4.16

EARNING YIELD RATIO:

Earning yield

Earning per share Market price per share

x100

Table 4.16.1. Shows Earning yield ratio from the year 2009-2013 Earning per share 61.14 83.96 108.33 121.79 106.37 Market Price per share 352.37 414.71 536.16 668.34 758.91 Earning yield 17.35 20.24 20.20 18.22 14.01

Year 2009 2010 2011 2012 2013

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table shows Earnings yield shows positive value. It is also decreased trend. It reveals that good performance of the bank.

4.17

RETURN ON EQUITY:

Return on Equity

Net profit after tax Net worth

Table 4.17.1. Shows Return on equity from the year 2009-2013 Net profit after tax 2227.20 3058.33 4241.68 5006.96 4480.72 ROE % 6.32 7.38 7.91 7.49 5.91

Year 2009 2010 2011 2012 2013

Net worth 352.37 414.71 536.16 668.34 758.91

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table conclude Here, the bank has earned profit, hence, the net profit of the shareholders net worth year after year. The return on equity ratio also showed decreased trends positive. The bank profitability position was good.

4.18

RETURN ON INVESTMENT:

ROI

Operating profit Capital employed

Table 4.18.1. Shows Return on investment from the year 2009-2013 Operating Profit 2757.66 2806.36 2809.19 3422.33 3630.62 ROI % 1.17 1.19 0.96 1.14 1.05

Year 2009 2010 2011 2012 2013

Capital Employed 2348.13 2350.88 2916.78 2985.58 3449.65

(Source: Dindigul Central Co-operative Bank, Annual Report 2009-2013) Interpretation From the above table shows that in the year 2010 the bank has incurred operational loss, and the 2010 the bank return on investment has incurred operational profit, in the year 2011 the bank has incurred operational loss, in the year 2012 the bank has incurred operational profit, and in the 2013 the bank has incurred operational loss as respectively.

4.19

RETURN ON TOTAL ASSET:

ROTA

Net profit after Tax Total assets

x 100

Table 4.19.1. Shows Return on total asset from the year 2009-2013 Return on Total Assets % 48.64 70.37 68.11 48.96 46.17

Year 2009 2010 2011 2012 2013

Net profit after tax 2227.20 3058.33 4241.68 5006.96 4480.72

Total Assets 4578.12 4347.22 6226.40 10224.73 9703.93

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table deals,In the year 2009-2013 the company incurred net profit. The return on total assets showed positive (Profit) balance in all the 5years.

4.20

DEBT RATIO:

Debt ratio

Total debt Net asset

Table 4.20.1. Shows Debt ratio from the year 2009-2013 Year 2009 2010 2011 2012 2013 Total debt 4341.68 5099.62 5671.28 7393.50 9409.31 Net Asset 4919.38 5826.77 6520.62 8317.27 10486.28 Debt ratio% 0.88 0.87 0.86 0.89 0.90

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table concludes debt ratio for the year 2009 is 0.88 and it is has increased subsequently to 0.90 in the year 2013. This position was not good to conduct business in future. Hence, the company has to take necessary step to avoid borrowing loan from bank or others. Huge debts carries huge amount of interest, it affects the profitability of the concern.

4.21

NET WORKING CAPITAL RATIO

Net working capital ratio

Net working capital Capital employed

Net working capital = Current assets Current liabilities Table 4.21.1. Shows Debt ratio from the year 2009-2013 Net working capital (in Rs.) 6776 7277 6445 6678 7024 Net Assets (or) Capital employed (in Rs.) 4578.12 4347.22 6226.40 6352.53 6975.12 Ratio

Year 2009 2010 2011 2012 2013

1.48 1.67 1.03 1.05 1.01

(Source: Dindigul Central Co-operative Bank,Annual Report 2009-2013) Interpretation From the above table revealed the networking capital ratio from the year 2009 to 2013. The bank borrowed loan for its working capital requirements, because current liabilities were lower than that of current assets, in every year. Hence liquidity position is good.

CHAPTER V SUMMARY OF FINDINGS,SIGGESTIONS AND CONCLUSIONS

5.1 FINDINGS 1. It is inferred that from the table 4.1.1,clear that current ratio of the bank from the year 2009 to 2013 is 2:1 ie current assets shall be 2 times of current liabilities. 2. It is showed that from the table 4.2.1,clar that quick ratio of the bank from the year 2009 to 2013 quick liabilities are twice when compared with quick assets. 3. It is inferred that from the table 4.3.1,clar that cash ratio of the bank from the year 2009 to 2013 cash position is not sufficient to meet its obligations. Because cash ratio is lower than ideal ratio. 4. It is concluded that from the table 4.4.1, clear that debt equity ratio of the bank from the year 2009 to 2013 the company has borrowed more long term debt for its operation. A high debt equity ratio indicates that the claims of outsiders are greater than those of owners. 5. It is showed that from the table 4.5.1,clar that proprietary ratio of the bank from the year 2009 to 2013 the bank fails to improve or retain its share holders funds. 6. It is concluded that from the table 4.6.1,clar that fixed asset turnover ratio of the

bank from the year 2009 to 2013 a lower ratio is the indication of under utilization of fixed assets in the year 2009&2011 and 2012&2013.

7. It is inferred that from the table 4.7.1,clar that inventory turnover ratio of the bank from the year 2009 to 2013 inventory turnover ratio for the year 2008 to 2011 was satisfactory, but it was very poor in 2013 8. It is showed that from the table 4.9.1,clar that turnover ratio of the bank from the

year 2009 to 2013 higher value of the debtors turnover indicates the more efficient and lower debtor turnover implies inefficient management of debtors . 9. It is concluded that from the table 4.10.1,clar that working capital turnover ratio of

the bank from the year 2009 to 2013 A higher ratio indicates efficient utilization of working capital and low ratio indicates inefficient utilization, comparatively in the year 2012 & 2013 net sales were decreased . 10. It is inferred that from the table 4.11.1,clear that the gross profit ratio of the bank from the year 2009 to 2013 subsequently increase and decrease every year. 11. It is showed that from the table 4.12.1,clear that the net profit ratio of the bank from the year 2009 to 2013 subsequently increase and decrease every year. 12. It is concluded that from the table 4.13.1,clear that the operating ratio of the bank from the year 2009 to 2013 subsequently increase and decrease every year. 13. It is inferred that from the table 4.14.1,clear that the earning per share of the bank from the year 2009 to 2013 in the year 2009 has heavy loss of the bank to pay dividend to its equity share holders. 14. It is showed that from the table 4.15.1,clear that the price earnings ratio of the bank from the year 2009 to 2013,negative earning ratio affects the market price of the shares. 15. It is concluded that from the table 4.17.1,clear that the return on investment of the bank from the year 2009 to 2013 subsequently increase and decrease every year.

16. It is inferred that from the table 4.19.1,clear that the return on total assets of the bank from the year 2009 to 2013, subsequently increase and decrease every year.

5.2 SUGGESTIONS 1. The liquidity position of the company can be utilized in a better or other effective purpose. 2. The bank can be use the credit facilities provided by the creditors. 3. Efforts should be taken to increase the overall efficiency in return out of capital employed by making used of the available resource effectively. 4. The bank can increase its sources of funds to make effective financial analyze system for more profits to be earn in upcoming years. 5. Quick liabilities could be reducing to avoid un certainty of fund flow of the bank to manage financial position in effective manner. 6. Utilization of fixed assets is very low its affects the ineffective utilization of resources so the bank can take necessary action to use effective utilization of resources. 7. Borrowing more long term debt by the bank it affects the claims of owners more than outsiders. 8. Improve cash position of the bank because bank fails to meet cash obligation because cash ratio is less than ideal ratio.

5.3 CONCLUSION The study is made on the topic financial performance using ratio analyze with five years data in dindigul central co operative bank. Finance is said to be an important factor of business it is the life blood of any bank for the growth and development of an bank, it financial system should be strong and perfect. The study will reveals the financial performance of the company from the past 5 years starting from 2009 to 2013.various ratio analysis are helpful in evaluating the efficiency of performance in dindigul central co operative bank, dindigul. The financial performance of the bank for the five years is analyses and it is proved that the bank is financially sound