A

PROJECT REPORT

ON

“A STUDY OF CAPITAL STRUCTURE OF AXIS BANK”

SUBMITTED TO

RASHTRASANT TUKADOJI MAHARAJ NAGPUR

UNIVERSITY, NAGPUR

IN PARTIAL FULFILLMENT FOR THE AWARD OF

MASTERS OF BUSINESS ADMINISRTATION

SUBMITTED BY:

SHASHANK D. WATH

UNDER THE GUIDANCE OF:

PROF. RAHUL KAPALE

PRIYADARSHINI LOKMANYA TILAK INSTITUTE OF

MANAGEMENT STUDIES & RESEARCH, NAGPUR

(2017-2019)

1
 Priyadarshini Lokmanya Tilak Institute of Management
Studies & Research, Nagpur

CERTIFICATE

This is to certify that the project entitled “A STUDY OF CAPITAL

STRUCTURE OF AXIS BANK” has been submitted by SHASHANK

WATH, a student of fourth semester of M.B.A. in Financial

Management from Priyadarshini Lokmanya Tilak Institute of

Management Studies & Research, Nagpur. This is a bonafide of the

work done by the student in the session towards the fulfillment of the

requirement for the award of degree in Master of Business

Administration under the supervision & guidance of Prof. RAHUL

KAPALE the student has undergone the requisite hours of practical

prescribed by the University for the Project.

Prof. Rahul Kapale Dr. S. R.

(Project Guide) Varma
Principal

2
3
 Priyadarshini Lokmanya Tilak Institute of Management
Studies & Research, Nagpur

CERTIFICATE

This is to certify that the project report titled “A STUDY OF

CAPITAL
STRUCTURE OF AXIS BANK” that has been submitted by me in
the partial
fulfillment of M.B.A is bonafide record exclusively carried out by me.

Place: Nagpur

Date: Shashank Wath

 ACKNOWLEDGEMENT

The pleasure of achievement, the glory, the satisfaction, the rewards,

the appreciation and construction of my project report cannot be
through without a few who apart from their regular schedule spared
their valuable time for me. The acknowledgement is not just
apposition of words but also an account of the indictment. They have
been guiding lights and a source of inspiration towards the
completion of this report.

I am highly obliged to express my deep sense of gratitude and

grateful thanks to my faculty guide, Prof. Rahul Kapale for the
valuable guidance and support which led to the successful and timely
completion of my project.

I am grateful to Dr. S. R. Varma,Principal, PLTIMSR for his moral

support, encouragement and generous assistance.

Last but not the least, I am very much thankful to all those who
helped me directly or indirectly in the successful completion of the
project.

Date :

Place: - NagpurIV SEM, MBA

 DECLARATION

I, Shashank Wath of MBA studying at Priyadarshini Lokmanya

Tilak Institute of Management Studies & Research, Nagpur

declare that the project work entitled ““A STUDY OF CAPITAL

STRUCTURE OF AXIS BANK” was carried by me in the partial

fulfillment of MBA program under the guidance of Prof. Rahul

Kapale at Priyadarshini Lokmanya Tilak Institute of Management

Studies & Research, Nagpur.

This project was undertaken as a part of academic curriculum

according to the institute rules and norms and it does not have any

commercial interest and motive. It’s my original work and it is not

submitted to any other organization for any other Purpose.

Date:
Place: Nagpur Shashank Wath
 INDEX

CHAPTER
PARTICULARS PAGE NO.
NO.

CHAPTER 1 EXECUTIVE SUMMARY 7-8

CHAPTER 2 INTRODUCTION 9-14

CHAPTER 3 COMPANY PROFILE 15-19

CHAPTER 4 OBJECTIVES OF THE STUDY 20-21

CHAPTER 5 SCOPE OF THE STUDY 22-23

CHAPTER 6 LIMITATIONS 24-25

CHAPTER 7 HYPOTHESIS 26-27

CHAPTER 8 RESEARCH METHODOLOGY 28-29

CHAPTER 9 DATA ANALYSIS & INTERPRETATION 30-39

CHAPTER 10 CONCLUSION 40-41

CHAPTER 11 BIBLIOGRAPHY 42-43

CHAPTER 12 ANNEXURE 44-51

 CHAPTER 1
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY

A telecommunication regular need to know about capital structure and the value
of the firm in order to assess if the firm is adequately financed. Capital structure gives
the early warning indications on the firm’s financial distress. With a number of firms to
be regulated the firm’s capital structure becomes important for continued client service.

Axis Bank Ltd is the third largest of the private-sector banks in India offering a
comprehensive suite of financial products. The bank has its head office in Mumbai and
Registered office in Ahmadabad. It has 3304 branches, 14,003 ATMs, and nine
international offices. The bank employs over 55,000 people and had a market
capitalization of ₹1.28 trillion (US$20 billion) (as on March 31, 2017). It offers the
entire spectrum of financial services large and mid-size corporate , SME, and retail
businesses. To examine the Capital Structure policy and pattern of Axis Bank. To
understand the capital structure of Axis Bank. To identify the share capital and debt of
the company. To find out the earnings per share. There is no significant relationship
between Return on equity and value of firm during 2013 – 17. The Company have a
sound capital structure in terms of profitability.

Research methodology is a methodology for collecting all sorts of information and

data pertaining to the subject in question. The objectives are to examine all the issue
involved and conduct situational analysis. The methodology includes the overall
research designing, sampling procedure and file work, fieldwork done and the analysis
procedure. The methodology used in the study consistence of sample survey using both
primary and secondary data. The analysis of financial statements is a process of
evaluating the relationship between components parts of financial settlements to obtain
a better understanding of the firm’s position and performance .The first task of
financial analyst is to select the information relevant to the decision under
consideration from the total information contained in the financial statements. The
second step to arrange the information in a way to highlight significant relationships.
The final step is interpretation and drawing of inferences and conclusions. In brief,
financial analysis is the process of selection, relation and evaluation.
 CHAPTER 2

INTRODUCTION
 INTRODUCTION

CAPITAL STRUCTURE

A telecommunication regular need to know about capital structure and the value of the
firm in order to assess if the firm is adequately financed. Capital structure gives the
early warning indications on the firm’s financial distress. With a number of firms to be
regulated the firm’s capital structure becomes important for continued client service.

Important Learning Terms

• Capital structure
• Break Even Analysis
• Leverage/Gearing

MM Model
• Degree of financial Leverage
• Degree of Operation Leverage
• Degree of Combined Leverage

The firm’s session structure, the proportions of debt and equity used to finance the
firm’s assets, has implications for stockholder value. Additionally, capital structure
affects leverage, which, in turn, affects the expected return and risk facing owners and
creditorsof the firm. The session analyzes the co-dependent leverage/capital structure
phenomenon when the corporation has both fixed operating and fixed financial
expenses in its cost structure.

Capital Structure, Leverage, Leverage Effects, and the Return/Risk Relationship

Definitions
“Capital structure is the composition of long-term liabilities, specific short-term
liabilities like bank notes, common equity, and preferred equity which make up the
funds with which a business firm finances its operations and its growth. The capital
structure of a business firm is essentially the right side of its balance sheet.”
Example: The capital structure of XYZ, Inc. is 40% long-term debt (bonds), 10%
preferred stock, and 50% common stock.

“Capital structure is the mixture of sources of funds a firm uses (debt, preferred stock,
common stock). The amount of debt that a firm uses to finance its assets is called
leverage. A firm with a lot of debt in its capital structure was called to be highly
levered. A firm with no debt is said to be unlevered. Capital structure can be viewed as
the permanent financing the firm represented primarily by long-term debt, preferred
stock, and common equity but excluding all short term credit.”

Debts Vs Equity Financing

Financing a business through borrowing is cheaper than using equity. This is because-
Lenders require a lower rate of return than ordinary shareholders. Debt financial
securities present a lower risk than shares for the finance providers because they have
prior claims on annual income and liquidation. In addition security is often provided
and covenants imposed. A profitable business effectively pays less for debt capital than
equity for another reason: the debt interest can be offset against pre-tax profits before
the calculation of the corporation tax bill, thus reducing the tax paid. Issuing and
transaction costs associated with raising and servicing debt are generally less than for
ordinary shares. There are some valuable benefits from financing a firm with debt.

Forms tend to avoid very high gearing levels.

One reason is financial distress risk. This could be induced by the requirement to pay
interest regardless of the cash flow of the business. If the firm hits a rough patch in its
business activities it may have trouble paying its bondholders, bankers and other
creditors their entitlement. Relationship between Expected return (Earnings per share)
and the level of gearing can be represented below.
Features of capital structure

1. Return
The capital structure of the company should be advantageous subjects to other considerations;
it should generate maximum returns to the shareholders without adding additional cost to
them.

2. Risk
The use of excessive debt threatens the solvency of the company. Debt can be used the point
where there is no significance risk, it should be avoided.

3. Flexibility
The capital structure should be flexible. It should be possible for the company to adapt its
capital structure with a minimum cost and delay if warranted by a changed situation. It should
also possible for the company to provide funds whenever needed to finance its profitable
activities.

4. Capacity
The capital structure should be determined within the debt capacity of the company, and the
capacity should not be exceeded. The capacity depends on the ability to generate future cash
flows. They should have enough cash to pay the creditors fixed charges and principal sum.

5. Control
The capital structure should involve minimum risk of loss of control of the company. The
owners of closely held companies are particularly concerned about dilution of control.
For example, a company may give more importance to flexibility then control while another
company may be more concerned about solvency than any other requirement; furthermore the
relative importance of the requirement may change with shifting conditions.

Forms of capital structure

The capital structure of a new company may consist of any of the following forms.
A. Equity shares only.
B. Equity and Preference shares.
C. Equity shares and Debentures.
D. Equity shares, Preferences shares and Debentures.

Optimal Capital Structure

The optimum capital structure may be defined as “that capital structure or combination
of debt and equity that leads to the maximum value of the firm”. It maximizes the
value of the company and wealth of its owners and minimizes the company’s cost of
capital.

Consideration for Optimum Capital Structure

1. The company should make maximum possible use of leverage.
2. The firm must save considerable amount in paying tax by using advantages of
tax leverage.
3. The firm should avoid undue financial risk
4. The firm’s capital structure should be flexible

The term capital structure refers to the percentage of capital (money) at work in a
business by type. Broadly speaking, there are two forms of capital: equity capital and
debt capital. Each has its own benefits and drawbacks and a substantial part of wise
corporate stewardship and management is attempting to find the perfect capital
structure in terms of risk / reward payoff for shareholders.

Equity Capital:
This refers to money put up and owned by the shareholders (owners). Typically, equity
capital consists of two types:
1.) contributed capital, which is the money that was originally invested in the business
in exchange for shares of stock or ownership and
2.) Retained earnings, which represents profits from past years that have been kept by
the company and used to strengthen the balance sheet or fund growth, acquisitions, or
expansion.

Debt Capital:
The debt capital in a company's capital structure refers to borrowed money that is at
work in the business. The safest type is generally considered long-term bondsbecause
the company has years, if not decades, to come up with the principal, while paying
interest only in the

meantime. Other types of debt capital can include short-term commercial paper utilized
by giants such as Wal-Mart and General Electric that amount to billions of dollars in
24-hour loans from the capital markets to meet day-to-day working capital
requirements such as payroll and utility bills. The cost of debt capital in the capital
structure depends on the health of the company's balance sheet - a triple AAA rated
firm is going to be able to borrow at extremely low rates versus a speculative company
with tons of debt, which may have to pay 15% or more in exchange for debt capital.

Other Forms of Capital:

There are actually other forms of capital, such as vendor financing where a company
can sell goods before they have to pay the bill to the vendor that can drastically
increase return on equity but don't cost the company anything. This was one of the
secrets to Sam Walton's success at Wal-Mart. He was often able to sell Tide detergent
before having to pay the bill to Procter & Gamble, in effect, using PG's money to grow
his retailer. In the case of an insurance company, the policyholder "float" represents
money that doesn't belong to the firm but that it gets to use and earn an investment on
until it has to pay it out for accidents or medical bills, in the case of an auto insurer.
 CHAPTER 3

COMPANY PROFILE
COMPANY PROFILE

Axis Bank Ltd is the third largest of the private-sector banks in India offering a
comprehensive suite of financial products. The bank has its head office in Mumbai and
Registered office in Ahmedabad. It has 3304 branches, 14,003 ATMs, and nine
international offices. The bank employs over 55,000 people and had a market
capitalization of ₹1.28 trillion (US$20 billion) (as on March 31, 2017).It offers the
entire spectrum of financial services large and mid-size corporates, SME, and retail
businesses.

As of 30 Jun. 2016, 30.81% shares are owned by promoters & promoter group
(United India Insurance Company Limited, Oriental Insurance Company Limited,
National Insurance Company Limited, New India Assurance Company Ltd, GIC, LIC
& UTI).Remaining 69.19% shares are owned by Mutual Funds Institutions, FIIs,
Financial Institutions (banks), Insurance companies, corporate bodies & individual
investors among others.

History;-

UTI Bank opened its registered office in Ahmedabad and corporate office in
Mumbai in December 1993.The first branch was inaugurated on 2 April 1994
in Ahmedabad by Dr. Manmohan Singh, the Finance Minister of India. UTI Bank
began its operations in 1993, after the Government of India allowed new private banks
to be established. The Bank was promoted in 1993 jointly by the Administrator of the
Unit Trust of India (UTI-I),Life Insurance Corporation of India (LIC), General
Insurance Corporation, National Insurance Company, The New India Assurance
Company, The Oriental Insurance Corporation and United India Insurance Company.

In 2001 UTI Bank agreed to merge with and amalgamate Global Trust Bank, but
the Reserve Bank of India (RBI) withheld approval and nothing came of this. In 2004
the RBI put Global Trust into moratorium and supervised its merger into Oriental Bank
of Commerce In 2003 Axis Bank became the first Indian bank to launch the travel
currency card.

In 2005, Axis Bank got listed on London Stock Exchange.

UTI Bank opened its first overseas Singapore branch in 2006. That same year it
opened a representative office in Shanghai, China. UTI Bank opened a branch in the
Dubai International Financial Centre in 2007. That same year it began branch
operations in Hong Kong. In 2008 it opened a representative office in Dubai.

Axis Bank opened a branch in Colombo in October 2011, as a Licensed Commercial

Bank supervised by the Central Bank of Sri Lanka. Also in 2011, Axis Bank opened a
representative offices in Abu Dhabi. In 2011, Axis bank inaugurated Axis House, its
new corporate office in Worli, Mumbai.

In 2013, Axis Bank's subsidiary, Axis Bank UK commenced banking operations. Axis
Bank UK has a branch in London.

Deepika Padukone, a Mumbai Film Industry (a.k.a. Bollywood ) actress is the brand
ambassador of Axis Bank.

In 2015, Axis Bank opens its representative office in Dhaka.

The bank has over 50,000 employees (as of 31 March 2016). The bank incurred ₹26.7
billion (US$410 million) on employee benefits during the FY 2012–13.The average
age of an Axis Bank employee is 29 years. [20] The attrition rate in Axis Bank is approx.
9% per year.

SERVICES:-

Retail Banking

In the retail category, the bank offers services such as lending to individuals/small
businesses subject to the orientation, product and granularity criterion, along with
liability products, card services, Internet banking, automated teller machines (ATM)
services, depository, financial advisory services, and Non-resident Indian (NRI)
services. Axis bank is a participant in RBI's NEFT enabled participating banks list.

Corporate Banking

Credit:The Bank offers various loan and fee-based products and services to Large and
Mid-corporate customers and Small and Medium Enterprise (SME) businesses. These
products and services include cash credit facilities, demand and short-term loans,
project finance, export

credit, factoring, channel financing, structured products, discounting of bills,

documentary credits, guarantees, foreign exchange and derivative products. Liability
products including current accounts, certificates and deposits and time deposits are also
offered to large and mid-corporate segments.

Transaction Banking

Formed in April 2015, Tax provides integrated products and services to customers in
areas of current accounts, cash management services, capital market services, trade,
foreign exchange and derivatives, cross-border trade and correspondent banking
services and tax collections on behalf of the Government and various State
Governments in India.

Treasury:

The Treasury manages the funding position of the Bank and also manages and
maintains its regulatory reserve requirements. It invests in sovereign and corporate
debt instruments and engages in proprietary trading in equity and fixed income
securities, foreign exchange, currency futures and options. It also invests in
commercial papers, mutual funds and floating rate instruments as part of the
management of short-term surplus liquidity. In addition, it also offers a wide range of
treasury products and services to corporate customers.

Syndication:
The Bank also provides services of placement and syndication in the form of local
currency bonds, rupee and foreign term loans and external commercial borrowings.

Investment Banking and Trustee Services:

The Bank provides investment banking and trusteeship services through its owned
subsidiaries. Axis Capital Limited provides investment banking services relating to
equity capital markets, institutional stock broking besides M&A advisory. Axis Trustee
Services Limited is engaged in trusteeship activities, acting as debenture trustee and as
trustee to various securitization trusts.

International Banking

The Bank continues to offer corporate banking, trade finance, treasury and risk
management solutions through the branches at Singapore, Hong Kong, DIFC,
Shanghai and Colombo, and also retail liability products from its branches at Hong
Kong and Colombo.
 CHAPTER 4

OBJECTIVE OF STUDY
 OBJECTIVE OF STUDY

The Objective of the projects are :-

• To examine the Capital Structure policy and pattern of Axis Bank

• To understand the capital structure of Axis Bank

• To identify the share capital and debt of the company.

• To give suggestions for improvement of the Capital Structure composition of

Axis Bank.
 CHAPTER 5

SCOPE OF THE STUDY

SCOPE OF THE STUDY

The study is confined to the financial management of Axis Bank of various

component in statements. The study is analysis of all the available components of ratio
analysis and to make item wise analysis of the statements.
CHAPTER 6

LIMITATIONS
LIMITATIONS

1. This research study will be taken in a limited area only.

2. While analysis of data, some human errors could have been possible.

3. More focused on capital structure of the company.

4. The study does not include any comparison with product of other companies.

5. The study mainly depends on the secondary data taken from annual report and
internal records of the company.
6. The study is confined to a short period of five years. This would not picture the
exact position of the company.
CHAPTER 7
HYPOTHESIS
 HYPOTHESIS

The Current Study says That:-

H1:- The company should utilizing the funds more efficiently to maximize
shareholder return, equity fund & debt fund.

H0:- The company should not utilizing the funds more efficiently to maximize
shareholder return, equity fund & debt fund.
 CHAPTER 8

RESEARCH METHODOLOGY
RESEARCH METHODOLOGY

Research methodology is a methodology for collecting all sorts of information and data
pertaining to the subject in question. The objectives are to examine all the issue involved
and conduct situational analysis. The methodology includes the overall research
designing, sampling procedure and file work, fieldwork done and the analysis procedure.
The methodology used in the study consistence of sample survey using both primary and
secondary data.

Data Collection Methods

Collecting Secondary Data:

Study of secondary data wills an insight into the problem into hand. It also provides with
clues and helped in designing primary research. It provided us a more accurate picture
about the functioning of various service providers. Extensive use of secondary
information in the form of magazines, journals, newspaper clippings, such as Business
World, Business Today, Business India, Economic Times, etc. Internet websites.
 CHAPTER 9

DATA ANALYSIS AND

INTERPRETATION
COST OF EQUITY

Equity is the permanent capital for a firm. The company may raise equity capital both
internally and externally. It can rise internally by retained earnings and externally by
issuing new shares. When a company wants to raise funds by way of equity shares, their
expectations have to be evaluated and for that cost of equity is calculated.

Dividend per share

Cost of equity = ---------------------------------- * 100
Market price per share

Cost of equity
2013 0.34
YEAR 2014 0.64
2015 0.45
2016 0.47
2017 0.85

1
0.85
0.8 0.64
0.6 0.45
0.47
0.34

0.4

0.2

0
2013 2014 2015 2016 2017
Interpretation:-
Among all the schemes in the equity fund, Axis Bank in 2017 shown the highest
return. This is because many investors have preferred to invest & the investment is made has
increased.

COST OF DEBT
A company may raise debt in various ways. It may be in the form of debenture or loan
borrowed from financial or public institutions for a certain period of time at a specific rate
of interest. The debenture or bond may be issued at par, discount or premium. It forms the
basis for calculating cost of debt.
Interest
Cost of debt = --------------------* 100
Total debt

Cost of Debt
2013 43.32
YEAR 2014 44.41
2015 58.52
2016 45.04
2017 54.64

70

60
58.52
50 54.64

40 43.32 44.41 45.04

30

20

10

0
2013 2014 2015 2016 2017
Interpretation:-
Among all the schemes in the debt fund, Axis Bank in 2015 shown the highest
return. This is because many investors have preferred to invest & the investment is made has
increased.

COMPOSITE COST OF CAPITAL

By using composite cost of capital to determine the optimal debt-equity mix for the
company.
DEBT- EQUITY RATIO
. The relationship between borrowed funds and owner’s capital is a popular measure of
the long-term financial solvency of a firm. This relationship is shown by debt-equity ratio.
This ratio was calculated to measure the relative claims of outsiders and the owners
against the firm’s assets. It indicates the relationship between the external equities (or)
outsider’s funds and the internal equities (or) the shareholders funds
Total debt
Debt equity ratio = --------------------------
Total Equity

Debt equity
ratio
2013 0.30
YEAR 2014 0.32
2015 0.16
2016 0.24
2017 0.14

0.35

0.3
0.32
0.30
0.25
0.30
0.2

0.15
0.16
0.14
0.1

0.05

0
 2013 2014 2015 2016 2017

Interpretation:-
Among all the schemes in the debt & equity fund, Axis Bank in 2014 shown the
highest return. This is because many investors have preferred to invest & the investment is
made has increased.
CAPITAL GEARING RATIO
The term capital gearing is used to describe the relationship between equity share capital
including reserves and surplus to preference share capital and other fixed interest– bearing
loans. If preference share capital and other fixed interest bearing loans exceed the equity
share capital including reserves, the firm is said to be highly geared and viceversa.

Long term Liability

Capital gearing ratio = ---------------------------------------------------------
Capital Employed

Capital gearing
ratio
2013 30.08
YEAR 2014 39.54
2015 34.66
2016 48.46
2017 68.18

80

70
68.18
60

50
48.46
40
39.54
30 34.66
30.08
20

10

0
2013 2014 2015 2016 2017
Interpretation:-
Among all the schemes in the Capital Ratio, Axis Bank in 2017 shown the highest
return. This is because many investors have preferred to invest & the investment is made has
increased.

DIVIDEND COVERAGE RATIO

. The relationship between borrowed funds and owner’s capital is a popular measure of
the long-term financial solvency of a firm. This relationship is shown by Dividend
Coverage ratio.

Profit after tax- Dividend paid on Irredeemable Preference Shares

Dividend Coverage ratio = --------------------------
Dividend paid to Ordinary Shareholders

Dividend
Coverage ratio

2013 0.26
YEAR 2014 0.28
2015 0.15
2016 0.24
2017 0.14

0.35

0.3
0.28
0.26
0.25
0.24
0.2

0.15
0.15
0.14
0.1

0.05

0
2013 2014 2015 2016 2017
Interpretation:-
Among all the schemes in the Dividend Coverage ratio, Axis Bank in 2014
shown the highest return. This is because many investors have preferred to invest & the
investment is made has increased.

INTEREST COVERAGE RATIO

. The relationship between borrowed funds and owner’s capital is a popular measure of
the long-term financial solvency of a firm. This relationship is shown by Interest coverage
ratio. This ratio was calculated to measure the relative claims of outsiders and the owners
against the firm’s assets. It indicates the relationship between the EBIT and the interest
expenses
Earning before interest & Taxes
Interest coverage ratio = --------------------------
Interest Expenses

Interest
coverage ratio

2013 0.40
YEAR 2014 0.42
2015 0.16
2016 0.24
2017 0.14

0.35

0.3
0.42
0.40
0.25
0.24
0.2

0.15
0.16
0.14
0.1

0.05

2013 2014 2015 2016 2017

Interpretation:-
Among all the schemes in the Interest coverage ratio, Axis Bank in 2014 shown
the highest return. This is because many investors have preferred to invest & the investment
is made has increased.

DEBT TO ASSET RATIO

. The relationship between borrowed funds and owner’s capital is a popular measure of
the long-term financial solvency of a firm. This relationship is shown by debt-equity ratio.
This ratio was calculated to measure the relative claims of outsiders and the owners
against the firm’s assets. It indicates the relationship between the debt & asset.
Total debt
Debt to asset ratio = --------------------------
Total Asset
Debt to asset
ratio
2013 0.50
YEAR 2014 0.52
2015 0.26
2016 0.24
2017 0.14

0.35

0.3
0.22
0.50
0.25
0.24
0.2

0.15
0.26
0.14
0.1

0.05

0
2013 2014 2015 2016 2017
Interpretation:-
Among all the schemes in the Debt to asset ratio, Axis Bank in 2014 shown the
highest return. This is because many investors have preferred to invest & the investment is
made has increased.

PROPRIETARY RATIO
Proprietary ratio is a variant to the debt – equity ratio. This ratio establishes the
relationship between shareholder’s funds to total assets of the firm. It is an important ratio
for long-term solvency of a firm.

Share holder’s fund

Proprietary ratio = -------------------------
Total assets

Proprietary ratio
2013 21.88
YEAR 2014 26.18
2015 26.05
2016 63.42
2017 38.61

70

60 63.42

50

40
38.61

30
26.18 26.05
20 22.80

10

0
 2013 2014 2015 2016 2017

Interpretation:-
Among all the schemes in the proprietary ratio, Axis Bank in 2016 shown the highest return. This is
because many investors have preferred to invest & the investment is made has increased.

RATIO OF RESERVES TO EQUITY CAPITAL

This ratio establishes a relationship between reserves and equity capital. The ratio
indicates that how much profit the firm for the future growth generally retains.

Reserves
Ratio of reserves to equity capital = -----------------------------
Equity share capital

Reserves to
equity capital
2013 4.60
YEAR 2014 3.85
2015 6.24
2016 3.78
2017 3.18

6
6.24

5
3.00
4
3.85 3.78

3
3.18

1
0
 2013 2014 2015 2016 2017

Interpretation:-
Among all the schemes in the ratio of reserves to equity capital, Axis Bank in 2015 shown the
highest return. This is because many investors have preferred to invest & the investment is made
has increased.

CHAPTER 10
CONCLUSION
 CONCLUSION

1. The company should utilize the funds more efficiently to maximize shareholder
return.
2. Increasingly firms are moving from secured debt to unsecured debt in order to free
their assets.

3. There has been continuous pressure in pricing side of the product due to heavy
imports coupled with lesser demand which has resulted in piling up of inventories.
 CHAPTER 11
BIBLIOGRAPHY
 BIBLIOGRAPHY

BOOKS

Capital Structure and Corporate Financing Decisions: Theory, Evidence, and Practice
(Robert W. Kolb Series)

WEBSITES:

• http://www.indiainfoline.com
• http://www.capital-structure.com
• http:// beginnersinvest.about.com
CHAPTER 12
ANNEXURE
BALANCE SHEETS

Balance Sheet of Axis

------------------- in Rs. Cr. -------------------
Bank

Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

12 moths 12 moths 12 moths 12 moths 12 moths

EQUITIES AND LIABILITIES

SHAREHOLDER'S
FUNDS

Equity Share Capital 479.01 476.57 474.10 469.84 467.95

Total Share Capital 479.01 476.57 474.10 469.84 467.95

Reserves and Surplus 55,283.53 52,688.34 44,202.41 37,750.64 32,639.91

Total Reserves and Surplus 55,283.53 52,688.34 44,202.41 37,750.64 32,639.91

Total ShareHolders
Funds 55,762.54 53,164.91 44,676.52 38,220.49 33,107.86

322,441.9
Deposits 414,378.79 357,967.56 4 280,944.56 252,613.59
Borrowings 105,030.87 99,226.38 79,758.27 50,290.94 43,951.10

Other Liabilities and

26,295.47 15,108.77 15,055.67 13,788.89 10,888.11
Provisions

Total Capital and 461,932.3 383,244.8 340,560.6

601,467.67 525,467.62 9 9 6
Liabilities

ASSETS

Cash and Balances with

30,857.94 22,361.15 19,818.84 17,041.32 14,792.09
Reserve Bank of India
Balances with Banks
Money
19,398.24 10,964.29 16,280.19 11,197.38 5,642.87
at Call and Short Notice
132,342.8
Investments 128,793.37 122,006.20 3 113,548.43 113,737.54
281,083.0
Advances 373,069.35 338,773.72 3 230,066.76 196,965.96

Fixed Assets 3,746.89 3,523.17 2,514.31 2,410.21 2,355.64

Other Assets 45,601.87 27,839.08 9,893.19 8,980.79 7,066.56

461,932.3 383,244.8 340,560.6

Total Assets 601,467.67 525,467.62 9 9 6

OTHER ADDITIONAL
INFORMATION

Number of Branches 3,304.00 2,904.00 2,589.00 2,402.00 1,947.00

Number of Employees 56,617.00 50,135.00 42,230.00 42,420.00 37,901.00

Capital Adequacy Ratios

15.00 15.00 15.00 16.00 17.00
(%)
KEY PERFORMANCE
INDICATORS
Tier 1 (%) 12.00 13.00 12.00 13.00 12.00

Tier 2 (%) 3.00 3.00 3.00 3.00 5.00

ASSETS QUALITY

Gross NPA 21,280.48 6,087.51 4,110.19 3,146.41 2,393.42

Gross NPA (%) 5.00 2.00 1.00 1.00 1.00

Net NPA 8,626.60 2,522.14 1,316.71 1,024.62 704.13

Net NPA (%) 2.00 1.00 0.00 0.00 0.00

Net NPA To Advances (%) 2.00 1.00 0.00 0.00 0.00

CONTINGENT LIABILITIES,
COMMITMENTS

Bills for Collection 81,055.36 80,764.78 80,592.46 36,601.58 27,894.88

548,115.9
Contingent Liabilities 669,625.84 587,961.04 559,591.13 574,844.79 0

Profit & Loss account of Axis ------------------- in Rs. Cr. -------------------

Bank
 Mar 17 Mar 16 Mar 15 Mar 14 Mar 13

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

Interest / 33,124.96 30,040.56 25,867.82 21,950.43

Discount on 19,166.24
Advances /
Bills
9,622.82 9,377.59 9,117.09
Income from 8,343.13 7,746.98
Investments
503.84 295.25 231.26 166.78
Interest on Balance 111.26
with RBI and Other
Inter-Bank funds 1,290.54 1,274.64 262.43 180.81
158.10
Others
 44,542.1 40,988.0 35,478.6 30,641.1
Total Interest Earned 6 4 0 6 27,182.57

Other Income 11,691.31 9,371.46 8,365.05 7,405.22 6,551.11

56,233.4 50,359.5 43,843.6 38,046.3

Total Income 7 0 4 8 33,733.68

EXPENDITURE

Interest Expended 26,449.04 24,155.07 21,254.46 18,689.52 17,516.31

Payments to and Provisions

3,891.86 3,376.01 3,114.97 2,601.35 2,376.98
for Employees

Depreciation 508.80 443.91 405.67 363.93 351.73

Operating Expenses
(excludes
Employee Cost & 7,799.24 6,280.90 5,683.10 4,935.49 4,185.52
Depreciation)

12,199.9 10,100.8
Total Operating Expenses 1 2 9,203.75 7,900.77 6,914.24

Provision Towards Income

4,988.90 4,241.96 3,852.37 3,489.74 2,720.58
Tax

-3,200.62 -71.87 -153.36 -358.78 -347.32

Provision Towards Deferred

Tax

Provision Towards Other

0.00 -0.05 0.93 0.42 0.38
Taxes

Other Provisions and

12,116.96 3,709.91 2,327.68 2,107.04 1,750.06
Contingencies

Total Provisions and 13,905.2

4 7,879.95 6,027.62 5,238.42 4,123.70
Contingencies
 52,554.1 42,135.8 36,485.8 31,828.7
Total Expenditure 9 4 2 1 28,554.25

Net Profit / Loss for The

3,679.28 8,223.66 7,357.82 6,217.67 5,179.43
Year

Net Profit / Loss After EI

&
3,679.28 8,223.66 7,357.82 6,217.67 5,179.43
Prior Year Items
Profit / Loss Brought
Forward 23,766.46 17,623.49 13,501.45 10,029.26 7,329.45

Total Profit / Loss

available 27,445.7 25,847.1 20,859.2 16,246.9
4 5 7 3 12,508.88
for Appropriations

APPROPRIATIONS

Transfer To / From Statutory

919.82 2,055.92 1,839.46 1,554.42 1,294.86
Reserve

Transfer To / From Reserve

1.75 1.74 -1.27 1.05 2.61
Fund

Transfer To / From Capital

755.57 62.04 63.14 38.87 141.46
Reserve
Transfer To / From
Investment
-87.17 -41.81 25.49 50.03 53.46
Reserve

Equity Share Dividend 1,197.52 1,191.42 1,087.54 939.69 843.86

Tax On Dividend 209.91 213.19 221.42 161.44 143.37

Balance Carried Over To

24,448.33 22,364.65 17,623.49 13,501.45 10,029.26
Balance Sheet
 27,445.7 25,847.1 20,859.2 16,246.9
Total Appropriations 4 5 7 3 12,508.88

OTHER INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 15.40 34.59 31.00 132.56 119.67

Diluted EPS (Rs.) 15.34 34.40 31.00 132.23 118.85

DIVIDEND
PERCENTAGE

Equity Dividend Rate (%) 250.00 250.00 230.00 200.00 180.00