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A

RESEARCH REPORT

ON

AN ANALYSIS OF FINANCIAL STATEMENT OF YES BANK

THROUGH RATIO ANALYSIS

Submitted in partial fulfillment for the award of the degree

Master of Business Administration

Chhattisgarh Swami Vivekanand Technical University, Bhilai

Submitted by,

RESHU CHHATIJA

MBASemester- II

(Session 2010-2012)

Approved By, Guided By,

Dr. Sumita Dave Ms. Meenakshee Sharma

Head of the Department Assistant Professor

FACULITY OF MANAGEMENT

Shri Shankaracharya Mahavidyalaya

Junwani, Bhilai (C.G.)490020


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DECLARATION

I the undersigned solemnly declare that the report of the research work entitled AN ANALYSIS

OF FINANCIAL STATEMENT OF YES BANK THROUGH RATIO ANALYSIS is based on my own

work carried out during the course of my study under the supervision of Ms. Meenakshee

Sharma.

I assure that the statements made and conclusions drowns are an outcome of my

research work. I further declare that the to the best of my knowledge and belief the report

does not contain any part of any work which has been submitted for the award of MBA degree

or any other degree/diploma/certificate in this university or any other university of India or

abroad.

(Signature of the Candidate)

Reshu Chhatija

Enrollment No: AG8612


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CERTIFICATE

This is to certify that the work incorporated in the report AN ANALYSIS OF FINANCIAL

STATEMENT OF YES BANK THROUGH RATIO ANALYSIS is a record of research work carried out

by Reshu Chhatija bearing Enrollment no. AG8612 under my/our guidance and supervision for

the part fulfillment for the award of MBA Degree of Chhattisgarh Swami Vivekanand technical

University, Bhilai (C.G.),India.

To the best of my knowledge and belief the Report

i) Embodies the work of the candidate him/herself,

ii)

Has duly been completed,

iii) Is up to the desired standard both in respect of contents and language for externalviva .

(Signature of the Supervisor)

Ms. Meenakshee Sharma

Assistant Professor


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ACKNOWLEDGEMENT

I would like to take this privilege, to specially thank respected Ms. Meenakshee Sharma, for her

kind support and valuable guidance which helped me to complete this project. I am thankful to

Dr. Sumita Dave (HOD) Department of management who has given me opportunity to do this

project and her continuous cooperation for our overall growth.

Date RESHU CHHATIJA

Place Bhilai MBA Semester-II


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TABLE OF CONTENTS

Declaration

Certificate

Acknowledge

Chapter 1: Introduction to the study

Chapter 2: Company Profile/Industry Profile

a. About the Company/Industry.

Chapter 3: Literature Review

Chapter 4: Research Methodology

Chapter 5: Data Tabulation, Analysis and Results

a. Type of Analysis used and Whyb. Results of the Analysis

Chapter 6: Findings of the study

Chapter 7: Recommendations

Chapter 8: Limitations

Chapter 9: Conclusion

References

Appendices


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INTRODUCTION

Banks have traditionally focused on how to transform their physical resources to generate

financial performance, and they inadvertently ignored the mediating factor of service quality.

Through various studies a measures for the return on quality is developed as the ratio of the

potential improvement in financial performance by enhancement of service quality delivery.

Banks delivering better service are shown to have better transformation of resources to

performance using superior service delivery as the medium.

In my study I have done ratio analysis of YES bank by evaluating the ratios of the financial data

available. I have analysis the current financial position of the bank, which facilities me to find

the relationship between the financial variables. Ratios are calculated in pure ratios terms. I did

the selection of relevant data, calculation of ratios, comparison of ratio and finally the

interpretation and conclusions on the basis of my study.


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INDUSTRY PROFILE:

India has a strong and vibrant banking sector comprising state-owned banks, private sector

banks, foreign banks, financial institutions and regional banks including cooperative banks, rural

banks and local area banks. In addition there are non-banking financial companies (NBFCs),

housing finance companies, Nidhi companies and chit fund companies which play the role of

financial intermediaries.

Since the launch of the economic liberalization and global programme in 1991, India has

considerably relaxed banking regulations and opened the financial sector for foreign

investment. India is also committed to further open the banking sector for foreign investment

in pursuance to its commitment to the World Trade Organisation (WTO).

As monetary authority of the country, the Reserve Bank of India (RBI) regulates the banking

industry and lays down guidelines for day-to-day functioning of banks within the overall

framework of the Banking Regulation Act, 1949, Foreign Exchange Management Act, 1999 and

Foreign Direct Investment (FDI) policy of the government..

State-owned banks

The Indian banking sector is dominated by 28 state-owned banks which operate through a

network of about 50,000 branches and 13,000 ATMs. The State Bank of India (SBI) in the largest

bank in the country and along with its seven associate banks has an asset base of about Rs.


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7,000 billion (approximately US$150 billion). The other large public sector banks are Punjab

National Bank, Canara Bank, Bank of Baroda, Bank of India and IDBI Bank.

The public sector banks have overseas operations with Bank of Baroda topping the list with 51

branches, subsidiaries, joint ventures and representative offices outside India, followed by SBI

(45 overseas branches/offices) and Bank of India (26 overseas branches/offices). Indian banks,

including private sector banks, have 171 branches/offices abroad.

SBI is present in 29 countries followed by Bank of Barod (20 countries) and Bank of India (14

countries).

Private sector banks India has 29 private sector banks including nine new banks which were

granted licences after the government liberalised the banking sector. Some of the well known

private sector banks are ICICI Bank, HDFC Bank and IndusInd Bank. Yes Bank is the latest entrant

to the private sector banking industry.


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COMPANY PROFILE

Yes Bank was incorporated as a Public Limited Company on November 21, 2003. Subsequently,

on December 11, 2003, RBI was informed of the participation of three private equity investors

namely {Citicorp International Finance Corporation, ChrysCapital II, LLC and AIF Capital Inc.), to

achieve the financial closure of the Bank. RBI by their letter dated February 26, 2004 provided

their no-objection to the participation of the three private equity investors namely Citicorp

International Finance Corporation, ChrysCapital II, LLC and AIF Capital Inc. in the equity of the

Bank at 10%, 7,5% and 7.5%, respectively, and also advised the Bank to infuse a sum of Rs. 2000

million as the paid up capital. Additionally, the RBI advised the Bank to submit an application

for final approval after completion of all formalities for incorporation as a banking company and

setting out the capital structure of the Bank as approved by RBI.

RBI by their letter dated December 29,2003 decided to further extending `In Principle' approval

for a period up to February 29, 2004 to allow the Bank to complete all financial arrangements.

Yes Bank obtained its certificate of Commencement of Business on January 21, 2004.

Subsequently, in March 2004, the Bank achieved the mobilization of the initial minimum paid

up capital of Rs. 2,000 million. Further, the Promoters by their letter dated March 29, 2004

made a final application for a banking licence under Section 22 (1) of the Banking Regulation

Act, 1949 providing complete details of the capital structure, the composition of Board of

Directors, the proposed human resources, information technology, premises and legal-policies

and the business and financial plan of the Bank.


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Share subscription

The Promoters, the Promoter Group Companies and Rabobank International Holding executed

a Share Subscription Agreement dated November 5, 2003, (the "SSA"), whereby they agreed to

subscribe to the Equity Shares along with the Private Equity Investors (with whom a separate

agreement was to be exeThe SSA provides that we shall have a Board consisting of a minimum

of three and a maximum of 15 directors. So long as any of the parties to the SSA hold at least

10.0% of the equity share capital, the Promoters and Doit, as shareholders, have the fight to

nominate three independent directors on the Board, in addition to Mr. Ashok Kapur being the

non-executive Chairman of the Bank and Mr. Rana Kapoor being the Managing Director and

Chief Executive Officer of the Bank. Rabobank International Holding also has the right to

nominate one non-rotational director on the Board, The SSA provides that the Promoters and

Doit, and Rabobank International Holding, are not permitted to transfer their locked-in

shareholding in the Bank for a period of five years from March 10, 2004. Under the terms of the

SSA, locked-in shares refer to 40 million Equity Shares.cuted).

Foreign loans

The subscription of the Equity Shares by Mags and Morgan was financed through a loan of Rs.

170 million availed by each of the companies from Rabobank International Holding, which is

documented through Dollar Loan Agreements between (i) Rabobank International Holding,

Mags and Mr. Ashok Kapur and (ii) Rabobank International Holding, Mr. Rana Kapoor and

Morgan, both dated November 5, 2003.


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In terms of these agreements, Rabobank International Holding has granted a loan of Rs. 170

million each to Mags and Morgan, to be utilised for subscribing to the 17 million Equity Shares

of the Bank as provided in the SSA.This loan has to be repaid within three years of the

disbursement of the loan amounts. These loans were disbursed on March 10, 2004. The SSA

states that the loans to Mags and Morgan by Rabobank International Holdings are to be at an

interest rate of nil (0%).

2005

- Yes Bank on May 12, 2005, for says into retail ing with launch of International Gold and Silver

debit card in partnership with MasterCard International.

-Yes Bank has announced that it will enter the capital market with its initial public offer on June

15 to raise Rs 266-315 crore. The issue will close on June 21. Yes Bank will offer seven crore

equity shares of Rs 10 face value through a 100 per cent book building route. The price band for

the shares has been fixed at Rs 38-45.

-Yes Bank initial public offer oversold 8.27 times on day 1

-The YES Bank IPO has been priced at Rs 45 per share as it received the maximum number of

bids at this price. The IPO, which was through a book-building route, had a price band of Rs 38-

45 per share. The IPO received 2,57,000 bids, resulting in a subscription of over 30 times.

--Yes Bank joins hands with IBM for tech infrastructure


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-Yes Bank launches International Gold, Silver debit card

2006

-Yes Bank Launches YES MICROFINANCE

-YES Bank join hands with Reuters

2007

-YES BANK received the Euromoney - Trade Finance Deal of The Year award for a structured &

innovative Rural Financing solution in providing loans to over 2000 nomadic honey bee farmers

in Jammu & Kashmir. The only Indian private sector Bank to have won this award as the lead

arranger out of a total of 367 deals presented across 30 countries.

2008

- Yes Bank Limited has appointed Ms. Radha Singh and Mr. Ajay Vohra as Independent

Director(s) on the Board of Yes Bank w.e.f. April 29, 2008.

- Yes Bank and PTC+, a premier Dutch practical training institution in the field of high

technology agriculture have announced an alliance to develop projects and encourage

innovations in the agri sector and other initiatives in the field of agri-infrastructure.

- The UAE-based private bank, Mashreq, has entered into an alliance with YES Bank to launch

global Indian banking services across UAE.

-YES Bank ties up with Cisco for voice-enabled phone banking -YES BANK received the Best

Corporate Social Responsibility Practice award at the Social & Corporate Governance Awards


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2007. These awards were instituted to recognize the need for new innovative strategies to

implement the CSR practice within the business focus of the Indian Corporate sector.

2009

- SKS Microfinance seems to have signed a securitisation deal worth Rs 100 crore with YES Bank.

This deal would allow the bank to purchase 1,48,950 micro loans extended to unbanked SC as

well as ST and minorities' families identified by the Reserve Bank of India as weaker sections.

The transaction has been rated as `Very Strong Safety' by CRISIL.

- Yes Bank has signed a loan agreement with development finance institution DEG, under which

it will borrow a 5-year loan of euros 20-million. DEG (Deutsche Investitions-und

Entwicklungsgesellschaft mbH), is one of Europe's largest development finance institutions.

-YES BANK was awarded the Most Innovative Bank in India at the New Economy First Annual

Banking and Finance Awards 2008 held in London and were announced in the December 2008

issue of the International Magazine, New Economy. YES BANK is the only Indian Bank to have

won this award.

2010

- YES Bank has joined hands with handset maker Nokia to offer mobile payment services that

will enable consumers pay for goods and services using their mobile devices.


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LITERATURE REVIEW

Meaning of financial statement:

Financial statement are the summarized statements of accounting data produced at the end of

the accounting process by an enterprise through which it communicates accounting

information to the internal management and external users. The external users can be

investors, lenders, suppliers and trade creditors, customers and government. Financial

statement is the information relating to the financial position of any enterprise, when

presented in a concise form.

Objective of financial statement:

The objective of the financial statement is to provide information about the financial position,

performance and cash flow of an enterprise that is useful to a wide range of users in making

economic decisions.

The objectives of financial statements are:-

1. To provide financial data on economic resources and obligations of an enterprise.2. To reveal implication of operating profit on the financial position of an enterprise.3.

To provide sufficient and reliable information to various parties interested in financial

statements.

4. To present true and fair view of the business.5. To serve as the basis of future operations.


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Meaning of financial statement analysis:

Analysis of financial statements is a systematic process of the critical examination of the

financial information contains in the financial statements in order to understand and make

decisions regarding the operations of the firm. Financial statement analysis is largely a study of

relationships among the various financial factors in a business, as disclosed by a single set of

statement, and a study of trends of these factors, as shown in a series of statements. The

analysis and interpretation of financial statements are attempts to determine the significance

and meaning of financial statement data so that the forecast may be made of the prospects for

future earning, ability to pay interest and debt maturities and profitability and sound dividend

policy.

Objectives of financial statement analysis:

1. Judging the earning capacity or profitability.2. Judging the short-term and long-term solvency of the enterprise.3. Inter-firm comparison.4. Making forecast and preparing budgets.

Uses of financial statement analysis:

1. Security analysis.2. Credit analysis.


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3. Debt analysis.4. Dividend decision.5. General business analysis.

Tools/techniques of financial statement analysis:

RATIO ANALYSIS:

Ratio analysis is a technique of analyzing the financial statements by computating ratios. Ratio

analysis is a process of determining and interpreting relationships between the items of

financial statement to provide a meaningful understanding of the performance and financial

position of an enterprise. Ratio analysis is an accounting tool to present variables in a simple,

concise, intelligible and understandable form.

Objective of Ratio analysis:

Ratio analysis is to judge the earning capacity, financial soundness and operating efficiency of a

business organization. The use of ratios in accounting and financial management analysis helps

the management to know the profitability, financial position (liquidity and solvency) and

operating efficiency of an enterprise.

Uses of Ratio analysis:

1. Useful in analysis of financial statements.2. Useful in simplifying accounting figures.3. Useful in judging the operating efficiency of business.


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4. Useful for forecasting.5. Useful in locating the weak spots.6. Useful in inter firm and intra firm comparison.

Balance sheet:

A balance sheet is a statement of enterprises assets and liabilities as on a particular date. It

necessarily means the amounts and values stated against each asset and liabilities are historical

meaning, they do not reflect the current values.

The assets of the enterprise, fixed assets and current assets, are represented by the liabilities,

long term liabilities and short term liabilities, and shareholders equity, i.e., paid-up share capital

and reserves. The form of balance sheet of an enterprise is prescribed in Schedule VI of the

companies Act 1956.


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RESEARCH METHODOLOGY

RESEARCH OBJECTIVES

1. To know the financial position of YES BANK.

2. To evaluate the assets and liabilities level of YES BANK.

METHODOLOGY:

Methodology is the way to systematically solve the problem. In it we study the various steps

that are generally adopted in the study along with the logic behind them. It is a conceptual

structure with in which study is conducted; it constitutes the blue print for the collection,

measurement and analysis of data. In the context of the study the methodology applied is as

follows.

Research design:

The research design used in this study is exploratory.

Sources of data :

Secondary data collection-

The data used in this study is the balance sheet of the YES bank.


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DATA TABULATION AND ANALYSIS:

1. Profitability ratioReturn on total resources = profit before interest & tax *100/total asset

= 4777393/363825107*100

= 1.31

2.

Return on capital employed =profit after tax& interest*100/capital employed

= 4057754 /78385264*100

= 5.17

This two ratio helps us to know the overall profitability of the concern.

3. Return on shareholder fund = profit after tax/shareholder fund*100=4057754/30895503*100

= 13.33

This ratio helps to the owners of the business concern.

Profitability from point of view of the prospective investors/financial analyst

4. Earning per share= net profit after tax/ no. of equity shares= 4057754/3396673


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=1.19

This ratio highlights upon the overall profitability & helps in determining the market price of the

equity shares. It reflects upon the ability of the concern to pay dividend to its equity

shareholder.

5. Price earning per share= market price per share/ earning per share=10/15.65

=.63

This ratio is of much help to the investors in deciding whether to invest in equity shares at a

particular market price or not.

This ratio judges the financial position of the bank

6. Current ratio=current asset/current liabilities=250198008/285433843

=.87

The objective of the calculating these ratio is to access the ability of the enterprise to meet its

short term liabilities. As low ratio means lack of liquidity o& shortage of working capital..As the

standard ratio is 1:1.33

7. Quick asset = quick asset/current liabilities=250198008/28543383


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=.87

As quick ratio is less it means liquid asset are less than current liabilities , the financial position

of the concern shall be deemed to be unsound & real cash will have to be provided for the

payment of liabilities.

8. Super ratio = super quick asset/ quick liabilities=26732482/285433843

=.09

This ratio belongs to the conservative test.

9. Cash ratio = cash + bank/current liabilities=26732482/28543383

=.09

10.Solvency ratio = total asset / total liability=13061979/64943938

=.20

This ratio highlights the long term solvency of the bank.

11.Debt equity ratio= debt/equity=17453177/30895503


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= .56

The objective of the calculating these ratio is to arrive at an idea of capital supplied to the

enterprise by the properiter & asset or cover its creditors.

As the ratio is less then we can say that the bank is safer by its financial position. As the

standard ratio is 2:1.

12.Total asset ratio= totalasset/long term debts=13061979/64943938

=.20

As the bank has low ratio it represents that the bank is highly depends heavily on the outside

loans for its existence. As the standard is 1:1.33.

13.Properitary ratio=shareholders/total asset=30895503/13061979

=2.36

This ratio indicates the strength of the financial foundation concern & serves as a measure of

ultimates or long term solvency.


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FINDINGS OF THE STUDY:

1. As the current ratio is less so it creates are problems in meetings current obligation.2. As the quick ratio is less it find difficulty for the payment of liabilities.3. As the solvency test indicates long term solvency of the bank.4. As the total assets ratios is less it represent that the bank is depend more upon the

outsider.

5. As the operating expenses are more than profits it means that the bank has moreexpenses.


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RECOMMENDATIONS

1. The bank should not depends more on the outsiders its should self capable.2. Operating expenses should be reduced.3. Current ratio should be increase to meet its current obligations.4. Its working capital should be increased to meets its short term liabilities.5. Quick assets should be increased so as to keep the bank sound &good.


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LIMITATIONS

Although the study was carried out with extreme enthusiasm and careful planning there are

several limitations, which handicapped the research via,

1. Time constraints: the time stipulated for the project to be completed is less andthus there are chances that some information might have been left out, however

due to care is taken to include all the relevant information needed.

2. The differences in the definition of terms in the balance sheet and the profit andloss statements make the interpretation of ratios difficult.

3. The ratios calculated at a point of time are less informative and defective as theysuffer from short-term changes.

4. The ratios are generally calculated from past financial statements and thus areno indicators for future.


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CONCLUSION

From my study I have found that YES bank has aggressive in nature means the YES bank is high

risk taking. YES bank have problem in meeting its current obligation and it also finds difficulty in

the payment of liability. YES bank has lack of liquidity and shortage of working capital. YES bank

have long term solvency. Its operating expenses are high so it has to reduce it. YES bank

depends heavily on outside loan and there is no risk for creditors for any time of harm.


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REFERENCES

From Books:

1. Investment Analysis and Portfolio Management, Second Edition, published byTata McGraw-Hill Publishing Company limited Delhi : Prasanna Chandra.

2. Investment Management, 11th Edition : V.k Bhalla.3. Financial Management, ninth Edition, VIKAS Publishing House Pvt ltd: I M

Pandey.

4. Research Methodology, methods and techniques, second revised edition: C.R.Kothari.

From Magazines:

1. Investment India. Indias leading magazines for wealth-creation- September2009

2. Investment India. Indias leading magazines for wealth-creation- January 2011

From websites:

1. http://www.moneycontrol.com/company-facts/yesbank/history/YB

2. http://www.ibef.co.in/download/banking_story_06.pdf

3. http://en.wikipedia.org/wiki/File:Yes_Bank_Logo.svg
http://www.moneycontrol.com/company-facts/yesbank/history/YBhttp://www.moneycontrol.com/company-facts/yesbank/history/YBhttp://www.ibef.co.in/download/banking_story_06.pdfhttp://www.ibef.co.in/download/banking_story_06.pdfhttp://en.wikipedia.org/wiki/File:Yes_Bank_Logo.svghttp://en.wikipedia.org/wiki/File:Yes_Bank_Logo.svghttp://en.wikipedia.org/wiki/File:Yes_Bank_Logo.svghttp://www.ibef.co.in/download/banking_story_06.pdfhttp://www.moneycontrol.com/company-facts/yesbank/history/YB

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