Cash Flow Statement Kotak Mahindra 2016

INTRODUCTION
In financial accounting, a cash flow statement, also known as statement of cash flows or
funds flow statement, is a financial statement that shows how changes in balance sheet
accounts and income affect cash and cash equivalents, and breaks the analysis down to
operating, investing, and financing activities. Essentially, the cash flow statement is
concerned with the flow of cash in and cash out of the business. The statement captures
both the current operating results and the accompanying changes in the balance sheet As
an analytical tool, the statement of cash flows is useful in determining the short-term
viability of a company, particularly its ability to pay bills. International Accounting
Standard 7 (IAS 7) is the International Accounting Standard that deals with cash flow
statements.
People and groups interested in cash flow statements include:
Accounting personnel, who need to know whether the organization will be able to
cover payroll and other immediate expenses
Potential lenders or creditors, who want a clear picture of a company's ability to

repay
Potential investors, who need to judge whether the company is financially sound
Potential employees or contractors, who need to know whether the company will
be able to afford compensation
Shareholders of the business.
Purpose
The cash flow statement was previously known as the flow of funds statement. The cash
flow statement reflects a firm's liquidity.
The balance sheet is a snapshot of a firm's financial resources and obligations at a single
point in time, and the income statement summarizes a firm's financial transactions over
an interval of time. These two financial statements reflect the accrual basis accounting
used by firms to match revenues with the expenses associated with generating those
revenues. The cash flow statement includes only inflows and outflows of cash and cash
equivalents; it excludes transactions that do not directly affect cash receipts and
payments. These noncash transactions include depreciation or write-offs on bad debts or
credit losses to name a few. The cash flow statement is a cash basis report on three types
of financial activities: operating activities, investing activities, and financing activities.
Noncash activities are usually reported in footnotes.
The cash flow statement is intended to provide information on a firm's liquidity and
solvency and its ability to change cash flows in future circumstances
1. provide additional information for evaluating changes in assets, liabilities and
equity
2. improve the comparability of different firms' operating performance by
eliminating the effects of different accounting methods
3. indicate the amount, timing and probability of future cash flows
The cash flow statement has been adopted as a standard financial statement because it
eliminates allocations, which might be derived from different accounting methods, such
as various timeframes for depreciating fixed assets.
NEED OF THE STUDY

Many business owners disregard the importance of cash flow statements because they
unwittingly believe that their current financial standing can be construed from other
financial reports and projections. Unfortunately, however, a cash flow statement is
necessary to adequately assess the incoming and outgoing flow of cash and other
resources in a business.
Not only will a business owner with a cash flow system be more aware of his or her
financial standing, but it will also help investors to make educated decisions on future
investments. A business with regular and reliable cash flow statements shows more
economic solvency, and is more attractive to investors.
A cash flow statement documents the incoming and outgoing cash in plain terms. Future
sales and sales made for credit (unless they have been paid off) are not included in the
cash flow statement, and most of the data will come from core operations. Payables and
receivables should be expressly defined, as should depreciation of product value and
inventory that has not yet been moved.
This will allow a business owner to compare past periods with the current financial
standing and determine whether your receivables have increased or decreased.
This can also help to track your investments next to your receivables and payables. Are
your investments increasing or decreasing in value? And has your inventory moved at a
steady pace? New or expanding businesses can expect to see a decrease in cash flow, but
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this doesnt mean that the business is going under. More stables businesses should see a
steadily increase in cash flow over a period of several months or years.
There are typically five different sections in a cash flow statement, though large
businesses might have more complex cash flow systems as required.
SCOPE OF THE STUDY

Since it will not be possible to conduct a micro level study of all Cement
industries in Andhra Pradesh, the study is restricted to Kotak Mahindra Group.
(Formerly Kotak Mahindra bank Ltd.) only.
A study that involves an examination of long term as well as short term sources that a
company taps in order to meet its requirements of finance. The scope of the study is
confined to the sources that Kotak Mahindra Group tapped over the years under study
i.e. 2009-13.
OBJECTIVES
To know the flow of cash in the organization Kotak Mahindra Group.
(Formerly Kotak Mahindra bank Ltd.).
To access the efficiency with sources and uses of cash were made by the
co ordinance the present year 2011-2012 to 2015-2016.
To identify the changes in the elements of focus and uses of working
capital in between above mentioned years.
To improve the financial performance of the company
METHODOLOGY OF STUDY
The following are the main sources of date used for this study which are
Collected and compiled from published and unpublished sources of the Company
data. The published sources are as follows.
Management information system published by Kotak Mahindra Group. (Formerly

Kotak Mahindra bank Ltd.).
Status Report on Kotak Mahindra Group. (Formerly Kotak Mahindra bank Ltd.).
Journals, books and other published reports.
The present study is mainly based on primary and secondary sources of Data
collection. The primary data was directly collected by observations, Interviews
questionnaire etc.
The secondary data was collected from the literate available in libraries and
research studies and annual reports are related to the present study. It includes
published and unpublished literature like books, reports and generally Articles of
the Kotak Mahindra Group. (Formerly Kotak Mahindra bank Ltd.). .
REVIEW OF LITERATURE
Cash flow is calculated by making certain adjustments to net income by adding or
subtracting differences in revenue, expenses and credit transactions (appearing on the
balance sheet and income statement) resulting from transactions that occur from one
period to the next. These adjustments are made because non-cash items are calculated
into net income (income statement) and total assets and liabilities (balance sheet). So,
because not all transactions involve actual cash items, many items have to be re-evaluated
when calculating cash flow from operations.
For example, depreciation is not really a cash expense; it is an amount that is deducted
from the total value of an asset that has previously been accounted for. That is why it is
added back into net sales for calculating cash flow. The only time income from an asset is
accounted for in CFS calculations is when the asset is sold.
Changes in accounts receivable on the balance sheet from one accounting period to the
next must also be reflected in cash flow. If accounts receivable decreases, this implies
that more cash has entered the company from customers paying off their credit accounts the amount by which AR has decreased is then added to net sales. If accounts receivable
increase from one accounting period to the next, the amount of the increase must be
deducted from net sales because, although the amounts represented in AR are revenue,
they are not cash.
An increase in inventory, on the other hand, signals that a company has spent more
money to purchase more raw materials. If the inventory was paid with cash, the increase
in the value of inventory is deducted from net sales. A decrease in inventory would be
added to net sales. If inventory was purchased on credit, an increase in accounts payable
would occur on the balance sheet, and the amount of the increase from one year to the
other would be added to net sales.
The same logic holds true for taxes payable, salaries payable and prepaid insurance. If
something has been paid off, then the difference in the value owed from one year to the
next has to be subtracted from net income. If there is an amount that is still owed, then
any differences will have to be added to net earnings. (For mroe insight, see Operating
Cash Flow: Better Than Net Income?)
Investing:
Changes in equipment, assets or investments relate to cash from investing. Usually cash
changes from investing are a "cash out" item, because cash is used to buy new equipment,
buildings or short-term assets such as marketable securities. However, when a company
divests of an asset, the transaction is considered "cash in" for calculating cash from
investing.
Financing:
Changes in debt, loans or dividends are accounted for in cash from financing. Changes in
cash from financing are "cash in" when capital is raised, and they're "cash out" when
dividends are paid. Thus, if a company issues a bond to the public, the company receives
cash financing; however, when interest is paid to bondholders, the company is reducing
its cash.
Difference between Cash Flow Statement and Income Statement
Cash Flow Statement
Income Statement
1. The Statements narrates the item of cost
1. It is disclosing the reasons for change in
and revenue to arrive at the figures of profit
working capital i.e., where from the
and loss earned / incurred during a
working capital cash has been applied.
particular period of time.
2. Income Statement helps the preparation 2. Cash Flow Statement doesnt help
of Cash Flow Statement in as much as one preparation of income statement
source of cash i.e., cash from operation is
found out from the income statement
3. Cash raised are matched with cash used.
3. Expenses are matched with income in
No distinction is made between capital and
order to find out the result of operation.
revenue items
Only revenue items are considered

Difference between Cash Flow Statement and
Position Statement
Cash Flow Statement
Position Statement
1. It is a Statement changes in financial 1. It is statement of financial position

position.
2. It shows the amount of changes during the 2. It present the amount of assets and
particular period of time.
liabilities at a particular point of time
3. It doesnt analyze the change in current 3. It shows all the accounting liabilities
asset and current liability.
whether current or non-current
4. It is a analytical statement analyzing form 4. It is not a analytical statement hence not

where they have been used, hence more that much useful for decision making as the
useful.
cash flow statement
Importance of cash flow statement:
The information which is provided by cash flow statement is neither available in the
balance sheet nor in the income statement and hence its important. The changes which
have taken place in between two accounting dates are highlighted by cash flow statement.
A lay man cannot grasp the underlying significance of achievements and progress of the
company simply by a personal of the balance sheet and income statement of different
years. The comparative and analytical study presented by the statement giving the details
of sources and uses of cash during a given period of immense help to the users of
information. It is very useful tool in analytical kit of the management also, besides the
outsiders, in order to have at a glance appraisal of the financial and operating
performance of a company. Since the statement shows the extent to which the working
capital has been effectively put to use, the managements task of taking policy decision
regarding investment, dividends etc, is great facilitated.
The projected cash flow statement can also be prepared and then budgetary
control and capital expenditure control can be exercised to the benefit of the entire
organization.
Uses of cash flow statement:
Cash flow statement of a company is of great value to management share holders,

creditors, bankers, money lending institutions etc.,
Informative value:- The financial consequence of business operation are clearly

explained in details by a cash flow statement some of the problems which crop up
in the minds of investors are well solved by a simple perusal of this statement for
e.g.,
1. Where have the profit gone.
2. Why does an imbalance exist between liquidity position and profitability position
of enterprise?
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Forecasting value:- A projected cash flow statement can be prepared and

resources can be properly allocated after an analysis of the present state of affairs.
The optimal utilization of available cash in necessary for the overall growth of the
enterprise. The cash flow statement prepared in advance given a clear direction to
the management in this raged.
Testing value:- Whether the working capital has been effectively is used or not
by the management can well be tested by cash flow statement. Whether working
capital has been maintained at proper level, and whether it is adequate or
inadequate can be known by a study of the statement. The management is warned
against the injudicious uses of cash.
Decision-making value:- Since over all credit worthiness of the enterprise is known,
creditors and money lenders can decide as to whether they have to provide loans to
company or not. The sources of raising cash and their application help the shareholders to
decide whether the management of the business is an enlightened or not regarding
managing cash. Mismanagement of cash may be prevented. The management can be
decide about the future financing policies and capital expenditure programmers.The
balance sheet, income statement, and cash flow statement are the three generally accepted
financial statements used by most businesses for financial reporting. All three statements
are prepared from the same accounting data, but each statement serves its own purpose.
The purpose of the cash flow statement is to report the sources and uses of cash during the
reporting period.
Structure of the Cash Flow Statement

The most commonly used format for the cash flow statement is broken down into three
sections: cash flows from operating activities, cash flows from investing activities, and
cash flows from financing activities.
Cash flows from operating activities are related to your principal line of business and
include the following:
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Cash receipts from sales or for the performance of services
Payroll and other payments to employees
Payments to suppliers and contractors
Rent payments
Payments for utilities
Tax payments
Investing activities include capital expenditures disbursements that are not charged to
expense but rather are capitalized as assets on the balance sheet. Investing activities also
include investments (other than cash equivalents as indicated below) that are not part of
your normal line of business. These cash flows could include:
Purchases of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Purchases of stock or other securities (other than cash equivalents)
Proceeds from the sale or redemption of investments
Financing activities include cash flows relating to the businesss debt or equity financing:
Proceeds from loans, notes, and other debt instruments
Installment payments on loans or other repayment of debts
Cash received from the issuance of stock or equity in the business
Dividend payments, purchases of treasury stock, or returns of capital
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Cash for purposes of the cash flow statement normally includes cash and cash
equivalents. Cash equivalents are short-term, temporary investments that can be readily
converted into cash, such as marketable securities, short-term certificates of deposit,
treasury bills, and commercial paper. The cash flow statement shows the opening balance
in cash and cash equivalents for the reporting period, the net cash provided by or used in
each one of the categories (operating, investing, and financing activities), the net increase
or decrease in cash and cash equivalents for the period, and the ending balance.
There are two methods for preparing the cash flow statement the direct method and the
indirect method. Both methods yield the same result, but different procedures are used to
arrive at the cash flows.
Direct Method
Under the direct method, you are basically analyzing your cash and bank accounts to
identify cash flows during the period. You could use a detailed general ledger report
showing all the entries to the cash and bank accounts, or you could use the cash receipts
and disbursements journals. You would then determine the offsetting entry for each cash
entry in order to determine where each cash movement should be reported on the cash
flow statement.
Another way to determine cash flows under the direct method is to prepare a worksheet
for each major line item, and eliminate the effects of accrual basis accounting in order to
arrive at the net cash effect for that particular line item for the period. Some examples for
the operating activities section include:
Cash receipts from customers:
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Net sales per the income statement
Plus beginning balance in accounts receivable
Minus ending balance in accounts receivable
Equals cash receipts from customers
Cash payments for inventory:
Ending inventory
Minus beginning inventory
Plus beginning balance in accounts payable to vendors
Minus ending balance in accounts payable to vendors
Equals cash payments for inventory
Cash paid to employees:
Salaries and wages per the income statement
Plus beginning balance in salaries and wages payable
Minus ending balance in salaries and wages payable
Equals cash paid to employees
Cash paid for operating expenses:
Operating expenses per the income statement
Minus depreciation expenses
Plus increase or minus decrease in prepaid expenses

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Plus decrease or minus increase in accrued expenses
Equals cash paid for operating expenses
Taxes paid:
Tax expense per the income statement
Plus beginning balance in taxes payable
Minus ending balance in taxes payable
Equals taxes paid
Interest paid:
Interest expense per the income statement
Plus beginning balance in interest payable
Minus ending balance in interest payable
Equals interest paid
Under the direct method, for this example, you would then report the following in the
cash flows from operating activities section of the cash flow statement:
Cash receipts from customers
Cash payments for inventory
Cash paid to employees
Cash paid for operating expenses
Taxes paid
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Interest paid
Equals net cash provided by (used in) operating activities
Similar types of calculations can be made of the balance sheet accounts to eliminate the
effects of accrual accounting and determine the cash flows to be reported in the investing
activities and financing activities sections of the cash flow statement.
Indirect Method
In preparing the cash flows from operating activities section under the indirect method,
you start with net income per the income statement, reverse out entries to income and
expense accounts that do not involve a cash movement, and show the change in net
working capital. Entries that affect net income but do not represent cash flows could
include income you have earned but not yet received, amortization of prepaid expenses,
accrued expenses, and depreciation or amortization. Under this method you are basically
analyzing your income and expense accounts, and working capital. The following is an
example of how the indirect method would be presented on the cash flow statement:
Net income per the income statement
Minus entries to income accounts that do not represent cash flows
Plus entries to expense accounts that do not represent cash flows
Equals cash flows before movements in working capital
Plus or minus the change in working capital, as follows:

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An increase in current assets (excluding cash and cash equivalents) would

be shown as a negative figure because cash was spent or converted into
other current assets, thereby reducing the cash balance.
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A decrease in current assets would be shown as a positive figure, because

other current assets were converted into cash.
An increase in current liabilities (excluding short-term debt which would

be reported in the financing activities section) would be shown as a
positive figure since more liabilities mean that less cash was spent.
A decrease in current liabilities would be shown as a negative figure,

because cash was spent in order to reduce liabilities.
The net effect of the above would then be reported as cash provided by (used in)
operating activities.
The cash flows from investing activities and financing activities would be presented the
same way as under the direct method.
REVIEW: 1
The ethics of creative accounting
Author:
John Blake, Jack Dowds, oriol Amat
Abstract:
The term 'creative accounting' can be defined in a number of ways. Initially we will
offer this definition: 'a process whereby accountants use their knowledge of accounting
rules to manipulate the figures reported in the accounts of a business'. To investigate the
ethical issues raised by creative accounting we will: - Explore some definitions of
creative accounting. - Consider the various ways in which creative accounting can be
undertaken. - Explore the range of reasons for a company's directors to engage in creative
accounting. - Review the ethical issues that arise in creative accounting. - Report on
surveys of auditors' perceptions of creative accounting in the UK, Spain and New
Zealand.
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REVIEW: 2
The Cash Flow Sensitivity of Cash
Author:
Heitor Almeida, Murillo Campello and Michael S.Weishbach
Abstract:
We model a firms demand for liquidity to develop a new test of the effect of
financial constraints on corporate policies. the effect of financial constraints is captured
by the firms propensity to save cash out of cash flows (the cash flow sensitivity of
cash).we hypothesize that constrained firms should have a positive cash flow sensitivity
of cash, while unconstraint firms cash savings should not be systematically related to
cash flows. we empirically estimate the cash sensitivity of cash using a large sample of
manufacturing firms over the 1971 to 2000 period and find robust support for our theory.
REVIEW: 3
Cash Flow sensitivities provide useful measures of financing constraints,
Author:
Steven N. Kaplan and luigi zingales
Abstract:
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No. This paper investigates the relationship between financing constraints and
investment-cash flow sensitivities by analyzing the forms identified by fazzari, hubbard,
And Petersen as having usually high investment-cash flow sensitivities. we find that
firms that appear less financially constrained exhibit significantly greater sensitivities
than firms that appear more financially constrained. we find this pattern for the entire
sample period, sub periods, and individual years. these results(and simple theoretical
arguments)
Suggest that higher sensitivities can not be interpreted as evidence that firms are more
financially constrained these findings call into question the interpretation of most
previous research that uses this methodology.
REVIEW: 4
A framework of daily family activities
Author:
Glenn muske and mary winter
Abstract:
The purpose of this paper is to develop a framework to explain and describe the daily
cash flow management processes of families. From data gathered through semi-structured
Interviews, themes are developed and linked into a daily cash flow management
framework. The proposed model suggests that families have a process for managing
money. The process focuses on short- term viability through safety, control, comfort, and
Routine aspects. Cash flow activities are motivated by the near future, feelings and
values, experience, and situational knowledge. The framework fills a gap in existing
research about motivating factors underlying the actual money management patterns of
families.
Keywords: cash flow management, family finance, family resource management, money
Management, personal financial behavior.
REVIWE: 5
Keys to effective cash flow management for business owners
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Author:
Steve jannicelli, BPM senior manager
Abstract:
There are a number of keys to effective cash flow management and planning. Though
The din of ratios, metrics, covenants and analyses may seem daunting , there are just a
few fundamentals that are crucial to understanding, projecting and improving cash flow
in your business. while some may be new and initially seen complex, in fact they can
significantly simplify the analysis, and are essentially to understand before sound cash
flow management is really possible.
This article details key metrics for determining and improving the quality of current cash
flow. methods for projecting and anticipating future cash flow, and some common
misconceptions that need to be debunked along the way.
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INDUSTRY PROFILE&COMPANY PROFILE

A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while
enriching investors. Government restrictions on financial activities by banks vary over
time and location. Banks are important players in financial markets and offer services
such as investment funds and loans. In some countries such as Germany, banks have
historically owned major stakes in industrial corporations while in other countries such as
the United States banks are prohibited from owning non-financial companies. In Japan,
banks are usually the nexus of a cross-share holding entity known as the keiretsu. In
France, bancassurance is prevalent, as most banks offer insurance services (and now real
estate services) to their clients.
Introduction:
Indias banking sector is constantly growing. Since the turn of the century, there has been
a noticeable upsurge in transactions through ATMs, and also internet and mobile banking.
Following the passing of the Banking Laws (Amendment) Bill by the Indian Parliament
in 2012, the landscape of the banking industry began to change. The bill allows the
Reserve Bank of India (RBI) to make final guidelines on issuing new licenses, which
could lead to a bigger number of banks in the country. Some banks have already received
licences from the government, and the RBI's new norms will provide incentives to banks
to spot bad loans and take requisite action to keep rogue borrowers in check.
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Over the next decade, the banking sector is projected to create up to two million new
jobs, driven by the efforts of the RBI and the Government of India to integrate financial
services into rural areas. Also, the traditional way of operations will slowly give way to
modern technology.
Market size
Total banking assets in India touched US$ 1.8 trillion in FY13 and are anticipated to
cross US$ 28.5 trillion in FY25.
Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent
over FY0613. Total deposits in FY13 were US$ 1,274.3 billion.
Total banking sector credit is anticipated to grow at a CAGR of 18.1 per cent (in terms of
INR) to reach US$ 2.4 trillion by 2017.
In FY14, private sector lenders witnessed discernable growth in credit cards and personal
loan businesses. ICICI Bank witnessed 141.6 per cent growth in personal loan
disbursement in FY14, as per a report by Emkay Global Financial Services. Axis Bank's
personal loan business also rose 49.8 per cent and its credit card business expanded by
31.1 per cent.
Investments
Bengaluru-based software services exporter Mphasis Ltd has bagged a five-year contract
from Punjab National Bank (PNB) to set up the banks contact centres in Mangalore and
Noida (UP). Mphasis will provide support for all banking products and services,
including deposits operations, lending services, banking processes, internet banking, and
account and card-related services. The company will also offer services in multiple
languages.
Microfinance companies have committed to setting up at least 30 million bank accounts
within a year through tie-ups with banks, as part of the Indian governments financial
inclusion plan. The commitment was made at a meeting of representatives of 25 large
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microfinance companies and banks and government representatives, which included

financial services secretary Mr GS Sandhu.
Export-Import Bank of India (Exim Bank) will increase its focus on supporting project
exports from India to South Asia, Africa and Latin America, as per Mr Yaduvendra
Mathur, Chairman and MD, Exim Bank. The bank has moved up the value chain by
supporting project exports so that India earns foreign exchange. In 201213, Exim Bank
lent support to 85 project export contracts worth Rs 24,255 crore (US$ 3.96 billion)
secured by 47 companies in 23 countries.
Government Initiatives
The RBI has given banks greater flexibility to refinance current long-gestation project
loans worth Rs 1,000 crore (US$ 163.42 million) and more, and has allowed partial
buyout of such loans by other financial institutions as standard practice. The earlier
stipulation was that buyers should purchase at least 50 per cent of the loan from the
existing banks. Now, they get as low as 25 per cent of the loan value and the loan will
still be treated as standard.
The RBI has also relaxed norms for mortgage guarantee companies (MGC) enabling
these firms to use contingency reserves to cover for the losses suffered by the mortgage
guarantee holders, without the approval of the apex bank. However, such a measure can
only be initiated if there is no single option left to recoup the losses.
SBI is planning to launch a contact-less or tap-and-go card facility to make payments in
India. Contact-less payment is a technology that has been adopted in several countries,
including Australia, Canada and the UK, where customers can simply tap or wave their
card over a reader at a point-of-sale terminal, which reads the card and allows
transactions.
SBI and its five associate banks also plan to empower account holders at the bottom of
the social pyramid with a customer call facility. The proposed facility will help customers
get an update on available balance, last five transactions and cheque book request on their
mobile phones.
Road Ahead
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India is yet to tap into the potential of mobile banking and digital financial services.
Forty-seven per cent of the populace have bank accounts, of which half lie dormant due
to reliance on cash transactions, as per a report. Still, the industry holds a lot of promise.
India's banking sector could become the fifth largest banking sector in the world by 2020
and the third largest by 2025. These days, Indian banks are turning their focus to
servicing clients and enhancing their technology infrastructure, which can help improve
customer experience as well as give banks a competitive edge.
Exchange Rate Used: INR 1 = US$ 0.0163 as on October 28, 2014
The level of government regulation of the banking industry varies widely, with countries
such as Iceland, having relatively light regulation of the banking sector, and countries
such as China having a wide variety of regulations but no systematic process that can be
followed typical of a communist system.
The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena,
Italy, which has been operating continuously since 1472.
History
Origin of the word
The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a
desk covered by a green tablecloth. However, there are traces of banking activity even in
ancient times, which indicates that the word 'bank' might not necessarily come from the
word 'banco'.
In fact, the word traces its origins back to the Ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed courtyards called
macella on a long bench called a bancu, from which the words banco and bank are
derived. As a moneychanger, the merchant at the bancu did not so much invest money as
merely convert the foreign currency into the only legal tender in Romethat of the
Imperial Mint.
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The earliest evidence of money-changing activity is depicted on a silver drachm coin

from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350325
BC, presented in the British Museum in London. The coin shows a banker's table
(trapeza) laden with coins, a pun on the name of the city.
In fact, even today in Modern Greek the word Trapeza () means both a table and
a bank.
Traditional banking activities

Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, EFTPOS, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting
term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend
money by making advances to customers on current accounts, by making installment
loans, and by investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that provide
payment services such as remittance companies are not normally considered an adequate
substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and lend most
funds to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market
funds, cash management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks for lending savings to.
Entry regulation
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Currently in most jurisdictions commercial banks are regulated by government entities

and require a special bank licence to operate.
Usually the definition of the business of banking for the purposes of regulation is
extended to include acceptance of deposits, even if they are not repayable to the
customer's orderalthough money lending, by itself, is generally not included in the
definition.
Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not
the case. In the UK, for example, the Financial Services Authority licences banks, and
some commercial banks (such as the Bank of Scotland) issue their own banknotes in
addition to those issued by the Bank of England, the UK government's central bank.
Accounting for bank accounts
Bank statements are accounting records produced by banks under the various accounting
standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and
credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets
and Expenses. This means you credit a credit account to increase its balance, and you
debit a debit account to decrease its balance.
This also means you debit your savings account every time you deposit money into it
(and the account is normally in deficit), while you credit your credit card account every
time you spend money from it (and the account is normally in credit).
However, if you read your bank statement, it will say the oppositethat you credit your
account when you deposit money, and you debit it when you withdraw funds. If you have
cash in your account, you have a positive (or credit) balance; if you are overdrawn, you
have a negative (or deficit) balance.
26
The reason for this is that the bank, and not you, has produced the bank statement. Your
savings might be your assets, but the bank's liability, so they are credit accounts (which
should have a positive balance). Conversely, your loans are your liabilities but the bank's
assets, so they are debit accounts (which should also have a positive balance).
Where bank transactions, balances, credits and debits are discussed below, they are done
so from the viewpoint of the account holderwhich is traditionally what most people are
used to seeing.
Economic functions
1. issue of money, in the form of banknotes and current accounts subject to cheque
or payment at the customer's order. These claims on banks can act as money
because they are negotiable and/or repayable on demand, and hence valued at par.
They are effectively transferable by mere delivery, in the case of banknotes, or by
drawing a cheque that the payee may bank or cash.
2. netting and settlement of payments banks act as both collection and paying
agents for customers, participating in interbank clearing and settlement systems to
collect, present, be presented with, and pay payment instruments. This enables
banks to economise on reserves held for settlement of payments, since inward and
outward payments offset each other. It also enables the offsetting of payment
flows between geographical areas, reducing the cost of settlement between them.
3. credit intermediation banks borrow and lend back-to-back on their own account
as middle men.
4. credit quality improvement banks lend money to ordinary commercial and
personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which
provides a buffer to absorb losses without defaulting on its obligations. However,
banknotes and deposits are generally unsecured; if the bank gets into difficulty
and pledges assets as security, to raise the funding it needs to continue to operate,
27
this puts the note holders and depositors in an economically subordinated

position.
5. maturity transformation banks borrow more on demand debt and short term
debt, but provide more long term loans. In other words, they borrow short and
lend long. With a stronger credit quality than most other borrowers, banks can do
this by aggregating issues (e.g. accepting deposits and issuing banknotes) and
redemptions (e.g. withdrawals and redemptions of banknotes), maintaining
reserves of cash, investing in marketable securities that can be readily converted
to cash if needed, and raising replacement funding as needed from various sources
(e.g. wholesale cash markets and securities markets).
Law of banking
Banking law is based on a contractual analysis of the relationship between the bank
(defined above) and the customerdefined as any entity for which the bank agrees to
conduct an account.
The law implies rights and obligations into this relationship as follows:
1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the
customer; when the account is overdrawn, the customer owes the balance to the
bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to the
credit of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's
account as the customer's agent, and to credit the proceeds to the customer's
account.
28
5. The bank has a right to combine the customer's accounts, since each account is
just an aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the extent
that the customer is indebted to the bank.
7. The bank must not disclose details of transactions through the customer's account
unless the customer consents, there is a public duty to disclose, the bank's
interests require it, or the law demands it.
8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular
jurisdiction may also modify the above terms and/or create new rights, obligations or
limitations relevant to the bank-customer relationship.
Some types of financial institution, such as building societies and credit unions, may be
partly or wholly exempt from bank licence requirements, and therefore regulated under
separate rules.
The requirements for the issue of a bank licence vary between jurisdictions but typically
include:
1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or
senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.
Types of banks
29
Banks' activities can be divided into retail banking, dealing directly with individuals and
small businesses; business banking, providing services to mid-market business; corporate
banking, directed at large business entities; private banking, providing wealth
management services to high net worth individuals and families; and investment banking,
relating to activities on the financial markets. Most banks are profit-making, private
enterprises. However, some are owned by government, or are non-profit organizations.
Central banks are normally government-owned and charged with quasi-regulatory
responsibilities, such as supervising commercial banks, or controlling the cash interest
rate. They generally provide liquidity to the banking system and act as the lender of last
resort in event of a crisis.
Types of retail banks
Commercial bank: the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that
banks only engage in banking activities, whereas investment banks were limited
to capital market activities. Since the two no longer have to be under separate
ownership, some use the term "commercial bank" to refer to a bank or a division
of a bank that mostly deals with deposits and loans from corporations or large
businesses.
Community Banks: locally operated financial institutions that empower

employees to make local decisions to serve their customers and the partners.
Community development banks: regulated banks that provide financial services

and credit to under-served markets or populations.
Postal savings banks: savings banks associated with national postal systems.
Private banks: banks that manage the assets of high net worth individuals.
Offshore banks: banks located in jurisdictions with low taxation and regulation.
Many offshore banks are essentially private banks.
30
Savings bank: in Europe, savings banks take their roots in the 19th or sometimes
even 18th century. Their original objective was to provide easily accessible
savings products to all strata of the population. In some countries, savings banks
were created on public initiative; in others, socially committed individuals created
foundations to put in place the necessary infrastructure. Nowadays, European
savings banks have kept their focus on retail banking: payments, savings
products, credits and insurances for individuals or small and medium-sized
enterprises. Apart from this retail focus, they also differ from commercial banks
by their broadly decentralised distribution network, providing local and regional
outreachand by their socially responsible approach to business and society.
Building societies and Landesbanks: institutions that conduct retail banking.
Ethical banks: banks that prioritize the transparency of all operations and make
only what they consider to be socially-responsible investments.
Islamic banks: Banks that transact according to Islamic principles.
Types of investment banks
Investment banks "underwrite" (guarantee the sale of) stock and bond issues,
trade for their own accounts, make markets, and advise corporations on capital
market activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade finance. The
modern definition, however, refers to banks which provide capital to firms in the
form of shares rather than loans. Unlike venture capital firms, they tend not to
invest in new companies.
Both combined
31
Universal banks, more commonly known as financial services companies, engage

in several of these activities. These big banks are very diversified groups that,
among other services, also distribute insurance hence the term bancassurance, a
portmanteau word combining "banque or bank" and "assurance", signifying that
both banking and insurance are provided by the same corporate entity.
Other types of banks
Islamic banks adhere to the concepts of Islamic law. This form of banking
revolves around several well-established principles based on Islamic canons. All
banking activities must avoid interest, a concept that is forbidden in Islam.
Instead, the bank earns profit (markup) and fees on the financing facilities that it
extends to customers.
COMPANY PROFILE
Kotak Mahindra Bank is the fourth largest Indian private sector bank by market
capitalization, headquartered in Mumbai, Maharashtra.
Since the inception of the erstwhile Kotak Mahindra Finance Limited in 1985, it has been
a steady and confident journey leading to growth and success. The milestones of the
group growth story are listed below year wise.
32
2010-
Ahmedabad Derivatives and Commodities Exchange, a Kotak

anchored enterprise, became operational as a national commodity
2014
exchange.
2009
Kotak Mahindra Bank Ltd. opened a representative office in Dubai
Entered Ahmedabad Commodity Exchange as anchor investor.
2008
Launched a Pension Fund under the New Pension System.
200
Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital
Company and Kotak Securities.
2005
Kotak Group realigned joint venture in Ford Credit; their stake in

Kotak Mahindra Prime was bought out (formerly known as Kotak
Mahindra Primus Ltd) and Kotak groups stake in Ford credit Kotak
Mahindra was sold.
200
4
Launched a real estate fund.
Launched India Growth Fund, a private equity fund.
200
Kotak Mahindra Finance Ltd. converted into a commercial bank - the first
33
Indian company to do so.
2001
Matrix sold to Friday Corporation.
Launched Insurance Services.
Kotak Securities Ltd. was incorporated
2000
Kotak Mahindra tied up with Old Mutual plc. for the Life Insurance
business.
Kotak Securities launched its on-line broking site.
Commencement of private equity activity through setting up of Kotak

Mahindra Venture Capital Fund.
Entered the mutual fund market with the launch of Kotak Mahindra
Asset Management Company.
1998
199
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.
34
1995
Brokerage and Distribution businesses incorporated into a separate
company - Securities. Investment banking division incorporated into a

separate company - Kotak Mahindra Capital Company
Entered the Funds Syndication sector
1992
199
The Investment Banking Division was started. Took over FICOM, one of
India's largest financial retail marketing networks
1990
The Auto Finance division was started
Kotak Mahindra Finance Ltd entered the Lease and Hire Purchase
market
1987
1986
Kotak Mahindra Finance Ltd started the activity of Bill Discounting
Our Businesses
Multiple businesses. One brand.
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.
35
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 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.
For more information, please visit the Kotak Mahindra Bank website
www.kotak.com/bank/personal-banking/
Kotak Mahindra Old Mutual Life Insurance Ltd
Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint

venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A
Company that combines its international strengths and local advantages to offer
its customers a wide range of innovative life insurance products, helping them
take important financial decisions at every stage in life and stay financially
independent. The company covers over 3 million lives and is one of the fastest
growing insurance companies in India. www.kotaklifeinsurance.com
36
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:
For
Stock Broking (retail and institutional)
Depository Services
Portfolio Management Services
Distribution of Mutual Funds
Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd products

more
information,
please
visit
the
Kotak
Securities
website
www.kotaksecurities.com
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.
37
For more information, please visit the Kotak Investment Banking website
www.kmcc.co.in
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.
For more information, please visit the KMPL website http://carloan.kotak.com
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.
For more information, please visit the Kotak Mahindra International Business
website www.investindia.kotak.com
Kotak Mahindra Asset Management Company Ltd (KMAMC)
38
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.
For
more
information,
please
visit
the
KPEG
website
www.privateequityfund.kotak.com
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.
39
For more information, please visit the Kotak Realty Fund website
www.realtyfund.kotak.com
Management-2014-15Senior
Mr. Uday S. Kotak
Executive Vice Chairman and Managing Director
Mr. Uday Kotak, is the Executive Vice-Chairman and Managing Director of the Bank,
and its principal founder and promoter. Mr. Kotak is an alumnus of Jamnalal Bajaj
Institute of Management Studies.
In 1985, when he was still in his early twenties, Mr Kotak thought of setting up a bank
when private Indian banks were not even seen in the game. First Kotak Capital
Management Finance Ltd (which later became Kotak Mahindra Finance Ltd), and then
with Kotak Mahindra Finance Ltd, Kotak became the first non-banking finance company
in India's corporate history to be converted into a bank. Over the years, Kotak Mahindra
Group grew into several areas like stock broking and investment banking to car finance,
life insurance and mutual funds.
Among the many awards to Mr Kotak's credit are the CNBC TV18 Innovator of the Year
Award in 2006 and the Ernst & Young Entrepreneur of the Year Award in 2003. He was
featured as one of the Global Leaders for Tomorrow at the World Economic Forum's
annual meet at Davos in 1996. He was also featured among the Top Financial Leaders for
the 21st Century by Euromoney magazine. He was named as CNBC TV18 India Business
Leader of the Year 2008 and as the most valued CEO by businessworld in 2010.
40
Mr. C Jayaram
Joint Managing Director
Mr. C. Jayaram, is a Joint Managing Director of the Bank and is currently in charge of the
Wealth Management Business of the Kotak Group. An alumnus of IIM Kolkata, he has
been with the Kotak Group since 1990 and member of the Kotak board in October 1999.
He also oversees the international subsidiaries and the alternate asset management
business of the group. He is the Director of the Financial Planning Standards Board,
India. He has varied experience of over 25 years in many areas of finance and business,
has built numerous businesses for the Group and was CEO of Kotak Securities Ltd. An
avid player and follower of tennis, he also has a keen interest in psephology.
Mr. Dipak Gupta
Joint Managing Director

An electronics engineer and an alumnus of IIM Ahmedabad, Mr. Gupta has been with the
Kotak Group since 1992 and joined the board in October 1999.
He heads commercial banking, retail asset businesses and looks after group HR function.
Early on, he headed the finance function and was instrumental in the joint venture
between Kotak Mahindra and Ford Credit International. He was the first CEO of the
resulting entity, Kotak Mahindra Primus Ltd.
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:
41
Won Gold Award for Best Innovation Worlds first socially powered bank
account and Gold Award for Best App developed Worlds first banking
application using Twitter awards at the Indian Digital Media Awards 2014 for
Kotak Jifi
Recognised as Highest Fundraising Company in Corporate Challenge category in

Standard Chartered Mumbai Marathon 2014
Kotak Mahindra Bank was ranked 292nd among India's most trusted brands
according to the Brand Trust Report 2012, a study conducted by Trust Research
Advisory. In the Brand Trust Report 2013, Kotak Mahindra Bank was ranked
861st among India's most trusted brands and subsequently, according to the Brand
Trust Report 2014, Kotak Mahindra Bank was ranked 114th among India's most
trusted brands.
Adjudged Best Bank among Emerging Banks at Outlook Money Awards 2013
Banking
Euromoney
Best Private Banking Services (India), 2014.
ICAI Award
Excellence in Financial Reporting under Category 1 - Banking Sector for the year
ending 31st March, 2012
Asiamoney
Best Local Cash Management Bank 2012
IDG India
Kotak won the CIO 100 'The Agile 100' award 2011
42
IDRBT
Banking Technology Excellence Awards Best Bank Award in IT Framework and
Governance Among Other Banks' - 2010
Banking Technology Award for IT Governance and Value Delivery, 2008
IR Global Rankings
Best Corporate Governance Practices - Ranked among the top 5 companies in
Asia Pacific, 2009
FinanceAsia
Best Private Bank in India, for Wealth Management business, 2009
Kotak Royal Signature Credit Card

Was chosen "Product of the Year" in a survey conducted by Nielsen in 2009
IBA Banking Technology Awards

Best Customer Relationship Achievement - Winner 2008 & 2009
Best overall winner, 2007
Best IT Team of the Year, 4 years in a row from 2006 to 2009
Best IT Security Policies & Practices, 2007
Euromoney
Best Private Banking Services (overall), 2009
Emerson Uptime Champion Awards

Technology Senate Emerson Uptime Championship Award in the BFSI category,
2008
Miscellaneous
Best Local Trade Bank in India

The UK based Trade & Forfaiting Review awarded Kotak Mahindra Bank Ltd.
the Bronze Award in the category of Best Local Trade Bank in India at the TFR
Awards 2011.
43
LACP Vision Awards 2010 for Annual Report 2010-11

Platinum Award - Best among Banking Category, APAC
Gold Award - Most Creative Report, APAC
Ranked No. 21 among Top 50 Reports, APAC
Ranked No. 87 among the World's Top 100 Annual Reports
Businessworld
'Most Valuable CEO' overall, 2010 awarded to Mr. Uday Kotak, Executive Vice
Chairman & Managing Director
CNBCTV
18
'Best Performing CFO in the Banking/Financial Services sector by CNBCTV 18

CFO Awards 2010 awarded to Mr. Jaimin Bhatt
GIREM
GIREM awarded Kotak Realty Funds Group, the "Investor of the Year" Award for
2009
IBA Banking Technology Awards

Best Use of Business Intelligence - up, 2008
Best Enterprise Risk Management - Runner up, 2008
The Great Places to Work Institute, India

Best Workplaces in India, 2008
Hewitt
10th Best Employer in India, 2007, 2008 & 2009
Financial Insights Innovation Award

Best Innovation in Enterprise Security Management in the Asia Pacific Region,
2009
Frost & Sullivan

Best Passenger Vehicle Finance Company in India, 2006
44
CNBC TV 18
Indian Business Leader of the Year, 2008 awarded to Uday Kotak, Executive Vice
Chairman & Managing Director
Banking information
The Bank publishes the standalone and consolidated results on a quarterly basis. The
standalone results is subjected to "Limited Review" by the auditors of the Bank. The
same are also reviewed by the Audit Committee before submission to the Board. Along
with the quarterly results, an earnings update is also prepared and posted on the website
of the Bank. Every quarter, the Executive Vice-Chairman and Managing Director and the
Executive Director(s) participate on a call with the analysts / shareholders, the transcripts
of which are posted on the website of the Bank. The Bank also has dedicated personnel to
respond to queries from investors.
Financial Calendar:For each calendar quarter, the financial results are reviewed and
taken on record by the Board during the last week of the month subsequent to the quarter
ending. The audited annual accounts as at 31st March are approved by the Board, after a
review thereof by the Audit Committee. The Annual General Meeting to consider such
annual accounts is held in the second quarter of the financial year.
Stock Exchanges on which listed:

Sr.No
Name & Address of Stock Exchange
Market Scrip Code
The Bombay Stock Exchange Limited

1
Phiroze Jeejeebhoy Towers
500247
Dalal Street, Fort,

Mumbai 400 023
National Stock Exchange of India Limited

45
KOTAKBANK
Exchange Plaza, 5th Floor,

Bandra-Kurla Complex,
Bandra, Mumbai 400 051
3
Luxembourg Stock Exchange BP 165, L-2011

Luxembourg
Trading of shares to be in compulsorily dematerialized form:The equity shares of the

Bank have been activated for dematerialisation with the National Securities Depository
Limited and with the Central Depository Services (India) Limited vide ISIN
INE237A01028.
Share Transfer System: Applications for transfers, transmission and transposition are
received by the Bank at its Registered Office or at the office(s) of its Registrars & Share
Transfer Agents. As the shares of the Bank are in dematerialised form, the transfers are
duly processed by NSDL/CDSL in electronic form through the respective depository
participants. Shares which are in physical form are processed by the Registrars & Share
Transfer Agents, Karvy Computershare Private Limited, on a regular basis and the
certificates despatched directly to the investors.
Investor Helpdesk:Share transfers, dividend payments and all other investor related
activities are attended to and processed at the office of our Registrars & Share Transfer
Agents. For lodgement of Transfer Deeds and any other documents or for any
grievances/complaints, kindly contact Karvy Computershare Private Limited, contact
details of which are provided elsewhere in the Report.
For the convenience of the investors, transfers and complaints from the investors are
accepted at the Registered Office between 9:30 a.m. to 5:30 p.m. from Monday to Friday
except on bank holidays:
Corporate Responsibility
Community investment and development
46
Kotak Mahindra views Corporate Social Responsibility as an investment in society and in

its own future. Kotak uses the power of its human and financial capital to help in
transforming communities into vibrant, desirable places for people to live. The group
leverages its core competencies in three areas:
Sustainability
An integral part of all Kotak Mahindra Group activities is to be consistently
responsible to shareholders, clients, employees, society and the environment.
Economic Development
By helping people achieve their financial goals, Kotak strengthens the fabric of
communities and helps them overcome unemployment and poverty to help them
shape their future.
For any CSR related queries, please contact:

Group CSR
Kotak Mahindra Bank Ltd
Tel. Board +91 22 6720 6720
Email: cr@kotak.com
DATA ANALYSES&INTERPRETATION
Working capital Of Kotak Mahindra limited
Implementing an effective working capital management system is an excellent way for
many companies to improve their earnings. The two main aspects of working capital
management are ratio analysis and management of individual components of working
capital.
Working capital turnover ratio for the year 2015-2016
47
Working capital turnover ratio 2015-2016

Working capital turnover ratio
2015
2016
Sundry Debtors
71439.39
71,967.91
Cash and Balances with RBI
2207.90
2,948.23
Balance with Bank
1481.26
Advances
48468.98
3,031.66
53,027.63
Total
123597.53
130,975.43
Borrowings
20410.62
Other Liabilities
2789.81
12,895.58
3,333.82
Contingent Liabilities
42117.47
46,903.54
Total
65317.90
63132.94
Net working capital
58279.63
67,842.49
Total current Assets
Total Current Liabilities
Increase\decrease in net working capital
48
9562.86
140000
120000
100000
80000
60000
40000
20000
0
Interpretation:
The networking capital of Kotak Mahindra has been increased to 9562.86 Cr the financial
position i.e. the performance of Kotak Mahindra has increased and the current assets
defects its current liability.
Calculation of operating profit for the period (2015-2016)

49
Particulars
Amount
Amount
(Cr)
(Cr)
2014
2013
Net profit
10166.83
9203.15
Add: depreciation
165.18
132.53
Gross cash generated
10332.01
9335.68
Less: taxation for the year
8.69
Net cash generated
10323.32
7.29
9328.39
STATEMENT OF SOURCES AND APPLICATION OF CASH

For the period (2015-16)
Sources
Applications
Rs
Rs
Secured loans
1154.68
Increase in Gross Block
357.48
Unsecured loans
7041.62
Secured loans paid
307.62
Cash from operation
3031.66
Net increases in
Working Capital
10227.96
9562.86
10227.96
Interpretation:
50
From the above table it is observed that the net working capital of the company
shows increasing trend. The current assets of the company have increased from
Rs.53027.63 to Rs.48468.98 in 2015-2016. The liability of the company showing
increasing trend from Rs.87585.35 in 2015-2016. The net capital company stood at
Rs.385.16 in 2015-2016. And it is increased to. The increasing working capital is
recorded as Rs.9562.86.
It is evident from the above table that the total cash flow during the period from
2015-2016. Amount Rs.67842.49. In the total cash flow 28.67% was received from cash
from operation, 29.67% received from secured loans and 39.67% was received from
unsecured loans.
Regarding the application of cash 11.57% used for repayment of secured loans
and 34.57% used for purchase of fixed assets and cash used for working capital
constitution 40.24% respectively.
Conclusion:
It is concluded that during the period 2013-14 12.54% secured loans, 22.58%
unsecured loans, 2.57% cash for operation. Increasing gross block net increasing working
capital, 69.64% secured loans paid.
51
Working capital turnover ratio 2015

2014
2015
Sundry Debtors
55132.04
71439.39
2016.49
2207.90
Balance with Bank
618.06
1481.26
Advances
39079.23
48468.98
Total
96845.82
123597.53
Borrowings
16595.52
20410.62
Other Liabilities
2553.67
2789.81
17319.52
42117.47
Total
36468.71
65317.90
Net working capital
60377.11
58279.63
52
2097.48
140000
120000
100000
80000
60000
40000
20000
0
Interpretation:
The networking capital of Kotak Mahindra has been decreased to 2097.48 Cr the
financial position i.e. the performance of Kotak Mahindra has increased and the current
assets defects its current liability.
53

Particulars
Amount
(Cr)
2015
Amount
(Cr)
2014
Net profit
9203.15
7028.66
Add: depreciation
132.53
116.76
9335.68
7145.42
7.29
7.22
Net cash generated
9328.39
7138.20
54

Sources
Rs
Applications
Secured loans
1028.77
Unsecured loans
2041.62
Secured loans paid
Cash from operation
1481.26
Net increases in
Rs
2016.49
39094.10
2097.48
Working Capital
43208.07
43208.07
Interpretation:
Rs.48468.98 to Rs.39079.23 in 2014-2015. The current liability of the company showing
increasing trend from Rs.9389.75 in 2014-2015. The net capital company stood at
unsecured loans.
55
Regarding the application of cash 2.57% used for repayment of secured loans and
34.57% used for purchase of fixed assets and cash used for working capital constitution
28.57% respectively.
Conclusion:
unsecured loans, 2.57% cash for operation. Increasing gross block net increasing working
capital, 34.57% secured loans paid.
56

2013
2014
Sundry Debtors
40984.92
55132.04
2107.72
2016.49
Balance with Bank
363.26
618.06
Advances
29329.31
39079.23
Total
72785.21
96845.82
Borrowings
11723.95
16595.52
Other Liabilities
3032.36
2553.67
12291.30
17319.52
Total
27047.61
36468.71
Net working capital
45737.6
60377.11
57
14639.51
120000
100000
80000
60000
40000
20000
0
Interpretation:
The networking capital of Kotak Mahindra has been increased to 60377.11 Cr the
58

Particulars
Amount
(Cr)
Amount
(Cr)
2014
2013
Net profit
7028.66
4811.12
Add: depreciation
116.76
98.27
7145.42
7.22
7138.20
Net cash generated
59
4909.39
4.37
4905.02

Sources
Applications
Rs
Secured loans
38536.52
Unsecured loans
16595.52
Secured loans paid
Cash from operation
618.06
Net increase in
Working Capital
55750.10
Rs
2016.49
39094.10
14639.51
55750.10
Interpretation:
decreasing trend from Rs.29329.31 in 2013-2014. The net capital company stood at
60
unsecured loans.
Conclusion:
unsecured loans, 3.25% cash for operation. Increasing gross block 62.34%, 34.87% net
increasing working capital, 69.67% secured loans paid.
61

2012
2013
Sundry Debtors
30026.98
40984.92
2085.67
2107.72
Balance with Bank
214.59
363.26
Advances
20775.05
29329.31
Total
53102.29
72785.21
Borrowings
6140.51
11723.95
Other Liabilities
2869.42
3032.36
4156.15
12291.30
Total
13166.08
27047.61
Net working capital

Increase\decrease in net working
39936.21
45737.6
capital
5801.39
62
80000
70000
60000
50000
40000
30000
20000
10000
0
Interpretation:
The networking capital of Kotak Mahindra has been increased to 45737.60 Cr the
63

Particulars
Amount
Net profit
Add: depreciation
(Cr)
(Cr)
2013
2012
4811.12
3676.59
98.27
90.00
4909.39
3766.59
4.37
Net cash generated
4905.02
64
Amount
-----
3760.59

Sources
Rs
Applications
Secured loans
29260.97
Unsecured loans
11723.95
Secured loans paid
Cash from operation
363.26
Net increase in
Working Capital
41348.18
Rs
2107.72
33439.07
5801.39
41348.18
Interpretation:
decreasing trend from Rs.5875.67 in 2012-2013. The net capital company stood at
Rs.4879.65 in 2012-2013. And it is increased to. The decreasing working capital is
65
unsecured loans.
Conclusion:
unsecured loans, 27.60% cash for operation. Increasing gross block 64.02%, 34.70% net
increasing working capital, 5.64% secured loans paid.
66

2011
2012
Sundry Debtors
21549.00
30026.98
995.35
2085.67
Balance with Bank
145.32
214.59
Advances
16625.34
20775.05
Total
39315.01
53102.29
Borrowings
5904.07
6140.51
Other Liabilities
3257.34
2869.42
4486.28
4156.15
Total
13647.69
13166.08
Net working capital

Increase\decrease in net working
25667.32
39936.21
14268.89
capital
67
60000
50000
40000
30000
20000
10000
0
Interpretation:
The networking capital of Kotak Mahindra has been increased to 39936.21Cr the
68
Calculation of operating profit

Particulars
Amount
Amount
(Cr)
(Cr)
2012
20011
Net profit
3676.59
3222.70
Add: depreciation
90.00
69.56
3766.59
3292.26

1.86
Net cash generated
3766.59
69
3290.40

FOR THE PERIOD (2011-2012)
SOURCES
AMOUNT
APPLICATIONS
AMOUNT
SECURED LOANS
23886.47
SALES UNSECURED-LOANS
2085.67
SECURED LOAN VEHICLE
6140.51
GROSS BLOCK
13887.06
CASH FROM OPERATION
214.59
INCREASE IN
WORKING APITAL
30241.57
14268.84
30241.57
Interpretation:
shows increased From Rs. 483.96 to Rs. 453.44 in 2011-.12.The net working capital of
the company Rs. 83.96 in 2011-2012. And it is increased. The increasing Working capital
is recorded as Rs. 657.43.
It is evident from the above table the total cash flow during the period from 201112. Amount Rs 83.73. In the total cash flow 53.40% was received from cash operation
70
and 45.44% was received from unsecured loans (vehicles) and 1.15% was received from
secured loans.
Regarding the application of cash 3.99% used for repayment of unsecured loans
and 81.16% used for purchase of fixed assets and cash used for working capital
constitution 14.85% respective.
Conclusion:
It is concluded that during the period 2009-10 more than 53.4% of the cash came
trading activities 1.16% used in secured loans, 45 the application of cash around 81.16%
of the cash utilized for investing in fixed assets. And 3.99% used for repayment of
unsecured loans.
71
NET INCREASES IN WORKING CAPITAL

YEAR
INCREASE / DECREASE
AMOUNT
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
INCREASE
DECREASE
INCREASE
INCREASE
INCREASE
14268.89
5801.39
14639.51
2097.48
9562.86
AMOUNT
16000
14000
12000
AMOUNT
10000
8000
6000
4000
2000
0
The above table observed that the working capital Increased. In year 2011 12 the
working capital has been increased. In the year 2015-16 the working capital is
Rs.9562.86 Due to the decrease in current liabilities the net working capital is increased.
72
Changes in cash from operations

YEAR
AMOUNT
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
214.59
363.26
618.06
1481.26
3031.66
AMOUNT
3500
3000
2500
2000
AMOUNT
1500
1000
500
0
The above table explains that continuous fluctuations in flow of cash from
operation.
In the year 2011-12 the cash from operation is increased .The cash from operation in the
years & it has increased. In the year 2015-16. The cash from operation in the year 201516 is Rs. 3031.66.
USES & APPLICATION OF CASH

73
APPLICA
2011-12
2012-13
2013-14
2014-15
2015-16
TION
Increase in
2085.67
2107.72
2016.40
2207.90
2948.23
Gross
Block
Secured
loans paid
13887.06
33439.07
39094.10
48468.98
53027.63
Unsecured
6140.51
11723.95
16595.52
20410.62
12895.58
loans
The above table shows that Gross block has increased to Rs. 2948.23 in 2015-16.
& Rs. 2207.90 in 2014-15. The secured loans paid Rs.13887.06 in 201112
&Rs.53027.63 in 2015-16. The unsecured loans paid Rs.6140.51 in the year 2011-12.
year Rs.12895.58 in 2015-16.
74
CHAPTER-V
FINDINGS
SUGGESTIONS
LIMITATIONS
CONCLUSIONS
BIBLIOGRAPHY
FINDINGS
75
During the period 2011-2016 more than 74% of the cash came from
trading activities. In the application of cash around 68% utilized for
investing in fixed assets.
During the period 2011-2012 to 2015-2016 more than 55.68% of the cash
came from trading activities. In the application of the cash around 81.17%
of the cash are utilized for investing in fixed assets.
came trading activities. In the application of the cash 32.32% of the cash
are utilized for investing in fixed assets.
came trading activities. In the application of the cash 71.64% of the cash
are utilized for investing in fixed assets.
During the period 2011-11 to 2011-12 more than 54.25% of the cash came
trading activities. In the application of the cash 71.64% of the cash are
utilize for the investing in fixed assets.
During the period 2009-2010 to 2013-2014 more than 58.96 % of the cash
came trading activities. In the application of the cash 75.61 % of the cash
are utilize for the investing in fixed assets.
SUGGESTIONS
76
For the improving the financial performance of the company the following suggestions are
made.
In order to reduce the outside borrowings in the company has to acquire. The capital from
equity sources. Keeping in view the debt equity the proportion as normal.
The liquidity of the company should be improved by maintaining the optimum current assets
and liquid assets according to standard norms.
The quantum of the sales generated should be improved impressively in order to attain
higher return on investment. To improve the financial health of the company and
maximizing the time between the source mobilization and utilization the management must
introduce the new cost saving techniques.
LIMITATIONS
The limitations of present study are as follows:
77
The study cover a period of FIVE years from 2010-2014.

The study does not flow the fund.
The study is based mainly on secondary information.
The study does not touch all the units of Kotak Mahindra Group. (Formerly
Kotak Mahindra bank Ltd.). .
The present study cannot be used for inter firm comparison.
Limited span of time is a major limitation for this project.
The act and figures of the study is limited to the period of FIVE years i.e. 20112016.
The data used in reports are taken from the annual reports, published at the end of
the years.
The result does not reflect the day-to-day transactions.
It is also impossible to the study of day-to-day transactions in cash management.
The analysis of the working capital is taken FIVE years.
CONCLUSIONS
78
The Kotak Mahindra Net Profit is showing negative profit in the year 2015-2016.
These event is an expected one because since from the previous two years it is
showing the decline stage in Net Profit.
Profit Margin of Kotak Mahindra is decreasing and showing negative profit
because there is increase in the price.
The Kotak Mahindra Net Working Capital Ratio is satisfactory.
The Kotak Mahindra return on Total Assets shows a negative sign in the year
2011-12
The Operating Ratio of Kotak Mahindra increase in the year 2011-12, in the year
2012-13 and reached in the year 2015-16 so the company has to reduce its
operating costs.
The Operating cash of Kotak Mahindra satisfactory. Due to increase in cost of
production, this ratio is decreasing. So the company has to reduce its office
administration expenses.
BIBLIOGRAPHY
79
1. FINANCIAL MANAGEMENT
- I.M. Panday
- Prasanna Chandra
- M.Y. Khan & P.K. Jain
4. PRINCIPLES OF MANAGEMENT
-Man Mohan&Goyal S.N
.
www.googlefinance.com
www.financeindia.com
www.cashflowstatement.com
www.kotak.com
80
- Maheswari S.N.

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INTRODUCTION

Potential lenders or creditors, who want a clear picture of a company's ability to

Shareholders of the business.

NEED OF THE STUDY

SCOPE OF THE STUDY

Management information system published by Kotak Mahindra Group. (Formerly

Journals, books and other published reports.

1. It is disclosing the reasons for change in

and revenue to arrive at the figures of profit

working capital i.e., where from the

and loss earned / incurred during a

working capital cash has been applied.

particular period of time.

found out from the income statement

3. Cash raised are matched with cash used.

3. Expenses are matched with income in

No distinction is made between capital and

order to find out the result of operation.

Only revenue items are considered

Cash Flow Statement

1. It is a Statement changes in financial 1. It is statement of financial position

liabilities at a particular point of time

whether current or non-current

4. It is a analytical statement analyzing form 4. It is not a analytical statement hence not

cash flow statement

Importance of cash flow statement:

Uses of cash flow statement:

Cash flow statement of a company is of great value to management share holders,

Informative value:- The financial consequence of business operation are clearly

Forecasting value:- A projected cash flow statement can be prepared and

Structure of the Cash Flow Statement

Cash receipts from sales or for the performance of services

Payroll and other payments to employees

Payments to suppliers and contractors

Payments for utilities

Purchases of property, plant and equipment

Proceeds from the sale of property, plant and equipment

Purchases of stock or other securities (other than cash equivalents)

Proceeds from the sale or redemption of investments

Proceeds from loans, notes, and other debt instruments

Installment payments on loans or other repayment of debts

Cash received from the issuance of stock or equity in the business

Dividend payments, purchases of treasury stock, or returns of capital

Net sales per the income statement

Plus beginning balance in accounts receivable

Minus ending balance in accounts receivable

Equals cash receipts from customers

Cash payments for inventory:

Minus beginning inventory

Plus beginning balance in accounts payable to vendors

Minus ending balance in accounts payable to vendors

Equals cash payments for inventory

Cash paid to employees:

Salaries and wages per the income statement

Plus beginning balance in salaries and wages payable

Minus ending balance in salaries and wages payable

Equals cash paid to employees

Cash paid for operating expenses:

Operating expenses per the income statement

Minus depreciation expenses

Plus increase or minus decrease in prepaid expenses

Plus decrease or minus increase in accrued expenses

Equals cash paid for operating expenses

Tax expense per the income statement