A

SYNOPSIS

ON

A STUDY ON FINANCIAL PERFORMANCE

AT

HDFC BANK LTD

A Project report submitted to Osmania University

In partial fulfillment for the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

M. MAHESHWAR

HT NO: 2121-20-672-091

UNDER THE GUIDANCE OF

P. SURAESH

ARISTOTLE PG COLLEGE

(Affliated To Osmania University,Hyderabad)

Recognized By UGC under section 2(f) of UGC Act 1956

Beside Moinabad Police Station,

Chilkur, Moinabad ,Ranga Reddy District, Telangana.

2020-2022

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 CHAPTER-I
INTRODUCTION
INTRODUCTION:-

The term ‘financial performance analysis also known as analysis and interpretation of
financial statements’ , refers to the process of determining financial strength and
weaknesses of the firm by establishing strategic relationship between the items of the
balance sheet , profit and loss account and other operative data.

“Financial performance analysis is a process of evaluating the relationship between

component parts of a financial statement to obtain a better understanding of a firm’s
position and performance.

The purpose of financial analysis is to diagnose the information contained in financial

statements so as to judge the profitability and financial soundness of the firm. Just like a
doctor examines his patient by recording his body temperature, blood pressure etc. Before
making his conclusion regarding the illness and before giving his treatment. A financial
analyst analyses the financial statements with various tools of analysis before commenting
upon the financial health or weaknesses of an enterprise.

The analysis and interpretation of financial statements is essential to bring out the mystery
behind the figures in financial statements. Financial statements analysis is an attempt to
determine the significance and meaning of the financial statement data so that forecast
may be made of the future earnings, ability to pay interest and debt maturities (both
current and long term) and profitability of a sound divided policy.

Financial performance refers to the act of performing financial activity. In broader sense,
financial performance refers to the degree to which financial objectives being or has been
accomplished. It is the process of measuring the results of a firm's policies and operations
in monetary terms. It is used to measure firm's overall financial health over a given period
of time and can also be used to compare similar firms across the same industry or to
compare industries or sectors in aggregation.
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In short, the firm itself as well as various interested groups such as managers,
shareholders, creditors, tax authorities, and others seeks answers to the
Following important questions:
1. What is the financial position of the firm at a given point of time?
2. How is the financial performance of the firm over a given
period? Of time?

These questions can be answered with the help of financial analysis of a firm. Financial
analysis involves the use of financial statements. A financial statement is an organized
collection of data according to logical and conceptual framework 50 consistent accounting
procedures. Its purpose is to convey an understanding of some financial aspects of a
business firm. It may show a position at a moment of time as in the case of a balance
sheet, or may reveal a series of activities over a given period of time, as in the case of an
income statement.

Thus, the term ‘financial statements’ generally refers to two basic

statements: The balance sheet and the income statement.

The balance sheet shows the financial position (condition) of the firm at a given point of
time. It provides a snapshot and may be regarded as a static picture.

“Balance sheet is a summary of a firm’s financial position on a given date

that Shows total assets = total liabilities + owner’s equity.”

The income statement (referred to in India as the profit and loss statement) reflects the
performance of the firm over a period of time.

“Income statement is a summary of a firm’s revenues and expenses over a specified

period, ending with net income or loss for the period.”

However, financial statements do not reveal all the information related to the financial
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operations of a firm, but they furnish some extremely useful information, which highlights
two important factors profitability and financial soundness. Thus analysis of financial
statements is an important aid to financial performance analysis. Financial performance
analysis includes analysis and interpretation of financial statements in such a way that it
Undertakes full diagnosis of the profitability and financial soundness of the business.

“The analysis of financial statements is a process of evaluating the relationship between

component parts of financial statements to obtain a better understanding of the firm’s
position and performance.”

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 CHAPTER-II
REVIEW OF LITERATURE
Rao (2014) discussed in his research about ‘Financial appraisal of HDFC BANK LTD’.
Main objective of study was intended to probe into the financial condition-financial
strength and weakness-of the Bajaj Capital. He has been measured and evaluates the
financial performance through inter-company and inter-sector analysis for the period of
2015-2019. He has found that the fixed assets utilization in many of the tyre undertakings
was not as productive as expected and inventory was managed fairly well. He has
considered that the tyre industry's overall profit performance was subjected to
inconsistency and ineffective. He has suggested some recommendations to improve
financial performance.

Rao (2014) has made a study about inter-company financial analysis of tea industry-
retrospect and prospect. He wished to analyses the important variables of tea industry and
projected future trends regarding sales and profit for the 30 next 10 year periods, with a
view to help the policy makers to take appropriate decisions. He have been calculated
various financial ratios for analyzing the financial health of the industry. After the
comparison of ratios, he has concluded that the forecast of sales and profits of tea
manufacturing companies showed that the Indian tea industry has bright prospects. He has
also revealed that the recent changes in the Indian economic policies may boost up the
foreign exchange earnings, which may benefit those companies, which are exporting to
hard currency areas.

Pai, Vadivel & Kamala (2015) have studied about the diversified companies and financial
performance. Main purpose of research was found out the relationship between diversified
firms and their financial performance. For the purpose of research, they have selected
seven large firms and analysed those firm which having different products-both related
and otherwise-in their portfolio and operating in diverse industries. In this study, a set
ofperformance measures / ratios was employed to determine the level of financial
performance and variation in performance from one firm to another has been observed and

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statistically established.They revealed that the diversified firms studied have been healthy
financial performance.

Vijayakumar A. (2015) has studied about ‘Assessment of Corporate Liquidity - a

discriminate analysis approach’ in this research he has revealed that the growth rate of
sales, leverage, current ratio, operating expenses to sales and vertical integration was the
important variables which determine the profitability of companies in the sugar industry.
Also he has studied the shortterm liquidity position in twenty-eight selected sugar factories
in co-operative and private sectors. In research a discriminate analysis has been used by
the researcher, to undertaken to distinguish the good risk companies from poor risk
companies based on current and liquidity ratios. In this study discriminating ‘Z’ scores
have been calculated with the help of discriminate function and according to the ‘Z’ scores
the companies are ranked in the order of liquidity.

Loundes (2016) studied on his research paper regarding “performance of Australian

Government Trading Enterprises: An overview”. He has provided an overview of GTE
performance over the 5 years to 1996 using the IBIS Enterprise Database, following the
method of analyzing firm performance as outlined by the steering committee (1998). He
has made comparative analysis and its results indicate that there are large differences in
performance across firms, and more particularly, across the industries. Assessing the
performance of Government Trading Enterprises (GTEs) has become increasingly
important in the context of the push towards privatisation.

Dhankar (2017) has studied about the criteria of performance measurement for business
enterprises in India study of public sector undertakings. The author gives a new model for
measuring the performance of a business enterprise in India, wherein, the basis is to
compare its actual rate of return with its expected risk adjusted rate of return. Realizing the
importance and controversy of public sector in India, an attempt was made to measure the
performance of all public sector undertakings, which were started up to 2015 and were in
operation until 1983. It is shocking to know that half of them on an average want to talk of
making excess returns, have not been able to earn equal to their cost of capital.

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Sengupta (2018) studied concerning the performance of the fertilizers industry in India.
By Analysing of cost functions and cobb-douglas production function have been made to
check the performance of the industry. Analysis of shifting cost functions further highlight
that the firms belonging to this industry expand capacities, even before fully exploiting the
existing capacity conforming to the oligopolistic behavioural tendency of the firms
belonging to the fertilizers industry. The results showed that the industry was subject to
the law of increasing costs. He founded that, to get further support from the examination
of the production function, which revealed that the average productivity of labour exceeds
its marginal productivity.

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 CHAPTER-III
RESEARCH METHODOLOGY

NEED FOR THE STUDY

 Need Of financial performance Study To Diagnose The Information Contain In

Financial Statement. So as To Judge the Profitability and Financial Position of the Firm.

 Financial Analyst Analyses The Financial Statements With Various Tools Of

Analysis Before Commanding Upon The Financial Health Of The Firm.

 Significance and Meaning of the Financial Statements.

OBJECTIVES:

1. To understand the financial performance of HDFC BANK LTD

2. To study the change in assets and liabilities of the company.

3. To study the liquidity position of the firm.

4. To study the financial health of the company using ratio analysis.

5. To study the profitability of the company.

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RESEARCH METHODOLOGY

Research Design

This is a systematic way to solve the research problem and it is important component for
the study without which researches may not be able to obtain the format. A research
design is the arrangement of conditions for collection and analysis of data in a manager
that aims to combine for collection and analysis of data relevance to the research purpose
with economy in procedure.

Meaning of Research Design

The formidable problem that follows the task of defining the research problem is the
preparation of design of the research project, popularly known as the research design,
decision regarding what, where, when, how much, by what means concerning an inquiry
of a research study constitute a research design. A research design is the arrangement of
conditions for collection and analysis of data in a manager that aims to combine for
collection and analysis of data relevance to the research purpose with economy in
procedure.

DATA COLLECTION:
The researcher has wide varieties of methods to consider either single or in
combination they were grouped first according to whether this use secondary or
primary sources of data.

PRIMARY DATA:

Data originally collected for an investigation known as primary data concluding

personal interviews through questionnaire. Most of the study for this project is
based on primary data itself.

SECONDARY DATA:
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 Data which is not originally collected rather obtained from published or
unpublished sources, is know as secondary data. It can be defined as data collected
by someone else for purposes other than solving the problems.

Secondary data for the present study is retrieved from company profile and text
books.

1. It includes data gathered from the annual reports of (HDFC)..

2. Articles are collected from official website of (HDFC).

Methodology Used:
Types Of Financial Statements Adopted:

Following Two Types of Financial Statements Are Commonly Used in Analyzing the
Firm’s Financial Position

a. Balance Sheet.

b. Income Statements.

LIMITATIONS OF THE STUDY:

Each Project Gives Rise to Its Own Unique Risks And Hence Possess Its Own Unique
Challenges.

1. Only Interim Reports:

Only interim statements don’t give a final picture of the concern. The data given in these
statements is only approximate. The actual position can only be determined when the
business is sold or liquidated.

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2. Don’t Give Extra Position:

The Financial Statements Are Expressed In Monetary Values, So They Appear To Give
Final And Accurate Position. The Values Of Fixed Assets In The Balance Sheet Neither
Represent The Value For Which Fixed Assets Can Be Sold Nor The Amount Which Will
Be Required To Replace These Assets
3. Historical Costs:

The Financial Statements Are Prepared On The Basis Of Historical Costs Or Original
Costs. The Value of Assets Decreases with the Passage of Time Current Price Changes
Are Not Taken Into Account. The Statements Are Not Prepared Keeping In View The
Present Economic Conditions. The Balance Sheet Loses The Significance Of Being An
Index Of Current Economic Realities.

4. Act of non monitory factors Ignored:

There are certain factors which have a bearing on the financial position and operating
results of the business but they don’t become a part of these statements because they can’t
be measured in monetary terms. Such factors may include in the reputation of the
management.

No Precision:

The precision of financial statement data is not possible because the statements deal with
matters which can’t be precisely stated. The data are recorded by conventional procedures
followed over the years. Various conventions, postulates, personal judgments etc.

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 PROFILE OF THE COMPANY
COMPANY PROFILE
HDFC (Housing Development Financial Corporation) Bank Limited is an Indian banking

and financial services company headquartered in Mumbai, Maharashtra. It has 84,325

employees and has a presence in Bahrain, Hong Kong and Dubai. HDFC Bank is India’s

largest private sector lender by assets. It is the largest bank in India by market capitalization

as of February 2017. It was ranked 69th in 2017 Brand Top 100 Most Valuable Global

Brands.

In 1994 HDFC Bank was incorporated, with its registered office in Mumbai, India. Its first

corporate office and a full service branch at Sandoz House, Worli were inaugurated by the

then Union Finance Minister, Manmohan Singh.

As of June 30, 2017, the bank's distribution network was at 4,715 branches and 12,260 ATMs

across 2,657 cities and towns. The bank also installed 4.30 Lacs POS terminals and issued

235.7 Lacs debit cards and 85.4 Lacs credit card in FY 2017.

Products and services

HDFC Bank provides a number of products and services including wholesale banking, retail

banking, treasury, auto loans, two wheeler loans, personal loans, loans against property

and credit cards.

The latest entry in the league is 'Project AI', under which HDFC Bank, over the next few

weeks, would deploy robots at select bank branches. These robots will offer options such as

cash withdrawal or deposit, forex, fixed deposits and demat services displaying on a screen to

customers.

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Acquisitions

HDFC Bank merged with Times Bank in February 2000. This was the first merger of two

private banks in the New Generation private sector banks category.[15] In 2008, Centurion

Bank was acquired by HDFC Bank. HDFC Bank Board approved the acquisition of CBoP for

95.1 billion INR in one of the largest mergers in the financial sector in India.

Listings and shareholding

The equity shares of HDFC Bank are listed on the Bombay Stock Exchange and the National

Stock Exchange of India. Its American Depository Shares are listed on NYSE and the global

depository receipt are listed on the Luxembourg Stock Exchange where two GDRs represent

one equity share of HDFC Bank.

Shareholders (as of 31 December 2015) Shareholding[17]

Promoter group (HDFC) 21.57%

Foreign institutional investors (FII) 32.4%

Individual shareholders 8.5%

Bodies corporate 7.5%

Insurance companies 5.38%

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Mutual funds/UTI 8.65%

NRI/OCB/others 0.29%

Financial institutions/banks 2.75%

ADS/GDRs 18.78%

3.2.2 VISION AND MISSION OF THE COMPANY

Vision Statement

"To become the market leader in Housing Development Finance in Sri Lanka"

Mission

We define our mission in the broader context of our shareholders, customers, staff, the

national economy, regulators and the natural environment.

 To our shareholders, our mission is to optimize returns.

 To our customers, our mission is to provide a caring service by anticipating their

requirements and innovatively satisfying them beyond their expectations.

 To our staff, our mission is to identify their multi-faceted talents, develop, motivate,

recognize and reward them towards fulfilment of the institutional and national housing

vision.

 To the national economy and the industry regulator, we are the key driver and thought

leader, shaping and financing the national housing policy.

 To our natural environment, we enforce sustainable practices across all our activities.

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 CHAPTERIZATION

CHAPTER-1
INTRODUCTION
CHAPTER-2
REVIEW OF LITERATURE
CHAPTER-3
RESEARCH METHODOLOGY
 NEED OF THE STUDY
 OBJECTIVES OF THE STUDY
 SCOPE OF THE STUDY
 DATA COLLECTION
 LIMITATIONS
CHAPTER-4
INDUSTRY/COMPANY PROFILE
CHAPTER-5
DATA ANALYSIS
CHAPTER-6
FINDINGS
CHAPTER-7
SUGGESTION & CONCLUSION
BIBLIOGRAPHY
ANNEXURES

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