ACKNOWLEDGEMENTS

I am heartily thankful to my supervisor, Mrs. GEETHA whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject and Dr. Nandeesh V. Hiremath for their support and guidance during my project work. I offer my regards and blessings to all of those who supported me in any respect during the completion of the project. Finally, yet importantly, I would like to express my heartfelt thanks to my beloved parents for their blessings, my friends/classmates for their help and wishes for the successful completion of this project.

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TABLE OF CONTENTS

Particulars of the Contents Executive Summary Part I : An overview of Kotak Mahindra Finance Ltd.

Page No. 4 7 30 37 41 46 65 78

PART II : Project Report 2.1 Introduction 2.2 Aims and objectives of the Project 2.3 Research Design & Methodology 2.4 Discussion on ratio analysis 2.5 Analysis & discussion of the Results 2.6 Summary & Conclusions Part III : Bibliography, References 3.1 Bibliography and References

81

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List of Tables, Charts & Graphs

Table, Chart & Graph No. 1 2

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Title of the Table, Chart & Graph Selling Models Aggressive Plan Moderate Plan Conservative Plan Components of current Ratio Components of quick or liquid Ratio Components of Absolute liquid Ratio Components of Share holders fund & total assets Components of working capital Components of current assets to fixed assets ratio Quarterly results Balance sheet Profit & loss A/C Ratios Operating profit margin Gross profit margin Net profit margin Return on investment Return on net worth Dividend yield

Page No. 24 27 27 28 53 54 55 56 58 60 66 67 69 70 71 72 73 74 75 76

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EXECUTIVE SUMMARY

Introduction

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The Kotak Mahindra group is one of Indias leading banking and financial services organizations, with offerings across personal financial services; commercial banking; corporate and investment banking and markets; stock broking; asset management and life insurance. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as on 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.

Aims And Objectives

The major objectives of the resent study are to know about financial strengths and weakness of KOTAK MAHINDRA GROUP through FINANCIAL RATIO ANALYSIS.

a. To evaluate the performance of the company by using ratios as a yardstick to measure the efficiency of the company. b. To evaluate the performance of the company by using ratios as a yardstick to measure the efficiency of the company during the study period. c. To evaluate and analyze various facts of the financial performance of the company. d. To make comparisons between the ratios during different periods.

ANALYSIS
On account of the data collected during the whole operation, using financial report of three different years from the year 2007-2009 and by direct contact from the personal involved in the operation, analysis was conducted according to the data collected.

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CONCLUSION
In this analysis the gross profit margin of a bank is comes down from 18.13 to 11.72 in year 2009. This shows that the bank is facing a problem of having low liquidity or cash flow to spend on marketing & investment, R&D.

RECOMMENDATION
In this analysis the gross profit margin of a bank is comes down. This shows that the bank is facing a problem of having low liquidity or cash flow to spend on marketing & investment, R&D. There is a need for better promotion for the investment products & services. The bank should advertise its products through television because it will reach to the masses. More returns should be provided on Insurance plans. As the bank provides the Insurance facility to its customers.

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PART- 1

AN OVERVIEW OF KOTAK MAHINDRA FINANCE LTD.

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The Kotak Mahindra Group

Kotak Mahindra is one of India's leading financial organizations, offering a wide range of financial services that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporates. The group has a net worth of over Rs. 6,523 crore and has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore. The Group services around 6.2 million customer accounts.

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 transform 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.

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Group Management

Snapshot Company Background Finance - Banks - Private Sector. Industry Kotak Mahindra Group Business Group Incorporation Date 21/11/1985 02/01/1992 Public Issue Date 10.0000 Face Value 1 MarketLot Company/Business INE237A01010 Registration No Key Officials Uday Kotak CEO Board of Directors Name Designation Anand Mahindra Non Executive Director Asim Ghosh Director C Jayaram Executive Director Cyril Shroff Director Dipak Gupta Executive Director Pradeep N Kotak Director Shankar Acharya Part Time Chairman Shivaji Dam Director Sudipto Mundle Additional Director Exec. Vice Chairman & Mang Uday Kotak Dir Company Secretary Bina Chandarana Share Holding Holder's Name No of Shares % Share Pattern Holding Promoters 167843544 48.47% OtherCompanies 10346567 2.99% ForeignNRI 2312587 0.67% ForeignOcb 2184644 0.63% ForeignInstitutions 101322369 29.26% Others 1044690 0.30% NBanksMutualFunds 9270865 2.68% GeneralPublic 49077053 14.17% FinancialInstitutions 2895953 0.84% Bangalore Stock Exchange Ltd. List of Exchanges Calcutta Stock Exchange Association Ltd. Cochin Stock Exchange Ltd. Delhi Stock Exchange Assoc. Ltd. Madras Stock Exchange Ltd., National Stock Exchange of India Ltd. The Stock Exchange, Mumbai Uttar Pradesh Exchange Assoc Ltd.

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Formation Of The Company

The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success.

1986 1987 1990 1991

Kotak Mahindra Finance Limited starts the activity of Bill Discounting. Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market. The Auto Finance division is started. The Investment Banking Division is started. Takes over FICOM, one of India's largest financial retail marketing networks.

1992 1995

Enters the Funds Syndication sector . Brokerage and Distribution businesses incorporated into a separate company Kotak Securities. 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. The launch of Matrix Information Services Limited marks the Group's entry into information distribution.

1998

Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company.

2000

Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business. Kotak Securities launches its on-line broking site (now

www.kotaksecurities.com). Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. 2001 2003 Matrix sold to Friday Corporation Launches Insurance Services Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian company to do so.

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2004 2005

Launches India Growth Fund, a private equity fund. Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra. Launches a real estate fund

2006

Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company and Kotak Securities

2008 2009

Launched a Pension Fund under the New Pension System.

Kotak Mahindra Bank Ltd. opened a representative office in Dubai Entered Ahmedabad Commodity Exchange as anchor investor.

About Companys Important Persons Directors

Mr. K. M. Gherda retired as a Director of the Bank at the Twenty Third Annual General Meeting of the Bank held on 28th July 2008. At the same meeting, Mr. Asim Ghosh who was appointed as an Additional Director of the Bank with effect from 9th May 2008, was appointed as a Director of the Bank. Mr. Pradeep Kotak, Director of the Bank retires by rotation at theTwenty Fourth Annual General Meeting. Mr. Kotak has expressed hisdesire not to seek re-appointment.

The Board of Directors of the Bank, at its meeting held on 12th May 2009, has re-appointed Dr. Shankar Acharya as part-time Chairman of the Bank, for a period of three years, with effect from 20th July 2009 subject to the approval of the shareholders and of the Reserve Bank of India. The approval of the shareholders in this regard is being sought at the ensuing Annual General Meeting of the Bank.

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Mr. Shishir Bajaj was appointed as an Additional Director of the Bank with effect from 12th May 2009 and, pursuant to the proviso to Section 260 of the Companies Act, 1956, holds office as a Director up to the date of this Annual General Meeting but is eligible to be appointed as a Director. In terms of Section 257 of the Companies Act, 1956 the Bank has received notice in writing from a member along with a requisite deposit of Rs. 500/- proposing the candidature of Mr. Shishir Bajaj for his appointment as a Director.

Mr. Shishir Bajaj is an MBA from the Stern School of Business, New York University majoring in Finance. Mr. Bajaj is presently the Chairman and Managing Director of Bajaj Hindusthan Ltd. (BHL), the largest sugar and ethanol manufacturing company in India. He has been looking after the affairs of BHL since 1974 shouldering its overall responsibility and was made the Managing Director of BHL in 1988. He has over 35 years of extensive experience in the Indian Sugar Sector

Auditors
Messrs S. R. Batliboi & Co., Chartered Accountants, auditors of your Bank, retire on the conclusion of Twenty Fourth Annual General Meeting and are eligible for reappointment. You are requested to appoint auditors for the current financial year and to fix their remuneration.

Staturatory Information
The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1998, are not applicable to Kotak Mahindra.

Employment
The employee strength of Kotak Mahindra along with its subsidiaries as of 31st March 2009 was around 18000, as compared to around 21000 employees a year ago. The Bank standalone had around 8400 employees as of 31st March 2009. 179 employees employed throughout the year and 88 employees employed for part of the year were in receipt of remuneration of Rs. 24 lacs or more per annum.

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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

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

IDRBT Banking Technology Award for IT Governance and Value Delivery, 2008

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Insurance

Outlook Money Kotak Platinum Advantage Plan - Ranked 1st in Type II ULIP category, 2008 Kotak Long Life Wealth Plus Plans - Ranked 4th in the Type I ULIPs category

Securities

CNBC Financial Advisor Awards Best Performing Equity Broker, 2008 & 2009

Asiamoney Brokers Poll Best Local Brokerage, 2006, 2007, 2008, 2009 Best Analyst in India - Sanjeev Prasad, 2005, 2006, 2007, 2008, 2009

FinanceAsia Best Broker in India, 2006 & 2009

Thomson Extel Surveys Awards India's Leading Equity House, 2007

SuperBrands Council of India Business Superbrand India, 2008

Investment Banking

FinanceAsia Best Investment Bank in India, 2006, 2007, 2008, 2009 Best Equity House in India, 2008

Asiamoney Best Domestic Equity House, 2008 & 2009

IFR Asia India Equity House of the Year, 2008

Global Finance Best Investment Bank in India, 2008 & 2009

Asset Asian Awards Best Domestic Investment Bank, 2006, 2007, 2008 & 2009

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Asset Management

ICRA Mutual Fund Awards 2009 Kotak Liquid (Regular Plan) - Ranked as a Seven Star Fund for its 1 year performance Kotak Flexi Debt Fund - Ranked as a Five Star Fund for its 1 year performance Kotak Flexi Debt Fund - Ranked as a Five Star Fund for its 3 year performance Kotak 30 - Ranked as a Five Star Fund for its 3 year performance

International Asset Management

Global Investor (Editorial Award) Asian Asset Manager of the Year, 2009

Miscellaneous

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

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Corporate Identity

Kotak Mahindra Asset Management Company Limited (KMAMC) Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 4 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. They are sponsored by Kotak Mahindra Bank Limited, one of India's fastest growing banks, with a pedigree of over twenty years in the Indian Financial Markets. Kotak Mahindra Asset Management Co. Ltd., a wholly owned subsidiary of the bank, is our Investment Manager. They made a humble beginning in the Mutual Fund space with the launch of our first scheme in December, 1998. Today we offer a complete bouquet of products and services suiting the diverse and varying needs and risk-return profiles of our investors. We are committed to offering innovative investment solutions and world-class services and conveniences to facilitate wealth creation for our investors.

Different people have different investment needs. The ability to take risks while investing in financial products varies accordingly. In this section we present our wide range of Mutual Fund schemes, which span across the risk-reward spectrum

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Companys Product Or Services

Kotak Mahindra is one of India's leading banking and financial services groups, offering a wide range of financial services that encompass every sphere of life.

Kotak Mahindra Bank Ltd

Kotak Mahindra Bank Ltd is a one stop shop for all banking needs. The bank offers personal finance solutions of every kind from savings accounts to credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking, operates lending verticals, manages IPOs and provides working capital loans. Kotak Bank has one of the largest and most respected Wealth Management teams in India, providing the widest range of solutions to high net worth individuals, entrepreneurs, business families and employed professionals.

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: Stock Broking (retail and institutional) Depository Services Portfolio Management Services Distribution of Mutual Funds Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd products.

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Kotak Mahindra Capital Company (KMCC)

Kotak Investment Banking (KMCC) is a full-service investment bank in India offering a wide suite of capital market and advisory solutions to leading domestic and multinational corporations, banks, financial institutions and government companies. Our services encompass Equity & Debt Capital Markets, M&A Advisory, Private Equity Advisory, Restructuring and Recapitalization services, Structured Finance services and Infrastructure Advisory & Fund Mobilization.

Kotak Mahindra Prime Ltd (KMPL)

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.

Kotak International Business

Kotak International Business specialises in providing a range of services to overseas customers seeking to invest in India. For institutions and high net worth individuals outside India, Kotak International Business offers asset management through a range of offshore funds with specific advisory and discretionary investment management services.

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Kotak Mahindra Asset Management Company Ltd (KMAMC)

Kotak Mahindra Asset Management Company offers a complete bouquet of asset management products and services that are designed to suit the diverse risk return profiles of each and every type of investor. KMAMC and Kotak Mahindra Bank are the sponsors of Kotak Mahindra Pension Fund Ltd, which has been appointed as one of six fund managers to manage pension funds under the New Pension Scheme (NPS).

Kotak Private Equity Group (KPEG)

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 fundraisers.

Kotak Realty Fund

Kotak Realty Fund deals with equity investments covering sectors such as hotels, IT parks, residential townships, shopping centres, 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.

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Management of one's finances to attain a defined goal calls for a lot of discipline, many a times self-imposed. Our Systematic Investment Plan is a tool, which can help you, inject this discipline in your financial management efforts. Our Systematic Investment Plan (SIP) provides you the facility to periodically invest a fixed sum over any defined period of time (6 months or more) in a disciplined manner. SIPs help in arresting uncertainties associated with trying to time the market and thus, in the long term tends to iron out market fluctuations. It also brings in the much needed investment discipline as you allocate a defined sum to your investments for a defined frequency, thus making investments a mandatory component while you allocate your resources. It brings down your average cost of acquisition of units. As you would allocate a fixed sum every month, you would buy more units when the prices of our units are lower than when they are higher. We call this Rupee Cost Averaging.

Finally, through this arrangement, your funds otherwise lying idle (and if you know it, on account of inflation, depleting in real value) in your bank account get channelised into future wealth creating investments. And of course, you stand to gain in terms of a more favourable entry load on your systematic investments.

Want to receive a regular stream of payouts in a defined frequency ? Want to book profits periodically ? Our Systematic Withdrawal Plan (SWP) is designed keeping in mind these requirements of yours. Through our SWP you can redeem defined sums at a pre-defined frequency by giving a one-time instruction to us. You may choose to regularly withdraw either a fixed sum or just the appreciation on your investments. This facility caters to two segments of investor needs :

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1) Investors wanting defined, regular funds inflow from their investments. 2) Investors interested in booking gains at a regular interval. If you require an exact amount regularly then the Fixed Option is suitable for you. If you do not want this withdrawal to disturb your capital contribution and would like only to reap theappreciation generated in the investment, you should opt for the appreciation option. Ideally SWP should be opted from the growth options of our schemes.

Want a phased entry into the Equity markets rather than putting in all your money at one tranch? Want to book profits from your equity holdings and want your profits to continue earning for you ? Try our Systematic Transfer Plan (STP). Our Systematic Transfer Plan (SWP) caters to your above needs.

Through our STP you can choose to switch your investments from one Kotak Mutual scheme to another at a predefined frequency by giving a one-time instruction to us. You also have a choice between switching a fixed sum or only the appreciation on your investments. This facility caters to two segments of investor needs : 1) Investors wanting to time their exposure in the equity markets over a period of

time instead of a point in time. Such investors can invest in our Debt Schemes and choose a periodic transfer of investments into our equity schemes. 2) Investors who are already invested in equity wanting to book profits regularly and

allowing the profits to earn returns in any of our Debt schemes. You can choose to transfer either a fixed sum every defined period or only the appreciation on your investments over that period from one scheme to another. The later is helpful, where you do not want the transfer to disturb your capital contribution. Ideally STP should be opted from the growth options of our schemes.

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Want to receive your dividend entitlement and redemption payouts faster and straight into your bank account. Our Direct Credit Facility comes automatically to you (unless you choose otherwise) if you hold an account with any of the 14 banks listed below : ABN AMRO Bank AXIS Bank Centurion Bank of Punjab Citibank Corporation Bank Deutsche Bank HDFC Bank HSBC ICICI Bank IDBI Bank Indusind Bank Kotak Mahindra Bank Standard Chartered Bank Yes Bank

Direct Credit is safer, faster and convenient compared to the conventional cheque payout mechanism.

Tired of running to the bank for banking your dividend cheques and then waiting for it to clear. Leave your worries to us. Opt in for ECS of Dividends. ECS (Electronic Clearing Service) is a Reserve Bank of India offering to facilitate, among others, faster and seamless payout of dividends directly into your bank account. ECS as a mechanism for payout of Dividends is faster, convenient, cost-effective and hassle-free. Besides, you don't run the risk of loss of dividend instruments in transit and the associated delays in obtaining a duplicate instrument. This facility is currently offered across all banks in over 71 locations.

This is a one stop shop for you to transact online. You can now do the following transaction online. Your first investment should be through your distributor / directly.

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To transact online you need to be an existing investor You can purchase or redeem Kotak Mutual Fund Units sitting at the comfort of your house or office at your convenient time. No need to do paper work or travel to ISCs to transact. Financial Transaction Purchase. Switch - in and Switch - out. Redemption.

Non Financial Transaction View your transaction status. View and print your account statement. Know latest unit balance. Know latest market value. Change your PIN number.

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The essence of professional selling today is building and maintaining of high quality relationships, based on establishing a high level of trust and credibility with the customer. Your job is to create and keep a customer indefinitely. You keep your customer by continually investing in maintaining the quality of your relationships. You should approach your clients as consultants and not as vendors and help them achieve their financial goals.

Selling Models

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 The Selling Process

Before you start selling Mutual funds you need to understand the scheme you are selling. You should not only focus on the specific features of the scheme but focus also on the specific financial goals of the prospect and show how the scheme enables him to get what he really wants. You should keep yourself updated on the track record of the scheme as well as the overall performance of the mutual fund.

Thus before recommending an investment you should know:

The strength of the Asset Management Company and sponsors of Mutual Fund. The various choices/plans available and their advantages The nature of the scheme The potential of returns and the risk associated with it Tax benefits Operational Details

Knowing your client is a strategic step. Clients may vary. Their financial needs and choice of investment differs depending on their age, earning capacity, family commitments and ability to take risk. Some of the categories are given below Young and Accumulating: These clients are typically under 40, seeking capital appreciation. They are willing to take high risks for high returns. Middle aged with family commitments: Ideally between 40-60 and looking at stable investments and lower risks

Retired: They are above 60 years seeking income to meet their regular expenses. Safety of their principal is their prime concern Institutions and high net worth individuals: These include corporates, banks, trusts and wealthy investors who seek an appropriate combination of tax efficient growth and income depending upon their return expectation.

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There are three types of prospects - Receptive, potential and independent minded. The earlier you identify which of these you are talking to the more productive will be your selling efforts.

Receptive: They are clients who will work in close association with you to develop a financial plan. They have the discipline to invest regularly and believe in the merits of professional financial advisors.

Potential: They are the people who have neither the discipline nor the patience to invest but do have the desire to become a successful investor. Working closely with them could make them Receptive clients. Independent minded clients: These are clients who prefer investing directly and do not use financial advisors. They can be cultivated over time.

Quality Policy& Objectives

Before you recommend a financial plan you must understand the needs and priorities of your client. You should help him see synergies between his financial goals and your financial plan objectives. For this you need to understand your clients Investment objectives Risk tolerance Return Expectation Cash flow requirement Tax benefits

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Organization Plans

Help them choose their investments

After having understood your client's needs, priorities and financial goals you have to advice him on where to invest. Your relationship depends a lot on the advice you give to your client. You should be honest and straightforward. Be completely focused on helping your client to make a good buying decision. Here are some of the alternatives that can be presented to your client.

Encourage regular investment

You should ask your clients to start investing early and invest regularly. This will help them to make more money because of the power of compounding of the rupee.

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Commit them to invest

The best investment advice and investment plans are a waste unless they are backed by the commitment of the client to invest. Be sure that the client gives you his commitment to invest. Go a step further and be ready with all kinds of paperwork, application forms and other documents required for the sale. Try and help him in any way you can.

Provide personalized after- sales- service

The last and the most important part of the sales process is the augmented element. These are the extra things that you include in your service that go beyond expectations.

It is in this area of exceeding expectations that you can set yourself apart from other distributors. It is by doing the things that go beyond what the client anticipates that you build high levels of goodwill that leads to testimonials, resales and referrals to other prospective clients.

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Some of the personalized services that you can provide are as follows

Making periodic calls to see if your clients need any help with their investments. Getting in touch with them when there is a lot of fluctuation in the market prices and advising them accordingly. Continuously assessing any change in their personal circumstances and recommending a change in investment plan if need be. Keeping your clients updated of the new schemes and products, which could be useful for them. Since you represent the interest of both the investor and the mutual fund you must regularly follow up with the mutual fund related problem. if your clients have experienced any service

At the end of all remember the golden rule. Treat every client as a special and important person. Be thoroughly prepared and knowledgeable. Be completely honest and straightforward. Focus on helping them achieve their financial goals and see the results.

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CHAPTER-2.1

INTRODUCTION

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Introduction

Financial Management is the specific area of finance dealing with the financial decision corporations make, and the tools and analysis used to make the decisions. The discipline as a whole may be divided between long-term and short-term decisions and techniques. Both share the same goal of enhancing firm value by ensuring that return on capital exceeds cost of capital, without taking excessive financial risks. Capital investment decisions comprise the long-term choices about which projects receive investment, whether to finance that investment with equity or debt, and when or whether to pay dividends to shareholders. Short-term corporate finance decisions are called working capital management and deal with balance of current assets and current liabilities by managing cash, inventories, and short-term borrowings and lending (e.g., the credit terms extended to customers). Corporate finance is closely related to managerial finance, which is slightly broader in scope, describing the financial techniques available to all forms of business enterprise, corporate or not.

Role of Financial Managers:

The role of a financial manager can be discussed under the following heads: 1. Nature of work 2. Working conditions 3. Employment 4. Training, Other qualifications and Advancement 5. Job outlook 6. Earnings 7. Related occupations

Let us discuss each of these in a detailed manner.

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1. Nature of work

Almost every firm, government agency and organization has one or more financial managers who oversee the preparation of financial reports, direct investment activities, and implement cash management strategies. As computers are increasingly used to record and organize data, many financial managers are spending more time developing strategies and implementing the long-term goals of their organization. The duties of financial managers vary with their specific titles, which include controller, treasurer or finance officer, credit manager, cash manager, and risk and insurance manager. Controllers direct the preparation of financial reports that summarize and forecast the organizations financial position, such as income statements, balance sheets, and analyses of future earnings or expenses. Regulatory authorities also in charge of preparing special reports require controllers. Often, controllers oversee the accounting, audit, and budget departments. Treasurers and finance officers direct the organizations financial goals, objectives, and budgets. They oversee the investment of funds and manage associated risks, supervise cash management activities, execute capital-raising strategies to support a firms expansion, and deal with mergers and acquisitions. Credit managers oversee the firms issuance of credit. They establish credit-rating criteria, determine credit ceilings, and monitor the collections of past-due accounts. Managers specializing in international finance develop financial and accounting systems for the banking transactions of multinational organizations. Cash managers monitor and control the flow of cash receipts and disbursements to meet the business and investment needs of the firm. For example, cash flow projections are needed to determine whether loans must be obtained to meet cash requirements or whether surplus cash should be invested in interest-bearing instruments. Risk and insurance managers oversee programs to minimize risks and losses that might arise from financial transactions and business operations undertaken by the institution. They also manage the organizations insurance budget. Financial institutions, such as commercial banks, savings and loan associations, credit unions, and mortgage and finance companies, employ additional financial managers who oversee various functions, such as lending, trusts, mortgages, and investments, or programs, including sales, operations, or electronic financial services.

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These managers may be required to solicit business, authorize loans, and direct the investment of funds, always adhering to State laws and regulations. Branch managers of financial institutions administer and manage all of the functions of a branch office, which may include hiring personnel, approving loans and lines of credit, establishing a rapport with the community to attract business, and assisting customers with account problems. Financial managers who work for financial institutions must keep abreast of the rapidly growing array of financial services and products. In addition to the general duties described above, all financial managers perform tasks unique to their organization or industry. For example, government financial managers must be experts on the government appropriations and budgeting processes, whereas healthcare financial managers must be knowledgeable about issues surrounding healthcare financing. Moreover, financial managers must be aware of special tax laws and regulations that affect their industry. Financial managers play an increasingly important role in mergers and consolidations and in global expansion and related financing. These areas require extensive, specialized knowledge on the part of the financial manager to reduce risks and maximize profit. Financial managers increasingly are hired on a temporary basis to advise senior managers on these and other matters. In fact, some small firms contract out all accounting and financial functions to companies that provide these services. The role of the financial manager, particularly in business, is changing in response to technological advances that have significantly reduced the amount of time it takes to produce financial reports. Financial managers now perform more data analysis and use it to offer senior managers ideas on how to maximize profits. They often work on teams, acting as business advisors to top management. Financial managers need to keep abreast of the latest computer technology in order to increase the efficiency of their firms financial operations.

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2. Working conditions

Financial managers work in comfortable offices, often close to top managers and to departments that develop the financial data these managers need. They typically have direct access to state-of-the-art computer systems and information services. Financial managers commonly work long hours, often up to 50 or 60 per week. They generally are required to attend meetings of financial and economic associations and may travel to visit subsidiary firms or to meet customers.

3. Employment
While the vast majority is employed in private industry, nearly 1 in 10 works for the different branches of government. In addition, although they can be found in every industry, approximately 1 out of 4 are employed by insurance and finance establishments, such as banks, savings institutions, finance companies, credit unions, and securities dealers.

4. Training, Other qualifications and Advancement

A bachelors degree in finance, accounting, economics, or business administration is the minimum academic preparation for financial managers. However, many employers now seek graduates with a masters degree, preferably in business administration, economics, finance, or risk management. These academic programs develop analytical skills and provide knowledge of the latest financial analysis methods and technology. Experience may be more important than formal education for some financial manager positionsnotably, branch managers in banks. Banks typically fill branch manager positions by promoting experienced loan officers and other professionals who excel at their jobs. Other financial managers may enter the profession through formal management training programs offered by the company. Continuing education is vital for financial managers, who must cope with the growing complexity of global trade, changes in State laws and regulations, and the proliferation of new and complex financial instruments. Firms often provide opportunities

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for workers to broaden their knowledge and skills by encouraging employees to take graduate courses at colleges and universities or attend conferences related to their specialty. Financial management, banking, and credit union associations, often in cooperation with colleges and universities, sponsor numerous national and local training programs. Persons enrolled prepare extensively at home and then attend sessions on subjects such as accounting management, budget management, corporate cash management, financial analysis, international banking, and information systems. Many firms pay all or part of the costs for employees who successfully complete courses. Although experience, ability, and leadership are emphasized for promotion, this type of special study may accelerate advancement. In some cases, financial managers also may broaden their skills and exhibit their competency by attaining professional certification. There are many different associations that offer professional certification programs. Candidates for financial management positions need a broad range of skills. Interpersonal skills are important because these jobs involve managing people and working as part of a team to solve problems. Financial managers must have excellent communication skills to explain complex financial data. Because financial managers work extensively with various departments in their firm, a broad overview of the business is essential. Financial managers should be creative thinkers and problem-solvers, applying their analytical skills to business. They must be comfortable with the latest computer technology. As financial operations increasingly are affected by the global economy, financial managers must have knowledge of international finance. Proficiency in a foreign language also may be important. Because financial management is critical for efficient business operations, well-trained, experienced financial managers who display a strong grasp of the operations of various departments within their organization are prime candidates for promotion to top management positions. Some financial managers transfer to closely related positions in other industries. Those with extensive experience and access to sufficient capital may start their own consulting firms.

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5. Job outlook
Some companies may hire financial managers on a temporary basis, to see the organization through a short-term crisis or to offer suggestions for boosting profits. Other companies may contract out all accounting and financial operations. Even in these cases, however, financial managers may be needed to oversee the contracts. Computer technology has reduced the time and staff required to produce financial reports. As a result, forecasting earnings, profits, and costs, and generating ideas and creative ways to increase profitability will become a major role of corporate financial managers over the next decade. Financial managers who are familiar with computer software that can assist them in this role will be needed.

6. Earnings
The Association for Financial Professionals 16th annual compensation survey showed that financial officers average total compensation in 2009, including bonuses and deferred compensation, was $261,800. Large organizations often pay more than small ones, and salary levels also can depend on the type of industry and location. Many financial managers in both public and private industry receive additional compensation in the form of bonuses, which also vary substantially by size of firm. Deferred compensation in the form of stock options is becoming more common, especially for senior level executives.

7. Related occupations
managers combine formal education with experience in one or more areas of finance, such as asset management, lending, credit operations, securities investment, or insurance risk and loss control. Workers in other occupations requiring similar training and skills include accountants and auditors; budget analysts; financial analysts and personal financial advisors; insurance underwriters; loan counselors and officers; securities, commodities, and financial services sales agents; and real estate brokers and sales agents.

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CHAPTER-2.2

AIM , OBJECTIVES AND SCOPE OF THE STUDY

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Aim Of The Study

1. The project work is done for analyzing the financial position of the Visakhapatnam Port Trust. The analysis of the financial position gives a better picture of the financial position of the organization in order to take better decisions.

2. Ratio analysis guides the board and management to pursue objectives that are in the interests of the company and share holders and facilitates effective monitoring thereby promoting optimal use of financial reserves more efficiently.

3. The study is also beneficial to employees and offers motivation by sharing how they are contributing for the company growth.

4. The investors who are interest in the investing the companys share will also get benefited by going through the study and can easily take a decision whether to invest or not in the company shares.

5. This study is also beneficial to top management of the company by providing relevant information regarding important aspects like liquidity, leverage, activity and profitability.

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Objectives Of The Study

Ratios are highly important profit tools in financial analysis that help financial analysts implement plans that improve profitability, liquidity, financial structure, reordering, leverage, and interest coverage. Although ratios report mostly on past performances, they can be predictive too, and provide lead indications of potential problem areas. Ratio analysis is primarily used to compare a company's financial figures over a period of time, a method sometimes called trend analysis. Through trend analysis, you can identify trends, good and bad, and adjust your business practices accordingly. You can also see how your ratios stack up against other businesses, both in and out of your industry. There are several considerations you must be aware of when comparing ratios from one financial period to another or when comparing the financial ratios of two or more companies.

If you are making a comparative analysis of a company's financial statements over a certain period of time, make an appropriate allowance for any changes in accounting policies that occurred during the same time span.

When comparing your business with others in your industry, allow for any material differences in accounting policies between your company and industry norms.

When comparing ratios from various fiscal periods or companies, inquire about the types of accounting policies used. Different accounting methods can result in a wide variety of reported figures.

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Scope Of The Study

Financial ratio analysis is the calculation and comparison of main indicators - ratios which are derived from the information given in a company's financial statements (which must be from similar points in time and preferably audited financial statements and developed in the same manner). It involves methods of calculating and interpreting financial ratios in order to assess a firm's performance and status. This analysis is primarily designed to meet informational needs of investors, creditors and management. The objective of ratio analysis is the comparative measurement of financial data to facilitate wise investment, credit and managerial decisions. Some examples of analysis, according to the needs to be satisfied, are:

Horizontal analysis- the analysis is based on a year-to-year comparison of a firm's ratios, Vertical analysis- the comparison of balance sheet accounts either using ratios or not, to get useful information and draw useful conclusions, and Cross-sectional analysis- ratios are used and compared between several firms of the same industry in order to draw conclusions about an entity's profitability and financial performance. Inter-firm analysiscan be categorized under cross-sectional, as the analysis is done by using some basic ratios of the industry in which the firm under analysis belongs to (and specifically, the average of all the firms of the industry) as benchmarks or the basis for our firm's overall performance evaluation. .

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CHAPTER-2.3

RESEARCH METHODOLOGY AND LIMITATION

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Meaning Of Research
Research Methology is a way to systematically solve the research problem. It may be understood as Science of studying how research is done, Scientifically in it we study the various steps that generally adopted by a reseacher in studying his reseach problem along with the logic behind them. Accuracy of the study depends on the systematic application of the method. The researcher has to decide the method to be used that helps him to get a desired direction in a systematic way.

Definitions According to Clifford Woody

Research comprises defining and redefining problems, formulating or hypothesis or suggested solutions collecting: organizing and evaluating data making deductions and reaching conclusions to determine whether they fit the formulating hypothesis. Thus, Research Methodology is a strategy that guides a researcher in providing answers to research questions and for this research survey is being done. Research in common parlance refers to a search for knowledge. In fact research is an act of scientific investigation.

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Steps of Research process

The seven major steps are :

Determine or define the problem or opportunity that is faced

Specify what information is needed

Identify the sources of the information.

Decide on the techniques for accruing the information

Gather and process the information

Analyze and interpret the meaning.

Present the findings to the decision makers.

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Sampling Design
Sampling is the selection of some part of aggregate or totality on the basis of which a judgement or inference about the aggregate or totality is made.

Sampling Unit
The sampling unit of my survey includes the Balance Sheet, Profit & Loss Account, Quarterly Results etc.

Sampling Method
In my survey,I have used Observation Method.

Data Collection
Data Collection was done in two ways they were1. Primary data collection 2. Secondary data Collection

Secondary Data Collection

In my project I have taken secondary data for analysis it is through Website, Journals etc.

Analysis And Interpretation

Data collected was compiled up and on the basis of percentage method depicted through bar diagrams Interpretation was done and recommendations was given. .

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Limitations Of Ratios And Potential Impact In The Analysis

Ratios are not predictive, as they are usually based on historical information notwithstanding ratios can be used as a tool to assist financial analysis. They help to focus attention systematically on important areas and summarise information in an understandable form and assist in identifying trends and relationships (see methods for facilitating the financial analysis above). However they do not reflect the future perspectives of a company, as they ignore future action by management. They can be easily manipulated by window dressing or creative accounting and may be distorted by differences in accounting policies. Inflation should be taken into consideration when a Ratio Analysis is being applied as it can distort comparisons and lead to inappropriate conclusions. Comparisons with industry averages are difficult for a conglomerate firm since it operates in many different market segments. Seasonal factors may distort ratios and thus must be taken into account when making ratios are used for financial analysis. Not always easy to tell that a ratio is good or bad. Must be always used as an additional tool to back up or confirm other financial information gathered. Different operating and accounting practices can distort comparisons. Using the average of certain ratios for companies operating in a specific industry to make comparisons and draw conclusions may not necessarily be a indicator of good performance; perhaps a company should aim higher.

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CHAPTER-2.4

DISCUSSION ON RATIO ANALYSIS

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RATIO ANALYSIS

Financial Analysis
Financial analysis is the process of identifying the financial strengths and weaknesses of the firm and establishing relationship between the items of the balance sheet and profit & loss account. Financial ratio analysis is the calculation and comparison of ratios, which are derived from the information in a companys financial statements. The level and historical trends of these ratios can be used to make inferences about a companys financial condition, its operations and attractiveness as an investment. The information in the statements is used by Trade creditors, to identify the firms ability to meet their claims i.e. liquidity position of the company. Investors, to know about the present and future profitability of the company and its financial structure. Management, in every aspect of the financial analysis. It is the responsibility of the management to maintain sound financial condition in the company.

Ratio Analysis
The term Ratio refers to the numerical and quantitative relationship between two items or variables. This relationship can be exposed as Percentages Fractions Proportion of numbers Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So that the strengths and weaknesses of a firm, as well as its historical performance and current financial condition can be determined. Ratio reflects a quantitative relationship helps to form a quantitative judgment.

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Steps In Ratio Analysis

The first task of the financial analysis is to select the information relevant to the decision under consideration from the statements and calculates appropriate ratios. To compare the calculated ratios with the ratios of the same firm relating to the pas6t or with the industry ratios. It facilitates in assessing success or failure of the firm.

Third step is to interpretation, drawing of inferences and report writing conclusions are drawn after comparison in the shape of report or recommended courses of action.

Basis Or Standard Of Comparision

Ratios are relative figures reflecting the relation between variables. They enable analyst to draw conclusions regarding financial operations. They use of ratios as a tool of financial analysis involves the comparison with related facts. This is the basis of ratio analysis. The basis of ratio analysis is of four types. Past ratios, calculated from past financial statements of the firm. Competitors ratio, of the some most progressive and successful competitor firm at the same point of time. Industry ratio, the industry ratios to which the firm belongs to Projected ratios, ratios of the future developed from the projected or pro forma financial statements

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Nature Of Ratio Analysis

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. It is only a means of understanding of financial strengths and weaknesses of a firm. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The following are the four steps involved in the ratio analysis. Selection of relevant data from the financial statements depending upon the objective of the analysis. Calculation of appropriate ratios from the above data. Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs.

Interpretation Of The Ratios

The interpretation of ratios is an important factor. The inherent limitations of ratio analysis should be kept in mind while interpreting them. The impact of factors such as price level changes, change in accounting policies, window dressing etc., should also be kept in mind when attempting to interpret ratios. The interpretation of ratios can be made in the following ways. Single absolute ratio Group of ratios Historical comparison Projected ratios Inter-firm comparison

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Guidelines Or Precautions For Use Of Ratios

The calculation of ratios may not be a difficult task but their use is not easy. Following guidelines or factors may be kept in mind while interpreting various ratios are Accuracy of financial statements Objective or purpose of analysis Selection of ratios Use of standards Caliber of the analysis

Importance Of Ratio Analysis

Aid to measure general efficiency Aid to measure financial solvency Aid in forecasting and planning Facilitate decision making Aid in corrective action Aid in intra-firm comparison Act as a good communication Evaluation of efficiency Effective tool

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Limitations Of Ratio Analysis

Differences in definitions Limitations of accounting records Lack of proper standards No allowances for price level changes Changes in accounting procedures Quantitative factors are ignored Limited use of single ratio Background is over looked Limited use Personal bias

Classifications Of Ratios
The use of ratio analysis is not confined to financial manager only. There are different parties interested in the ratio analysis for knowing the financial position of a firm for different purposes. Various accounting ratios can be classified as follows: 1. Traditional Classification 2. Functional Classification 3. Significance ratios

1. Traditional Classification
Balance sheet (or) position statement ratio: They deal with the relationship between two balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items must, however, pertain to the same balance sheet. Profit & loss account (or) revenue statement ratios: These ratios deal with the relationship between two profit & loss account items, e.g. the ratio of gross profit to sales etc., Composite (or) inter statement ratios: These ratios exhibit the relation between a profit & loss account or income statement item and a balance sheet items, e.g. stock turnover ratio, or the ratio of total assets to sales.

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2. Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity ratios and profitability ratios.

3. Significance ratios
Some ratios are important than others and the firm may classify them as primary and secondary ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios that support the primary ratio are called secondary ratios.

In The View Of Functional Classification The Ratios Are

Liquidity ratio Leverage ratio Activity ratio Profitability ratio

Liquidity Ratios
Liquidity refers to the ability of a concern to meet its current obligations as & when there becomes due. The short term obligations of a firm can be met only when there are sufficient liquid assets. The short term obligations are met by realizing amounts from current, floating (or) circulating assets The current assets should either be calculated liquid (or) near liquidity. They should be convertible into cash for paying obligations of short term nature. The sufficiency (or) insufficiency of current assets should be assessed by comparing them with short-term current liabilities. If current assets can pay off current liabilities, then liquidity position will be satisfactory. To measure the liquidity of a firm the following ratios can be calculated Current ratio Quick (or) Acid-test (or) Liquid ratio Absolute liquid ratio (or) Cash position ratio

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(a) Current Ratio:

Current ratio may be defined as the relationship between current assets and current liabilities. This ratio also known as Working capital ratio is a measure of general liquidity and is most widely used to make the analysis of a short-term financial position (or) liquidity of a firm.

Current assets Current ratio = Current liabilities

Components of current ratio

CURRENT ASSETS Cash in hand Cash at bank Bills receivable Inventories Work-in-progress Marketable securities Short-term investments Sundry debtors Prepaid expenses

CURRENT LIABILITIES Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income-tax payable

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(b) Quick Ratio

Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to the ability of a firm to pay its short-term obligations as & when they become due. Quick ratio may be defined as the relationship between quick or liquid assets and current liabilities. An asset is said to be liquid if it is converted into cash with in a short period without loss of value.

Quick or liquid assets Quick ratio = Current liabilities

Components of quick or liquid ratio

QUICK ASSETS Cash in hand Cash at bank Bills receivable Sundry debtors Marketable securities Temporary investments

CURRENT LIABILITIES Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income tax payable

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(c) Absolute Liquid Ratio

Although receivable, debtors and bills receivable are generally more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. Hence, absolute liquid ratio should also be calculated together with current ratio and quick ratio so as to exclude even receivables from the current assets and find out the absolute liquid assets.

Absolute liquid assets Absolute liquid ratio = Current liabilities

Absolute liquid assets include cash in hand etc. The acceptable forms for this ratio is 50% (or) 0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid assets are considered to pay Rs.2 worth current liabilities in time as all the creditors are nor accepted to demand cash at the same time and then cash may also be realized from debtors and inventorie

Components of Absolute Liquid Ratio

ABSOLUTE LIQUID ASSETS Cash in hand Cash at bank Interest on Fixed Deposit

CURRENT LIABILITIES Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income tax payable

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Leverage Ratios
The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations. Accordingly, long term solvency ratios indicate firms ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowings. The following ratio serves the purpose of determining the solvency of the concern.

(a) Proprietory Ratio

A variant to the debt-equity ratio is the proprietory ratio which is also known as equity ratio. This ratio establishes relationship between share holders funds to total assets of the firm.

Shareholders funds Proprietary ratio = Total assets

Components of share holders Fund And Total Assets

SHARE HOLDERS FUND Share Capital Reserves & Surplus

TOTAL ASSETS Fixed Assets Current Assets Cash in hand & at bank Bills receivable Inventories Marketable securities Short-term investments Sundry debtors Prepaid Expenses

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Activity Ratios
Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly effect the volume of sales. Activity ratios measure the efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are also called Turn over ratios because they indicate the speed with which assets are converted or turned over into sales. Working capital turnover ratio Fixed assets turnover ratio Capital turnover ratio Current assets to fixed assets ratio

(a) Working Capital Turnover Ratio

Working capital of a concern is directly related to sales.

Working capital = Current assets - Current liabilities

It indicates the velocity of the utilization of net working capital. This indicates the no. of times the working capital is turned over in the course of a year. A higher ratio indicates efficient utilization of working capital and a lower ratio indicates inefficient utilization.

Working capital turnover ratio=cost of goods sold/working capital.

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Components of Working Capital

CURRENT ASSETS Cash in hand Cash at bank Bills receivable Inventories Work-in-progress Marketable securities Short-term investments Sundry debtors Prepaid expenses

CURRENT LIABILITIES Out standing or accrued expenses Bank over draft Bills payable Short-term advances Sundry creditors Dividend payable Income-tax payable

(b) Fixed Assets Turnover Ratio

It is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets. Cost of Sales Fixed assets turnover ratio = Net fixed assets

Cost of Sales = Income from Services

Net Fixed Assets = Fixed Assets - Depreciation

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(c) Capital Turnover Ratios

Sometimes the efficiency and effectiveness of the operations are judged by comparing the cost of sales or sales with amount of capital invested in the business and not with assets held in the business, though in both cases the same result is expected. Capital invested in the business may be classified as long-term and short-term capital or as fixed capital and working capital or Owned Capital and Loaned Capital. All Capital Turnovers are calculated to study the uses of various types of capital.

Cost of goods sold Capital turnover ratio = Capital employed Cost of Goods Sold = Income from Services

Capital Employed = Capital + Reserves & Surplus

(d) Current Assets To Fixed Assets Ratio

This ratio differs from industry to industry. The increase in the ratio means that trading is slack or mechanization has been used. A decline in the ratio means that debtors and stocks are increased too much or fixed assets are more intensively used. If current assets increase with the corresponding increase in profit, it will show that the business is expanding. Current Assets Current Assets to Fixed Assets Ratio = Fixed Assets

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Component of Current Assets to Fixed Assets Ratio

CURRENT ASSETS Cash in hand Cash at bank Bills receivable Inventories Work-in-progress Marketable securities Short-term investments Sundry debtors Prepaid expenses Machinery Buildings Plant Vehicles

FIXED ASSETS

Profitability Ratios
The primary objectives of business undertaking are to earn profits. Because profit is the engine, that drives the business enterprise. Net profit ratio Return on total assets Reserves and surplus to capital ratio Earnings per share Operating profit ratio Price earning ratio Return on investments

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(a) Net Profit Ratio

Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the efficiency of the management in manufacturing, selling administrative and other activities of the firm.

Net profit after tax Net profit ratio= Net sales Net Profit after Tax = Net Profit () Depreciation () Interest () Income Tax

Net Sales = Income from Services

It also indicates the firms capacity to face adverse economic conditions such as price competitors, low demand etc. Obviously higher the ratio, the better is the profitability.

(b) Return On Total Assets

Profitability can be measured in terms of relationship between net profit and assets. This ratio is also known as profit-to-assets ratio. It measures the profitability of investments. The overall profitability can be known.

Net profit Return on assets = Total assets Net Profit = Earnings before Interest and Tax

Total Assets = Fixed Assets + Current Assets

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(c) Reserves And Surplus To Capital Ratio

It reveals the policy pursued by the company with regard to growth shares. A very high ratio indicates a conservative dividend policy and increased ploughing back to profit. Higher the ratio better will be the position.

Reserves& surplus Reserves & surplus to capital = Capital

(d) Earnings Per Share

Earnings per share is a small verification of return of equity and is calculated by dividing the net profits earned by the company and those profits after taxes and preference dividend by total no. of equity shares.

Net profit after tax Earnings per share = Number of Equity shares The Earnings per share is a good measure of profitability when compared with EPS of similar other components (or) companies, it gives a view of the comparative earnings of a firm.

(e) Operating Profit Ratio

Operating ratio establishes the relationship between cost of goods sold and other operating expenses on the one hand and the sales on the other. Operating cost Operation ratio = Net sales However 75 to 85% may be considered to be a good ratio in case of a manufacturing under taking.

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Operating profit = Net sales - Operating cost

Operating profit Operating profit ratio = Sales

(f) Price - Earning Ratio

Price earning ratio is the ratio between market price per equity share and earnings per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether (or) not to buy shares in a particular company. Generally, higher the price-earning ratio, the better it is. If the price earning ratio falls, the management should look into the causes that have resulted into the fall of the ratio.

Market Price per Share Price Earning Ratio = Earnings per Share

Capital + Reserves & Surplus Market Price per Share = Number of Equity Shares Earnings before Interest and Tax Earnings per Share = Number of Equity Shares

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(g) Return On Investments

Return on share holders investment, popularly known as Return on investments (or) return on share holders or proprietors funds is the relationship between net profit (after interest and tax) and the proprietors funds.

Net profit (after interest and tax) Return on shareholders investment = Shareholders funds The ratio is generally calculated as percentages by multiplying the above with 100.

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CHAPTER-2.5

ANALYSIS AND INTERPRITATION OF THE RESULTS

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Data Interpretation

Quarterly Results
First Quarterly Results (Rs. in Millions) March2009 [4 Quarter] Sales Turnover Other Income Total Income Total Expenditure Operating Profit Interest Gross Profit Depreciation Tax ReportedPAT Equity Capital Extra Ordinary Items Adjusted Profit After Extra Ordinary Item Book Value EPS Dividend 8030.29 1150.62 9180.92 2765.97 6414.95 3850.36 2564.59 0.00 575.98 1025.73 3456.69 0.00 1025.73 112.80 2.97 0.00 December2008 [3 Quarter] 8035.19 1090.30 9125.49 2941.25 6184.24 4209.67 1974.58 0.00 382.00 711.30 3454.74 0.00 711.30 0.00 2.06 0.00 March2008 [4 Quarter] 7636.70 393.51 8030.21 2610.59 5419.62 3728.88 1690.74 0.00 123.75 692.08 3446.73 0.00 692.08 0.00 2.01 0.00

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Balance Sheet
Kotak Mahindra Bank Ltd. From FY 2007 2009 (In Millions) Balance Sheet (Rs. in millions) Liabilities March2009 March2008 March2007 (12 Months) 3,261.56 13,357.69 16,619.25 50,997.52

(12 Months) (12 Months) Share Capital Reserves & Surplus Net Worth (1) Secured Loans (2) Unsecured Loans (3) Total Liabilities(1+2+3) 3,456.69 35,598.58 39,055.27 59,040.71 156,449.34 254,545.31 3,446.73 32,490.36 35,937.09 51,192.53

164,236.46 110,000.91 251,366.08 177,617.68

Assets

March2009

March2008

March2007 (12 Months)

(12 Months) (12 Months) Fixed Assets Gross Block (-) Acc. Depreciation Net Block (A) Capital WorkinPrgs.(B) 4,606.07 2,472.51 2,133.56 0.00 3,914.21 1,811.72 2,102.49 0.00

2,735.65 1,324.78 1,410.87 0.00

Investments (C) Current Assets, Loans & Advs. Inventories Sundry Debtors

91,101.81

91,419.89

68,619.65

0.00 0.00

0.00 0.00

0.00 0.00

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Cash And Bank Loans And Advances (i) Current Liab. & Provs. Current Liabilities Provisions (ii)

11,406.70 182,476.68 193,883.37

21,494.67

12,959.66

168,106.58 116,164.02 189,601.24 129,123.67

32,270.12 303.31 32,573.43

31,455.10 302.44 31,757.54

21,269.40 267.11 21,536.51

Net Curr. Assets (i - ii) 161,309.94 (D) Misc. Expenses (E) Total (A+B+C+D+E) 0.00 Assets 254,545.31

157,843.70 107,587.16

0.00

0.00

251,366.08 177,617.68

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PROFIT & LOSS ACCOUNT.

FROM YEAR 2007 TO 2009 (IN MILLION) Profit & Loss Accounts (Rs. in millions)

March 2009 March - 2008 March - 2007 (12 months) Sales Other Income Total Income Raw Material Cost Excise Other Expenses Operating Profit Interest Name Gross Profit Depreciation Profit Bef. Tax Tax Net Profit Other Non- Recurring Income Reported Profit Equity Dividend 32,626.77 420.00 33,046.77 0.00 0.00 28,106.48 4,520.29 15,465.98 -10,945.69 695.57 4,257.84 1,499.60 2,758.24 2.74 2,760.97 259.55 (12 months) 28,202.98 140.78 28,343.76 0.00 0.00 22,579.54 5,623.44 13,095.63 -7,472.20 508.55 3,966.59 1,038.48 2,928.11 11.22 2,939.33 258.70 (12 months) 15,920.58 59.32 15,979.90 0.00 0.00 13,605.54 2,315.04 6,992.40 -4,677.36 347.39 2,026.97 618.80 1,408.17 5.49 1,413.65 228.61

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Ratios
From Year 2007 to Year 2009

Ratios Profitability Ratios % March- 2009 March- 2008 March- 2007 (12 months) Operating Profit Margin Gross Profit Margin Net Profit Margin Turnover Ratios Return On Investment Return On Networth Dividend Yield 2.31 7.06 10.07 2.80 8.17 10.29 1.82 8.50 18.91 13.85 11.72 8.35 (12 months) 19.93 18.13 10.37 (12 months) 14.54 12.35 8.84

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OPERATING MARGIN RATIO

Formula to calculate operating margin:

Operating Margin = (earnings before interest and taxes) sales

Operating margin definition and explanation:

The operating margin is also referred to as operating profit margin, or EBIT to sales ratio. The operating margin ratio determines whether the fixed costs are too high for the production volume. The operating margin ratio is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Operating Profit Margin

19.93 20 18

16
14 12

14.54

13.85

10
8 6 4 2 0 2011 2012 2013

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GROSS PROFIT MARGIN

Indicates what the company's pricing policy is and what the true mark-up margins are. Revenue - Cost of Goods Sold Revenue

Gross Profit Margin Analysis:

The gross margin is not an exact estimate of the company's pricing strategy but it does give a good indication of financial health. Without an adequate gross margin, a company will be unable to pay its operating and other expenses and build for the future.

20 18 16 14 12 10 8 6 4 2 0 2011

18.13

12.35

11.72

2012

2013

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NET PROFIT MARGIN First some basic profitability equations:

Net Profit Net Profit Margin = Turnover * 100 =

Profit before Interest and Taxation * 100 Turnover

Remember: Net Profit = Gross Profit - Expenses

Why do we have two versions of this ratio - one for net profit and the other for profit before interest and taxation? Well, in some cases, you will find they use the term net profit and in other cases, especially published accounts, they use profit before interest and taxation.

12 10.37 10 8.84

8.35

2011

2012

2013

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RETURN ON INVESTMENT
Formula to calculate return on investment:

RETURN ON INVESTMENT RATIO =NET PROFITS BEFORE TAX SHAREHOLDERS EQUITY

The return on investment ratio provides a standard return on investor's equity. The return on investment ratio is also referred to as return on investment or ROI. Return on Investment is a key ratios for investors.

2.8

2.5

2.31

1.82

1.5

0.5

0 2011 2012 2013

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RETURN ON NET WORTH

Net After Tax Profit divided by Net Worth, this is the 'final measure' of profitability to evaluate overall return. This ratio measures return relative to investment in the company. Put another way, Return on Net Worth indicates how well a company leverages the investment in it. May appear higher for startups and sole proprietorships due to owner compensation draws accounted as net profit. Return on net worth, Return on ordinary shareholders' funds measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth.

9 8 7 6 5 4 3 2 1 0

8.5

8.17 7.06

2011

2012

2013

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Dividend Yield

20 18 16

18.91

14
12 10 8 6 4 2 0 2011 2012 2013 10.29 10.07

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FINDINGS OF THE STUDY

After doing the analysis, i find out that the operating profit margin of a bank is low in year 2009 as compared to last two years. Which shows that sales is low.

In this analysis the gross profit margin of a bank is also comes down from 18.13 to 11.72 in year 2009 which shows that the bank is facing a problem of having low liquidity or cash flow to spend on marketing & investment, R&D.

The analysis also shows that net profit margin of bank is also came down by 2.02%, it means that bank is not performing well to recover its debts.

The return on investment ratio comes down by very less margin; it shows that the bank is having a consistent performance in earning on its investment as compared to last year. The return on net worth shows that how the firm uses the shareholders interest or investment fund to generate earning growth. By comparing last 3 years RONW it is decaling every year which shows the bank is not having much profit available to equity shareholder & it is also not preferred much by the investors.

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CHAPTER-2.6

SUMMARY AND CONCLUSION

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Summary

After overhauling the all situation that boosted a number of Pvt. Companies associated with multinational in the Insurance Sector to give befitting competition to the established behemoth Kotak in private sector, we come at the conclusion that : There are very tough competitions among the private insurance companies on the

level of new trend of advertising to lull a major part of Customers. Kotak have to work more to increase its sale or attract customers for investing,

because the operating profit margin goes very down in 2009. The positive point is that they are having consistent return on investment. As a private player in the market kotak is facing problem in recovering its loans

due to which net profit of the bank came down by 2.02%. The entry of more Pvt. Players in the Insurance Sector has expanded the product

segment to meet the different level of the requirement of the customers. It has brought about greater choice to the customers.

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Conclusion

The study has provided with the useful data from the respondents. There has a lot to be recommended. Following are the recommendations:

There is a need for better promotion for the investment products & services. The

bank should advertise its products through television because it will reach to the masses. More returns should be provided on Insurance plans. As the bank provides the

Insurance facility to its customers. It should provide this facility by tie up with the other Insurance organizations as well. The main reason is that, the entire customers do not want Insurance of only one company. They should have choice while selecting a suitable Insurance plans. This will definitely add to the goodwill & profit for the bank.

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CHAPTER-3.1

BIBLIOGRAPHYAND REFERENCES

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Books
Money outlook, January edition 2009 Marketing management : kotler & keller CI-23 S.M. Shukla Saklecha S.M. Shukla Saklecha

Principals of life Assurance : Financial Management Corporate Accounting Cost Accounting Income Tax : : : :

Websites
www.kotaklife.com www.kotak.com www.insuranceworld.com www.about.com www.moneycontrol.com www.economictimes.com www.wikipedia.com www.indiainfoline.com

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