SUMMER PROJECT REPORT

RATIO ANALYSIS OF KOTAK MAHINDRA BANK LTD

Prepared for the Mumbai University in the partial fulfillment of the

requirement for the award of the degree in

MASTERS OF MANAGEMENT STUDIES

Submitted By:

Name: Surendra Saroj

Roll No. & Year: 111 2016-18

Under the guidance of

Prof. Kiran Rodrigues
SFIMAR

St Francis Institute of Management and Research, Mt. Poinsur,

S.V.P Road, Borivali (W) Mumbai.

Batch- 2016-2018 :

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 DECLARATION

I, Surendra Chhotelal Saroj student of St Francis Institute of Management and

Research, hereby declare that this report is my original and authentic work and to
the best of my knowledge and understanding, there is no plagiarism or dishonest
means involved. Any reference made from secondary data and other resources
have been duly acknowledged. I also declare that if found otherwise, my report will
render itself null and void.

Guides Name & Signature Students Name & Signature

Prof Kiran rodrigues Surendra.C.Saroj

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 Acknowledgement

I Place my sincerely thanks to kotak Mahindra Bank Ltd. For giving me an opportunity to
complete internship in their organization.

I wish to express my earnest gratitude to my company guide, Mr. Devang Naik (Assistant
Manager) for providing all the support and help required for the project.

I am also extremely grateful to my faculty guide Prof. Kiran Rodrigues for his guidance and
tireless support throughout this internship.

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 Executive Summary

In any organization, the two important financial statements are the Balance Sheet and Profit & Loss
Account of the business. Balance Sheet is a statement of financial position of an enterprise at a particular point
of time. Profit & Loss account shows the net profit or net loss of a company for a specified period of time. When
these statements of the last few year of any organization are studied and analyzed, significant conclusions may
be arrived regarding the changes in the financial position, the important policies followed and trends in profit and
loss etc. Analysis and interpretation of financial statement has now become an important technique of credit
appraisal. The investors, financial experts, management executives and the bankers all analyze these statements.
Though the basic technique of appraisal remains the same in all the cases but the approach and the emphasis in
the analysis vary. A banker interprets the financial statement so as to evaluate the financial soundness and
stability, the liquidity position and the profitability or the earning capacity of borrowing concern. Analysis of
financial statements is necessary because it helps in depicting the financial position on the basis of past and current
records. Analysis of financial statements helps in making the future decisions and strategies. Therefore it is very
necessary for every organization whether it is a financial or manufacturing, to make financial statement and to
analyze it.

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 Table of contents

Sr NO Topic Page no

1 Title Page 1

2 Declaration 2

3 Company Certificate 3

4 Acknowledgement 4

5 Executive summary 5

6 Introduction to company 7

7 Need for study 12

8 Objective 13

Research Methodology 14

Data Collection 15

Data analysis 16

9 Finding and interpretation 27

10 Limitation 28

11 Future scope 29

12 Conclusion 30

13 Reference 31

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KOTAK MAHINDRA BANK LTD

Our Vision:

To be the most trusted Global Indian Financial Services brand and the most preferred financial
services employer with focus on creating value.

Our Mission:

Create a lasting value for communities by:

Promoting and supporting education and other interventions for the under privileged

Encouraging employee volunteering

Supporting Non-Governmental Organizations and other institutions with financial and other
resources to collectively deliver community initiatives

CSR Focus Areas:

Promoting Education - Primary Focus Area

Enhancing vocational skills and livelihood projects

Promoting preventive healthcare and sanitation

Reducing inequalities faced by socially and economically backward groups

Environmental Sustainability

Kotak Mahindra Bank is an Indian private sector bank headquartered

in Mumbai, Maharashtra, India. In February 2003, Reserve Bank of India (RBI) gave the licence
to Kotak Mahindra Finance Ltd., the group's flagship company, to carry on banking business.

It offers a wide range of banking products and financial services for corporate and retail
customers through a variety of delivery channels and specialized subsidiaries in the areas
of personal finance, investment banking, life insurance, and wealth management.

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Kotak Mahindra Bank has a network of 1,369 branches across 689 locations and 2,163 ATMs in
the country (as of 31 March, 2017) in 2016, it was the fourth largest private bank in India by
market capitalization.

History:

Established in 1985, the Kotak Mahindra group has been one of India's most reputed financial
conglomerates. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship company
was given the license to carry on banking business by the Reserve Bank of India (RBI). This
approval created banking history since Kotak Mahindra Finance Ltd. is the first nonbanking
finance company in India to convert itself in to a bank as Kotak Mahindra Bank Ltd. Today, the
bank is one of the fastest growing bank and among the most admired financial institutions in
India.
The bank has over 323 branches and a customer account base of over 2.7 million. Spread all over
India, not just in the metros but in Tier II cities and rural India as well, it is redefining the reach
and power of banking. Presently it is engaged in commercial banking, stock broking, mutual
funds, life insurance and investment banking. It caters to the financial needs of individuals and
corporates. The bank has an international presence through its subsidiaries with offices in
London, New York, Dubai, Mauritius, San Francisco and Singapore that specialize in providing
services to overseas investors seeking to invest into India.

Kotak group Products and Services Bank

Credit Cards
Life Insurance
Mutual funds
Securities
Institutional Equities
Investment Banking
International Business
Kotak Private Equity
Kotak Realty fund
Wealth Management

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 Services of Kotak Mahindra Bank
Deposit Accounts
Saving Account
Current Account
Term deposits
Corporate Salary Accounts
Jifi Account
Safe Deposit Locker
Kotak 3-in-1 Account

Kotak Cards
Debit Cards
Credit Cards
Compare Credit Cards
Kotak Netc@rd
Best Compliment Cards
Kotak Multi Currency World travel Cards

Kotak Loans:
Personal Loans
Home Loans
Loan Against Property
Education Loan
Tractor Finance
Rural Auto & Farm Equipment Finance
Home Loan Balance Transfer
Gold Loans
Commercial Vehicle Finance
Loan Against Securities

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 Construction Equipment/ Infrastructure Finance
Saral Auto Finance

Convenience Banking
Net Banking
Mobile Banking
Phone Banking
Atm Networks
Money Watch
Hastag Banking
Kotak Payment Gateway
Insta Balance Service
Immediate Payment Service
Alerts
Sms Banking
Cash Deposit Machine
Investment and Insurance
Demat
Mutual Funds
Life Insurance
Qualified Foreign Investor
ASBA
National Pension System

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 TIMELINE
Year Milestone
1985 Kotak Mahindra Finance Limited commences bill discounting business
1987 Kotak Mahindra Finance Limited enters leasing and hire purchase business
1990 Starts the auto finance division for financing passenger cars
1991 Launches investment banking business
1992 Enters the funds syndication business
1995 Commenced joint venture with Goldman sachs group inc.
Investment Banking division incorporated into a separate company- kotak
Mahindra capital company
1996 The auto finance business is hived off into a separate company kotak Mahindra
Prime limited(formerly known as Kotak Mahindra Primus Limited)
Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited,
for financing ford vehicles.
1998 Launches mutual fund through kotak Mahindra Asset management company
2000 Kotak Securities Launches online broking business(now
www.kotaksecurities.com)
2001 Launches insurance business, partners Old Mutual from South Africa to form
Kotak Mahindra Old Mutual Life Insurance Ltd.
2003 Kotak Mahindra Finance Ltd, the groups flagship company, receives banking
license from the Reserve Bank of India. With this, KMFL becomes the first non-
banking finance company to be converted into a commercial bank Kotak
Mahindra bank Ltd.
2004 Enters alternate assets business with the launch of a private equity fund.
2005 Kotak Mahindra Group realigns joint venture in ford credit; takes 100% ownership
of Kotak Mahindra Prime and sells its stake in ford credit Mahindra to ford.
2005 Launches a real estate fund.
2006 Buys out Goldman Sachs equity stake in Kotak Mahindra Capital Company and
Kotak Securities Ltd.
2008 Launches a Pension Fund under Indias National Pension System

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 2009 Kotak Mahindra Bank Ltd. Opens a representative office in Dubai
Kotak Mahindra Bank Ltd. Becomes anchor investor in Ahmedabad Commodities
Exchange
2015 ING Vyas Bank has merged with Kotak Mahindra Bank with effect from 1 April
2015

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Need for study:

The need for study of the project is to understand various ratios their meaning, their importance
and their significance.to study and understand the ratio of kotak Mahindra bank ltd & to
understand various product and services at Kotak Mahindra bank ltd.

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Objective of study:

1. To understand the various products and services of Kotak Mahindra Bank Ltd.

2. To analyze various ratios based on the Balance Sheet & profit and loss account of Kotak
Mahindra bank Ltd.

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 Research Methodology

The research methodology which is used for study to describe the features and characteristics of
Kotak Mahindra Bank Ltd.

Exploratory Research

Descriptive Research

Exploratory research, as the name states, intends merely to explore the research questions
and does not intend to offer final and conclusive solutions to existing problems.

The main objective of project is to study about the product and services of Kotak Mahindra bank
Ltd and also to study about the financial position of the bank by doing Ratio Analysis of the Past
five years.

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Data Collection:

Secondary Data was collected from moneycontrol.com, capital line and through kotak website,
other internet sites and some past annual report of kotak Mahindra bank ltd.

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 Data Analysis

Ratio:

There are different types of ratio and some ratio are:

1. Current ratio

2. Quick ratio

3. Gross profit ratio

4. Earnings per share ratio

5. Net Profit Margin

6. Cash to Total Deposit Ratio

7. Return on Total Asset Ratio

8. Asset Turnover

9. Return On Capital employed

1) Current Ratio:

o The current ratio is a liquidity ratio that measures a company's ability to pay short-term
and long-term obligations. To gauge this ability, the current ratio considers the current
total assets of a company (both liquid and illiquid) relative to that companys current total
liabilities.
o The formula for calculating a companys current ratio =

Current Ratio = Current Assets / Current Liabilities

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 Year Current ratio
March 2013 0.78
March 2014 0.59
March 2015 0.40
March 2016 1.14
March 2017 1.10

Chart Title
2019
2018
1.1
2017
1.14
2016
2015 0.4
2014 0.59
0.78 2017
2013 2016
2015
2012 2014
2013
2011
2010
1 2 3 4 5

Year Current ratio

Interpretation:

The standard norm of current ratio is (2:1). In all years the current ratio is less than
standard which is not satisfactory. This is mainly due to increasing creditors. Therefor it
can be calculated the liquidity performance of the bank is not satisfactory.

2) Quick Ratio:

The quick ratio is an indicator of a companys short-term liquidity. The quick ratio measures a
companys ability to meet its short-term obligations with its most liquid assets. For this reason,
the ratio excludes inventories from current assets, and is calculated as follows:

Quick ratio = (current assets inventories) / current liabilities

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 Year Quick ratio
March 2013 18.95
March 2014 17.39
March 2015 14.83
March 2016 15.61
March 2017 18.09

2040

2035

2030

2025 18.09
17.39 15.61
18.95 14.83
2020

2015

2010
2015 2016 2017
2013 2014
2005

2000
1 2 3 4 5

Year Quick ratio

Interpretation:

The standard norm of Quick ratio is (1:1). In all year quick ratio is more than the standard norm
which is satisfactory. This is mainly due to fast moving of large parts of current assets and debts.
Therefore it can be calculated the liquidity performance of bank is excellent.

3) Gross profit ratio:

Gross profit ratio (GP ratio) is a profitability ratio that shows the relationship between gross
profit and total net sales revenue. It is a popular tool to evaluate the operational performance of
the business . The ratio is computed by dividing the gross profit figure by net sales.

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Formula:

The following formula/equation is used to compute gross profit ratio:

Year Gross Profit ratio

March 2013 12.38
March 2014 13.43
March 2015 9.96
March 2016 8.72
March 2017 14.16

Chart Title
2035

2030

2025 14.16
2020 13.43 9.96 8.72
12.38
2015

2010
2015 2016 2017
2013 2014
2005

2000
1 2 3 4 5

Year Gross Profit ratio

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Interpretation:

In the year 2013 is 12.38,2014 is 13.43,2015 is 9.96,2016 is 8.72 and 2017 is 14.16

4) Earning per Share ratio:

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share
of common stock. Earnings per share serves as an indicator of a company's profitability.

Calculated as:

Year Earnings Per Share Ratio

March 2013 18.23
March 2014 19.51
March 2015 24.16
March 2016 63.09
March 2017 70.53

Chart Title
2100

2080

2060
63.09 70.53
2040
19.51 24.16
2020 18.23

2000
2013 2014 2015 2016 2017
1980

1960
1 2 3 4 5

Year Earnings Per Share Ratio

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Interpretation:

In this Eps is increasing every year has in the year 2017 is 70.53 which indicate that kotak
growing its earning percent and it increases the share price in the stock market..

5) Net Profit Margin:

Net profit margin is a vital calculation in determining the financial strength of a company. It is a
ratio that explains how much of the money a company earns that is kept as profits, showing how
much of each dollar earned is retained by the company.

Because net profit margin is a measurement of income, the higher the net profit margin, the
better. Likewise, when comparing the net profit margin of a company to its competitors, the best
case scenario is to have a higher net profit margin than other companies in the industry.

Calculated as:

Net profit = Revenue - Cost of Goods Sold (COGS) - Operating Expenses - Interest and Taxes

Year Net Profit Margin

March 2013 16.91
March 2014 17.13
March 2015 19.19
March 2016 12.75
March 2017 19.27

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 Chart Title
2040
2035
2030
19.27
2025 19.19
16.91 17.13 12.75
2020
2015
2010
2015 2016 2017
2013 2014
2005
2000
1 2 3 4 5

Year Net Profit Margin

Interpretation:

It indicate the firm capacity to face adverse economic condition such as price competitors, low
demand etc. obviously higher the ratio, the better is the profitability for the year 2016 we can see
that net profit margin of kotak has gone down considerably. This primarily due one off
expenditure incurred for the merger with ingvyas bank. .

6) Cash to Total Deposit Ratio:

Total deposit includes current account, saving account, fixed deposits in different schemes laid
down by banks and deposits of other financial institution. Fixed deposits are required after
certain period of time. But current account and saving account cash can be withdrawn any time.
Thus banks have to maintain certain amount of cash with them to meet the need of current
account and saving account of the banks. If there is excess of cash holding even that is not
favorable to the bank as they can invest that cash in some investment opportunities to earn
income.

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 Year Cash to total deposit
March 2013 4.72
March 2014 4.68
March 2015 5.13
March 2016 5.07
March 2017 4.86

cash to total deposit

5.2

5.1

4.9

4.8
5.13
5.07
4.7
4.86
4.6
4.72 4.68
4.5

4.4
1 2 3 4 5

Interpretation:

Cash to total deposit shows that kotak has less cash with him to maximize the profit.

7) Return On Total Assets ratio:

Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
ROA gives an idea as to how efficient management is at using its assets to generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a
percentage. Sometimes this is referred to as "return on investment".

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The formula for return on assets is:

Year Return on Total asset ratio

March 2013 1.82
March 2014 1.75
March 2015 1.93
March 2016 1.4
March 2017 1.68

Return on Total asset ratio

2.5

1.5

1 1.93
1.82 1.75 1.68
1.4
0.5

0
1 2 3 4 5

Interpretation:

In the year 2016-2017 compared to previous year the return on total asset was highest so we can
say that as the company was using its asset more efficiently so as to generate sales. However the
ratio in the year 2015-2016 had declined because of one operating expense incurred with the
IngVysya Bank.

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 8) Asset turnover ratio:

The asset turnover ratio is an efficiency ratio that measures a company's ability to generate sales
from its assets by comparing net sales with average total assets. In other words, this ratio shows
how efficiently a company can use its assets to generate sale.

The Formula for Asset Turnover Ratio= Revenue/ Total Assets

Year Asset Turnover ratio

March 2013 0.11
March 2014 0.1
March 2015 0.1
March 2016 0.11
March 2017 0.9

Asset Turnover ratio

1
0.9
0.8
0.7
0.6
0.5
0.9
0.4
0.3
0.2
0.1
0.11 0.1 0.1 0.11
0
1 2 3 4 5

Interpretation:

Asset Turnover ratio in Kotak Mahindra Bank is have been increased in the year 2016-2017 as
compared to previous year. This means bank is having low profit margin as it has high asset
turnover.

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 9) Return on capital Employed:

Return on capital employed (ROCE) is a financial ratio that measures a company's profitability
and the efficiency with which its capital is employed. ROCE is calculated as:

ROCE = Earnings before Interest and Tax (EBIT) / Capital Employed

Year Return on capital employed

March 2013 14.4
March 2014 12.24
March 2015 13.19
March 2016 8.72
March 2017 12.35

Retrun on capital employed

16

14

12

10

8
14.4
13.19 12.35
6 12.24

4 8.72

0
1 2 3 4 5

Interpretation:

It indicates the return on the funds invested by company before taking into consideration interest
and tax element. Higher the ratio indicates optimum utilization capital as we can see that kotak
ROCE is increased from the previous year as it indicates that kotak is putting his capital to
optimum use.

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FINDING AND INTERPERTATION:

1. Kotak Mahindra Bank Follows RBI Guidelines and strictly adheres to the instruction
given by RBI.
2. Due to merger in 2016 the previous period numbers are not comparable for the bank.
3. There has been a 73% increase in the operating expenses of kotak Mahindra due to the
merger with INGVYAS as number of branches have increase from 641 in 2014 to 1261
in 2016.
4. The borrowing have increased by 66% for current year. Indicating high Borrowing rate
primarily to finance Ing Vysya Merger.
5. In the year 2016-2017 the return on total asset was highest so we can say that the
company is using its asset more efficiently to generate sales
6. We can also see that in the year 2016-2017 ROCE shows us that kotak has made
optimum utilization of capital to make profit.
7. In the year 2016-2017 at the time of demonetization kotak got new account of sole
proprietors and other accounts.

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Limitations to the study:

1. Constraints related to non-disclosure of the confidential data hindered the inclusion in the
study and thus, limiting the scope of the study.
2. Assumption and Projection are based on the data and information provided by internet
sites which can be mis-leading and may deviate from current market condition.
3. The staff although was very helpful but was not able to give much of its time due to its
own work constraints.

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FUTURE SCOPE:

Fundamental analysis can further be studied by analyzing cash flow structure and by
using economic environment.
Further analysis can be done by comparing ratio of kotak Mahindra bank and other banks
and check its place in the market.
Further comparison between kotak and peer group can be done by using technical
analysis.
Detail analysis can be done by comparing Kotak bank and its peer group product and
services thoroughly.
Detail analysis can be done by using different method of research methodology.
Kotak has more clients after demonetization as many new accounts where opened and
this will get more investment in banks at different branches.

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 Conclusion

The current ratio of the kotak Mahindra bank ltd is increasing every year which is a good
sign that company is having liquid asset which can be converted to cash in need.
The earning per share is also increasing every year which shows that you can invest
money in the company.
The Net profit margin is good of kotak bank ltd as it shows the company stability to face
economic condition price competition in future.
The kotak liquidity performance is excellent which more than the standard norm.

REFERENCES:

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http://www.kotak.com/our-story.html

https://en.wikipedia.org/wiki/Kotak_Mahindra_Bank

www.investopedia.com

http://money.rediff.com/companies/Kotak-Mahindra-Bank-
Ltd/14060005/ratio?src=comp_research

http://www.kotak.com/

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