Financial Reporting and Analysis

Kotak Mahindra Bank

Contents

About the Report

Consolidated Balance Sheet
Income Statement
Cash Flow Statement
Notes to Accounts
Financial Ratio Analysis
Conclusion
About the Report

The report complies with the requirements of the

Companies Act, 2013 (and its rules); Indian
Accounting Standards; Securities and Exchange
Board of Indi (Listing Obligations and Disclosure
Requirements) Regulations 2015; the secretarial
standards issued by the Institute of Company
Secretaries of India. The report follows the
International Integrated reporting framework for
the narrative section.
 Balance Sheet
A balance sheet is a financial
statement that reports a company's
assets, liabilities, and shareholder
equity at a specific point in time.
 Consolidated Balance Sheet
as at March 31, 2024 Rs. in thousands
Capital and Liabilities:
There was a Y-O-Y increase
in the capital of 23.73%
attributed to a rise in
multiple FSLIs of which
Deposits contributed the
highest absolute increase of
~Rs. 839M
 Consolidated Balance Sheet
as at March 31, 2024 Rs. in thousands
Assets:
A Y-O-Y increase in the
Assets of 23.73% was
attributed to a rise in
multiple FSLIs, including
Cash, Investments,
Advances
 Income Statement
An income statement is a financial
statement that lays out a company's
revenue, expenses, gains, and losses
during a set accounting period.
 Income Statement
for the year ended March 31, 2024 Rs. in thousands
Income:
A Y-O-Y increase in the
Income of 38.34% was
attributed to a rise in
Interest earned and other
income
 Income Statement
for the year ended March 31, 2024 Rs. in thousands
Expenses:
A Y-O-Y increase in
Expenses of 42.98% was
attributed to a rise in
Interest expended by
56.59%, operating expenses
by 36.33%, and Provisions
and contingencies by
48.13%
 Cash Flow Statement
for the year ended March 31, 2024 Rs. in thousands
Cash Flow from Operating Activities:
Net Cash generated from operations
has shot up by 13 times mainly on
account of the Increase in other
liabilities and provisions by 7 times
approximately
 Cash Flow Statement
for the year ended March 31, 2024 Rs. in thousands

Cash Flow from Investing Activities:

Net Cash generated from investing
activities has gone down by 13.77% on
account of fall in other investments
by the Bank
 Cash Flow Statement
for the year ended March 31, 2024

Cash Flow from Financing Activities:

Net Cash generated from financing
activities has seen a massive rise by
8.6 times on account increased
borrowings by the Bank
 Notes to Accounts
1. Fixed Assets (Property, Plant and Equipment)
PPE has been stated at Cost less accumulated depreciation and amortization as well as
Impairment (if any)
Depreciation/amortization is provided on a pro-rata basis on a straight-line method over the
estimated useful life of the assets
The estimated useful lives of assets based on technical evaluation by management are as
follows:
 Notes to Accounts
2. Employee Benefits

Gratuity: The Group provides for gratuity covering employees by the Payment of
Gratuity Act, 1972, service regulations, and service awards as the case may be. The
Group’s liability is actuarially determined using the projected unit credit method at
the balance sheet date
Pension: The pension fund is managed by a Life Insurance company. The present
value of the Bank’s defined pension obligation is determined using the projected
unit credit method as at the balance sheet date.
 Notes to Accounts
3. Investments: Valuation

The valuation of investments is performed by the RBI guidelines as follows:

Investments classified as HTM: – These are carried at their acquisition cost. Any premium on
the acquisition of debt instruments/government securities is amortized over the balanced maturity
of the security on a straight-line basis. Any diminution, other than temporary, in the value of such
securities, is provided.
Investments classified as HFT or AFS:– Investments in these categories are marked to market
and the net depreciation, if any, within each group is recognized in the profit and loss account.
Treasury bills, exchange-funded bills, commercial paper and certificates of deposits being
discounted instruments, are valued at carrying cost.
 Notes to Accounts
4. Taxes on Income

The income tax expense comprises current tax and deferred tax. Current tax is measured at the
amount expected to be paid in India in respect of taxable income for the year by the Income Tax Act,
1961 enacted in India. Tax expenses relating to overseas subsidiaries are determined per the tax laws
applicable in countries where such subsidiaries are domiciled.

Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences
being the difference between the taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent period.
 Notes to
Accounts
4. Segment Reporting
 Notes to Accounts
5. Leases
As Lessee: Leases where all the risks and
rewards of ownership are retained by the lessor
are classified as operating leases. Operating
lease payments are recognized as an expense in
the profit and loss account on a straight-line
basis over the lease term.
As Lessor: Leases, where the Group has
substantially retained all the risks and rewards
of ownership, are classified as operating leases
and included in fixed assets. Lease income is
recognized in the profit and loss account on a
straight-line basis over the lease term.
 Notes to Accounts
6. Accounting for Provisions, Contingent Liabilities, and Contingent Assets

Per Accounting Standard - 29 on ‘Provisions,

Contingent Liabilities, and Contingent Assets’,
the Group recognizes a provision for material
foreseeable losses when:
it has a present obligation as a result of a
past event
an outflow of resources will probably be
required to settle the obligation, in respect of
which a reliable estimate can be made
 Notes to Accounts
7. Scheme Expenses

New fund offer expenses and other expenses not chargeable to schemes, in accordance with
applicable circulars and guidelines issued by SEBI and Association of Mutual Funds in India (AMFI)
are borne by the Asset management company of the Group. Brokerage paid for close ended schemes
before 22nd October, 2018 circular issued by SEBI in relation to upfront brokerage are amortised by
the Asset Management Company of the Group over the tenor of each scheme on a straight line basis.
 Ratio Analysis
1. Debt to Equity Ratio:
=Total Debt (Advances)/Total Equity
=430,352/129,892.39
≈3.31

This ratio compares the company's total debt to its shareholders'

equity. A ratio of 3.31 means that for every ₹1 of equity, the
company has ₹3.31 in debt. This suggests that the company relies
heavily on borrowed funds compared to its equity base. Higher
ratios indicate more leverage and potentially higher risk.
 Ratio Analysis

2. Debt to Assets Ratio

=Total Debt (Advances)/Total Assets
=430,352/767,667
≈0.56 or 56%

This ratio shows the proportion of a company’s assets that are financed by
debt. A 56% debt to assets ratio indicates that 56% of the company's assets
are funded by debt, with the remaining 44% funded by equity. This
indicates a moderate level of leverage, with over half of the assets financed
through borrowing.
 Ratio Analysis

3. Price to Earnings (P/E) Ratio:

=Market Price per Share/Earnings per Share
=1,786/91.5
≈19.5

The P/E ratio measures the price investors are willing to pay for each
rupee of earnings. A P/E ratio of 19.5 means investors are willing to pay
₹19.5 for every ₹1 of earnings. A higher P/E ratio typically indicates that
the market expects future growth, though it can also suggest that the stock
is overvalued.
 Ratio Analysis

4. Return on Equity (ROE):

=Net Profit/Total Equity x 100
=18,213/129,892.39×100
≈14.02%

ROE measures a company’s profitability in relation to shareholders' equity.

A 14.02% ROE indicates that for every ₹1 of equity, the company generated
₹0.1402 in profit during the year. This is a measure of how effectively
management is using the company’s equity to generate profits.
 Ratio Analysis

4. Return on Equity (ROE):

=Net Profit/Total Equity x 100
=18,213/129,892.39×100
≈14.02%

ROE measures a company’s profitability in relation to shareholders' equity.

A 14.02% ROE indicates that for every ₹1 of equity, the company generated
₹0.1402 in profit during the year. This is a measure of how effectively
management is using the company’s equity to generate profits.
 Ratio Analysis

5. Earnings per share (EPS):

=91.5
Total Number of Outstanding Shares:
=Net Income​/EPS
=18,213/91.5
≈199millionshares
ACCOUNTING METHODOLOGY AND SIGNIFICANT ACCOUNTING POLICIES:

A. Accounting Methodology: The Consolidated Financial Statements have been prepared on historical cost basis of accounting. The
Group adopts the accrual method of accounting and historical cost convention unless stated otherwise. The Group has prepared
these consolidated financial statements to comply in all material respects with the Accounting Standards notified under Section 133
and the relevant provisions of the Companies Act, 2013 read with the Companies (Accounting Standards) Rules, 2021 in so far as they
apply to the Group and the guidelines issued by the Reserve Bank of India (RBI), Insurance Regulatory and Development Authority
of India (IRDAI) from time to time as applicable and the generally accepted accounting principles prevailing in India. The financial
statements of Indian subsidiaries (excluding insurance companies) and associates are prepared as per Indian Accounting Standards
in accordance with the Companies (Indian Accounting Standards) Rules, 2015. The financial statements of subsidiaries located
outside India are prepared in accordance with accounting principles generally accepted in their respective countries. However, for
the purpose of preparation of the consolidated financial results, the results of subsidiaries and associates are prepared in accordance
with Generally Accepted Accounting Principles in India (‘GAAP’) specified under Section 133 and relevant provision of Companies
Act, 2013 read with Companies Accounting Standard Rules, 2021. In case the accounting policies followed by consolidating entities
are different from those followed by Bank, the same have been disclosed separately.

B. Use of Estimates: The preparation of financial statements requires the management to make estimates and assumptions in the
reported amounts of assets and liabilities (including contingent liabilities) as at the date of the financial statements and the reported
income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial
statements are prudent and reasonable. Actual results could differ from these estimates. Any revision in the accounting estimates is
recognised prospectively in the current and future periods.

C. Revenue Recognition
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