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CHAPTER-1
Introduction




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(1.1)Topic

Ratio Analysis

(1.1.1) Definition of ratio analysis:
Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of
ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as
its historical performance and current financial condition can be determined. The term ratio
refers to the numerical or quantitative relationship between two variables.


(1.1.2) Significance or Importance of ratio analysis:

Helps in evaluating the firms performance:

With the help of ratio analysis conclusion can be drawn regarding several aspects
such as financial health, profitability and operational efficiency of the undertaking. Ratio
points out the operating efficiency of the firm i.e. whether the management has utilized
the firms assets correctly, to increase the investors wealth. It ensures a fair return to its
owners and secures optimum utilization of firms assets

Helps in inter-firm comparison:

Ratio analysis helps in inter-firm comparison by providing necessary data. An
interfirm comparison indicates relative position.It provides the relevant data for the
comparison of the performance of different departments. If comparison shows
avariance, the possible reasons of variations may be identified and if results are
negative, the action may be intiated immediately to bring them in line.


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Simplifies financial statement:

The information given in the basic financial statements serves no useful Purpose
unless it s interrupted and analyzed in some comparable terms. The ratio analysis is one
of the tools in the hands of those who want to know something more from the financial
statements in the simplified manner.

Helps in determining the financial position of the concern:

Ratio analysis facilitates the management to know whether the firms
financial position is improving or deteriorating or is constant over the years by setting a
trend with the help of ratios The analysis with the help of ratio analysis can know the
direction of the trend of strategic ratio may help the management in the task of planning,
forecasting and controlling.


Helpful in budgeting and forecasting:

Accounting ratios provide a reliable data, which can be compared, studied and
analyzed.These ratios provide sound footing for future prospectus. The ratios can also
serve as a basis for preparing budgeting future line of action.

Liquidity position:

With help of ratio analysis conclusions can be drawn regarding the Liquidity
position of a firm. The liquidity positon of a firm would be satisfactory if it is able to
meet its current obligation when they become due. The ability to met short term
liabilities is reflected in the liquidity ratio of a firm.


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Long term solvency:

Ratio analysis is equally for assessing the long term financial ability of the Firm.
The long term solvency s measured by the leverage or capital structure and profitability
ratio which shows the earning power and operating efficiency, Solvency ratio shows
relationship between total liability and total assets.

Operating efficiency:

Yet another dimension of usefulness or ratio analysis, relevant from the View
point of management is that it throws light on the degree efficiency in the various
activity ratios measures this kind of operational efficiency.



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(1.2) Trend and Industry Analysis
Thats where trend (time-series) and industry (cross-sectional) analysis come in. You can
compare your firms ratios to trend data, which is data from other time periods for your firm, to
see how your firm is doing over a series of time periods.
You can also compare your firms ratios to industry data. You can gather data from
similar firms in the same industry, calculate their financial ratios, and see how your firm is doing
compared to the industry at large. Ideally, to get a good picture of the financial picture of your
firm, you should do both.

STANDARDS OF COMPARISION:
The ratio analysis involves comparison for a useful interpretation of the financial
statements. A single ratio is itself does not indicate favourable or unfavourable condition. It
should be compared with some standard. It consists of:
PAST RATIOS: Rations calculated from past financial statements of the same
firm.
COMPETITORS RATIOS: Ratios of some selected firms, especially most
progressive and successful competitor, at the same point of time.
INDUSTRY RATIOS: Ratios of industry to which the firm belongs.
PROJECTED RATIOS: Ratios developed using the projected or proforma,
financial statements of the same firm.




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(1.3) Classification Of Ratios
The parties interested in financial analysis are short and long term creditors, owners and
management. Short term creditors main interest is I the liquidity position or short term solvency
of the firm. Long term creditors on the other hand are more interested in the long term solvency
and profitability of the firm. Similarly, owners concentrate on the firm's profitability and
financial condition. Management is interested in evaluating every aspect of the firm's
performance. They are classified into 4 categories:
Liquidity ratios
Liverage ratios
Activity ratios
Profitability ratios

Liquidity Ratios:
Liquidity ratios measure the firms ability to meet current obligations. It is extremely
essential for a firm to be able to meet its obligations as they become due liquidity ratio's
measure. The ability of the firm to meet its current obligations. In fact analysis is of liquidity
needs in the preparation of cash budgets and cash and funds flow statements, but liquidity ratios
by establishing a relationship between cash and other current assets to current obligations
provide a quick measure of liquidity.
A firm should ensure that it does not suffer from lack of liquidity and also that it does not
have excess liquidity. The failure of the company to meet its obligations due to the lack of
sufficient liquidity will result in a poor credit worthiness, loss of creditors confidence or even in
legal tangles resulting in the closure of company. A very high degree of liquidity is also bad,
idle assets earn nothing. The firm's funds will be unnecessarily tied up to current assets.
Therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity.

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1. Current ratio
2. Quick ratio
3. Interval measure
4. Net working capital ratio

1. Current Ratio:
Current ratio is calculated by dividing current assets by current liabilities: Current assets
include cash and those assets which can be converted into cash with in a year, such as
marketable securities, debtors and inventories. Current liabilities include creditors, bills
payable, accrued expenses, short term back loan, income tax liability and long term debt
maturing in current year. The current ratio is a measure of firm's short term solvency.
As a conventional rule a current ratio of 2:1 or more is considered satisfactory. The
current ratio represents margin of safety for creditors

CURRENT RATIO = CURRENTS ASSETS
CURRENT LIABILITIES

2. Quick Ratio:
Quick ratio establishes a relationship between quick or liquid, assets and current
liabilities. Cash is the most liquid asset, other assets which are considered to be relatively liquid
and included in quick assets are debtors and bills receivables and marketable securities.
Inventories are considered to be less liquid.
Generally a quick ratio of 1:1 is considered to represent a satisfactory current financial condition

QUICK RATIO: CURRENT - INVENTORIES
CURRENT LIABILITIES

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3. Interval Measure:
The ratio which assesses a firm's ability to meet its regular cash expenses is the interval
measure. Interval measure relates the liquid assets to average daily operating cash outflows.
The daily operating expenses will be equal to cost of goods sold plus selling, administrative and
general expenses less depreciation divided by number of days in the year.

INTERVAL MEASURE: CURRENTASSETSINVENTORY
AVERAGE DAILY OPERATING EXPENSES

4. Net Working Capital Ratio:
The difference between current assets and current liabilities excluding short term bank
borrowing is called net working capital or net current assets. Net working capital is some times
used as measure of firm's liquidity.

NET W.C RATIO: NETWORKING CAPITAL
NET ASSETS
Liverage Ratios:
The short term creditors, like bankers and suppliers of raw material are more concerned
with the firms current debt paying ability. On the other hand, long term creditors like debenture
holders, financial institutions etc. are more concerned with firms long term financial strength. In
fact a firm should have short as well as long term financial position. To judge the long term
financial position of the firm, financial leverage or capital structure, ratios are calculated. These
ratios indicate mix of funds provided by owners and lenders. As a general rule, there should be
an appropriate mix of debt and owners equity in financing the firm's assets.
1. Debt Ratio
2. Debt Equity Ratio
3. Capital employed to net worth ratio
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4. Other Debt Ratios

1. Debt Ratio:
Several debt ratios may be used to analyse the long term solvency of the firm. It may
therefore compute debt ratio by dividing total debt by capital employed or net assets.
Net assets consist of net fixed assets and net current assets:

DEBT RATIO:TOTAL DEBT
NET ASSETS

2. Debt Equity Ratio:
It is computed by dividing long term borrowed capital or total debt by Share holders fund or net
worth.

DEBT EQUITY RATIO: TOTAL DEBT
NET WORTH

DEBT EQUITY RATIO: LONG TERM BORROWED CAPITAL
SHARE HOLDERS FUND


3. Capital Employed To Net Worth Ratio:
There is an another alternative way of expressing the basic relationship between debt and
equity. It helps in knowing, how much funds are being contributed together by lenders and
owners for each rupee of owner's contribution. This can be found out by calculating the ratio of
capital employed or net assets to net worth

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NET WORTH RATIO: CAPITAL EMPLOYED
NET WORTH

4. Other Debt Ratios:
To assess the proportion of total funds Short and Long term provided by outsiders to
finance total assets, the following ratio may be calculated TL to TA RATIO:
Other debt ratio:TOTAL LIABILITIES
TOTAL ASSETS

Activity Ratios:
Funds of creditors and owners are invested in various assets to generate sales and profits.
The better the management of assets, the larger is an amount of sales. Activity ratios are
employed to evaluate the efficiency with which the firm manages and utilizes its assets these
ratios are also called turnover ratios because they indicate the speed with which assets are being
converted or turned over into sales. Activity ratios, thus, involve a relationship between sales
and assets. A proper balance between sales and assets generally reflects that assets are managed
well.
1. Inventory turnover ratio
2. Debtors turnover ratio
3. Collection period
4. Net assets turnover ratio
5. Working Capital turnover ratio

1. Inventory Turnover Ratio:
Inventory turnover ratio indicates the efficiency of the firm in producing and selling its
product. It is calculated by dividing cost of goods sold by average inventory. Average
inventory consists of opening stock plus closing stock divided by 2.
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INVENTORY TURNOVER RATIO: COST OF GOODS SOLD
AVERAGE INVENTORY

2. Debtors Turnover Ratio:
Debtors turnover ratio is found out by dividing credit sales by average debtors. Debtors
turnover indicates the number of times debtors turnover each year. Generally the higher the
value of debtors turnover, the more efficient is the management of credit

DEBTORS TURNOVER RATIO =CREDIT SALES
AVERAGE DEBTORS

3. Collection Period:
The average number of days for which debtors remain outstanding is called the average
collection period.

AVERAGE COLLECTION PERIOD= NO. OF DAYS IN A YEAR
DEBTORS TURNOVER

4. Net Assets Turnover Ratio:
A firm should manage its assets efficiently to maximise sales. The relationship between
sales and assets is called net assets turnover ratio. Net assets include net fixed assets and net
current assets

NET ASSETS TURNOVER RATIO= SALES
NET ASSETS
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5. Working Capital Turnover Ratio:
A firm may also like to relate net current assets to sales. It may thus compute net
working capital turnover by dividing sales by net working capital

WORKING CAPITAL TURNOVER RATIO= SALES
NET CURRENT ASSETS

Profitability Ratios:
A company should earn profits to survive and grow over a long period of time. Profits
are essential but it would be wrong to assume that every action initiated by management of a
company should be aimed at maximizing profits, irrespective of social consequences.
Profit is the difference between revenues and expenses over a period of time. Profit is the
ultimate output of a company and it will have no future if it fails to make sufficient profits.
Therefore, the financial manager should continuously evaluate the efficiency of the company in
terms of profits. The profitability ratios are calculated to measure the operating efficiency of the
company.
Generally, there are two types of profitability ratios
1. Profitability in relation to sales
2. Profitability in relation to investment
a. Gross profit margin ratio
b. Net profit margin ratio
c. Operating expenses ratio
d. Return on Investment
e. Return on equity
f. Earning per share
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g. Dividends per share
h. Dividend pay out ratio
i. Price earning ratio

a.Gross Profit Ratio:
It is calculated by dividing gross profit by sales. The gross profit margin reflects the
efficiency with which management produces each unit of product. This ratio indicates the
average spread between the cost of goods sold and the sales revenue.

GROSS PROFIT RATIO= GROSS PROFIT
SALES

b.Net Profit Ratio:
Net profit is obtained when operating expenses, interest and taxes are subtracted from the
gross profit. The net profit margin is measured by dividing profit after tax or net profit by sales.
NET PROFIT RATIO= NET PROFIT
SALES

c.Operating Expense Ratio:
Operating expense ratio explains the changes in the profit margin ratio. This ratio is
computed by dividing operating expenses like cost of goods sold plus selling expenses, general
expenses and administrative expenses by sales.

OPERATING EXPENSE RATIO= OPERATING EXPENSES
SALES
The higher operating expenses ratio is unfavorable since it will leave operating income to
meet interest dividends etc.
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d. Return On Investment:
The term investment may refer to total assets or net assets. The conventional approach of
calculating return on investment is to divide profit after tax by investment. Investment
represents pool of funds supplied by shareholders and lenders. While PAT represent residue
income of shareholders

RETURN ON INVESTMENT= PROFIT AFTER TAX
INVESTMENT

e. Return On Equity:
Ordinary share holders are entitled to the residual profits. A return on shareholders
equity is calculated to see the profitability of owners investment. Return on equity indicates
how well the firm has used the resources of owners. The earning of a satisfactory return is the
most desirable objective of business.

RETURN ON EDQUITY= PROFIT AFTER TAX
NET WORTH

f. Earnings Per Share:
The measure is to calculate the earning per share. The earning per share is calculated by
dividing profit after tax by total number of outstanding. EPS simply shows the profitability of
the firm on a per share basis, it does not reflect how much is paid as dividend and how much is
retained in business.

EARNINGS PER SHARE= PROFIT AFTER TAX
NO. OF SHARES OUTSTANDING

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g. Dividends Per Share:
The net profits after taxes belong to shareholders. But the income which they really
receive is the amount of earnings distributed as cash dividends. Therefore, a larger number of
present and potential investors may be interested in DPS rather than EPS. DPS is the earnings
distributed to ordinary shareholders divided by the number of ordinary shares outstanding.

DPS= EARNINGS PAID TO SHARE HOLDERS
NUMBER OF SHARES OUTSTANDING

h. Dividend Pay Out Ratio:
The dividend pay out ratio is simply the dividend per share divided by Earnings Per
Share.

DIVIDEND PAY OUT RATIO= DIVIDEND PER SHARE
EARNINGS PER SHARE

i.Price Earning Ratio:
The reciprocal of the earnings yield is called price earning ratio. The price earning ratio
is widely used by security analysts to value the firm's performance as expected by investors.
Price earning ratio reflects investors expectations about the growth of firm's earnings. Industries
differ in their growth prospects. Accordingly, the P/E ratios for industries very widely.

PRICE EARNING RATIO= MARKET VALUE PER SHARE
EARNING PER SH

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CHAPTER 2
Organization Profile








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(2.1) About The Company

The Kotak Mahindra Group

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

Group Management
Mr. Uday Kotak Executive Vice Chairman & Managing Director
Mr. C. Jayaram
Mr. Dipak Gupta

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(2.2) Formation Of The Company

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

1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting
1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market
1990 The Auto Finance division is started
1991
The Investment Banking Division is started. Takes over FICOM, one of India's largest
financial retail marketing networks
1992 Enters the Funds Syndication sector
1995
Brokerage and Distribution businesses incorporated into a separate company - Kotak
Securities. Investment Banking division incorporated into a separate company - Kotak
Mahindra Capital Company
1996
The Auto Finance Business is hived off into a separate company - Kotak Mahindra
Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra
takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford
vehicles. The launch of Matrix Information Services Limited marks the Group's entry
into information distribution.
1998
Enters the mutual fund market with the launch of Kotak Mahindra Asset Management
Company.
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2000

Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business.
Kotak Securities launches its on-line broking site (now www.kotaksecurities.com).
Commencement of private equity activity through setting up of Kotak Mahindra
Venture Capital Fund.
2001 Matrix sold to Friday Corporation Launches Insurance Services
2003
Kotak Mahindra Finance Ltd. converts to a commercial bank - the first Indian
company to do so.
2004 Launches India Growth Fund, a private equity fund.
2005
Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime
(formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak
Mahindra. Launches a real estate fund
2006
Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company
and Kotak Securities

(2.3) About Companys Important Persons

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

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

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

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

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


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

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


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(2.4) Corporate Identity



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

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


Kotak 30

Kotak Midcap

Kotak Opportunities

Kotak Lifestyle

Kotak Contra

Kotak Tax Saver

Kotak Equity Arbitrage
Fund

Kotak Emerging
Equity Scheme

Kotak Global
Emerging Market

Kotak Indo World
Infrastructure Fund



(2.5.1)


Management of one's finances to attain a defined goal calls for a lot of discipline, many a
times self-imposed. Our Systematic Investment Plan is a tool, which can help you, inject this
discipline in your financial management efforts.
Our Systematic Investment Plan (SIP) provides you the facility to periodically invest a
fixed sum over any defined period of time (6 months or more) in a disciplined manner.
SIPs help in arresting uncertainties associated with trying to time the market and thus, in
the long term tends to iron out market fluctuations.
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It also brings in the much needed investment discipline as you allocate a defined sum to
your investments for a defined frequency, thus making investments a mandatory component
while you allocate your resources.
It brings down your average cost of acquisition of units. As you would allocate a fixed
sum every month, you would buy more units when the prices of our units are lower than when
they are higher. We call this Rupee Cost Averaging.
Finally, through this arrangement, your funds otherwise lying idle (and if you know it, on
account of inflation, depleting in real value) in your bank account get channelised into future
wealth creating investments.
And of course, you stand to gain in terms of a more favourable entry load on your
systematic investments.

(2.5.2)


Want to receive a regular stream of payouts in a defined frequency ? Want to book profits
periodically ?
Our Systematic Withdrawal Plan (SWP) is designed keeping in mind these requirements
of yours. Through our SWP you can redeem defined sums at a pre-defined frequency by giving
a one-time instruction to us. You may choose to regularly withdraw either a fixed sum or just the
appreciation on your investments.
This facility caters to two segments of investor needs :
1) Investors wanting defined, regular funds inflow from their investments.
2) Investors interested in booking gains at a regular interval.
If you require an exact amount regularly then the Fixed Option is suitable for you. If you
do not want this withdrawal to disturb your capital contribution and would like only to reap
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theappreciation generated in the investment, you should opt for the appreciation option. Ideally
SWP should be opted from the growth options of our schemes.

(2.5.3)


Want a phased entry into the Equity markets rather than putting in all your money at one
tranch? Want to book profits from your equity holdings and want your profits to continue
earning for you ?
Try our Systematic Transfer Plan (STP). Our Systematic Transfer Plan (SWP) caters to
your above needs.
Through our STP you can choose to switch your investments from one Kotak Mutual
scheme to another at a predefined frequency by giving a one-time instruction to us. You also
have a choice between switching a fixed sum or only the appreciation on your investments.
This facility caters to two segments of investor needs :
1) Investors wanting to time their exposure in the equity markets over a period of time
instead of a point in time. Such investors can invest in our Debt Schemes and choose a periodic
transfer of investments into our equity schemes.
2) Investors who are already invested in equity wanting to book profits regularly and
allowing the profits to earn returns in any of our Debt schemes.
You can choose to transfer either a fixed sum every defined period or only the
appreciation on your investments over that period from one scheme to another. The later is
helpful, where you do not want the transfer to disturb your capital contribution.
Ideally STP should be opted from the growth options of our schemes.


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(2.5.4)


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

(2.5.5)

Tired of running to the bank for banking your dividend cheques and then waiting for it to
clear. Leave your worries to us. Opt in for ECS of Dividends.
ECS (Electronic Clearing Service) is a Reserve Bank of India offering to facilitate, among
others, faster and seamless payout of dividends directly into your bank account.
ECS as a mechanism for payout of Dividends is faster, convenient, cost-effective and hassle-
free. Besides, you don't run the risk of loss of dividend instruments in transit and the associated
delays in obtaining a duplicate instrument.
This facility is currently offered across all banks in over 71 locations.
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(2.5.6)


This is a one stop shop for you to transact online.
You can now do the following transaction online.
Your first investment should be through your distributor / directly.
To transact online you need to be an existing investor
You can purchase or redeem Kotak Mutual Fund Units sitting at the comfort of your
house or office at your convenient time.
No need to do paper work or travel to ISCs to transact.
Financial Transaction

Purchase.

Switch - in and Switch - out.

Redemption.

Non Financial Transaction


View your transaction status.

View and print your account statement.

Know latest unit balance.

Know latest market value.

Change your PIN number.




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(2.5.6)

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

Selling Models





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The Selling Process

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


Thus before recommending an investment you should know:
The strength of the Asset Management Company and sponsors of Mutual Fund.
The various choices/plans available and their advantages
The nature of the scheme
The potential of returns and the risk associated with it
Tax benefits
Operational Details

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

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

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

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

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

(2.6) Quality Policy& Objectives

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

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


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

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

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

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





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

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

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










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CHAPTER-3
Research Objectives
&Scope




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(3.1) Objectives Of Project

Ratios are highly important profit tools in financial analysis that help financial analysts
implement plans that improve profitability, liquidity, financial structure, reordering, leverage,
and interest coverage. Although ratios report mostly on past performances, they can be
predictive too, and provide lead indications of potential problem areas.
Ratio analysis is primarily used to compare a company's financial figures over a period of
time, a method sometimes called trend analysis. Through trend analysis, you can identify trends,
good and bad, and adjust your business practices accordingly. You can also see how your ratios
stack up against other businesses, both in and out of your industry.
There are several considerations you must be aware of when comparing ratios from one
financial period to another or when comparing the financial ratios of two or more companies.
If you are making a comparative analysis of a company's financial statements over a
certain period of time, make an appropriate allowance for any changes in accounting policies
that occurred during the same time span.
When comparing your business with others in your industry, allow for any material
differences in accounting policies between your company and industry norms.
When comparing ratios from various fiscal periods or companies, inquire about the
types of accounting policies used. Different accounting methods can result in a wide variety of
reported figures.



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(3.2) Scope Of Project

Financial ratio analysisis the calculation and comparison of main indicators - ratios which are
derived from the information given in a company's financial statements(which must be from
similar points in time and preferably audited financial statements and developed in the same
manner). It involves methods of calculating and interpreting financial ratios in order to assess a
firm's performance and status. This analysis is primarily designed to meet informational needs of
investors, creditors and management. The objective of ratio analysis is the comparative
measurement of financial data to facilitate wise investment, credit and managerial decisions.
Some examples of analysis, according to the needs to be satisfied, are:
Horizontal analysis- the analysis is based on a year-to-year comparison of a firm's ratios,
Vertical analysis- the comparison of balance sheet accounts either using ratios or not, to
get useful information and draw useful conclusions, and
Cross-sectional analysis- ratios are used and compared between several firms of the
same industry in order to draw conclusions about an entity's profitability and financial
performance. Inter-firm analysiscan be categorized under cross-sectional, as the analysis
is done by using some basic ratios of the industry in which the firm under analysis
belongs to (and specifically, the average of all the firms of the industry) as benchmarks
or the basis for our firm's overall performance evaluation.




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CHAPTER-4
Research Methodology
&Limitation

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(4.1) Meaning Of Research

Research Methology is a way to systematically solve the research problem. It may be
understood as Science of studying how research is done, Scientifically in it we study the various
steps that generally adopted by a reseacher in studying his reseach problem along with the logic
behind them. Accuracy of the study depends on the systematic application of the method. The
researcher has to decide the method to be used that helps him to get a desired direction in a
systematic way.
Definitions
According to Clifford Woody
Research comprises defining and redefining problems, formulating or hypothesis or
suggested solutions collecting: organizing and evaluating data making deductions and reaching
conclusions to determine whether they fit the formulating hypothesis.
Thus, Research Methodology is a strategy that guides a researcher in providing answers
to research questions and for this research survey is being done.
Research in common parlance refers to a search for knowledge. In fact research is an act of
scientific investigation.









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Present the findings to the decision makers.

(4.2)Steps of Research process

The seven major steps

Determine or define the problem or
opportunity that is faced
Specify what information is needed
Identify the sources of the information.
Decide on the techniques for accruing
the information
Gather and process the information
Analyze and interpret the meaning.
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(4.3)Sampling Design-
Sampling is the selection of some part of aggregate or totality on the basis of which a
judgement or inference about the aggregate or totality is made.

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

(4.2.2) Sampling Method-
In my survey,I have used Observation Method.

(4.2.3) Data Collection-
Data Collection was done in two ways they were-
1. Primary data collection
2. Secondary data Collection

(4.2.4) Secondary Data Collection
In my project I have taken secondary data for analysis it is through Website, Journals etc.

(4.2.5) Analysis And Interpretation-
Data collected was compiled up and on the basis of percentage method depicted through
bar diagrams Interpretation was done and recommendations was given. .

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


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CHAPTER-5
Data Interpretation &
Presentation
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(5.1) Data Interpretation
Quarterly Results
First Quarterly Results (Rs. in Millions)

March2009
[4 Quarter]
December2008
[3 Quarter]
March2008
[4 Quarter]
Sales Turnover 8030.29 8035.19 7636.70
Other Income 1150.62 1090.30 393.51
Total Income 9180.92 9125.49 8030.21
Total Expenditure 2765.97 2941.25 2610.59
Operating Profit 6414.95 6184.24 5419.62
Interest 3850.36 4209.67 3728.88
Gross Profit 2564.59 1974.58 1690.74
Depreciation 0.00 0.00 0.00
Tax 575.98 382.00 123.75
ReportedPAT 1025.73 711.30 692.08
Equity Capital 3456.69 3454.74 3446.73
Extra Ordinary Items 0.00 0.00 0.00
Adjusted Profit After Extra Ordinary Item 1025.73 711.30 692.08
Book Value 112.80 0.00 0.00
EPS 2.97 2.06 2.01
Dividend 0.00 0.00 0.00
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Balance Sheet
Kotak Mahindra Bank Ltd.
From FY 2007 2009 (In Millions)
Balance Sheet (Rs. in millions)
Liabilities
March- 2009
(12 Months)
March-
2008
(12
Months)
March- 2007
(12 Months)
Share Capital 3,456.69 3,446.73 3,261.56
Reserves & Surplus 35,598.58 32,490.36 13,357.69
Net Worth (1) 39,055.27 35,937.09 16,619.25
Secured Loans (2) 59,040.71 51,192.53 50,997.52
Unsecured Loans (3) 156,449.34 164,236.46 110,000.91
Total
Liabilities(1+2+3)
254,545.31 251,366.08 177,617.68

Assets
March- 2009
(12 Months)
March-
2008
(12
Months)
March- 2007
(12 Months)
Fixed Assets
Gross Block 4,606.07 3,914.21 2,735.65
(-) Acc. Depreciation 2,472.51 1,811.72 1,324.78
Net Block (A) 2,133.56 2,102.49 1,410.87
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Capital WorkinPrgs.(B) 0.00 0.00 0.00
Investments (C) 91,101.81 91,419.89 68,619.65
Current Assets, Loans & Advs.
Inventories 0.00 0.00 0.00
Sundry Debtors 0.00 0.00 0.00
Cash And Bank 11,406.70 21,494.67 12,959.66
Loans And Advances 182,476.68 168,106.58 116,164.02
(i) 193,883.37 189,601.24 129,123.67
Current Liab. & Provs.
Current Liabilities 32,270.12 31,455.10 21,269.40
Provisions 303.31 302.44 267.11
(ii) 32,573.43 31,757.54 21,536.51
Net Curr. Assets (i - ii) (D) 161,309.94 157,843.70 107,587.16
Misc. Expenses (E) 0.00 0.00 0.00
Total Assets
(A+B+C+D+E)
254,545.31 251,366.08 177,617.68

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


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

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Ratios
From Year 2007 to Year 2009

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



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(5.1.1) OPERATING MARGIN RATIO
Formula to calculate operating margin:

Operating Margin =
(earnings before interest and taxes)
sales

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






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0 5 10 15 20
2007
2008
2009
14.54
19.93
13.85
Operating Profit Margin
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(5.1.2)GROSS PROFIT MARGIN

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

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

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0 5 10 15 20
2007
2008
2009
12.35
18.13
11.72
Gross Profit Margin
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(5.1.3) NET PROFIT MARGIN
First some basic profitability equations:
Net Profit Margin =
Net Profit
* 100 =
Profit before Interest and Taxation
* 100
Turnover Turnover

Remember:
Net Profit = Gross Profit - Expenses

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







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0 2 4 6 8 10 12
2007
2008
2009
8.84
10.37
8.35
Net Profit Margin
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(5.1.7)RETURN ON INVESTMENT
Formula to calculate return on investment:

RETURN ON INVESTMENT RATIO =
NET PROFITS BEFORE TAX
SHAREHOLDERS EQUITY
The return on investment ratio provides a standard return on investor's equity.
The return on investment ratio is also referred to as return on investment or ROI. Return
on Investment is a key ratios for investors
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0 0.5 1 1.5 2 2.5 3
2007
2008
2009
1.82
2.8
2.31
Return On Investment
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(5.1.8)RETURN ON NET WORTH
Net After Tax Profit divided by Net Worth, this is the 'final measure' of profitability to
evaluate overall return. This ratio measures return relative to investment in the company. Put
another way, Return on Net Worth indicates how well a company leverages the investment in it.
May appear higher for startups and sole proprietorships due to owner compensation draws
accounted as net profit.
Return on net worth, Return on ordinary shareholders' funds measures the rate of return on the
ownership interest (shareholders' equity) of the common stock owners. It measures a firm's
efficiency at generating profits from every unit of shareholders' equity (also known as net assets
or assets minus liabilities). ROE shows how well a company uses investment funds to generate
earnings growth.













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0 2 4 6 8 10
2007
2008
2009
8.5
8.17
7.06
Return On Networth
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0 5 10 15 20
2007
2008
2009
18.91
10.29
10.07
Dividend Yield
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(5.2) FINDINGS OF THE STUDY
After doing the analysis, i find out that the operating profit margin of a bank is low
in year 2009 as compared to last two years. Which shows that sales is low.
In this analysis the gross profit margin of a bank is also comes down from 18.13 to
11.72 in year 2009 which shows that the bank is facing a problem of having low
liquidity or cash flow to spend on marketing & investment, R&D.
The analysis also shows that net profit margin of bank is also came down by 2.02%,
it means that bank is not preforming well to recover its debts.
The return on investment ratio comes down by very less margin; it shows that the
bank is having a consistent performance in earning on its investment as compared to
last year.
The return on net worth shows that how the firm uses the shareholders interest or
investment fund to generate earning growth. By comparing last 3 years RONW it is
decaling every year which shows the bank is not having much profit available to
equity shareholder & it is also not preferred much by the investors.

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CHAPTER-6
CONCLUION& SUGGESTION







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(6.1) Conclusion
After overhauling the all situation that boosted a number of Pvt. Companies associated with
multinational in the Insurance Sector to give befitting competition to the established behemoth
Kotak in private sector, we come at the conclusion that :-
There are very tough competitions among the private insurance companies on the level of
new trend of advertising to lull a major part of Customers.
Kotak have to work more to increase its sale or attract customers for investing, because
the operating profit margin goes very down in 2009.
The positive point is that they are having consistent return on investment.
As a private player in the market kotak is facing problem in recovering its loans due to
which net profit of the bank came down by 2.02%.
The entry of more Pvt. Players in the Insurance Sector has expanded the product segment
to meet the different level of the requirement of the customers. It has brought about greater
choice to the customers.





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

There is a need for better promotion for the investment products & services. The bank
should advertise its products through television because it will reach to the masses.
More returns should be provided on Insurance plans.
As the bank provides the Insurance facility to its customers. It should provide this facility by tie
up with the other Insurance organizations as well. The main reason is that, the entire customers
do not want Insurance of only one company. They should have choice while selecting a suitable
Insurance plans. This will definitely add to the goodwill & profit for the bank.



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Chapter-7
Bibliography





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(7.1) Books
Money outlook, January edition 2009
Marketing management : kotler & keller
Principals of life Assurance : CI-23
Financial Management : S.M. Shukla
Corporate Accounting : Saklecha
Cost Accounting : S.M. Shukla
Income Tax : Saklecha

(7.2) Websites
www.indiainfoline.com
www.kotaklife.com
www.insuranceworld.com
www.corpbank.com
www.about.com