Assignment

Of
Accounting for Managers
Topic: Kotak Mahindra Bank
Submitted to: Dr. Jyoti
Submitted by: Gurneet kaur
Course: MBA
At
GNA University
Introduction:
Kotak Mahindra Bank Limited is an Indian private sector bank
headquartered in Mumbai, Maharashtra, India. It offers banking
products and financial services for corporate and retail customers in the
areas of personal finance, investment banking, life insurance, and
wealth management. As of February 2021, it is the third largest Indian
private sector bank by market capitalization, with 1600 branches &
2519 ATMs.

  History:
In 1985, Uday Kotak founded what later became an Indian financial
services conglomerate. In February 2003, Kotak Mahindra Finance Ltd.
(KMFL), the group's flagship company, received a banking license from
the Reserve Bank of India. With this, KMFL became the first non-
banking finance company in India to be converted into a bank.
 
In a study by Brand Finance Banking 500 published in February 2014 by
Banker magazine, KMBL was ranked 245th among the world's top 500
banks with a brand valuation of around $481 million and brand rating
of AA+.
 
TYPE:
Public
 
Traded as:
BSE: 500247
NSE: KOTAKBANK
BSE SENSEX Constituent
NSE NIFTY 50 Constituent

Industry
Banking Financial services
Founded
February 2003; 18 years ago
 
Founders
Uday Kotak
 
Headquarters
Mumbai, Maharashtra, India.
 
Key people        
Prakash Apte (Chairman)
Uday Kotak (MD & CEO)
 
Revenue        
Increase ₹50,365.74 crore (US$7.1 billion) [1] (2020)
Operating income        Increase ₹29,880.59 crore (US$4.2 billion) [1] (2020)
Net income        Increase ₹8,593.36 crore (US$1.2 billion) [1] (2020)
Total assets        Increase ₹443,172.71 crore (US$62 billion) [2] (2020)
Total equity        Increase ₹65,677.60 crore (US$9.2 billion) [2] (2020)
 
Number of employees        
33,013 (2017)
 
Subsidiaries        
Kotak Mahindra General Insurance
Kotak Life Insurance
Kotak Mutual Fund
Kotak Securities
Kotak Mahindra Prime Ltd.
Airtel Payments Bank

Website        
www.kotak.com
 
Financial statements of five years:
 
Profit and loss account of Kotak
Mahindra Bank
Standalone Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar 20 Mar 19 Mar 18 Mar 17 Mar 16

12 months 12 months 12 months 12 months 12 months

INCOME

Interest / Discount on Advances / Bills 20,999.24 18,371.25 14,727.95 13,402.10 12,470.37

Income from Investments 5,257.25 4,872.77 3,933.00 3,681.04 3,456.01

Interest on Balance with RBI and Other Inter- 381.24 381.42 755.29 218.32 92.91
Bank funds

Others 291.89 317.76 332.25 397.47 364.90

Total Interest Earned 26,929.61 23,943.21 19,748.50 17,698.93 16,384.18

Other Income 5,372.11 4,604.03 4,052.21 3,477.16 2,612.23

Total Income 32,301.72 28,547.23 23,800.70 21,176.09 18,996.42

EXPENDITURE

Interest Expended 13,429.95 12,684.25 10,216.81 9,572.78 9,483.81

Payments to and Provisions for Employees 3,911.12 3,183.61 2,950.23 2,768.53 2,816.97

Depreciation 371.95 366.92 302.69 290.66 287.38

Operating Expenses (excludes Employee Cost 4,567.87 3,964.27 3,172.80 2,559.30 2,367.17
& Depreciation)

Total Operating Expenses 8,850.94 7,514.80 6,425.72 5,618.50 5,471.52

Provision Towards Income Tax 1,996.67 2,504.34 2,133.92 1,800.31 1,036.12

Provision Towards Deferred Tax -139.18 16.12 0.00 -63.74 -2.32

Provision Towards Other Taxes 0.00 0.00 0.00 0.00 0.14

Other Provisions and Contingencies 2,216.17 962.39 939.95 836.74 917.37

Total Provisions and Contingencies 4,073.66 3,482.85 3,073.87 2,573.31 1,951.31

Total Expenditure 26,354.54 23,681.90 19,716.40 17,764.59 16,906.64

Net Profit / Loss for The Year 5,947.18 4,865.33 4,084.30 3,411.50 2,089.78

Net Profit / Loss After EI & Prior Year Items 5,947.18 4,865.33 4,084.30 3,411.50 2,089.78

Profit / Loss Brought Forward 16,919.29 13,604.60 10,756.29 8,214.12 5,095.26

Transferred on Amalgamation 0.00 0.00 0.00 0.00 1,674.71

 Total Profit / Loss available for 22,866.47 18,469.93 14,840.59 11,625.62 8,859.75
Appropriations

APPROPRIATIONS

Transfer To / From Statutory Reserve 1,486.80 1,216.34 1,021.08 852.88 522.45

Transfer To / From Special Reserve 80.00 40.00 55.00 55.00 45.00

Transfer To / From Capital Reserve 114.84 6.99 24.00 10.55 9.17

Transfer To / From Investment Reserve -31.06 101.95 0.00 -48.49 -41.52

Transfer To / From Revenue And Other 481.74 1.40 0.00 0.00 0.00
Reserves

Equity Share Dividend 0.00 160.28 114.21 0.07 91.84

Preference Share Dividend 193.26 0.00 0.00 0.00 0.00

Tax On Dividend 29.09 23.68 21.70 -0.68 18.70

Balance Carried Over To Balance Sheet 20,511.81 16,919.29 13,604.60 10,756.29 8,214.12

Total Appropriations 22,866.47 18,469.93 14,840.59 11,625.62 8,859.75

OTHER INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 30.88 25.52 21.54 18.57 11.42

Diluted EPS (Rs.) 30.84 25.48 21.51 18.55 11.40

DIVIDEND PERCENTAGE

Equity Dividend Rate (%) 0.00 16.00 14.00 12.00 10.00

Source : Dion Global Solutions Limited

 
 
Balance sheet of Kotak Mahindra Bank
BALANCE SHEET OF MAR 20 MAR 19 MAR 18 MAR 17 MAR 16
KOTAK MAHINDRA
BANK (in Rs. Cr.)

12 months 12 months 12 months 12 months 12 months

EQUITIES AND
LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 956.52 954.38 952.82 920.45 917.19

TOTAL SHARE CAPITAL 1,456.52 1,454.38 952.82 920.45 917.19

Revaluation Reserve 0.00 0.00 0.00 0.00 0.00

Reserves and Surplus 47,558.78 41,444.00 36,528.83 26,695.62 23,041.87

Total Reserves and Surplus 47,558.78 41,444.00 36,528.83 26,695.62 23,041.87

TOTAL SHAREHOLDERS 49,018.17 42,900.45 37,483.82 27,617.94 23,962.47

FUNDS

Deposits 262,820.5 225,880.3 192,643.2 157,425.8 138,643.0

2 6 7 6 2

Borrowings 37,993.31 32,248.29 25,154.15 21,095.48 20,975.34

Other Liabilities and 10,419.68 11,142.98 9,652.15 8,450.68 8,678.96

Provisions

TOTAL CAPITAL AND 360,251.6 312,172.0 264,933.4 214,589.9 192,259.7

LIABILITIES 8 9 0 6 9

ASSETS

Cash and Balances with 9,505.05 10,877.52 8,908.51 7,492.43 6,903.43

Reserve Bank of India

Balances with Banks 43,787.25 13,798.02 10,711.60 15,079.58 3,976.28

Money at Call and Short
Notice

Investments 75,051.55 71,189.09 64,562.35 45,074.19 51,260.22

Advances 219,748.1 205,694.8 169,717.9 136,082.1 118,665.3

9 1 2 3 0

Fixed Assets 1,623.13 1,651.55 1,527.16 1,537.63 1,551.59

Other Assets 10,536.52 8,961.11 9,505.86 9,324.00 9,902.97

TOTAL ASSETS 360,251.6 312,172.0 264,933.4 214,589.9 192,259.7

8 9 0 6 9

OTHER ADDITIONAL
INFORMATION

Number of Branches 1,600.00 1,500.00 1,388.00 1,369.00 1,333.00

Number of Employees 50,034.00 41,753.00 50,000.00 44,000.00 31,410.00

Capital Adequacy Ratios 18.00 17.00 18.00 17.00 16.00

(%)

KEY PERFORMANCE
INDICATORS

Tier 1 (%) 17.00 17.00 18.00 16.00 15.00

Tier 2 (%) 1.00 1.00 1.00 1.00 1.00

ASSETS QUALITY

Gross NPA 5,026.89 4,467.94 3,825.38 3,578.61 2,838.11

Gross NPA (%) 2.00 2.00 2.00 3.00 2.00

Net NPA 1,557.89 1,544.37 1,665.05 1,718.07 1,261.96

Net NPA (%) 0.71 1.00 1.00 1.00 1.00

 Net NPA To Advances (%) 1.00 1.00 1.00 1.00 1.00

CONTINGENT
LIABILITIES,
COMMITMENTS

Bills for Collection 39,518.98 31,852.23 24,255.31 20,318.26 25,578.12

Contingent Liabilities 187,277.3 212,082.2 205,104.8 193,067.5 231,996.2

6 7 4 4 2

Source : Dion Global Solutions Limited

 
 
COMPARATIVE BALANCE SHEET:
Particulars March 19 Mar 2020 Increase/ % increase/
12 months 12 months Decrease decrease
(in Rs.)
EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 956.52 954.38 (2.14) (0.223)

Preference Share Capital 500.00 500.00 - -
Total Share Capital 1,956.52 1,454.38 (502.14) (25.66)
Reserves and Surplus 47,558.78 41,444.00 (6114.78) (12.85)
Total Reserves and Surplus 47,558.78 41,444.00 (6114.78) (12.85)
Employees Stock Options 2.87 2.07 (.8) (27.87)
Total Share Holders Funds 49,018.17 42,900.45 (6117.72) (12.48)
Deposits 262,820.52 225,880.36 (36940.16) (14.05)
Borrowings 37,993.31 32,248.29 (5745.02) (15.12)
Other Liabilities and Provisions 10,419.68 11,142.98 723.3 6.94
Total Capital and Liabilities 360,251.68 312,172.09 (48079.59) (13.34)
ASSETS
Cash and Balances with Reserve 9,505.05 10,877.52 1372.47 14.43
Bank of India
Balances with Banks Money at 43,787.25 13,798.02 (29989.23) (68.48)
Call and Short Notice
Investments 75,051.54 71,189.09 (3862.42) (5.14)
Advances 219,748.19 205,694.81 (14053.38) (6.39)
Fixed Assets 1,623.13 1,651.55 28.42 1.75
Other Assets 10,536.52 8,961.11 (1575.41) (14.95)
Total Assets 360,251.68 312,172.09 (48079.59) (13.34)
OTHER ADDITIONAL
INFORMATION
Number of Branches 0.00 1,500.00 1500 -
Number of Employees 0.00 41,753.00 41753 -
Capital Adequacy Ratios (%) 18.00 17.00 (1.00) (5.55)
KEY PERFORMANCE
INDICATORS
Tier 1 (%) 0.00 17.00 17 -
Tier 2 (%) 0.00 1.00 1 -
ASSETS QUALITY
Gross NPA 5,026.89 4,467.94 (558.95) (11.11)
Gross NPA (%) 2.00 2.00 - -
Net NPA 1,557.89 1,544.37 (13.52) (0.86)
Net NPA (%) 1.00 1.00 - -
Net NPA To Advances (%) 2.00 1.00 (1.00) (50)
CONTINGENT LIABILITIES,
COMMITMENTS
Bills for Collection 0.00 31,852.23 31852.23 -
Contingent Liabilities 0.00 212,082.27 212082.27 -

Interpretation:
According to comparative statements of Kotak Mahindra Bank of 2019 and 2020:

First of all the equity share capital of the bank has decreased in 2020 as compared
to 2019 with 0.223%. There is no change in preference share capital. Total
reserves and surplus are decreased with 12.85%. So if we talk about total then
total shareholder fund is decreased with 12.48%. Similarly, deposits, borrowings
also decreased with 14.05 and 15.12% respectively. As a result of which total
capital and liabilities of the bank also tend to decrease with 13.34%.

If we talk about assets of the company, then the cash and bank balance of bank is
increased with 14.43%. but short term assets of bank that is call money is
decreased with 68.48%. Investments, advances and other assets also decreased
with 5.14%, 6.39% and 14.95% respectively. But the fixed assets of the bank are
increased with 1.75%. As a result of which total assets of the bank are decreased
with 13.34% as compared to the previous year.

There is no change in the number of branches and number of employees of the

bank. And the net NPA that is non-performing assets are decreased with 0.86%,
that’s a good sign. But overall position of the Bank is not much good.
Common size statements:
Particulars March 19 Mar 2020 % change % change
12 months 12 months (2019) (2020)
EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 956.52 954.38 0.266 0.30

Preference Share Capital 500.00 500.00 0.13 0.16
Total Share Capital 1,956.52 1,454.38 0.54 0.46
Reserves and Surplus 47,558.78 41,444.00 13.20 13.27
Total Reserves and Surplus 47,558.78 41,444.00 13.20 13.27
Employees Stock Options 2.87 2.07 0.00079 0.00066
Total Share Holders Funds 49,018.17 42,900.45 13.60 13.74
Deposits 262,820.52 225,880.36 72.95 72.35
Borrowings 37,993.31 32,248.29 10.54 10.33
Other Liabilities and Provisions 10,419.68 11,142.98 2.89 3.56
Total Capital and Liabilities 360,251.68 312,172.09 100 100
ASSETS
Cash and Balances with Reserve 9,505.05 10,877.52 2.63 3.48
Bank of India
Balances with Banks Money at Call 43,787.25 13,798.02 12.15 4.42
and Short Notice
Investments 75,051.54 71,189.09 20.83 22.80
Advances 219,748.19 205,694.81 60.99 65.89
Fixed Assets 1,623.13 1,651.55 0.45 0.52
Other Assets 10,536.52 8,961.11 2.92 2.87
Total Assets 360,251.68 312,172.09 100 100
OTHER ADDITIONAL
INFORMATION
Number of Branches 0.00 1,500.00
- -
Number of Employees 0.00 41,753.00
- -
Capital Adequacy Ratios (%) 18.00 17.00
- -
KEY PERFORMANCE INDICATORS
Tier 1 (%) 0.00 17.00
- -
Tier 2 (%) 0.00 1.00
- -
ASSETS QUALITY
Gross NPA 5,026.89 4,467.94
- -
Gross NPA (%) 2.00 2.00
- -
Net NPA 1,557.89 1,544.37
- -
Net NPA (%) 1.00 1.00
- -
Net NPA To Advances (%) 2.00 1.00
- -
CONTINGENT LIABILITIES,
COMMITMENTS
Bills for Collection 0.00 31,852.23
- -
Contingent Liabilities 0.00 212,082.27
- -

Interpretation:
According to common size statements of Kotak Mahindra Bank of 2019 and 2020:

First of all, equity share capital and preference share capital is increased as
compared to last year by dividing it to the total. But total share capital of the bank
is decreased as compared to 2019 with 0.08%. Total reserves and surplus are also
decreased. As a result of which total shareholder fund has also been decreased
0.14%. Deposits and borrowings of the bank are also decreased as in 2019n it was
72.95% and 10.54% respectively and in 2020 it was 72.35% and 10.33%. But other
liabilities and provisions of the bank are increased with 0.67%. As a result of this
change, net capital and liabilities of the Bank are decreased.

Now coming to the assets of the bank, cash and bank balance are increased as in
2019 it was 2.63 and in 2020 it was 3.48. But call money, investments, advances
and other assets are decreased but the fixed assets are increased with 0.07%. As a
result of which total assets of the Bank are also decreased in 2020 as compared to
2019.

There is no change in the number of branches and number of employees of the

bank. And the net NPA that is non-performing assets are decreased with 0.86%,
that’s a good sign. But overall position of the bank is not much good.
Trend analysis of profits of the Bank:
Year: 2016 2017 2018 2019 2020
Profit(actual 2089.78 3411.50 4084.30 4865.33 5947.18
figures)
Trend of profit 100 163.24 195.44 232.81 284.58

Trend on graph:

profits
300

250

200
profits
150

100

50

0
2016 2017 2018 2019 2020

Interpretation:
So we can see that there’s an upward trend in the profits of the bank. As we take
2016 as the base year, so it is 100. In 2017 the profits were increased with
163.24%, in 2018 the profits are increased with 195.44%, in 2019 the profits are
increased with 232.81% and in 2020 the profits are increased with 284.58%. So
the profits of the bank have been increased every year. So there’s an upward
trend in the profits of the bank.
Ratio analysis:
Key Financial Ratios ------------------- in Rs. Cr. -------------------

Mar '20 Mar '19 Mar '18 Mar '17 Mar '16

Investment Valuation Ratios

Face Value 5.00 5.00 5.00 5.00 5.00

Dividend Per Share -- 0.80 0.70 0.60 0.50

Operating Profit Per Share (Rs) 14.66 16.50 17.86 15.16 4.35

Net Operating Profit Per Share (Rs) 140.77 125.44 103.63 96.14 89.32

Free Reserves Per Share (Rs) -- -- -- -- --

Bonus in Equity Capital 67.05 67.20 67.31 69.68 69.93

Profitability Ratios

Interest Spread 7.79 6.73 6.94 7.64 7.86

Adjusted Cash Margin(%) 19.56 18.32 18.43 17.48 12.51

Net Profit Margin 22.08 20.32 20.68 19.27 12.75

Return on Long Term Fund(%) 43.32 46.78 43.84 53.30 52.62

Return on Net Worth(%) 11.86 11.47 10.89 12.35 8.72

Adjusted Return on Net Worth(%) 11.86 11.47 10.89 12.35 8.72

Return on Assets Excluding Revaluations 253.60 222.13 196.69 150.01 130.61

Return on Assets Including Revaluations 253.60 222.13 196.69 150.01 130.61

Management Efficiency Ratios

Interest Income / Total Funds 8.01 8.30 8.24 8.70 10.99

Net Interest Income / Total Funds 4.02 3.90 3.98 3.99 4.63

Non Interest Income / Total Funds 1.60 1.60 1.69 1.71 1.75

Interest Expended / Total Funds 3.99 4.40 4.26 4.71 6.36

Operating Expense / Total Funds 3.18 2.81 2.56 2.62 4.09

Profit Before Provisions / Total Funds 2.32 2.56 2.98 2.94 2.09

Net Profit / Total Funds 1.11 1.35 1.70 1.67 0.79

Loans Turnover 0.13 0.13 0.13 0.14 0.18

Total Income / Capital Employed(%) 9.61 9.89 9.93 10.41 12.74

Interest Expended / Capital Employed(%) 3.99 4.40 4.26 4.71 6.36

Total Assets Turnover Ratios 0.08 0.08 0.08 0.09 0.11

Asset Turnover Ratio 0.08 0.09 0.09 0.09 0.12

Profit And Loss Account Ratios

Interest Expended / Interest Earned 49.87 52.98 51.73 54.09 57.88

Other Income / Total Income 16.63 16.13 17.03 16.42 13.75

Operating Expense / Total Income 33.11 28.41 25.75 25.19 32.12

Selling Distribution Cost Composition 0.45 0.49 0.55 0.55 0.60

Balance Sheet Ratios

Capital Adequacy Ratio 17.89 17.45 18.22 16.77 16.34

Advances / Loans Funds(%) 78.63 86.44 85.65 80.49 96.23

Debt Coverage Ratios

Credit Deposit Ratio 87.06 89.70 87.35 86.04 86.57

Investment Deposit Ratio 29.92 32.44 31.32 32.54 38.26

Cash Deposit Ratio 4.17 4.73 4.69 4.86 5.07

Total Debt to Owners Fund 6.20 6.09 5.81 6.46 6.66

Financial Charges Coverage Ratio 1.77 1.69 1.73 1.66 1.46

Financial Charges Coverage Ratio Post Tax 1.47 1.41 1.43 1.39 1.25

Leverage Ratios

Current Ratio 0.04 0.04 0.05 0.06 0.07

Quick Ratio 23.01 20.24 19.49 18.09 15.61

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit -- 3.29 2.79 -- 4.39

Dividend Payout Ratio Cash Profit -- 3.06 2.60 -- 3.86

Earning Retention Ratio 100.00 96.71 97.21 100.00 95.61

Cash Earning Retention Ratio 100.00 96.94 97.40 100.00 96.14

Adjusted Cash Flow Times 41.59 43.17 43.91 42.52 58.32

Interpretation:
As we can see that, there are ratios of five years. I am going to interpret some of
the key ratios of the bank in 2020.

So first of all, if we talk about the current ratios, the current ratio of the bank in
2020 is 0.04, which is very less than the ideal current ratio that is 2:1. So we can
interpret that the current position of the bank is not much satisfactory.

CASA ratio as on March 31, 2020 stood at 56.2% compared to 52.5% as on March
31, 2019. Average Savings deposits grew by 21% to ` 85,656 cr for FY20 compared
to ` 70,990 cr for FY19. Capital adequacy ratio of the Bank as per Basel III, as on
March 31, 2020 is 17.9% and Tier I ratio is 17.3%.

Conclusion:
So we can conclude that As of February 2021, Kotak Mahindra Bank is
the third largest Indian private sector bank by market capitalization,
with 1600 branches & 2519 ATMs. Bank assures you that the Kotak
Mahindra Bank is a financially strong, well-capitalized bank with strong
risk and corporate governance framework. Your deposits with us are
absolutely safe".

But Kotak Mahindra Bank's loan growth has already been slowing,
dropping to 6.8% in the year to March from 21.2% a year earlier. ...
Gross bad loans fell to 2.25% of total advances from 2.5% the previous
quarter. Newly soured debts totaled 4.9 billion rupees, down from 10.6
billion rupees three months earlier. Bank share continued falling for the
sixth straight session amid a 3.8% intraday fall. The fall came amid the
private sector lender reporting a 16.1% YoY growth in profit at Rs
1,853.5 crore for the quarter ended December 2020 against a profit of
Rs 1,596 crore in a year-ago period.