International E Conference on Adapting to the New Business Normal – The way ahead

December 3-4, 2020 Mysuru, India

“Financial Analysis with Reference To Kotak Mahindra Bank”

Megha Hosakatti
Student (III Sem)
KLES’s Institute of Management Studies and Research, Hubli-580031
Email-meghahoskatti123@gmail.com

Prof. Nitin Bhasker

Assistant Professor,
KLES’s Institute of Management Studies and Research, Hubli-580031
Email- nitimb@gmail.com

Abstract:
“Effective financial management is the key for running a financially successful business. The term
financial analysis is also referred as financial statement analysis. Financial statements report
profitability and financial position of the business at the end of financial year. Financial analysis
helps to determine the financial strength and weakness of the firm by establishing strategic
relationship between the items of balance sheet and profit and loss account. The main objective
of the study is to compare and analyze the financial statements for the past ten financial years
and also to analyze and interpret the liquidity, efficiency, profitability and solvency position of
Kotak Mahindra Bank. For the purpose of the study various methods and techniques are used in
financial analysis such as comparative statements analysis, common size statement analysis,
trend analysis and ratio analysis. Financial analysis are used by many including Shareholders,
Debenture holders, Creditors, Commercial, Financial Institutions, Managers or Management,
Government Departments, SEBI and Stock Exchanges. Research methodology adopted for the
study is descriptive in nature and is collected from various sources like annual report of Kotak
Mahindra Bank available in www.bseindia.com, secondary data from Company
website(www.kotak.com), other websites (www.moneycontrol.com, Ibef.org and
www.google.com) and book sources .The study involves various ratios like Liquidity Ratios,
Leverage ratios/solvency ratios, Activity/Turnover ratios and Profitability ratios. The findings of
the study reveal that as per liquid ratio and cash ratio it was ascertained that the banks day to
day cash management is good which helps in current asset management so the liquidity position
of Kotak Mahindra Bank is good. Fixed asset turnover ratio has increased in 2020 so the fixed
assets have been effectively used but current asset turnover ratio and capital turnover ratio are
showing decreasing trends. Hence in this regard the bank should be in a position to meet debt
obligations and reduce expenses in order to improve efficiency of bank. As per debt equity ratio
the bank is trying to increase its leverage along with ROE and proprietary ratio owner’s stake in
total assets as it is seen increasing in recent years so bank is improving its solvency position. As

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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

per gross profit ratio and net profit ratio it is observed that sales are increasing but the bank need
to ensures adequate return to the owners by increasing return on equity capital ratio. So the
banks overall profitability is in better position the bank ensures adequate return to the owners
and the banks overall profitability is in better position. The suggestion provided in study to
increase its number of branches in the state, check on unnecessary operating expenses by using
automation, use channel optimization and check staff productivity, to review the capital
requirements and relative capital costs and sell of ideal assets to improve profitability and
financial position of the business which might certainly help the bank to inculcate the same and
reap profits ahead.

Keywords: Industry Analysis, Company Analysis, Comparative Statements Analysis, Common

Size Statement Analysis, Trend & Ratio Analysis.

INDUSTRY PROFILE:
According to section 5(b) Banking regulation Act 1949 Banking means “Accepting deposits for
the purpose of lending or investment of deposits of money from the public, repayable on demand
or otherwise and withdraw by cheque, draft or otherwise”.

Reserve Bank of India is the Central Bank of our country. It was established on 1st April 1935
accordance with the provisions of the Reserve Bank of India Act, 1934. It holds the apex position
in the banking structure. No company shall carry on banking business in India unless it holds a
licence issued in that behalf by the Reserve Bank and any such licence may be issued subject of
such conditions as the Reserve Bank of India under section 22.The banking sector is nothing less
than the backbone of Indian economy. As it helps in implementing monetary policy, growth of
capital market, Capital formation, Promote savings and investment habits of the people,
Promotion of new entrepreneurs and financial assistance to agriculture sector etc. Banking
structure in India involves Scheduled and Non-Scheduled Banks scheduled banks are classified
into commercial and cooperative banks. Commercial bank includes public sector, private sector,
foreign banks and regional rural banks.

INTRODUCTION:

According to john Myer, “financial statement analysis is largely a study of relationship among
the various financial factors in a business as disclosed by single set of statements and a study of
the trend of these factors as shown in a series of statements.

ANALYTICAL TOOLS OR METHODS OF FINANCIAL ANALYSIS:

➢ COMPARATIVE STATEMENT ANALYSIS: The comparative statements analysis is also

referred as horizontal analysis. These are statements of the financial position at different
periods of time on percentage form. The elements of financial position are shown in a
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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

comparative form so as to give idea of financial position at 2 or more periods. These

statements enable an in-depth study of financial position operating results. There are two
types of comparative statement analysis:-a) Comparative balance sheet and b)
Comparative Income Statement.
➢ COMMON SIZE STATEMENTS ANALYSIS: The common size statements analysis is also
referred as vertical analysis, it involves evaluating financial statements in which the items
of financial statements are converted into percentage of common base. It help the
analysts compare companies of different sizes in different industries. There are two types
of common size statement analysis:- a) Common size balance sheet and b) Common size
income statement.
➢ TREND ANALYSIS: Trend analysis helps the future forecasts of various items. For
calculation of trend Base year is assumed to be equal to 100 and on the basis the
percentage of item of each year calculated.
➢ RATIO ANALYSIS: Ratio analysis is one of the techniques used to analyse the financial
statement. It is the process of establishing and interpreting various ratios (quantitative
relationship between figures and group of figures). Ratio analysis helps in analysing
financial statement and decision making.

OBJECTIVES OF MY RESEARCH
▪ To compare and analyze the financial statements for past ten financial years.
▪ To analyze and interpret the liquidity, solvency position, efficiency and profitability of the
Kotak Mahindra Bank.

RESEARCH METHODOLOGY:

The main aim of the study is to analyse the financial statements of kotak Mahindra Bank by using
secondary data available in the annual reports published in official websites of kotak Mahindra
bank or in the BSE website. Data collection methods- Secondary data:

• Kotak Mahindra Bank annual report.

• Kotak Mahindra Bank balance sheet and income statement for past ten years.
• Company website - www.kotak.com
• Other websites - Ibef.org, www.moneycontrol.com, www.bseindia.com, www.google.

COMPANY PROFILE:

In 1985 Uday Kotak founded an Indian financial services conglomerate. In February 2003,
the Reserve Bank of India (RBI) issued a banking licence to Kotak Mahindra Finance Ltd(KMFL).,
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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

the group's flagship company This approval created banking history since Kotak Mahindra
Finance Ltd. is the first non–banking finance company in India to convert itself in to a bank as
Kotak Mahindra Bank Ltd. It is Indian private sector bank headquartered
in Mumbai, Maharashtra, India.

In a study by Brand Finance Banking 500 published in February 2014 by Banker magazine
(from The Financial Times stable), KMBL was ranked 245th among the world's top 500 banks with
brand valuation of around half a billion dollars ($481 million) and brand rating of AA+. As of April
2019, it is the second largest Indian private sector bank by market capitalization, with 1600
branches & 2519 ATMs

VISION:

• The Global Indian Financial Services Brand

• The Most Trusted Financial Services Company
• Value Creation

BOARD OF DIRECTORS:
Name Designation
Mr. Prakash Apte Non-Executive - Independent Director-Chairperson
Mr. Uday Kotak Executive Director-CEO-MD
Jaimin Bhatt Group Chief Financial Officer
Mr. Dipak Gupta Executive Director
Mr. K V S Manian Executive Director
Mr. Gaurang Shah Executive Director
Mr. C Jayaram Non-Executive - Non Independent Director
Mr. S Mahendra Dev Non-Executive - Independent Director
Ms. Farida Khambata Non-Executive - Independent Director
Mr. Uday Khanna Non-Executive - Independent Director
Mr. Uday Shankar Non-Executive - Independent Director
Mr. Paul Parambi Chief Risk Officer
Ms. Bina Chandarana Joint President & Company Secretary
Source - Company annual report

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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

COMPARATIVE STATEMENTS ANALYSIS:

COMPARATIVE BALANCE SHEET OF KOTAK MAHINDRA BANK (in Rs. Cr.
2011-12 2012-13 2013-14 2014-15 2015-16
change change change change change change change change change in change
Particulars
in Rs. in % in Rs. in % in Rs. in % in Rs. in % Rs. in %
EQUITIES AND
LIABILITIES
Equity Share Capital 1.90 0.52 2.96 0.80 11.86 3.18 1.02 0.26 531.01 137.50
Reserves and
1936.00 18.28 2345.80 18.72 3814.40 25.64 3076.30 16.46 10676.30 49.05
surplus
Minority Interest 52.85 49.30 48.66 30.40 62.17 29.79 64.80 23.92 59.91 17.85
Employees stock
options (grants) -2.09 -5.66 -33.07 -94.97 6.78 387.43 -5.54 -64.95 0.42 14.05
outstanding
Deposits 9147.80 33.49 12928.40 35.46 7540.61 15.27 15913.70 27.95 63105.30 86.63
-
Borrowings 7121.40 32.26 6977.27 23.90 -19.81 2407.74 8.30 12314.90 39.20
7164.80
Policyholders funds 866.33 10.64 1065.74 11.83 937.28 9.30 2778.05 25.22 1355.67 9.83
Other Liabilities and
-456.00 -9.04 133.72 2.92 1209.52 25.62 2103.05 35.47 4184.28 52.09
Provisions
TOTAL CAPITAL
18668.00 25.34 23485.00 25.43 6402.00 5.53 26339.00 21.55 92227.80 62.08
AND LIABILITIES
ASSETS
Cash and Balances
with Reserve Bank -84.23 -3.98 190.13 9.36 739.75 33.31 984.61 33.26 2979.78 75.53
of India
Balances with
Banks Money at Call 665.80 75.71 752.29 48.69 1385.11 60.29 -724.27 -19.67 1716.18 58.01
and Short Notice
-
Investments 5609.40 21.53 9248.81 29.21 -5.17 8559.82 22.07 22923.00 48.41
2116.20
Advances 11902.00 28.86 13114.00 24.68 5434.87 8.20 16939.70 23.63 56160.60 63.36
Fixed Assets 14.87 2.48 4.61 0.75 644.19 103.92 120.88 9.56 376.05 27.15
Other Assets 560.71 20.06 175.41 5.23 314.24 8.90 458.40 11.92 8072.17 187.54
TOTAL ASSETS 18668.00 25.34 23485.00 25.43 6402.00 5.53 26339.00 21.55 92227.80 62.08

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December 3-4, 2020 Mysuru, India

Table No 1: Comparative analysis of balance sheet for the year 2011 to 2015

2018-
2016-17 2017-18 2019-20
19
change change change change change change change change
Particulars
in Rs. in % in Rs. in % in Rs. in % in Rs. in %
EQUITIES AND LIABILITIES
Equity share capital 3.26 0.36 32.37 3.52 1.56 0.16 2.14 0.22
Reserves and surplus 5126.9 15.8 11962.9 31.84 7292.11 14.72 8852.25 15.58
Minority Interest 78.83 19.93 -474.43 -100 0 0 0 0
Employees stock options (grants)
-1.55 -45.45 0.3 16.13 -0.09 -4.17 0.79 38.16
outstanding
Deposits 19591 14.41 35695.8 22.95 33588.5 17.56 35575.95 15.82
Borrowings 5960.1 13.63 8914.06 17.94 7834.97 13.37 -862.22 -1.3
Policyholders funds 3644.6 24.06 3632.46 19.33 4992.48 22.26 4091 14.92
Other Liabilities and Provisions 980.55 8.03 1769.49 13.41 3241.3 21.66 31850.36 174.92
TOTAL CAPITAL AND LIABILITIES 35384 14.69 61532.9 22.28 57450.8 17.01 48001.46 12.15
ASSETS
Cash and Balances with Reserve
587.33 8.48 1421.27 18.92 1977.42 22.13 -1397.68 -12.81
Bank of India
Balances with Banks Money at Call
13402 286.7 -2609.2 -14.43 4886.41 31.59 34213.07 168.09
and Short Notice
Investments -1812 -2.58 22515.1 32.89 12510.4 13.75 7709.89 7.45
Advances 22332 15.42 38872.4 23.26 37464.7 18.19 6416.97 2.64
Fixed Assets -2.4 -0.14 784.27 44.6 154.57 6.08 -836.5 -31.01
Other Assets 877.5 7.09 549.09 4.14 457.28 3.31 1081.97 7.59
TOTAL ASSETS 35384 14.69 61532.9 22.28 57450.8 17.01 48001.46 12.15

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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

Table No 2: Comparative analysis of balance sheet for the year 2016 to 2020
Interpretation -

•
The share capital of the bank shows an increasing % trend from the year 2011 to 2020 but
there is fluctuation in the rate of increase in capital. In 2015-16 i.e. 137.5% the rate of
increase in capital is more than other years.
• There is fluctuation in all the years in the rate of increase in reserves and surplus also. This
shows that bank is efficiently utilizing its reserves and surplus.
• The deposits of bank shows increasing % trend in all the years and there is no decreasing
% in any year than it indicates that the bank has not repaid any of its deposits.
• The borrowings also shows an increasing % trend in all the years except in the year 2013-
14 and 2019-20 which shows decreasing % i.e. (19.81%) and (1.3%) which indicate bank
has repaid a large amount of borrowings in this year and thereby reducing the
dependence on outside debt.
Comparative income statement of kotak Mahindra Bank (in Rs. Cr.):

2011-12 2012-13 2013-14 2014-15 2015-16

change in change change in change change in change change in change change in change
Particulars
Rs. in % Rs. in % Rs. in % Rs. in % Rs. in %
INCOME
Total interest earned 1,990.5 47.5 1,862.3 30.1 724.6 9.0 952.8 10.9 6,664.3 68.6
Others 1.3 127.9 -0.1 -5.5 12.8 573.2 -3.8 -25.1 353.6 3,132.1
TOTAL INCOME 2,187.3 44.0 2,045.6 28.6 963.7 10.5 1,581.5 15.6 7,248.1 61.7
EXPENDITURE
Interest Expended 1,575.6 75.3 1,169.1 31.9 210.3 4.3 449.1 8.9 3,987.7 72.6
Payments to and
Provisions for 118.5 15.1 172.8 19.1 97.0 9.0 294.5 25.1 1,350.3 92.1
Employees
Depreciation 18.5 18.8 15.8 13.5 32.7 24.6 27.8 16.8 94.4 48.9
Operating Expenses
(excludes Employee 144.5 21.5 186.4 22.8 203.2 20.3 389.8 32.3 772.1 48.4
Cost & Depreciation)
TOTAL OPERATING
281.5 18.1 374.9 20.4 332.9 15.1 712.1 28.0 2,216.8 68.1
EXPENSES
TOTAL PROVISIONS
63.3 12.5 225.9 39.6 278.7 35.0 56.9 5.3 819.8 72.5
AND CONTINGENCIES

TOTAL EXPENDITURE 1,920.4 46.3 1,769.9 29.1 821.9 10.5 1,218.0 14.1 7,024.3 71.1
NET PROFIT / LOSS
266.9 32.6 275.7 25.4 141.8 10.4 363.5 24.2 223.8 12.0
FOR THE YEAR

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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

Table No 3: Comparative analysis of income statement for the year 2011 to 2015

2016-17 2017-18 2018-19 2019-20

change change change change change change change
Particulars change in %
in Rs. in % in Rs. in % in Rs. in % in Rs.
INCOME
1,314.7
Total interest earned 8.02 2,049.57 11.58 4,194.71 21.24 2,986.40 12.47
5
Others 32.57 8.93 -65.22 -16.41 -14.49 -4.36 -25.88 -8.14
2,179.6
TOTAL INCOME 11.47 2,624.61 12.39 4,746.53 19.94 3,754.49 13.15
7
EXPENDITURE
Interest Expended 88.97 0.94 644.03 6.73 2,467.44 24.15 745.70 5.88
Payments to and
Provisions for -48.44 -1.72 181.70 6.56 233.38 7.91 694.02 21.80
Employees
Depreciation 3.28 1.14 12.03 4.14 64.23 21.22 -366.92 -100.00
Operating Expenses
(excludes Employee 192.13 8.12 613.50 23.97 791.47 24.95 1,009.04 25.45
Cost & Depreciation)
TOTAL OPERATING
146.98 2.69 807.22 14.37 1,089.08 16.95 1,336.14 17.78
EXPENSES
TOTAL PROVISIONS AND
622.00 31.88 500.56 19.45 408.98 13.31 590.80 16.96
CONTINGENCIES
TOTAL EXPENDITURE 857.95 5.07 1,951.81 10.99 3,965.50 20.11 2,672.64 11.29
NET PROFIT / LOSS FOR 1,321.7
63.25 672.80 19.72 781.03 19.12 1,081.85 22.24
THE YEAR 2
Table No 4: Comparative analysis of income statement for the year 2016 to 2020
Interpretation –

• This the net profit also shows an increasing % trend for all the year 2011-12, 2012-13 ,
2013-14, 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 i.e. 32.6%, 25.4%,
10.4%, 24.2% 12.0% , 63.25%, 19.72%, 19,12% and 22.23% respectively. This indicates
that the total incomes are showing higher rate increasing % as compared to the rate of
increasing % of total expenditure.

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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

COMMON SIZE STATEMENTS ANALYSIS:

Common size Balance sheet of kotak Mahindra Bank (in Rs. Cr.)
2011 2012 2013 2014 2015
(in Rs. (in Rs. (in Rs. (in Rs. (in Rs.
Particulars (in %) (in %) (in %) (in %) (in %)
Cr.) Cr.) Cr.) Cr.) Cr.)
EQUITIES AND
LIABILITIES
Equity Share Capital 368.44 0.50 370.34 0.40 373.30 0.32 385.16 0.32 386.18 0.26
TOTAL RESERVES
AND SURPLUS 10594.51 14.38 12530.70 13.57 14876.49 12.84 18690.85 15.29 21767.14 14.65
Minority Interest 107.21 0.15 160.06 0.17 208.72 0.18 270.89 0.22 335.69 0.23
Employees stock
options (grants)
outstanding 36.91 0.05 34.82 0.04 1.75 0.00 8.53 0.01 2.99 0.00
Deposits 27312.98 37.07 36460.73 39.48 49389.14 42.64 56929.75 46.57 72843.46 49.03
Borrowings 22073.32 29.96 29194.69 31.61 36171.96 31.23 29007.14 23.73 31414.88 21.14
Policyholders funds 8145.20 11.05 9011.53 9.76 10077.27 8.70 11014.55 9.01 13792.60 9.28
Other Liabilities and
Provisions 5042.56 6.84 4586.52 4.97 4720.24 4.07 5929.76 4.85 8032.81 5.41
TOTAL CAPITAL AND 115834.6 122236.6 148575.7
LIABILITIES 73681.13 100 92349.39 100 6 100 3 100 6 100
ASSETS
Cash and Balances
with Reserve Bank of
India 2114.86 2.87 2030.63 2.20 2220.76 1.92 2960.51 2.42 3945.12 2.66
Balances with Banks
Money at Call and
Short Notice 879.40 1.19 1545.20 1.67 2297.49 1.98 3682.60 3.01 2958.33 1.99
Investments 26048.99 35.35 31658.43 34.28 40907.24 35.32 38791.05 31.73 47350.87 31.87
Advances 41241.95 55.97 53143.61 57.55 66257.65 57.20 71692.52 58.65 88632.21 59.65
Fixed Assets 600.42 0.81 615.29 0.67 619.90 0.54 1264.09 1.03 1384.97 0.93
Other Assets 2795.51 3.79 3356.22 3.63 3531.63 3.05 3845.87 3.15 4304.27 2.90
115834.6 122236.6 148575.7
TOTAL ASSETS
73681.13 100 92349.39 100 6 100 3 100 6 100

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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

Table No 5: Common size statement analysis of balance sheet for the year 2011 to 2015.

2016 2017 2018 2019 2020

(in Rs. (in Rs. (in Rs. (in Rs. (in Rs.
Particulars (in %) (in %) (in %) (in %) (in %)
Cr.) Cr.) Cr.) Cr.) Cr.)
EQUITIES AND
LIABILITIES
Equity Share Capital 917.19 0.38 920.45 0.33 952.82 0.28 954.38 0.24 956.52 0.22
TOTAL RESERVES AND
SURPLUS 32443.45 13.47 37570.39 13.60 49533.24 14.67 56825.35 14.38 65677.60 14.82
Minority Interest 395.60 0.16 474.43 0.17 0.00 0.00 0.00 0.00 0.00 0.00
Employees stock
options (grants)
outstanding 3.41 0.00 1.86 0.00 2.16 0.00 2.07 0.00 2.86 0.00
135948.7 155540.0 191235.8 224824.2 260400.2
Deposits
6 56.46 0 56.32 0 56.63 6 56.89 1 58.76
Borrowings 43729.79 18.16 49689.91 17.99 58603.97 17.35 66438.94 16.81 65576.72 14.80
Policyholders funds 15148.27 6.29 18792.87 6.80 22425.33 6.64 27417.81 6.94 31508.81 7.11
Other Liabilities and
Provisions 12217.09 5.07 13197.64 4.78 14967.13 4.43 18208.43 4.61 50058.79 11.30
TOTAL CAPITAL AND 240803.5 276187.5 337720.4 395171.2 443172.7
LIABILITIES 8 100 6 100 7 100 5 100 1 100
ASSETS
Cash and Balances with
Reserve Bank of India 6924.90 2.88 7512.23 2.72 8933.50 2.65 10910.92 2.76 9513.24 2.15
Balances with Banks
Money at Call and
Short Notice 4674.51 1.94 18076.32 6.54 15467.13 4.58 20353.54 5.15 54566.61 12.31
103487.0 111196.9
Investments
70273.90 29.18 68461.54 24.79 90976.60 26.94 2 26.19 1 25.09
144792.8 167124.9 205997.3 243461.9 249878.9
Advances
2 60.13 1 60.51 2 61.00 9 61.61 6 56.38
Fixed Assets 1761.02 0.73 1758.62 0.64 2542.89 0.75 2697.46 0.68 1860.96 0.42
Other Assets 12376.44 5.14 13253.94 4.80 13803.03 4.09 14260.31 3.61 15342.28 3.46
240803.5 276187.5 337720.4 395171.2 443172.7
TOTAL ASSETS
8 100 6 100 7 100 5 100 1 100

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 International E Conference on Adapting to the New Business Normal – The way ahead
December 3-4, 2020 Mysuru, India

Table No 6: Common size statement analysis of balance sheet for the year 2016 to 2020.

Interpretation -

▪ The reserves of kotak Mahindra bank is increasing in the year 2020 i.e. 14.8% .This
indicates that in past years the companies reserves are increasing that means that the
bank is earning more profits.
▪ The cash balance of bank for the year 2019 i.e. 2.7% but was decreasing in the year 2020
i.e. 2.1% This indicates that the cash balance of kotak bank were increasing but in the year
2020 there was decrease in cash balance so bank need to manage its cash properly.
▪ Kotak bank advances for the year 2019 i.e. 61.6% but was decreasing in the year 2020 i.e.
56.3%. This indicates that bank advance were increasing but there was decrease in the
year 2020 so bank need to take necessary steps to increase its advances.

Common size income statement of kotak Mahindra Bank (in Rs. Cr.)
2011 2012 2013 2014 2015
Particulars (in Rs. Cr.) (in %) (in Rs. Cr.) (in %) (in Rs. Cr.) (in %) (in Rs. Cr.) (in %) (in Rs. Cr.) (in %)
INCOME
Total interest
4189.8 100.0 6180.2 100.0 8042.5 100.0 8767.1 100.0 9719.9 100.0
earned
Other Income 780.5 18.6 977.4 15.8 1160.7 14.4 1399.7 16.0 2028.5 20.9
TOTAL INCOME 4970.3 118.6 7157.6 115.8 9203.2 114.4 10166.8 116.0 11748.3 120.9
EXPENDITURE
Interest
2092.2 49.9 3667.8 59.3 4836.8 60.1 5047.1 57.6 5496.1 56.5
Expended
TOTAL
OPERATING 1553.3 37.1 1834.8 29.7 2209.7 27.5 2542.6 29.0 3254.7 33.5
EXPENSES
TOTAL
PROVISIONS AND 506.6 12.1 570.0 9.2 795.9 9.9 1074.6 12.3 1131.5 11.6
CONTINGENCIES
TOTAL
4152.1 99.1 6072.5 98.3 7842.4 97.5 8664.3 98.8 9882.3 101.7
EXPENDITURE
NET PROFIT /
LOSS FOR THE 818.2 19.5 1085.1 17.6 1360.7 16.9 1502.5 17.1 1866.0 19.2
YEAR

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December 3-4, 2020 Mysuru, India

Table No 7: Common size statement analysis of income statement for the year 2011 to 2015.

2016 2017 2018 2019 2020

(in Rs.
Particulars (in %) (in Rs. Cr.) (in %) (in Rs. Cr.) (in %) (in Rs. Cr.) (in %) (in Rs. Cr.) (in %)
Cr.)
INCOME
Total interest earned 16384.2 100.0 17698.9 100.0 19748.5 100.0 23943.0 100.0 26929.6 100.0
Other Income 2612.2 15.9 3477.2 19.6 4052.2 20.5 4604.0 19.2 5372.1 19.9
TOTAL INCOME 18996.4 115.9 21176.1 119.6 23800.7 120.5 28547.2 119.2 32301.7 119.9
EXPENDITURE
Interest Expended 9483.8 57.9 9572.8 54.1 10216.8 51.7 12684.3 53.0 13430.0 49.9

TOTAL OPERATING 5471.5 33.4 5618.5 31.7 6425.7 32.5 7514.8 31.4 8850.9 32.9
EXPENSES
TOTAL PROVISIONS
AND 1951.3 11.9 2573.3 14.5 3073.9 15.6 3482.9 14.5 4073.7 15.1
CONTINGENCIES
TOTAL
16906.6 103.2 17764.6 100.4 19716.4 99.8 23681.9 98.9 26354.5 97.9
EXPENDITURE
NET PROFIT / LOSS
2089.8 12.8 3411.5 19.3 4084.3 20.7 4865.3 20.3 5947.2 22.1
FOR THE YEAR

Table No 8: Common size statement analysis of income statement for the year 2016 to 2020
Interpretation –

▪ Interest expended by kotak Mahindra bank shows continuously decreasing from the year
2016 to 2020 i.e. 57.9% to 49.9% this indicate that banks interest on deposits of its
customers and interest on loan taken are reducing.
▪ The kotak bank operating expenses has increased in the year 2015 i.e. 32.9% than it
started to decrease continuously till 2019 but there was increase in 2020 i.e. 33.6% so the
bank need to decrease its operating expenses to earn more profits.

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TREND ANALYSIS

Year deposits advances net profit

2011 100 100 100
2012 133.492318 128.858141 132.61752
2013 180.826625 160.655958 166.31059
2014 208.434781 173.833972 183.64174
2015 266.699057 214.907903 228.06473
2016 497.744149 351.081411 255.41812
2017 569.472829 405.230378 416.96204
2018 700.164537 499.484918 499.19333
2019 823.140719 590.326088 594.65277
2020 953.393625 605.885415 726.87917
Table No 9: Trend analysis for the year 2011 to 2020.

TREND ANALYSIS
deposits advances net profit

1200

1000

800

600

400

200

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Graph No 1: Diagrammatic representation of trend analysis for the year 2011 to 2020.

Interpretation -

• Deposits of bank for the past ten years shows an increasing trend as in the beginning from
20011 to 2015 there was not much increase but than from the year 2015 to 2020 there is
continuous increasing trend in deposits
• Similarly advances shows an increasing from the year 2011 to 2020

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• There is an increasing trend in the net profits of kotak Mahindra Bank for the past ten
years i.e. from 2011 to 2020
The overall performance of the Kotak Mahindra Bank in past ten years.

RATIO ANALYSIS
Book refereed – Financial Management – M Y Khan. P K Jain

➢ LIQUID RATIO - Liquidity refers to the ability of a firm to meet its obligations in the short
run.
Current Ratio-Current Ratio establishes the relationship between current Assets and current
Liabilities. It attempts to measure the ability of a firm to meet its current obligations. The ideal
current ratio is 2:1. It indicates that current assets double the current liability is considered to be
satisfactory. If current liabilities exceeds current assets, then the company may have problem in
meeting its short term obligations. 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐚𝐬𝐬𝐞𝐭𝐬
𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐫𝐚𝐭𝐢𝐨 =
𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐞𝐬

Current Current Current

Year assets liabilities ratio
2011 8,098.29 5,042.56 1.605988
2012 10,566.01 4,586.52 2.30371
2013 12,116.27 4,720.24 2.566876
2014 15,396.58 5,929.76 2.596493
2015 19,257.78 8,032.81 2.39739
2016 39,905.93 12,217.09 3.266402
2017 48,819.99 13,197.64 3.699145
2018 65,469.56 14,967.13 4.374223
2019 66,405.26 18,208.43 3.646951
2020 1,07,530.38 18,550.00 5.796786
Table No 10: Current ratio for the year 2011 to 2020.

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Current Ratio
7

5
Axis Title

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Current Ratio 1.60599 2.30371 2.56688 2.59649 2.39739 3.2664 3.69915 4.37422 3.64695 5.79679

Graph No 2: Diagrammatic representation of current ratio for the year 2011 to 2020.

Interpretation – The above graph indicates that current ratio in the year 2011, 2012, 2013, 2014
and 2015 i.e. 1.6, 2.3, 2.5, 2.5 and 2.3 respectively which were close to the ideal ratio of 2:1 but
in the year 2016, 2017, 2018, 2019 and 2020 i.e. 3.2, 3.6, 4.3, 3.6 and 5.7 respectively and which
are above the ideal ratio so the bank need to properly use its current assets or its short term
financing facilities.

▪ Quick Ratio/ Acid/ Liquid test ratio -The Liquid ratio is used to measure a firm's ability to
pay its short-term obligations 'as and when they become due. Quick Ratio establishes the
relationship between the quick assets and current liabilities. The ideal Quick Ratio of 1:1
is considered to be satisfactory. High Acid Test Ratio is an indication that the firm has
relatively better position to meet its current obligation in time.
𝐋𝐢𝐪𝐮𝐢𝐝 𝐚𝐬𝐬𝐞𝐭𝐬
𝐐𝐮𝐢𝐜𝐤 𝐑𝐚𝐭𝐢𝐨 =
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

ISBN: 978-93-83302-47-5 15
 International E Conference on Adapting to the New Business Normal – The way ahead
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Current
Year Liquid asset liabilities Liquid ratio
2011 8071.34 5,042.56 1.600643
2012 10537.66 4,586.52 2.297528
2013 12080.12 4,720.24 2.559217
2014 15337.71 5,929.76 2.586565
2015 19203.99 8,032.81 2.390694
2016 39514.07 12,217.09 3.234327
2017 48776.3 13,197.64 3.695835
2018 65449.82 14,967.13 4.372904
2019 66380.39 18,208.43 3.645586
2020 107490.29 18,550.00 5.794625
Table No 11: Liquid ratio for the year 2011 to 2020.

Liquid Ratio
7

5
Axis Title

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Liquid Ratio 1.60064 2.29753 2.55922 2.58657 2.39069 3.23433 3.69584 4.3729 3.64559 5.79462

Graph No 3: Diagrammatic representation of liquid ratio for the year 2011 to 2020.

Interpretation – A quick ratio of 1:1 is considered favourable because of every rupee of current
liability, there is at least one rupee of liquid asset. In the above graph liquid ratio for the year
2011 was 1.6:1 it implies that the current assets of 1.6 of the bank can meet all current claims,
further it goes on increasing from the year 2012 to 2018 i.e. 2.29 to 4.3 respectively but starts to
decrease for the year 2019 i.e. 3.6 and again started to increase in the year 2020 i.e. 5.7. It
indicates that the bank has sufficient liquid assets, it is considered satisfactory as bank can easily
meet its obligations in all the years from 2011 to 2020.

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▪ Cash Ratio/ Absolute ratio:

Absolute Liquid Ratio is also called as Cash Position Ratio (or) Over Due Liability Ratio.
This ratio established the relationship between the absolute liquid assets and current
liabilities. The optimum value for this ratio should be one, i.e., 1: 2. It indicates that 50% worth
absolute liquid assets are considered adequate to pay the 100% worth current liabilities in
time. If the ratio is relatively lower than one, it represents that the company's day-to-day cash
management is poor.

𝐀𝐛𝐬𝐨𝐥𝐮𝐭𝐞 𝐥𝐢𝐪𝐮𝐢𝐝 𝐚𝐬𝐬𝐞𝐭𝐬

𝐀𝐛𝐬𝐨𝐥𝐮𝐭𝐞 𝐑𝐚𝐭𝐢𝐨 =
𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

Absolute
liquid Current Absolute
Year assets liabilities ratio
2011 2,994.26 5042.56 0.593798
2012 3,575.83 4586.52 0.779639
2013 4,518.25 4720.24 0.957208
2014 6,643.11 5929.76 1.1203
2015 6,903.45 8032.81 0.859407
2016 11,599.41 12217.09 0.949441
2017 25,588.55 13197.64 1.938873
2018 24,400.63 14967.13 1.630281
2019 31,264.46 18208.43 1.717032
2020 64,079.85 18,550.00 3.454439

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Table No 12: Absolute ratio for the year 2011 to 2020.

Absolute Ratio
4

3.5

2.5
Axis Title

1.5

0.5

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Absolute Ratio 0.5938 0.77964 0.95721 1.1203 0.85941 0.94944 1.93887 1.63028 1.71703 3.45444

Graph No 4: Diagrammatic representation of absolute ratio for the year 2011 to 2020.

Interpretation – In the above graph absolute liquid ratio in the year 2011 was 0.59, there after it
shows increasing trend for the year 2012, 2013 and 2014 i.e. 0.77, 0.95 and 1.12 respectively and
then it started to increase in the year 2016 and 2017 i.e. 0.94 and 1.93 respectively but in the
year 2018 and 2019 it reduced to 1.7and in the year 2020 it again increased to 3.4. This indicates
that in past three years there is availability of liquid cash balance in the bank which helps to pay
off its short term liabilities.

➢ LEVERAGE RATIO-Financial leverage refers to the use of debt finance.

▪ Debt Equity Ratio: This ratio shows the relationship between the borrowed capital and
owner’s capital. This ratio is calculated to ascertain the firm's obligations to creditors in
relation to funds invested by the owners. The ideal Debt Equity Ratio is 1: 1.
𝐋𝐨𝐧𝐠 𝐭𝐞𝐫𝐦 𝐝𝐞𝐛𝐭
𝐃𝐞𝐛𝐭 𝐄𝐪𝐮𝐢𝐭𝐲 𝐑𝐚𝐭𝐢𝐨 =
𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬 𝐞𝐪𝐮𝐢𝐭𝐲

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Debt
Shareholder equity
Year Total debt s’ equity ratio

2011 49,386.30 368.44 134.0416

2012 65,655.42 370.34 177.2842
2013 85,561.10 373.3 229.202
2014 85,936.89 385.16 223.12
1,04,258.3
386.18
2015 4 269.9734
1,79,678.5
917.19
2016 5 195.9011
2,05,229.9
920.45
2017 1 222.9669
2,49,839.7
952.82
2018 7 262.2109
2,91,263.2
2019 0 1454.38 200.2662
3,25,976.9
2020 3 1956.52 166.6106
Table No 13: Debt equity ratio for the year 2011 to 2020.

Debt Equity Ratio

300

250

200
Axis Title

150

100

50

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Debt Equity Ratio 134.042177.284229.202 223.12 269.973195.901222.967262.211200.266166.611

Graph No 5: Diagrammatic representation of debt equity ratio for the year 2011 to 2020.

ISBN: 978-93-83302-47-5 19
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▪ Interpretation –In the above graph debt equity ratio shows increasing trend from
the year 2011 to 2015 i.e. 134.0 to 269.97 but in the year 2016 it was reduced to 195.9 but
after that it again shows an increasing trend for the year 2017 and 2018 i.e. 222.9 and 262.2
respectively but in the year 2019 and 2020 it is showing a decreasing trend i.e. 200.2 to 166.6
respectively. This indicates that the debt equity ratio for the past ten years are always too
high, this shows that the bank is more relying on outside funds as compared to the internal
source of capital in its capital structure.

➢ Proprietary Ratio: Proprietary Ratio is also known as Capital Ratio or Net Worth to Total
Asset Ratio. This ratio shows the relationship between shareholders' fund and total
assets.

𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬 𝐟𝐮𝐧𝐝
𝐏𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐚𝐫𝐲 𝐑𝐚𝐭𝐢𝐨 =
𝐓𝐨𝐭𝐚𝐥 𝐚𝐬𝐬𝐭𝐬

Shareholders Total Proprietar

Year fund assets y ratio

2011 368.44 73,681.13 0.005

2012 370.34 92,349.39 0.00401
1,15,834.6
373.3
2013 6 0.003223
1,22,236.6
385.16
2014 3 0.003151
1,48,575.7
386.18
2015 6 0.002599
2,40,803.5
917.19
2016 8 0.003809
2,76,187.5
920.45
2017 6 0.003333
3,37,720.4
952.82
2018 7 0.002821
3,95,171.2
2019 1454.38 5 0.00368
4,43,172.7
2020 1956.52 1 0.004415
Table No 14: Proprietary ratio for the year 2011 to 2020.

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December 3-4, 2020 Mysuru, India

Proprietary Ratio
0.006

0.005

0.004
Axis Title

0.003

0.002

0.001

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Proprietary Ratio 0.005 0.004010.003220.00315 0.0026 0.003810.003330.002820.003680.00441

Graph No 6: Diagrammatic representation of proprietary ratio for the year 2011 to 2020.

Interpretation – In the above graph the proprietary ratio for the year 2011 was 0.5% but started
to decrease from the years 2012 to 2015 i.e. 0.40% to 0.26% respectively and then in the year
2016 there was an increase in the proprietary ratio up to 0.38% but started to decrease from the
years 2017 to 2018 i.e. 0.33% to 0.28% respectively but again in 2019 and 2020 it started to
increase i.e. 0.36% and 0.44% respectively. Hence it leads to conclusion that owners have more
stake in the total assets of the bank. As owners stake in total assets is increasing in the recent
years it is good sign as far the long term solvency is concerned.

➢ TURNOVER/ACTIVITYRATIO: Turnover ratio is concerned with measuring the efficiency

in asset management. The proper balance between sales and assets generally reflects
that assets are managed well.
▪ Fixed Assets Turnover Ratio: Fixed Asset Turnover Ratio indicates the extent to which the
investment in fixed assets contributes towards sales. Higher the ratio highlights a firm has
successfully utilized the fixed assets. If the ratio is depressed, it indicates the
underutilization of fixed assets.

𝐜𝐨𝐬𝐭 𝐨𝐟 𝐠𝐨𝐨𝐝𝐬 𝐬𝐨𝐥𝐝

𝐅𝐢𝐱𝐞𝐝 𝐀𝐬𝐬𝐞𝐭 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 =
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐟𝐢𝐱𝐞𝐝 𝐚𝐬𝐬𝐞𝐭𝐬

ISBN: 978-93-83302-47-5 21
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Fixed Asset
Cost Of Average Turnover
Year Goods Sold Fixed Assets Ratio
2011 1,553.32 605.415 2.565711
2012 1,834.83 607.855 3.018532
2013 2,209.73 617.595 3.57796
2014 2,542.61 941.995 2.699176
2015 3,254.73 1324.53 2.457272
2016 5,471.52 1572.995 3.478409
2017 5,618.50 1759.82 3.192656
2018 6,425.72 2150.755 2.987658
2019 7,514.80 2620.175 2.868053
2020 8,850.94 2279.21 3.883337
Table No 15: Fixed asset turnover ratio for the year 2011 to 2020.

Fixed Asset Turnover Ratio

4.5
4
3.5
3
Axis Title

2.5
2
1.5
1
0.5
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Fixed Asset Turnover Ratio 2.565713.018533.577962.699182.457273.478413.192662.987662.868053.88334

Graph No 7: Diagrammatic representation of fixed asset turnover ratio for the year 2011 to
2020.

Interpretation –In the above graph fixed assets turnover ratio shows increasing trend from 2011
,2012 and 2013 i.e. 2.56, 3.01 and 3.57 respectively but started to show decreasing trend for
2014 and 2015 and then in the year 2016 it increased to 3.47 but again started to decrease from
2017 to 2019 i.e. 3.19 to 2.86 respectively and then in the year 2020 it increased up to 3.88, it is
good sign to the bank because the fixed assets have been effectively used and managed in the
business for the year 2020.

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▪ Current Asset Turnover Ratio: This is ratio to know the efficiency of utilization of current
assets this indicates the efficiency with firm uses its current assets to generate sales.
𝐂𝐨𝐬𝐭 𝐎𝐟 𝐆𝐨𝐨𝐝𝐬 𝐒𝐨𝐥𝐝
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 =
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐜𝐮𝐫𝐫𝐞𝐧𝐭 𝐚𝐬𝐬𝐞𝐭𝐬

Average
Cost Of Current Current Asset
Year Goods Sold Assets Turnover Ratio
2011 1,553.32 5873.15 0.264478
2012 1,834.83 9332.15 0.196614
2013 2,209.73 11341.14 0.194842
2014 2,542.61 13756.425 0.184831
2015 3,254.73 17327.18 0.18784
2016 5,471.52 29581.855 0.184962
2017 5,618.50 44362.96 0.126648
2018 6,425.72 57144.775 0.112446
2019 7,514.80 65937.41 0.113969
2020 8,850.94 86967.82 0.101773
Table No 16: Current asset turnover ratio for the year 2011 to 2020.

Current Asset Turnover Ratio

0.3

0.25

0.2
Axis Title

0.15

0.1

0.05

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Current Asset Turnover Ratio 0.264480.196610.194840.184830.187840.184960.126650.112450.113970.10177

Graph No 8: Diagrammatic representation of current asset turnover ratio for the year 2011 to
2020.

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▪ Interpretation –In the above graph the current asset turnover ratio for the year 2011
shows a better position i.e. 0.26 were current assets of banks were efficiently utilized and
managed but it started to decrease from 2012 to 2020 i.e. 0.19 to 0.10 respectively. Hence
it indicates that there is no proper utilization of current assets available in the business so
it is not good sign for the bank. So the bank need to increase its cost of goods sold to the
proportion current assets available.

▪ Capital turnover ratio: The objective of this ratio is to determine how efficiently the
capital employed is being used, profitability and effective management by computing
how many times capital employed is turn-over in a stated period.

𝐂𝐨𝐬𝐭 𝐨𝐟 𝐠𝐨𝐨𝐝𝐬 𝐬𝐨𝐥𝐝

𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 = 𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐝

Cost Of Average Capital

Goods Capital Turnover
Year Sold Employed Ratio
2011 1,553.32 9,436.95 0.1646
2012 1,834.83 11,932.00 0.153774
2013 2,209.73 14,075.42 0.156992
2014 2,542.61 17,162.90 0.148146
2015 3,254.73 20,614.67 0.157884
2016 5,471.52 27,756.98 0.197122
2017 5,618.50 35,925.74 0.156392
2018 6,425.72 44,488.45 0.144436
2019 7,514.80 54,382.90 0.138183
2020 8,850.94 62,956.93 0.140587
Table No 17: Capital turnover ratio for the year 2011 to 2020.

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Capital Turnover Ratio

0.25

0.2

0.15
Axis Title

0.1

0.05

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Capital Turnover Ratio 0.16460.153770.156990.148150.157880.197120.156390.144440.138180.14059

Graph No 9: Diagrammatic representation of capital turnover ratio for the year 2011 to 2020.

▪ Interpretation – In the above graph the capital turnover ratio for the year 2011 to 2015
that was not much fluctuations i.e. around0.16 to 0.15. In the year 2016 there was an
increasing in capital turnover ratio i.e. 0.19 but again from the year 2017 to 2020 there
was decreasing trend i.e. 0.15 to 0.14 respectively. This indicates that there is not much
efficient utilization of capital employed in the business in the past years. This is because
the cost of goods sold are increasing in the proportion of capital employed in the bank.

▪ Working Capital Turnover Ratio: This ratio is used if a firm may also like to relate net
current assets (or net working capital gap) to sales. It may thus computed by dividing sales
by net working capital.
𝐍𝐞𝐭 𝐬𝐚𝐥𝐞𝐬
𝐖𝐨𝐫𝐤𝐢𝐧𝐠 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝐑𝐚𝐭𝐢𝐨 =
𝐍𝐞𝐭 𝐰𝐨𝐫𝐤𝐢𝐧𝐠 𝐜𝐚𝐩𝐢𝐭𝐚𝐥

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Working
Total Net Working Capital
Year Income Capital Turnover Ratio
2011 4,970.29 3,055.73 1.6265475
2012 7,157.58 5,979.49 1.19702182
2013 9,203.15 7,396.03 1.24433649
2014 10,166.83 9,466.82 1.07394352
2015 11,748.32 11,224.97 1.04662373
2016 18,996.42 27,688.84 0.68606774
2017 21,176.09 35,622.35 0.59446078
2018 23,800.70 50,502.43 0.47127831
2019 28,547.23 48,196.83 0.59230514
2020 32,301.72 57,471.59 0.56204674
Table No 18: Working capital turnover ratio for the year 2011 to 2020.

Working Capital Turnover Ratio

1.8
1.6
1.4
1.2
Axis Title

1
0.8
0.6
0.4
0.2
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Working Capital Turnover Ratio1.62655
1.19702
1.24434
1.07394
1.04662
0.68607
0.59446
0.47128
0.59231
0.56205

Graph No 10: Diagrammatic representation of working capital turnover ratio for the year 2011
to 2020.

Interpretation –In the above graph the working capital turnover ratio shows a continuous
decreasing trend, as in the year 2011 it has 1.62 but it was decrease up to 1.19 in the year 2012,
than it was slightly increased to 1.24 in the year 2013 and there after it started to decrease further
from the years 2014 to 2018 i.e. 1.07 to 0.47 respectively and then it started to increase slightly
in the year 2019 and 2020 i.e. 0.59 and 0.56 respectively. It indicates that the bank is not
efficiently using working capital employed in the bank. Even though the working capital

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employed is increasing year by year the working capital turnover ratio is decreasing this is due to
not increase in the income to the proportion of increase in working capital employed.

➢ PROFITABILITYRATIO: Profitability reflects the final result of business operations.

Profitability ratios are calculated to measure overall performance and operating
efficiency of the company.
▪ Gross Profit Ratio -Gross Profit Ratio established the relationship between gross
profit and net sales. Higher Gross Profit Ratio is an indication that the firm has higher
profitability.

𝐆𝐫𝐨𝐬𝐬 𝐩𝐫𝐨𝐟𝐢𝐭
𝐆𝐫𝐨𝐬𝐬 𝐏𝐫𝐨𝐟𝐢𝐭 𝐑𝐚𝐭𝐢𝐨 = × 𝟏𝟎𝟎
𝐍𝐞𝐭 𝐬𝐚𝐥𝐞𝐬

Gross Total
Year Profit Income Gross Profit Ratio
2011 916.45 4,970.29 18.43856
2012 1,201.81 7,157.58 16.79073
2013 1,493.25 9,203.15 16.22542
2014 1,667.70 10,166.83 16.40334
2015 2,058.98 11,748.32 17.52574
2016 2,377.16 18,996.42 12.51373
2017 3,702.16 21,176.09 17.48274
2018 4,386.99 23,800.70 18.43219
2019 5,232.25 28,547.23 18.3284
2020 5,947.18 32,301.72 18.41134
Table No 19: Gross profit ratio for the year 2011 to 2020.

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Gross Profit Ratio

20
18
16
14
12
Axis Title

10
8
6
4
2
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gross Profit Ratio 18.438616.790716.225416.403317.525712.513717.482718.432218.328418.4113

Graph No 11: Diagrammatic representation of gross profit ratio for the year 2011 to 2020.

▪ Interpretation – In the above graph the gross profit ratio is decreasing from the year 2011
to 2014 i.e. 18.43% to 16.40% respectively, then there was slight increase in the year 2015
i.e. 17.52% but there was decrease in the year 2016 i.e. 12.51% and then there was an
increase in gross profit ratio in the year 2017 i.e. 17.48%, there after there was not much
fluctuation in gross profit ratio for the year 2018, 2019 and 2020 i.e. 18.4%. This indicates
that the bank is in good position as its gross profit for past four years has maintained
stability but further the bank has to increase its sales so that its gross profit ratio
increases.

▪ Net Profit Ratio -Net Profit Ratio is also termed as Sales Margin Ratio / Profit Margin Ratio
/ Net Profit to Sales Ratio. This ratio reveals the firm's overall efficiency in operating the
business. Higher Net Profit Ratio indicates the standard performance of the business
concern.
𝐄𝐀𝐓
𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭 𝐑𝐚𝐭𝐢𝐨 = 𝐍𝐞𝐭 𝐬𝐚𝐥𝐞𝐬 × 𝟏𝟎𝟎

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Net
Profit
Year Net Profit Total Income Ratio
2011 818.18 4,970.29 16.46141
2012 1,085.05 7,157.58 15.15945
2013 1,360.72 9,203.15 14.78537
2014 1,502.52 10,166.83 14.77865
2015 1,865.98 11,748.32 15.88295
2016 2,089.78 18,996.42 11.00091
2017 3,411.50 21,176.09 16.11015
2018 4,084.30 23,800.70 17.16042
2019 4,865.33 28,547.23 17.04309
2020 5,947.18 32,301.72 18.41134
Table No 20: Net profit ratio for the year 2011 to 2020.

Net Profit Ratio

20
18
16
14
12
Axis Title

10
8
6
4
2
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Net Profit Ratio 16.461415.159514.785414.7786 15.883 11.000916.110217.160417.043118.4113

Graph No 12: Diagrammatic representation of net profit ratio for the year 2011 to 2020.

Interpretation –In the above graph the net profit ratio in the year 2011 was 16.46% and
thereafter there was no fluctuation in net profit ratio for the years 2012 to 2014 i.e. 14.77% and
then it increased in the year 2015 i.e. 15.88% but it decreased in the year 2016 i.e. 11.00% and
there after it started to show increasing trend from the year 2017 to 2020 i.e. 16.11% to 18.41%
respectively. This indicates a good sign for the bank as it is in better position and ensures
adequate return to the owners.
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▪ Return on assets (ROA) -This ratio is calculated to measure the profit after tax against the
amount invested in total assets to ascertain whether assets are being utilized properly or
not. The return on assets shows at how much is the profit earned by the firm per rupee
of asset is used.
𝐍𝐞𝐭 𝐩𝐫𝐨𝐟𝐢𝐭 𝐚𝐟𝐭𝐞𝐫 𝐭𝐚𝐱𝐞𝐬
𝐑𝐞𝐭𝐮𝐫𝐧 𝐎𝐧 𝐀𝐬𝐬𝐞𝐭𝐬 = × 𝟏𝟎𝟎
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐭𝐨𝐭𝐚𝐥 𝐚𝐬𝐬𝐞𝐭𝐬

Net Average Return On

Year Profit Total Assets Assets
2011 818.18 64,414.63 1.270177
2012 1,085.05 83,015.26 1.307049
2013 1,360.72 1,04,092.02 1.307228
2014 1,502.52 1,19,035.64 1.262244
2015 1,865.98 1,35,406.19 1.378061
2016 2,089.78 1,94,689.67 1.07339
2017 3,411.50 2,58,495.57 1.319752
2018 4,084.30 3,06,954.01 1.33059
2019 4,865.33 3,66,445.86 1.327708
2020 5,947.18 4,19,171.98 1.418792

Table No 21: Return on asset for the year 2011 to 2020.

Return On Assets
1.6

1.4

1.2

1
Axis Title

0.8

0.6

0.4

0.2

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Return On Assets 1.270181.307051.307231.262241.378061.073391.319751.330591.327711.41879

Graph No 13: Diagrammatic representation of return on asset for the year 2011 to 2020.
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Interpretation – In the above graph the return on asset for the year 2011 the bank realized Rs.
1.27 out of Rs. 100 investment then from the year 2012 and 2013 there was no fluctuations in
return on asset ratio i.e. 1.30%, in the year 2014 it slightly decreased i.e. 1.26% and it increased
in the year 2015 i.e. 1.37% but in the year 2016 there was decrease up to 1.07% and then from
the year 2017 to 2020 there was again not much fluctuation in return on asset i.e. 1.31% to 1.41%
respectively, hence it indicates there is no proper utilization of assets in the bank.

▪ Return on Equity Capital (ROE)- The return on equity capital ratio indicates what
percentage of profits are enjoyed by equity share holders.

𝐍𝐞𝐭 𝐩𝐫𝐨𝐟𝐢𝐭 𝐚𝐟𝐭𝐞𝐫 𝐭𝐚𝐱𝐞𝐬 − 𝐩𝐫𝐞𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐝𝐢𝐯𝐢𝐝𝐞𝐧𝐝

𝐑𝐞𝐭𝐮𝐫𝐧 𝐎𝐧 𝐄𝐪𝐮𝐢𝐭𝐲 𝐂𝐚𝐩𝐢𝐭𝐚 = × 𝟏𝟎𝟎
the business. 𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐨𝐫𝐝𝐢𝐧𝐚𝐫𝐲 𝐬𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬 𝐞𝐪𝐮𝐢𝐭𝐲

Average Equity
Total Net Share Holders Return On Equity
Year Profit Fund Capital
2011 818.18 358.29 2.28356918
2012 1,085.05 369.39 2.93741033
2013 1,360.72 371.82 3.65962025
2014 1,502.52 379.23 3.96202832
2015 1,865.98 385.67 4.83828143
2016 2,089.78 651.685 3.20673331
2017 3,411.50 918.82 3.71291439
2018 4,084.30 936.635 4.36061006
2019 4,865.33 1203.6 4.04231472
2020 5,947.18 1705.45 3.48716175
Table No 22: Return on equity capital for the year 2011 to 2020.

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Return On Equity Capital

6

4
Axis Title

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Return On Equity Capital 2.283572.937413.659623.962034.838283.206733.712914.360614.042313.48716

Graph No 14: Diagrammatic representation of return on equity capital for the year 2011 to
2020.

Interpretation –In the above graph the return on equity capital ratio shows an increasing trend
from the year 2011 to 2015 i.e. 2.2 to 4.8 but during the year 2016 there was a sudden fall in
return on equity ratio i.e. 3.2 and then it shown an increasing trend thereafter for the year 2017
and 2018 i.e. 3.7 and 4.3 respectively but it started to fall in 2019 and 2020 i.e. 4.0 and 3.4
respectively. Hence it indicate that there is no effective utilization of equity capital employed
which does not provide exclusive return on the owner’s funds.

▪ Earnings per Share: Earnings per share (EPS) is the portion of a company's profit allocated
to each outstanding share of common stock. Earnings per share acts as indicator of a
company's profitability. It helps in determining the market price of equity shares of the
company and in estimating the company’s capacity to pay dividend to its equity share
holders.
𝐍𝐞𝐭 𝐩𝐫𝐨𝐟𝐢𝐭 𝐚𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞 𝐭𝐨 𝐞𝐪𝐮𝐢𝐭𝐲 𝐡𝐨𝐥𝐝𝐞𝐫𝐬
𝐄𝐏𝐒 =
𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐨𝐫𝐝𝐢𝐧𝐚𝐫𝐲 𝐬𝐡𝐚𝐫𝐞 𝐨𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠

Total Net
Year Profit No Of Equity Shares EPS
2011 818.18 334.72767 2.4443154
1,085.05 2.6652980
2012 407.10269 4
2013 1,360.72 139.75712 9.7363197

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1,502.52 3.2818717
2014 457.82410 9
1,865.98 6.9694102
2015 267.73858 4
2,089.78 3.7412360
2016 558.58010 4
3,411.50 3.3828375
2017 1,008.47289 9
4,084.30 10.615777
2018 384.73865 7
4,865.33 11.062085
2019 439.82033 3
5,947.18 5.6660250
2020 1,049.62119 9
Table No 23: Earnings per share for the year 2011 to 2020.

Earnings per share

12

10

8
Axis Title

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Earnings per share 2.44432 2.6653 9.736323.281876.969413.741243.3828410.615811.06215.66603

Graph No 15: Diagrammatic representation of earnings per share for the year 2011 to 2020.

Interpretation – In the above graph the earnings per share was low in the year 2011 and 2012
i.e. 2.44 and 2.66 respectively, then there was drastic increase in earnings per share in the year
2013 i.e. 9.73% but also there was sudden decline in the year 2014 i.e. 3.28% and then there was
drastic increase in the year 2018 and 2019 i.e. 10.61 and 11.06 respectively but again there was
decline in EPS in the year 2020 i.e. 5.66. This indicates that there was lot of fluctuation of EPS.
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From investor point of view the decrease in EPS is not good sign. Even though there is increase
in profits year by year EPS declined because along with increased profits there is an increase in
the number of shares of bank, so bank should increase its profits along with the number of shares.

▪ Dividend Per Share (DPS) -It is expressed by dividing dividend paid to equity shareholders
by number of equity shares outstanding. It is very helpful for potential investors to know
the dividend paying capacity of the company.

𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝 𝐩𝐚𝐢𝐝 𝐭𝐨 𝐨𝐫𝐝𝐢𝐧𝐚𝐫𝐲 𝐬𝐡𝐚𝐫𝐞 𝐡𝐨𝐥𝐝𝐞𝐫𝐬

𝐃𝐏𝐒 =
𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐨𝐫𝐝𝐢𝐧𝐚𝐫𝐲 𝐬𝐡𝐚𝐫𝐞𝐬 𝐨𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠

Dividend Paid To
Equity Share Number Of Dividend Per
Year Holders Equity Shares Share
2011 36.88 334.72767 0.110179
2012 44.49 407.10269 0.109284
2013 52.38 139.75712 0.374793
2014 63.08 457.82410 0.137782
2015 82.07 267.73858 0.30653
2016 91.84 558.58010 0.164417
2017 0.07 1,008.47289 0.000069
2018 114.21 384.73865 0.296851
2019 160.28 439.82033 0.364422
2020 193.25 1,049.62119 0.184114
Table No 24: Dividend per share for the year 2011 to 2020.

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Dividend Per Share

0.4

0.35

0.3

0.25
Axis Title

0.2

0.15

0.1

0.05

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Dividend Per Share 0.110180.109280.374790.137780.306530.164426.9E-050.296850.364420.18411

Graph No 16: Diagrammatic representation of dividend per share for the year 2011 to 2020.

Interpretation – In the above graph the dividend per share ratio started to decrease from
2011and 2012 i.e. 0.11% and 0.10% respectively and then started to increase for the year 2013
i.e. 0.37% but suddenly decreased in the year 2014 i.e. 0.13% and then increased in the year
2015 i.e. 0.30% but it started to decrease in the year 2016 i.e. 0.16%, further it drastically reduced
to zero in the year2017 which indicates that company did not distributed profits to shareholders
instead it retained for future expansion and then in the year 2018 bank distributed 0.29 per share
to shareholders, than it was further increased in the year 2019 i.e. 0.36% but in the year 2020 it
was reduced i.e. 0.18%. This indicates that dividend paid to shareholders is reducing.

CONCLUSION:

On the basis of various techniques applied for the financial analysis i.e. comparative statement
analysis, common size statement, trend analysis and ratio analysis of Kotak Mahindra Bank it can
be concluded that the overall financial position and overall performance of the bank is quiet
healthy, as the incomes of the bank have increased over the period, but not in the same pace as
that of expenses. The bank has succeeded in maintaining a reasonable profitable position.

Over the last ten years which has been covered in the study i.e. 2011 to 2020. As per liquid ratio
and cash ratio it came to know that the bank day to day cash management is good which helps
in repayment of current liabilities which in turn helps in current asset management so the
liquidity position of Kotak Mahindra Bank is good. As per gross profit ratio and net profit ratio it
came to know that sales are increasing but the bank need to ensures adequate return to the
owners by increasing return on equity capital ratio. So the banks overall profitability is in better
position. As per fixed asset turnover ratio, current asset turnover ratio and proprietary ratio it

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December 3-4, 2020 Mysuru, India

came to know that efficiency and solvency position is better. The bank need to improve its
current asset management, efficiently utilize capital employed, increase its number of branches
in the state, check on unnecessary operating expenses by using automation, use channel
optimization and check staff productivity, to review the capital requirements and relative capital
costs and sell of ideal assets to improve profitability and financial position of the business which
might certainly help the bank to inculcate the same and reap profits and continue the further
growth and expansion of Kotak Mahindra Bank.

REFERENCES:

▪ Dr.P.Ganapathi, M.Kulandaivelu and P.Keerthana “A STUDY ON FINANCIAL STATEMENT

ANALYSIS OF TAMILNADU NEWSPRINT AND PAPER LIMITED (TNPL) KARUR DISTRICT”.
ISSN (PRINT): 2393-8374, (ONLINE): 2394-0697, VOLUME-5, ISSUE-6, 2018.
▪ S. Saigeetha and DR.S. T. Surulivel “A STUDY ON FINANCIAL PERFORMANCE USING RATIO
ANALYSIS OF BHEL, TRICHY” international journal of innovative research in management
studies (IJIRMS) volume 2, Issued 3, April 2017.pp. 31-39.
▪ Dr. Donthi Ravinder and Muskula Anitha “Financial Analysis” IOSR Journal of Economics
and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 2, Issue 3 (Nov. –
Dec. 2013), PP 10-22 www.iosrjournals.org.
▪ R. Buvaneswari and S. Lakshmi “A STUDY ON FINANCIAL STATEMENT ANALYSIS OF
SRIRAM PERFUMES, TRICHY” international journal of advanced research in management
and social science (IJARMSS) Vol.4 July 2015.
▪ M. Renu and DR. S. Sekar “A STUDY ON THE FINANCIAL PERFORMANCE OF STANDARD
CHARTERED FINANCE LIMITED” international journal of advanced research (2014),
Volume 2, Issue 6, 528-534, journal home page: http://www.journalijar.com.
▪ Pratik P. Valand and K. K. Shstry “AN EMPIRICAL STUDY OF RATIO ANALYSIS” Indian
journal of applied research. Volume : 2, issue : 1, October 2012, ISSN-2249-555X.
▪ Book refereed – Financial Management – M Y Khan. P K Jain.

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