EXECUTIVE

A Project Report onCASH FLOW STATEMENT ANALYSIS of AXIS BANK BRANCH HANUMAN TEKDI, HYDERABAD.

A Project Report submitted in partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By

SHAIK JAMEEL AHMED

Reg.No.09721E0020

Under the guidance of

Asst. Prof. MISS B.G. NAGAMANI (MBA)

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITYANANTAPUR

MADINA ENGINEERING COLLEGE

KADAPA 516003

2009 2011MADINA ENGINEERING COLLEGE, KADAPA

(BUKHARIA EDUCATIONAL SOCIETY)

Affiliated to JNTU Anantapur, approved by AICTE New Delhi.

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION

CERTIFICATE

This is to certify that the project report titled Cash Flow Statement Analysis Carried out at Axis bank Hanuman tekdi branch koti. is being submitted by SHAIK JAMEEL AHMED Roll No- 09721e0020 in partial fulfillment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION to the Jawaharlal Nehru Technological University Anantapur, Anantapur is a record of confide work carried out by him/her under my guidance and supervision during 2009-11. The results embedded in this thesis have not been submitted to any other University or institute for the award of any degree or diploma.

Project Guide Head of the Department

B.G. NAGAMANI G. SUDARSANA REDDY

Asst. Prof (MBA) M.Tech. F.I.E. M.I.S.T.E. External Examiner

ACKNOWLEDGEMENT

I express my deepest sense of gratitude for Mr. B. SARFARAZ AHMED BRANCH SALES MANAGER for Providing me an opportunity to undertake my Industrial Training-cum-Project Work with Principal AXIS BANK HYDERABAD My tenure has been a very enriching experience and helped me to get a firsthand experience of the industry and prepare myself for tomorrows managerial trysts.

I owe a profound intellectual debt to Faculty OF M.B.A M/S B.G, NAGAMANI who has been a guiding force and a source of encouragement, advice and help for me throughout the course of this project. Evaluate my project proceedings on a timely basis and provide me with his valuable Suggestions. His suggestions are the foundation on which my project is based.

I would also like to take this opportunity to thank the staff of AXIS BANK BRANC HANUMAN TEKDI HYDERABAD for their help and co-operation. And Last but not least I want to thank to all those who are directly and indirectly helped me in this project.

With Thanks

SHAIK JAMEEL AHMEDRoll no: 09721e0020MADINA ENGENEERING COLLEGE

KADAPA.DECLARATION

I declare that the project entitled CASH FLOW STATEMENT ANALYSIS done at AXIS Bank Hanuman Tekdi Branch, Hyderabad. Submitted by one as partial fulfillment for the award of Master of Business Administration, at JNTU ANANTAPUR, Andhra Pradesh under the faculty guidance of Prof. B.G.NAGAMANI is a record of bonafied work written by me and that it has not previously formed the basis for the award of any degree, diploma, associate ship or other similar titles.

Place:

Date: Signature:

COMPANY PROFILE:

Commercial banking services which includes merchant banking, direct finance infrastructure finance, venture capital fund, advisory, trusteeship, forex, treasury and other related financial services. As on 31-Mar-2009, the Group has 827 branches, extension counters and 3,595 automated teller machines (ATMs).Axis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank today is capitalized to the extent of Rs. 359.76 crores with the public holding (other than promoters) at 57.79%.The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The Bank has a very wide network of more than 853 branches and Extension Counters (as on 30th June 2009). The Bank has a network of over 3723 ATMs (as on 30th June 2009) providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence.

EARLY HISTORYBanking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and The Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in Calcutta in JUNE 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency bank, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East

India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1925 to form the Imperial Bank of India, which upon Indias independence, became the State Bank of India. Indian merchants in Calcutta Established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honour belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Shimla

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC established itself in Bengal in 1869. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India. Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities.

NATIONALISATION:The next significant milestone in Indian Banking happened in the late 1960s when the Indira Gandhi government nationalized, on 19th July, 1969, 14 major commercial Indian banks, followed by nationalization of 6 more commercial Indian banks in 1980. The stated reason for the nationalization was more control of credit delivery. After this, until the 1990s, the nationalized banks grew at a leisurely pace of around 4%-also called as the Hindu growth of the Indian economy.To understand the Indian banking sector more easily a diagram is shown regarding the name of the bank, its numbers shown in the bracket and also the category of bank under which it falls.

INDUSTRIAL PROFILE:

Rural Bank in India was started since the establishment of banking sector in India. In these days Regional Rural Banks (RRBs) mainly focused upon the agro sector. Rural bank in India penetrate every corner of the country and extended helping having in the country. The government of India setup Regional Rural Bank on October 2nd 1975,the bank provide credit to the weaker section of the rural area, particularly the small and marginal former, agricultural labor, artisans and small enterprises.

MISSION AND VALUES:

Mission of Axis Bank:

Customer Service and Product Innovation tuned to diverse needs of individual and corporate clientele.

Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices.

Core Values of Axis Bank: Customer Satisfaction through

Providing quality service effectively and efficiently

"Smile, it enhances your face value" is a service quality stressed on

Periodic Customer Service Audits

Objectives:

To assess the ability of the company.

To know how much cash will be available to meet obligation to trade creditors.

To plan and coordinate the financial operations properly.

To know how much cash is needed from which source it will be derived, how much can be generated internally and how much could be obtained from outside

Introduction to Cash flow : An analysis of cash flow of a concern during a specified period, presented in the form of a statement can be for the past or can be a projection for the past or can be projection for the future. The cash flow of the concern in the near future, say for a period of six months or in year, can be prepared based on the past trends and expectations of the concern regarding factors that would affect its cash receipts and cash payments. Such an estimate of future cash flows is better termed cash budget. Cash flow statement generally refers to the statement showing the receipts and payment or cash during the period covered by two consecutive balance sheets.

Cash flow analysis enables the management to plan and co-ordinate the financial operations of the enterprise, an furnish the basis for evaluating financing policies. It provides a barometer for ensuring the profitabililty of the business, and makes financing problems of the business much more manageable.

CASH FLOW MANAGEMENT:

Cash flow management is the process of monitoring, analyzing, and adjusting businesss cash flows. The most important aspect of cash flow management is avoiding extended cash shortages, caused by a time gap between cash inflows and outflows. Firm cannot stay in business if it is not able to pay its bills on time. Therefore, a cash flow analysis is required on as regular basis so that so that it can take the necessary steps to meet cash flow problems. Today, even in the large business organizations cash is mot as readily available as it was before, so companies are looking into ways to gain better visibility into future cash flows and to monitor it for better planning. There is a growing need for companies to forecast more accurately because in addition to tightened cash flow, there is an increasing need for timely forecasts as market conditions have become volatile. One of the best way to manage cash in the business is to fully understand cash flow patterns. These helps a firm in avoiding cash deficiencies as well as excessive idle cash balances. Moreover, cash flow analysis is needed:To ensure that the cash balance always remains above the desired minimum level

To predict when cash levels will rose sufficiently above the minimum level to facilitate investment of idle balances.

GEORGE PHILIPATOS is of the view that, in its generic sense, a cash flow is the receipt and the payment of amount of money and that it implies more than our accrual or a financial obligation, hence cash flow is a movement of cash which is a real one. L Leon Simons observes that cash flow is frequently and erroneously assumed to include only current operations.

CASH FLOW CONCEPTS

In its simplest form, cash flow is the movement of money in and out of the business uses cash to generate goods or services for the sale to its customers, collects the cash from the sales, and then completes this cycle all over again.

CASH INFLOWS

Cash Inflows are the movement of money into the business. Inflows are most likely from the sale of goods or services to the customers. If credit extended to its customers, then an inflow occurs as the firm collects on the customers accounts. Normally the main sourced of cash inflows to a business are receipts from sales, increases in bank loans, proceeds if share issues and asset disposals, and other income such as interest earned.

CASH OUTFLOWS

Cash Outflows are the movement of money out of the business. Outflows are generally the result of paying expenses. If the business involves reselling goods, then its largest outflow is of the purchases of raw materials and other components needed for the manufacturing of the final product. Salaries and wages to staff, purchasing fixed assets, and paying accounts payable are also cash outflows.

DEFINITIONS: The following are used in this statement with the meaning specified:

Cash comprises cash on hand and demand deposits with banks CASH EQUIVALENTS ARE SHORT-TERM HIGHLY LIQUID INVESTMENTS, THAT ARE READILY CONVERTIBLE INTO KNOW AMOUNTS OF CASH AND WHICH ARE SUBJECT TO AN INSIGNIFICANT RISK OF CHANGES IN VALUE. CASH FLOWS ARE INFLOWS AND OUTFLOWS OF CASH AND CASH EQUIVALENTS.CASH FLOW STATEMENT

In a business in a perfect world there is no time gap between a cash inflow and a cash outflow. But in real world, cash outflows and inflows occur at different times, and never actually occur together. Usually, cash inflows lag behind the cash outflows, leaving the business short of cash. This shortage is termed as cash flow gap. The cash flow gap represents and excessive outflow of cash that may not be covered by a cash inflow for a definite period of time say a few weeks, few months, or even few years. Managing the cash flow allows a firm to bridge the cash flow gap. It does this by examining the different items that affect the cash flow of the business.

The cash flow statement provides information regarding a companys cash receipts and cash payments. The statement complements the profit & Loss Account and Balance Sheet. Over the life of a company, total net profits or income and net cash inflow will equal.

All companies provide the cash flow statements as part of their financial statements, but cash flow can also be calculated net income plus depreciation and other non-cash items.

A company not generating the same amount of cash as competitors is bound to lose out when there are difficult times. Short-term liquidity can also be achieved by deferring payments of current obligations; however, companys ability to generate cash flow through the deferred payments of current liabilities will be exhausted. This statement is useful for decision making because it provides relevant and reliable information for predicting future cash flows.

The cash flow statement is an important analytical tool that the trade creditor, can use to determine if a customer is able to generate sufficient cash to meet its trade obligations. Using the cash flow statement in the credit analysis process can help to users evaluate a customers solvency, liquidity position, and its financial flexibility.

In the cash flow statement, cash receipts and payments are classifies as operating, investing and financing activities. The cash flow statement explains the change during the period in cash and cash equivalents. Cash equivalents are short-term, highly liquid investments that are readily convertible to cash. The cash flow statement must summarize the cash flows so that net cash provided or used by each of the three types of activities is reported. Beginning and ending cash must be reconciled based on the net effect of these activities.

STEPS IN PREPARATION OF CASH FLOW STATEMENT:

Before preparing cash flow statement, first of all, the following three steps have to be completed Determining cash flows from operations or operating activities

Determining cash flows from investing activities.

Determining cash flows from financing activities.

LIMITATIONS OF THE CASH FLOW STATEMENT

Cash flow statement has its limitations too. For example, cash flow does not reveal the profit earned or lost during a particular period. Cash flow also does not indicate the overall financial health of the company. Though, the statement of cash flow gives a good indication of what the company is doing with its cash and from where cash is being generated, but these do not directly reflect true financial condition. The cash flow statements does not account for liabilities and assets, which are recorded in the balance sheet. Accounts receivable and accounts payable, each of which can be very large for a company, are also not reflected in the cash flow statement. In other words, it is a compressed version of the companys cashbook that includes a few other items, like the financing section, which tells the amount of money the company sent or collected from the repurchase or sale of stock, the amount of issuance or retirement of debt, and the amount the company paid out in dividends. In conclusion, interpreting the cash statement is not a very easy and simple task. Analyzing the cash flow together with the other statement gives a glimpse into the short-term financial position of company.

Objectives

To assess the ability of the enterprise.

To know how much cash will be available to meet obligation to trade creditors.

To plan and coordinate the financial operations properly.

To know how much cash is needed from which source it will be derived, how much can be generated internally and how much could be obtained from outside.

METHODOLOGY

For the calculations of cash flows AXIS BANK. The primary data has not been taken only the secondary data that is, the annual reports of the company from the year 2009-2010 are taken into consideration.

The theoretical contents are gathered from eminent text book and reference library at AXIS BANK BRANCH KOTI.

The financial data & information is gathered from annual reports of the company internal records.

Interpretations & conditions are purely based on my opinion.

SUGGESTIONS:

The following are the suggestions suggested for the smooth running of the bank: The bank should try to reduce the expenses on purchasing the fixed assets because it decreases the profit.

The bank shall increase the investment position by issuing shares and debenture and the bonds of the MNCs.

The bank has to implement online technology and various services to their customer.

The bank has to provide more agriculture and small business loans to all sectors of the society as to increase the employment of the pupil.

The bank expanded their branches more and more in the district particularly and in India in general.

EXECUTIVE

SUMMARY

INDUSTRIAL PROFILE

Banks are the most significant players in the Indian financial market. They are the biggest purveyors of credit, and they also attract most of the savings from the population. Dominated by public sector, the banking industry has so far acted as an efficient partner in the growth and the development of the country. Driven by the socialist ideologies and the welfare state concept, public sector banks have long been the supporters of agriculture and other priority sectors. They act as crucial channels of the government in its efforts to ensure equitable economic development. The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of bank in 1969, the public sector bank or the nationalized bank have acquired a place of prominence and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting at higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problemslinked to huge Non-Performing Assets (NPAs) and payment default. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the high revenue niche retail segments. The Indian banking has finally worked up to the competitive dynamics of the new Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be futuristic and proactive players capable of meeting the multifarious requirements of the large customers base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium.The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. borrowing and lending). The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. The Indian banking can be broadly categorized into nationalized, private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring bodies in the Indian financial sector. The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid also includes 24 foreign banks that have started their operations here. The liberalize policy of Government of India permitted entry to private sector in the banking, the industry has witnessed the entry of nine new generation private banks.COMPANY PROFILE

AXIS bank completed the 5th year of its operation at the end of March 99. The bank witnessed good growth in its business and profit and also came out with a public issue of its quality for the 1st time during the year, which evoked excellent retail response. The bank made significant progress during the year in line with its committed business targets, despite difficult market condition the bank spread over different states, there by enlarging its client based substantially. The bank continue to introduce new products, upgrade the technology support system to improve operational efficiencies and strengthen its human resource based on the whole, 2002-2003 has been a productive years for the bank in terms of both growth and consolidation of business as well as strengthening of its infrastructure. The bank ended the year 2002-2003 conducting business in 80 cities and towns, with 192 branches and extension counters and 822 ATMs. The AXIS bank will spread out across the country with operation in 23 states and 1 union territory.

STATEMENT OF THE PROBLEM

Banks are the main financial sources to the public. They are the providers and mobilizes of the finance from the public. But they are facing different problems such as dissatisfaction of the customer regarding banking services, improper cash management, financial performance and the like. Among the problems faced by RRBs. Cash management is a very important technique to be adopted in any bank. Hence, this study concentrates on cash flow analysis of AXIS BANK BRANCH HANUMAN TEKDI, HYD.

OBJECVTIES OF STUDY

The main intention of this study is to analysis the financial position of the AXIS BANK BRANCH HANUMAN TEKDI, HYD. The following are the main objectives of the study:

To measure the profitability and liquidity position in the organization.

To evaluate the cash position of the bank through cash flow analysis.

To analyze total cash deposits, loan syndication position of the bank

To elicit the sources of cash income and cash payments.

NEED FOR THE STUDY

It is the common obligation to every financial institution to know

its strengths and weaknesses. Though the company has several departments, the under researched area is finance. But there is number of studies have been conducted on the cash flow analysis in AXIS BANK BRANCH HANUMAN TEKDI, HYD in A.P. So, the study is needed to help the bank for its smooth financial transactions effectively.

RESEARCH METHODOLOGY AND DESIGN

There are five main branches in Andhra Pradesh one in Hyderabad Branches, one in Prakasham District, one in Kurnool district, one in Ananthapur district, one in Nellore district. The Head Office located in Hyderabad, district and it has various branches throughout the district. Among all these branches, the selected branch is AXIS Bank Branch hanuman tekdi is located in Hyderabad koti in Andhra Pradesh. The executives and financial department officials are enquired for the purpose of the study... The study is mainly based on the analytical research design. This design largely interprets the already available information.

DATA SOURCES

The data for the present study is collected through primary and secondary sources. Secondary data is obtained from annual reports of the company and primary data was collected by interacting financial executives of the company.

Primary Data

The primary data of this study was collected by consulting the accounting officer, financial Executive of that bank.

Secondary Data

The study is mainly based on the sources of secondary data. The secondary data for this study was collected from the published sources i.e., annual reports and WWW.AXISBANK.COMSCOPE OF THE STUDY

The present study is confined to only AXIS Bank Branch hanuman tekdi Hyderabad. The study is limited to cash flow analysis and it has been analyzed by taking the information related to both the present and past data into consideration with reference to the performance of the bank.

TOOLS FOR THE STUDY

The data relating to the performance of the AXIS Bank Branch hanuman tekdi from different activities that is operating activities, investing activities and financing activities have been carefully analyzed and also cash flow statement, column and bar charts.

LIMITATIONS OF STUDY

The major limitations of the study are:

Due to constraint of time, the researcher unable to collect detailed analysis of the financial data.

There are some differences in collected data as of data collected from different secondary sources.

Finance is also an important constraint for the detailed analysis.

PROJECT SCHEME

The study is mainly divided into six chapters

Chapter 1- Introduction to Banks

Chapter 2- AXIS Bank - A Profile

Chapter 3- Methodology and Model of Research

Chapter 4- Cash Flow Statement Analysis- A Review

Chapter 5- Data Analysis and Implementation

Chapter 6- Findings and Suggestions

INTRODUCTION

TO

BANKS

INTRODUCTION OF BANK

Regional Banks in India are integral part of the rural credit structure of the country. Since the very beginning, when the Regional Banks in India (RRBs) were established in October 2nd, 1975, these banks played a pivotal role in the economic development of the rural India. The main goal of establishing regional rural banks in India was to provide credit to the rural people who are not economically strong enough, especially the small and marginal farmers, artisans, agricultural labors and even small entrepreneurs. Regional Rural Banks in India are an integral part of the rural credit structure of the country. Since the very beginning, when the Regional Rural Banks in India (RRBs) were established in October 2nd 1975, these banks played a pivotal role in the economic development of the rural India. The main goal of establishing regional rural banks in India was to provide credit to the rural people who are not economically strong enough, especially the small and marginal farmers, artisans, agricultural labors, and even small entrepreneurs.

The Concept and The Brief History

The history of regional rural banks in India dates back to the year 1975. Its the Narsimham committee that conceptualized the foundation of regional rural banks in India. The committee felt the need of regionally oriented rural banks that would address the problems and requirements of the rural people with local feel, yet with the same level of professionalism of commercial banks. Five regional rural banks were set up on October 2nd with a total authorized capital of Rs.1 crore, which later augmented to Rs.5 crores.There were five commercial banks, viz. Punjab National Bank, State Bank of India, Syndicate Bank, United Bank of India and United Commercial Bank, which sponsored the regional rural banks. The equities of rural banks were divided in a proportion of 50:35:15 among the Central Government, the sponsor bank and the Concerned State Government.

The following years have not been so easy for the regional rural banks in India, as there were major concern of financial viability. A number of committees were formed to find out solution. Studies were conducted to find out the factors that influence RRBs performance. The roles played by the sponsor banks were also analyzed.FORMATION The Govt. of India, in July 1975, appointed a working group to study in depth the problem of devising alternative agencies to provide institutional credit to the rural people in the context of steps then initiated under the 29 Point Economic Program. The Narsimham Committee Conceptualized the creation of RRBs in 1975 as a new set of regionally oriented rural banks, which would combine the local feel and familiarity of rural problems characteristic of cooperatives with the professionalism and large resource base of commercial banks. The Government of India promulgated the Regional Rural Banks Ordinance on 26th September 1975, which was later replaced by the Regional Rural Bank Act 1976. OBJECTIVESThe RRBs have following objectives:

To develop rural economy. To provide credit for agriculture and allied activities. To encourage village industries, artisans, carpenters, craftsmen, etc. To reduce dependence of weaker sections on money-lenders. To identify a specific and functional gap in the present institutional structure. To supplement the other institutional agencies in credit delivery to rural areas, To make backward and tribal areas economically better by opening new branches. Every RRBs is authorized to carry on to transact the business of

banking as defined in the Banking Regulation Act and may also engage in other business specified in Section 6(1) of the said Act. In particular, a RRB is farmers and agricultural laborers, whether individually or in groups, and to cooperative societies, including agricultural marketing societies, agricultural processing societies, cooperative farming societies, primary agricultural credit societies or farmers service societies, primary agricultural purposes or agricultural operations or other related purposes, and granting loans and advances to artisans, small entrepreneurs and persons of small means engaged in trade, commerce, industry or other productive activities, within its area its area of operation.

The Reserve Bank of India has brought RRBs under the ambit of priority sector lending on par with the commercial banks. They have to ensure that forty percent of their advances are accounted for the priority sector. Within the 40% priority target, 25% should go to weaker section or 10% of their total advances to go to weaker section.

CAPITAL STURCTURE

Their equity is held by the Central Government, concerned State Government and the Sponsor Bank in the proportion of 50:15:35. A Regional Rural Bank is jointly owned by the Govt. of India, the Government of concerned state and public sector bank, which sponsored it. Each bank carries the banking business within the local limits specified by the Govt. Notification.

ORGANISATIONAL STRUCTUREThe management of a RRB is vested in a nine-member Board of Directors headed by chairman who is an officer deputed by a sponsor bank but appointed by the Govt. of India. Three directors to be nominated by the central Government. Two directors to be nominated by the sponsor bank.

The sponsor bank, besides subscribing to the capital and deputing

one of its official as chairman, provides assistance to RRB in several ways as financial accommodation, deputing managerial and other staff and arranging the recruitment of staff and their training.

Role of Regional Rural Banks in Economic Development

The importance of the rural banking in the economic development

of a country cannot be overlooked. As Gandhiji said Real India lies in villages and village economy is the backbone of Indian economy. Without the up liftment of the rural economy as well as the rural people of our country, the objectives of economic planning cannot be achieved. In fact, the real growth of Indian economy lied in the emancipation of rural masses from acute poverty, unemployment, and socio-economic backwardness. Keeping this end in view, various important plans and programmers of rural development have been conceived and implemented by the government of India since the commencement of first five-year plan from 1951-56. But an appraisal of the achievement of these programmers clearly reveals that many programmers failed to achieve the desired objectives due to the backward economic condition and lack of adequate finance to the poor people in the rural areas. Hence, bank and other financial institutions are of vital importance for development of rural economy of a country. The present study is a modest attempt to make an appraisal of the credit needs of the rural people and the way Regional Rural meet the same in the state of Arunachal Pradesh. It deals with the performance evaluation of Arunachal Pradesh. Rural Bank (APRB) for the economic development of the state. Further, an attempt has also been made to study the growth and performance of Scheduled Commercial Banks with special emphasis on Regional Rural Banks (RRBs) in India and North-East Region.

Balance Sheet of Axis Bank ------------------- in Rs. Cr. -------------------

Mar '07Mar '08Mar '09Mar '10Mar '11

12 mths12 mths12 mths12 mths12 mths

Capital and Liabilities:

Total Share Capital281.63357.71359.01405.17410.55

Equity Share Capital281.63357.71359.01405.17410.55

Share Application Money0.002.191.210.170.00

Preference Share Capital0.000.000.000.000.00

Reserves3,120.588,410.799,854.5815,639.2718,588.28

Revaluation Reserves0.000.000.000.000.00

Net Worth3,402.218,770.6910,214.8016,044.6118,998.83

Deposits58,785.6087,626.22117,374.11141,300.22189,237.80

Borrowings5,195.605,624.0410,185.4817,169.5526,267.88

Total Debt63,981.2093,250.26127,559.59158,469.77215,505.68

Other Liabilities & Provisions5,873.807,556.909,947.676,133.468,208.86

Total Liabilities73,257.21109,577.85147,722.06180,647.84242,713.37

Mar '07Mar '08Mar '09Mar '10Mar '11

12 mths12 mths12 mths12 mths12 mths

Assets

Cash & Balances with RBI4,661.037,305.669,419.219,473.8813,886.16

Balance with Banks, Money at Call2,257.275,198.585,597.695,732.567,522.49

Advances36,876.4859,661.1481,556.77104,343.12142,407.83

Investments26,897.1633,705.1046,330.3555,974.8271,991.62

Gross Block1,098.931,384.701,741.862,107.983,426.49

Accumulated Depreciation450.55590.33726.45942.791,176.03

Net Block648.38794.371,015.411,165.192,250.46

Capital Work In Progress24.82128.4857.4857.2422.69

Other Assets1,892.072,784.513,745.153,901.064,632.12

Total Assets73,257.21109,577.84147,722.06180,647.87242,713.37

Contingent Liabilities55,993.0478,028.44104,428.39296,125.58429,069.63

Bills for collection11,751.8316,569.9529,906.0435,756.3257,400.80

Book Value (Rs)120.80245.13284.50395.99462.77

AXIS BANK PROFILE

BRIEF HISTORY OF AXIS BANKINTRODUCTIONBanking in India originated in the last decade of the 18th century. The oldest bank 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. After Indias independence in 1947 the Reserve Bank of India was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks, and again 6 next in 1980.EARLY HISTORYBanking in India originated in the last decades of the 18th century. The first banks were The General Bank of India which started in 1786, and The Bank of Hindustan, both of which are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in Calcutta in JUNE 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency bank, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East

India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors.\The three banks merged in 1925 to form the Imperial Bank of India, which upon Indias independence, became the State Bank of India.Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India. It was not the first though. That honour belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of ShimlaForeign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking centre.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, Established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities.NATIONALISATIONThe next significant milestone in Indian Banking happened in the late 1960s when the Indira Gandhi government nationalized, on 19th July, 1969, 14 major commercial Indian banks, followed by nationalization of 6 more commercial Indian banks in 1980. The stated reason for the nationalization was more control of credit delivery. After this, until the 1990s, the nationalized banks grew at a leisurely pace of around 4%-also called as the Hindu growth of the Indian economy.To understand the Indian banking sector more easily a diagram is shown regarding the name of the bank, its numbers shown in

BACKGROUNDAxis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd.

The Bank today is capitalized to the extent of Rs. 359.44 corers with the public holding (other than promoters) at 57.74%.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The Bank has a very wide network of more than 838 branches and Extension Counters (as on 31st May 2009). The Bank has a network of over 3674 ATMs (as on 31st May 2009) providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country.The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence.

MISSION AND VALUES

Mission of Axis Bank Customer Service and Product Innovation tuned to diverse needs of individual and corporate clientele.

Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices.Core Values of Axis Bank Customer Satisfaction through Providing quality service effectively and efficiently

"Smile, it enhances your face value" is a service quality stressed on

Periodic Customer Service Audits Maximisation of Stakeholder value

Success through Teamwork, Integrity and People.

PROMOTERSAxis Bank Ltd. has been promoted by the largest and the best Financial Institution of the country, UTI. The Bank was set up with a capital of Rs. 115 corers, with UTI contributing Rs. 100 corers, LIC - Rs. 7.5 corers and GIC and its four subsidiaries contributing Rs. 1.5 corers each.THE COMPANY AND ITS PRODUCT LINEAxis Bank Limited (Axis Bank) offers a broad range of retail & corporate banking products and services in India. The bank was earlier known as UTI Bank Limited.The company offers several products including accounts, deposits, cards, credits, advisory services, treasury, mutual funds, cash management, international banking and transaction services. The bank operates 827 branches and extension counters, as on 31 March 2009. Axis Bank has operations in 29 States and 3 Union Territories in India. The bank has a network of 3595 ATM machines. Axis Bank is the third largest ATM network provider in India. It also has branches in China, Hong Kong, Singapore and UAE. The bank is headquartered at Mumbai in India.

The company reported revenues of (Rupee) INR 108,291.13 million during the

fiscal year ended March 2009, an increase of 54.59% over 2008. The operating

profit of the company was INR 36,801.90 million during the fiscal year 2009, an

increase of 42.35% over 2008. The net profit of the company was INR 18,129.32 million during the fiscal year 2009, an increase of 71.17% over 2008.

Axis bank offers banking and financial services in India. The companys services and Brands include the following:

Services:

Personal Banking:

Accounts

Deposits

Loans

CardsInvestments

Insurance

Payments

Other Services

Corporate Banking:

Accounts

CreditCapital Market

Treasury

Cash Management Services

Govt Business

NRI services:

Accounts

Deposits

Remittances

COMPETITORS OF AXIS BANK LIMITED Central bank of India

Corporation bank

HDFC bank limited

ICICI bank limited

State bank of India

Union bank of India Bank of BarodaBOARD OF DIRECTORSThe members of board are :Smt. Shikha SharmaManaging Director & CEO

Shri N.C. SinghalDirector

Shri. J.R. VarmaDirector

Dr. R.H. PatilDirector

Smt. Rama BijapurkarDirector

Shri R.B.L. VaishDirector

Shri M.V. SubbiahDirector

Shri Ramesh RamanathanDirector

Shri K. N. PrithvirajDirector

METHODOLOGY

AND

MODEL OF RESEARCH

STATEMENT OF THE PROBLEM

Banks are the main financial sources to the public. They are the providers and mobilizes of the finance from the public. But they are facing different problems such as dissatisfaction of customer regarding banking services, improper cash management financial performance and the like. Among these problems faced by RRBs Cash management is very important technique to be adopted in any bank. Hence, this study concentrates on cash flow analysis of AXIS BANK HANUMAN TEKDI BRANCH HYD.OBJECTIVES OF STUDY

The main intension of this study is to analyze the financial position of the AXIS BANK HANUMAN TEKDI BRANCH HYD. The following are the main objectives for the study:

To measure the profitability and liquidity position in the organization.

To evaluate the cash position of the bank through cash flow analysis.

To analyze total cash deposits, loan syndication position of the bank

To elicit the sources of cash income and cash payments.

NEED FOR THE STUDY

It is the common obligation to every financial institution to know its strengths and weaknesses. Though the company has several departments, the under researched area is finance. But there is less number of studies have been conducted on the cash flow analysis in AXIS BANK HANUMAN TEKDI BRANCH HYD. A.P. So, the study is needed to help the bank for its smooth financial transactions with effectively.

RESEARCH METHODOLOGY AND DESIGN

There are Some Important branches in Andhra Pradesh one in hyderabad, one in Prakasham District, one in Kurnool district, one in Ananthapur district, one in Nellore district. The Head Office located in Hyderabad, district and it has various branches through out the district. Among all these branches, the selected branch is AXIS BANK MAIN BRANCH . is located in HYDERABAD in Andhra Pradesh. The executives and financial department officials are enquired for the purpose of the study. The study is mainly based on the analytical research design. This largely interprets the already available information.

DATA SOURCES

The data for the present study is collected through primary and secondary sources. Secondary data is obtained from annual reports of the company and primary data was collected by interacting financial executives of The Company.

Primary Data

The primary data of this study was colleted by consulting the accounting officer, financial Executives of that bank.

Secondary Data

The study is mainly based on the sources of secondary data. The secondary data for this study was collected from the published sources i.e., annual reports and WWW.APGBANK.COMSCOPE OF THE STUDY

The present study is confined to only AXIS BANK HANUMAN TEKDI BRANCH HYD. The study is limited to cash flow analysis and it has been analyzed by taking the information related to both the present and past data into consideration with reference to the performance of the bank.

PERIOD OF STUDY

TOOLS FOR THE STUDY The data relating to the performance of he AXIS BANK HANUMAN TEKDI BRANCH HYD. from different activities that is operating activities, investing activities and financing activities have been carefully analyzed and also cash flow statement, column and bar charts.

LIMITATIONS OF STUDY

The major limitations of the study are:

Due to constraint of time, the researcher unable to collect detailed analysis of the financial data.

There are differences in collected data as of data collected from different secondary sources.

Finance is also an important constraint for the detailed analysis.

CASH FLOW STATEMENT ANALYSIS

A REVIEW

INTRODUCTION

An analysis of cash flow of a concern during a specified period, presented in the form of a statement can be for the past or can be a projection for the past or can be projection for the future. The cash flow of the concern in the near future, say for a period of six months or in year, can be prepared based on the past trends and expectations of the concern regarding factors that would affect its cash receipts and cash payments. Such an estimate of future cash flows is better termed cash budget. Cash flow statement generally refers to the statement showing the receipts and payment or cash during the period covered by two consecutive balance sheet.

Cash flow analysis enables the management to plan and co-ordinate the financial operations of the enterprise, an furnish the basis for evaluating financing policies. It provides a barometer for ensuring the profitability of the business, and makes financing problems of the business much more manageable.

CASH FLOW MANAGEMENT

Cash flow management is the process of monitoring, analyzing, and adjusting businesss cash flows. The most important aspect of cash flow management is avoiding extended cash shortages, caused by a time gap between cash inflows and outflows. Firm cannot stay in business if it is not able to pay its bills on time. Therefore, a cash flow analysis is required on as regular basis so that so that it can take the necessary steps to meet cash flow problems. Today, even in the large business organizations cash is mot as readily available as it was before, so companies are looking into ways to gain better visibility into future cash flows and to monitor it for better planning. There is a growing need for companies to forecast more accurately because in addition to tightened cash flow, there is an increasing need for timely forecasts as market conditions have become volatile. One of the best way to manage cash in the business is to fully understand cash flow patterns. These helps a firm in avoiding cash deficiencies as well as excessive idle cash balances. Moreover, cash flow analysis is needed:

To ensure that the cash balance always remains above the desired minimum level

To predict when cash levels will rose sufficiently above the minimum level to facilitate investment of idle balances.

GEORGE PHILIPATOS is of the view that, in its generic sense, a cash flow is the receipt and the payment of amount of money and that it implies more than our accrual or a financial obligation, hence cash flow is a movement of cash which is a real one. L Leon Simons observes that cash flow is frequently and erroneously assumed to include only current operations.

CASH FLOW CONCEPTS

In its simplest form, cash flow is the movement of money in and out of the business uses cash to generate goods or services for the sale to its customers, collects the cash from the sales, and then completes this cycle all over again.

CASH INFLOWS

Cash Inflows are the movement of money into the business. Inflows are most likely from the sale of goods or services to the customers. If credit extended to its customers, then an inflow occurs as the firm collects on the customers accounts. Normally the main sourced of cash inflows to a business are receipts from sales, increases in bank loans, proceeds if share issues and asset disposals, and other income such as interest earned.

CASH OUTFLOWS

Cash Outflows are the movement of money out of the business. Outflows are generally the result of paying expenses. If the business involves reselling goods, then its largest outflow is of the purchases of raw materials and other components needed for the manufacturing of the final product. Salaries and wages to staff, purchasing fixed assets, and paying accounts payable are also cash outflows.

NET CASH FLOWS

Net Cash Flow is the difference between the inflows and outflows within a given period. A projected cumulative positive net cash flow over several period highlights the capacity of a business to generate surplus cash and, in the same manner, a cumulative negative cash flow indicates he amount of additional cash required to sustain the business.

FREE CASH FLOWS

Some financial analysts give much importance to concept of cash flow called Free Cash Flow. The cash is considered free if it can be used for any desirable purpose. The large is the amount, the more a firm has flexibility and investment strength because it can use the money immediately to take advantage of an opportunity. The accumulation of free cash comes from free cash flows which are calculated as cash flow from operations, less capital expenditure for ongoing production needs and payment of dividends. Free cash may be accumulating in liquidity but it is not intended to be used for financing working capital requirement. Instead, it is used for long-term purposes such as capital budgeting expenditure on asset, mergers, acquisitions etc.

DEFINITIONS:

The following are used in this statement with the meaning specified:

Cash comprises cash on hand and demand deposits with banks

Cash equivalents are short-term highly liquid investments, that are readily convertible into know amounts of cash and which are subject to an insignificant risk of changes in value.

Cash flows are inflows and outflows of cash and cash equivalents.

Operating activities are the principal revenue-producing activities of the enterprise and other activities and are not investing or financing activities.

Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Financing activities are activities that result in changes in the size and composition of the owners capital (including preference share capital in the case of a company) and borrowings of the enterprise.

CLASSIFICATION OF CASH FLOWS

The model prescribed in AS-3, Cash Flow Statement, classifies cash flow into three categories cash flow from operating activities, cash flow from investing activities, cash flow from financing activity.

CASH FLOW FROM OPERATING ACTIVITIES

The statement provides information about the cash generated from a companys primary operating activities. A companys operating activities services. Operating activities that generate cash inflow include customer other operating cash receipts. Operating activities that create cash outflows include payments to suppliers, payment to employees, interest payments, payment of income taxes and other operating cash payments.

CASH FLOWS FROM INVESTING ACTIVITIES

This area lists all the cash used or provided by the purchase on sale of income producing assets. Investing activities include giving loans and advances, collection from those loans and advances, buying and selling and buying and selling securities not classifies as cash equivalents. Cash inflows generated by investing activities include sales of fixed assets such as property, plant, equipments, sale of debt/equity instruments and the collection of loans.

CASH FLOWS FROM FINANCING ACTIVITIES

This section measures the flow of cash between a firm and its owners and creditors. Financing activities include borrowing and repaying funds from suppliers of funds, a return on their investments. The return on investment is provided in the form of dividends and interest. If the firm uses debt or equity to expand its operations, it is disclosed in the financing activities. Also, if the firm uses cash to retire debt, it appears in the statement. Negative numbers can mean the company is servicing debt bur can also mean the company is making dividend payments and share buyback, which is good news for investors.

CASH FLOW STATEMENT

In a business in a perfect world there is no time gap between a cash inflow and a cash outflow. But in real world, cash outflows and inflows occur at different times, and never actually occur together. Usually, cash inflows lag behind the cash outflows, leaving the business short of cash. This shortage is termed as cash flow gap. The cash flow gap represents and excessive outflow of cash that may not be covered by a cash inflow for a definite period of time say a few weeks, few months, or even few years. Managing the cash flow allows a firm to bridge the cash flow gap. It does this by examining the different items that affect the cash flow of the business.

The cash flow statement provides information regarding a companys cash receipts and cash payments. The statement complements the profit & Loss Account and Balance Sheet. Over the life of a company, total net profits or income and net cash inflow will equal.

All companies provide the cash flow statements as part of their financial statements, but cash flow can also be calculated net income plus depreciation and other non-cash items.

A company not generating the same amount of cash as competitors is bound to lose out when there are difficult times. Short-term liquidity can also be achieved by deferring payments of current obligations; however, companys ability to generate cash flow through the deferred payments of current liabilities will be exhausted. This statement is useful for decision making because it provides relevant and reliable information for predicting future cash flows.

The cash flow statement is an important analytical tool that the trade creditor, can use to determine if a customer is able to generate sufficient cash to meet its trade obligations. Using the cash flow statement in the credit analysis process can help to users evaluate a customers solvency, liquidity position, and its financial flexibility? In the cash flow statement, cash receipts and payments are classifies as operating, investing and financing activities. The cash flow statement explains the change during the period in cash and cash equivalents. Cash equivalents are short-term, highly liquid investments that are readily convertible to cash. The cash flow statement must summarize the cash flows so that net cash provided or used by each of the three types of activities is reported. Beginning and ending cash must be reconciled based on the net effect of these activities.

STEPS IN PREPARATION OF CASH FLOW STATEMENT

Before preparing cash flow statement, first of all, the following three steps have to be completed

Determining cash flows from operations or operating activities

Determining cash flows from investing activities.

Determining cash flows from financing activities.

Cash from operation

The profit and loss account focuses on net income determination from operating activities. However, it does not show cash inflow and outflow relating to operating activities because the profit and loss account is prepared on accrual basis. In preparing profit and loss account, revenues are recorded even though cash for them has not been received. Similarly, expenses are recorded even though they may not been paid. Therefore, to find cash flows from operations, one need to convert accrual basis income statement figures to cash basis making adjustments. By way of adjustments, earned revenues will be converted into cash received from sales or customers and incurred expenses will be converted into cash expended, i.e., expenses actually pain to cash.

Reporting Cash Flows from Operating Activities:

An enterprise should report cash flows from operating activities using either:

Direct method: the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or

Indirect method: The indirect method, whereby net profit or loss is adjusted for the effects of transaction of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows.

The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method and is, therefore, considered more appropriate than the indirect method. Under the direct method, information about major classes of gross cash receipts and gross cash payments may be obtained either:

From the accounting records of the enterprise; or

By adjusting sales, cost of sale (interest and similar income expenses and similar charges for a financial enterprise) and other items in the statement of profit and loss for:

Changes during the period in inventories and operating receivable and payable.

Other non-cash items and

Other items for which the cash effects are investing or financing cash flows

Under the indirect method, the net cash flow from operating activities is determined by adjusting net profit or loss for the effects of:

Changes during the period inventories and operating receivable and payables;

Non-cash items such as depreciation, provisions, deferred taxes, and unrealized foreign exchanges gains and losses and

All other items for which the cash effects are investing or financing cash flows.

Alternatively, the net cash flow from operating activities may be presented under the indirect method by showing the operating revenues and expenses, excluding non-cash items disclosed in the statement of profit and loss and changes during the period in inventories and operating receivables and payables.

Investing Activities:

The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. Example of cash flows arising from investing are:

Cash payments to acquire fixed assets (including intangible). These payments include those relating to capitalized research and development cost and self-constructed fixed assets.

Cash receipts from disposal of fixed assets.

Cash payments to acquire share. Warrants or debt instruments of other enterprises and interests in joint ventures.

Cash receipts from disposal of shares, warrants or debt instruments of other enterprises and interests in joint ventures.

Cash advances and loans made to third parties.

Cash receipts from the repayment to advances and loans made to third parties.

Cash payments for futures contracts, forward contracts and swap contracts except when the contracts are held for dealing or trading purposes or the payment are classified as financing activities and

Cash receipts from futures contracts, forward contracts, option contract, swap contracts except when the contracts are held for dealing or trading purposes, or the receipts are classified as financing activities.

When a contract is accounted for as a hedge of an identifiable position, the cash flows of the contract are classified in the same manner as the cash flows of the position being hedged.

Financing Activities:

The separate disclosure of cash flow arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of funds to enterprise. Examples of cash flows arising from financing activities are:

Cash proceeds from issuing shares or other similarly instruments;

Cash proceeds from issuing debentures, loans, notes, bonds, and other short of long-term borrowings, and cash repayments of amounts borrowed

USES OF CASH FLOW STATEMENT

A cash flow statement is an important financial tool for management efficient short-term financial planning. It enables the management to plan and co-ordinate the financial operation of the concern and furnish the basis for evaluating financing policies. It helps the management in making the financing problems of the business much more manageable. The following are the uses of cash flow analysis.

Helpful in efficient cash management: It is very helpful in understanding the cash position of a firm. Since cash is the basis for carrying on business operations, the cash flow statement is very useful in evaluating the current cash position.

Planning of Programmes: The repayment of loans, replacement of assets and other such programmes can be planned on its basis.

Helpful in short-term financial decisions: The cash flow statement is helpful in making short term financial decisions relating to liquidity, and the ways and means position of the firm.

Useful of Capital budgeting: Cash flow statement is also useful for making appraisal of different capital investment projects in order to determine their viability and profitability.

Useful as a control device: It helps the management to understand the past behavior of the cash cycle, and to control the uses of cash in future. A comparison of the projected cash flow statement helps to management in appraising the inflows and outflows of cash according to the plan and taking the necessary remedial measures.

Useful to outsiders: Cash flow statement the short-term solvency of a business concern as well as its capacity to meet its short-term obligation.

LIMITATIONS OF THE CASH FLOW STATEMENT

Cash flow statement has its limitations too. For example, cash flow does not reveal the profit earned or lost during a particular period. Cash flow also does not indicate the overall financial health of the company. Though, the statement of cash flow gives a good indication of what the company is doing with its cash and from where cash is being generated, but these do not directly reflect true financial condition. The cash flow statements does not account for liabilities and assets, which are recorded in the balance sheet. Accounts receivable and accounts payable, each of which can be very large for a company, are also not reflected in the cash flow statement. In other words, it is a compressed version of the companys cashbook that includes a few other items, like the financing section, which tells the amount of money the company sent or collected from the repurchase or sale of stock, the amount of issuance or retirement of debt, and the amount the company paid out in dividends. In conclusion, interpreting the cash statement is not a very easy and simple task. Analyzing the cash flow together with the other statement gives a glimpse into the short-term financial position of company. CLASSIFIED CASH FLOW STATEMENT: The cash flow statements are classified into three classes.

Cash flow from operating activities.

Cash flow from investing activities.

Cash flow from financing activities.

Thought this format calls for more details. It provides useful information on how cash flows have been influenced by different kinds of decisions. Given the greater informational content of such a format, the discussion paper on cash flow statement prepared by the accounting principles board of the institute of chartered accountants of India recommends this format. Incidentally the listed companies must include a cash flow statement prepared according to the format suggested in the discussion paper in their annual reports.

Format of a cash flow statement Cash flow statement

For the year ending on.. Balance as on 1-1-2000

---------------------------------------------------------------------- Cash balance

Bank balance ..

Add: Sources of cash

Issue of shares .

Raising of long term loans ..

Sale of fixed assets .

Short-term operations:

Cash from operations .

Profit as per profit and loss account .Add/less: Adjusted for non-cash items Add: increase in current liabilities Decrease in current assets Less: increase in current assets ..

Decrease in current assets ..

Total cash available ..

Less: application of cash:

Redemption of redeemable preference shares .. ..

Redemption of long term loans ..

Purchase of fixed assets . Decrease in deferred payment liabilities ..

Cash outflow on account of operation ..

Tax paid ..

Dividend paid ..

Decrease in unsecured loans, deposits etc

Total applications

Closing balance

Cash balance ....

Bank balance

*it should tally with the bank balance as shown (1)-(2) DATA ANALYSIS

AND

IMPLEMENTATION

NET CASH FLOW

The total cash flow can be calculated by adding operating, investing and financing activities of the bank.

Total cash flow = operating + financing + investing activities

The total cash flow is being described in the table per the period of 5 years from 2011-2007 TOTAL NET CASH FLOW

Mar-11Mar-10Mar-09Mar-08Mar-07

Net cashflow-operating activity11,425.0728.8710,551.635,960.455,295.53

Net cash used in investing activity-13,985.33-5,122.98-9,741.96-4,702.52-3,655.58

Net cash used in fin. activity8,769.695,304.071,692.324,325.791,637.01

NET CASH FLOW-OPERATING ACTIVITY Interpretation: This can be calculated by taking total operating, investing and financial activities. This shows that in the year 2010 the total cash flow will be increased from Rs.1271529 to Rs.4090303. This shows that the bank had spent fewer amounts for expense.

TOTAL OPERATING ACTIVITIES:

The total operating activities can be calculated by taking the values of increased/decreased in assets and liabilities.

This can be shown in the table for the period of 5 years from 2007-2011.

TOTAL OPERATING ACTIVITY

Total Liabilities

Total Assets

Total Income

Mar-11

73,257.21

73,257.21

155838.03

Mar-10

109,577.85

109,577.84

137323.64

Mar-09

147,722.06

147,722.06

88008.04

TOTAL OPERATING ACTIVITY

Interpretation

There can be calculated by taking net profit minus increase/decrease assets and liabilities. This shows that in the years 2008 and 2010, negative values will occur. For this purpose, there is a mutual increase and decrease

in assets and liabilities.

Total investing activities:

This can be calculated by taking the difference between the cash inflow and outflow.

Investing activity = Cash Inflow Cash Outflow

Total Investing Activity

YEAR

ENDEDCASH IN FLOW CASH OUT FLOWCASH FROM INVESTING ACTIVITY

200711,425.07-13,985.338,769.69

200828.87-5,122.985,304.07

200910,551.63-9,741.961,692.32

20105,960.45-4,702.524,325.79

20115,295.53-3,655.581,637.01

TOTAL INVESTING ACTIVITIES

Interpretation:

This can be calculated by taking Cash inflow and Cash Outflow. This shows that the bank has spent fewer amounts for purchasing the assets, so there is a decrease in 2009-10 when compared to 2007-08.

Total Financing Activities

In this activities can be calculated by taking the financial activity.

This can be show in the table for the year 2006-2010.

Total financing activities

BORROWINGSNet financial income

2009171696876969

2010155199530407

2011562404169232

Interpretation:

This graph shows that the bank borrowing position. This shows that the bank had decreased to money from others. So the position is good in the bank.

Net profit:

The net profit can be calculated by taking total income and total expenses.

Net profit = Total income Total expenses

Total income = Interest expended + other expenses

NET PROFIT

TOTAL INCOME TOTAL EXPENSESNET PROFIT

2009155838.03151781.74056.33

2010137323.64109468.8518153.58

201188008.0471545.2510710.29

Interpretation:

This can be calculated by taking total income and total expended.

This shows that the bank can earn more profit in 2008 and 2010. This shows that the bank can spend more expenses in that years and the profit position will be decreased.

APPENDICES

ParticularsFor the year ended (31/3/2010)

A CASH FLOW FROM OPERATING ACTIVITIES

Interest Earned during the year3175171

Other income310780

Less:

Interest paid during the year on deposits, borrowings etc.,1607363

Operating Expenses including Provision & Contingencies973680

NET PROFIT

Add:

Depreciation on Fixed Assets20605

Depreciation adjusted on leased assets

Provisions & Contingencies

ICASH PROFIT GENERATED FROM OPERATIONS925513

(Prior to changes in operating Assets & Liabilities

IICASH FLOW FROM OPERATING ASSETS & LIABILITIES

Increase/(Decrease) in Liabilities

Deposits 4442850

Other Liabilities and Provisions1310379

(Increase)/Decrease in assets

Advances -5901723

Investments -741844

Other Assets-332390

Total of II-1222728

A.NET CASH FLOW FROM OPERATING ACTIVITIES(I+II)297215

B.CASH FLOW FROM INVESTING ACTIVITIES

Sale/Disposal of Fixed Assets1337

Purchase of Fixed Assets-49892

B.NET CASH FLOW FROM INVESTING ACTIVITIES-48555

C.CASH FLOW FROM FINANCING ACTIVITIES

Share Capital

Share premium

Other Reserves & Surplus

Borrowings 1617299

Amount paid off on redemption of sub-ordinate debt

Amount raised through fresh issue of Sub-ordinated Debt

Dividend paid: Previous year dividend, paid during the current year

C.NET CASH FLOW FROM FINANCING ACTIVITIES1617299

TOTAL CASH FLOW DURING THE YEAR (A+B+C)1271529

Increase/(Decrease) in Cash flow

ICash and Cash Equivalents at the Beginning of the year

C) Cash and Balances with the RBI1680083

D) Balances with Banks and Money at Call and Short Notice2522384

Total I4202467

IICASH AND CSH EQUIVALENTS AT THE END OF THE YEAR

C) Cash and Balances with RBI2407030

D) Balance with Banks and Money at Call Short Notice3066966

Total II5473996

TOTAL CASH FLOW DURING THE YEAR

Increase / (Decrease) in Cash flow (II I)1271529

BALANCE SHEET AS AT 31.03.2010 (Amount in 000s)

Particulars BALANCE SHEET (Amount in 000s)2008-092009-10

Capital and Liabilities

Share capital

Reserve and surplus

Deposits

Borrowing

Other liabilities and provision423426

4191468

23678077

5935922

1419557423426

5096376

28120927

7553221

2729936

Total 3564845043923886

Assets

Cash and Balance with RBIs

Balance with banks and money at call and short notices

Investments

Net advances

Fixed assets

Other assets1680083

2522384

6020381

23471434

52032

1902116240730

3066966

6762225

29373177

79982

2234506

Total 3564845043923886

Contingent liabilities103999155023

Profit and Loss Account

Particulars 2008-092009-10

Income

Interest Earned

Other income2808486

2596533175171

310780

Total34859513068139

Expenditure

Interest expended

Operating Expenses

Provision and Contingencies

Profit

1150059

985922

56044

8761141607363

950101

23578

904909

Total34859513068139

STATEMENT OF CASH FLOWParticularsFor the year ended (3/31/2010)

A CASH FLOW FROM OPERATING ACTIVITIES

Interest Earned during the year3876666

Other income322676

Less:

Interest paid during the year on deposits, borrowings etc.,2224977

Operating Expenses including Provision & Contingencies1214811

NET PROFIT759554

Add:

Depreciation on Fixed Assets29354

Depreciation adjusted on leased assets

Provisions & Contingencies-250000

ICASH PROFIT GENERATED FROM OPERATIONS538908

(Prior to changes in operating Assets & Liabilities

IICASH FLOW FROM OPERATING ASSETS & LIABILITIES

Increase/(Decrease) in Liabilities

Deposits 2256149

Other Liabilities and Provisions-1025393

(Increase)/Decrease in assets

Advances -1067158

Investments -630611

Other Assets740446

Total of II273433

A.NET CASH FLOW FROM OPERATING ACTIVITIES(I+II)812341

B.CASH FLOW FROM INVESTING ACTIVITIES

Sale/Disposal of Fixed Assets2261

Purchase of Fixed Assets-57375

B.NET CASH FLOW FROM INVESTING ACTIVITIES-55114

C.CASH FLOW FROM FINANCING ACTIVITIES

Share Capital

Share premium

Other Reserves & Surplus

Borrowings 365274

Amount paid off on redemption of sub-ordinate debt

Amount raised through fresh issue of Sub-ordinate Debt

Dividend paid: Previous year dividend, paid during the current year

C.NET CASH FLOW FROM FINANCING ACTIVITIES365274

TOTAL CASH FLOW DURING THE YEAR (A+B+C)1122501

Increase/(Decrease) in Cash flow

ICash and Cash Equivalents at the Beginning of the year

C) Cash and Balances with the RBI2407030

D) Balances with Banks and Money at Call and Short Notice3066966

Total I5473996

IICASH AND CSH EQUIVALENTS AT THE END OF THE YEAR

C) Cash and Balances with RBI1872135

D) Balance with Banks and Money at Call Short Notice4724362

Total II6596497

TOTAL CASH FLOW DURING THE YEAR

Increase / (Decrease) in Cash flow (II I)1122501

BALANCE SHEET AS AT 31.03.2010(Amount in 000s)

Particulars 2009-102010-11

Capital and Liabilities

Share capital

Reserve and surplus

Deposits

Borrowing

Other liabilities and provision423426

5096376

28120927

7553221

2729936423426

6672809

35173369

11808394

1725141

Total 4392388655803139

Assets

Cash and Balance with RBIs

Balance with banks and money at call and short notices

Investments

Net advances

Fixed assets

Other assets240730

3066966

6762225

29373177

79982

22345062511725

8175075

8926999

35052791

95390

1041159

Total 4392388655803139

Contingent liabilities155023116768

Profit and Loss Account

Particulars 2009-102010-11

Income

Interest Earned

Other income3175171

3107804463958

412900

Total30681394876858

Expenditure

Interest expended

Operating Expenses

Provision and Contingencies

Profit

1607363

950101

23578

9049092442690

1165992

201297

2148449

Total30681394876858

STATEMENT OF CASH FLOWCash flow

Mar ' 11Mar ' 10Mar ' 09Mar ' 08Mar ' 07

Profit before tax5,135.663,851.362,785.191,646.27996.24

Net cashflow-operating activity11,425.0728.8710,551.635,960.455,295.53

Net cash used in investing activity-13,985.33-5,122.98-9,741.96-4,702.52-3,655.58

Netcash used in fin. activity8,769.695,304.071,692.324,325.791,637.01

Net inc/dec in cash and equivlnt6,204.75189.542,512.665,585.943,276.46

Cash and equivalnt begin of year15,203.9115,016.9012,504.246,918.313,641.84

Cash and equivalnt end of year21,408.6615,206.4415,016.9012,504.246,918.31

FINDINGSFINDINGS The major findings and conclusions of the study are:

Of the bank Income is increased from Rs.34,85,951 to Rs.41,99,342 thousands. So, the maintenance is good in the bank.

Interest on deposits and borrowings and other expenses also increased from 2008-09 to 2009-10 Rs.25,81,043 to Rs.34,39,788 thousands. So, it pays more interest to the depositors.

Net profit of bank is increased in the study period that is Rs.20,605 to Rs.29,354 thousands

Investment is also decreased from year to year i.e., Rs.7,41,844 to Rs.6,30,611 thousands.

Advances also decreased from Rs.59,01,723 to Rs.10,67,158 thousands.

Total cash flow from operating activities is Rs.12,22,728 to Rs.2,73,433.

The bank can purchase the fixed asset and they are increased from Rs.49, 892 to Rs.57,375 crores and the sale of asset will be increased from Rs.1,337 to Rs.2,265 thousands so the investing activity will be increased from previous year to current year.

Financing activities will be maintained in a good way that is Rs.16, 17,299 to Rs.3,65,274 thousands.

The maintenance of cash and balance with RBI from opening and ending of the year will be good. So, the maintenance of cash from opening and closing is increased from Rs.42,02,467 to Rs.54,72,996 in 2008-09 and Rs.5,47,399 to Rs.65,95,497 in 2009-10.

SUGGESTIONS The following are the suggestions suggested for the smooth running of the bank:

The bank should try to reduce the expenses on purchasing the fixed assets because it decreases the profit.

The bank shall increase the investment position by issuing shares and debenture and the bonds of the MNCs.

The bank has to implement online technology and various services to their customer.

The bank has to provide more agriculture and small business loans to all sectors of the society as to increase the employment of the pupil.

The bank expanded their branches more and more in the district particularly and in India in general.

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