SHRIMAD RAJCHANDRA INSTITUTE OF MANAGEMENT & COMPUTER APPLICATION

S.Y.MBA (SEM. IV) 2012-13

Financial analysis of The Surat Mercantile Co-op. Bank Ltd.

SUBMITTED BY:
ID No. 11 MBA 069 Enrolment No. 201104100710068

Group F3
Name of Students Ankit Gorasiya

11 MBA 102

201104100710100

Ankur Meruliya

SUBMITTED TO: Mr. Sanjay Joshi

(Assistant Professor)

Literature Review
Researcher: Martin ihk and Klaus Schaeck(2009) Title: A study of How Well Do Aggregate Bank Ratios Identify Banking Problems? Conclusion: The paper provides an empirical analysis of aggregate banking system ratios during systemic banking crises. They utilize parametric and nonparametric tests to assess the power of these ratios to discriminate between sound and unsound banking systems. They also estimate a duration model to investigate whether the ratios help determine the timing of a banking crisis. Despite some weaknesses in the available data, their findings offer initial evidence that some indicators are precursors for the likelihood and timing of systemic banking problems.

Researcher: Mabwe Kumbirai and Robert Webb(2009) Title: A study of financial Ratio Analysis of Commercial Bank Performance in South Africa Conclusion: In this paper investigates the performance of South Africas commercial banking sector for the period 2005- 2009. Financial ratios are employed to measure the profitability, liquidity and credit quality performance of five large South African based commercial banks. The study found that overall bank performance increased considerably in the first two years of the analysis. A significant change in trend is noticed at the onset of the global financial crisis in 2007, reaching its peak during 2008-2009. This resulted in falling profitability, low liquidity and deteriorating credit quality in the South African Banking sector.

Company Profile:
The Surat Mercantile Co-Op. Bank Ltd. Is established by Mr. Shambhubhai V. Patel.
This is registered by low of corporate sector with the register number UBD GUJ.1562 dated on 14-04-1965 and certified with the license in Reserve Bank of India. In The Surat Mercantile Co-Op. Bank Ltd., there are total 13 branch including head office. There are about 109 employees in which 7 employees are at the top level management and 31 employees in the officers categories and others are the clerk and peon.

Research Methodology
Problem define: Financial Analysis of The Surat Mercantile Co Op Bank Ltd Objectives:

-To analyze financial performance of The Surat Mercantile Co Op Bank Ltd. -To get basis for financial planning, analysis and decision making through financial information. -To study financial strength and weakness.
Research Design:

Descriptive Research Design

Sources of data collection: Secondary data

Time duration: 2008 to 2012

Data analysis: -Ratio Analysis -Branch comparison with ANOVA test

Data Analysis & Interpretation

All over analysis of SUMCO
SHARE CAPITAL DEPOSISTS WORKING CAPITAL INVESTMENTS LOAN ADVANCES NET PROFIT
250.00 200.00 150.00 100.00 50.00 0.00 2008-09 SHARE CAPITAL DEPOSISTS 2009-10 WORKING CAPITAL 2010-11 INVESTMENTS 2011-12 LOAN ADVANCES

HIGH LIGHT (Rs. in Crore) 2008-09 2009-10 2010-11 2011-12 6.86 7.41 7.69 7.42 154.77 171.97 184 190.33 210.54 102.60 95.95 2.70 232.44 119.59 94.26 1.95 241.52 125.55 99.18 1.62 249.51 130.26 101.44 2.55

Profit of SUMCO (Rs. in Lacs)

350.00 300.00

300.00 310.00 248.00 251.57

270.19 195.43 162.00

250.00
200.00 150.00 100.00 50.00 0.00

255.00

Profit

DEPOSITS (Rs. (Rs. in Lacs) All particular branches Deposits of SUMCO in Lacs)
NO. 1 2 3 4 5 6 7 8 BRANCH LAL DARVAJA KATARGAM KHATODARA BHAGAL RAMPURA KADODARA BHATHENA AMROLI 2007-08 1877.29 2716.48 2213.45 4883.02 289.10 486.23 634.19 703.82 2008-09 1776.34 2680.91 2072.85 4171.74 332.90 476.43 863.19 844.02 2009-10 1802.67 2888.55 1945.67 4058.93 418.27 639.68 1036.53 853.65 2010-11 1750.80 3306.45 2045.46 3960.75 395.91 846.24 972.38 923.73 2011-12 1839.26 3582.12 1981.14 3842.78 395.86 737.07 1120.68 961.44

9
10 11 12 13

KAPODRA
BHATAR ANAND MAHAL PANDESARA BAMROLI

559.25
723.08 1193.83 0.00 0.00 16279.74

473.56
683.01 1102.32 0.00 0.00 15477.27

703.56
683.01 1583.68 307.59 111.70 17033.49

910.00
883.31 1827.92 375.36 201.77 18400.08

1202.83
1013.83 1693.48 367.14 295.08
LAL DARVAJA 19032.71 KATARGAM KHATODARA

5000.00 4500.00

TOTAL

4000.00 3500.00 3000.00 2500.00 2000.00 1500.00 1000.00 500.00 0.00 2007-08 2008-09 2009-10 2010-11 2011-12

BHAGAL
RAMPURA KADODARA BHATHENA AMROLI KAPODRA BHATAR ANAND MAHAL PANDESARA BAMROLI

All particular branches Lending of SUMCO (Rs. in Lacs)

NO. 1 2 3 4 5 6 7 8 BRANCH LAL DARVAJA KATARGAM KHATODARA BHAGAL RAMPURA KADODARA BHATHENA AMROLI 2007-08 1718.83 1345.18 643.92 1195.79 414.56 819.08 266.29 357.55 2008-09 1637.60 1187.02 516.02 1105.21 472.19 714.14 218.63 599.29 2009-10 1635.01 1217.17 621.05 904.56 281.45 759.76 599.20 452.44 2010-11 1357.97 1370.80 833.14 904.40 208.66 776.76 814.31 214.31 2011-12 1382.67 1579.04 919.73 815.25 164.66 636.57 879.24 273.11

9
10 11 12 13 3000.00 TOTAL
2500.00

KAPODRA
BHATAR ANAND MAHAL PANDESARA BAMROLI

1996.43
461.54 559.91 0.00 0.00 9779.08

2084.86
517.04 543.48 0.00 0.00 9595.48

2146.50
316.75 300.40 62.40 29.27 9325.96

2578.33
374.48 252.64 188.57 44.29 9918.66

2652.08
318.50 235.56 208.44 79.22 10144.07

LAL DARVAJA KATARGAM KHATODARA

2000.00

BHAGAL
RAMPURA KADODARA BHATHENA AMROLI KAPODRA BHATAR ANAND MAHAL PANDESARA BAMROLI 2007-08 2008-09 2009-10 2010-11 2011-12

1500.00

1000.00

500.00

0.00

NO. BRANCH 1 LAL DARVAJA 2 KATARGAM 3 KHATODARA 4 BHAGAL 5 RAMPURA 6 KADODARA 7 BHATHENA 8 AMROLI 9 KAPODRA 10 BHATAR 11 ANAND MAHAL 12 PANDESARA 13 BAMROLI TOTAL

PROFIT (Rs. in Lacs) 2007-08 2008-09 2009-10 2010-11 2011-12 15.78 4.38 -71.51 -179.90 -109.88 62.59 71.71 52.89 79.67 108.25 33.35 12.16 36.14 50.64 52.09 8.90 20.16 18.21 -11.36 -23.89 22.74 6.26 3.95 1.04 -1.86 27.29 39.39 29.24 39.48 41.21 5.19 0.83 41.51 46.38 36.25 0.04 11.80 10.43 6.81 -0.40 38.87 67.29 78.47 111.07 127.88 21.75 16.57 9.86 18.61 16.22 14.99 19.63 4.28 3.68 5.50 0.00 0.00 -7.07 6.77 7.20 0.00 0.00 -10.97 -10.90 -3.57 251.49 270.18 195.43 161.99 255.00

All particular branches Profit of SUMCO (Rs. in Lacs)

150.00 100.00 50.00 0.00 2007-08 2008-09 2009-10 2010-11 2011-12

-50.00
-100.00 -150.00 -200.00

LAL DARVAJA KATARGAM KHATODARA BHAGAL RAMPURA KADODARA BHATHENA AMROLI KAPODRA BHATAR ANAND MAHAL PANDESARA BAMROLI

Ratio Analysis :Ratio

Current Ratio

2008-09 2009-10 2010-11 2011-12

2.03 11.9 62 22.04 5.57 8.91 9.01 54.81 14.84 3.27 9.61 7.43 53.9 20.57 4.07 9.33 10.79 53.3 20.06 3.5

Profit Margin Ratio

Credit Deposit
Owner Funds to assets Other income Ratio Interest Expenses Ratio Profit on Loan & Advance

49.87
2.81

50.23
2.07

50.11
1.63

46.36
2.51

Ratio Analysis :12 10 8 6 4 2 0 2008-09 2009-10 Ratio 2010-11 2011-12 2.032282

3 2.5

2.81

Profit on Loan & Advance Ratio

2.51 2.07

Current Ratio
8.908583 9.609528 9.332254

2 1.5 1 0.5 0 2008-09 2009-10 Ratio

1.63

2010-11

2011-12

1.4 1.2 1 0.8 0.6 0.4 0.2 0

64 1.220298

Profitability Ratio
0.965992 0.637063

62 60 58

62

Credit Deposit Ratio

0.565925

56 54 52 50 48

54.81

53.9

53.3

2008-09

2009-10

2010-11

2011-12

2008-09

2009-10

2010-11

2011-12

Ratio

Ratio

Ratio Analysis :25

14 12 10 8 11.9

Profit Margin Ratio

10.79 9.01 7.43

Owner Funds to assets Ratio

22.04 20.57 14.84 20.06

20
15 10 5 0

6 4 2 0

2008-09

2009-10
Ratio

2010-11

2011-12

2008-09

2009-10 Ratio

2010-11

2011-12

51 6 5 5.57

Interest Expenses Ratio

49.87

50.23

50.11

Other income Ratio

4.07
3.27 3.5

50
49 48 47

4 3 2 1 0 2008-09

46.36

46
45 44 2009-10 2010-11 2011-12 2008-09 2009-10 2010-11 2011-12

Ratio

Ratio

Ratio Analysis :Profit on Loan & Advance Ratio

3 2.5 2.07 2 1.63 2.81 2.51

1.5
1 0.5 0 2008-09 2009-10 Ratio 2010-11 2011-12

Anova: Single Factor SUMMARY Groups laldarvaja katargam khatodara bhagal rampura kadodara bhathena amroli kapodra bhatar anandmahal pandesara bamroli Count 5 5 5 5 5 5 5 5 5 5 5 5 5 Sum -341.13 375.11 184.38 12.02 32.13 176.61 130.16 28.68 423.58 83.01 48.08 6.9 -25.44 Average -68.226 75.022 36.876 2.404 6.426 35.322 26.032 5.736 84.716 16.602 9.616 1.38 -5.088 Variance 6636.39 445.2633 261.1921 372.0313 92.49288 42.50247 456.8867 32.51353 1250.549 19.03387 52.45263 34.53395 30.61427

ANOVA Source of Variation Between Groups Within Groups

SS 86317.4 38905.83

df 12 52

MS 7193.117 748.189

F 9.614037

P-value 0.0000000

F crit 1.943617

Total

125223.2

64

CONCLUSION
Branch comparisons in profit related Kapodra branch continues increasing profit 38.87 lacs in 2007-08 and its last year which is highest profit making branch to other with 127.88 lacs. Main branch of bank Lal Darvaja which last three year continues loss in market and other three branch Bamroli, Amroli and Bhagal not making profit which is affecting whole branch through data. In particular branch deposits of SUMCO in Kapodra branch performance increasing compare with all other branch. In Lal Darvaja branch highly deposited money but it is not able to making profit. In providing loan to customer in Kapodra branch is last five year performance well so that its profit increasing. In current ratio in last three year very high compare 2:1 so bank not using efficient way that current assets in bank so this ratio is not good.

CONCLUSION
Net working capital ratio last two year respectively 0.94 and 0.95 so bank working capital cycle is good for pay short term liquidity. Positive working capital indicates that bank has the ability to payments of short terms liabilities Profit of bank also decreasing continually because of the government policy in Embroidery business Textile sector tough loan position and also not providing subsidies to customer. Credit deposit ration according RBI rules its maintain 60-70% but last four year continues down so bank increasing their loan & advantages. In other income ratio also decreasing because of bank not providing locker facility in some branch.

RECOMMENDATION
Bank should increase funds through short term sources for short term requirement of funds, which comparatively economical as compare to long term funds. In competitive market The Surat Mercantile Co-op. Bank Ltd. should give more facilities to its customers like locker, SMS system, e-payment and ATM facilities so it can attract more & more customer. They should expand its branches at new industrial area like Sachin, Hazira, Vesu, Kamrej so it will benefited for bank. Bank should effective way use of current assets so they have to lending money its customer so earn more money. Banks hade office continually making loss so they should cut down in expense. Bank Increasing loan facility to its customer through credit policy.

BIBLIOGRAPHY
Ahmed, M., B. (2009). Measuring the Performance of Islamic Banks by Adapting Conventional Ratios German University in Cairo Faculty of Management Technology Working Paper No. 16 pp 1-26. Beck, T., A. Demirg-Kunt, and R. Levine, 2005, Bank Concentration, Competition and Crises: First Results, Journal of Banking and Finance, forthcoming. Annual Report of The Surat Mercantile Coop Bank Ltd. 2011-12 2010-11 2009-10 2008-09 2007-08 Pandya, K., Bulsari, S. and Sinha (2009), SPSS In Simple Steps, TechDream Press. PP 101-110 Gupta, A.(2006) Financial Accounting for Management: An Analytical Perspective , Pearson Education, 1/e, pp 606-651