WCM Kotak Mahindra
WCM Kotak Mahindra
WCM Kotak Mahindra
WORKING CAPITAL:
Cash is the lifeline of a company. If this lifeline deteriorates, the company's ability to fund
operations, reinvest and meet capital requirements and payments also deteriorate.
Understanding a company's cash flow health is essential for making investment decisions. A
good way to judge a company's cash flow prospects is to look at its working capital
management (WCM).
Working capital of a company reveals more about the financial condition of a business than
almost any other calculation. It tells you what would be left if a company raised all of its short
term resources, and used them to pay off its short term liabilities. The more working capital,
the less financial strain a company experiences. Working capital also gives investors an idea of
the company's underlying operational efficiency. Money that is tied up in inventory or
money that customers still owe to the company can't be used to pay off any of its obligations.
So, if a company is not operating in the most efficient manner (slow collection) it will show up
in the working capital. This can be seen by comparing the working capital from one period of
time to another; slow collection may signal an underlying problem in the company's operations.
DEFINITION:
The definition of working capital is that it is the difference between an organization’s current
assets and its current liabilities. Of more importance is its function which is primarily to support
the day-to-day financial operations of an organization, including the purchase of stock, the
payment of salaries, wages and other business expenses, and the financing of credit sales. It’s a
measure of both a company's efficiency and its short-term financial health.
The better a company manages its working capital, the less the company needs to borrow. Even
companies with cash surpluses need to manage working capital to ensure that those surpluses
are invested in ways that will generate suitable returns for investors.
There are two concepts of working capital.
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They are
→ Gross working capital and
→ Net working capital.
The term gross working capital, also referred to as working capital means the total current
asset. The term net working capital can be defined in two ways:
The most common definition of net working capital is the difference between the
current assets and the current liabilities.
The alternate definition of NWC is that portion of current assets which is financed with
long term funds. Since the current liabilities represent the sources of short term funds,
as long as current assets exceed current liabilities, the excess must be financed with
long term funds.
The net working capital, as a measure of liquidity is quite useful for internal control. The net
working capital helps in comparing the liquidity of the same firm over time.
Therefore:
Current Assets - Current Liabilities = Working Capital
A positive working capital means that the company is able to pay off its short-term liabilities. A
negative working capital means that a company currently is unable to meet its short-term
liabilities with its current assets (cash, accounts receivable, inventory).Management must
ensure that a business has sufficient working capital. Too little of the working capital will result
in cash flow problems highlighted by an organization exceeding its agreed overdraft limit, failing
to pay suppliers on time, and being unable to claim discounts for prompt payment. In the long
run, a business with insufficient working capital will be unable to meet its current obligations
and will be forced to cease trading even if it remains profitable on paper.
On the other hand, if an organization ties up too much of its resources in working capital it will
earn a lower than expected rate of return on capital employed. Again this is not a desirable
situation. As it is said that working capital is the difference between the current assets and the
current liabilities, the management of the company has to manage their current assets and
current liabilities.
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NEED OF THE STUDY:
Working capital management is one of the key areas of financial decision-making. It is
significant because, the management must see that an excessive investment in current assets
should protect the company from the problems of stock-out. Current assets will also determine
The goal of working capital management is to manage the firm current assets and current
liabilities in such a way that a satisfactory level of working capital is maintained. If the firm
cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may
sources that a company taps in order to meet its requirements of finance. Working Capital
scope is very wide concerning with the problems of managing current assets and current
liabilities because managing them is not an easy task. The scope of the study is confined to the
sources that Kotak Mahindra Group tapped over the years under study i.e. 2010-15.
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OBJECTIVES OF THE STUDY:
To study the existing working capital management system of Kotak Mahindra Group.
To find the liquidity position of the current assets and current liabilities of the company.
To analyze the financial performance of the company with reference to working capital.
To investigate the impact of different factors affecting the working capital on net
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LIMITATIONS OF THE STUDY:
Due to the busy schedule of the executives in the company, all the required primary data could
Recommendations of the study are only personal opinions. Hence the judgments may be biased
Short period of time is one of the limitations, due to which a detailed study could not be
You can’t expand, can’t pay your staff, can’t pay yourself and can’t pay your suppliers.
Firm fails to maintain the relationship with the banks due to non requirement of fun.
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RESEARCH METHODOLOGY
The study of Working Capital management is based on primary as well as secondary data.
Data relating to. Has been collected through
PRIMARY DATA:
Data observed or collected directly from first-hand experience. It is original research data in its raw
form, without any analysis or processing
SECONDARY DATA:
Secondary data is the data that have been already collected by and readily available from other sources.
Such data are cheaper and more quickly obtainable than the primary data.
Published annual reports of the company for the year 2008-12.
DATA ANALYSIS
The collected data has been processed using the tools of
Ratio analysis
Graphical analysis
Year-year analysis
These tools access in the interpretation and understanding of the Existing scenario of the
Capital Structure.
The primary data was gathered through personal interaction with the director of the
company.
The secondary data was collected from company’s annual reports from 2010-11 to 2014-
15, various books and Internet.
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INDUSTRY PROFILE
History:
A bank is a financial institution that accepts deposits and channels those deposits into lending
activities. Banks primarily provide financial services to customers while enriching investors.
Government restrictions on financial activities by banks vary over time and location. Banks are
important players in financial markets and offer services such as investment funds and loans.
In some countries such as Germany, banks have historically owned major stakes in industrial
corporations while in other countries such as the United States banks are prohibited from
owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding
entity known as the keiretsu. In France, bancassurance is prevalent, as most banks offer
insurance services (and now real estate services) to their clients. The level of government
regulation of the banking industry varies widely, with countries such as Iceland, having
relatively light regulation of the banking sector, and countries such as China having a wide
variety of regulations but no systematic process that can be followed typical of a communist
system. The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena,
Italy, which has been operating continuously since 1472.
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The coin shows a banker's table (trapeza) laden with coins, a pun on the name of the city.In
fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and a bank.
Entry regulation:
Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate.Usually the definition of the business of banking for
the purposes of regulation is extended to include acceptance of deposits, even if they are not
repayable to the customer's order—although money lending, by itself, is generally not included
in the definition.
Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a monopoly
on the business of issuing banknotes. However, in some countries this is not the case. In the UK,
for example, the Financial Services Authority licences banks, and some commercial banks (such
as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of
England, the UK government's central bank.
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Definition:
The definition of a bank varies from country to country. Under English common law, a banker is
defined as a person who carries on the business of banking, which is specified as:
conducting current accounts for his customers
paying cheques drawn on him, and
Collecting cheques for his customers.
In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in
relation to negotiable instruments, including cheques, and this Act contains a statutory
definition of the term banker: banker includes a body of persons, whether incorporated or not,
who carry on the business of banking' (Section 2, Interpretation). Although this definition seems
circular, it is actually functional, because it ensures that the legal basis for bank transactions
such as cheques do not depend on how the bank is organized or regulated.
The business of banking is in many English common law countries not defined by statute but by
common law, the definition above. In other English common law jurisdictions there are
statutory definitions of the business of banking or banking business. When looking at these
definitions it is important to keep in minds that they are defining the business of banking for
the purposes of the legislation, and not necessarily in general. In particular, most of the
definitions are from legislation that has the purposes of entry regulating and supervising banks
rather than regulating the actual business of banking. However, in many cases the statutory
definition closely mirrors the common law one. Examples of statutory definitions:
"banking business" means the business of receiving money on current or deposit account,
paying and collecting cheques drawn by or paid in by customers, the making of advances to
customers, and includes such other business as the Authority may prescribe for the
purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).
"banking business" means the business of either or both of the following:
1. Receiving from the general public money on current, deposit, savings or other similar
account repayable on demand or within less than [3 months] ... or with a period of call or
notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers.
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Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct
debit and internet banking, the cheque has lost its primacy in most banking systems as a
payment instrument. This has led legal theorists to suggest that the cheque based definition
should be broadened to include financial institutions that conduct current accounts for
customers and enable customers to pay and be paid by third parties, even if they do not pay
and collect cheques.
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Economic functions:
1. Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because they
are negotiable and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
2. Netting and settlement of payments – banks act as both collection and paying agents for
customers, participating in interbank clearing and settlement systems to collect,
present, be presented with, and pay payment instruments. This enables banks to
economies on reserves held for settlement of payments, since inward and outward
payments offset each other. It also enables the offsetting of payment flows between
geographical areas, reducing the cost of settlement between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
4. Credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement
comes from diversification of the bank's assets and capital which provides a buffer to
absorb losses without defaulting on its obligations. However, banknotes and deposits
are generally unsecured; if the bank gets into difficulty and pledges assets as security, to
rise the funding it needs to continue to operate, this puts the note holders and
depositors in an economically subordinated position.
5. Maturity transformation – banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
With a stronger credit quality than most other borrowers, banks can do this by
aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g.
withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in
marketable securities that can be readily converted to cash if needed, and raising
replacement funding as needed from various sources (e.g. wholesale cash markets and
securities markets).
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Law of banking:
Banking law is based on a contractual analysis of the relationship between the bank (defined
above) and the customer—defined as any entity for which the bank agrees to conduct an
account.
The law implies rights and obligations into this relationship as follows:
1. The bank account balance is the financial position between the bank and the customer:
when the account is in credit, the bank owes the balance to the customer; when the
account is overdrawn, the customer owes the balance to the bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to the credit
of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's account as
the customer's agent, and to credit the proceeds to the customer's account.
5. The bank has a right to combine the customer's accounts, since each account is just an
aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the extent that
the customer is indebted to the bank.
7. The bank must not disclose details of transactions through the customer's account—
unless the customer consents, there is a public duty to disclose, the bank's interests
require it, or the law demands it.
8. The bank must not close a customer's account without reasonable notice, since cheques
are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the customer
and the bank. The statutes and regulations in force within a particular jurisdiction may also
modify the above terms and/or create new rights, obligations or limitations relevant to the
bank-customer relationship.
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The requirements for the issue of a bank license vary between jurisdictions but typically
include:
1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or senior
officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.
Types of banks:
Banks' activities can be divided into retail banking, dealing directly with individuals and small
businesses; business banking, providing services to mid-market business; corporate banking,
directed at large business entities; private banking, providing wealth management services to
high net worth individuals and families; and investment banking, relating to activities on the
financial markets. Most banks are profit-making, private enterprises. However, some are
owned by government, or are non-profit organizations.
Central banks are normally government-owned and charged with quasi-regulatory
responsibilities, such as supervising commercial banks, or controlling the cash interest rate.
They generally provide liquidity to the banking system and act as the lender of last resort in
event of a crisis.
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Community development banks: regulated banks that provide financial services and
credit to under-served markets or populations.
Postal savings banks: savings banks associated with national postal systems.
Private Banks: banks that manage the assets of high net worth individuals.
Offshore banks: banks located in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even
18th century. Their original objective was to provide easily accessible savings products
to all strata of the population. In some countries, savings banks were created on public
initiative; in others, socially committed individuals created foundations to put in place
the necessary infrastructure. Nowadays, European savings banks have kept their focus
on retail banking: payments, savings products, credits and insurances for individuals or
small and medium-sized enterprises. Building societies and Landesbanks: institutions
that conduct retail banking.
Ethical banks: banks that prioritize the transparency of all operations and make only
what they consider to be socially-responsible investments.
Islamic banks: Banks that transact according to Islamic principles.
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Both combined:
Universal banks, more commonly known as financial services companies, engage in
several of these activities. These big banks are very diversified groups that, among other
services, also distribute insurance— hence the term bancassurance, a portmanteau
word combining "banque or bank" and "assurance", signifying that both banking and
insurance are provided by the same corporate entity.
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COMPANY PROFILE
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Kotak Securities Ltd
Kotak Securities is one of the largest broking houses in India with a wide geographical
reach. Kotak Securities operations include stock broking and distribution of various
financial products including private and secondary placement of debt, equity and
mutual funds.
Kotak Securities operate in five main areas of business:
o Stock Broking (retail and institutional).
o Depository Services.
o Portfolio Management Services.
o Distribution of Mutual Funds.
o Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd products.
Kotak Mahindra Prime Ltd is among India's largest dedicated passenger vehicle finance
companies. KMPL offers loans for the entire range of passenger cars, multi-utility
vehicles and pre-owned cars. Also on offer are inventory funding and infrastructure
funding to car dealers with strategic arrangements via various car manufacturers in
India as their preferred financier.
For more information, please visit the KMPL website http://carloan.kotak.com
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Kotak International Business
Kotak Private Equity Group helps nurture emerging businesses and mid-size enterprises
to evolve into tomorrow's industry leaders. With a proven track record of helping build
companies, KPEG also offers expertise with a combination of equity capital, strategic
support and value added services. What differentiates KPEG is not merely funding
companies, but also having a close involvement in their growth as board members,
advisors, strategists and fund-raisers.
For more information, please visit the KPEG website www.privateequityfund.kotak.com
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Kotak Realty Fund
Kotak Realty Fund deals with equity investments covering sectors such as hotels, IT
parks, residential townships, shopping centers, industrial real estate, health care, retail,
education and property management. The investment focus here is on development
projects and enterprise level investments, both in real estate intensive businesses.
Since the inception of the erstwhile Kotak Mahindra Finance Limited in 1985, it has been a
steady and confident journey leading to growth and success. The milestones of the group
growth story are listed below year wise.
VISION
To be the most trusted Global Indian Financial Services brand and the most preferred financial
services employer with focus on creating value.
OUR STORY
Since the inception of the erstwhile Kotak Mahindra Finance Limited in 1985, it has been a
steady and confident journey leading to growth and success. The milestones of the group growth
story are listed below year wise.
OUR BUSINESSES
Kotak Mahindra is one of India's leading banking and financial services group, offering a wide
range of financial services that encompass every sphere of life.
Kotak Mahindra Old Mutual Life Insurance Ltd
Kotak Securities Ltd
Kotak Mahindra Capital Company (KMCC)
Kotak Mahindra Prime Ltd (KMPL)
Kotak International Business
Kotak Mahindra Asset Management Company Ltd (KMAMC)
Kotak Private Equity Group (KPEG)
Kotak Realty Fund
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Milestones
2015 Uday Kotak - 'Transformational Business Leader Award' at the AIMA Managing
India Awards 2014.
Uday Kotak - 'Entrepreneur of the Decade' by Bombay Management Association
(BMA).
2014 . Ranked among top 5 Best Ranked Companies for Corporate Governance Practices in
IR Global Ranking
2012 . Uday Kotak, Executive Vice Chairman & Managing Director, Kotak Mahindra Bank
was presented with the Financial Leadership Award at NDTV Profit Biz Excellence Award.
2011 .Kotak Mahindra Bank and Cisco won the Asian Banker Award for the Best Contact
Center Deployment
Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital
2006
Company and Kotak Securities.
Kotak Group realigned joint venture in Ford Credit; their stake in Kotak Mahindra
2005
Prime was bought out (formerly known as Kotak Mahindra Primus Ltd) and Kotak
group’s stake in Ford credit Kotak Mahindra was sold.
Launched a real estate fund.
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2004 Launched India Growth Fund, a private equity fund.
Kotak Mahindra Finance Ltd. converted into a commercial bank - the first Indian
2003
company to do so.
Kotak Mahindra tied up with Old Mutual plc. for the Life Insurance business.
2000
Kotak Securities launched its on-line broking site.
Commencement of private equity activity through setting up of Kotak Mahindra
Venture Capital Fund.
Entered the mutual fund market with the launch of Kotak Mahindra Asset
The Auto Finance Business is hived off into a separate company - Kotak
1996
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. The launch of Matrix Information
Services Limited marks the Group's entry into information distribution.
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1992 Entered the Funds Syndication sector
The Investment Banking Division was started. Took over FICOM, one of India's
1991
largest financial retail marketing networks
1987 Kotak Mahindra Finance Ltd entered the Lease and Hire Purchase market
1986 Kotak Mahindra Finance Ltd started the activity of Bill Discounting
Awards
Recent achievements
At Kotak Mahindra Group we take a client-centric view and constantly innovate to provide you
with the best of services and infrastructure. We have regularly received accolades that stand
testimony to our success in this endeavour. Some of our recent achievements are:
Banking
ICAI Award
Excellence in Financial Reporting under Category 1 - Banking Sector for the year ending
31st March, 2014.
Asiamoney
Best Local Cash Management Bank 2014.
IDG India
Kotak won the CIO 100 'The Agile 100' award 2013.
IDRBT
Banking Technology Excellence Awards Best Bank Award in IT Framework and
Governance Among Other Banks' – 2009.
Banking Technology Award for IT Governance and Value Delivery, 2008.
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IR Global Rankings
Best Corporate Governance Practices - Ranked among the top 5 companies in Asia
Pacific, 2009.
FinanceAsia
Best Private Bank in India, for Wealth Management business, 2009.
Kotak Royal Signature Credit Card
Was chosen "Product of the Year" in a survey conducted by Nielsen in 2009.
IBA Banking Technology Awards
Best Customer Relationship Achievement - Winner 2008 & 2009.
Best overall winner, 2007.
Best IT Team of the Year, 4 years in a row from 2006 to 2009.
Best IT Security Policies & Practices, 2007.
Euromoney
Best Private Banking Services (overall), 2009.
Emerson Uptime Champion Awards
Technology Senate Emerson Uptime Championship Award in the BFSI category, 2008.
Miscellaneous
Best Local Trade Bank in India
The UK based Trade & Forfaiting Review awarded Kotak Mahindra Bank Ltd. the Bronze
Award in the category of Best Local Trade Bank in India at the TFR Awards 2011.
LACP Vision Awards 2010 for Annual Report 2010-11
Platinum Award - Best among Banking Category, APAC.
Gold Award - Most Creative Report, APAC.
Ranked No. 21 among Top 50 Reports, APAC.
Ranked No. 87 among the World's Top 100 Annual Reports.
Businessworld
'Most Valuable CEO' overall, 2010 awarded to Mr. Uday Kotak, Executive Vice Chairman
& Managing Director.
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CNBCTV 18
'Best Performing CFO in the Banking/Financial Services sector by CNBCTV 18 CFO
Awards 2010 awarded to Mr. Jaimin Bhatt.
GIREM
GIREM awarded Kotak Realty Funds Group, the "Investor of the Year" Award for 2009.
IBA Banking Technology Awards
Best Use of Business Intelligence - up, 2008.
Best Enterprise Risk Management - Runner up, 2008.
The Great Places to Work Institute, India
Best Workplaces in India, 2008.
Hewitt
10th Best Employer in India, 2007, 2008 & 2009.
Financial Insights Innovation Award
Best Innovation in Enterprise Security Management in the Asia Pacific Region, 2009.
Frost & Sullivan
Best Passenger Vehicle Finance Company in India, 2006.
CNBC TV 18
Indian Business Leader of the Year, 2008 awarded to Uday Kotak, Executive Vice
Chairman & Managing Director.
Banking information
The Bank publishes the standalone and consolidated results on a quarterly basis. The
standalone results is subjected to "Limited Review" by the auditors of the Bank. The same are
also reviewed by the Audit Committee before submission to the Board. Along with the
quarterly results, an earnings update is also prepared and posted on the website of the Bank.
Every quarter, the Executive Vice-Chairman and Managing Director and the Executive
Director(s) participate on a call with the analysts / shareholders, the transcripts of which are
posted on the website of the Bank. The Bank also has dedicated personnel to respond to
queries from investors.
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Financial Calendar: For each calendar quarter, the financial results are reviewed and taken
on record by the Board during the last week of the month subsequent to the quarter ending.
The audited annual accounts as at 31st March are approved by the Board, after a review
thereof by the Audit Committee. The Annual General Meeting to consider such annual accounts
is held in the second quarter of the financial year.
Stock Exchanges on which listed:
Share Transfer System: Applications for transfers, transmission and transposition are
received by the Bank at its Registered Office or at the office(s) of its Registrars & Share Transfer
Agents. As the shares of the Bank are in dematerialized form, the transfers are duly processed
by NSDL/CDSL in electronic form through the respective depository participants. Shares which
are in physical form are processed by the Registrars & Share Transfer Agents, Karvy
Computershare Private Limited, on a regular basis and the certificates dispatched directly to the
investors.
Investor Helpdesk: Share transfers, dividend payments and all other investor related
activities are attended to and processed at the office of our Registrars & Share Transfer Agents.
For lodgment of Transfer Deeds and any other documents or for any grievances/complaints,
kindly contact Karvy Computershare Private Limited, contact details of which are provided
elsewhere in the Report.
For the convenience of the investors, transfers and complaints from the investors are accepted
at the Registered Office between 9:30 a.m. to 5:30 p.m. from Monday to Friday except on bank
holidays.
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Corporate Responsibility
Community investment and development
Kotak Mahindra views Corporate Social Responsibility as an investment in society and in its own
future. Kotak uses the power of its human and financial capital to help in transforming
communities into vibrant, desirable places for people to live. The group leverages its core
competencies in three areas:
Sustainability
An integral part of all Kotak Mahindra Group activities is to be consistently responsible
to shareholders, clients, employees, society and the environment.
Economic Development
By helping people achieve their financial goals, Kotak strengthens the fabric of
communities and helps them overcome unemployment and poverty to help them shape
their future.
Doing My Bit
A growing number of employees are committed to civic leadership and responsibility
with the support and encouragement of the Kotak Group. A number of employees have
been involved in strengthening communities through voluntary work, payroll giving and
management inputs.
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Senior Management
Mr. Uday S. Kotak
Executive Vice Chairman and Managing Director
Mr. Uday Kotak, is the Executive Vice-Chairman and Managing Director of the Bank, and its
principal founder and promoter. Mr. Kotak is an alumnus of Jamnalal Bajaj Institute of
Management Studies.
In 1985, when he was still in his early twenties, Mr Kotak thought of setting up a bank when
private Indian banks were not even seen in the game. First Kotak Capital Management Finance
Ltd (which later became Kotak Mahindra Finance Ltd), and then with Kotak Mahindra Finance
Ltd, Kotak became the first non-banking finance company in India's corporate history to be
converted into a bank. Over the years, Kotak Mahindra Group grew into several areas like stock
broking and investment banking to car finance, life insurance and mutual funds.
Among the many awards to Mr Kotak's credit are the CNBC TV18 Innovator of the Year Award
in 2006 and the Ernst & Young Entrepreneur of the Year Award in 2003.
He was featured as one of the Global Leaders for Tomorrow at the World Economic Forum's
annual meet at Davos in 1996. He was also featured among the Top Financial Leaders for the
21st Century by Euromoney magazine. He was named as CNBC TV18 India Business Leader of
the Year 2008 and as the most valued CEO by businessworld in 2010.
Mr. C Jayaram
Joint Managing Director
Mr. C. Jayaram, is a Joint Managing Director of the Bank and is currently in charge of the Wealth
Management Business of the Kotak Group. An alumnus of IIM Kolkata, he has been with the
Kotak Group since 1990 and member of the Kotak board in October 1999. He also oversees the
international subsidiaries and the alternate asset management business of the group. He is the
Director of the Financial Planning Standards Board, India. He has varied experience of over 25
years in many areas of finance and business, has built numerous businesses for the Group and
was CEO of Kotak Securities Ltd. An avid player and follower of tennis, he also has a keen
interest in psephology.
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Mr. Dipak Gupta
Joint Managing Director
An electronics engineer and an alumnus of IIM Ahmedabad, Mr. Gupta has been with the Kotak
Group since 1992 and joined the board in October 1999.
He heads commercial banking, retail asset businesses and looks after group HR function. Early
on, he headed the finance function and was instrumental in the joint venture between Kotak
Mahindra and Ford Credit International.
He was the first CEO of the resulting entity, Kotak Mahindra Primus Ltd.
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REVIEW OF LITERATURE
WORKING CAPITAL MANAGEMENT
Management of working capital plays a very important role in the financial management of a
company because maintaining a balance of income to debt can be difficult and owners must be
diligent to assure that it is kept. Sometimes it takes a little assistance to maintain levels of
fluidity or make major purchases.
If working capital dips too low, a business risks running out of cash. Even very profitable
businesses can run into trouble if they lose the ability to meet their short-term obligations.
Working capital financing can be used as a fast cash option to cushion the periods when the
flow is not ideal or readily available. Even when owners are meticulous in managing working
capital, finding the right levels to remain comfortable and competitive can be difficult.
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Working capital management takes place on two levels:
Ratio analysis can be used to monitor overall trends in working capital and to identify
areas requiring closer management
The individual components of working capital can be effectively managed by using
various techniques and strategies
When considering these techniques and strategies, departments need to recognize that each
department has a unique mix of working capital components. The emphasis that needs to be
placed on each component varies according to department.
Furthermore, working capital management is not an end in itself. It is an integral part of the
department's overall management. The needs of efficient working capital management must be
considered in relation to other aspects of the department's financial and non-financial
performance.
Current assets:
The term current assets refer to those assets which in the ordinary course of business can be,
or will be, converted into cash within one year without under going any diminution in the value
and without disrupting the operations of the firm. The major current assets are cash, cash
equivalent, marketable securities, accounts receivable, inventory, prepaid expenses and other
short term investments.
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Debtors
Debtors are people or other firms who owe money to the firm. This will usually happen where
the firm has sold goods with a period of credit. The firm sells the good or service but allows the
purchaser a period of credit to pay - usually a month. During this month the purchaser owes the
firm the money and is therefore a debtor.
If the firm has debts these are considered an asset, because when the debtors pay the firm will
have converted the debt into cash in the bank. Because most debts are relatively short-term
they are considered current assets the amount of debtors a firm has depends on the line of
business they are in.
CASH
In a business the term cash may have a broader meaning. Cash is an asset to the business and is
usually considered to be one of the current assets. Under the heading cash on the balance
sheet may be included a number of items of varying liquidity. A small amount may actually be
cash (or readies) held in tills or as petty cash, but the majority is likely to be held in various bank
accounts. However, since money in current accounts rarely earns interest, if a business has a
surplus of cash it may invest it in various ways. Some will have to be in very liquid accounts so
that if necessary they can get at it very quickly, but some may be tied up for longer periods of
time.
Inventory
Inventory is also a current asset which can be either raw materials, finished items available for
sale, or goods in the process of being manufactured. Inventory is recorded as an asset on a
company's balance sheet.
Raw material
An item used to produce something else is called a "raw material." Some raw materials are easy
to spot, but many require detective work.
31
Raw material of a company may be imported or indigenous. Raw material should be managed
in such a way that flow of production is not interrupted. Reordering quantity and time should
be estimated in a proper manner.
Work in process
An operation is composed of processes designed to add value by transforming inputs into useful
outputs. Inputs may be materials, labor, energy, and capital equipment. Outputs may be a
physical product (possibly used as an input to another process) or a service. Processes can have
a significant impact on the performance of a business, and process improvement can improve a
firm's competitiveness.
Finished Goods
Definition: Commodities that will not undergo further processing and are ready for sale to the
final demand user, either an individual consumer or business firm. This includes unprocessed
foods such as eggs and fresh vegetables, as well as processed foods such as bakery products
and meats.
This also includes durable goods such as automobiles, household furniture and appliances, and
Nondurable goods such as apparel and home heating oil.
Prepaid Expenses
In the course of every day operations, businesses will have to pay for goods or services before
they actually receive the product sometimes companies decide to prepay taxes, salaries, utility
bills, rent, or the interest on their debt. These would all be pooled together and put on the
balance sheet under the heading prepaid expenses. By their very nature, Prepaid Expenses are
a small part of the balance sheet.
32
Current liabilities
The term current liabilities are those liabilities which are intended at the time of their inception,
to be paid in the ordinary course of business, within a year, out of the current assets or
earnings of the concern. The basic current liabilities are accounts payable, bills payable, bank
overdraft and outstanding expenses and other short term debts.
Creditors
Creditors (Accounts Payable) are suppliers whose invoices for goods or services have been
processed but who have not yet been paid.
In other words, creditors are people to whom the company owes the money.
The term creditor is frequently used in the financial world, especially in reference to short term
loans, long term bonds, and mortgages.
The term creditor derives from the notion of credit. In modern America, credit refers to a rating
which indicates the ability of a borrower and likelihood to pay back his or her loan. In earlier
times, credit also referred to reputation or trustworthiness.
33
cash expenditures are included in the inventory value. Upon sale of the products or
performance of services, the accumulated expenditures are converted into receivables and
ultimately into cash again. The average period of time intervening between the cash-to-cash
conversion is the operating cycle of the business. When the business has no clear operating
cycle, or when the operating cycle is shorter than 12 months, a 12-month period should be
used to segregate current assets.
This concept of the nature of current assets would exclude from that classification such
resources as 1) cash and claims to cash that are restricted as to withdrawal or other use for
current operations; 2) investments in securities (whether marketable or not) or advances that
have been made for the purpose of control, affiliation, or other business advantage; 3) cash
surrender value of life insurance; 4) depreciable assets; 5) long-term receivables; and 6) land.
For analytical purposes, specific recommendations of the FFSC are:
1. Principal debt due within 12 months, even on notes with monthly payments, should be
included as a current liability.
2. Capital leases should be accounted for on the balance sheet, with the current portion of
the principal due and the accrued interest shown as a current liability.
3. Cash value of life insurance should be a non-current asset.
4. Loans to family members should be treated based on the characteristics of the notes.
(The amount of these loans should be separately disclosed, if material.)
5. PIK certificates should be treated as current assets.
6. Retirement accounts should be shown as non-current assets.
The current portion of both deferred tax assets and deferred tax liabilities are to be recorded as
current assets or current liabilities.
34
CASH MANAGEMENT
Good cash management can have a major impact on overall working capital management.
The key elements of cash management are:
Cash forecasting;
Balance management;
Administration;
Internal control.
Cash Forecasting:
Good cash management requires regular forecasts. In order for these to be materially accurate,
they must be based on information provided by those managers responsible for the amounts
and timing of expenditure. Capital expenditure and operating expenditure must be taken into
account. It is also necessary to collect information about impending cash transactions from
other financial systems, such as creditors and payroll.
Balance Management: Those responsible for balance management must make decisions
about how much cash should at any time be on call in the Departmental Bank Account and how
much should be on term deposit at the various terms available.
There are various types of mathematical model that can be used. One type is analogous to the
ERQ inventory model. Linear programming models have been developed for cash management,
subject to certain constraints. There are also more sophisticated techniques.
35
Where possible, cash floats (mainly petty cash and advances) should be avoided. If, on review,
the only reason that can be put forward for their existence is that "we've always had them",
they should be discontinued. There may be situations where they are useful, however. For
example, it may be desirable for peripheral parts of departments to meet urgent local needs
from cash floats rather than local bank accounts.
Internal Control:
Cash and cash management is part of a department's overall internal control system. The main
internal cash control is invariably the bank reconciliation. This provides assurance that the cash
balances recorded in the accounting systems are consistent with the actual bank balances. It
requires regular clearing of reconciling items.
The key to successful cash management is milestones:
o Capital is provided to execute a business plan
o Cash use must track growth in enterprise value
o Enterprise value is measured by milestones, not the fiscal calendar
Cash management is not cost control
o Cost control is a reactive measure using crude tools e.g. % cuts
o Cost control often depletes value (e.g. by using people as accounting chips)
CREDITORS MANAGEMENT:
Creditors are the businesses or people who provide goods and services in credit terms. That is,
they allow us time to pay rather than paying in cash.
There are good reasons why we allow people to pay on credit even though literally it doesn't
make sense! If we allow people time to pay their bills, they are more likely to buy from your
business than from another business that doesn't give credit. The length of credit period
allowed is also a factor that can help a potential customer deciding whether to buy from a
company or not: the longer the better.
Creditors will need to optimize their credit control policies in exactly the same way as the
debtors' turnover ratio.
36
CREDITORS TURNOVER RATIO:
Average Creditors
Creditors' Turnover =
(Cost of Sales/365)
As with the stock turnover ratio, creditor values relate to the costs of raw materials, goods and
services.
DEBTORS MANAGEMENT
The objective of debtor management is to minimize the time-lapse between completion of
sales and receipt of payment. The costs of having debtors are:
Opportunity costs (cash is not available for other purposes);
Bad debts.
Debtor management includes both pre-sale and debt collection strategies.
37
- a reminder;
- a letter;
- cancellation of further credit;
- telephone calls;
- use of a collection agency;
- legal action.
Objectives of Receivables management:
To maintain an optimum level of investment in receivables.
To maintain optimum volume of sales.
To control the cost of credit allowed & to keep it at the minimum possible level.
To keep down the average collection period.
To obtain benefit from the investment in debtors at optimum level.
365_____________
DEBT COLLECTION PERIOD (in days)
debt turnover ratio
The figure measures (in number of days) how long on average it has taken the firm to collect its
debts. The higher the figure the longer it has taken. However, the normal period for collecting
debts will differ between industries. For example, a figure of 10 days may sound very
impressive, but if this was the figure for a chain of supermarkets it would be high. Therefore no
debt is incurred and retail firms will tend to have very few debtors and a low debt collection
period. Firms who do a lot of business on credit though will have much higher debt collection
periods.
38
Debtors' Turnover:
Debtors control is a vital aspect of working capital management. Many businesses need to sell
their goods on credit, otherwise they might find it difficult to survive if their competitors
provide such credit facilities; this could mean losing customers to the opposition.
The formula for debtors' turnover is:
The way working capital moves around the business is modeled by the working capital cycle.
This shows the cash coming into the business, what happens to it while the business has it and
then where it goes.
The working capital cycle shows the movement of cash into and out of the business. The
components of working capital cycle are the debtors, creditors, raw materials and cash.
The cycle starts with buying of raw materials on credit from the suppliers. These suppliers
become the creditors of the company. The raw materials undergo through different value
addition stages and are converted into finished goods. The finished goods are sold to the
customers on credit who become the debtors of the company. At the end of the credit period
the company gets the cash from the debtors whom they pay to the creditors and the cycle goes
on.
It is must for any company to have an ideal working capital cycle. It should neither be too long
nor too short. If the cycle is too long the funds get stuck up with the debtors and prompt
payment to the creditors cannot be made.
A simple working capital cycle may look something like:
39
Payment
CASH CREDITORS
Supply
Collection
RAW
DEBTORS
MATERIALS
Sales Production
FINISHED W.I.P
GOODS
Value added conversion
40
WORKING CAPITAL FINANCING:
Banks are the main institutional sources of working capital finance in India. After trade credit
bank credit is the most important source of working capital requirement of firms in India. A
bank considers a firm’s sales and production plans and the desirable levels of current assets in
determining its working capital requirements. The amount approved by the bank for the firm’s
working capital is called credit limit.
TANDON COMMITTEE:
Like many other activities of the banks, method and quantum of short-term
finance that can be granted to a corporate was mandated by the Reserve Bank of
India till 1994. This control was exercised on the lines suggested by the
recommendations of a study group headed by Shri Prakash Tandon.
The study group headed by Shri Prakash Tandon, the then Chairman of Punjab
National Bank, was constituted by the RBI in July 1974 with eminent personalities
drawn from leading banks, financial institutions and a wide cross-section of the
Industry with a view to study the entire gamut of Bank's finance for working
capital and suggest ways for optimum utilization of Bank credit. This was the first
elaborate attempt by the central bank to organize the Bank credit. The report of
this group is widely known as Tandon Committee report.
41
Most banks in India even today continue to look at the needs of the corporate in
the light of methodology recommended by the Group.
As per the recommendations of Tandon Committee, the corporate should be
discouraged from accumulating too much of stocks of current assets and should
move towards very lean inventories and receivable levels.
42
Working Capital assessment on the formula prescribed by the Tandon
Committee.
Working Capital Requirement (WCR) = [Current assets i.e. CA (as per industry norms) – Current
Liabilities i.e. CL]
Permissible Bank Financing [PBF} = WCR – Promoter’s Margin Money i.e. PMM (to be brought in
by the promoter)
As per Formula 1: PMM = 25% of [CA – CL] and thereby PBF = 75% of [CA – CL]
As per Formula 2: PMM = 25% of CA and thereby PBF = 75%[CA] – CL
As is apparent Formula 2 requires a higher level of PMM as compared to Formula 1. Formula 2
is generally adopted in case of bank financing. In cases of sick units where the promoter is
unable to bring in PMM to the extent required under Formula 2, the difference in PMM
between Formulae 1 and 2 may be provided as a Working Capital Term Loan repayable in
installments over a period of time.
43
The main factors used in the estimation of working capital requirement:
The nature of business and sector-wise norms
Factors such as seasonality of raw materials or of demand may require a high level of
inventory being maintained by the company. Similarly, industry norms of credit allowed
to buyers determine the level of debtors of the company in the normal course of
business.
The level of activity of the business Inventories and receivables are normally expressed
as a multiple of a day’s production or sale. Hence, higher the level of activity, higher the
quantum of inventory, receivables and thereby working capital requirement of the
business. So in order to arrive at the working capital requirement of the business for the
year, it is essential to determine the level of production that the business would
achieve. In case of well-established businesses, the previous year’s actual and the
management projections for the year provide good indicators. The problems arise
mainly in the case of determining the limit for the first time or in the initial few years of
the business. Banks often adopt industry standard norms for capacity utilization in the
initial years.
44
The issue of computation of working capital requirement has aroused considerable
debate and attention in this country over the past few decades. A directed credit
approach was adopted by the Reserve Bank of ensuring the flow of credit to the priority
sectors for fulfillment of the growth objectives laid down by the planners. Consequently,
the quantum of bank credit required for achieving the requisite growth in Industry was
to be assessed. Various committees such as the Tandon Committee and the Chore
Committee were constituted and studied the problem at length.
Norms were fixed regarding the quantum of various current assets for different
industries (as multiples of the average daily output) and the Maximum Permissible Bank
Financing (MPBF) was capped at a certain percentage of the working capital
requirement thus arrived at.
Ratio Analysis:
The ratio analysis is one of the most powerful tools of financial analysis. it is the process of
establishing and interpreting various ratios (Quantities relationship between figures and groups
of figures).it is with the help of ratios that the financial statements can be analysis more clearly
and decision are made from such analyses.
45
A ratio is simple arithmetic expression of the relationship of one to another. According to
accountants Handbooks by Ixen and Bedford a ratio is an expression of the quantities
relationship between two numbers.
Types of Ratios:
i. Liquidity Ratios
ii. Leverage Ratios
iii. Profitability Ratios
iv. Activity Ratios
i. Liquidity Ratio
Current ratio= current assets/current liabilities
Quick ratio= quick assets/current liabilities
Measures firms ability to meet its obligation; leverage ratios show the proportions of
the debt equity in financing the firm’s assets; activity ratios reflect the firm efficiency in
utilizing its assets, and profitability ratios measure overall performance and
effectiveness of the firm.
46
iii. Profitability Ratio
Profitability refers to net result of business operation two types of ratios are used to
measure profitability. These are profit margin ratios rate of return ratios.While profit
margin ratios shows the relationship between profit and investment.
These ratios are also referred to activity ratios asset management ratios. They measure
how efficiency a firm employs the assets. They are based on the relationship between
level of activity and levels of various assets. The important turnover ratios are inventory
turnover ratio, debtors’ turnover ratio, creditors’ turnover ratio, fixed turnover ratio,
total assets turnover ratio.
47
Comparative balance sheet:
The comparative balance sheet analysis is the study of the trend of the same items, group of
items and computed items in two or more balance sheets of the same enterprise on different
dates. The changes in periodic observed by comparison of the balance sheet at the end of a
period and these changes can help in informing an opinion about the progress of and
enterprise.
While interpreting comparative balance sheet the interpreter is expected to study the following
aspects;-
1. Current interpreting comparative and liquidity position
2. Long term financial position
3. Profitability of the concern
48
DATA ANALYSIS AND INTERPRETATION
Size and growth of current assets and liabilities and Net working capital of Kotak Mahindra
during the period 2010-11 to 2014-15.
CURRENT ASSETS AND LIABILITIES (All amounts are in Cr)
Year Current Growth Current Growth Rate (%) Net W.C
Assets Rate (%) Liabilities
2010-11 17701.69 100 12844.57 100 4857.12
2011-12 17766.01 100.3634 15064.09 117.2798 2701.92
2012-13 23075.31 129.8846 24270.24 161.1132 -1194.93
2013-14 31800.29 137.8109 23803.06 98.07509 7997.23
2014-15 41713.78 131.1742 29197.75 122.6639 12516.03
45000
40000
35000
30000 2010-11
25000 2011-12
20000 2012-13
15000 2013-14
10000 2014-15
5000
0
CURRENT GROWTH RATE CURRENT GROWTH RATE NET W.C
-5000
ASSETS LIABILITRIES
Interpretation:
The Current assets and the current liabilities of Kotak Mahindra are in the increasing stage but
at the financial year 2014-2015 it is in the decreasing stage because of increasing in the current
liabilities and the growth rate is 131.17. The net working capital is also in the increasing stage.
49
WORKING CAPITAL TURNOVER RATIO:
(All amounts are in Cr)
Year
Sales(Income) Networking Capital Ratio
14000
12000
10000
2010-11
8000
2011-12
6000 2012-13
2013-14
4000
2014-15
2000
0
SALES (Income) NET W.C RATIO
-2000
Interpretation:
The Net working capital of Kotak Mahindra are In the increasing stage but at the financial year
2014-2015 it is in the decreasing stage because of increasing in the sales and the growth rate is
131.17. The net working capital is also in the increasing stage.
50
TURNOVER RATIO:
Debtors Turnover Ratio expresses the relationship between debtors and sales. A high Debtors
Turnover Ratio or low Debt collection period is indicative of sound credit management policy.
60000
50000
40000
2010-11
2011-12
30000
2012-13
2013-14
20000
2014-15
10000
0
NET CREDIT SALE (Income) AVERAGE DEBT. RATIO
51
INERPRETATION:
From the above table, it is observed that the Kotak Mahindra debtor’s turnover ratio shows a
good sigh. The company noted a maximum ratio of 14.95 in the year 2011-12 and the maximum
If we observed the above table the ratio is increasing the year 2010--11 is 13.21 to 14.95 in the
year 2011-12 in the year but it is decreased to 12.74 in the year 2014-15. It shows a good sign
52
Current Ratio:
It is the ratio of the current assets current liabilities this ratio is used to know the company’s
ability to meet its current obligations. The standard norm for the current ratio is 2:1
Current ratio = current Assets / Current liabilities.
Table showing current ratio of Kotak Mahindra Ltd during the period 2010-11 to 2014-15
45000
40000
35000
30000 2010-11
25000 2011-12
20000 2012-13
15000 2013-14
2014-15
10000
5000
0
CURRENT ASSETS CURRENT LIABILITRIES RATIO
53
INTERPRETATION:
It is observed that the Kotak Mahindra current rationing a increasing trend; the company’s
liquidity position is satisfactory. The current ratio increased slightly up to 2011-12 is 1.33. But in
2012-13 it declined because of increase in current liabilities, and then it started to decreased
further in 2012-13 as 0.95.If the company maintains to increase the ratio it can meet
obligations.
54
Quick Ratio:
Quick ratio is relation between quick assets and current liabilities. The term quick assets, which
can be converted into cash with a short notice. This category also includes cash bank balances
short – term investments and receivables.
Quick ratio = Quick Assets / current liabilities
Table showing quick ratio of Kotak Mahindra during the period 2010-11 to 2014-15.
(All amounts are in Cr)
Year Quick Assets Current Liabilities Ratio
2010-11 17701.69 12844.57 1.378146
2011-12 17766.01 15064.09 1.179362
2012-13 23075.31 24270.24 0.950766
2013-14 31800.29 23803.06 1.335975
2014-15 41713.78 29197.75 1.428664
45000
40000
35000
30000 2010-11
25000 2011-12
20000 2012-13
15000 2013-14
2014-15
10000
5000
0
QUICK ASSETS CURRENT LIABILITRIES RATIO
55
INTERPRETATION:
It is observed that the Kotak Mahindra current rationing a increasing trend; the company’s
The current ratio increased slightly up to 2011-12 is 1.33. But in 2012-13 it declined because of
increase in current liabilities, and then it started to decrease further in 2012-13 as 0.95. If the
56
Composition of current Assets:
(All the amounts are in Cr)
Particulars 2010-11 2011-12 2012-13 2013-14 2014-15 Avg.
60000
50000
40000 2010-11
2011-12
30000
2012-13
20000 2013-14
2014-15
10000
0
SUNDRY DEBTORS CASH AND ADVANCES BALANCE WITH
BALANCE WITH RBI BANK
57
INTERPRETATION:
The income statement is also called as income statement, it is considered to be the most useful
of all financial statements. It prepared by a business concern in order to know the profit
earned and loss sustained during a specified period. It explains what has happened to a
business as a result of operations between two balance sheet dates. For this purpose it matches
the revenues and cost incurred in the process of earning revenues and shows the net profit
earned or loss suffered during a particular period.
The nature of Income which is a focus of the income statement can be well understood if
business is taken as an organization that uses “Input” to produce “Output”. The output of the
goods and services that the business provides to its customers. The values of these outputs are
the goods and services that the business provides to its customers. The values of these outputs
art the amounts paid by the customers for them. These amounts are called “revenues” in the
accounting. The inputs are the economic resources used by the business in providing these
goods and services. These are termed “expenses” in accounting.
The comparative balance sheet analysis is the study of the same items, group of items and
computed items in two or more balance sheets of the same enterprise on different dates. The
changes in periodic balance sheet items reflect the conduct of a business. The changes can be
observed by comparison of the balance sheet at the beginning and at the end of a period and
these changes can help in informing an opinion about the progress of and enterprise.
58
Working capital turnover ratio Of Kotak Mahindra limited:
Implementing an effective working capital management system is an excellent way for many
companies to improve their earnings. The two main aspects of working capital management are
ratio analysis and management of individual components of working capital.
59
120000
100000
80000
60000
40000
20000
Interpretation:
The networking capital of Kotak Mahindra has been increased to 60377.11 Cr the financial
position i.e. the performance of Kotak Mahindra has increased and the current assets defects
its current liability.
60
Working capital turnover ratio 2014
61
80000
70000
60000
50000
40000
30000
20000
10000
INTERPRETATION:
The networking capital of Kotak Mahindra has been increased to 45737.60 Cr the financial
position i.e. the performance of Kotak Mahindra has increased and the current assets defects
its current liability.
62
Working capital turnover ratio 2013
63
60000
50000
40000
30000
20000
10000
INTERPRETATION:
The networking capital of Kotak Mahindra has been increased to 39936.21Cr the financial
position i.e. the performance of Kotak Mahindra has increased and the current assets defects
its current liability.
64
Working capital turnover ratio 2012
65
45000
40000
35000
30000
25000
20000
15000
10000
5000
INTERPRETATION:
The networking capital of Kotak Mahindra has been increased to 25667.32 Cr the financial
position i.e. the performance of Kotak Mahindra has increased and the current assets defects
its current liability.
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FINDINGS
1. The Kotak Mahindra net working capital is satisfactory between the years 2012-13, since
it shows decreasing trend but after that it is in declining position.
2. The current ratio of Kotak Mahindra is satisfactory during the period of study 2010-11 to
2014-15. It is increased but after that it is declining.
3. The average quick ratio of Kotak Mahindra is not good though the quick ratio is showing
maximum value of 1.24 in the year 2010-11 and then it is declining.
4. Fixed assets turnover ratio of Kotak Mahindra has been increased. And the company has
to maintain this.
5. Inventory turnover ratio of Kotak Mahindra is also increased gradually, without any fit
falls up to 2010-11. In the year 2010-11 it is inclined, and again it has increased in the
year 2014-15. Good inventory management is good sign for efficient management.
6. Total Assets turnover ratio of Kotak Mahindra is not satisfactory because it is always
below one, except in the year 2014-15 having a value of 2.14.
7. Return on investment is not satisfactory. This indicates that the company’s funds are not
being utilized in a better way.
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SUGGESTIONS
5. The investment on raw material should be made as per the requirement. Unnecessary
6. Neither too high nor too low inventory turnover ratios may reduce profit and liquidity
position of the industry. So, proper balance should be made to increase profits and to
ensure liquidity.
7. The raw material should be acquired from the right source at right quality and at right
cost.
8. The process that was being used by Kotak Mahindra Group with the purchasing
without compromising its quality by improving the utilization of materials, labor and
equipment.
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CONCLUSIONS
1. The Kotak Mahindra Net Profit Ratio is showing negative profit in the year 2010--11.
These event is an expected one because since from the previous two years it is showing
2. Profit Margin of Kotak Mahindra is decreasing and showing negative profit because
4. The Kotak Mahindra return on Total Assets ratio shows a negative sign in the year 2010-
11.
production, this ratio is decreasing. So the has to reduce its office administration
expenses.
69
BIBLIOGRAPHY
BOOKS REFFERED:
Financial Management Written By M.Y. Khan & P.K. Jain
Financial Management Written By Prasanna Chandra
Financial Management Written By I. M. Pandey
Financial Management Written By S. N. Maheswari
Websites:
www.kotak.com
www.bankingindia.com
www.evanimics.com
www.damodaram.com
www.investopedia.com
www.valuebasedmanagement.net
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