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A STUDY ON WORKING CAPITAL ANALYSIS AT CANARA BANK SIDLAGHATTA

CHAPTER 1 INDUSTRY PROFILE INTRODUCTION TO BANKING: In the past i.e., before the introduction of money there was a barter system. When the Money came into vogue its use was limited to buying and selling and selling activities only. Growth of economy consequent upon development in the fields like communication, science, transportation has necessitated the increase in the usage of money. With the growth of money the use of credit instruments also increased. The origin of banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposit from friends, relatives, and others in a limited sense. The growth in fields like trade, commerce, industry, science and technology has accelerated the growth of banking sector. Today Banking industry become a part parcel of the economic system and we cannot imagine economy or growth in the economy without Banks. ORIGIN OF BANKING: Though there is no unanimous opinion regarding the origin of the word Bank, for study purpose we can trace the word Bank to the Italian word Banco, Latin word Bancus or French word Banque. In fact the Jews in Lombardy used to transact their banking business by sitting on benches. Since the banking activities led to profits there was lot of growth of banking business and in the modern economy it has acquired the status of industry viz., Banking industry. MEANING AND DEFINITION OF BANK AND BANKERS: The word bank associated with the institution dealing in money raised from the public. In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy. Bankers often popularity describes as factories of credit of manufacturers of money. According to word Bank Encyclopaedia, Bank is a business establishing that safeguards peoples money and uses it to make loans and investments. HISTORY OF BANKING IN INDIA: Banking was in existence in India from very early times. The modern Banking (i.e. banking on western lines) started in India in the beginning of the 19th century only. The employees of East India Company (these banks were known as Agency houses) started the earliest commercial banks in India. The first joint stock bank to establish was Bank of Hindustan. The other joint stock banks present at those times were Bank of Bengal, Bank of Bombay, and Bank of Madras. As these banks were started with the financial participation of the government, they were called the presidency Banks. In 1921, they were amalgamated and converted into the imperial bank of India.
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Modern Banking Modern banking institution is a large corporate giant with large resources and a vast field of activity. Since the nationalization of some big commercial banks in India in the year 1969, there has been a great surge of banking industry throughout the worl with the growing number of banking offices. The banking business today has become highly critical and competitive between various classes of banks in offering a greater variety of services nationally and internationally. With the growth of trade and commerce, banks are also modernizing operations with a view to satisfying modern customers. The main aim is to modernizing banking system is to improve bank operation with a view to maintaining high standard banking system. This involves applications of better management techniques. In India, class banking has given way to mass banking by Nationalization of bank, there by bringing in its fold very large number customers. Banks are now looked upon as agents for development instead of purveyors of credit to the large industries and big business companies. More and more functions are entrusted to banks apart from providing credit to trade, industry and agriculture it is also offering services such as pension payment to the retired employees, payments of salary to government servants, collections of water, electricity bills etc. In the year 1991, the financial sectors in India was heavily controlled and commercial intermediaries, had mutually exclusives and operated in a largely stable environment, with little or no competition. Term lending institutions were focused on the achievement of the Indian governments socio economic objectives, including balanced industrial growth and employment creation, especially in areas requiring development. The focus of commercial banks was primarily to mobilise household savings through demand and time deposit and to use these deposits to meet the short term financial needs of borrowers in industry, trade and agriculture. In addition, the commercial banks provide a range of banking services to individuals and trade. However since 1991, there have been comprehensive changes in the Indian Financial system. The Indian banking system is financially stable and resilient to the shocks that may arise due to higher non-performing assets (NPAs) and the global economic crisis, according to a stress test done by the Reserve Bank of India (RBI).Significantly, the RBI has the tenth largest gold reserve in the world after spending US$ 6.7 billion for the purchase of 200 metric tons of gold from the International Monetary Fund (IMF). Following the recent financial crisis, new deposits have gravitated towards the public sector banks. According to RBIs Quarterly Statistics on Deposits and Credit of scheduled Commercial banks: June 2009, nationalised banks, as a group, accounted for 49.7percent of the aggregate deposits, while State Bank of India(SBI) and its associates accounted for 24.2percent. The share of other scheduled commercial
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banks, foreign banks and regional rural banks in aggregate deposits were 17.5percent, 5.6percent and 2.9percent, respectively. Banking in India originated in the last decades of the 18th century. The oldest banks in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the Imperial Bank of India, relegating it to commercial banking functions. CLASSIFICATION OF BANKS Generally banks are classified on the basis of their functions of banks is called functional classification of banks. On the basis of their functions banks are classified into six categories. They are. Commercial banks or deposits banks Industrial banks or investment banks Agricultural banks Exchange banks Saving banks Central banks
COMMERCIAL OR DEPOSIT BANK:-

Commercial banks are which accept deposits from the public and lend them mainly to commerce for short periods. As they finance mainly commerce they are called commercial banks. They are also called deposits banks as they accept deposits from the public and lend them for short periods. [The system of accepting deposits from the public and lending them for short periods is called deposit banking and banks engaged in such banking are called deposit banks.
INDUSTRIAL BANKS OR INVESTMENT BANKS:-

Industrial banks are banks which provide block or fixed capital to industries. As they finance industries they are called industrial banks. They are also called investments banks as they invest their funds in subscribing to shares and debentures of industrial concerns with the objective of providing long term finance to industries.
AGRICULTURAL BANKS:-

Agricultural banks are banks which provide finance to agriculture. As they provide finance to agriculture, they are called agricultural banks. Agricultural banks are found in many countries such as India, England, Germany, finance, the U.S.A etc In most
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of the countries, agricultural banks are organized on co-operative banks provide short term finance to the agriculturists for the purchase of fertilizers, pesticides and seeds and for the payment of wages. Land development banks provide long-term finance to the farmers for the purchase of agricultural machinery installation of pumps sets, construction of minor irrigation works, etc..
EXCHANGE BANKS:-

Exchange banks are banks which finance mainly foreign exchange business of a country. As they finance mainly the foreign exchange, business of country they are called exchange banks. Special exchange banks are found only in some countries. In many countries, commercial banks themselves perform exchange business. A small portion of Indias foreign exchange business is done by Indian commercial banks.
SAVING BANKS:-

Savings banks are special banks which specialize in the mobilization of the small savings of the middle and low income groups. As they are concerned with the mobilization of the small saving of the people they are called saving banks. Special savings bank is not found in many countries. They are found only in a few countries like the U.S.A Canada etc In most of the countries. Saving bank business is done by commercial banks and post offices.
CENTRAL BANKS:-

Today every country in the world has a central bank. A central bank is the highest banking and monetary institution of a country. In other words it is the leader of all other banking and monetary institutions found in a country. As it occupies a central position in the banking structure of a country it is called the central bank. The central bank operates under state control and works for the promotion of the monetary and economic stability of the country unlike other banks it does not work for profits. Functions of bank The functions of bank ma0y be divided into two broad categories Primary function Secondary function

1. Primary function:
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Accepting deposits Lending money or investment

2. Secondary function: Agency services General utility services

Public sector banks in India Among the public sector banks in India, United Bank of India is one of the 14 major banks which were nationalised on July 19, 1969. Its predecessors, in the Public Sector Banks, the United Bank of India Ltd., was formed in 1950 with the amalgamation of four banks viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd. (1922), and Hooghly Bank Ltd. (1932). Oriental bank of commerce (OBC), a Government of India Undertaking offers. The following are the list of Public Sector Banks in India

Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank Of India Corporation Bank Dena Bank Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank

And other subsidiary banks of SBI.

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CHAPTER 2 COMPANY PROFILE A. BACKGROUND AND INSPECTION OF THE CAMPANY One of the Indias largest banks, Canara bank (also known as Can Bank) has a network of more than 3043 branches throughout India, in addition to branches in Hong Kong and London. All of Canara Banks branches including those located in rural areas are computerised, in a country where that is not a given. The modernization of all branches allows the bank to offer its customers networked ATMs, telebanking, Internet banking and debit card services. Canara Banks lending focus is on agriculture, retail, housing, and infrastructure loans. Other services include asset management and factoring. The financial institution is 73% owned by Indias government. The Beginnings making of an Indian multinational. Canara bank occupies a premier position in the comity of Indian Banks. With an unbroken record of profits since its inception, Canara bank has several first to its credit. These include : Launching of Inter-City ATM Network Obtaining ISO Certification for a Branch Articulation of Good Banking-Banks Citizen Charter Commissioning of Exclusive Mahila Banking Branch Launching of Exclusive Subsidiary for IT Consultancy Issuing Credit Card for farmer Providing Agricultural Consultancy Services

HISTORICAL TREND Founded as the Canara Bank Hindu permanent fund in 1906, by late Sri.Ammembal Subba Roa pai, a philanthropist, thisjjjj small seed blossomed in to a LTD company as Canara bank Ltd in 1910. Canara Bank is one of the premier banks in country accredited with umpteen distinctions. Since inception, it has been on the profit making and bank today satisfies completely a perfect blend of commercial and social banking. Canara bank is in fact the first bank to be conferred FICCI award for contribution to the rural development.

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late Sri.Ammembal Subba Roa pai FOUNDING PRINCIPLES 1. 2. 3. 4. To remove Superstition and ignorance. To spread education among all to sub-serve the first principle. To include the habit of thrift and savings. To transform the financial institution not only as the financial heart of the community but the social heart as well. 5. To assist the needy. 6. To work with sense of service and dedication. 7. To develop a concern for fellow human being and sensitivity to the surroundings with a view to make changes/remove hardships and sufferings. B. NATURE OF THE BUSINESS CARRIED : Canara Bank is a Public Sector banking Company which is running under the Administrative Control of Govt of India. Canara Bank is a commercial bank which was nationalised in the year 1969. The total share capital is Rs 410 crores of which government capital is 300 crores, others Rs 110 crores and, the total business of the bank stood at Rs 4, 00,000 crores. Canara bank was ranked at 1299 in the Forbes Global 2000 list. Canara bank is a nationalised bank which is offering services to the industry, NRIs and all the classes of people under, Corporate Banking, NRI banking personal banking, Priority credit and other services which includes Saving bank a/c and term deposits, Loan products, Technology products, Mutual funds, Insurance business, International services, Card services, Consultancy services, Depository services, Ancillary services, Accounts and Banking, Cash management services, Syndication services, IPO, Merchant banking, TUF schemes, Remittance facilities, Consultancy services. It has come to the forefront of the commercial and financial services and
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established a leadership in the financial services. The bank has also carved a distinctive mark, in various corporate social responsibilities, namely, serving national priorities, promoting rural development, enhancing rural self-employment through several training institutes and spearheading financial inclusion objective. It has explained his services internationally to many countries like London, Hongkong, Moscow, Shangai, Doha. Canara bank also has diversified into other financial areas like Factoring, Investments Management, Venture Capital, Home finance and security trading with his subsidiaries. C. VISION, MISSION AND QUALITY PROFILE : MISISION: To provide quality-banking services with enhanced customer orientation, higher value creation for stakeholders and to continue as a responsive corporate social citizen by effectively blending commercial pursuits with social banking. VISION: To emerge as a Best Practices Bank by pursuing global benchmarks in profitability, operational efficiency, asset quality, risk management and expanding the global reach QUALITY POLICY: The branches will provide total banking services and continually review and improve the process of total customer satisfaction by implementing the quality management system requirement as per ISO 9001-2000 D. PRODUCT PROFILE: THE DIFFERENT FINANCIAL PRODUCTS & SERVICES OFFERD ARE: DOMESTIC PRODUCTS: Saving bank deposits : For individuals & non trading organizations/institutions. Current Account : For business operations-traders, businessmen, corporate bodies Fixed deposit : Secured way to high returns individuals & institutions.

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Kamandhenu Deposits : Re-investment money multiplier plan.

Can bank Auto Renewal Deposits : Higher return in shorter span.

Can flexi Deposits : A combination of savings & fixed deposit return instant liquidity.

Ashraya Deposits : Respecting value for Indian citizens.

Recurring deposits Scheme : Inculcating saving, rewarding & recurring habits.

Floating rate Deposit Scheme (FRDS) : Insures against interest fluctuations.

Saving suraksha: A group insurance scheme for its deposits clients.

LOAN PRODUCTS : Housing loan scheme : Purchase of ready built house / flat, Construction of house, purchase of a sites & Construction of house of house there on, undertaking repairs ,renovation ,up gradation, creation of additional & for taking over of Hl liability from other recognizing finance companies & banks. Some Improvement Loans : Furnishing the house / flat along with banks home loans/ independently. Can mobile : Facilities purchase of new/used car/jeep of all makes the scheme also cover finance of new for purchase of brand new two wheeler. Can carry :
Provided to credit worthy individuals, Professionals & salaried class for buying consumer durable & house articles.

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Can budget : Fulfils the financial needs of confirmed employees of reputed PSUs joint stock companies / Central /State /Semi- government employees & Lecturers /Professors/ assistant professors of colleges/ universities & research institutes.

Can rent : Provides loans to property owners wherever the property is leased rented out to PSUs Central/State /Semi-government undertakings, reputed corporate, banks financial institutions, insurance companies & MNCs.

Can mortgage : Designed to meet the financial requirement against security of equitable mortgage of property (Land, Building) to professional, businessmen, salaried person & Individuals.

Vidyasagar Loan scheme : Renders financial assistance for needy & meritous student for pursuing all types of studies (Professional /General) in India & abroad.

E. AREA OF OPERATIONS : Global presence : Canara bank established its branches its International Division in 1976, to supervise functioning of its various foreign departments, to give the required thrust to Foreign exchange business, particular exports and to meet the requirements of NRIs. Though small in size, the Banks presence abroad has brought in considerable business, particular NRI deposits. The presence of is shown under, Canara Bank, London, UK (branches) Indo Hong Kong international Finance co. LTD; Hong Kong (Subsidiary) AL Razouki international exchange company, Dubai ,UAE Canara Bank, Moscow (Representative office)

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National presence :

Canara bank has a network of 3043 branches; Spread over 28 states/4union territories of the country & one oversees branches at London, which are administered through: Head office at Bangalore 30 circle offices/1 international division 17 Regional offices 3043 Branches Number of branches 727 744 793 779 3043 % to total branches 24 24 26 26 100.00

Population growth Metro Urban Semi-urban Rural Total

PUBLICATION -BASED NETWORK OF THE BANK IS GIVEN BELOW:

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F. OWNERSHIP PATTERN : The board consist of a whole time Chairman and Managing Director and Two executives director and one director representing Govt of India and one representing Reserve Bank of India and four part times Non-official Director. A Canara bank is a public sector undertaking (PSU), 73.17% of its shares his held by Govt of India and mutual fund/other institutions 5.75% private corporate bodies 3.33% and public ownership is 17.75%.

Category Promoters The president of India Institutional Investors Mutual Funds/UTI Financial Institutions Insurance companies Foreign Investors Non-institutions Bodies corporate Individuals Individual shareholders holding share capital up to Rs. 1 lakh. Individual shareholders holding share capital in excess of Rs. 1 lakh. Any other (specify) - Trusts - Clearing Members - Non-resident India Total

Number of shares

Percentage of share holding

300000000

73.17

7305534 843417 27091475 46014662

3.01 0.29 7.06 10.36

3695578

0.68

23143204 1104491

5.24 0.27

5762 436408 358869 410000000

0.00 0.11 0.06 100

G. COMPETATORS INFORMATION :
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State Bank of India In 1921, the imperial bank of India, the precursor to State Bank of India, was formed as the result of amalgamation of the Bank of Bengal and two other presidency banks, namely, Bank of Madras and Bank of Bombay. In 1955, it was abolished by an Act of Parliament, which handed over its assets and operations to new entity called State Bank of India. As the Government wanted more control over the credit delivery, it nationalised 14 largest commercial banks in India in 1969. The SBI has a sense of social responsibility and caters to various sections of the society.

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PUNJAB NATIONAL BANKS Punjab National Bank caters to 3.5 crore customers through a network of over 4525 offices. The Economic Times has designated it as the most frustrated Bank in India and has ranked it as 21st amongst top 500 companies worldwide. Punjab National Bank offers banking services all kinds of clients from SSIs to multinational companies. The bank has been conscious of Corporate Social Responsibility (CSR) and has been financing agricultural activities and SSIs. It is trying to expand its operations overseas by setting up offices in Shangai, London, and Kabul. It also offers internet banking facilities and is deploying the concept of Anytime Anywere Banking. HDFC BANK HDFC Bank was incorporated in August 1994. The bank has a Pan India network of 583 branches in 263 cities and over 1471 ATMs. It has technical expertise, maintains product quality and has set global standards for itself. The bank has corporate governance and aims to attain fairness for the stakeholders. Some of the products and services offered by the bank are :Accounts and Deposits saving, current & fixed deposits, Private Banking, Loans, Cards Credit cards, Debit cards, Prepaid Cards, Investment & Insurance. ICICI BANK : ICICI Bank is spread across the length and breadth of the country. It has 614 branches and over 2200 ATMs. The bank offers a huge variety of services in retail banking and investment banking, life and non-life insurance, venture capital and asset management. To serve global clients the bank looks forward to strengthen its operations internationally, ICIC currently has subsidiaries in the UK, Russia, Canada, Singapore, and Dubai. ICICI Bank, with market capitalisation of about Rs. 480.00 billion (US$ 10.8 billion), ranked third amongst all the companies listed on the Indian stock exchanges in June 2006. CITI BANK : The origin of citi bank go to the year 1812, when a group of New York merchants came together to found it. It is an international bank with its operations spreading across many countries. It provides various strategic financial advisory services including acquisitions, mergers, financial restructurings, loans, foreign exchange. The products and services offered by bank are as follows: Loans, Citibusiness, Banking, Insurance services, Credit cards, Investment.

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UTI BANK : The year 1994 saw the UTI bank commencing its operations when private banks were allowed to establish in India. UTI, LIC, General insurance Corporation Ltd. And four other PSU companies jointly administered the bank. At present, the bank has a market capitalisation of Rs. 281.46 crores with the public holding at 56.86%. The Registered office of the bank is situated at Ahmedabad and Central Office is located at Mumbai. It has a network of more the 510 branch offices and Extension counters. It has 2200 ATMs, which is one of the largest networks in the country providing 24 hours service. H. INFRASTRUCTURE FACILITIES : Canara Bank has 3040 branches all over India apart from administrative Units R & D facilities are computerised and Core banking system is implemented in 1800 branches and the bank is going ahead with the plan of introducing CORE BANKING SYSTEM in branches and following facilities: Online tax Account system Internet and Mobile Banking Funds transfer Canara bank EFT-SEFT, RBI-EFT Structural Financial Messaging System RTGS Western Union Money Transfer Internet of the bank Automatic Teller Machine Corporate Cash management service Core banking solutions Anywhere banking Retail lending and Monitoring software

I. ACHEIVEMENTS/AWARDS : The bank has already carved a niche in providing IT-based services, Computerized braches accounting for 97% of branches & 91.24% of aggregate business provide a wide array of services such as networked ATMs, Anywhere banking, TeleBanking & remote access Terminals,etc. The bank was the first to launch networked ATMs & obtain ISO certification. Canara bank shares are listed in Bangalore, Mumbai & National Stock Exchange. Bank has received Corporate Social Responsibility- citizen award for 2003, instituted by business world- FICCI-SEDF, for excellence in varied social activities and furthering rural development.
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Canara bank was ranked 14th (1st among Indian Nationalized Banks)among top500 companies in India Dun &Bradstreet, the worlds leading provider for business information services. The bank also won the first national award for its outstanding performance in SSI leading for the year 2203-23, instituted by ministry of SSI, Govt. of India.

Received during 2008-09 Conferred First Rank in Indias best Banks awards under the category Strength and Soundness for 2006-07 by a survey conducted by Ernst & young. Best Corporate Social Responsibility Practice Award, instituted by BSE, NASSCOM and Times Foundation. The bank won two Silver Corporate Collateral Awards for best Corporate Ad in the Print Media and best Corporate film on Corporate Social Responsibility at the Public Relations Council of India Awards 2009. The bank won two Silver Corporate Collateral Awards for Best Corporate Ad in the Print Media and Best Corporate Film on Corporate Social Responsibility at the Public Relations Council of India Awards 2009. Golden Peacock National Training Award 2008 for excellence in training.

Received during 2009-10 Best bank in South zone Award for the year 2008-09 in respect of lending under KVIC and PMEGP Schemes. The award was handed over by Dr.Manmohan Singh, Honble Prime Minister of India.

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J. WORKFLOW MODEL (END TO END) :

FLOWCHART
Customer enquiry

New

Existing

Clerk/cashier for Not acceptable further processing

Pass book, closing of a/c, cheque book transactions & changed requirements

CUSTOMER SERVICED Clerk open the a/c complete A/c opened formalities

Clerk transact as per rules

Office/manager verify/pass

Officer/manager verify/authorize

Clerk/cashier for further processing

Requirements Met

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FOR ADVANCES:

Customer Enquiry

New Terms not Acceptable


Manager/branch in-charge discussion: *. Availability of scheme of resources *. Explanation of bank requirements & formalities *. Accept application & details CUSTOMER SERVICED Manager/branch in charge for changed requirements Discussion & processing

Existing

Clerk (for transactions) Acceptable

Reject Sanction

Clerk for further Officer/manager for further processin processing like documentation/ entering

rk opens the a/c or documentation or disbursement Requirements met Officer/manager authorize/verify/pass Requirements met
Clerk/cashier for further processing

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K. FUTURE GROWTH AND PROSPECTS : The bank has taken up a major brand building exercise & comprehensive review of its business strategies, covering products, process, people and its organisation structure.
In pursuit of the global aspiration, 21 prominent centers have identified by the

bank for expanding it reach. With the preliminary moves underway, the Banks Representative office at Shanghai is being converted in to a full fledged branch.
After creation of JVs in Insurance and Asset Management, the Bank is

exploring similar options in other financial services. The branch is up to company with the revised guideline issued under priority sector lending. Under HR, Assessment Development Center will be implemented to map training competence and upgrade manpower skill.
It will focus on new market in future which can segment the Banking business

to bring out high profitability to Bank.


The Canara Bank in future intends to improve the infrastructure facility.

Leverage on the strengths of Canara Bank.


Plan are underway to introduce Internship programme to assist student

pursuing professional course.

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CHAPTER 3 3.1 MCKINSEY'S 7S framework The 7s model is better known as Mc Kinsey 7S this is because the two individuals who developed this model, Tom Peters and Roberty Waterman, had been consultants at Mc Kinsey & Co during that time. They published their 7s model article Structure is not organisation1980, in their books The art of Japanese management(1981) and In search of excellence(1982). The model starts on the premise that an organisation is not just structure, but consists of seven elements: The Strategy, Structure, Systems are feasible and easy to identify. They can be found in Strategy statements, corporate plans, organisation charts and other documents.

STRATEGY : The management which are renewed by march 2010, which are as follows: Retail Lending Thrust on technology NPA management
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Treasury Management

(a)Retail Lending High potential Improvement in Spreads Better assets quality

(b) Thrust on technology Reduction in operational cost Better customer service Matching competitor forces

(c) NPA management Speed recovery High recoveries Better profitability

(d) Treasury management Effective fund management Improving yield Hedging market risk

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ORGANISATION STRUCTURE :

BOARD OF DIRECTORS

CEO & MANAGING

CMD SECRETRIATE

EXECUTIVE DIRECTOR

E.D SECRETRIATE

GENERAL MANGERS

GENERAL MANGERS

ASSISTANT GENARAL MANGER

DIVISIONAL MANAGERS

SENIOR MANAGER

MANAGER

SUB STAFFS

CLERKS

OFFICER

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SYSTEM : This attribute of Mc Kinsey model includes three parts they are: Strategic direction Computerization Technology enabled delivery channels & services

(a) Strategic direction: Computer policy and planning department (C.P.P.D) to monitor it activities as per the plan drawn by the board. The bank has designated THE INDIAN INSTITUTE OF SCIENCE Bangalore as consultant to implement various I.T initiatives. The bank is in preparedness to implement RTGS & has designated 191 branches for SFMS implementation.

(a) Computerization: 2384 branches are computerized across the country abroad. 91.24% of the banks business computerized Also Circle office, Head office & most of regional offices are interconnected through INTFINET. 890branches/or offices brought under corporate network.

(c)Technology enabled channels and services: Anywhere banking implemented in 609 branches across 85 centers. 504 networked ATMs, 28 ATM under shared payment networked system (SNPS) & 1 standalone SWADHAN & SWITH connectivity to 504 branches. Provision of televoice banking in 71 branches. Corporate cash management services (CCMS) implemented in 198 operating centers & 706 poling braches. Bank has recently launched mobile banking, Internet banking & debit card.

STAFF : Staffing is a process of acquiring, developing, employing, appraising, remunerating, and retaining people so that right type of people are available at right positions and at right time in the organization. It is clear that staffing must be closely linked to organizing, that is, the setting up of intentional structures of roles and positions. To
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be sure, this department provides valuable assistance, but it is the job of managers to fill the positions in their organization and to keep them filled with qualified people. As on march 31, 2010 bank has 45260 employees, among them, 18186 employees belong to the officer category. 16776 employees belong to the clerks category. 10298 employees belong to the sub staffs category.

Among these employee, Women employees are as follows, 1309 employees belong to the officer category. 7168 employees belong to the clerks category. 1106 employees belong to the sub staffs category.

Number of physically handicapped persons in the bank stood at 821. SKILL : Strength of training System continued to receive focused attention in the banks HRD /HRM agenda. In all 19513 personnel of bank, in various categories received training in functional area like, Asset liability management Consumer credit Housing finance Retail finance Rehabilitation of sick SSI units Trade finance Relationship banking Besides in house training programmes the bank also deputed its staff to various external programmes conducted by bank. Entrepreneurship development among women programmes. Quality circle.

STYLE :

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The management style in CANARA BANK is mostly centralized since bank is public sector bank. But still it has managed to decentralize the decision-making among the different branches regarding financing of funds. The information flew among different levels of management will be through circulars, manuals, and handouts. Banks has been allowed offshore banking unit (OBUs) & Special Economic Zone (SEZs). Risk based supervision of banks commenced under extent guidelines of RBI. During the year, 215 additional branches of bank received ISO certification, taking the tally of branch ISO umbrella to 521 as at march 2009. Concerted focus on total brought noteworthy for the bank. Especially in terms of ISO certification for branches and offices. In most of the cases, bank follows the conventional management for any changes that they have to make. type of

Besides corporate credit wing (C.C.W), Recovery Wing & the C.P.P.D computer policy & planning department at banks corporate office were also conferred ISO certification during the year, taking the number of ISO certified administrative unit to nine.

SHARED VALUES :

SERVING TO GROW GROWING TO SERVE. This organizations motto is, quality in services industry entail adequate focus on customer care customer centric ethos. There is growing recognition in canara bank that the success of any business model depends not just on margins, but more on ensuring value based services to the customers. The corporate vision To emerge as a world class bank with best practices in the realms of asset portfolio, customer orientation, product innovation, profitability & enhanced value for stakeholders.

3.2 SWOT ANALYSIS :

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The training at Canara Bank was a great learning experience and certainly enables me for the systematic evaluation of the Strength, Weakness, Opportunities, and Threats of the bank and Indian financial sector. STRENGTHS : The bank has established 3055 branches across the nation. It has large pool of committed work force. The bank has over 700 active quality circles. 1351 branches of the bank provide Internet and Mobile Banking services. Quality lending and lower NPAs. More personal level of interaction with the clients. Core banking solution and total branch computerization. Anywhere banking services are being provided at 3055 of its branches. The branch cannot directly communicate with the head office; it is possible only through circle office. Staff take time to get adjusted to the new inventions. Still many branches are yet to be Core banking solutions. Requires training program due technologies. Aging staff : Most of the employees are above 45 years of age & they are not receptive to new work. OPPURTUNITIES : The bank provides extra privileges to the customers to maintain & retain customers. The bank has the capacity to adapt to the new technology, to stay at the top in the competitive market. The bank can use campus recruitments to rope in fresh talents. The bank can increase the international operations. To attract customers with good loan offers at very impressive rates, against the competitors. It can use modem means of scales of promotion for its products and services. Still many more bank branches can be opened in north India including rural areas. THREATS :
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WEAKNESSES :

to introduction of many new schemes &

A STUDY ON WORKING CAPITAL ANALYSIS AT CANARA BANK SIDLAGHATTA

There will be no guarantee of the recovery of credit. Technological changes in the field of banking are another major threat. Adoption of many technologies & banking systems from abroad. Establishment of private banks, increasing the competition. Innovative interest rates and attractive customers care services provide by the private banks. Stiff competition from SBI, ICICI & other private sector banks. Global economic slowdown. Very efficient research team, who are always tracking the new inventions in the market and most of the private banks provide 24hrs facility.

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3.3 ANALYSIS OF FINANCIAL STATEMENT


BALANCE SHEET OF CANARA BANK

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PARTICULARS Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities

Mar '2009

Mar '2010

410.00 410.00 0.00 0.00 9,629.61 2,168.16 12,207.77 186,892.51 7,056.61 193,949.12 13,488.91 219,645.80

410.00 410.00 0.00 0.00 12,129.11 2,132.68 14,671.79 234,651.44 8,440.56 243,092.00 6,977.30 264,741.09

Assets: Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs) 10,036.79 6,622.99 138,219.40 57,776.90 4,440.07 1,510.61 2,929.46 0.00 4,060.26 219,645.80 136,851.39 25,757.73 244.87 15,719.46 3,933.75 169,334.63 69,676.95 4,480.37 1,620.99 2,859.38 0.00 3,216.92 264,741.09 110,627.02 21,206.47 305.83
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(Rs. in crore)

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PROFIT & LOSS ACCOUNT OF CANARA BANK (Rs. in crore)

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PARTICULARS Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses

Mar '09

Mar '10

17,119.05 2,427.10 19,546.15

18,751.96 3,000.82 21,752.78

12,401.25 1,877.15 1,540.27 173.64 1,481.42 0.00 3,965.24 1,107.24 17,473.73

13,071.43 2,193.70 2,164.65 155.13 1,146.44 0.00 4,903.79 756.13 18,731.35

Net Profit for the Year Extraordinary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Earnings Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves

2,072.42 0.00 0.00 2,072.42 0.00 328.00 55.75

3,021.43 0.00 0.00 3,021.43 0.00 410.00 70.00

50.55 80.00 244.87

73.69 100.00 305.83

1,508.64 180.03

1,676.35 865.08
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INTERPRETATION From the above statement we can determine the financial position of the concern. Short term solvency position and long term solvency position is satisfying. When comparing balance sheet of 2009 and 2010, the net worth of the company has been increased in the year 2010 when compare to 2009, it shows that the company is growing year by year. There is a net profit of Rs .2072.42crore in the year 2008-09 and which is increased to 3021.43crore in the year 2009-10, because there is increase in the income earned i.e. interest earned and other income.

3.4 LEARNING EXPERIENCE

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Learning experience means getting experience out of learning process. In the organization (Bank), I was exposed to the working environment of the organization. Until now we were learning only the theory aspects in class but during this training I came to know how the theory concepts are actually applied in the functioning of the organization. An organization involves many components in reality for proper functioning of the organization there should be a correct blend of these components. If any one of these components goes wrong there will be a huge loss for the organization. All departments like finance, production, human resource etc., should go hand in hand. All these departments are interconnected to one another and controlled by a manager in the bank. Organisation (Bank) study helped me to know the real picture of the organisation, its function, policies, procedure and methods. I had great time to working on the project, as it gives insights into the working environment of an organisation and also helped me to know many facts of an organisation and gain practical knowledge, which will go a long way in horizon of our career.

CHAPTER - 4 INTRODUCTION:
One of the vital aspects of companys financial management is to manage its current assets and the current liabilities in such a way that a satisfactory level of
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working capital is maintained. Working capital management means administration of all aspects of working capital i.e. current assets and current liabilities. Firm has to manage it properly in order to attain its goal of wealth maximization. DEFINITION OF WORKING CAPITAL Working capital can be defined as the excess of current assets over current liabilities. Current assets are those assets. Which can be converted into cash within the current accounting period and current liabilities are the debts of the firm that have to be paid during the current accounting period or within a year. According to Prof. Harry G Guthaman and Hebert I Dangall, Working capital is the excess of current assets over current liabilities. But J.E.Began states as the portion that circulates from one firm to another firm in the ordinary conduct of business. He thinks in the working capital and current assets are interchangeable terms. Working capital is regarded as the lifeblood of business. Working capital Its

management is an important aspect in the study of financial management.

effective provision can do much to ensure the success of a business while its inefficient management can lead not only to loss of profits but also to the ultimate downfall. The goal of working capital management is to maintain the firm current assets and liabilities in such a way that a satisfactory level of working capital is maintained. This is so because if the firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy. The interaction between current assets and current liabilities is therefore, the main theme of the theory of working capital management.

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Concepts of Working Capital The working capital can be classified into two concepts: 1. Gross working capital 2. Net working capital 1. Gross Working Capital It refers to the firms investment in current assets. Current assets are the assets which can be converted into cash within an accounting year (or operating cycle) and include cash, short-term securities, debtors, (accounts receivable or book debts) bills receivable and stock (inventory). 2. Net Working Capital It refers to the difference between the current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year and include creditors (accounts payable), bills payable, and outstanding expenses. Net working capital can be positive or negative. A positive net working capital will arise when current assets exceeds current liabilities. A negative net working capital occurs when current liabilities are in excess of current assets. DETERMINANTS OF WORKING CAPITAL : The following are some of the factors, which generally influence the working capital requirements of firms. 1. NATURE OF BUSINESS: Working capital requirements of a firm are basically influenced by the nature of its business. Trading and financial firms have a very small investment in fixed assets, but require a large sum of money to invest in working capital. Retail stores, for example, must carry large stocks of a variety of goods to satisfy varied and continuous demands of their customers. Some manufacturing businesses, such as tobacco manufacturers and construction firms, also have to invest substantially in working capital and a nominal amount in fixed assets.

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2. SALES AND DEMAND CONDITIONS: The working capital needs of a firm are related to its sales. It is difficult to precisely determine the relationship between volume of sales and working capital needs. In practice, current assets will have to be employed before growth takes place. It is, therefore, necessary to make advance planning of working capital for a growing firm on a continuous basis. 3. TECHNOLOGY AND MANUFACTURING POLICY: The manufacturing cycle comprises of the purchase and use of raw materials and the production of finished goods. Longer the manufacturing cycle, larger will be the firms working capital requirements. 4. CREDIT POLICY: The credit policy of the firm affects the working capital by influencing the level of debtors. The credit terms to be granted to customers may depend upon the norms of the industry to which the firm belongs. But a firm has the flexibility of shaping its credit policy within the constraint of industry norms and practices. The firm should use discretion in granting credit terms to its customers. 5. AVAILABILITY OF CREDIT: The working capital requirements of a firm are also affected by credit terms granted by its creditors. A firm will need less working capital if liberal credit terms are available to it. Similarly, the availability of credit from banks also influences the working capital needs of the firm. A firm, which can get bank credit easily on favorable conditions, will operate with less working capital than a firm without such a facility. 6. OPERATING EFFICIENCY: The operating efficiency of the firm relates to the optimum utilization of resources at minimum costs. The firm will be effectively contributing in keeping the working capital investment at a lower level if it is efficient in controlling operating costs and utilizing current assets. The use of working capital is improved and pace of cash conversion cycle is accelerated with operating efficiency. Better utilization of resources improves profitability and, thus, helps in releasing the pressure on working capital.
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7. PRICE LEVEL CHANGES: The increasing shifts in price level make functions of financial manager difficult. He should anticipate the effect of price level changes on working capital requirement of the firm. Generally, rising price levels will require a firm to maintain higher amount of working capital. Same levels of current assets will need increased investment when prices are increasing. However, companies, which can immediately revise their product prices with rising price levels, will not face a severe working capital problem. NEED FOR WORKING CAPITAL: Working capital is generally required to meet day-to-day requirement like purchase of raw materials, payment of salaries, payment of wages and meeting other expenses. The need of working capital to run the day-to-day business activities is a must. We will find hardly the business firms, which do not require any amount of working capital. Therefore every firm requires a certain amount of working capital to meet its obligations. COMPONENTS OF WORKING CAPITAL MANAGEMENT
1. Management of cash and marketable securities :

Cash is the most important current assets for the operation of the business. Cash is the basic input needed to keep the business running on a continuous basis; it is also the ultimate output expected to be realized by selling the service or product manufactured by the firm. The management of cash raises similar issues to those raised in relation to the management of stocks. There are costs involved in holding too much cash (e.g. investment opportunities foregone, loss of purchasing power during a period of rising prices etc) and also costs in holding too little cash (e.g. interest costs, lost goodwill etc). Thus, there is a need for careful planning and monitoring of cash flows overtime.

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2. Receivables Management The term receivables mean the amount due from the debtors. They also include the bills receivables. An efficient management of these receivables is necessary because it involves a large amount of investment in current assets. It is fund that 1/3rd of the current assets are nearly 11% to 15% of total assets are constituted by these receivables. In order to keep current customers and attracts new ones. Most manufacturing firms find it necessary to offer trade credit. Trade credit thus creates receivables as book debts, which the firm accepts to collects in near futures. A lucrative credit period increases sales and also the debtors. 3. Inventory Management Inventories constitute the most significant part of current assets of a large majority of companies in India. On an average, inventories are approximately 60% of current assets in public limited companies in India. Because of the large size of inventories maintained by firms, a considerable amount of funds is required to be committed to them. It is, there fore, absolutely imperative to manage inventories efficiently and effectively in order to avoid unnecessary investment. A firm neglecting the management of inventories will be jeopardizing its long-run profitability and may fail ultimately. It is possible for a company to reduce its levels of inventories to a considerable degree, e.g., 10% to 20%, without any adverse effect on production and sales, by using simple inventory planning and control techniques. The reduction in excessive inventories carries a favourable impact on a companys profitability.

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RESEARCH DESIGN TITLE OF THE STUDY


A STUDY ON WORKING CAPITAL ANALYSIS AT CANARA BANK SIDLAGHATTA

2.1 STATEMENT OF THE PROBLEM : The working capital is the most critical problem in financial management. Importance of working capital management stems from five reasons viz. 1. A substantial portion of total investment is invested in current assets. 2. Level of current assets and current liabilities will change quickly with the variation in sales. 3. Problems of deciding the optimal mix of short-term funds in relation to longterm capital. 4. Location of sources of short-term financing. 5. The study of working capital management is incomplete unless we have an overlook on the management of current liabilities. Hence the study of working capital position in the company is needed to understand the concepts adopted by the top management. 2.2 OBJECTIVES OF THE STUDY : 1. To examine the structure, sources and utilization of working capital and its components. 2. To study the overall financial position of the company over 5 years by preparing the comparative flow statement. 3. To evaluate the efficiency in working capital management of the Canara Bank by using ratio analysis. 2.3 SCOPE OF THE STUDY: The scope of working capital management lies in testing of short run solvency and on the effectiveness with which the business is conducted. Tests of receivables and inventory should be regarded primarily as relating to solvency rather than to efficiency. Standards of turnover always are held as tentative for the final test of effectiveness of business management.
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2.4 METHODOLOGY : Methodology consists of different techniques adopted in data collection. Much needed information for the study was collected through various means. DATA COLLECTION METHOD In order to fulfil the objectives of the study, the data was collected from primary and secondary sources. Secondary source

Annual report of 2009-10 Journals, magazines Newspapers Internet

Primary source Discussion with HR Manager. Discussion with accounts manager and other departments executives. By personal observation of the activities of organization. Interview with the accounts staff members.

1.5 LIMITATIONS OF THE STUDY : The study is purely of academic interest. The inexperience makes the analysis less precious when compared to professional analysis. conclusions from analysis of statement are not sure indicators. The study not solve into the problems of capital budgeting, fund flow analysis, tax and finance planning, foreign exchange, management and treasury operations. The study is limited as it being a study of static positional figures Through a complete attempt has been made to include all the factors affecting the case study putting into writing, there is every possibility of some factors being left out due to the shortage of time and some due to the policy of the management to keep them confidential.
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Hence

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CHAPTER 5 ANALYSIS OF DATA To study the overall financial position of the company over 5 years by preparing the comparative flow statements. ANALYSIS OF WORKING CAPITAL The financial management always tries to maintain an adequate working capital at every time, so as to carry on day-to-day operation successfully and economically. These are dangers in having too little or too more working capital. Therefore a through scouting into the current assets and current liabilities is to be made to control the working capital. The working capital balance of a concern has a positive value but often due to the intensive user of working capital, if it exceeds the sources thus indicating a deficit. This process is known as analysis of working capital. It is a test of short-term solvency. The analysis of working capital becomes necessary to know 1. If the management is using the working capital effectively. 2. If the amount of working capital is adequate. 3. If the current financial position is improving. The needs for the analysis are 1. To maintain adequate working capital at every time. 2. To minimize the cost of short term financing. 3. To choose from the various sources of short term finance and employ them in times of need.
4. To assess the effectiveness of the management of current assets.

5. To study the trends in working capital positions. 6. To maximize the earning per share of the equity shareholders.

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ANALYSIS OF WORKING CAPITAL AT CANARA BANK : An important function of the management and the prime duty of the finance department are to maintain an optimum level of working capital since it is an important aspect because of its nature of revealing the clear cut position of the liquidity of the firm. Though there are several tools of analyzing working capital, the below mentioned are note worthy. 1. Statement of changes in working capital. 2. Working capital ratios. A. STATE OF CHANGES IN WORKING CAPITAL Statement of changes in working capital shows the trend to the changes in working capital. This statement is prepared with the help of current assets and current liabilities of two periods. It is comparative statement that is used to calculate increase or decrease in working capital. It also indicates the overall effects of the changes, which shows the trend in changes of working capital and its components. following table shows the statement of changes in working capital. Following are the features of statement of changes in working capital. 1. Increase in current assets increases working capital. 2. Decrease in current assets decreases working capital. 3. Increase in current liabilities decreases working capital. 4. Decrease in current liabilities increases working capital. Under the gross working capital concept, Table shows the working capital of Canara Bank under Gross concept: 1. Gross concept takes into consideration only the current assets. 2. It indicates the gross working capital is a quantitative concept. 3. Gross concept does not indicate the liquidity position of the firm. The

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Under the net working capital concept, Table shows the working capital of Canara Bank under Net concept: 1. Net working capital includes other current assets and current liabilities. 2. Unlike gross working capital indicates qualitative concept by showing the excess of current assets over current liabilities. 3. It also indicates the liquidity position of the firm. TABLE 1 STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2005-06 WHEN COMPARED TO 2006-07
PARTICULARS 2005-06 2006-07 INCREASE DECREASE

(A). CURRENT ASSETS Cash and Bank balance Loans and advances Other assets 12823.56 79425.70 3026.03 16373.93 98505.69 3132.58 3550.37 19079.99 106.55 -

Total Current Assets (A)

95275.29

118012.20

(B). CURRENT LIABILITIES Other Current liabilities Total Current Liabilities (B) 8976.65 8976.65 11789.30 11789.30 NET WORKING CAPITAL . (A-B) Increase in Working capital . 86298.64 106222.90 19924026 2812.65

TOTAL

106222.90

106222.90

22736.91

22736.91

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TABLE 2 STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2006-07 WHEN COMPARED TO 2007-08
PARTICULARS 2006-07 2007-08 INCREASE DECREASE

(A). CURRENT ASSETS Cash and Bank balance Loans and advances Other assets 16373.93 98505.69 3132.58 17837.42 107238.04 2892.14 1463.49 8732.35 240.44

Total Current Assets (A)

118012.20

127967.6

(B). CURRENT LIABILITIES Other Current liabilities Total Current Liabilities (B) 11789.30 11789.30 13605.90 13605.90 1816.60

NET WORKING CAPITAL . . (A-B) Increase in Working capital

106222.90

114361.7 -

8138.80

Total

114361.70

114361.70

10195.85

10195.85

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TABLE - 3 STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2007-08 WHEN COMPARED TO 2008-09
PARTICULARS 2007-08 2008-09 INCREASE DECREASE

(A). CURRENT ASSETS Cash and Bank balance Loans and advances Other assets 17837.42 107238.04 2892.14 16659.78 138219.40 4060.26 30981.36 1168.12 1177.64 -

Total Current Assets (A)

127967.6

158939.44

(B). CURRENT LIABILITIES Other Current liabilities Total Current Liabilities (B) 13605.90 13605.90 6544.57 6544.57 7061.33 -

NET WORKING CAPITAL . . (A-B) Increase in Working capital

11436.17

152394.87

38033.17

38033.17

Total

152394.87

152394.87

39210.81

39210.81

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TABLE - 4 STATEMENT OF CHANGES IN WORKING CAPITAL FOR THE YEAR 2008-09 WHEN COMPARED TO 2009-10 Particulars 2008-09 2009-10 Increase Decrease

(A). CURRENT ASSETS Cash and Bank balance Loans and advances Other assets 16659.78 138219.40 4060.26 19653.21 169334.63 3216.92 2993.43 31115.23 843.34

Total Current Assets (A)

158939.44

192204.76

(B). CURRENT LIABILITIES Other Current liabilities Total Current Liabilities (B) 6544.57 6544.57 7287.90 7287.90 743.33

NET WORKING CAPITAL . (A-B)

152394.87

184916.86

Increase in Working capital

32521.99

32521.99

Total

185227.46

185227.46

34108.66

34108.66

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B. WORKING CAPITAL RATIO To evaluate the efficiency in working capital management of the Canara Bank by using ratio analysis.
1. CURRENT RATIO :

Current ratio is most widely used ratio to know the working capital position. Generally 2:1 is considered ideal for a concern. This ratio expresses the relationship between current assets and current liabilities. This ratio gives the information about firms ability to meet short term and long term working capital. Current assets Current Ratio=-----------------------Current liabilities TABLE NO 5 TABLE SHOWING CURRENT RATIO (Rs. in crore)

YEARS

CURRENT ASSETS

CURRENT LIABILITIES

RATIO

2005-06 2006-07 2007-08 2008-09 2009-10

95963.76 120873.55 130884.47 161865.9 195374.73

8976.65 11789.30 13605.90 6544.57 7287.90

10.69 10.25 9.62 24.73 26.80

ANALYSIS: In the above table we can observe that in the year 2005-06 the current ratio was 10.69 and slightly decreased to 10.25 in the year 2006-07 and 9.62 in the year 2007-08, then suddenly increased to 24.73 in the year 2007-08 and 26.80 in the year 2009-19.

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GRAPH-1

INTERPRETATION: From the above table we can observe that the current ratio indicates the available of funds to payment of current liabilities in form of current assets. A higher ratio indicates that there are sufficient assents available with the organization which can be converted into cash, without any reduction in the value. As ideal current ratio is 2:1, where current ratio of the firm is more than 2:1, it indicates the investment in the current assets in the form of cash balance and loans and advances. The ratio was higher in the year 2008-09 and 2009-210 i.e.24.73 and 26.80 respectively.

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2. CASH RATIO/ABSOLUTE LIQUIDE RATIO:

It is the ratio of cash equivalent balance of current liabilities. Even though debtors and bills receivables are considered as more liquid then inventories, it cannot be converted in to cash immediately or in time. Therefore while calculation of cash ratio only the absolute liquid assets as like cash in the hand, cash at bank, short term financial obligation. It is calculated by absolute assets dividing by current liabilities.

Absolute liquid assets Cash Ratio = ------------------------------Current liabilities Table NO 6 Table Showing Cash Ratio (Rs. in crore) Years 2005-06 2006-07 2007-08 2008-09 2009-10 Cash 7914 9095.19 13364.79 10036.79 15719.47 Current Liabilities 8976.65 11789.30 13605.90 6544.57 7287.90 Ratio 0.88 0.77 0.98 1.53 2.16

ANALYSIS In the above table it shows in the year 2005-06 cash ratio was 0.88 which has been decreased to 0.77 in the year 2006-07 and then it was increased in the year 2007-08, 2008-09 and 2009-10 i.e. 0.98, 1.53 and 2.16 respectively.

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GRAPH 2

INTERPRETATION: From the above table we can observe that the Cash ratio indicates whether the availability of cash with company is sufficient because company also has other current assets to support current liabilities of the company. In the year 2005-06 cash ratio was 0.88 which has been decreased to 0.77 in the year 2006-07 and then it was increased in the next years up to 2.16. The higher cash ratio indicates the bank has good cash balance.

3. NET WORKING CAPITAL RATIO:

Net Working Capital Net Working Capital =-----------------------------Net assets TABLE NO 7 TABLE SHOWING NETWORKING CAPITAL RATIO (Rs. in crore)

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YEARS

NETWORKING CAPITAL

NET ASSETS

RATIO

2005-06 2006-07 2007-08 2008-09 2009-10

86298.64 106222.90 114361.70 152394.87 184916.86

132821.86 165961.04 180528.69 219645.80 264741.09

0.65 0.64 0.633 0.693 0.698

ANALYSIS: In the above table we can observe that in the year 2005-06 ratio is 0.65 and which has been decreased to 0.64 in the year 2006-07 and 0.633 in the year 2007-08. Then it was increased to 0.696 in the year 2008-09 and 0.699 in the year 2009-10.

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Graph 3

INTERPRETATION: From the above table we can observe that in the net working capital ratio there was some fluctuation from year to year, because increase in the current assets over current liabilities. It is good sign to the bank, the net working capital ratio was 0.65 in the year 2005-06 and which has been decreased to 0.64 in the year 2006 -07 and 0.633 in the year 2007-08. Then it was increased to 0.696 in the year 2008-09 and 0.698 in the year 2009-10.

4. DEBT-EQUITY RATIO :

The debt- equity ratio shows the relative contribution of creditors and owners. It is very important aspects in long term financial analysis for any business institution. The debt-equity 1:1 is supposed to be standard or ideal ratio.

Total Debt / outsiders fund Debt-equity ratio = -----------------------------------Net worth / owners fund

TABLE NO 8 TABLE SHOWING DEBT-EQUITY RATIO (Rs. in crore)


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YEARS 2005-06 2006-07 2007-08 2008-09 2009-10

TOTAL DEBT 116829.05 143955.80 156589.65 193949.12 243092.00

NET WORTH 7132.24 10353.99 10500.49 12207.77 14671.78

RATIO 16.38 13.90 14.91 15.88 16.56

ANALYSIS: In the given table, the ratio ranges from around 13-17. In the year 2005-06, it is 16.38, than it decreasing to 13.90 in 2006-07. And it was further slightly increasing to 14.91 in the year2007-08, 15.88 and 16.56 a continuous rise up to 2009-10.

GRAPH 4

INTERPRETATION: In the above table we can observe that Debt-equity ratio indicates the financial position of the company when equity is more it reveals that creditors interest is more secure and when debt is more vice versa. In the year 2005-06 ratio is 16.38 and it was decreased to 13.90 in 2006-07. And it was increased to 14.91, 15.88 and 16.56 in the year 2007-08, 2008-09 and 2009-10 respectively. The bank utilize the debt fund than own fund, because the bank accept barrowings and deposits from public to lend the money.

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5. INTEREST COVERAGE RATIO:

It is defined by

PBDIT Interest coverage ratio=-------------------------Interest charges

TABLE NO 9 TABLE SHOWING INTEREST COVERAGE RATIO

(Rs. in crore) Years 2005-06 2006-07 2007-08 2008-09 2009-10 PBDIT 6818.25 9156.72 12737.92 15147.30 17047.99 Interest charges 5130.00 7337.73 10662.94 12401.24 13071.43 Ratio 1.33 1.25 1.19 1.22 1.30

ANALYSIS: In the above table we can observe that the interest coverage ratio1.33 in the year 2005-06 and it decreased to 1.25 in the year 2006-07 and 1.19 in the year 2007-08, then it increased to 1.22 in the year 2008-09 and 1.30 in the year 2009-10.

Graph - 5
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INTERPRETATION: From the above table we can observe that interest coverage ratio indicates the percentage of amount charge to the use of debt money, the interest charge on yearly basis. The bank has paid the interest yearly and it was increase from year to year, because increase in the using debt amount. The interest coverage ratio1.33 in the year 2005-06 and it decreased to 1.25 in the year 2006-07 and 1.19 in the year 200708, then it increased to 1.22 in the year 2008-09 and 1.30 in the year 2009-10.

6. TOTAL DEBT RATIO: The debt to assets ratio is measures the extent to which barrowed funds supports the firms assets. It can be defined as Total debt Total debt ratio = ----------------------Net assets TABLE NO 10 TABLE SHOWING TOTAL DEBT RATIO (Rs. in crore) Years Total Debt Net Assets Ratio

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2005-06 2006-07 2007-08 2008-09 2009-10

116829.05 143955.80 156589.65 193949.12 243092.00

132821.86 165961.04 180528.69 219645.80 264741.09

0.88 0.87 0.87 0.88 0.92

ANALYSIS: The above table shows that the debt to asset ratio is 0.88 in the year 2005-06 which has been decreased to 0.87 in the year 2006-07 and it has same in the next year 200708. It has been further increased 0.88 in the year 2008-09 and 0.92 in the year 200910.

GRAPH - 6

INTERPRETATION: This ratio indicates that extent to which borrowed funds support the firms assets. In terms of company increase the asset proportion compare to debt proportion it shows that the company is not depends on the external funds. In the year 2009-10 the ratio of total debt is 0.92 it was slightly increased from 0.88 in the year 2005-06.

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7. TOTAL ASSET TURNOVER RATIO: Total asset turnover ratio is calculated to know the firms efficiency of utilizing the firms assets. Total assets include the assets like fixed assets, current assets. Net Sales T.A. turnover ratio = -------------------Total assets TABLE NO 11 TABLE SHOWING TOTAL ASSET RATIO

YEARS 2005-06 2006-07 2007-08 2008-09 2009-10

SALES 8711.51 11364.56 14200.74 17119.05 18751.96

NET ASSETS 132821.86 165961.04 180528.69 219645.80 264741.09

RATIO 0.065 0.068 0.078 0.077 0.071

(Rs. in crore)

ANALYSIS: The above table shows that the total assets turnover ratio was 0.065 in the year 200506 which has been increased to 0.068 in the year 2006-07 and 0.078 in the year 200708. Then which was decreased to 0.077 in the year 2008-09 and 0.071 in 2009-10.

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GRAPH - 7

INTERPRETATION: This ratio measures that efficiency of the management and utilization of the assets. When the turnover ratio is lower it indicates the underutilization of available resources and presence of idle capacity. In the year 2005-06 the total asset turnover ratio 0.065, it was slightly increased to 0.068 and 0.078 in next two years, then decreased to 0.077 and 0.071 in the year 2008-09 and 2009-10 respectively. The bank use assets effectively 2005-06 to 2009-10.

1. FIXED ASSET TURNOVER RATIO:

This ratio measures sales per rupee of investment in fixed asset, as plant and machinery, land and building etc.. It can be calculated by:Net sales F.A. turnover ratio = -----------------------Fixed assets

TABLE NO 12

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TABLE SHOWING FIXED ASSET TURNOVER RATIO

YEARS 2005-06 2006-07 2007-08 2008-09 2009-10

SALES 8711.51 11364.56 14200.74 17119.05 18751.96

FIXED ASSETS 1718.60 4056.39 4254.33 4440.07 4480.37

RATIO 5.06 2.80 3.33 3.85 4.18

(Rs. in crore)

ANALYSIS: The above table shows that the fixed assets turnover ratio was 5.06 in the year 200506 after it decreased to 2.80 in the year 2006-07. In the year 2007-08 it has increased to 3.33 and it has been further increased to 3.85 and 4.18 in the year 2008-09 and 2009-10.

GRAPH - 8

INTERPRETATION: From the above table we can observe fixed asset turnover ratio is to measure the efficiency with which fixed assets are employed. A high ratio indicates a higher degree of efficiency in assets utilization and a low ratio reflects inefficiency use of assets. In the year 2005-06 the ratio was 5.06 it was higher in the 5 years, it shows the efficiently utilization of fixed assets in this year.
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9. CURRENT ASSET TURNOVER RATIO: Current assets turnover ratio is calculate to know the firms efficiency of utilizing the current assets. Current assets include the assets like cash and balance with RBI, balance with banks, money at call and advances. This ratio includes the efficiency with which current assets turn into sales. An analysis of this ratio over a period of time reflects working capital management of a firm. Sales C.A. turnover ratio = ---------------------Current assets TABLE NO 13 TABLE SHOWING CURRENT ASSET TURNOVER RATIO YEARS SALES CURRENT ASSETS 2005-06 2006-07 2007-08 2008-09 2009-10 8711.51 11364.56 14200.74 17119.05 18751.96 92249.26 114879.62 17878.04 154879.18 188987.84 0.09 0.10 0.79 0.11 0.10 (Rs. in crore) RATIO

ANALYSIS: In the above table we can observe that the current asset turnover ratio was 0.09 in the year 2005-06 and it increased to 0.10 and 0.79 in the year 2006-07 and 2007-08 respectively, but it decreased to 0.11 and 0.10 in the year 2008-09 and 2009-10 respectively

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GRAPH-9

INTERPRETATION: In the above table we can observe that the current asset turnover ratio was fluctuation between 0.79 in these years i.e.2005-06 to 2009-10. In the year2007-08 the ratio was 0.79 this was higher in these years, due to the increase in sales (income earned from interest) by effective utilizing of current assets. Cash did not help to increase in sales volume, because cash is non earning assets.

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10. EARNING PER SHARE RATIO: Earnings per share are calculated to know the how much dividend gain by the shareholders investment in banks. PAT Earnings per share =--------------------------------Number of equity shares

TABLE NO 14 TABLE SHOWING EARNING PER SHARE RATIO Years 2005-06 2006-07 2007-08 2008-09 2009-10 PAT 1343.22 1420.71 1565.01 2072.42 3021.43 N0. E/S 41 41 41 41 41 Ratio 32.76 34.65 38.17 50.55 73.69

(Rs. in crore)

ANALYSIS: From the above the table we can observe that the Earnings per share ratio in the year 2005-06 was 32.76 and then it was increased continuously year to year 34.65, 38.17, 50.55 and 73.69 in the year 2006-07, 2007-08, 2008-09 and 2009-10 respectively. It shows bank provide more dividend to shareholders.

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GRAPH - 10

INTERPRETATION: From the above the table we can observe that the Earnings per share ratio indicate the earning of profit/loss per share in the year after deduction of tax. The ratio around 31 to74, the ratio of the bank continuously increase from year to year, this increment shows the bank earning of more profit in these year. The ratio of EPS in the year 2005-06 is 32.76 and 73.69 in the year 2009-10 It shows bank provide more dividend to shareholders.

11. RETURN ON ASSETS RATIO: Return on assets indicates the profit earned by investment made on assets. It can be defined by, NPAT Return on assets =-------------------Total assets

TABLE NO 15 TABLE SHOWING RETURN ON ASSETS RATIO (Rs. in crore)

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YEARS 2005-06 2006-07 2007-08 2008-09 2009-10

NPAT 1343.22 1420.81 1565.01 2072.42 3021.43

TOTAL ASSETS 132821.86 165961.03 180528.69 219645.80 264741.09

RATIO 1.01 0.85 0.87 0.94 1.14

ANALYSIS: In the above table reprents the return on assets ratio, in the year 2005-06 ratio was 1.01 and it decreased to 0.85 in the next year 2006-07, then it was increased to 0.87, 0.94 and 1.14 in the year 2007-08, 2008-09 and 2009-10 respectively.

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GRAPH -11

INTERPRETATION: In the above table reprents the return on assets ratio, in the year 2005-06 ratio was 1.01, it was decreased to 0.85 in the 2006-07 than it was contineousely increases up to 1.14 from year to year due to the increase in the NPAT everey year and also incrases in the total assets.

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12. RETURN ON NETWORTH RATIO: PAIT Return on net worth = -----------------Net worth TABLE NO 16 TABLE SHOWING RETURN ON NET WORTH RATIO

YEARS 2005-06 2006-07 2007-08 2008-09 2009-10

NPAIT 1343.22 1420.71 1565.01 2072.42 3021.43

NET WORTH 7132.24 10353.99 10500.49 12207.77 14671.78

RATIO 18.83 13.72 14.90 16.98 20.59

(Rs. in crore)

ANALYSIS: From the above table we can observe that in the year 2005-06 ratio is 18.83 and it was decreased to 13.72 in the year 2006-07 and 14.90 in the year 2007-08, then it was increased to 16.98 and 20.59 in the next years.

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GRAPH 12

INTERPRETATION: From the above table shows that return on networth ratio was differ from year to year, in the year 2005-06 and 2009-10 the retun on networth ratio was more i.e. 18.83 and 20.59 compare to other years. Becase in this two years the NPAIT was more. The networth of the bank increases year to year due to increases in the reserves, but there no increments in the share capital.

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CHAPTER 6 SUMMARY OF FINDINGS


a) As per the liquidity of position, the bank standard current ratio is 2:1, the

current ratio during all the years are more than standard ratio i.e. the ratio between 9 to 29. So it should be considered as good financial sign.
b) The absolute cash ratio is meets the standard ratio 0.5:1 in all years, it is

gradually increase the cash balance from year to year. So it should consider as a good financial sign.
c) The Working capital ratio of the bank is 0.70 during the year 2009-10, which

is less than 1. This shows that bank invest more on working capital but sales are less, the main reason for increase the ratio during the year 2008-09 i.e. 0.69 to 0.70 during the year 2009-10 which shows inefficiency management of current assets.
d) Debt-equity ratio of the bank is increasing every year, but in the year 2006-07

it was decreased to 13.90. It shows that the extent of dependency on the creditors when it is high and in case of low ratio less dependency on the creditors.
e) The bank paying more interest, because the bank is depending more on

borrowed funds.
f) Debt to asset ratio indicates that extent to which borrowed funds support the

firms assets. The bank is maintaining the ratio at 0.92 which is less than 1. It shows that the bank is not depends on the external funds.
g) During the year 2009-10, the total assets turnover ratio is 0.071, which is very

less, from the bank is less, it shows the inefficiency utilization of assets.
h) The fixed asset turnover ratio of the bank in the year 2009-10 was 4.18 times.

It means that the bank has generated 4.18 times sales by making investment in fixed assets.
i) The current asset turnover ratio of the bank is 0.10 during the year 2009-10

which is very less than 1. It shows the utilization of current assets in the bank is less.
j) Bank is increasing its profit year to year; it shows good sign for equity

shareholders to get more dividends from the bank.


k) The return on assets ratio increases from year to year, due to the raise of total

assets. It shows the good financial position of the bank.


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l) The return on net worth ratio increases year to year due to increases in the

NPAIT. It shows good sign to the bank.

SUGGESTIONS:
a) The analysis shows that the liquidity position of the bank is very much

satisfactory. So the bank should maintain same liquid position to the next years.
b) Bank has good cash balance, so it should maintain same to meet the short and

long term requirement of funds in future days.


c) In order to decrease in interest amount, the bank should utilize its own funds

than borrowed funds. d) In order to increase the profits, the bank should reduce the purchase fixed assets.
e) The analysis shows that the bank is not utilizing its current assets property. So

it should maintain properly to make good turnover in the bank. f) The bank as to reduce its liabilities in order to increase its liquidity position. g) Bank should reduce its debt amount, so that bank will increase its profitability position.
h) Over all bank has good liquidity position and from year to year financial

position is improves the position of the bank.


i) Bank should utilize the current assets properly to make good turnover in the

firm.

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Conclusion:
Working capital analysis is an important aspect of financial management. The study of working capital analysis of CANARA BANK has revealed that the current ratio and cash ratio ware more than the standard industrial practice as

The performance of this bank improves from year to year; the bank can meet its obligations (objectives) and also satisfy the customer needs from the further improvements.

To achieve financial performance of the company, efforts should be made in various current assets to achieve the liquidity position of the bank. Proper management of working capital. They improved their services better than its competitors. Working capital of the bank is increasing from year to year. It shows good liquidity position. Increasing working capital indicates that the bank has ability to pay the shortterm liabilities.

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ANNEXURE
BALANCE SHEET OF CANARA BANK (Rs. in crore)
PARTICULARS Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities 410.00 410.00 0.00 0.00 6,608.86 113.38 7,132.24 116,803.23 25.82 116,829.05 8,860.57 132,821.86 410.00 410.00 0.00 0.00 7,701.11 2,242.87 10,353.98 142,381.45 1,574.35 143,955.80 11,651.25 165,961.03 410.00 410.00 0.00 0.00 7,885.63 2,204.86 10,500.49 154,072.42 2,517.23 156,589.65 13,438.55 180,528.69 410.00 410.00 0.00 0.00 9,629.61 2,168.16 12,207.77 186,892.51 7,056.61 193,949.12 13,488.91 219,645.80 410.00 410.00 0.00 0.00 12,129.11 2,132.68 14,671.79 234,651.44 8,440.56 243,092.00 6,977.30 264,741.09 MAR '06 MAR '07 MAR '08 MAR '09 MAR '10

Assets: Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection 7,914.00 4,909.56 79,425.70 36,974.18 1,718.60 1,030.13 688.47 0.00 2,909.95 132,821.86 47,062.37 12,260.93 9,095.19 7,278.74 98,505.69 45,225.54 4,056.39 1,195.04 2,861.35 0.00 2,994.53 165,961.04 52,150.75 15,660.41 13,364.79 4,513.25 107,238.04 49,811.57 4,254.33 1,337.46 2,916.87 0.00 2,684.17 180,528.69 95,710.87 25,299.63 10,036.79 6,622.99 138,219.40 57,776.90 4,440.07 1,510.61 2,929.46 0.00 4,060.26 219,645.80 136,851.39 25,757.73 15,719.46 3,933.75 169,334.63 69,676.95 4,480.37 1,620.99 2,859.38 0.00 3,216.92 264,741.09 110,627.02 21,206.47

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Book Value (Rs)

171.19

197.83

202.33

244.87

305.83

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PROFIT & LOSS ACCOUNT OF CANARA BANK

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PARTICULARS Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses

Mar '06

Mar '07

Mar '08

Mar '09

Mar '10

8,711.51 1,377.51 10,089.02

11,364.56 1,511.80 12,876.36

14,200.74 2,308.31 16,509.05

17,119.05 2,427.10 19,546.15

18,751.96 3,000.82 21,752.78

5,130.01 1,515.30 1,061.42 145.03 894.05 0.00 2,982.32 633.48 8,745.81

7,337.73 1,609.29 957.77 148.18 1,402.58 0.00 3,023.26 1,094.56 11,455.55

10,662.94 1,661.28 1,491.09 169.97 958.76 0.00 3,666.30 614.80 14,944.04

12,401.25 1,877.15 1,540.27 173.64 1,481.42 0.00 3,965.24 1,107.24 17,473.73

13,071.43 2,193.70 2,164.65 155.13 1,146.44 0.00 4,903.79 756.13 18,731.35

Net Profit for the Year Extraordinary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Proposed Dividend/Transfer to Govt Balance c/f to Balance Sheet Total

1,343.22 0.00 0.00 1,343.22 0.00 270.60 38.00

1,420.81 0.00 0.00 1,420.81 0.00 287.00 48.78

1,565.01 0.00 0.00 1,565.01 0.00 328.00 56.00

2,072.42 0.00 0.00 2,072.42 0.00 328.00 55.75

3,021.43 0.00 0.00 3,021.43 0.00 410.00 70.00

32.76 66.00 171.19

34.65 70.00 197.83

38.17 80.00 202.33

50.55 80.00 244.87

73.69 100.00 305.83

-867.12 1,901.74 308.60 0.00 1,343.22

362.21 722.82 335.78 0.00 1,420.81

802.00 379.01 384.00 0.00 1,565.01

1,508.64 180.03 383.75 0.00 2,072.42

1,676.35 865.08 480.00 0.00 3,021.43 79

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(Rs. in crore)

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BIBLIOGRAPHY:
BOOKS AND JOURNALS REFERED
Financial Management

Financial Management Business Research Methods WEBSITES: www.canarabank.com www.canbank.com

M.Y.Khan and P.K.Jain Prasanna Chandra S.N.Murthy/U.Bhojanna

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