Professional Documents
Culture Documents
Kotak Mahindra.
Kotak Mahindra.
Success in my endeavor calls for cooperation and guidance from seniors and colleagues. This was simply brought out to me while making this project.
A special note goes thanks to Mrs.Ruchika madam for his guidance while undergoing this project.
I would like to convey my heartfelt to my faculty for the trust she showed in me in assigning me an important and interesting project by sparing time for me from her busy schedule to discuss and clarify various issue connected with this project, for her friendly advice and the motivation she provided me in the completion of the project.
It was enlivening and worthwhile experience to HDFC bank minor project my thanks would be incomplete without thanking almighty god for his superlative support and blessings
MANKIT SINGH
CHAPTER-1 Introduction
HELPS IN EVALUATING THE FIRMS PERFORMANCE: With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health profitability an operational efficiency of the undertaking ratio points out the operating efficiency of the firm i.e. whether the management has utilize the firm assets correctly to increase the investors wealth.it ensure a firm return to its owner and secures optimum utilization firms assets.
HELPS IN COMMUNICATING: The financial strength and weakness of a firm are communicating in a more easy and understandable manner by the use of ratio. The info contained in the financial statement is conveyed in meaningful manner to the one from who it is mean. Thus a ratio helps in communicating and enhances the value of the financial statement.
Simplifies financial statement: The information given in the basic financial statements serves no useful Purpose unless its interrupted and analyzed in some comparable terms. The ratio analysis is one of the tools in the hands of those who want to know something more from the financial statements in the simplified manner.
Helps in determining the financial position of the concern: Ratio analysis facilitates the management to know whether the firms financial position is improving or deteriorating or is constant over the years by setting a trend with the help of ratios The analysis with the help of ratio analysis can know the direction of the trend of strategic ratio may help the management in the task of planning, forecasting and controlling.
Helpful in budgeting and forecasting: Accounting ratios provide a reliable data, which can be compared, studied and analyzed. These ratios provide sound footing for future prospectus. The ratios can also serve as a basis for preparing budgeting future line of action.
Liquidity position: With help of ratio analysis conclusions can be drawn regarding the Liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its current obligation when they become due. The ability to meet short term liabilities is reflected in the liquidity ratio of a firm.
Long term solvency: Ratio analysis is equally for assessing the long term financial ability of the Firm. The long term solvency s measured by the leverage or capital structure and profitability ratio which shows the earning power and operating efficiency, Solvency ratio shows relationship between total liability and total assets.
Operating efficiency: Yet another dimension of usefulness or ratio analysis, relevant from the Viewpoint of management is that it throws light on the degree efficiency in the various activity ratios measures this kind of operational efficiency.
Long term solvency: Ratio analysis is equally for assessing the long term financial ability of the Firm. The long term solvency s measured by the leverage or capital structure and profitability ratio which shows the earning power and operating efficiency, Solvency ratio shows relationship between total liability and total assets.
(1.2) Trend and Industry Analysis Thats where trend (time-series) and industry (cross-sectional) analysis come in. You can compare your firms ratios to trend data, which is data from other time periods for your firm, to see how your firm is doing over a series of time periods. You can also compare your firms ratios to industry data. You can gather data from similar firms in the same industry, calculate their financial ratios, and see how your firm is doing compared to the industry at large. Ideally, to get a good picture of the financial picture of your firm, you should do both.
STANDARDS OF COMPARISION: The ratio analysis involves comparison for a useful interpretation of the financial statements. A single ratio is itself does not indicate favorable or unfavorable condition. It should be compared with some standard. It consists of: PAST RATIOS: Ratio calculated from past financial statements of the same firm. Current ratio in 1991 compared with 2009
COMPETITORS RATIOS: Ratios of some selected firms, especially most progressive and successful competitor, at the same point of time.
PROJECTED RATIOS: Ratios developed using the projected or preforms financial statements of the same firm.
Liquidity Ratios: Liquidity ratios measure the firms ability to meet current obligations. It is extremely essential for a firm to be able to meet its obligations as they become due liquidity ratio's measure. The ability of the firm to meet its current obligations. In fact analysis is of liquidity needs in the preparation of cash budgets and cash and funds flow statements, but liquidity ratios by establishing a relationship between cash and other current assets to current obligations provide a quick measure of liquidity. A firm should ensure that it does not suffer from lack of liquidity and also that it does not have excess liquidity. The failure of the company to meet its obligations due to the lack of sufficient liquidity will result in poor credit worthiness, loss of creditors confidence or even in legal tangles resulting in the closure of company. A very high degree of liquidity is also bad, idle assets earn nothing. The firm's funds will be unnecessarily tied up to current assets. Therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity. 1. Current ratio 2. Quick ratio 3. Interval measure 4. Net working capital ratio
1. Current Ratio: Current ratio is calculated by dividing current assets by current liabilities: Current assets include cash and those assets which can be converted into cash within a year, such as marketable securities, debtors and inventories. Current liabilities include creditors, bills payable, accrued expenses, short term back loan, income tax liability and long term debt maturing in current year. The current ratio is a measure of firm's short term solvency.
As a conventional rule a current ratio of 2: 1or more is considered satisfactory. The current ratio represents margin of safety for creditors
2. Quick Ratio: Quick ratio establishes a relationship between quick or liquid, assets and current liabilities. Cash is the most liquid asset, other assets which are considered to be relatively liquid and included in quick assets are debtors and bills receivables and marketable securities. Inventories are considered to be less liquid. Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial condition
3. Interval Measure: The ratio which assesses a firm's ability to meet its regular cash expenses is the interval measure. Interval measure relates the liquid assets to average daily operating cash outflows. The daily operating expenses will be equal to cost of goods sold plus selling, administrative
and general expenses less depreciation divided by number of days in the year.
4. Net Working Capital Ratio: The difference between current assets and current liabilities excluding short term bank borrowing is called net working capital or net current assets. Net working capital is sometimes used as measure of firm's liquidity.
Leverage Ratios: The short term creditors, like bankers and suppliers of raw material are more concerned with the firms current debt paying ability. On the other hand, long term creditors like debenture holders, financial institutions etc. are more concerned with firms long term financial strength. In fact a firm should have short as well as long term financial position. To judge the long term financial position of the firm, financial leverage or capital structure, ratios are calculated. These ratios indicate mix of funds provided by owners and lenders. As a general rule, there should be an appropriate mix of debt and owners equity in financing the firm's assets.
1. Debt Ratio 2. Debt Equity Ratio 3. Capital employed to net worth ratio 4. Other Debt Ratios
1. Debt Ratio: Several debt ratios may be used to analyses the long term solvency of the firm. It may therefore compute debt ratio by dividing total debt by capital employed or net assets. Net assets consist of net fixed assets and net current assets: DEBT RATIO: TOTAL DEBT NET ASSETS
2. Debt Equity Ratio: It is computed by dividing long term borrowed capital or total debt by Shareholders fund or net worth. DEBT EQUITY RATIO: TOTAL DEBT NET WORTH DEBT EQUITY RATIO: LONG TERM BORROWED CAPITAL SHARE HOLDERS FUND
3. Capital Employed To Net Worth Ratio: There is another alternative way of expressing the basic relationship between debt and equity. It helps in knowing, how much funds are being contributed together by lenders and owners for each rupee of owner's contribution. This can be found out by calculating the ratio of capital employed or net assets to net worth NET WORTH RATIO: CAPITAL EMPLOYED NET WORTH
4. Other Debt Ratios: To assess the proportion of total funds Short and Long term provided by outsiders to finance total assets, the following ratio may be calculated TL to TA RATIO: Other debt ratio: TOTAL LIABILITIES TOTAL ASSETS
Activity Ratios: Funds of creditors and owners are invested in various assets to generate sales and profits. The better the management of assets, the larger is an amount of sales. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets these ratios are also called turnover ratios because they indicate the speed with which assets are being converted or turned over into sales. Activity ratios, thus, involve a relationship between sales and assets. A proper balance between sales and assets generally reflects that assets are managed well.
1. Inventory turnover ratio 2. Debtors turnover ratio 3. Collection period 4. Net assets turnover ratio 5. Working Capital turnover ratio
1. Inventory Turnover Ratio: Inventory turnover ratio indicates the efficiency of the firm in producing and selling its product. It is calculated by dividing cost of goods sold by average inventory. Average inventory consists of opening stock plus closing stock divided by 2. INVENTORY TURNOVER RATIO: COST OF GOODS SOLD AVERAGE INVENTORY
2. Debtors Turnover Ratio: Debtors turnover ratio is found out by dividing credit sales by average debtors. Debtors turnover indicates the number of times debtors turnover each year. Generally the higher the value of debtors turnover, the more efficient is the management of credit DEBTORS TURNOVER RATIO = CREDIT SALES AVERAGE DEBTORS
3. Collection Period: The average number of days for which debtors remain outstanding is called the average collection period. AVERAGE COLLECTION PERIOD= NO. OF DAYS IN A YEAR DEBTORS TURNOVER
4. Net Assets Turnover Ratio: A firm should manage its assets efficiently to maximize sales. The relationship between sales and assets is called net assets turnover ratio. Net assets include net fixed assets and net current assets NET ASSETS TURNOVER RATIO= SALES NET ASSETS
5. Working Capital Turnover Ratio: A firm may also like to relate net current assets to sales. It may thus computer networking capital turnover by dividing sales by net working capital WORKING CAPITAL TURNOVER RATIO= SALES NET CURRENT ASSETS
Profitability Ratios: A company should earn profits to survive and grow over a long period of time. Profits are essential but it would be wrong to assume that every action initiated by management of a company should be aimed at maximizing profits, irrespective of social consequences. Profit is the difference between revenues and expenses over a period of time. Profit is the ultimate output of a company and it will have no future if it fails to make sufficient profits. Therefore, the financial manager should continuously evaluate the efficiency of the company in terms of profits. The profitability ratios are calculated to measure the operating efficiency of the company.
Generally, there are two types of profitability ratios 1. Profitability in relation to sales 2. Profitability in relation to investment a. Gross profit margin ratio b. Net profit margin ratio c. Operating expenses ratio d. Return on Investment e. Return on equity f. Earnings per share g. Dividends per share h. Dividend payout ratio i. Price earnings ratio
A. Gross Profit Ratio: It is calculated by dividing gross profit by sales. The gross profit margin reflects the efficiency with which management produces each unit of product. This ratio indicates the average spread between the cost of goods sold and the sales revenue. GROSS PROFIT RATIO= GROSS PROFIT SALES B. Net Profit Ratio: Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross profit. The net profit margin is measured by dividing profit after tax or net profit by sales. NET PROFIT RATIO= NET PROFIT SALES C. Operating Expense Ratio: Operating expense ratio explains the changes in the profit margin ratio. This ratio is computed by dividing operating expenses like cost of goods sold plus selling expenses, general expenses and administrative expenses by sales. OPERATING EXPENSE RATIO= OPERATING EXPENSES *100 SALES The higher operating expenses ratio is unfavorable since it will leave operating income to meet interest dividends etc.
D. Return On Investment: The term investment may refer to total assets or net assets. The conventional approach of calculating return on investment is to divide profit after tax by investment. Investment represents pool of funds supplied by shareholders and lenders. While PAT represents residue income of shareholders RETURN ON INVESTMENT=PROFIT AFTER TAX INVESTMENT E. Return On Equity: Ordinary shareholders are entitled to the residual profits. A return on shareholders equity is calculated to see the profitability of owners investment. Return on equity indicate show well the firm has used the resources of owners. The earning of a satisfactory return is the most desirable objective of business. RETURN ON EDQUITY= PROFIT AFTER TAX NET WORTH F .Earnings Per Share: The measure is to calculate the earnings per share. The earning per share is calculated by dividing profit after tax by total number of outstanding. EPS simply shows the profitability of the firm on a per share basis, it does not reflect how much is paid as dividend and how much is retained in business. EARNINGS PER SHARE= PROFIT AFTER TAX NO. OF SHARES OUTSTANDING
G. Dividends per Share: The net profits after taxes belong to shareholders. But the income which they really receive is the amount of earnings distributed as cash dividends. Therefore, a larger number of present and potential investors may be interested in DPS rather than EPS. DPS is the earnings distributed to ordinary shareholders divided by the number of ordinary shares outstanding. DPS= EARNINGSPAID TO SHARE HOLDERS NUMBER OF SHARES OUTSTANDING
H. Dividend Pay Out Ratio: The dividend payout ratio is simply the dividend per share divided by Earnings per Share. DIVIDEND PAY OUT RATIO= DIVIDEND PER SHARE EARNINGS PER SHARE
I. Price Earnings Ratio: The reciprocal of the earnings yield is called price earnings ratio. The price earnings ratio is widely used by security analysts to value the firm's performance as expected by investors. Price earnings ratio reflects investors expectations about the growth of firm's earnings. Industries differ in their growth prospects. Accordingly, the P/E ratios for industries very widely.
PRICE EARNING RATIO= MARKET VALUE PER SHARE EARNING PER SHARE
The group has a net worth of over Rs.6, 523crore and has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 6.2 million customer accounts.
Group Management
Mr. Uday Kotak Mr. C. Jayaram Mr. Dipak Gupta Executive Vice Chairman & Managing Director
Matrix Information Services Limited marks the Group's entry into information distribution. 1998 Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company. Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business. 2000 Kotak Securities launches its on-line broking site (now www.kotaksecurities.com).Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. 2001 Matrix sold to Friday Corporation Launches Insurance Services 2003 Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian company to do so. 2004 Launches India Growth Fund, a private equity fund. 2005 Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra. Launches a real estate fund 2006 Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities
ethanol manufacturing company in India. He has been looking after the affairs of BHL since 1974 shouldering its overall responsibility and was made the Managing Director of BHL in 1988. He has over 35 years of extensive experience in the Indian Sugar Sector
AUDITORS
Messrs. S. R. Batliboi & Co., Chartered Accountants, auditors of your Bank, retires on the conclusion of Twenty Fourth Annual General Meeting and is eligible for re-appointment. You are requested to appoint auditors for the current financial year and to fix their remuneration.
STATUTORY INFORMATION
The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable to Kotak Mahindra.
EMPLOYEES
The employee strength of Kotak Mahindra along with its subsidiaries as of 31st March 2009 was around 18000, as compared to around 21000 employees a year ago. The Bank standalone had around 8400 employees as of 31st March 2009. 179 employees employed throughout the year and 88 employees employed for part of the year were in receipt of remuneration of Rs.24 lacks or more per annum.
Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF).KMAMC started operations in December 1998 and has over 4 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles
and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. They are sponsored by Kotak Mahindra Bank Limited, one of India's fastest growing banks, with a pedigree of over twenty years in the Indian Financial Markets. Kotak Mahindra Asset Management Co. Ltd., a wholly owned subsidiary of the bank, is our Investment Manager. They made a humble beginning in the Mutual Fund space with the launch of our first scheme in December, 1998. Today we offer a complete bouquet of products and services suiting the diverse and varying needs and risk-return profiles of our investors. We are committed to offering innovative investment solutions and world-class services and conveniences to facilitate wealth creation for our investors. Different people have different investment needs. The ability to take risks while investing in financial products varies accordingly. In this section we present our wide range of Mutual Fund schemes, which span across the risk-reward spectrum.
PROMISES
To deliver the highest standard of service quality. To advice you of your targeted turnaround time and adhere to the same. To have a transparency in all over transaction or dealings To have a solution oriented mind set where customers are placed first. To act courteously fairly and responsibly in all our dealing with you. To accept and act upon customers feedback/complaint.
It also brings in the much needed investment discipline as you allocate a defined sum to your investments for a defined frequency, thus making investments a mandatory component while you allocate your resources. It brings down your average cost of acquisition of units. As you would allocate a fixed sum every month, you would buy more units when the prices of our units are lower than when they are higher. We call this Rupee Cost Averaging. Finally, through this arrangement, your funds otherwise lying idle (and if you know it, on account of inflation, depleting in real value) in your bank account get channelized into future wealth creating investments. And of course, you stand to gain in terms of a more favorable entry load on your systematic investments.
This facility caters to two segments of investor needs : 1) Investors wanting defined, regular funds inflow from their investments. 2) Investors interested in booking gains at a regular interval. If you require an exact amount regularly then the Fixed Option is suitable for you. If you do not want this withdrawal to disturb your capital contribution and would like only to reap the appreciation generated in the investment, you should opt for the appreciation option. Ideally SWP should be opted from the growth options of our schemes.
our Debt Schemes and choose a periodic transfer of investments into our equity schemes. 2) Investors who are already invested in equity wanting to book profits regularly and allowing the profits to earn returns in any of our Debt schemes. You can choose to transfer either a fixed sum every defined period or only the appreciation on your investments over that period from one scheme to another. The latter is helpful, where you do not want the transfer to disturb your capital contribution. Ideally STP should be opted from the growth options of our schemes.
(2.5.4) D-Kredit
Want to receive your dividend entitlement and redemption payouts faster and straight into your bank account. Our Direct Credit Facility comes automatically to you (unless you choose otherwise) if you hold an account with any of the 14 banks listed below: ABN AMRO Bank Deutsche Bank AXIS Bank HDFC Bank Centurion Bank of Punjab HSBC Citibank ICICI Bank Corporation Bank IDBI Bank Indusind Bank Kotak Mahindra Bank Standard Chartered Bank Yes Bank
Direct Credit is safer, faster and convenient compared to the conventional cheque payout mechanism.
Knowing your client is a strategic step. Clients may vary. Their financial needs and choice of investment differs depending on their age, earning capacity, family commitments and ability to take risk. Some of the categories are given below Young and Accumulating: These clients are typically under 40, seeking capital appreciation. They are willing to take high risks for high returns. Middle aged with family commitments: Ideally between 40-60and looking at stable investments and lower risks
Retired: They are above 60 years seeking income to meet their regular expenses. Safety of their principal is their prime concern Institutions and high net worth individuals: These include corporates, banks, trusts and wealthy investors who seek an appropriate combination of tax efficient growth and income depending upon their return expectation. There are three types of prospects - Receptive, potential and independent minded. The earlier you identify which of these you are talking to the more productive will be your selling efforts. Receptive: They are clients who will work in close association with you to develop a financial plan. They have the discipline to invest regularly and believe in the merits of professional financial advisors. Potential: They are the people who have neither the discipline nor the patience to invest but do have the desire to become a successful investor. Working closely with them could make them Receptive clients. Independent minded clients: These are clients who prefer investing directly and do not use financial advisors. They can be cultivated over time.
You should ask your clients to start investing early and invest regularly. This will help them to make more money because of the power of compounding of the rupee.
It is by doing the things that go beyond what the client anticipates that you build high levels of goodwill that leads to testimonials, resales and referrals to other prospective clients.
(4.3) Sampling DesignSampling is the selection of some part of aggregate or totality on the basis of which a judgment or inference about the aggregate or totality is made.
(4.2.1) Sampling UnitThe sampling unit of my survey includes the Balance Sheet, Profit & Loss Account, Quarterly Results etc.
(4.2.3) Data CollectionData Collection was done in two ways they were1. Primary data collection 2. Secondary data Collection
(4.2.4) Secondary Data Collection In my project I have taken secondary data for analysis it is through Website, Journals etc.
(4.2.5) Analysis and InterpretationData collected was compiled up and on the basis of percentage method depicted through bar diagrams Interpretation was done and recommendations were given.
CHAPTER 6 FINDINGS
The return on investment ratio comes down by very less margin; it shows that the bank is having a consistent performance in earning on its investment as compared to last year.
The return on net worth shows that how the firm uses the shareholders interest or investment fund to generate earning growth. By comparing last 3 years RONW it is decaling every year which shows the bank is not having much profit available to equity shareholder & it is also not preferred much by the investors.
(7.1) Conclusion
After overhauling the all situation that boosted a number of Pvt. Companies associated with multinational in the Insurance Sector to give befitting competition to the established behemoth Kotak in private sector, we come at the conclusion that : There are very tough competitions among the private insurance companies on the level of new trend of advertising to lull a major part of Customers.
Kotak have to work more to increase its sale or attract customers for investing, because the operating profit margin goes very down in 2009.
The positive point is that they are having consistent return on investment.
As a private player in the market kotak is facing problem in recovering its loans due to which net profit of the bank came down by 2.02%.
The entry of more Pvt. Players in the Insurance Sector has expanded the product segment to meet the different level of the requirement of the customers. It has brought about greater choice to the customers.
(7.2) Suggestion
The study has provided with the useful data from the respondents. There has a lot to be recommended. Following are the recommendations:
There is a need for better promotion for the investment products & services. The bank should advertise its products through television because it will reach to the masses.
More returns should be provided on Insurance plans. As the bank provide the Insurance facility to its customers. It should provide this facility by tie up with the other Insurance organizations as well. The main reason is that, the entire customers do not want Insurance of only one company. They should have choice while selecting a suitable Insurance plans. This will definitely add to the goodwill & profit for the bank.
Bibliography
(8.1) Books:
Research methodology by C.R KOTHARI Management accounting and business finance by SHASHI K. GUPTA & R.K. SHARMA
(8.2) Website
www.google.com www.indiainfoline.com www.kotaklife.com www.insuranceworld.com www.corpbank.com www.about.com
ANNEXURE
Profit and Loss a/c of the year of 31st march`09 to 31st march`13