ISSN: 2278-4853 Vol 7, Issue 6, June 2018 Impact

ISSN: 2278-4853

Vol 7, Issue 6, June 2018

Impact Factor: SJIF 2017 = 5.443

TRANS Asian Research Journals http://www.tarj.in

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ISSN: 2278-4853




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ISSN: 2278-4853



Asian Journal of Multidimensional Research (AJMR) ( Dou b l e B li n d Ref e r e e d & Re vi e we d I n te r n a ti on a l J ou r n a l )

UGC APPROVED JOURNAL SR. NO.

PARTICULAR

PAGE NO.

THESIS AND ANTITHESIS OF BEEF CONSUMPTION IN VEDIC INDIA 1.

6-19 Haricharan Singh Yadava, Dr. Dharmendra Kumar Singh

2.

SOCIAL SCIENCE RESEARCH IN INDIA: TRENDS AND PERSPECTIVES

20-25

S.I. Humayun, Ms. Aprameya Mohanty

3.

FINANCIAL DISTRESS AND SUSTAINABILITY GROWTH OF INDIAN BANKS LISTED IN BSE 30

26-38

Mr.Arya Kumar 4.

DIGITAL CINEMA PRACTICES AND CINEMA GOING AUDIENCE IN PONDICHERRY

39-51

Mr. Sreesanth K, Dr. Balasaravanan T 5.

A STUDY ONIMPACT OF ICT TOWARDSHRM PRACTICES IN LOGISTICS FIRMS

52-64

V.Vinoth Kumar, Dr.C.Muthuvelayutham

6.

WOMEN’S WORK AND GENDER DIVISION OF LABOUR IN RURAL HILL ECONOMY- A STUDY OF HILL DISTRICTS IN THE STATE OF WEST BENGAL IN INDIA

65-82

Srijana Rai, Sanchari Roy Mukherjee 7.

EMPLOYEE RETENTION- A REAL TIME CHALLENGES IN INDIAN IT SECTOR REVIEW PAPER

83-95

T.S.Kumar, Dr.M.Kavitha

8.

ARE SUWIDHA CENTRES IN PUNJAB PROVIDING SUWIDHAS TO PUBLIC IN REAL SENSE? A STUDY ASSESSING THE SEEKER’S AGE EFFECTS ON THE DELIVERY OF THE SERVICES AT THE DISTRICT LEVEL

96-104

Dr. Jyoti Arora TRANS Asian Research Journals http://www.tarj.in

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9.



CONSUMER BEHAVIOUR TOWARDS BANKING SERVICES: A COMPARATIVE ANALYSIS BETWEEN PUNJAB NATIONAL BANK AND 105-128 HDFC BANK

Dr Artta Bandhu Jena, Mr Parsuram Pati 10.

TECHNICAL ANALYSIS IN I.T SECTOR OF INDIAN EQUITY MARKET- A SELECT STUDY 129-140 Dr.Rambabu Gopisetti, Mr. M Narsing Rao

11.

A NOVEL METHOD TO PREDICT HEART DISEASE USING SVM ALGORITHM 141-150 S. Shylaja, R. Muralidharan

12.

A STUDY ON IMPACT OF FOREIGN DIRECT INVESTEMENT ON GDP OF INDIA 151-165

Ishfaq Ahmad shah, Dr. Manoj songra

13.

ORGANISATIONAL CLIMATE: A COMPARATIVE STUDY OF PUBLIC & PRIVATE BANKS IN BHUBANESWAR 166-178

Dr. Kishore Kumar Das, Ms. Smaraki Pattanayak

14.

WOMEN PARTICIPATION IN MGNREGA WITH SPECIAL REFERENCE TO DEHRADUN DISTRICT OF UTTARAKHAND 179-190

Ms. Deepali Tomar

15.

CLIMATE CHANGE MITIGATION AND ADAPTATION PRACTICES IN INDIA 191-200

Dr. I.Sundar 16.

SCHOOL DAMAGE BY ELEPHANT: AN EMERGING PROBLEM IN FOREST-FRINGE AREA OF DUARS REGION, WEST BENGAL, INDIA 201-206

Chandan Datta

17.

INFLUENCE OF BRAND TRUST IN CREATING E-LOYALTY FROM OFFLINE LOYALTY: A LITERATURE REVIEW

207-217

Maani Dutt, Dr.Anurupa.B.Singh TRANS Asian Research Journals http://www.tarj.in

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18.


EXPLORING THE MARKETS


PRICE BUNDLING PORTFOLIO IN INDIAN FMCG 218-233

P.Baba Gnana kumar 19.

KASHMIR DISPUTE AND ITS IMPACT ON INDIA-PAKISTAN RELATIONS

234-244

Bilal Ahmad Shergojri

20.

POSSIBILITIES OF USING EDUCATIONAL AND MORAL ACTIVITIES IN PREPARING STUDENTS OF ORPHANAGES TO THE SOCIAL LIFE. 245-250

Ogiloy Asqarova Mamashakirovna, Islomiddin Rakhimov

21.

RELATIONSHIP BETWEEN ISLAMIC PERSONALITY AND SPIRITUAL PRACTICES AMONG MUSLIM STUDENTS 251-260

Mubashir Gull, Akbar Husain 22.

ABDURAZZAQFAKIRI AND KHOREZM’S LITERARY ENVIRONMENT

261-266

Otaboyev Akbar Inoyatovich

23.

EMPLOYMENT PERFORMANCE: A STUDY ON LABOUR MARKET IN INDIA 267-273

Dr. Umakanta Tripathy

24.

ANALYSIS OF FACTOR RESPONSIBLE FOR EMPLOYEE TURNOVER AND PROVIDE SUITABLE REMEDIES FOR SMALL AND MEDIUM-SIZED 274-290 ENTERPRISES (SME’S) OF DELHI-NCR REGION.

Shobha Bhardwaj, Dr. Ajay Jain


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ISSN: 2278-4853



Asian Journal of Multidimensional Research (AJMR) ( Dou b l e B li n d Ref e r e e d & Re vi e we d I n te r n a ti on a l J ou r n a l )

UGC APPROVED JOURNAL

FINANCIAL DISTRESS AND SUSTAINABILITY GROWTH OF INDIAN BANKS LISTED IN BSE 30 Mr.Arya Kumar* *Ph.D. Research Scholar, Faculty of Management Sciences, Siksha„O‟ Anusandhan (Deemed to be University), Bhubaneswar, Odisha, INDIA. Email id: [email protected]

_________________________________________________________________ ABSTRACT Banks are considered as the backbone of the economic financial system of a nation. Any failure in the financial performance or financial breakdown will affect the whole banking sectors as well as other dependent sectors heavily. Any issues related to financial distress or the financial problem will make the bank in a shortage of capital. The Altman Z- Score helps in testing the credit strength of the banking sector in the Indian economy as the Altman Z-Score is based on five financial ratios to assess the profitability, leverage, liquidity, solvency, and activity. So in this paper, this model is used to study the level of financial distress of banking sectors. Further, Higgins model suggests various methods to measure the performance of firms like financial leverage (debt ratio and equity ratio), liquidity (current ratio), and assets efficiency (total asset turnover). However, the sustainable growth rate is a method that identifies the performances of firms that they supposed to achieve. This helps to compare the actual growth rate with sustainable growth rate. In this paper, an attempt has been made to critically analyze the financial and operational policies that will help to maintain a healthy growth. For examining the sustainable growth rate of Indian banking sector, the banks listed in BSE 30 have been selected as these banks are the representative of the banking sector. The analysis will reveal the effect of sustainable growth rate on profit margin, debt-equity ratio, return on equity, dividend payout ratio and return on total assets to sales.

KEYWORDS: Financial ratio, Indian Banks, profit margin, Sensex,Sustainable Growth Rate


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ISSN: 2278-4853



INTRODUCTION In the era of globalization, rapid change in business activities and growth of companies help them to sustain in the market by providing best services and customer friendly products. The strategy of sustainability by satisfying both customer and business firm can only be achieved through innovations. In the field of financial risk management and risk transfer, banking financial institution in capital market played a major role around the world. Arrival of new set of asset range can strengthen the financial sector in economic growth that can be achieved through financial innovation (Rajan, 2006). Since from several years few question has been raised on the financial market give raise to positive influence on economic growth (Schumpeter, 1911/1959, Goldsmith, 1969, McKinnon, 1973) and whether financial developments support in growth or vice-versa (Greenwood and Jovanovich, 1988, Pagano, 1993). While during mid-nineties several studies came with a conclusion that financial sector supports economic growth (king and Levine, 1993), in contrary Rousseau and Wachtel (2006, 2009) through there theoretical and empirical analysis concluded that there is weak relationship between financial sector and economic growth. A sustainable development, leads to economic growth and it is not a show for one time. To maintain a consistency in the financial markets, they need to concentrate on better operational services, reduce the destabilization in financial system, and deal with several financial market crises that arise in economic cycles. This is possible through better regulation and supervision. In the financial system, banking sector holds a major role in sustainable development. Various scholar establishes the relation between financial sector and economic growth by adding several financial sector and segments (Obstfeld, 1994; Levine and Zervos, 1998; Fink, Haiss, Hristoforova, 2006; Haiss and Sumegi, 2008; Cooray, 2010), effects of industry (Rajan and Zingales, 1998), impact of law (LaPorta et al,1998), and liberalization (Rusek, 2004; Haiss and Fink, 2006; Pichleret al, 2008). REVIEW OF LITERATURE Higgins (2003), He stated that the maximum rate a firm can upturn its sales and revenues without exhausting its resources can be defined as Sustainable Growth rate. A firm without sufficient financial resources may not sustain in long run. Van Horne(1998), Maximum sales that can be achieved through targeted dividend ratio and debt. A company must use an appropriate model of sustainable growth to identify the growth in sales as per the financial goals. Kumar Arya (2018), Sustainability of firm depends on product innovation, a continuous growth can be achieved through comparing the expected growth and sustainable growth. Drake, He considered the data of Wal-Mart stores for the fiscal year 2005, a concluded that, if the organisation increases the dividend pay-out ratio then a downfall trend is found in sustainable growth. It means if a steep growth is observed in sustainable growth compared to actual growth then it is expected an immediate downfall in such in long run. Radasanu (2015), He stated that, the model used by Churchill and Mullins (2001), that to maintain sustainable growth rate one should focus on cashflow management. As per them the sustainable growth rate can be attained through operational resources like profitability ratio, asset turnover ratio, financial policy and dividend policy. Rahim and Saad (2014), They said that the sustainable growth rate is positively significant to profitability of a firm. Even they concluded that debt equity ratio and sustainable growth rate has no difference significantly in ASEAN Countries. Seens (2013), The study, reveals a question that how much financial support does the Canadian SMEs get in growth? The HSGM implemented to evaluate sales growth rate, financial policies, earning powers. The result conclude that the sales TRANS Asian Research Journals http://www.tarj.in

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ISSN: 2278-4853



growth was approx. 7.3 per cent during the year 2000-2010 whereas the sustainable growth rate for the period 2000-2010 is affected by net profit margin, and some extend due to retention rates and financial leverage. Saputro (2013), The study states about the impact of liquidity, stock return against actual rate of substantial growth of Indonesia Stock Exchange in manufacturing sector. The study reveals that there is a positive significant impact acid variable and sustainable growth rate. While ROA and current ratio has a negatively impact on the deviation of actual sustainable growth rate. And the stock returns affect negatively on sustainable growth rate. Amauzesh et al (2011), The study shows about the sustainable growth rate relationship with liquidity and firm performance. The output of result shows that ROA has a relationship with the sustainable growth and actual growth. Arya et.al ( 2017), The study states about the benchmarking of firms that can be maintained through a continuous growth which can be achieved through better performances, strategy and process. SIGNIFICANCE OF THE STUDY The analysis includes all the top performing banks that are listed in BSE 30 to analyse the healthiness of the banks which will reflect the real face to the investors. This analysis consider the banking performances for several years to understand the past performance and expected growth in near future. OBJECTIVE OF THE STUDY   

To find out the level of financialdistress ofIndian Banks listed in BSE 30by using Altman Z Score model. To study the Sustainable growth rate of the Indian banks listed in BSE 30 by using models stated by Daum J.H. etal& Robert C. Higgins. To examine the impact of important financial variables on Sustainable growth rate of Indian Banks listed in BSE 30.

RESEARCH METHODOLOGY Sample Size: The data considered for the analysis are profit margin, dividend payout ratio, debtequity ratio, ratio total assets to sales, return on equity and Sustainable growth rate of seven banks listed in BSE 30 i.e. Axis Bank, HDFC Bank, ICICI Bank, Indus Ind Bank, Kotak Mahindra Bank, SBI Bank and Yes Bank. The analysis is done for seven years from 2011- 2017. HYPOTHESIS OF THE STUDY 1. H0: There is no distress zone of Indian Banks listed in BSE 30. H1: There is distress zone of Indian Banks listed in BSE 30. 2. H0: There is no significant difference of impact of important financial variables on sustainable growth rate. H2: There is a significant difference of impact of important financial variables on sustainable growth rate. DATA ANALYSIS TOOLS Distress Analysis: During the year 1967, Prof. Edward Altman, proposed a tool to measure the financial distress of a firm i.e. the chances of bankruptcy. Altman added a tool for measuring the TRANS Asian Research Journals http://www.tarj.in

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ISSN: 2278-4853



financial distress statistically and named it as multivariate analysis. The tool inculcates several financial ratios for analysis that are as follows: Z-Score formula for service sector firms i.e. Banks X1 = (Current Assets – Current Liabilities) / Total Assets X2 = Retained Earnings / Total Assets X3 = Earnings before Interest and Taxes / Total Assets X4 = Book Value of Equity / Total Liabilities Z-Score bankruptcy model: Z = 6.56X1 + 3.26X2 + 6.72X3 + 1.05X4 Zones of discriminations: Z > 2.6 –“Safe” Zone 15.1

< Z < 2.6 –“Grey” Zone

Z < 1.1 –“Distress” Zone Regression: To measure the linear strength of association between two variables, X and Y correlation coefficient is considered. To measure the cause and effect relationship regression analysis is used. Following is the regression model: Y= β0 + β1*X1 + β2*X2 + β3*X3 + β4*X4+ β5*X5 + e Y= Sustainable Growth Rate X1=Profit Margin X2=Dividend Pay Out Ratio X3=Debt Equity Ratio X4=Ratio Total assets to sales X5=Return on Equity VARIABLE MEASUREMENT: Daum. J.H. et alsay a business can follow its success path by following certain models that will make the firms most competitive and challenge others. Models for Sustainable Growth Rate: Model-I Sustainable Growth Rate= ROE x (1-Dividend Payment Ratio) ROE is a method that helps to find out the company‟s profitability, while Dividend payment ratio states about the per-share earnings of the company that is paid as dividend. ROE= Net Income (after Tax) Average Shareholder‟s Equity


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Dividend Payment Ratio=


Yearly dividend per share Earnings per share

Table-1: Sustainable Growth Rate (Model-I) of Banks listed in BSE 30 NAME OF MODEL-1 THE ROE x (1-Dividend Payment Ratio) BANKS 2011 2012 2013 2014 2015 2016 14.5127 AXIS BANK 15.8237 16.8713 15.6956 1 3 2 14.96610 15.22881 4 17.5451 16.9455 16.6234 15.0076 HDFC 6 4 5 17.00275 16.02777 5 BANK 12.5527 12.1793 11.2627 8.70766 ICICI 2 7 8 11.73443 11.90304 2 BANK KOTAK 15.3855 16.0812 15.0586 11.8173 MAHINDR 4 9 5 14.01700 14.21720 9 A BANK 15.5373 13.8723 12.6609 5.96305 SBI 3 7 8 8.452416 9.135615 6 14.4768 INDUS IND 15.7050 15.4174 15.1741 9 3 2 15.26490 16.76491 6 BANK YES BANK 22.5196 21.7634 20.7064 20.55893 17.33275 16.6399 1 4 2 4 8 3 Calculated by author

2017 4.870612 14.82557 8.359008

13.15163 0.175758 15.26847 15.66294

Model-II Sustainable Growth Rate=

Pm x (1-d) x (1+L) T- {Pm x (1-d) x (1+L)}

Pm

=Profit Margin (Existing & Target)

d

= Dividend pay-out ratio (Target)

L

= Debt Equity Ratio (Target)

T

= Ratio of Total Asset to Sales

Table2-: Sustainable Growth Rate (Model-II) of Banks listed in BSE 30 NAME OF MODEL-2 THE BANKS 2011 2012 2013 2014 2015 2016 AXIS BANK -104.16 -103.62 -103.49 -102.77 -102.70 -102.64 HDFC BANK -102.94 -102.88 -102.79 -102.61 -102.59 -102.62 ICICI BANK -104.98 -104.18 -104.14 -103.80 -103.52 -103.70 KOTAK MAHINDRA -102.07 -102.50 -102.64 -102.08 -102.24 -102.71 BANK SBI -103.57 -103.08 -103.05 -103.15 -103.07 -104.42 INDUS IND -103.82 -103.85 -103.92 -103.48 -103.21 -102.92 TRANS Asian Research Journals http://www.tarj.in

2017 -103.42 -102.54 -103.29

-102.21 -103.09 -102.38 .

ISSN: 2278-4853 BANK YES BANK -105.13 Calculated by the author

Vol 7, Issue 6, June 2018 -104.87

-104.61


-104.22

-104.12

-103.75

-103.80

Interpretation: 

Growth rate > Sustainable Growth Rate: If a company‟s growth is expected to grow to say 14 per cent for upcoming years and in case the policies remain unchanged then its SGR can sustain only 9 per cent. Then such result will clearly indicate that the policy set by the managers is out of track. So as to grow 14 per cent, the company needs to reduce the dividends, or try to increase the capital or maybe both. So this analysis will help to get a clear picture of the validity of the future plans.



Growth rate < Sustainable Growth Rate: If the firms expect a growth of 7 per cent while the sustainable growth rate figures a rate of 9 per cent then in such situation the manager should try to raise the dividend payout

As a result of this analysis, help to compare and measure the sustainable growth rate and expected growth rate basing on which the manager should design its policy on introducing innovative products or services in the banking sector to sustain the rate. RESULTS AND ANALYSIS: The graph shown below signifies the growth of various banks listed in BSE 30 i.e. Axis Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, SBI Bank, Indus Ind Bank and Yes Bank for a period of seven years starting from 2011-2017. Graph-1- Dividend pay-out ratio of Banks listed in Top 30 Sensex Interpretation: 35 30

Dividend Pay out ratio

AXIS BANK

HDFC BANK

25 ICICI BANK

20 15

KOTAK MAHINDRA BANK

10

SBI

5

INDUS IND BANK

0

YES BANK

From the graph, we can see a clear picture that ICICI Bank, HDFC Bank,and SBI bank show a consistent dividend pay-out throughout the years. While ICICI bank has been paying the highest dividend from the year 20112016, but during the year 2017 Axis bank suddenly shows a high growth in dividend payout ratio

2011 2012 2013 2014 2015 2016 2017


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Graph-2- Return on Equity of Banks listed in Top 30 Sensex 30

Return on Equity

25

AXIS BANK HDFC BANK

20 ICICI BANK

15

KOTAK MAHINDRA BANK

10 5

SBI

0

INDUS IND BANK

-5

2011 2012 2013 2014 2015 2016 2017

Interpretation: From the graph, we can see the picture like Yes Bank and HDFC bank, maintain a consistency of ROE through the year.Surprisingly the PSU bank i.e SBI shows a negative ROE during the year 2017 i.e. -0.22

Graph-3- Sustainable Growth Rate of Banks listed in Top 30 Sensex using Model-1 25

SGR

Interpretation:

AXIS BANK

20

HDFC BANK

15

ICICI BANK

10

KOTAK MAHINDRA BANK

SBI 5 INDUS IND BANK YES BANK

0

From the graph, we can observe that Yes Bank and HDFC bank maintain a consistency ofSustainable Growth Rate through the year.For the year 2017, SBI shows a negative SGR. While Axis bank is found to be highly volatile at the rate of sustainable growth rate

2011 2012 2013 2014 2015 2016 2017 -5

Distress Assessment by Altman Z-Score: Banks

Table 3- Distress Analysis of banks for testing the hypothesis Years 2013 2014 2015 2016

2017

Axis Bank

Z Score

1.019

1.041

1.220

1.031

0.766

Zone

Distress

Distress

Grey

Distress

Distress

H0

Rejected

Rejected

Accepted

Rejected

Rejected

Z Score

0.750

0.932

1.203

1.012

1.026

Zone

Distress

Distress

Grey

Distress

Distress

H0

Rejected

Rejected

Accepted

Rejected

Rejected

Z Score

1.226

1.213

2.212

1.826

1.816

Zone

Grey

Grey

Grey

Grey

Grey

H0

Accepted

Accepted

Accepted

Accepted

Accepted

HDFC

ICICI


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ISSN: 2278-4853 Kotak Mahindra

SBI


Z Score

1.409

1.684

1.587

1.877

1.934

Zone

Grey

Grey

Grey

Grey

Grey

H0

Accepted

Accepted

Accepted

Accepted

Accepted

Z Score

0.553

0.611

0.522

0.596

0.546

Zone

Distress

Distress

Distress

Distress

Distress

H0

Rejected

Rejected

Rejected

Rejected

Rejected

5.569

5.221

4.999

4.785

5.092

Safe

Safe

Safe

Safe

Safe

H0

Accepted

Accepted

Accepted

Accepted

Accepted

Z Score

0.510

0.528

0.816

0.701

0.881

Zone

Distress

Distress

Distress

Distress

Distress

H0

Rejected

Rejected

Rejected

Rejected

Rejected

Indus Ind. Z Score Bank Zone Yes Bank


Calculated by the author Interpretation: From the above table we got a clear picture that; SBI and Yes Bank are coming under distress zone. It states that the financial performance of these two banks is worst and likely to be bankrupt. This can otherwise conclude that the investors will not like to invest further as they will not expect any return out of it in long run. Same trend is also observed in Axis and HDFC Bank with a grey zone during the year 2015 but the distress has over shadowed in following years. While ICICI and Kotak Mahindra Banks are consistently falling under Grey Zone, So the investors may likely to invest as there is a hope of minimum return in long run. However, Indus Ind. Is the only bank which is coming under Safe zone consistently for last 5 years, which conclude that the investors will likely to invest as they will get cent per cent return from it. Impact of important financial variables on Sustainable growth rate- A quantitative approach through regression analysis Table 4-Regression analysis of banks for testing the hypothesis Variab Axis HDFC ICICI Kotak SBI Indus les Bank Mahindr Ind. a Bank t

Si g.

t

Si g.

t

Si g.

t

t

Si g.

SGR

70. 91

.00 1337. 9 23

.00 28. 0 09

.02 277. 3 89

.00 1040. 2 92

.00 114. 1 73

.00 86.4 6 4

.00 7

Profit

3.1

.19 64.09

.01 1.6

.34 34.8

.01 208.1

.00 7.32

.08 15.2

.04


Si g.

t

Si g.

Yes Bank

t

Si g.

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Vol 7, Issue 6, June 2018 7

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92

0

94

Impact Factor: SJIF 2017 = 5.443 8

11

3

3

6

15

2

Divide nd Pay 5.3 Out 48 Ratio

.11 8 3.159

.19 .04 5 8

.96 1.21 9 3

.43 -.723 9

.60 3.73 2 5

.16 .197 7

.87 6

Debt Equity Ratio

1.9 96

.29 24.33 6 0

.02 .03 6 5

.97 3.54 8 0

.17 28.18 5 2

.02 1.04 3 9

.48 2.29 5 6

.26 1

Ratio Total assets to sales

16. 13

.03 162.4 9 0

.00 4.3 4 33

.14 35.5 4 14

.01 44.48 8 6

.01 12.9 4 32

.04 9 .112

.92 9

Retur n on .72 Equity 5

.60 1 6.820

.09 .26 3 7

.83 4.07 4 2

.15 14.20 3 0

.04 .432 5

.74 3.37 1 1

.18 4

Calculated by the author From the above result of regression, we get the following results: Axis bank- We can say that sustainable growth rate is significantly influenced by the ratio of total assets to sales negatively with p-value as 0.029 and t value as -16.139 i.e. lesser the ROA higher will be the SGR. While in other variables we can see no significance at 0.05 per cent level like ROE and Dividend pay-out ratio which are negatively related with t value as -0.725 and 5.348 respectively and profit margin and the debt-equity ratio has a positive relationship with t value as 3.108 and 1.996 respectively. HDFC- From the above analysis it shows a clear picture of the significance of sustainable growth rate with debt-equity ratio and profit margin positively, it means any rise of debt-equity ratio and profit margin it will raise the SGR. While the ratio of total assets shows a negative significance i.e. p-value is .004 and t value is -162.40 which means any rise of ROA will decrease the SGR. However, we don‟t find any sign of Dividend payout ratio and ROE in HDFC bank ICICI-We can say that sustainable growth rate is not significantly influenced by any of the ratios; we find the p-value of profit margin as 0.340, dividend payout ratio as 0.969, debt-equity ratio 0.978, ratio total assets to sales 0.144, and return on equity 0.834. Kotak Mahindra- From the above analysis it shows a clear picture of the significance of sustainable growth rate with profit margin is positive with p-value as 0.018 and t value as 34.894 at 0.05 level of significance, it means any rise of profit margin it will raise the SGR. While the ratio of total assets shows a negative significance i.e. p-value is .018 and t value is -35.514 which means any rise of ROA will decrease the SGR. However, we don‟t find any sign of Dividend payout ratio, debt-equity ratio and ROE in Kotak Mahindra Bank.


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SBI- We can say that sustainable growth rate is significantly influenced by the ratio of total assets to sales and Return on equity negatively with p-value as 0.014 and 0.045 respectively t value as -44.486 and -14.200 respectively i.e. lesser the ROA and ROE higher will be the SGR. While we can see a positive significance at 0.05 per cent level like profit margin and debt-equity ratio with p-value as .003 and .023 respectively it means any rise of profit margin and debtequity ratio it will raise the SGR. IndusInd. Bank- From the above analysis it shows a clear picture of the significance of sustainable growth rate with ROA negatively with p-value as 0.049 and t value as -12.932, it means any rise of ROA it will decrease the SGR. However, we don‟t find any sign of Profit Margin, Dividend payout ratio, Debt equity ratio, and ROE. Yes Bank- We can say that sustainable growth rate is significantly influenced by profit margin positively with p-value as 0.042 and t value as 15.215 i.e. higher the profit margin higher will be the SGR. While in other variables we can see no significance at 0.05 per cent level like ROE, ROA, debt-equity ratio and Dividend payout ratio. R-Square Test A statistical tool to identify the variable variation through regression line which can be explained through percentage of the response of data R-squared = Explained variation Total variation It will only be measured in between 0 and 100 per cent: 

If the result shows 0 per cent then it has no response with the variance considered around its mean



If the result shows 100 per cent then it has a response with the variance considered around its mean.

Vari ables

Table-5- R-square Test and Durbin Watson test of banks HDFC ICICI Kotak SBI Indus Yes Bank Mahindra Ind. Bank

Axis Bank

RDur RDur RSqu bin Squ bin Squ are wat are wat are son son

Dur Rbin Squ wat are son




Dur bin wat son

Profi t Mar gin

.75 2

1.1 56

.13 2

.73 6

.80 4

1.9 42

.58 7

1.9 25

.67 9

1.7 11

.80 1

2.1 42

.98 8

1.9 99

Divi dend Pay Out Rati

.08 1

.49 1

.68 4

1.9 53

.01 4

.67 5

.00 3

2.3 88

.10 8

2.0 93

.75 8

1.4 58

.08 3

.37 5


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o Debt Equi ty Rati o

.00 0

.75 6

.20 0

.80 1

.03 9

.65 1

.02 1

2.2 89

.13 1

1.8 98

.21 7

.87 7

.68 8

1.6 90

Rati o Total .79 asset 4 s to sales

1.6 12

.89 8

1.9 34

.77 0

.98 2

.65 1

1.1 88

.07 5

2.1 66

.86 6

2.4 75

.68 3

1.7 68

Retu rn on Equi ty

.82 2

.56 2

1.3 30

.49 4

1.6 97

.04 5

2.3 63

.01 1

2.5 84

.57 4

1.2 94

.83 8

1.8 68



.00 6

Calculated by the author

Interpretation: (Keeping SGR as dependent and other factor as predictors is compared individually) Axis Bank-Here from the above analysis we get a response like SGR is affected by ROA and Profit margin with79.4 per cent and 75.2 per centrespectively.While debt equity ratio has no response towards SGR. HDFC- The above result brings to a conclusion that ROA affects 89.8 per cent for the change of SGR while Debt Equity ratio is affected only by 20 per cent. ICICI- Here from the above analysis we get a response like SGR is affected by ROA and Profit margin with 77 per cent and 80.4 per cent respectively. While dividends pay-out ratio and debt equity ratiohas response of only 1.4 per centand 3.9 per cent respectively towards SGR. Kotak Mahindra- The above result brings to a conclusion that ROA affects 65.1 per cent for the change of SGR while dividends pay-out ratio is affected only by 0.3 per cent. SBI- Here from the above analysis we get a response like SGR is affected by Profit margin with 67.9 per cent. While ROE and ROA has 1.1 per cent and 7.5 per cent respective response for SGR. Indus Ind. Bank- The above result brings to a conclusion that ROA, profit margin and dividend pay-out ratio is affected by 86.6 per cent, 80.1 per cent and 75.8 per cent respectively for the change of SGR while Debt Equity ratio is affected only by 21.7 per cent. Almost all the factors have maximum contribution for determination of SGR. Yes Bank- Here from the above analysis we get a response like SGR is affected by ROE and Profit margin with 89.8 per cent and 98.8 per cent respectively. While dividend pay-out ratio has 8.3 per centresponse towards SGR. TRANS Asian Research Journals http://www.tarj.in

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ISSN: 2278-4853



Durbin Watson Test A measurement of autocorrelation from the regression analysis with an objective of finding the predictors those are significant while they are not due to standard error. The test statistic is calculated with the following formula:

DW 

Tt2 (et  et 1 ) 2 Tt1 et2

.

Here, et- residuals

Report of Durbin Watson test, lies between 0 to 4, where 0 to 2 to 4 negative autocorrelation (less common in time series data)

CONCLUSION: The Altman Z score helps to identify the bankruptcy of selected banks for last 5 years from 2013-2017. The result states that Axis bank, HDFC, SBI and Yes Bank are under financial distress zone, while Indus Ind. is the only bank that is financially sound as it is under safe zone and rest are in Grey zone. By conducting the regression analysis of seven banks listed in BSE 30, we conclude that for most of the bank‟s ROA is found to be negatively significant for sustainable growth rate, while profit margin in most of the banks is found to be positively significant. As we have discussed, if a firm maintains the SGR then such firm can sustain for the long run with a continuous growth rate. So the findings of this article will be a guiding tool tothe management, investors and Government for taking a right decision to maintain sustainable growth rate andfinancial soundness. REFERENCES 

Amouzesh, N., Zahra, M., & Zahra, M. (2011),"Sustainable Growth Rate and Firm Performance: Evidence From Iran Stock Exchange", International Journal of Business and Social Science, 23(2), 249–255.

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Arya et.al (2017) “Reflection of Firms Performance through Return on Equity – A study on Sensex Companies in India” The Management Accountant, Vol 52, Issue 5, pp: 96-101

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Arya et.al (2017) “Benchmarking and Economic Ranking-Indian Tyre Industry” The Management Accountant, Vol 52, Issue 7, pp: 34-41.

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Higgins, R. (1977),"How much growth can a firm afford?",Financial Management, 6(3), 7– 16. http://doi.org/10.2307/3665251

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Kumar, A. (2018). A Study on Risk Hedging Strategy: Efficacy Of Option Greeks. Abhinav National Monthly Refereed Journal of Research in Commerce & Management, 7(4), pp.7785.

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Rădăşanu, A. C. (2015),"Cash-Flow Sustainable Growth Rate Models" ,Journal of Public Administration. Retrieved from http://www.jopafl.com/uploads/issue7/Cashflow_Sustainable_Growth_Rate_Models.pdf TRANS Asian Research Journals http://www.tarj.in

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

Higgins, R. C. (2003). Analysis for Financial Management. 6th edition Irwin/McGraw-Hill.

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Radasanu, Alinconstantin. (2015). Cash-flow sustainable growth rate models. Journal of public administration, finance, and low, issue 7.

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Rahim, Norfhadzilahwati and NorizaSaad. (2014). Sustainable Growth of Public Listed Companies (PLC) Using Capital Structure Choices and Firm Performance in an Asean Market. Proceeding of the Global Summit on Education GSE 2014, 4-5 March 2014, Kuala Lumpur, Malaysia.

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Saputro, A. W., (2013). Pengaruh Hubungan Kinerja, Likuiditasdan Retur Saham Terhadap Devias Actual Growth Rate Dari Sustainable Growth Rate Pada Perusahaan Manu faktur Di Bursa Efek Indonesia, Semarang.

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Seens, Daniel L. (2013). Small and Medium-Size Enterprises Growth Study: Actual vs. Sustainable Growth. Small Business Branch Research and Analysis Directorate.



Van Horne, J.C. (1987). Sustainable growth modeling. Journal of Corporate Finance, 2 (3), 19-26

WEBSITE:    

www.moneycontrol.com www..wikipedia.com www.yahoofiance.com www.bseindia.com


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0618/03

30-06-2018

MR.ARYA KUMAR

I am very pleased to inform you that your article/research paper titled FINANCIAL DISTRESS AND SUSTAINABILITY GROWTH OF INDIAN BANKS LISTED IN BSE 30 has been published in Asian Journal of

Multidimensional Research (AJMR) (UGC approved journal) (ISSN: 2278-4853) (Impact Factor: SJIF 2017 = 5.443) Vol.7, Issue- 6, (June, 2018). The scholarly paper provided invaluable insights on the topic. It gives me immense pleasure in conveying to your good self that our Editorial Board has highly appreciated your esteemed piece of work. We look forward to receive your other articles/research works for publication in the ensuing issues of our journal and hope to make our association everlasting.


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ISSN: 2278-4853




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ISSN: 2278-4853




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