Research Proposal

On
EVA-Analysis of
Public & Private Sector Banks
(SBI, BOB, PNB) & (ICICI, HDFC, IDBI)

Submitted By:
Maradiya Paresh Liladhar
Jadeja Pranav Harishchandra
Enrollment No.:
097840592062 (Paresh)
097840592029 (Pranav)
Academic Year: 2009-11
(For the Partial Fulfillment of Master of Business
Administration)
Name of College:
T. N. Rao College of Management Studies, Rajkot
Guided By:
Lect.:- Vidhi Joshi
Submitted To:
Gujarat Technological University, Ahemdabad
 Introduction
• This research studies Indian bank’s profile to demonstrate a direct correlation between
the investment in stakeholder relationships and corporate performance. Many Indian
banking seems to have destroyed shareholder’s wealth over a period of time and only a
few have positively contributed to their wealth. With the help of EVA (Economic Value
Added) which tell what the institution is doing with investor’s hard earned money, the
study examines an appropriate way of evaluating bank’s performance and also finds out
which Indian banks have been able to create (or destroy) shareholders wealth since 2007-
08 to 2009-10.
• EVA is an estimate of true economic profit or the amount by which earnings exceed or
fall short of the required minimum rate of return that shareholder and lenders could get
by investing in other securities of comparable risk.

Objective of the study

• To study the shareholders value (it term of economic value added) of selected banks
during the last three years i.e. since 2007-08 to 2009-10.
• To learn EVA and application to increase the shareholder’s wealth.
• To measure bank’s historical success in creating values.
• To study the determining factor which affect the future performance of bank’s stock?

Research limitation

• EVA does not control for size differences across divisions

• EVA is based on financial accounting methods that can be manipulated by managers
• EVA may focus on immediate results which diminishes innovation
• EVA provides information that is obvious but offers no solutions in much the same way
as historical financial statement do

Short Literature Survey

1) International Journal of Economics and Finance -Vol. 2, No.2; May 2010
EVA and stock returns- This is the most widely covered aspect in the number of
studies conducted on the concept of EVA. This includes literature on relationship of
EVA and firm performance, evidences from stock returns, comparison of EVA with
other accounting measures, portfolio selection tool, testing information content of EVA,
error–rate, earning forecasts and residual income model etc.
2) Athanassakos, G. (2007) Management Decision, 45(9), 1397-1411.

Managerial behavior and performance management- It includes literature on wealth

creation, managerial compensation, agency theory & EVA, performance &
 compensation, performance evaluation profit sharing and gain sharing plans & EVA
aspects.

Research Design and Methodology

The hypothesis for the ANOVA-TEST for the significance of the difference in means is
stated as follows:
1) Sample size : - 6 banks
2) Types of Data Source :- Secondary
3) Types of sample : - Independent
4) Research type : - Analytical research
5) Hypothesis :- The hypothesis for the ANOVA-TEST for the significance of the
Difference in means is stated as follows:
• Ho: There is no significant difference between EVA of three public and three private
sector banks in the study years.
• HA : There is significant difference between EVA of three public and three private sector
banks in the study years.

Time Budget

• PARTICULAR DAYS

1) Literature review 4

2) Research Design 4

3) Tools preparation or construction 5

4) Data collection 5

5) Data presentation and analysis 15

6) Report writing 12

Total 45
Tentative Chapter Plan

• Initial pages(Declaration, Preface, Certificate)

• Executive summary

• Literature review

Ch-1 Introduction of Economic Value Added

Ch-2 Overview of Banks

Ch-3 Research Design

Ch-4 Research Methodology / focus / limitation / scope

Ch-5 Data analysis & Interpretation

Ch-6 Conclusion and Recommendation

• Bibliography

• Appendices

Beneficiaries

• To Shareholder- Increase value of share and wealth of shareholders

• To Nation- Increase economic power and performance and make growth

• To Bank- get more motivation for doing well performance

Short write up on the researcher

1) PARESH MARADIYA

Profitability of banks is not only enough for saying good performance of bank. By the EVA we
can determine perform well because in EVA measure internal and external financial
performance measure, its conceptual under derives from well-established microeconomic
literature regarding the link between firm earnings and wealth creation.
 2) PRANAV JADEJA

EVA is a tool for measure real performance of any business. Profit of the business is just
internal report but EVA is measure internal and external performance of business. By it can
make prove that what business add in economic growth of nation, business and society.

Bibliography/Appendices

• Books & Magazine

1) Berry J. (2003). Economic Value Added. Computerworld.

2) Economic times news paper

3) ICFAI journal

• Website

www.rbi.org.in

www.statebankofindia.com

http:// www.hdfcbank.com /financial report/

www.pnbindia.com

http://www.icicibank.com/aboutus/annual.html

www.idbi.com

www.bankofbaroda.com

Appendices

Last Three year (2008, 2009, 2010) financial annual reports of SBI, BOB,
PNB, HDFC, ICICI, IDBI