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CRITICAL ANALYSIS OF PROFIT & LOSS A/c. 4.1 Introduction 4.2 Groupwise analyses 4.2.1 The Cosmos Co-operative Bank Ltd. 4.2.2 Janata Sahakari Bank Ltd. 4.2.3 The Shree Suvarna Sahakari Bank Ltd. 4.2.4 Bhagini Nivedita Sahakari Bank Ltd. 4.2.5 Vidya Sahakari Bank Ltd. 4.^.6 Bharati Sahakari Bank Ltd. 4.2.7 Shivajirao Bhosale Sahakari Bank Ltd. 4.2.8 Sampada Sahakari Bank Ltd. 4.2.9 Jijamata Mahila Sahakari Bank Ltd. 4.2.10 Shree Laxmi Co-operative Bank Ltd. 4.2.11 Defence Accounts Co-operative Bank Ltd. 4.2.12 Pune Municipal Corporation Servants Co-operative Urban Bank Ltd. 4.2.13 Lokseva Sahakari Bank Ltd. CHAPTER -IV CRITICAL ANALYSIS OF PROFIT & LOSS A/c. 4.1 INTRODUCTION: The end on working results of banks are reflected in Profit and Loss Account wherein are summarized various income and expenditure heads. Profitability of bank is primary concern to all to keep banking activity ongoing as profitable venture. The banks making more profits and distribution of it by way of dividend are preferred by investors. However restrictions on dividend distribution as per act as an impediment on co-operative banks, a profit makes more funds available to those banks for strengthening/widening its asset base. More profit leads attracting more business to bank. Recovery of loans and iriterest on them also has vital impact on banks profitability. Therefore, Non-performing Assets {NPA} management also becomes an important part of prudent banking and banks are encouraging borrowers for one time settlement of these NPA’s. Banks cannot afford to keep its money blocked for longer time in such assets which have adverse bearing on banks* profitability. Profit and loss account is an important financial statement as it represents snapshot of the organizational activities at the end of a year. In other words, profit and loss account reveal how the bank has prospered under the leadership of the then existing management. In short it is a statement which is the medium of evaluation of management performance. It is important for all those 7 0 who are concerned with the management of the bank. The profit and loss account shows net results of the bank’s operation during an accounting period. The basic purpose of preparation of profit and loss account is to ascertain the net profit earned or net loss incurred by the bank as a result of bank’s operations during an accounting period. It IS prepared and presented with a view to recording, reporting and reviewing the progress made or the results achieved by the bank. It reflects or focuses the combination of facts and figures, which are based on the recording the business transaction, accounting principles and conventions, competence, integrating, honesty and sincerity of persons involved in the preparation and presentation of such statements. One can know the financial position and soundness of the bank business from these statements. Profit and loss account takes into account those revenue and expenditure items which are related to management of the bank. These expenses relate to conduct of the bank. The items which are taken into account in a Profit and Loss A/c. and which would increase or decrease the quantum of Net Profit or Net Loss, which are as under: 7 I DEBIT SIDE 1. Interest paid on Deposits & Borrowings 2. Salary and Allowances and other Welfare Expenses for the staff. 3. Director’s and Local Committee member’s Fees and Allowance 4. Rent, Taxes, Insurance and Lighting 5. Legal Charges 6. Postage, Telegram and Telephone Charges 7. Audit Fees 8. Depreciation 8s Repairs 9. Stationary, Printing 85 Advertisement 10. Loss from Sale or dealing with Non-banking Assets 11. Other Expenditure 12. Provisions 13. Net Profit transferred to Balance Sheet CREDIT SIDE L Interest 8& Discount on Loans & Investments. 2. Commission, Exchange and Brokerage 3. Subsidies and donations 4. Income from non banking Assets 5. Other Assets 6. Net Loss CLOSURE: The profit and loss account is closed by transferring available balances to balance- sheet after appropriations. 4.2 GROUPWISE ANALYSIS: In this chapter the researcher has tried to analyze the profit and loss account i.e. income statement of the selected urban co­ operative banks. There are 63 urban co-operative banks registered in Pune district during the study period. Out of these 63 banks for analysis, banks are grouped in following categories: A. Urban Co-operative Banks having deposits more than Rs. 1,000 crores. There are three urban co-operative banks in this group. Out of which following two banks are selected for detail analysis. 1. The Cosmos Co-operative Bank Ltd. 2. Janata Sahakari Bank Ltd. B. Urban Co-operative Banks having deposits less than Rs. 1000/- crores but more than Rs. 100 crores. There are fourteen urban co-operative banks in this group. Out of which following four banks are selected. 1. The Shree Suvarna Sahakari Bank Ltd. 2. Bhagini Nivedita Sahakari Bank Ltd. 3- Vidya Sahakari Bank LTd. 4. Bharati Sahakari Bank LTd. 7'4 C. Urban Co-operative Banks having deposits less than Rs. 100 crores. There are forty six urban co-operative banks in this group. Out of v^^hich following seven Banks are selected, 1. Shivajirao Bhosale Sahakari Bank Ltd. 2. Sampada Sahakari Bank Ltd. 3. Jitamata Mahila Sahakari Bank Ltd. 4. Shree Laxmi Co-operative Bank Ltd. 5. Defence Accounts Co-operative Bank Ltd. 6. Pune Municipal Corporation Servants Co-operative Urban Bank Ltd. 7. Lokseva Sahakari Bank Ltd. For the analysis following tools and techniques are used. 1. Trend analysis 2. Inter bank comparison 3. Ratio Analysis 4. Common size statement Bank Profit and Loss A/c. is analyzed with the help of following ratios. i) Net Profit to Total Income ii) Operating Profit to Working Fund iii) Operating Expenses to Total Income iv) Provisions to Total Income While analyzing the Profit and Loss A/c. in this chapter financial years are mentioned as per closing date i.e. for 2000-2001 = 2001, for 2001-2002=2002, for 2002-2003=2003. 4.2.1 THE COSMOS CO-OPERATIVE BANK LTD., PUNE Bank was established on January 1906. Cosmos co­ operative bank is the oldest co-operative bank in Pune district and which has got Multi-State scheduled bank status. Bank has completed 97 years and reaching towards its century soon. The Cosmos co-operative bank Ltd. is the second largest co-operative bank in Pune in the year 2001 having deposits of Rs. 171255.37 lakhs. The performance of the bank shows following picture in the last three years. TABLE - 3 BANK PERFORMANCE - COSMOS CO-OP. BANK Sr. Particular 2001 2002 2003 No. 1 Members 42685 32305 35910 2 Branches+Ext. Counter 35+6 38+4 41+5 3 Total Employees 1196 1244 1237 4 Audit Class A A ■k_ 5 Employee Productivity 228 259 279.40 (*Not applicable being Multi-State scheduled bank) In the year 2002 bank stood first in Pune district so far deposits are concerned. The Total Deposits in 2002 was raised up to Rs. 209193.44 lakhs and in the year 2003 bank maintains its first number in this context because deposits increased in the year up to Rs. 226283 lakhs. The bank has maintained its audit class 'A' continuously. The bank has shown progress in branches as well as in deposits and employee’s productivity without increasing a number of employees. TABLE - 4 Analytical table of Profit & Loss A/c. Item 2001 2002 2003 A. Incom e i) Interest 86 Discount 21777 27701 32369 ii) Com m ission & Exchange 605 570 650 iii) Other Income 522 154 215 Total Incom e (i + ii + iii) 22904 28425 33234 B. Expenditure i) Interest Expended 15921 18030 19660 ii) Salary & Allowance 1936 2613 2579 iii) Other Expenses 1320 1554 2054 iv) Provisions & Contingencies 1260 3389 5935 Total Exp. (i+ii+iii+iv) 20437 25586 30228 Net Profit 2467 2823 3006 Operating Profit 3727 6212 8970 Operating Expenses 19177 22197 24293 4.2.1.A Total Income TOTAL INCOME From the above statement and graph, it shows that the total income of the Cosmos co-operative bank is increased every year. Income graph shows that the total income in the year 2002 is increased by 24.10% and in the year 1 2 3 2003 it is increased by 45.10% S eriesi 22904 28425 33234 compare to the year 2001 and total mcome in the year 2003 is increased by 16.92% compare to the year 2002, The total income of the cosmos bank is increasing every year but bank couldn’t maintain the percentage of increase in the year 2003. But the decrease is marginal and by and large the bank shows progressive trend in its income. INCOME DIVISION 2001 In the year 2001 graph shows that out of Total Income 95% income is income from interest and discount. 3% income from 95% commission and exchange and 2% is □ i) Interest & Discount other income. That means only 5% ■ ii) Commission & Exchange □ ill) other Income income is non-interest income. In the year 2002 the income from interest and discount is 97% and income from commission and exchange is 2% and 1% is other income and position remains the same in the year 2003. INCOME DIVISION 2003 ^2% / It is observed from above comparison that share of income from interest and 97% discount is more in the year 2002 and 2003 than 2001. There is no much □ 1) Luerest &Discouiu 1 B II) Commission AExchanjiC variation in other heads of income. j □ ui) Olher Income 4.2.l.B Total Expenses TOTAL EXPENSES The above statement and graph shows that the total expenses of the Cosmos co-operative bank is increased every year.

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