CHAPTER 1 Mergers and Acquisitions

1.1 INTRODUCTION TO MERGERS AND ACQUISITIONS

Business firms constantly strive for the growth in profit; which can be achieved either by the process of introducing/developing new products or by expanding/enlarging the existing products, this process is referred to as internal growth process. Whereas if a company grows by acquisitions, amalgamations of the existing takeovers, absorption, consolidation and so on it is viewed as external growth process. Even though legal procedures involved are different, the terms are used interchangeably in view of economic consideration.

MERGERS
When two or more companies combine and the resulting firm maintain the identity of one of the firms, the emerged situation is called a merger. One or more companies

may merge with an existing company or they may merge to form a new company. Generally the assets and liablitites of the smaller firms are merged into those of larger firms. Merger may take two forms1. 2. Merger through absorption Merger through consolidation.

Absorption Absorption is a combination of two or more companies into an existing company. All companies except one loose their identity in a merger through absorption.

Consolidation Combination of two or more companies into a new company is called a Consolidation merger. All companies are legally dissolved and a new entity is generated in this form of merger. The acquired company transfers its assets, liabilities and shares of the acquiring company for cash or exchange of assets.

ACQUISITION
The act of acquiring effective control by one company over the assets or management of another company without any combination of companies is called as an acquisition. In merger the acquiring company takes over the ownership of other companies and combines their operations with its own operations. Takeover A takeover may also be defined as obtaining control over management of a company by another company.

1.2

DISTINCTION BETWEEN MERGERS AND ACQUISITIONS

These terms are often uttered and used as though they were synonymous, but in fact they mean slightly different things. When a company takes over another and clearly establishes itself as the new owner, the purchase is called an acquisition. Legally the target company ceases to exist and the buyer companys stock continues to be traded.

A merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remaining separately owned and operated, which is also referred to as a "merger of equals." Both companies' stocks are surrendered and new company stock is issued in its place. For example, both Daimler -Benz and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler, was cre ated.

In reality, usually one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it's technically an acquisition. By describing a deal as a merger the deal makers and top managers try to make the takeover more acceptable rather than appearing as being sold. It could also genuinely be a merger when both CEOs agree that their companies will hugely benefit by such a coalition. But when the deal is hostile that is, when the target company does not want to be purchased it is always regarded as an acquisition. A merger or an acquisition really depends on whether the deal is friendly or hostile and how it is announced. In other words, the perspective in which the purchase is communicated and received by the target companys board of directors, employees and shareholders reflects the difference in merger and acquisition. Both processes have got their strengths and weaknesses. Internal expansion is generally associated with developing new product, whereas external expansion provides flexibility in terms of choosing equipments, mode of technology and location. Usually merger generates financial problem as substantial/full payment is made normally in the form of shares of the purchasing company. Whereas, it also assist the pace of growth as the acquired firm already has the conventional facility or products, which save the resources otherwise required in case of internal expansion.

However, merger evaluation is more difficult compare to other financing decisions, the two main reasons are:

1.

All the benefits from merger are not easily quantifiable and so also all cost. For instance benefit of lesser competition and economy of scale are not easily measurable attributes.

2.

Buying a company is more complicated than buying a new machine in that firm. It should address itself to many tax, accounting and legal issues.

1.3

TYPES OF MERGERS

Mergers are of many types. Mergers may be differentiated on the basis of activities, which are added in the process of the existing product or service lines. Mergers can be a distinguished into the following four types:-

1. Horizontal Merger 2. Vertical Merger 3. Conglomerate Merger 4. Concentric Merger

Horizontal merger Horizontal merger is an association of two or more corporate firms dealing in same lines of business activity. Horizontal merger is a co centric merger, which involves combination of two or more business units related to technology, production process, marketing research and development and management.

Vertical Merger Vertical merger is the joining of two or more firms in different stages of production or distribution that are usually separate. The vertical Mergers chief gains are identified as the lower buying cost of material. Minimization of distribution costs,

assured supplies and market increasing or creating barriers to entry for potential competition or placing them at a cost disadvantage.

Conglomerate Merger Conglomerate merger is the combination of two or more unrelated business units in respect of technology, production process or market and management. In other words, firms engaged in the different or unrelated activities are combined together. Diversification of risk constitutes the rational for such merger moves.

Concentric Merger Concentric mergers are based on specific management functions. The activities of the segments brought together are so related that there is carry over on specific management functions; such as manufacturing and personnel. marketing research, Marketing, financing,

1.4

BENEFITS OF MERGER

ECONOMIES OF SCALE The prime motive for horizontal and vertical mergers is the advantage of operating cost in terms of economies of scale which results in lower average cost of production and increased sales due to the higher level of operation. A companys overhead costs could be drastically reduced by sharing central services such as accounting & finance, office, executives and top level management, legal and sales promotion, and advertisement, etc.

According to Koutsiyiannis this economy can be divided into two groups, namely real and pecuniary.

Real economies arise from a reduction in the factor inputs per unit of output, and they are: 1. The production activity of the firm

2. The research & development/ technologies activity 3. Synergy effect 4. Marketing & distribution activity 5. Transport storage & inventory 6. Managerial Economies

Whereas pecuniary economies arise from paying lower price for factor input due to bulk transaction in operational term. Cheaper finance is the most vital ingredient of pecuniary economies. A post merger Company being large is likely to raise finance at cheaper rates than that at which either of pre-merger unites could have acquired such fund. The reason is simple, the larger the size of the firm, the more secure is the investors fund; this results in lower risk of default / financial risk besides the flotation cost per unit decreases with the increase in the size of share and debentures. Because of mergers optimum debt capacity is obtained in both firms which may have hardly balanced previously. Later both the firms will be valued firms.

SYNERGY Whenever the value of combination is greater than the sum of the values of its parts then such nature of combination is called as synergism. Whereas, identifying synergy on evaluation may be difficult, infact its a subtle nature of implementation. Basically its an economical justification of a merger that results incremental value from the combination of businesses. This incremental value must have derived from either financial or operational efficiency.

The different types of synergisms are as follows: Operating Synergism occurs when intangible assets may be combined with the existing assets of the acquiring firm to produce an incremental value. Although that value may be difficult to appraise it may be the prime motive behind the acquisition.

Financial Synergism is an incremental funds value which occurs because of efficient internal funds flow, better use of financial leverages, increased external financial capability and income tax advantages.

Counter Synergism is a negative impact generated by a merger. Sometimes the disadvantages outweigh advantages of a deal. Say for instance, occasionally the management of acquiring firm may lack sufficient knowledge to manage the business and staff of the acquired firm, resulting into reduction of efficiency and post merger profitability of the acquired firm. Such effect may eliminate expected operating synergy.

GROWTH OR DIVERSIFICATION Companies that desire rapid growth in size or market share or diversification in the range of their products may find that a merger can be used to fu lfill the objective instead of going through the time consuming process of internal growth or diversification. Similar objectives can be achieved in a firm by a merger with existing firm in a short span of time; additionally it is sometimes cheaper than developing the necessary production capability and capacity within the firm. A firm can find suitable growth by avoiding risks associated with a design or innovating new products which can be easily compensated by merging with another firm. Moreover when a firm expands or extends its product line by acquiring another firm, it also removes a potential competitor. TAX BENEFITS Tax benefit is sometimes a very important motive behind a merger. It totally depends on the tax laws, which allow set off and carry forward. For a firm with sufficient earnings, a merger may help huge tax benefits; whereas these tax loss carry forward will reduce the taxable income of the new merger firm with its obvious impact on the reduction of the tax liabilities.

DIVERSIFICATION This is another major advantage of merger. When two firms merge they tend to reduce business risk, which in turn reduce the discount rate/required rate (Ke) of the firms earning and thus increase in market value. In order to stabilize or smoother over all corporate income such mergers are helpful, which would otherwise fluctuate because of seasonal or economical cycle. In operational term the greater the combination of statically independent or negatively correlated income streams of the merged company the higher will be the reduction in the business risk factors will be the benefit of diversification.

PURCHASE OF ASSETS AT BARGAIN PRICE Mergers may be explained by opportunity to acquire assets, particularly land mineral rights, plant and equipment, at lower cost than would be incurred if they were purchased or constructed at the current market prices. If the market price of many socks have been considerably below the replacement cost of the assets they represent, expanding firm considering construction plants, developing mines or buying equipments often have found that the desired assets could be obtained where by heaper by acquiring a firm that already owned and operated that asset. Risk could be reduced because the assets were already in place and an organization of people knew how to operate them and market their products. Many of the mergers can be financed by cash tender offers to the acquired firms shareholders at price substantially above the current market. Even so, the assets can be acquired for less than their current casts of construction. The basic factor underlying this apparently is that inflation in construction costs not fully rejected in stock prices because of high interest rates and limited optimism by stock investors regarding future economic conditions.

INCREASED MANAGERIAL SKILLS OR TECHNOLOGY Occasionally a firm will have poor potential that finds it unable to develop fully because of deficiencies in certain areas of management or an absence of needed

product or production technology. If the firm cannot hire the management or the technology it needs, it might combine with a compatible firm that has needed managerial personnel or technical expertise. Of course, any merger, regardless of specific motive for it, should contribute to the maximization of owners wealth.

1.5

LIMITATIONS TO THE MERGER:

1.

The merger may not turn to be financially profitable p roposition in view of non-realization of potential economies in term of cost reduction.

The management of two companies may not go along because of friction.

CHAPTER 4

INTRODUCTION OF CENTURION BANK

 Centurion bank established on July 30, 1994 under company act, 1956.  Registered office of the centurion bank was situated at Dirga Nivas Mahatma Gandhi Road Panji 40301.  Its a banking company under the banking regulation act, 1949.

The centurion bank was listed on mumbai stock exchange and natio nal stock exchange of India, and its global depository bonds are listed on Luxembourg stock exchange.

4.1 Centurion Bank History

Yearly Events

1994 -

Centurion Bank was established on July the 30th, and it came out after venture between Kepple bank from Singapore and centaury finance corporation ltd

The fund has provided by kepple Singapore and centaury finance corporation ltd through kephinance investments ltd (Mauritius)

1995- Centuary Finance Corporation limited has merged with centurion bank ltd.

In late 1995 bank has setup fully computerised environment with Automatic Teller Machine (ATM) facility at most of the branch.

The bank is launched their retail business in the country, the main attraction of the bank is anywhere banking through debit card which can operate account from anywhere in country.

1996Centurion bank made a public issues of 22,50,000 equity shares to the shareholders and centurion bank has allotted 9,44,50,000 equity share to promoters including asian development bank and kepple bank of group Singapore.

Bank has extending growing their branched at Banglore, Chandigarh, Chennai, Delhi, Calcutta, centurion bank branches are increased it was 4 in 1994 and now its 10.

1997-

The centurion bank proposed to their shareholder to increase their branches and network 35 branches.

Centurion bank is the fastest growing private bank in the hole country and bank was awarded safest bank as A1 rating by industrial rating agency.

1998

Centurion bank has offered their customer for the first time internet banking and centurion bank was the first in the country who offer a internet banking.

Centurion bank ltd has amalgamated with General Motors and offer a car loan to their customer.

1990

Centurion bank has given a financial support to the TCFC finance ltd for six years.

Centurion bank entered in world wide inter bank telecommunication which called (SWIFT) network which allows instant remit worldwide. Bank has also proposed to innovate new software so another customer of other bank also used their card in centurion bank ATM machine.

2000Logic pica Uk and centurion bank agreed to do technology alliance so the bank launched a new internet products to the customer and also can connect to the other ATM machine. Former ICICI Bank General Manager has joined centurion bank as a Director of the centurion bank.

2001-. Centurion bank has joined shared payment network scheme called swadhan netork in association with Indian bank. . Rs 10 at premium of Rs. 2 centurion bank has issued of 10,67,133 no of share to boost centurion bank capital.

Centurion bank Manaing Director Mr. Subbaiah has resigned his post on 31 March.

2002-

Mr. Janakram take charge as Managing Director and chairman of the centurion bank.

Mr. R. karoglan has resign as the centurion bank director.

2003CDC fund and chrysalis capital has tie up with rana talwars share capital worldwide to exercise to introduce a formal bid on the centurion bank.

As chairman and managing director Mr Jankiramana re-appointed of centurion bank

Reserve bank of India to recast the equity share structure of the centurion as it approached by Asian Development Bank.

2004-

Morgan Stanley is considered to induct centurion bank right issue.

Mr. S. Bhandari is newly appointed as Managing Director of the company.

6 th January 2004 Mr. S. Bhandari become a new CEO of the centurion bank of Punjab. 2005-

Centurion bank announce Rs. 71 Mn net profit declares in Q3 and 155 Mn for the nine months.

In January 2005 bank has opened its 62 nd branch in Manglore.

On 1st October 2005, centurion bank merge with bank of Punjab.

4.2 CENTURION BANK PRODUCTS

FIXED DEPOSITS:

Proactive Deposit (Auto Renewal)

This product main objective is that it renew by itself every month. It means customers deposit renewed automatically if customer doesnt want to withdraw at every 30 days also customer can withdraw their amount after 30 days and get interest plus amount of the deposit.

Monthly Growth Deposit (Recurring Deposit)

Monthly growth deposit means a every month customer can deposit more then 50 Rs and can gain a high return at the end of the term deposit period. Centurion bank offer this service to the middle class family as this product gain a high exposure as the product itself a massive success of the bank.

N-Cash Deposit (Overdraft Facility)

This particular facility is easy to use and its also called as pay as you go which is very attractive to the customer as its processing time is fast easy. If customer have a fixed deposit and he or she wishes to take loan against the fixed deposit then bank can provide a instant 75 percent of the fixed deposit money and same time the original amount is continue to earn same interest as used from the overdraft.

SAVING BANK ACCOUNT

Bank believes in making customer life easier and simple as possible. Bank understand valuable time of the customer so the bank has developed a saving account and given many options to take care of customers wealth and take care that it grows constant. Centurion bank has established countrys larget netwok branches in private banking sector our technology combine with safest banking and provide a one of the best banking experience. Includes satellite technology in are all branches to take experince of are innovative services. Centurion bank have all requirement which customer needed for their safety.

 Saving Bank Account  Prepaid Savings Access Account (No Minimum Balance Only Maximum Benefits).  Gold Universal Access Savings (Unlimited Freedom)  Pick Up And Vroom- Vroom Saving Account.  Universal Access Saving- Easy to Reach, Easy to N-Cash.

Anywhere Banking
As a customer of Centurion bank, you have luxury and passion to use the account anywhere in India can access their saving account from anywhere in the India any branches of centurion bank. You can withdraw, deposit or statement of account can be obtain by any branch in India and also there are no restriction on withdraw amount.

Vintage-24 Global Debit Card

Centurion bank Global Debit card has tied up with Master Card which means, you dont have to carry the money all the time and its convenient to the customer as they can withdraw the money at 2900 ATM branches in India any time 24 hours and over 7,00,000 all over the world. Can be purchased at 24000 merchant outlet in India and over 5 Mn in the world.

Internet Banking-

This service provide by centurion bank which allows you to operate your account from anywhere in the world through internet banking service which service includes view statement, print statement, view account balance, transfer funds etc etc. all you have to do is click the mouse and its done.

Fast Collection of ChequesBank network facilities allows fastest credit of your cheques whether its from out of state so you dont have to wait for 7 days to clear you cheque and also can collect your cheque from any place in country.

Demand Draft at 150 CentresCenturion bank has a facility of continence that you just give an instruction to the bank or via Internet banking and pick up your demand draft in short time after instruction given.

Attractive Deposit Rate

Centurion bank has many deposit schemes, which is innovative and rewarding and all designed to meet customers individual requirment.

Extended Banking Hours

Centurion bank has extended their banking hours to 10 am to 8 pm as customer demand and easy for the customer to ignore the rush hour.

Current Account
In centurion bank, we aim give you a innovative and safest experience of banking. Using our nationwide braches and technology and are attitude, to give you good bank experience. Centurion bank has larget network of the branches in India amongst the private bank so whatever your business need we deliver. We support with each branch with satellite network so you can access your account wherever you like. We have wide range of services and schemes, so business gets a special and safest banking support.

In centurion Bank, we understand only one size never fits to are customer. So we designed and tailor made schemes to are current account customer. We provide nothing less then the best for are special current account customer. So your business gets edge of its kind.

Anywhere Banking

In centurion Bank customers can enjoy the banking with his or her home branch but also where ever he or she goes in the country they can access their account anywhere and use for statement enquiry at any branch in India. What you need is an any account with centurion bank.

Multi-city Cheques
This is special services to the centurion bank customer which enable to enjoy sending a payment to one city to another city. Become a select cusmer, at centurion bank and get a facility which is cheaper then any are compeitiors.

Instant Remittances
Centurion bank has largest banking network in India. So instant remittances is very easy as are all branches are satellite connected so as soon as customer deposit the money in his or her account and instant they can withdraw at any other branches.

Fast Collection of Cheques

Centurion Bank network is very trustable as for fastest credit cheque in your account. Your account receives the cheque credit from five metro city in maximum 5 working days. customer also can have the services which provide them to collect their cheque from major cities in India. Centurion bank collect customer cheque on behalf of the customer and credited in customers account.

Quick High-value clearing

Customers high value of amount cheques of more then Rs, 1,00,000 can be deposit at are any branches in India and can get a same day clearing before the 4 p.m.

Cash Delivery/Cash pick up

Centurion bank believes service is everything so we have a facility which allows are customer to advice payment on their door which means cash up to Rs, 1,00,000 we can deliver at customer door and cash pick up services available at are Metro city branches with minimum charges.

Instant Bankers Cheque

Centurion Bank provide a fastest bankers cheques on request whenever customer need to issue Pay orders or bankers cheques.

Courier pick-ups
In centurion bank customers does not need to queue in long line to waste your valuable times in branch. Customers cheque can be pick up and service to deliver in a day once at locally.

Quick Foreign Outward Remittances

Centurion Bank has facility which allows customer to send or receive money all over the world which we called as swift remittance in various currencies at competitive rates.

Vintage -24 Global Debit card

Vintage 24 Global Debit card can be used with centurion bank at anywhere in India. Debit card can be used in 6900 ATM Machine in India and over 8 Mn ATM machines all over the world, which displays the Cirrus Logo and Master card Logo and over 53000 Merchant in India and over 10 mn in all over the world. Vintage Debit card comes with cirrus logo and master card logo so customer can use Centurion bank ATM Machine and also a different ATM machine in India

Vintage-24 debit card is give an edge to the customer for making life safe and easier as customer does not have to carry a cash all the time they can withdraw at any our branches.

In addition customer can withdraw and paying to the purchases Rs 50000 per day on a gold debit card and Rs 25000 on silver vintage 24 debit card. (Limitation of withdrawals and purchases are subjects to available balance in customers account)

Internet Banking
Customer can access their account anywhere and anytime they want through Internet banking services provided by the bank. Internet banking service allows you to print a statement, to view account balance, transfer funds between one account to another only one click and its done.

LOANS

Home loans Centurion Bank has a different kinds of loan products to suits customer needs. Centurion bank provide facilities which are listed below  To buy a residential property  Loan against the property.  To buy commercial property.  Overdraft against property.
.

Two wheeler Loans

Centurion bank customer also gets a loan for two wheeler motorcycle Only in centurion bank there is 95 percent chance that you qualify for a two wheeler loan.

Car Loans
Centurion bank has flexible and easy car loan facility in the market. No extra (pre) payment penalties

Personal Loans
Centurion bank also gives a personal loan, which allows their customer to against NO security No guarantors.

Types of Borrowing Organizations:

Public and Pvt limited Company Partnership Company Proprietorship Company

Types of facilities
 Term Loans.  Draft/cheque purchase  Letters of credit to be opened by the customer on the manufacturer.  Overdraft facility  Remittance/collection facilities with service charges.  Bill discounting facility drawn by manufacturers

Documentation to support credit proposals

Proof of income-Audited P&L and Balance Sheet for the last three years.

Last three years of proof of income- Audited Profit and Loss balance sheet.  Proof of Business:  Manufacturer and supplier Agreement  Council certificate of the business  Ownership documents or lease documents for business premises.  Registration of sales tax

Foreign Currency Depositary

Non Residence Account Foreign Currency (FCRA)

 On minimum one year term deposit can maintain in US Dollars, Euro, Japanese Yen and Pound sterling.  As Principal amount and interest amount are payable in foreign currency so there is No exchange loss.  With NRE account customer can remittance from abroad or by transfer funds held in NRE account and then deposit can be made.

Correspondent Banks
Below the Name of the banks where centurion bank maintain its account. Cur Bank's Name USD BANK OF NEW YORK CAD NOVA SCOTIA BANK USD WACHOVIA BANK Account No 890044274 527120070114 20019300737 SWIFT Code IRVTUS3N NOSCCAT PNBPUS3NYC BCITITMM

EUR BANCA COMMERCIALE 90030430183 ITALIANA EUR COMMERZBANK AG JPY UNION BANK OF CALIFORNIA GBP LLOYDS BANK PLC

400875070500EUR COBADEFF 16-240341-1121 BOFCJPJT

01009711

LOYDGB2L NATAU33

AUD NATIONAL AUSTRALIA INDO57 BANK

CHF UBS AG DKK DANSKE BANK

9006805G 3996073092

UBSWCHZH DABADKK

Senior Citizen
For senior citizen centurion bank developed unique Term Deposit schemes for the benefit above 60 years age customer. This term deposit schemes offer to the customer extra interest on their deposit as compared to normal term deposit offered. This applies to the Monthly growth deposit, term deposit, reinvestment deposit and extra saver deposit.

Centurion also offers special facilities in the saving bank account.

 Anywhere banking in India  Quarterly bank statement by post  Internet banking  Vintage-24 ATM Debit card

And also a benefits of Life Insurance Products & Mutual Funds etc etc..

CHAPTER 5 INTRODUCTION OF BANK OF PUJAB

5.1 BANK OF PUNJAB HISTORY

 It was established in may 27, 1994 under India companies act, 1956.  Bank of Punjab resisted office at 46-47, sector D Madhya Road, Chandigarh 16017.  It is banking company under the provisions of regulation act, 1949.  Bank Of Punjab is a banking company under regulation Act, 1949.  Bank Of Punjab is private sector bank and operating 136 branches.  Bank Of Punjab is listed on Mumbai stock exchange and National stock exchange of India.

YEAR EVENTS:
1994 -

On May 27 getting an approval of Memodandum of articles of association from Reserve Bank Of India. Received a commencement of business certificate in August 1994. The Bank Of Punjab has active with banking relation ship with international banks.

1995 Bank Of Punjab has launched an issue of 2,95,10,000 No of shares of only Rs 10 in march which is been successful and oversubscribed. 1996 50,00,000 no of shares is issued to the business associate and promoters and their family. 50,00,000 shares issued to the employees of bank of Punjab.. 80,00,000 no of equity shares is allotted to the Mutual funds.

1999 Bank of Punjab has associate with cirrus and mastercard to issue a ATM cards to access mastercards network all over country and the world.

Bank of Punjab launched a Maestro Debit card to their customer with tie up with mastercard. Bank of Punjab has introduced new products for their customer: Housing, Trade Finance. Bank of Punjab and SHCIL has tie up and offer loan facility against the equity.

2000 - Bank of Punjab joined the cirrus Global ATM network and become part of `Master card` which is the largest ATM networks.

Bank of Punjab has opened a new branches in Banglore, Mumbai, chennai, Calcutta and Hyderabad.

Bank of Punjab has tied up with Airtel cellular provider to offer their customer mobile banking services in India. This service also provides a facility to the Airtel customer as well as Bank of Punjab customer. Bank of Punjab also tie up with Essar cell phone, which operates the network in Delhi to provide a Banking facility.

. Bank of Punjab alliance with National Insuarance company for introduce general insurance product. Bank of Punjab has offered their customer swagat technology features Bank of Punjab alliance with Indian bank association and promote the swadhn ATM network. Indian Oil Corporation and bank of Punjab tie up with understanding that install ATM Machine in the Indian Oil corporation retail outlet in the country. 2001 Bank has innovate its first luxury club for the cream customers as a special package and services for the customers. Canadian Bank Nova Scotia and Bank of Punjab has tied up with instant remittance from Canada to India. Himachal state Co opearative Bank and Bank of Punjab tied up offering services through ATM. 2002 Bank of Punjab launched as sub agent office in Ontario Canada it helps the bank of Punjab to get business in Canada. Bank of Punjab introduce their banking service in Haryana, Panchkul with expanding new branches in state.

2003 Bank of Punjab has tied up with tourism corporation and Indian railway give facility to the customer to book online ticket using a internet banking service.

2004 - Bank of Punjab increases its ATMs in country to 3100 through alliance with Euro net group and Cashnet TM. Bank of Punjab and Toyota Kirlosakar Motor tied up to increase retail finance assistance. 2005 1st OCT, Bank of Punjab merge with Centurion Bank.

5.2 BANK OF PUNJAB PRODUCTS RETAIL LOANS

Retail loan business continues to soar the growth in financial year 2004 and 2005 taking 31 percent of the total advances, including 20787 disbursements amounting of Rs 7138 Million. Bank of Punjab retail portfolio has 49138 customers. Bank also evaluate the portfolio of home loan which amounting Rs 3000 million with SBI. Bank of Punjab retail loan acceptability in the market, where as education loan has growing sky high potential. Bank of Punjab grows into 27 new cities and takeover volumes of Rs 4750 million and 3188 merchants added during the year. The bank has expanded in 27 cities all over in India and generate of Rs 4750 million. Bank business grow stedy and bank gathered a 3188 merchants added during that year.

TREASURY

Rising Interest rates witnessed the year, The 10 yr bond benchmark yield grew from 5.08 percent in Apr 2004 to 6.69 percent in 2005 March. caused by inflation in the country. Reserve Bank Of India increases repo rate 4.75 percent to 4.50 percent in 2004 oct. Borrowing programme which is launched by government of India has showed actual amount borrowed is less then budget amount. The financial year 2004 & 2005 has been unfavorable to the Indian rupees as the year 2004 opened with US dollar price of Rs. 43.60 but because of the post general election in the country and booming crude oil prices the Indian currency has weakened during the year to Rs 46 against the US dollars. However the government reforms and foreign exchange flows and growing India it helped to closing year end US dollar against rupee was 43.75. Indias foreign exchange reserved continue during 2004 and 2005 and it reached to US dollar 135.08 billion from the level of US dollar 107.17 billion at the year end. In foreign exchange reserve bank of Punjab has a massive presence, Taking money market and debt securities and rising interest rate into account bank investment portfolio, Bank of Punjab continuously reshuffled its investment portfolio mainly to the T bills during year. Bank of Punjab aggregating 4430.9 million. In foreign exchange revenues particularly derived by spreads on merchant transaction.

FOREX BUREAU, GLOBAL BANKING AND CASH MANAGEMENT SERVICES

Bank of Punjab Merchant Business and Foreign Exchange and trade remittance grew by Rs 33780 million, which lead to grew by 22 percent over the year ago.

Bank of Punjab Foreign exchange business branch increases to 35 with relation of 75 countries. Bank of Punjab continuous to provide finest and safest service to the domestic customer as well as international customers. Bank of Punjab sub agent offices in Ontario Canada provide support to the NRI customers. Bank of Punjab Bureau of foreign exchange saw a business grew by 38.66 percent. The bank get a business of amounting Rs 2540 million compared with 18355 million in last year, which revenue taking account of Western union retail and wholesale services to the customer. Bank announce the first foreign exchange bureau in goa which met the great success and bank planning to opening new bureau in future. Western union remittance is great success for Bank of Punjab, which lead to the top position among the competitors in India. Bank of Punjab launched a new enhanced system, which is new in banking industry, and behalf of this system cash management service is continues to grow for the corporate customer. INFORMATION TECHNOLOGY Bank of Punjab introduce a new products Internet payment service, recharge mobile coupon through ATM machine and corporate banking on Internet. Internet facility called Direct Debit facility launched for the Delhi Municipal Corporation. This facility gives a customer to pay on line payment to Municipal Corporation. Jammu state bank and Bank of Punjab has tied up to use their ATM machine for both banks customers for free. Bank of Punjab tie up the Chandigarh admin safe and easy and fastest collection of payment to the administration through bank of Punjab branches.

CURRENT ASSET LIABILITY AND RISK MANAGEMENT Bank of Punjab is aware of that Basel -2 implementation and risk manage is the only key for the future banking system. Bank of Punjab has active market risk that indulge manages market risk and liquidity risk and interest rate. Market risk evaluate on every day while others are evaluate fortnightly basis. Bank of Punjab is making its way to the future level of managing credit risk,

CHAPTER 6 RATIONALE BEHIND MERGER

6.1 OBJECTIVES OF THE BANKS GOING FOR MERGER

On 29 th June 2005, Centurion Bank announced that board of directors of Bank of Punjab approved the mergers of both banks. The new bank will named after both bank and will be exist as Centurion Bank of Punjab become a big brand name in their own market. This proposal is only subjected to the promoters and statuary and shareholders approvals.

Mr. Tejbir Singh will be newly appointed executive director and Mr. R. Talwar is the chairman and Mr. S. Bhadari is the managing director of the newly venture centurion bank of Punjab. Appointments are subjects to approval in Board meeting.

NM Ranji & co and KPMG PVT ltd are the valuers of the both baks to evaluate the merger between both banks. The share swap ratio is 4:9 that means every 4 share of bank of Punjab their shareholders gets nine share from the newly venture bank which is centurion bank of Punjab.

Centurion Bank And Bank of Punjab to Reform Centurion Bank of Punjab

29 th June 2005, Centurion Bank have nnounced that the directors of Bank of Punjab has approved the merger of both banks. The new bank will named after both bank and will be exist as Centurion Bank of Punjab and become a big brand name in their own market. In Board of Directors meeting Mr. R. Talwar said the combination of the bank of Punjab and centurion bank will innovate one the safest and strongest services banks in India. So the centurion bank of Punjab has nationwide branches and strongest presence in the retail market in banking industry. Agricultural sector and small and medium enterprise business sector is the strong points for the centurion bank and bank of Punjab. And both are their own markets. Centurion bank of Punjab will joins this safe and become strong brands. .

The newly created Centurion Bank of Punjab will have the biggest earning potential and follow the Indian companies act and become safest bank in its own standard. Bank of Punjab and centurion bank has good young staff which is confident that both together be able to increases th growth of the business in hole. Mr. S. Bhadari the managing director of the bank commented that the combination company will have maximum synergies. The new combined bank called centurion bank of Punjab will have nationwide presence. The new entity will produce massive growth opportunities for the customer and also for the staff of both banks. In near future I will be confident that are new venture will biggest on its own name in India. Mr. T. Singh commented on combined bank who is a director of bank of Punjab told that the partnership of two banks has been solemnized. Momentum of growth of the both banks combines and gives mind blowing results. Both banks represent perfection in all respects with negligible and vertually overlaps.

The New venture of the both banks will called as Centurion Bank Of PunjabBank Of Punjab, Centurion Bank mergers ratio fixed at 4:9. Centurion Bank and Bank of Punjab board of the directors approved the merger on Wednesday 29 th both banks. The combination of the bank will be called centurion bank of Punjab. After announcing a share swap ratio Mr. Talwar the chairman of centurion bank said that the ratio for swap of the shares has been fixed at 4:9 that means for every 4 share of bank of Punjab their shareholder will receive a 9 shares of new bank called centurion bank of Punjab. NM Ranjji & co and KPMG PVT Ltd are the valuer of the banks. The reason behind the merger is to aecheived a goal presence in all over India and become the biggest brand in India. Mr. Talwar also said that there is no intention of decrease in business after the regulators approval of the merger. When we were talking about growth so there is no chance to downsizing the business.

Centurion bank stands at 1300 employees and bank of Punjab had 1900 employess. The combned bank will have net worth of 6960 million rupees as on 31 March 2005. The capital adequacy ratio will be 16.1 %. Mr. Talwar said it will well organize bank.

Centurion bank and Bank of Punjab both have called a general meeting of their shareholders on 3 Aug. After obtaining a shareholder nod both banks can go to Reserve Bank of India for the approval of the merger. When the merger is finished , Muscat Bank shareholding in the centurion bank of Punjab will be 25 percent. And in the keppel corporation the shareholding will be 11 percent in the centurion bank of Punjab. Mr. Tejbir Singh said combined bank would produce magnifying results and represent a perfect fit in its own, On 31st march 2005, bank of Punjab has reported net loss if 610 million for that particular year, previous year profit was Rs 370 million.

6.2 OBJECTIVES OF THE NEW VENTURE BANK  After Merger of centurion bank and bank of Punjab will have all over countrywide branches, strong growth and capital highest profit margin in the industry. After merger centurion bank of Punjab will have the 2.2 million customers all over the India and will be the one of the known bank in India  Centurion Bank of Punjab can become highly earnings potential and can follow world class safest banking standard of balancesheet management. Centurion bank & bank of Punjab both have young and dynamic staffs so we are confident are goal together  Centurion bank and bank of Punjab both banks perfect fit as both has business in different geographical areas. They can increase an employment in Haryana and Punjab especially for rural area and the presence all over the country.  The newly venture centurion bank of Punjab will be one safest and strongest full service provider bank in India. Centurion bank of Punjab has a nationwide branches and very strong geographical presence in the retail and small and medium sized enterprise and agri sectors. Centurion bank and bank of Punjab have both had their own market and create a new venture called a centurion bank of Punjab.

CHAPTER 7
PRE-MERGER ANALYSIS OF CENTURION BANK

7.1 BALANCE SHEET ANALYSIS

To analysis of pre merger of centurion bank will start with the Balance sheet analysis which including liability, assets and total assets the date are taken from the balance sheet and represented in below table and also in the graph given below.

Year In 20 Current Liabilites

01-02 3435.3

02-03 3143.6

03-04 2836.6

(Rs. Mn) 04-05 4476.1

Total Asset Current Asset

41567.7 3321.6

33855.7 2786.3

35487.7 706.4

6606.1 1311.4

GRAPHICAL PRESENTATION OF BALANCE SHEET ANALYSIS OF CENTURION BANK :-

BALANCE SHEET ANALYSIS

50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 Current ssets Current Liability YEAR Total ssets

Rs. in MILLIONS

2001-2002 2002-2003 2003-2004 2004-2005

ANALYSIS:
TOTAL ASSETS Analysis of balance sheet according to the graph and table total assets of the bank in the year of 2003-2004 is 3588 million increased and went up to 46116 million in the 2004-2005 is increased by 30 percent in particular year. CURRENT LIABILITIES . According to the table and graph current liabilities of the bank in year of 2003 to 2004 is Rs 2831 million increased in that year of 2004 to 2005 is Rs 4475 million. It shows the 52 percent increased in that particular year

CURRENT ASSETS As we seen on table and graph we can see that current assets of the centurion bank are increased in year 2004 to 2005 compete to year 2003 to 2004. it include liquidity of the bank increased. It helps the bank for everyday transaction. Table and graph show that current assets increased up to 90 percent of the last year.

INTERPRETATION:
TOTAL ASSETS Current liabilities and assets will might have an impact on total assets of the bank when total assets are increased by only 30 percent than also current assets are increased by 90 percent in year of 2003 to 2004. Increased in liability but also current assets therefore decreased in total assets.

CURRENT LIABILITIES If the current liquidity position of the bank is in good health then it might increased current liabilities. It might effects on the banks business all over. If the assets of the

bank decrease then the current liabilities will increase and also effects on total assets of the bank.

CURRENT ASSETS To evaluate a current liquidity position in the bank during the particular period current assets are helpful to identify. After analysis of the bank balance sheet current asset is increased if evaluate with the previous year. Which pointed out that centurion banks liquidity position is in good health.

CONCLUSION:
CURRENT ASSETS Banks try to increase current assets, so it helps the bank every day business transaction therefore it conclude as banks liquidity position is in excellent health.

CURRENT LIABILITIES

Current liabilities indicate that bank should decrease the current liabilities of the centurion bank therefore it might helps to increased in the net assets of the hole banking business.

TOTAL ASSETS Total assets of the centurion bank should try to decrease in the of the bank current liabilities and increased the current assets of the bank. Therefore total assets of the bank can be increased.

7.2 CENTURION BANK EXPENSES & INCOME ANALYSIS

The expenses & income analysis includes operating profit and total income, intrest of income and net profit (or loss). The data is taken from the balance sheet and presented in the table and graph below, which is produce below. Year Interest income Operating Profit Total Income Net Profits 01-02 4821.8 144.1 5529.4 940.1 20-03 3713.4 216.9 4511.2 253.6 20-04 3337.9 121.3 3867.7 1055.4 (Rs. Mn) 04-05 3460.9 231.6 4155.5 252.1

GRAPHICAL REPRESENTATION OF INCOME & EXPANSES ANALYSIS:-

INCOME & EXPANSES ANALYSIS

6000 400 200 5000 0 4000 2001-2002 3000 2002-2003 2003-2004 2004-2005 2000 -400 -600 -800 1000 -1000 0 Y EA R

INCOME & EXPANSES ANALYSIS

Ope a ing P o i -200

Ne p o i

To al n o e

nee

in o e

-1200 Y EA R

2001-2002 2002-2003 2003-2004 2004-2005

ANALYSIS:
INTEREST INCOME

Centurion bank interest income in 2003 to 2004 was 3337 million, which increased in the 2004 to 2005, was Rs 3460 million which was 4 percent increased in only in year one. OPERATING PROFIT Centurion bank Operating profit was increased by 90 percent in the year of 2004 to 2005 which amounting of Rs 231 million in the one year period.

NET PROFIT/LOSS The net profit of the bank in year of 2004 to 2005 was 251 million. However bank had loss in the previous year.

TOTAL INCOME

Centurion bank income of interest and other income in 2001 to 2002 was Rs 5529 million which was decreased in year of 2002 to 2003 Rs 4512 million and decreased in year of 2003 to 2004 which is amounting Rs 3967 million and at last income centurion bank increased in year of 2004 to 2005 is Rs 4105 million. Which is 3.5 percent growth of the last year.

INTERPRETATION:
INCOME OF INTREST

Income of interest in total income will increased in the return in interest of income of centurion bank of Punjab. Increased in income of interest bank will be better off.

OPERATING PROFIT Expenses of the centurion bank was decreased in year of 2004 to 2005 compare to 2003 to 2004 and also operating profit of the bank is increased. Therefore the total income of the bank increased.

NET PROFIT/LOSS Net profit defines excess of income over total expenses. If the balance sheet is positive between total expenses and income, net profit increases compare to the previous year in the year where bank has made loss

TOTAL INCOME Total Income will be increased before the merger with bank of Punjab. Which indicate total income of the bank if increased if evaluate with the year end of previous. Difference between expenses and income is positive trend, it reflects the growth (profit) of the centurion bank.

CONCLUSION:
INCOME OF INTREST

Centurion bank interest income increased it means bank will have to give more loan to their customer to earn maximum profit (interest).

OPERATING PROFIT Centurion bank operating profits is in interest income if it increased and also expenses are decreased that means company is trying to stable.

NET PROFIT/LOSS The centurion bank has trying to increased its net profit. the bank centurion bank doing sound and good if study with the previous year where bank made a loss

TOTAL INCOME

Centurion bank should try to decrease their expenses and try to give more loan to their customers of the banks.

7.3 RATIO ANALYSIS

Ration analysis includes Capital Adequacy Ratio, Debt Equity Ratio and Earning Per Share (EPS), Current Ratio. The data is taken from balance sheet and presented in table and also in graph as follows.

Year CAR EPS CR D/E

01-02 9.16 21.24 1.85 2.00

02-03 4.16 3.32 1.55 1.65

03-04 1.95 6.65 1.17 1.60

04-05 4.41 0.68 1.03 0.47

GRAPHICAL REPRESENTATION OF INCOME & EXPANSES ANALYSIS:-

RATI ANALYSIS
15 10 5 0 %
        

2001-2002 rr R AR / R S 2002-2003 2003-2004 2004-2005

  

-5 -10 -15 -20 -25

YEAR

ANALYSIS:
CAPITAL ADEQUACY RATIO According to the above table Capital Adequacy Ratio of the centurion bank in the year end of 2003 to 2004 is 1.95, which increased in the year end of 2004 to 2005 to 4.41.

EARNING PER SHARE According to the above graph and table the bank Earning per Share might be increased compare to the previous year, which is .068 times in the year end of 2004 to 2005 and year end of 2003 to 2004, it was negativein in year end.

CURRENT RATIO

Above table show a Current Ration in year end 2003 to 2004 was 1.17, and year end of 2004 to 2005 is 1.03.that means in end of year 2003 to 2004 compare to 2004 to 2005 is a better ratio. That is good for the centurion bank compare to the past year.

DEBT/EQUITY RATIO

According to the above table and graph Debt Equity Ratio of the centurion bank in the year end 2003 to 2004 was 1.6 times while in the year end of 2004 to 2005 is 0.47.

INTERPRETATION:
CAPITAL ADEQUACY RATIO (CAR) CAR also evaluates the financial better condition of centurion bank of India and the management ability at a time to meet for additional capital if it also needed. So it shaw a centurion bank leverage in the bank capital adequacy ratio in year end of 2004 to 2005 is only 4.41 which in very good health.

EARNING PER SHARE (EPS) Earning per share will show on table and graph that earning of the centurion bank. The earning per share will be increased in the end of the year 204 to 2005 up to 0.68 which in the past year negative. The earning per share shows the earning profit of the bank at each share. It reflects bank has earned in a year.

CURRENT RATIO A capital ratio of 2:1 is considered .it indicates that the insufficient liquidity in year of 2003 to 2004 and 2004 to 2005. Current ratio also known as capital working ratio, which measures of working capital available at particular time.

DEBT EQUITY RATIO Debt on equity that means it reflects on debt on equity ratio. That means total equity compare to the amount of the debt equity.

CONCLUSION:
CAPITAL ADEQUACY RATIO (CAR) Capital Adequacy ratio should be better off. However, it will try to increased the capital adequacy ratio therefore higher the financial ratio then higher the capital adequacy ratio.

EARNING PER SHARE (EPS) Centurion bank will try to increased the earning per share. If the EPS is higher then bank is in good position. In the share market shareholders always see the EPS before buying the shares.

CURRENT RATIO

Capital ratio is not known as conventional ratio. So, the centurion bank will try to increased the capital ratio therefore, centurion bank can increased its liquidity.

DEBT EQUITY RATIO

Debt Equity Ratio of the bank in the year end 2003 to 2004 was 1.6 times while in the year end of 2004 to 2005 is 0.47. Debt on equity that means it reflects on debt on equity ratio. That means total equity compare to the amount of the debt equity.

CHAPTER 8

PRE-MERGER ANALYSIS OF BANK OF PUNJAB LTD

8.1 BALANCE SHEET ANALYSIS

To analysis of pre merger of bank of punjab will start with the Balance sheet analysis which including liability, assets and total assets the date are taken from the balance sheet and represented in below table and also in the graph given below (Rs. Mn) Year Current liability Total Assets Current Asset 01-2002 579.86 1454 2590.60 02-03 1421.82 1604 1246.49 03-04 619.51 1806 1786.26 04-05 84.12 1831 2543.55

GRAPHICAL REPRESENTATION OF BALANCE SHEET ANALYSIS:-

BALANCE SHEET ANALYSIS

3000 2500 ILLI N
4

2000 1500 1000 500 0 YEAR

% "%% &( 21 0 '&')('& #" ! % "%% #"

2001-2002 2002-2003 2003-2004 2004-2005

Rs. in

rr

rr

ANALYSIS:
TOTAL ASSETS Analysis of balance sheet according to the graph and table total assets of the bank in the year of 2003-2004 is 1806 million increased and went up to 1831 million in the 2004-2005 is increased by 1 percent in particular year.

CURRENT LIABILITIES

According to the table and graph current liabilities of the bank in year of 2003 to 2004 is Rs 619 million increased in that year of 2004 to 2005 is Rs 84.1 million. It shows the 87 percent increased in that particular year.

CURRENT ASSETS As we seen on table and graph we can see that current assets of the centurion bank are increased in year 2004 to 2005 which is Rs 2543 mn compare to year 2003 to 2004 which is 1768.2mn it include liquidity of the bank increased. It helps the bank for everyday transaction. Table and graph show that current assets increased up to 43 percent of the last year.

INTERPRETATION:
TOTAL ASSETS Current liabilities and assets will might have an impact on total assets of the bank when total assets are increased by only 43 percent than also current assets are increased by 1 percent in year of 2003 to 2004. Increased in liability but also current assets therefore decreased in total assets.

CURRENT LIABILITIES

If the current liquidity position of the bank is in good health then it might increased current liabilities. It might effects on the banks business all over. If the assets of the bank decrease then the current liabilities will increase and also effects on total assets of the bank.

CURRENT ASSETS To evaluate a liquidity position of the bank during the particular period current assets are helpful to identify. After analysis of the bank balance sheet current assets is increased if compare to the previous year. Which pointed out that the banks liquidity position is in good health

CURRENT LIABILITIES

If the current liquidity position of the bank is in good health then it might increased current liabilities. It might effects on the banks business all over. If the assets of the bank decrease then the current liabilities will increase and also effects on total assets of the bank.

CONCLUSION:
CURRENT ASSETS Banks try to increase current assets, so it helps to the bank every days business transaction therefore it conclude as banks liquidity position is in good health

CURRENT LIABILITIES

Current liabilities indicate that bank should decrease the current liabilities of the bank therefore it might helps to increased in the net current assets of the hole banking business.

TOTAL ASSETS In this case current liabilities decrease by 43 percent if compare to last year so the banks should find out reason behind the 1 percent increased in total assets.

8.2 BANK OF PUNJAB EXPENSES AND INCOME ANALYSIS

The expenses & income analysis includes operating profit and total income, intrest of income and net profit (or loss). The data is taken from the balance sheet and presented in the table and graph below, which is produce below.

(Rs.Mn) Year Interest income Operating profit Total income Net Profit/Loss 2001-02 3621.77 744.50 4804.75 357.19 2002-03 3533.91 1083.9 4883.1 318.4 2003-04 3398.37 1029.2 4725.8 370.02 2004-05 3289.7 194.9 3976.57 (612.45)

GRAPHICAL REPRESENTATION OF INCOME & EXPANSES ANALYSIS:-

6000

12 0 0 10 0 0

5000
800

4000 01-Feb 3000 02-M ar 03-A pr 04-M ay 2000

600 400 200 03- A pr 0 - 200

6

Op e a i n g p o i

Ne P o i / Lo

1000

- 400 - 600
C B A

0 To al n o e
C B A

n ere

in o e

- 800 YEA R

Y EA R

99

INCOME & EXPANSES ANALYSIS

INCOME & EXPANSES ANA YSIS

0 1- Fe b 02- M ar

04- M ay
7 8 7 7 8 6 7 6

D @

ANALYSIS:
INTEREST INCOME

Bank of Punjab interest income in 2003 to 2004 was 3399.3 million, which decreased in the 2004 to 2005, was Rs 3285.9 million which was 4 percent decreased in only in year one.

OPERATING PROFIT Bank of Punjab Operating profit of the Bank was decreased by 80 percent in the year of 2004 to 2005 which amounting of Rs 197.7 million in the one year period.

NET PROFIT/LOSS The net profit of the bank in year of 2003 to 2004 was 370.02 million. However bank had loss in the year after.

TOTAL INCOME

Income of bank of Punjab interest and other income in year end of 2003&2004 was Rs 4723.5mn which is decreased which is Rs 3997.5mn in the year end of 2004&2005, it almost decreased by 16 percent if compare to the last year.

INTERPRETATION:

INTEREST INCOME

Increased in the total income will increased in the interest income of bank of Punjab. Increased in the income reflects bank will be better off.

OPERATING PROFIT Expenses of the bank of Punjab was decreased in year of 2004 to 2005 compare to 2003 to 2004 and also operating profit of the bank is increased. Therefore the total income of the bank increased

NET PROFIT/LOSS Net profit defines excess of income over total expenses. If the balance sheet is positive between total expenses and income, net profit increases compare to the previous year in the year where bank has made loss.

TOTAL INCOME

Income will be increased before the merger with centurion bank. Which indicate total income of the bank if increased compare to the previous year. Difference between expenses and income is positive, it reflects the profit of the bank of Punjab.

COUNCLUSION:
INTEREST INCOME

Bank of Punjab interest income increased it means bank will have to give more loan to their customer to earn maximum profit (interest).

OPERATING PROFIT Bank of Punjab banks expenses were increased and income decrease so the bank d has to increases its operating profit. Increases in profit can be very useful for the market. It attracts the shareholders and deposit and invests in the bank of Punjab.

NET PROFIT/LOSS Bank of Punjab announced a biggest loss in bank in 2004&2005. However the bank was doing the good previous year

TOTAL INCOME

Bank of Punjab should want make more income then bank of Punjab should decrease its expenditure and increase to give more loan to their customers and made profit from it. Bank of Punjab has many schemes so it can make more profit and give world-class services to their customers.

8.3 RATIO ANALYSIS

Ration analysis includes Capital Adequacy Ratio (CAR), Debt Equity Ratio and Earning Per Share (EPS), Current Ratio. The data is taken from balance sheet and presented in table and also in graph as follows.

Year Current Ratio CAR EPS

2004-05 3.02 4.41 (5.83)

2003-04 2.85 1.95 3.85

2002-03 0.86 4.16 3.03

2001-02 0.95 9.61 3.40

GRAPHICAL REPRESENTATION OF INCOME & EXPANSES ANALYSIS:-

R T

N L

- pr r -Feb

C rrent R tio

C R

EPS

XR W

R W HI

PI

YI

H P I P

ANALYSIS:

EARNING PER SHARE (EPS) According to the above graph and table the bank Earning per Share will be increased compare to the previous year, which is 5.83 times in the year end of 2004 to 2005 and year end of 2003 to 2004, it was 3.52.

CAPITAL ADEQUACY RATIO (CAR) According to the above table Capital Adequacy Ratio of the centurion bank in the year end of 2003 to 2004 is 12.64 times, which is increased in the year end of 2004 to 2005 to 9.23.

CURRENT RATIO

Above table show a Current Ration in year end 2003 to 2004 is 2.85 and in year end of 2004 to 2005 is 3.02 that means in end of year 2003 to 2004 compare to 2004 to 2005 is a better ratio. That is good for the bank of Punjab compare to the past year.

INTERPRETATION:
EARNING PER SHARE (EPS) Earning per share will show on table and graph that earning of the centurion bank. The earning per share will be increased in the end of the year 204 to 2005 is in negative. The earning per share shows the earning profit of the bank at each share. It reflects bank has earned in a year.

CAPITAL ADEQUACY RATIO (CAR) Capital Adequacy ratio also evaluates the financial condition of the centurion bank and the management ability at a time to meet for additional capital if needed. It shows a centurion bank leverage the banks capital adequacy ratio in year end of 2004 to 2005 is 9023, which is good health

CURRENT RATIO A capital ratio of 2:1 is considered .it indicates that the insufficient liquidity in year of 2003 to 2004 and 2004 to 2005. Current ratio also known as working capital ratio, which measures of working capital available at particular time .

CONCLUSION:
EARNING PER SHARE (EPS) Centurion bank will try to increase the earning per share. If the EPS is higher then bank is in good position. In the share market shareholders always see the EPS before buying the shares. CAPITAL ADEQUACY RATIO (CAR) Capital Adequacy ratio should be better off. However, it will try to increased the capital adequacy ratio therefore higher the financial ratio then higher the capital adequacy ratio.

CURRENT RATIO Capital ratio is not known as conventional ratio. So, the centurion bank will try to increased the capital ratio therefore, centurion bank can increased its liquidity.

CHAPTER 9
POST-MERGER ANALYSIS OF CENTURION BANK OF PUNJAB LIMITED

9.1 INCOME & EXPENSES ANALYSIS

To evaluate the Income & expenses data are taken from balance sheet and presented in graph and also in table. Includes the total income, operating profit (or loss) and interest income.

(Rs. In Mn) Year Total Income Interest Income Operating Profit Net Profit/Loss 2004-2005 2438.9 1922.1 270.7 209.0

GRAPHICAL REPRESENTATION OF INCOME & EXPANSES ANALYSIS:-

INCOME
3000 2500 ION 2000 1500 1000 500 0

EXP NSES N

YSIS

R . i MI

h h`u

` r

gt

` r qd

b gp i

g f` edc

hg g dc

g f` edc

b `

r i

r i

r i/

a s

a s

x x

2004-2005

ANALYSIS:
TOTAL INCOME

Above analysis shows that income of centurion bank of Punjab has been increased up to 200 percent last year which data are taken from the both banks. It increased after merger of centurion bank and bank of Punjab. In first quarter of the 2005&2006 it was 2438.9 million, which it was 4105.4 million and also 3976.5 million respectively if, compare to last year of bank of Punjab and centurion bank of Punjab. This data are on the basis of quarterly result of the both banks i.e. September 9th 2005.

INTEREST INCOME

According to the table centurion bank of Punjab increased its profit to 150 percent from the last year on total interest income. It has been noticed after merger of centurion bank and bank of Punjab. In the year of 2003&2004 it was 3285.9mn and in 2004&2005 it was 3460.9mn and 1922.1 million bank of Punjab and centurion bank. Its taken on the basis of quarterly result.

OPERATING PROFIT According to above table the Operating Profit of Centurion Bank of Punjab increased up to 400% approximately from the previous year. It is increased after amalgamation of Bank of Punjab and Centurion Bank. In the first quarter it is 270.07 million while it was 231.6mn and 194.7mn in the previous whole year of Centurion Bank and Bank of Punjab respectively. It is taken that it is on the basis of quarterly result i.e. 9 th September and 2005.

NET PROFIT/LOSS Above table and graph of the net profit of the newly venture bank centurion bank of Punjab increased its net profit too 300 percent if compare to last year. It dramatically increased after merger between bank of Punjab and centurion bank. Net profit in year of 2005&2006 it was 209 million which was 251 million and 612 million in last year

in compare of centurion bank and bank of Punjab respectively. The data take from the quarterly result of the both banks.

INTERPRETATION:
TOTAL INCOME

200 percent of the total income has been increased after merger of bank of Punjab and centurion bank. It also in increased in second quarters.

INTEREST INCOME

After merger of bank of Punjab and centurion bank the interest of the income also increased which is up to 150 percent. It increased in second quarters in the year.

OPERATING PROFIT After merger of bank of Punjab and centurion bank the centurion bank of Punjab operating profit is increased by 400 percent in the second quarter of the year

NET PROFIT/LOSS After merger between bank of Punjab and centurion bank the centurion bank of Punjab profit increased by 300 percent in second quarter of the year

CONCLUSION:
TOTAL INCOME

Before the Merger of the centurion bank and bank of Punjab gives an excellent result in year and after merger between the both banks the results should be excellent because it may increased in the total income of the centurion bank of Punjab. Before they merge the income of invidual bank is less then which is after merger of the bank of Punjab and centurion bank.

INTEREST INCOME

Centurion bank and bank of Punjab gives an excellent result the merger between the both banks should successful because it increased in the total interest in income of the combined bank. Before the merger the income of the interest is less then the current one.

OPERATING PROFIT Centurion bank and bank of Punjab gives an excellent result the merger between the both banks should successful as it increased in operating profit of the centurion bank of Punjab. Before the bank of Punjab and centurion bank merger operating profit is less then the currently appears. The bank has try there best, as the bank of Punjab operating profit is negative.

NET PROFIT/LOSS Centurion bank and bank of Punjab gives and excellent result the merger between the both banks should give a successful as it increased in operating profit of the centurion bank of Punjab. Before the bank of Punjab and centurion bank merge net profit is less then the currently appears. The bank will try their best, as the bank Punjab net profit was negative.

Note: The results of the bank are quarterly which is in third quarter.

9.2 RATIO ANALYSIS

To evaluate the ratio analysis I used a capital adequacy ratio (CAR) and earning per share (EPS) The data is taken balance sheet and presented in the graph and in the table as below:

Year CAR EPS

2005-2006 10.92 0.40

2004-2005 4.93 0.09

2004-2005 9.08 0.08

GRAPHICAL REPRESENTATION OF INCOME & EXPANSES ANALYSIS:-

RATI
12

ANALYSIS
0 .4 5 0 .4

RATI

10
0 .3 5

0 .3 0 .2 5 0 .2

CA R

0 .15 0 .1

2
0 .0 5

0 2005-2006 2004-2005 Y EA R 2004-2005

0 2005- 2006 2004- 2005 YEA R 2004- 2005

ANALYSIS

EP

ANALYSIS:
CAPITAL ADEQUACY RATIO (CAR) Above graph and table shows that capital adequacy ratio of the bank in the end of the year 2005&2006 was 10.92. which is good if compare to last year. In the 2004&2005 it was 4.93 and 9.08 of bank of Punjab and centurion bank. Which increased by 100 percent from the last year was.

EARNING PER SHARE (EPS) Above graph and table of the bank earning per share (EPS). Which is increased in 2005&2006 which 0.40 times and in 2004&2005 it was 0.09 and 0.08 times if compare to the last year.

INTERPRETATION:
CAPITAL ADEQUACY RATIO (CAR) To finding a overall financial position of the banks Capital Adequacy helps to find out and also has an ability required capital. It indicate the bank leverage position. The both banks Capital Adequacy in 2004&2005 was 10.92 which better and the centurion bank of Punjab Capital Adequacy ratio is greater then 8 percent which 10.92. if the banks management is poor then CAR is below the 8 percent and in centurion bank of Punjab case bank has a 8 percent so the reserve bank of India rules says the centurion bank of Punjab management is very good. EARNING PER SHARE (EPS) The centurion bank of Punjab bank earning per share is increased in the end of the year of 2005&2006, which is up by 0.40. in same last year it was lower. Earning per share reflects the earning of the centurion bank. It reflects how much each share of the centurion bank of Punjab earning.

CONCLUSION:
CAPITAL ADEQUACY RATIO (CAR) The centurion bank of Punjab may better of the Capita Adequacy Ration. If the Capital Adequacy Ratio is higher then it means the financial condition of the centurion bank is sound. So behalf of that reason bank should try their best to increase the CAR.

EARNING PER SHARE (EPS) Centurion bank of Punjab should try their best to increases their earning per share each quarter. If the earning per share is high then the bank is in good position and also to made value in the share market.

Note: The data is been taken in third quarter of the year 2005&2006.

CHAPTER 10

CONCLUSION

10. 1 CONCLUSION:

Centurion Bank and Bank of Punjab merging with both banks create a new venture called Centurion Bank Of Punjab. There are many employees and customer are related with this newly established bank. After study of the pre merger and post merger of the both banks I can say that before the merger both banks are doing excellent business in their field but after merger of both banks centurion bank of Punjab will do far better then they use to do individually. In early 2000s centurion bank was doing very good business. The centurion bank current assets of the bank tried to increases, therefore it helps centurion bank in every days transaction and so behalf of that reason we can say that centurion bank liquidity position on that time is good in health. So it reflects and indicates that centurion bank should try to decrease current liabilities of the bank. So it helps to grow banks net current assets. If bank tries to decrease in the current liabilities of the company and increased in current assets of the bank so the total assets of the bank can incr ease easily.

Centurion bank should try their best to decrease their expenses at current position and increases in give away loan to their customer of the bank. If centurion banks interest of income grows that means bank should concentrate on giving the loan and earn interest from it. Banks expenses are decreasing and interest of income increasing. So company is trying to stable and also bank try to increase their profit.

Bank of Punjab will try to push its best to increase their current assets it will help bank of Punjab on every days business and transaction so in that case we can say that the bank of Punjab liquidity position is good. It also reflects that the bank of Punjab should be good at current liabilities if the current liabilities is decrease from past year and also bank should maintain current liabilities at up to date. The total assets were increased up by 1 percent from the year ago but same time current liabilities is

decreased by 43 percent from the year ago. So the bank of Punjab should find out why only 1 percent of the total increased.

Bank of Punjab will try to decreased its expenditure and increased in give away some loan to the customer. Bank of Punjab can grew their income through various schemes of loan and deposit and make more profit if give away loan as completive rate of interest and stable rate of interest to the customer and also by providing a world class services. Bank of Punjab decreases their interest of income from past year. So bank should try to increase. Bank of Punjab expenses are increase and decreased in income of interest so the bank is try their best to grow its operating profit. If bank pull up there operating profit than it means banks is in good position in share market it also attract the customer to deposit the money. The bank was doing quit good before the 2004&2005.

The merger between the Bank of Punjab and Centurion Bank gives a positive attitude in the market. The merger should be successful as that increased in total interest, operating profit and total income and net profit of the centurion bank of Punjab. Before the merger parameters are less then they are after merger of two banks. Therefore, the bank try to increased parameters and can achieve progress in the future.

Note: Centurion bank of Punjab data and results are taken from third quarter of the year 2004&2005.

CHAPTER 11

RECOMMENDATIONS AND LIMITATIONS

11.1 FINDINGS
 Centurion Bank Of Punjab liquidity position is in good health. So we can say that banks current assets is enough to meet its requirement of liability.

 Centurion Bank Of Punjab is achieving its benefit of economic of scale after improving of the growth of the bank.  Centurion Bank of Punjabs increased net profit compare to gross profit.  Centurion Bank of Punjab can expand its business through new branches and improves numbers of customers in India.  Centurion Bank of Punjab is having synergy benefit after merge with bank of Punjab and centurion bank.

11.2 RECOMMENDATIONS

 Centurion Bank of Punjabs liquidity position was excellent when it merge so the bank will try to decrease its current liability and increased current assets.

 Centurion Bank of Punjabs total income after merger with bank of Punjab and centurion bank is increased. So the bank can achieve its best goal.

 Centurion bank and Bank of Punjab income of interest were increased after merger take place.

 Bank gross profit and net profit were increased. Where the centurion bank has low profit and bank of Punjab had negative profit.  After merger Banks Capital Adequacy ratio (CAR) increased so we can say that the centurion bank of Punjab management is in good hand.  After Merger the banks earning per share increased. So we can say that the bank is making profit.

 It suggests that the centurion bank of Punjab should try to lower their expenses. So the bank can make excellent profit and goal.

11.3 LIMITATIONS

 The above project is only covering four years for pre merger and post merger analysis of centurion bank and bank of Punjab.  This project only covered quarterly result of the centurion bank and bank of Punjab and also analysis after merger take place.  The reason behind the not analysed of balance sheet of centurion bank of Punjab is that there is no data are available.  The study of this project is totally depending on secondary data.  The post merger analysis is only covered for quarterly date, which is till sep 2005 and also I believe the period of the month is not ideal for the analysis

 The reason behind not having a more product of bank of Punjab in these project because the data and information are not available.