Cash Flow Analysis at Kotak Mahindra Bank

A SYNOPSIS ON
CASH FLOW ANALYSIS

AT
KOTAK MAHINDRA BANK LTD
M SREEJA
HALL TICKET NO. 160717672029
Project submitted in partial fulfillment for the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
By
OSMANIA UNIVERSITY, Hyderabad – 500007
METHODIST COLLEGE OF ENGINEERING &TECHNOLOGY

ABIDS Hyderabad
2017-2019
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CHAPTER PLAN
CHAPTER-1
INTRODUCTION
SCOPE OF THE STUDY
OBJECTIVES OF THE STUDY
METHODOLOGY OF THE STUDY
LIMITATIONS OF THE STUDY
CHAPTER-2
REVIEW OF LITERATURE
CHAPTER-3
INDUSTRY PROFILE
COMPANY PROFILE
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
CHAPTER-5
SUGGESTION
FINDINGS & CONCLUSION
BIBLIOGRAPHY
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INTRODUCTION
The statement of cash flows is part of the financial statements issued by a business,
and describes the cash flows into and out of the organization. Its particular focus is on the
types of activities that create and use cash, which are operations, investments, and financing.
Though the statement of cash flows is generally considered less critical than the income
statement and balance sheet, it can be used to discern trends in business performance that are
not readily apparent in the rest of the financial statements. It is especially useful when there is
a divergence between the amount of profits reported and the amount of net cash flow
generated by operations.
There can be significant differences between the results shown in the income statement and
the cash flows in this statement, for the following reasons:
• There are timing differences between the recordation of a transaction and when the
related cash is actually expended or received.
• Management may be using aggressive revenue recognition to report revenue for
which cash receipts are still some time in the future.
• The business may be asset intensive, and so requires large capital investments that do
not appear in the income statement, except on a delayed basis as depreciation.
• Many investors feel that the statement of cash flows is the most transparent of the
financial statements (i.e., most difficult to fudge), and so they tend to rely upon it
more than the other financial statements to discern the true performance of a business.
• Cash flows in the statement are divided into the following three areas:
• Operating activities. These constitute the revenue-generating activities of a business.
Examples of operating activities are cash received and disbursed for product sales,
royalties, commissions, fines, lawsuits, supplier and lender invoices, and payroll.
• Investing activities. These constitute payments made to acquire long-term assets, as
well as cash received from their sale. Examples of investing activities are the purchase
of fixed assets and the purchase or sale of securities issued by other entities.
• Financing activities. These constitute activities that will alter the equity or borrowings
of a business. Examples are the sale of company shares, the repurchase of shares, and
dividend payments.
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There are two ways in which to present the statement of cash flows, which are the
direct method and the indirect method. The direct method requires you to present cash flow
information that is directly associated with the items triggering cash flows, such as:
• Cash collected from customers

• Interest and dividends received
• Cash paid to employees
• Cash paid to suppliers
• Interest paid
• Income taxes paid
Few organization collect information as required for the direct method, so they
instead use the indirect method. Under the indirect approach, the statement begins with the
net income or loss reported on the company's income statement, and then makes a series of
adjustments to this figure to arrive at the amount of net cash provided by operating activities.
People and groups interested in cash flow analysis include:
• Accounting personnel, who need to know whether the organization will be able to
cover payroll and other immediate expenses
• Potential lenders or creditors, who want a clear picture of a company's ability to repay
• Potential investors, who need to judge whether the company is financially sound
• Potential employees or contractors, who need to know whether the company will be
able to afford compensation
• Shareholders of the business.
Purpose
The cash flow analysis was previously known as the flow of funds statement. The
cash flow analysis reflects a firm's liquidity.
The balance sheet is a snapshot of a firm's financial resources and obligations at a

single point in time, and the income statement summarizes a firm's financial transactions over
an interval of time.
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These two financial statements reflect the accrual basis accounting used by firms to
match revenues with the expenses associated with generating those revenues. The cash flow
analysis includes only inflows and outflows of cash and cash equivalents; it excludes
transactions that do not directly affect cash receipts and payments. These noncash
transactions include depreciation or write-offs on bad debts or credit losses to name a few.
The cash flow analysis is a cash basis report on three types of financial activities: operating
activities, investing activities, and financing activities. Noncash activities are usually reported
in footnotes.
The cash flow analysis is intended to provide information on a firm's liquidity and
solvency and its ability to change cash flows in future circumstances
1. provide additional information for evaluating changes in assets, liabilities and equity
2. improve the comparability of different firms' operating performance by eliminating

the effects of different accounting methods
3. indicate the amount, timing and probability of future cash flows
The cash flow analysis has been adopted as a standard financial statement because it
eliminates allocations, which might be derived from different accounting methods, such as
various timeframes for depreciating fixed assets.
NEED AND IMPORTANCE OF THE STUDY
Many business owners disregard the importance of cash flow analysiss because they
unwittingly believe that their current financial standing can be construed from other financial
reports and projections. Unfortunately, however, a cash flow analysis is necessary to
adequately assess the incoming and outgoing flow of cash and other resources in a business.
Not only will a business owner with a cash flow system be more aware of his or her
financial standing, but it will also help investors to make educated decisions on future
investments. A business with regular and reliable cash flow analysis shows more economic
solvency, and is more attractive to investors.
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A cash flow analysis documents the incoming and outgoing cash in plain terms.
Future sales and sales made for credit (unless they have been paid off) are not included in the
cash flow analysis, and most of the data will come from core operations. Payables and
receivables should be expressly defined, as should depreciation of product value and
inventory that has not yet been moved.
This will allow a business owner to compare past periods with the current financial
standing and determine whether your receivables have increased or decreased. This can also
help to track your investments next to your receivables and payables. Are your investments
increasing or decreasing in value? And has your inventory moved at a steady pace? New or
expanding businesses can expect to see a decrease in cash flow, but this doesn’t mean that the
business is going under. More stables businesses should see a steadily increase in cash flow
over a period of several months or years. There are typically five different sections in a cash
flow analysis, though large businesses might have more complex cash flow systems as
required.
SCOPE OF THE STUDY:
Since it will not be possible to conduct a micro level study of all industries in
Telangana, the study is restricted to Kotak Mahindra Group. (Formerly Kotak Mahindra
bank Ltd.) only. A study that involves an examination of long term as well as short term
sources that a company taps in order to meet its requirements of finance. The scope of the
study is confined to the sources that Kotak Mahindra Group tapped over the years under
study i.e. 2011-12 to 2015-16.
OBJECTIVES OF THE STUDY:
➢ To know the flow of cash in the organization Kotak Mahindra Group.

(Formerly Kotak Mahindra bank Ltd.).
➢ To access the efficiency with sources and uses of cash were made by the co
ordinance the present year 2011-2012 to 2015-2016.
➢ To identify the changes in the elements of focus and uses of working capital in
between above mentioned years.
➢ To improve the financial performance of the company
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METHODOLOGY OF THE STUDY:
The following are the main sources of date used for this study which are
Collected and compiled from published and unpublished sources of the Company data. The
published sources are as follows.
1) Management information system published by Kotak Mahindra Group. (Formerly

Kotak Mahindra bank Ltd.).
2) Status Report on Kotak Mahindra Group. (Formerly Kotak Mahindra bank Ltd.). .
3) Journals, books and other published reports.
a. The present study is mainly based on primary and secondary sources of Data
collection. The primary data was directly collected by observations, Interviews
questionnaire etc.
b. The secondary data was collected from the literate available in libraries and
research studies and annual reports are related to the present study. It includes
published and unpublished literature like books, reports and generally Articles
of the Kotak Mahindra Group. (Formerly Kotak Mahindra bank Ltd.). .
LIMITATIONS OF THE STUDY:
The limitations of present study are as follows:

1. The study cover a period of FIVE years from 2012-13to 2015-16.
2. The study does not flow the fund.
3. The study is based mainly on secondary information.
4. The study does not touch all the units of Kotak Mahindra Group. (Formerly Kotak
Mahindra bank Ltd.). .
5. The present study cannot be used for inter firm comparison.
6. Limited span of time is a major limitation for this project.
7. The act and figures of the study is limited to the period of FIVE years i.e. 2012-13to
2015-16.
8. The data used in reports are taken from the annual reports, published at the end of the
years.
9. The result does not reflect the day-to-day transactions.
10. It is also impossible to the study of day-to-day transactions in cash management.
11. The analysis of the working capital is taken FIVE years.
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INDUSTRY PROFILE
Introduction
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently
capitalised and well-regulated. The financial and economic conditions in the country are far
superior to any other country in the world. Credit, market and liquidity risk studies suggest
that Indian banks are generally resilient and have withstood the global downturn well.
Indian banking industry is expected to witness better growth prospects in 2016 as a

sense of optimism stems from the Government’s measures towards revitalizing the industrial
growth in the country. In addition, RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and
location. Banks are important players in financial markets and offer services such as
investment funds and loans. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the keiretsu. In France, bank
assurance is prevalent, as most banks offer insurance services (and now real estate services)
to their clients.
Introduction
India’s banking sector is constantly growing. Since the turn of the century, there has
been a noticeable upsurge in transactions through ATMs, and also internet and mobile
banking.
Following the passing of the Banking Laws (Amendment) Bill by the Indian
Parliament in 2012, the landscape of the banking industry began to change. The bill allows
the Reserve Bank of India (RBI) to make final guidelines on issuing new licenses, which
could lead to a bigger number of banks in the country. Some banks have already received
licenses from the government, and the RBI's new norms will provide incentives to banks to
spot bad loans and take requisite action to keep rogue borrowers in check.
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Over the next decade, the banking sector is projected to create up to two million new
jobs, driven by the efforts of the RBI and the Government of India to integrate financial
services into rural areas. Also, the traditional way of operations will slowly give way to
modern technology.
History
Origin of the word
The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a desk
covered by a green tablecloth. However, there are traces of banking activity even in ancient
times, which indicates that the word 'bank' might not necessarily come from the word 'banco'.
In fact, the word traces its origins back to the Ancient Roman Empire, where
moneylenders would set up their stalls in the middle of enclosed courtyards called macella on
a long bench called a bancu, from which the words banco and bank are derived. As a
moneychanger, the merchant at the bancu did not so much invest money as merely convert
the foreign currency into the only legal tender in Rome—that of the Imperial Mint.
The earliest evidence of money-changing activity is depicted on a silver drachm coin

from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC,
presented in the British Museum in London. The coin shows a banker's table (trapeza) laden
with coins, a pun on the name of the city.
In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table
and a bank.
Market Size
The Indian banking system consists of 26 public sector banks, 25 private sector banks,
43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural
cooperative banks, in addition to cooperative credit institutions. Public-sector banks control
nearly 80 percent of the market, thereby leaving comparatively much smaller shares for its
private peers.
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As of November 11, 2015, 192.1 million accounts had been opened under Pradhan
Mantri Jan Dhan Yojna (PMJDY) and 165.1 million RuPay debit cards were issued. These
new accounts have mustered deposits worth Rs 26,819 crore (US$ 4 billion).
Standard & Poor’s estimates that credit growth in India’s banking sector would
improve to 12-13 per cent in FY16 from less than 10 per cent in the second half of CY15.
Investments/developments
In the past few months, there have been many investments and developments in the Indian
banking sector
• Global rating agency Moody's has upgraded its outlook for the Indian banking system
to stable from negative based on its assessment of five drivers including improvement
in operating environment and stable asset risk and capital scenario.
• Lok Capital, a private equity investor backed by US-based non-profit organisation

Rockefeller Foundation, plans to invest up to US$ 15 million in two proposed small
finance banks in India over the next one year.
• The Reserve Bank of India (RBI) has granted in-principle licences to 10 applicants to
open small finance banks, which will help expanding access to financial services in
rural and semi-urban areas.
• IDFC Bank has become the latest new bank to start operations with 23 branches,
including 15 branches in rural areas of Madhya Pradesh.
• The RBI has given in-principle approval to 11 applicants to establish payment banks.
These banks can accept deposits and remittances, but are not allowed to extend any
loans.
• The Bank of Tokyo-Mitsubishi (BTMU), a Japanese financial services group, aims to

double its branch count in India to 10 over the next three years and also target a 10 per
cent credit growth during FY16.
• State Bank of India has tied up with e-commerce portal Snapdeal and payment
gateway Payroll to finance MSME businesses.
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• The United Economic Forum (UEF), an organization that works to improve socio-
economic status of the minority community in India, has signed a memorandum of
understanding (MoU) with Indian Overseas Bank (IOB) for financing entrepreneurs
from backward communities to set up businesses in Tamil Nadu
• The RBI has allowed third-party white label automated teller machines (ATM) to
accept international cards, including international prepaid cards, and said white label
ATMs can now tie up with any commercial bank for cash supply.
• The RBI has allowed Indian alternative investment funds (AIFs), to invest abroad, in
order to increase the investment opportunities for these funds.
• In order to boost the infrastructure sector and the banks financing long gestation
projects, the RBI has extended its flexible refinancing and repayment option for long-
term infrastructure projects to existing ones where the total exposure of lenders is
more than Rs 500 crore (US$ 75.1 million).
• RBI governor Mr Raghuram Rajan and European Central Bank President Mr Mario
Draghi have signed an MoU on cooperation in central banking. “The memorandum of
understanding provides a framework for regular exchange of information, policy
dialogue and technical cooperation between the two institutions. Technical
cooperation may take the form of joint seminars and workshops in areas of mutual
interest in the field of central banking,” RBI said on its website.
• RBL Bank informed that it would be the anchor investor in Trifecta Capital’s Venture
Debt Fund, the first alternative investment fund (AIF) in India with a commitment of
Rs 50 crore (US$ 7.51 million). This move provides RBL Bank the opportunity to
support the emerging venture debt market in India.
• Bandhan Financial Services raised Rs 1,600 crore (US$ 240.2 million) from two
international institutional investors to help convert its microfinance business into a
full service bank. Bandhan, one of the two entities to get a banking licence along with
IDFC, launched its banking operations in August 2015.
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Government Initiatives
The government and the regulator have undertaken several measures to strengthen the Indian
banking sector.
• The Government of India is looking to set up a special fund, as a part of National

Investment and Infrastructure Fund (NIIF), to deal with stressed assets of banks. The
special fund will potentially take over assets which are viable but don’t have
additional fresh equity from promoters coming in to complete the project.
• The Reserve Bank of India (RBI) plans to soon come out with guidelines, such as
common risk-based know-your-customer (KYC) norms, to reinforce protection for
consumers, especially since a large number of Indians have now been financially
included post the government’s massive drive to open a bank account for each
household.
• To provide relief to the state electricity distribution companies, Government of India

has proposed to their lenders that 75 per cent of their loans be converted to state
government bonds in two phases by March 2017. This will help several banks,
especially public sector banks, to offload credit to state electricity distribution
companies from their loan book, thereby improving their asset quality.
• The Reserve Bank of India (RBI), the Department of Industrial Policy & Promotion
(DIPP) and the Finance Ministry are planning to raise the Foreign Direct Investment
(FDI) limit in private banks sector to 100 per cent from 74 per cent.
• Government of India aims to extend insurance, pension and credit facilities to those
excluded from these benefits under the Pradhan Mantri Jan Dhan Yojana (PMJDY).<
• The Government of India announced a capital infusion of Rs 6,990 crore (US$ 1.05
billion) in nine state run banks, including State Bank of India (SBI) and Punjab
National Bank (PNB). However, the new efficiency parameters would include return
on assets and return on equity. According to the finance ministry, “This year, the
Government of India has adopted new criteria in which the banks which are more
efficient would only be rewarded with extra capital for their equity so that they can
further strengthen their position."
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• To facilitate an easy access to finance by Micro and Small Enterprises (MSEs), the
Government/RBI has launched Credit Guarantee Fund Scheme to provide guarantee
cover for collateral free credit facilities extended to MSEs upto Rs 1 Crore (US$ 0.15
million). Moreover, Micro Units Development & Refinance Agency (MUDRA) Ltd.
was also established to refinance all Micro-finance Institutions (MFIs), which are in
the business of lending to micro / small business entities engaged in manufacturing,
trading and services activities upto Rs 10 lakh (US$ 0.015 million).
• The central government has come out with draft proposals to encourage electronic
transactions, including income tax benefits for payments made through debit or credit
cards.
• The Union cabinet has approved the establishment of the US$ 100 billion New
Development Bank (NDB) envisaged by the five-member BRICS group as well as the
BRICS “contingent reserve arrangement” (CRA).
• The government has plans to set up a fund that will provide surety to banks against
loans given to students for higher education.
Road Ahead
The Indian economy is on the brink of a major transformation, with several policy initiatives
set to be implemented shortly. Positive business sentiments, improved consumer confidence
and more controlled inflation are likely to prop-up the country’s the economic growth.
Enhanced spending on infrastructure, speedy implementation of projects and continuation of
reforms are expected to provide further impetus to growth. All these factors suggest that
India’s banking sector is also poised for robust growth as the rapidly growing business would
turn to banks for their credit needs.
Also, the advancements in technology have brought the mobile and internet banking services
to the fore. The banking sector is laying greater emphasis on providing improved services to
their clients and also upgrading their technology infrastructure, in order to enhance the
customer’s overall experience as well as give banks a competitive edge.
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Many banks, including HDFC, ICICI and AXIS are exploring the option to launch contact-
less credit and debit cards in the market shortly. The cards, which use near field
communication (NFC) mechanism, will allow customers to transact without having to insert
or swipe.
Indian banking sector credit growth has grown at a healthy pace

• Credit off-take has been surging ahead over the past decade, aided by strong economic
growth, rising disposable incomes, increasing consumerism and easier access to credit
• Total credit extended went up to US$ 1,089 billion by FY16
• Credit to non-food industries increased 9.75 per cent to US$ 1,073.4 billion in FY16, from
the previous financial year
• Demand has grown for both corporate and retail loans
Reserve Bank of India (RBI) in its fifth bi-monthly monetary policy review has maintained
status status quo in key policy interest rate. The key policy interest rates were kept unchanged
on the basis of an assessment of the current and evolving macroeconomic situation in the
country. The Key policy interest rates are Repo rate under the liquidity adjustment facility
(LAF): unchanged at 6.75 per cent. Reverse repo rate under the LAF: unchanged at 5.75 per
cent Marginal standing facility (MSF) rate and the Bank Rate has unchanged at 7.75 per cent.
Cash Reserve Ratio (CRR) of scheduled banks: Unchanged at 4.0 per cent of net demand and
time liability (NDTL). Continuation of liquidity under overnight repos at 0.25 per cent of
bank-wise NDTL at the LAF repo rate. Continuation of liquidity under 14-day term repos as
well as longer term repos of up to 0.75 per cent of NDTL of the banking system through
auctions.
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COMPANY PROFILE
Kotak Mahindra Bank is the fourth largest Indian private sector bank by market
capitalization, headquartered in Mumbai, Maharashtra.
Since the inception of the erstwhile Kotak Mahindra Finance Limited in 1985, it has been a
steady and confident journey leading to growth and success. The milestones of the group
growth story are listed below year wise.
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.
The Kotak Mahindra Group
Kotak Mahindra is one of India's leading financial conglomerates, offering complete

financial solutions 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
financial needs of individuals and corporate.
The group has a net worth of over Rs. 6,799 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 6.4 million customer accounts.
2016
Ahmadabad Derivatives and Commodities Exchange, a Kotak anchored enterprise, became
operational as a national commodity exchange.
2015
Reserve Bank of India (RBI) approves merger of ING Vysya Bank with Kotak Mahindra
Bank effective April 1, 2015.
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2014
Thrust on digital and social with the launch of innovative solutions - first-of-its-kind fully
integrated social bank account - 'Jifi', and world's first bank agnostic instant funds transfer
platform using Facebook - 'KayPay'. Subsequently in Jan 2015, 'Jifi Saver' - a savings bank
account with secure and seamless transactions on popular social networks was launched.
Kotak Mahindra Bank acquires 15% equity stake in Multi Commodity Exchange of India
Limited (MCX)
Kotak Mahindra Asset Management Company Ltd. acquires schemes of Pinebridge Mutual
Fund
Kotak Mahindra Group announces its foray into General Insurance business
2011-2015 Ahmedabad Derivatives and Commodities Exchange, a Kotak anchored

enterprise, became operational as a national commodity exchange.
2010 Kotak Mahindra Bank Ltd. opened a representative office in Dubai Entered
Ahmedabad Commodity Exchange as anchor investor.
2009 Launched a Pension Fund under the New Pension System.
2006 Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company
and Kotak Securities.
2005 Kotak Group realigned joint venture in Ford Credit; their stake in Kotak Mahindra
Prime was bought out (formerly known as Kotak Mahindra Primus Ltd) and Kotak
group’s stake in Ford credit Kotak Mahindra was sold. Launched a real estate fund.
2004 Launched India Growth Fund, a private equity fund.
2003 Kotak Mahindra Finance Ltd. converted into a commercial bank - the first Indian
company to do so.
2001 Matrix sold to Friday Corporation. Launched Insurance Services. Kotak Securities
Ltd. was incorporated
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2000 Kotak Mahindra tied up with Old Mutual plc. for the Life Insurance business.
• Kotak Securities launched its on-line broking site.
• Commencement of private equity activity through setting up of Kotak Mahindra

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

Securities. Investment banking division incorporated into a separate company - Kotak
Mahindra Capital Company
1992 Entered the Funds Syndication sector
1991 The Investment Banking Division was started. Took over FICOM, one of India's
largest financial retail marketing network
1990 The Auto Finance division was started
1987 Kotak Mahindra Finance Ltd entered the Lease and Hire Purchase market
1986 Kotak Mahindra Finance Ltd started the activity of Bill Discounting
Our Value Proposition
1. KOTAK Group Strategic Partnership with the client would help the client leverage
our Technology and Development facilities, quickly build resource pools consisting
of focused R & D teams for new initiatives in specific technologies
2. Our dedicated Technology labs for the client's R&D division acts as Virtual Extension
in terms of Vision, People, and Infrastructure
17
3. Protect client's Intellectual Property Rights (IPR) by following established processes
for secure communication and protection
4. Our strong focus is towards the quality of solution we deliver and support we offer to
our client
5. Our extensive skills in developing re-usable components, frameworks and expertise in
executing complex solutions gives advantage of high-quality, cost-effective
development to our customers
6. We make sure that our work is towards minimizing the business risks and speeding up
the entry of new products in the market.
Our Businesses
Multiple businesses. One brand. Kotak Mahindra is one of India's leading banking and
financial services groups, offering a wide range of financial services that encompass every
sphere of life.
Vision
To be the most trusted Global Indian Financial Services brand and the most preferred
financial services employer with focus on creating value.
• The Global Indian Financial Services Brand
Our customers will enjoy the benefits of dealing with a global Indian brand that best
understands their needs and delivers customized pragmatic solutions across multiple
platforms. We will be a world class Indian financial services group. Our technology
and best practices will be bench-marked along international lines while our
understanding of customers will be uniquely Indian. We will be more than a
repository of our customers' savings. We, the group, will be single window to every
financial service in a customer's universe.
Mission
The global Indian financial services brand
Our customers will enjoy the benefits of dealing with a global Indian brand that best
understands their needs and delivers customized pragmatic solutions across multiple
platforms. We will be a world-class Indian financial services group. Our technology and best
practices will be benchmarked along international lines while our understanding of customers
will be uniquely Indian. We will be more than a repository of our customers' savings. We, the
group, will be a single window to every financial service in a customer's universe.
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The most preferred employer in financial services
A culture of empowerment coupled with a spirit of enterprise, attracts bright minds with an
entrepreneurial streak to join us and stay with us. Working with a home-grown,
professionally-managed company, which has partnerships with international leaders, gives
our people a perspective that is universal as well as unique.
The most trusted financial services company
We will create an ethos of trust across all our constituents. Adhering to high standards of
compliance and corporate governance will be an integral part of building trust.
Value creation
Value creation rather than size alone will be our business driver.
Kotak Mahindra Bank Ltd
Kotak Mahindra Bank Ltd is a one stop shop for all banking needs.
The bank offers personal finance solutions of every kind from savings accounts to
credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra
Bank offers transaction banking, operates lending verticals, manages IPOs and
provides working capital loans. Kotak has one of the largest and most respected
Wealth Management teams in India, providing the widest range of solutions to high
net worth individuals, entrepreneurs, business families and employed professionals.
Kotak Mahindra Old Mutual Life Insurance Ltd
Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint

venture between Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A
Company that combines its international strengths and local advantages to offer its
customers a wide range of innovative life insurance products, helping them take
important financial decisions at every stage in life and stay financially independent.
The company covers over 3 million lives and is one of the fastest growing insurance
companies in India. www.kotaklifeinsurance.com
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Kotak Securities Ltd
Kotak Securities is one of the largest broking houses in India with a

wide geographical reach. Kotak Securities operations include stock broking and
distribution of various financial products including private and secondary placement
of debt, equity and mutual funds.
Kotak Securities operate in five main areas of business:
o Stock Broking (retail and institutional)

o Depository Services
o Portfolio Management Services
o Distribution of Mutual Funds
o Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd products
Kotak Mahindra Capital Company (KMCC)
Kotak Investment Banking (KMCC) is a full-service investment

bank in India offering a wide suite of capital market and advisory solutions to leading
domestic and multinational corporations, banks, financial institutions and government
companies.
Our services encompass Equity & Debt Capital Markets, M&A Advisory, Private
Equity Advisory, Restructuring and Recapitalization services, Structured Finance
services and Infrastructure Advisory & Fund Mobilization.
Kotak Mahindra Prime Ltd (KMPL)
Kotak Mahindra Prime Ltd is among India's largest dedicated

passenger vehicle finance companies. KMPL offers loans for the entire range of
passenger cars, multi-utility vehicles and pre-owned cars. Also on offer are inventory
funding and infrastructure funding to car dealers with strategic arrangements via
various car manufacturers in India as their preferred financier.
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Kotak International Business
Kotak International Business specializes in providing a range of

services to overseas customers seeking to invest in India. For institutions and high net
worth individuals outside India, Kotak International Business offers asset
management through a range of offshore funds with specific advisory and
discretionary investment management services.
Kotak Mahindra Asset Management Company Ltd (KMAMC)
Kotak Mahindra Asset Management Company offers a complete

bouquet of asset management products and services that are designed to suit the
diverse risk return profiles of each and every type of investor. KMAMC and Kotak
Mahindra Bank are the sponsors of Kotak Mahindra Pension Fund Ltd, which has
been appointed as one of six fund managers to manage pension funds under the New
Pension Scheme (NPS).
Kotak Private Equity Group (KPEG)
• Kotak Private Equity Group helps nurture emerging businesses and

mid-size enterprises to evolve into tomorrow's industry leaders. With a proven track
record of helping build companies, KPEG also offers expertise with a combination of
equity capital, strategic support and value added services. What differentiates KPEG
is not merely funding companies, but also having a close involvement in their growth
as board members, advisors, strategists and fund-raisers.
Kotak Realty Fund
• Kotak Realty Fund deals with equity investments covering sectors

such as hotels, IT parks, residential townships, shopping centres, industrial real estate,
health care, retail, education and property management. The investment focus here is
on development projects and enterprise level investments, both in real estate intensive
businesses.
21
Senior Management-2015-16
Mr. Uday S. Kotak
Executive Vice Chairman and Managing Director
Mr. Uday Kotak, is the Executive Vice-Chairman and Managing Director of the Bank, and its
principal founder and promoter. Mr. Kotak is an alumnus of Jamnalal Bajaj Institute of
Management Studies.
In 1985, when he was still in his early twenties, Mr Kotak thought of setting up a bank when
private Indian banks were not even seen in the game. First Kotak Capital Management
Finance Ltd (which later became Kotak Mahindra Finance Ltd), and then with Kotak
Mahindra Finance Ltd, Kotak became the first non-banking finance company in India's
corporate history to be converted into a bank. Over the years, Kotak Mahindra Group grew
into several areas like stock broking and investment banking to car finance, life insurance and
mutual funds.
Among the many awards to Mr Kotak's credit are the CNBC TV18 Innovator of the Year
Award in 2006 and the Ernst & Young Entrepreneur of the Year Award in 2003. He was
featured as one of the Global Leaders for Tomorrow at the World Economic Forum's annual
meet at Davos in 1996. He was also featured among the Top Financial Leaders for the 21st
Century by Euromoney magazine. He was named as CNBC TV18 India Business Leader of
the Year 2008 and as the most valued CEO by businessworld in 2010.
Mr. C Jayaram
Joint Managing Director
Mr. C. Jayaram, is a Joint Managing Director of the Bank and is currently in charge of the
Wealth Management Business of the Kotak Group. An alumnus of IIM Kolkata, he has been
with the Kotak Group since 1990 and member of the Kotak board in October 1999. He also
oversees the international subsidiaries and the alternate asset management business of the
group. He is the Director of the Financial Planning Standards Board, India. He has varied
experience of over 25 years in many areas of finance and business, has built numerous
businesses for the Group and was CEO of Kotak Securities Ltd. An avid player and follower
of tennis, he also has a keen interest in psephology.
22
Mr. Dipak Gupta
Joint Managing Director
An electronics engineer and an alumnus of IIM Ahmedabad, Mr. Gupta has been with the
Kotak Group since 1992 and joined the board in October 1999.
He heads commercial banking, retail asset businesses and looks after group HR function.
Early on, he headed the finance function and was instrumental in the joint venture between
Kotak Mahindra and Ford Credit International. He was the first CEO of the resulting entity,
Kotak Mahindra Primus Ltd.
Awards
Recent achievements
At Kotak Mahindra Group we take a client-centric view and constantly innovate to provide
you with the best of services and infrastructure. We have regularly received accolades that
stand testimony to our success in this endeavour. Some of our recent achievements are:
• Won ‘Gold Award for Best Innovation – World’s first socially powered bank account’
and ‘Gold Award for Best App developed – World’s first banking application using
Twitter’ awards at the Indian Digital Media Awards 2016 for Kotak Jifi
• Recognised as Highest Fundraising Company in Corporate Challenge category in

Standard Chartered Mumbai Marathon 2015
• Kotak Mahindra Bank was ranked 292nd among India's most trusted brands according
to the Brand Trust Report 2012, a study conducted by Trust Research Advisory. In the
Brand Trust Report 2013, Kotak Mahindra Bank was ranked 861st among India's
most trusted brands and subsequently, according to the Brand Trust Report 2014,
Kotak Mahindra Bank was ranked 114th among India's most trusted brands.
• Adjudged Best Bank among Emerging Banks at Outlook Money Awards 2013
23
Banking
FY2015-16
Kotak Mahindra Bank Ltd. (KMBL)

Uday Kotak - Ernst & Young World Entrepreneur of The Year Award 2016
Uday Kotak - 'Transformational Business Leader Award' at the AIMA Managing India
Awards 2015
Uday Kotak - 'Entrepreneur of the Decade' by Bombay Management Association (BMA)
Uday Kotak - Banker of the year 2014 by Businessworld magazine
Shanti Ekambaram - Woman of the Year award in the Banking and Financial Services
category for 2013-2014 by IMC Ladies Wing
Shanti Ekambaram - Among Business Today's Most Powerful Women in Indian Business
Best Bank in 2014 by Business India Most Imminent Bank 2014 by Outlook Money
• Euro money
• Best Private Banking Services (India), 2014.
• ICAI Award
• Excellence in Financial Reporting under Category 1 - Banking Sector for the year
ending 31st March, 2012
• Asia money
• Best Local Cash Management Bank 2012
• IDG India
• Kotak won the CIO 100 'The Agile 100' award 2011
• IDRBT
Banking Technology Excellence Awards Best Bank Award in IT Framework and
Governance Among Other Banks' – 2010
• Banking Technology Award for IT Governance and Value Delivery, 2008
24
• IR Global Rankings
• Best Corporate Governance Practices - Ranked among the top 5 companies in Asia
Pacific, 2009
• FinanceAsia
Best Private Bank in India, for Wealth Management business, 2009
• Kotak Royal Signature Credit Card
• Was chosen "Product of the Year" in a survey conducted by Nielsen in 2009
• IBA Banking Technology Awards
• Best Customer Relationship Achievement - Winner 2008 & 2009
• Best overall winner, 2007
• Best IT Team of the Year, 4 years in a row from 2006 to 2009
• Best IT Security Policies & Practices, 2007
• Euromoney
Best Private Banking Services (overall), 2009
• Emerson Uptime Champion Awards
• Technology Senate Emerson Uptime Championship Award in the BFSI category,

2008
Miscellaneous
• Best Local Trade Bank in India
• The UK based Trade & Forfaiting Review awarded Kotak Mahindra Bank Ltd. the
Bronze Award in the category of Best Local Trade Bank in India at the TFR Awards
2011.
• LACP Vision Awards 2011 for Annual Report 2012-13
• Platinum Award - Best among Banking Category, APAC
25
• Gold Award - Most Creative Report, APAC
• Ranked No. 21 among Top 50 Reports, APAC
• Ranked No. 87 among the World's Top 100 Annual Reports
• Businessworld
'Most Valuable CEO' overall, 2010 awarded to Mr. Uday Kotak, Executive Vice
Chairman & Managing Director
• CNBCTV 18
• 'Best Performing CFO in the Banking/Financial Services sector by CNBCTV 18 CFO

Awards 2010 awarded to Mr. Jaimin Bhatt
• GIREM
GIREM awarded Kotak Realty Funds Group, the "Investor of the Year" Award for
2009
• IBA Banking Technology Awards
• Best Use of Business Intelligence - up, 2008
• Best Enterprise Risk Management - Runner up, 2008
• The Great Places to Work Institute, India
• Best Workplaces in India, 2008
• Hewitt
10th Best Employer in India, 2007, 2008 & 2009
• Financial Insights Innovation Award
• Best Innovation in Enterprise Security Management in the Asia Pacific Region, 2009
• Frost & Sullivan

• Best Passenger Vehicle Finance Company in India, 2006
• CNBC TV 18
• Indian Business Leader of the Year, 2008 awarded to Uday Kotak, Executive Vice
Chairman & Managing Director
26
Banking information
The Bank publishes the standalone and consolidated results on a quarterly basis. The
standalone results is subjected to "Limited Review" by the auditors of the Bank. The same are
also reviewed by the Audit Committee before submission to the Board. Along with the
quarterly results, an earnings update is also prepared and posted on the website of the Bank.
Every quarter, the Executive Vice-Chairman and Managing Director and the Executive
Director(s) participate on a call with the analysts / shareholders, the transcripts of which are
posted on the website of the Bank. The Bank also has dedicated personnel to respond to
queries from investors.
Financial Calendar: For each calendar quarter, the financial results are reviewed and taken
on record by the Board during the last week of the month subsequent to the quarter ending.
The audited annual accounts as at 31st March are approved by the Board, after a review
thereof by the Audit Committee. The Annual General Meeting to consider such annual
accounts is held in the second quarter of the financial year.
Stock Exchanges on which listed:
Sr.No Name & Address of Stock Exchange Market Scrip Code
The Bombay Stock Exchange Limited

Phiroze Jeejeebhoy Towers
1 500247
Dalal Street, Fort,
Mumbai 400 023
National Stock Exchange of India Limited

Exchange Plaza, 5th Floor,
2 KOTAKBANK
Bandra-Kurla Complex,
Bandra, Mumbai 400 051
Luxembourg Stock Exchange BP 165, L-2011

3
Luxembourg
Trading of shares to be in compulsorily dematerialized form: The equity shares of the

Bank have been activated for dematerialization with the National Securities Depository
Limited and with the Central Depository Services (India) Limited vide ISIN INE237A01028.
27
Share Transfer System: Applications for transfers, transmission and transposition are
received by the Bank at its Registered Office or at the office(s) of its Registrars & Share
Transfer Agents. As the shares of the Bank are in dematerialized form, the transfers are duly
processed by NSDL/CDSL in electronic form through the respective depository participants.
Shares which are in physical form are processed by the Registrars & Share Transfer Agents,
Karvy Computershare Private Limited, on a regular basis and the certificates dispatched
directly to the investors.
Investor Helpdesk: Share transfers, dividend payments and all other investor related
activities are attended to and processed at the office of our Registrars & Share Transfer
Agents. For lodgment of Transfer Deeds and any other documents or for any
grievances/complaints, kindly contact Karvy Computershare Private Limited, contact details
of which are provided elsewhere in the Report.
For the convenience of the investors, transfers and complaints from the investors are accepted
at the Registered Office between 9:30 a.m. to 5:30 p.m. from Monday to Friday except on
bank holidays:
Corporate Responsibility
Community investment and development
Kotak Mahindra views Corporate Social Responsibility as an investment in society and in its
own future. Kotak uses the power of its human and financial capital to help in transforming
communities into vibrant, desirable places for people to live. The group leverages its core
competencies in three areas:
For any CSR related queries, please contact:

Group CSR
Kotak Mahindra Bank Ltd
Tel. Board +91 22 6720 6720
Email: cr@kotak.com
28
THEORETICAL FRAME WORK
Cash flow is calculated by making certain adjustments to net income by adding or
subtracting differences in revenue, expenses and credit transactions (appearing on the balance
sheet and income statement) resulting from transactions that occur from one period to the
next. These adjustments are made because non-cash items are calculated into net income
(income statement) and total assets and liabilities (balance sheet). So, because not all
transactions involve actual cash items, many items have to be re-evaluated when calculating
cash flow from operations.
For example, depreciation is not really a cash expense; it is an amount that is deducted
from the total value of an asset that has previously been accounted for. That is why it is added
back into net sales for calculating cash flow. The only time income from an asset is
accounted for in CFS calculations is when the asset is sold.
Changes in accounts receivable on the balance sheet from one accounting period to
the next must also be reflected in cash flow. If accounts receivable decreases, this implies that
more cash has entered the company from customers paying off their credit accounts - the
amount by which AR has decreased is then added to net sales. If accounts receivable increase
from one accounting period to the next, the amount of the increase must be deducted from net
sales because, although the amounts represented in AR are revenue, they are not cash.
An increase in inventory, on the other hand, signals that a company has spent more
money to purchase more raw materials. If the inventory was paid with cash, the increase in
the value of inventory is deducted from net sales. A decrease in inventory would be added to
net sales. If inventory was purchased on credit, an increase in accounts payable would occur
on the balance sheet, and the amount of the increase from one year to the other would
be added to net sales.
The same logic holds true for taxes payable, salaries payable and prepaid insurance. If
something has been paid off, then the difference in the value owed from one year to the next
has to be subtracted from net income. If there is an amount that is still owed, then any
differences will have to be added to net earnings. (For mroe insight, see Operating Cash
Flow: Better than Net Income?)
29
Investing
Changes in equipment, assets or investments relate to cash from investing. Usually cash
changes from investing are a "cash out" item, because cash is used to buy new equipment,
buildings or short-term assets such as marketable securities. However, when a company
divests of an asset, the transaction is considered "cash in" for calculating cash from investing.
Financing
Changes in debt, loans or dividends are accounted for in cash from financing. Changes in
cash from financing are "cash in" when capital is raised, and they're "cash out" when
dividends are paid. Thus, if a company issues a bond to the public, the company receives cash
financing; however, when interest is paid to bondholders, the company is reducing its cash.
Difference between Cash flow analysis and
Income Statement
Cash flow analysis Income Statement
1. The Statements narrates the item of cost

1. It is disclosing the reasons for change in
and revenue to arrive at the figures of profit
working capital i.e., where from the
and loss earned / incurred during a
working capital cash has been applied.
particular period of time.
2. Income Statement helps the preparation

of Cash flow analysis in as much as one 2. Cash flow analysis doesn’t help
source of cash i.e., cash from operation is preparation of income statement
found out from the income statement
3. Cash raised are matched with cash used. 3. Expenses are matched with income in
No distinction is made between capital and order to find out the result of operation.
revenue items Only revenue items are considered
30
Difference between Cash flow analysis and
Position Statement
Cash flow analysis Position Statement

1. It is a Statement changes in financial 1. It is statement of financial position
position.
2. It shows the amount of changes during the 2. It present the amount of assets and
particular period of time. liabilities at a particular point of time
3. It doesn’t analyze the change in current 3. It shows all the accounting liabilities
asset and current liability. whether current or non-current
4. It is a analytical statement analyzing form 4. It is not a analytical statement hence not

where they have been used, hence more that much useful for decision making as the
useful. cash flow analysis
Importance of cash flow analysis:
The information which is provided by cash flow analysis is neither available in the
balance sheet nor in the income statement and hence its important. The changes which have
taken place in between two accounting dates are highlighted by cash flow analysis. A lay
man cannot grasp the underlying significance of achievements and progress of the company
simply by a personal of the balance sheet and income statement of different years.
The comparative and analytical study presented by the statement giving the details of
sources and uses of cash during a given period of immense help to the users of information.
It is very useful tool in analytical kit of the management also, besides the outsiders, in order
to have ‘at a glance’ appraisal of the financial and operating performance of a company.
Since the statement shows the extent to which the working capital has been effectively put to
use, the management’s task of taking policy decision regarding investment, dividends etc, is
great facilitated. The projected cash flow analysis can also be prepared and then budgetary
control and capital expenditure control can be exercised to the benefit of the entire
organization.
31
Uses of cash flow analysis:
Cash flow analysis of a company is of great value to management share holders,

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

explained in details by a cash flow analysis some of the problems which crop up in
the minds of investors are well solved by a simple perusal of this statement for e.g.,
1. Where have the profit gone.
2. Why does an imbalance exist between liquidity position and profitability position of
enterprise?
➢ Forecasting value:- A projected cash flow analysis can be prepared and resources
can be properly allocated after an analysis of the present state of affairs. The optimal
utilization of available cash in necessary for the overall growth of the enterprise. The
cash flow analysis prepared in advance given a clear direction to the management in
this raged.
➢ Testing value:- Whether the working capital has been effectively is used or not by
the management can well be tested by cash flow analysis. Whether working capital
has been maintained at proper level, and whether it is adequate or inadequate can be
known by a study of the statement. The management is warned against the
injudicious uses of cash.
Decision-making value:- Since over all credit worthiness of the enterprise is known, creditors
and money lenders can decide as to whether they have to provide loans to company or not. The
sources of raising cash and their application help the shareholders to decide whether the
management of the business is an enlightened or not regarding managing cash.
Mismanagement of cash may be prevented. The management can be decide about the future
financing policies and capital expenditure programmers.
32
The balance sheet, income statement, and cash flow analysis are the three generally
accepted financial statements used by most businesses for financial reporting. All three
statements are prepared from the same accounting data, but each statement serves its own
purpose. The purpose of the cash flow analysis is to report the sources and uses of cash during
the reporting period.
Structure of the Cash flow analysis
The most commonly used format for the cash flow analysis is broken down into three
sections: cash flows from operating activities, cash flows from investing activities, and cash
flows from financing activities.
Cash flows from operating activities are related to your principal line of business and include
the following:
• Cash receipts from sales or for the performance of services
• Payroll and other payments to employees
• Payments to suppliers and contractors
• Rent payments
• Payments for utilities
• Tax payments
Investing activities include capital expenditures – disbursements that are not charged to
expense but rather are capitalized as assets on the balance sheet. Investing activities also
include investments (other than cash equivalents as indicated below) that are not part of your
normal line of business. These cash flows could include:
• Purchases of property, plant and equipment
• Proceeds from the sale of property, plant and equipment
• Purchases of stock or other securities (other than cash equivalents)
• Proceeds from the sale or redemption of investments
33
Financing activities include cash flows relating to the business’s debt or equity financing:
• Proceeds from loans, notes, and other debt instruments
• Installment payments on loans or other repayment of debts
• Cash received from the issuance of stock or equity in the business
• Dividend payments, purchases of treasury stock, or returns of capital
Cash for purposes of the cash flow analysis normally includes cash and cash
equivalents. Cash equivalents are short-term, temporary investments that can be readily
converted into cash, such as marketable securities, short-term certificates of deposit, treasury
bills, and commercial paper. The cash flow analysis shows the opening balance in cash and
cash equivalents for the reporting period, the net cash provided by or used in each one of the
categories (operating, investing, and financing activities), the net increase or decrease in cash
and cash equivalents for the period, and the ending balance.
There are two methods for preparing the cash flow analysis – the direct method and
the indirect method. Both methods yield the same result, but different procedures are used to
arrive at the cash flows.
Direct Method
Under the direct method, you are basically analyzing your cash and bank accounts to
identify cash flows during the period. You could use a detailed general ledger report showing
all the entries to the cash and bank accounts, or you could use the cash receipts and
disbursements journals. You would then determine the offsetting entry for each cash entry in
order to determine where each cash movement should be reported on the cash flow analysis.
Another way to determine cash flows under the direct method is to prepare a
worksheet for each major line item, and eliminate the effects of accrual basis accounting in
order to arrive at the net cash effect for that particular line item for the period. Some
examples for the operating activities section include:
34
Cash receipts from customers:
• Net sales per the income statement
• Plus beginning balance in accounts receivable
• Minus ending balance in accounts receivable
• Equals cash receipts from customers
Cash payments for inventory:
• Ending inventory
• Minus beginning inventory
• Plus beginning balance in accounts payable to vendors
• Minus ending balance in accounts payable to vendors
• Equals cash payments for inventory
Cash paid to employees:
• Salaries and wages per the income statement
• Plus beginning balance in salaries and wages payable
• Minus ending balance in salaries and wages payable
• Equals cash paid to employees
Cash paid for operating expenses:

• Operating expenses per the income statement
• Minus depreciation expenses
• Plus increase or minus decrease in prepaid expenses
• Plus decrease or minus increase in accrued expenses
• Equals cash paid for operating expenses
35
Taxes paid:
• Tax expense per the income statement
• Plus beginning balance in taxes payable
• Minus ending balance in taxes payable
• Equals taxes paid
Interest paid:
• Interest expense per the income statement
• Plus beginning balance in interest payable
• Minus ending balance in interest payable
• Equals interest paid
Under the direct method, for this example, you would then report the following in the cash
flows from operating activities section of the cash flow analysis:
• Cash receipts from customers
• Cash payments for inventory
• Cash paid to employees
• Cash paid for operating expenses
• Taxes paid
• Interest paid
• Equals net cash provided by (used in) operating activities
Similar types of calculations can be made of the balance sheet accounts to eliminate the
effects of accrual accounting and determine the cash flows to be reported in the investing
activities and financing activities sections of the cash flow analysis.
36
Indirect Method
In preparing the cash flows from operating activities section under the indirect method,
you start with net income per the income statement, reverse out entries to income and
expense accounts that do not involve a cash movement, and show the change in net working
capital. Entries that affect net income but do not represent cash flows could include income
you have earned but not yet received, amortization of prepaid expenses, accrued expenses,
and depreciation or amortization. Under this method you are basically analyzing your
income and expense accounts, and working capital. The following is an example of how the
indirect method would be presented on the cash flow analysis:
• Net income per the income statement
• Minus entries to income accounts that do not represent cash flows
• Plus entries to expense accounts that do not represent cash flows
• Equals cash flows before movements in working capital
• Plus or minus the change in working capital, as follows:
o An increase in current assets (excluding cash and cash equivalents) would be

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

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

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

cash was spent in order to reduce liabilities.
The net effect of the above would then be reported as cash provided by (used in)
operating activities. The cash flows from investing activities and financing activities would
be presented the same way as under the direct method.
37
Cash flow is the movement of money into or out of a business, project, or financial product.
It is usually measured during a specified, finite period of time. Measurement of cash flow can
be used for calculating other parameters that give information on a Company's value and
situation. Cash flow can e.g. be used for calculating parameters:
• To determine a project's rate of return or value. The time of cash flows into and out of
projects are used as inputs in financial models such as internal rate of return and net
present value.
• To determine problems with a business's liquidity. Being profitable does not

necessarily mean being liquid. A Company can fail because of a shortage of cash even
while profitable.
• As an alternative measure of a business profits when it is believed that accrual

accounting concepts do not represent economic realities. For example, a Company
may be notionally profitable but generating little operational cash (as may be the case
for a Company that barters its products rather than selling for cash). In such a case,
the Company may be deriving additional operating cash by issuing shares or raising
additional debt finance.
• Cash flow can be used to evaluate the 'quality' of income generated by accrual
accounting. When net income is composed of large non-cash items it is considered
low quality.
• To evaluate the risks within a financial product, e.g. matching cash requirements,
evaluating default risk, re-investment requirements, etc.
Cash flow is a generic term used differently depending on the context. It may be defined by
users for their own purposes. It can refer to actual past flows or projected future flows. It can
refer to the total of all flows involved or a subset of those flows. Subset terms include net
cash flow, operating cash flow and free cash flow.
38
How to Analyze a Company's Cash Flow Statement
Although reported earnings (or losses) per share most often take the spotlight in the
financial headlines, cash flow can be an even more valuable measure of a Company's long-
term financial health.
Cash flow is exactly what it sounds like. It is cash generated and used by a Company's
business. It is reported in a financial statement showing three years of data in the Company's
annual 10-K filing with the Securities and Exchange Commission (SEC). It is also reported
quarterly in a Company's 10-Q filings with the SEC.
Here is one method to quickly evaluate a Company's cash flow statement.
The cash flow statement has three sections, cash flow generated by or used by
operations, cash flow generated by or used by investing activities, and cash flow generated by
or used by financing activities.
Cash flow generated by or used by operations reflects the cash produced by (or used
by) the Company's ongoing operations. It excludes noncash items such as depreciation,
amortization and stock-based compensation that are expensed on the profit and loss
statement. In addition, it takes into account cash generated by or used by working capital.
Cash flow generated by (or used by) operations is one of the most important numbers on the
cash flow statement, because it is the cash available from ongoing operations to reinvest in
the business, repay debt, pay dividends, etc.
Now look at cash generated by or used by investing activities. This category includes
capital expenditures (often called additions to property and equipment), acquisitions or sales
of businesses or property for cash, and other investing activities. Most often it will be a
negative number dominated by spending on capital projects but, depending on the nature of
the business, that is not always the case.
Finally, take a look at the impact of financing activities on cash. Cash inflows in this
category could come from, among other things, bank borrowings, debt issuance, and the sale
of equity. Uses of cash for financial purposes include principal payments on debt, share
repurchases and cash dividend payments.
39
The total of the cash generated by or used by these three categories is shown on the
cash flow statement (after the effect of exchanges rates, if any, on cash) as the year's net
change in cash and cash equivalents. This figure, when added to cash at the beginning of the
reporting period, will result in the cash and cash equivalents held by the Company at the end
of the reporting period. In evaluating a Company's three year cash-flow performance consider
the following.
First, do its operations consistently generate cash and what is the trend of this figure?
Ideally, you would like to see solidly positive cash flow generated by operations. If this
number is growing each year, that's even better.
Second, to what extent is cash generated by operations sufficient to pay annual capital
expenditures and cash dividends? This figure (cash flow from operations net of capital
expenditures and dividends) is sometimes called free cash flow. This is a very useful measure
because it tells you how much cash a Company has left over each year, after reinvesting in its
business and paying its shareholders, to take advantage of additional growth opportunities,
increase the dividend, repurchase stock, or just put away for a rainy day. As a result, this
figure can give you an idea of a Company's ability to weather a slowdown or a downturn, to
grow its business long term, and to maintain and grow its dividend.
The free cash flow number discussed above excludes cash used to make acquisitions
or from the sale of businesses. However, if acquisitions are a key part of a Company's long-
term growth strategy and, therefore, it regularly purchases other businesses, you may want to
factor this into your cash flow analysis.
This article only summarizes how to evaluate the cash flow statement in a
rudimentary way based on historical numbers. A more sophisticated dissection of a
Company's cash flow statement, taking into account the specific characteristics of its business
and its industry, would often be more revealing. In addition, the cash flow statement does not
tell you what cash requirements a Company faces, such as a large principal payment on debt
coming due or the need to build a new plant. Nevertheless, analyzing free cash flow, even in
a basic way, can help you identify public companies worthy of further analysis and provide
valuable insights into the financial health of companies in which you already own shares.
40
Advantages of Cash Flow Statement:
1. It helps the newly formed companies to know their inflow and outflow of cash.
2. It helps the investors to judge whether the Company is financially sound or not.
3. It helps the Company to know whether it will be able to cover the payroll and other
expenses.
4. It helps the lenders to know the Company’s ability to repay.
5. A cash flow statement is provided on monthly basis or quarterly basis or six monthly
basis or yearly basis.
6. These statements help to have an accurate analysis of the firm’s ability to meet its
current liabilities.
7. A cash flow statement is helpful for planning and managing future financial
commitments.
8. A cash flow statement summarizes the Company’s cash receipts and cash payments
over a period of time.
9. It is useful for determining the short term ability of the concern to meet its liabilities
as it does not include non cash items.
10. A cash flow statement gives vital information not only about the Company’s
performance but also about its major activities during the year.
Disadvantages of Cash Flow Statement:
1. By itself, it cannot provide a complete analysis of the financial position of the firm.
2. It can be interpreted only when it is in confirmation with other financial statements
and other analytical tools like ratio analysis.
Summary
Cash flow analysis is another important technique of financial analysis. It involves

preparation of cash flow statement for identifying sources and applications of cash. It is
termed as ‘projected cash flow statement’, which is synonymous with the term ‘cash budget.
41
DATA ANALYSIS & INTERPRETATION
CASH FLOW STATEMENT FOR THE YEAR ENDED APRIL 2011 MARCH 2012.
(Rs in lakhs)
PARTICULARS Amount (in Rs)
A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit (Loss)before tax and 3,213,455
Extra extraordinary items
Adjustments for:
Depreciation 23,518,270
Misc. Expenditure Written off 1,450
Profit on Sale of Fixed Assets (156,195)
Other Income (138,959)
Interest Received on FD (417,537)
Operating Profit (Loss) before working capital changes 26,020,484
Adjustments for:
Trade and other receivables 5,368,905
Inventories (598,394)
Trade Payables 35,504,470
Cash generated from operations 66,295,465
Taxes Paid
CASH FLOW BEFORE EXTRAORDINARY ITEMS 66,295,465
Extraordinary items (Pro. Written back)
Net Cash From Operating Activities 66,295,465
B CASH FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (23,335,949)
Sale of Fixed Assets
Purchase Investment
Other Income 1,101,770
Net cash used in investing activities
(22,234,179)
42
Increase in Share Capital -

Proceeds from Long term barrowings
Repayment of finance/lease liabilities (5,112,701)
Repayment of Unsecured Loans -
NET CASH USED IN FINANCING ACTIVITIES (5,112,701)
Net increase in cash and cash equivalents 38,948,585
Cash and Cash equivalents as at 01-04-2011 31,899,521
(Closing balance)
Table IV.1.:-Cash Inflow For the Year 2011-12 (Rs in lakhs)

Particulars Amount (in Rs)
Operating profit 26,020,484
Trade & Other receivables 5,368,905
Other Income 1,101,770
Illustration IV.1:- Cash Inflow for the Year 2011-12
Interpretation:
During the year 2011-12 operating profit increased by Rs.26, 020,484/-, trade & other
receivables have decreased to Rs.5,368,905/-, and other income increased by Rs.1,101,770/-.
43
Table IV.2.Cash Outflow For the Year 2011-12 (Rs in lakhs)
Inventories 598,394
Purchase of Fixed Assets 23,335,949
Long term borrowings 5,112,701
Illustration IV.2: Cash Outflow for the Year 2011-12
Interpretation:
During the year 2011-12 Purchase of fixed assets increased by Rs.23, 335,949/-, Inventories
have decreased to Rs.598, 394, trade payables increased by Rs.33, 127,250/-and long term
borrowings have decreased to Rs.5, 112,701/-.
44
(Rs in lakhs)

Adjustments for:
Other Income (96,497)
Interest Received on FD (452,915)
Operating Profit (Loss) before working capital
changes 24,288,581
Adjustments for:

Inventories (2,529,376)
Trade Payables (54,287,819)
Cash generated from operations (31,283,105)
Taxes Paid (153,173)
CASH FLOW BEFORE EXTRAORDINARY ITEMS (31,436,278)
Net Cash From Operating Activities (31,436,278)
Sale of Fixed Assets
Purchase Investment (58,580)
Other Income 630,412
Net cash used in investing activities (7,012,716)
45
Amount (in Rs)
PARTICULARS
Increase in Share Capital 25,000,000
Proceeds from Long term barrowings
Repayment of Unsecured Loans (7,000,000)
NET CASH USED IN FINANCING ACTIVITIES 478,245
Net increase in cash and cash equivalents (37,970,749)
(Closing balance)
Table IV.3:Cash Inflow For the Year 2012-13 (Rs in lakhs)

Operating Profit 24,288,581
Other Income 630,412
share capital 25,000,000
Illustration IV.3: Cash Inflow for the Year 2012-13
Interpretation:
During the year 2012-13 operating profit have decreased to Rs.24, 288,581, Trade & Other
receivables have decreased to Rs.1,245,509/- and Other Income have decreased to
Rs.630,412/- Share capital increased by Rs.25, 000,000/-.
46
Table IV.4:Cash Outflow For the Year 2012-13 (Rs inlakhs)
Inventories 2,529,376
purchase of fixed assets 7,584,548
purchase of investments 58,580
Repayment of Finance 17,521,755
Repayment of Unsecured loans 7,000,000
Interpretation:
During the year 2012-13cash outflows of Inventories increased by Rs.2,529,376/-, and Trade
Payables have decrease to Rs.50,678,440/-, purchase of Fixed assets have decrease to
Rs.7,584,548/-, purchase of investments increased by 58,580, repayment of finance increased
by Rs.17,521,755/-, and repayment of Unsecured Loans increased by Rs.7,000,000/-.
47
(Rs in lakhs)

Adjustments for:
Profit on Sale of Fixed Assets 1,798,976
Adjustments for:
Trade and other receivables (39,862,080)
Trade Payables & Provisions (7,093,419)

Sale of Fixed Assets 7,318,835
Investment in Subsidiaries (23,000,000)
Profit on Sale of Investments & Other Income 723,352
48
Amount (in Rs)
PARTICULARS
Proceeds from Long term barrowings 22,048,597
NET CASH USED IN FINANCING ACTIVITIES 61,788,453
(Closing balance)
Table IV.5: Cash Inflow For the Year 2013-14 (Rs in lakhs)
Operating profit 45,329,042
Trade & Other Receivables 39,862,080
Profit on sale of investments & Other Income 723,352
Share Capital 57,300,000
Secured loans 22,048,597
Interpretation:
During the year 2013-14 operating profit increased by Rs.45,329,042/-, Trade & other
receivables Increased by Rs.39,862,080/- and sale of fixed assets increased to Rs.7,318,835/-,
share capital Increase to Rs.5,70,00,000/-, and long term borrowings increase by
Rs.22,048,597/- and profit on sale of investments & Other Income increased by Rs.723,352/-
49
Table IV.6:Cash Outflow For the Year 2013-14 (Rs in lakhs)
Trade Payables & Provisions 7,093,419
Purchase of Fixed assets 31,260,897
Investment on subsidiaries 23,000,000
Repayment of Liabilities 17,560,144
Interpretation:
During the year 2013-14 Inventories Increased by Rs. 6,763,000/-, Trade Payables have
decrease to Rs.7,093,419/-, purchase of fixed assets increased by 31,260,897/-, Investment in
Subsidiaries is Rs.23,000,000 and Repayment of loans increased by 17,560,144 /-.
50
CASH FLOW STATEMENT FOR THE YEAR ENDED APRIL 2014 TO MARCH 2015
(Rs in lakhs)

Adjustments for:
Profit on Sale of Investment (7,625,356)
Interest Received (346,360)
Other income (42,000)
Adjustments for:
Trade and other receivables (60,665,419)
Trade Payables & Provisions (2,125,289)
Investment in Subsidiaries (80,000,000)
Profit on Sale of Investments & Other Income 8,013,716
51
Amount (in Rs)
PARTICULARS
Proceeds from Long term barrowings 71,883,646
Net increase in cash and cash equivalents (27,861,369)
(Closing balance)
Table IV.7: Cash Inflow for the Year 2014-15 (Rs in lakhs)

operating profit 80,755,936
profit on sale of investments& other income 8,013,716
Share Capital 69,293,720
Long term borrowings 71,883,646
Interpretation:
During the year 2014-15 Operating Profit increased by Rs.80,755,936/-, Sale of
Fixed assets increased by Rs.13,029,407/-, Profit on Sale of Investments increased by
Rs.8,013,716/-, Share Capital Increased by Rs.69,293,720/- , working Capital loans increased
by 71,883,646/- and Trade receivables have increased to Rs.60,665,419/-.
52
Table IV.8: Cash Outflow For the year 2014-15 (Rs in lakhs)
Trade payables & provisions 2,125,289
Purchase of fixed assets 79,567,583
Investments in Subsidiaries 80,000,000
Repayment of Finance 1,846,518
Illustration IV.8: Cash Outflow For the year 2014-15
Interpretation:
During the year 2014-15 Inventories increased by Rs.46,632,986/-, Trade payables &
provisions have decreased to Rs.2,125,289/-,Purchase of fixed assets increased by
Rs.79,567,583/,Investments in subsidiaries increased by Rs 80,000,000/-, and Repayment of
Finance have decreased to Rs.1, 846,518/-
53
CASH FLOW STATEMENT FOR THE YEAR ENDED APRIL-2015 TO MARCH 2016
(Rs in lakhs)

Adjustments for:
Profit on Sale of Fixed Assets -
Profit on Sale of Investment -
Interest Received -
Other income (4,632,005)
Adjustments for:
Trade Payables & Provisions 1,511,055
74,458,827
CASH FLOW BEFORE EXTRAORDINARY ITEMS -
Net Cash From Operating Activities 74,458,827
B .CASH FROM INVESTING ACTIVITIES
Investment in Subsidiaries -
Profit on Sale of Investments & Other Income 4,632,005
Net cash used in investing activities 23,157,573
54
Amount (in Rs)
PARTICULARS
Increase in Share Capital -
Increased in Bank barrowings 2,379,276
Loan from Directors (16,800,000)
(Closing balance)
Table IV.9: Cash Inflow for the year 2015-16 (Rs in lakhs)
operating profit 90,338,501
Profit on sale of investments& other income 4,632,005
Bank borrowings 2,379,276
Illustration IV.9: Cash Inflow for the year 2015-16
Interpretation:
During the year 2015-16 Operating Profit increased by Rs. 90,338,501/-, Trade
receivables & other receivables have decreased to Rs.29, 788,823/-, Sale of Fixed assets have
decreased to Rs. 12,119,688/-, Profit on Sale of Investments have decreased to Rs.
4,632,005/-, Bank borrowings have decreased to Rs.2,379,276/-.
55
Table IV.10: Cash Outflow For the year 2015-16 (Rs lakhs)
Trade payables & provisions 1,511,055
Purchase of fixed assets 68,052,947
Illustration IV.10: Cash Outflow For the year 2015-16
Interpretation:
During the year 2015-16 Cash outflows are Inventories Increased by Rs. 47,179,552 /-
, Trade payables & provisions have decreased to Rs.1, 511,055/- and Purchase of fixed assets
have decreased to Rs. 68,052,947 /-
56
FINDINGS
1. Major cash inflows of the company during 2012-16 are operating profit, trade & other
receivables and other income.
2. Major cash outflows of the company during 2012-16 are purchase of fixed assets and
investments in subsidiaries.
3. The company has negative cash flows from investing activities through purchase of
fixed assets, investments from 2012-16
4. Through increase in share capital & working capital loans, the company owns the
results for financial activities.
5. The growth in operating profit from 2012-16 gives positive results for the company
6. The company has increased its share capital from 2012-2014 from 25,000,000-
69,293,720.
7. The operating activities from 2012-16 shows positive cash flows for the organization.
8. The company has increased its sale of fixed assets from 2014-16 from 7,318,835-
12,119,688.
9. The company is having credit limit with Banks.
57
SUGGESTIONS
1. For the improving the financial performance of the company the following
suggestions are made.
2. In order to reduce the outside borrowings in the company has to acquire. The capital
from equity sources. Keeping in view the debt equity the proportion as normal.
3. The liquidity of the company should be improved by maintaining the optimum current
assets and liquid assets according to standard norms.
4. The quantum of the sales generated should be improved impressively in order to
attain higher return on investment. To improve the financial health of the company
and maximizing the time between the source mobilization and utilization the
management must introduce the new cost saving techniques.
5. There are timing differences between the recordation of a transaction and when the
related cash is actually expended or received.
6. Management may be using aggressive revenue recognition to report revenue for
which cash receipts are still some time in the future.
7. The business may be asset intensive, and so requires large capital investments that do
not appear in the income statement, except on a delayed basis as depreciation.
8. For this, the company is decreasing its share for its shareholders
which will indirectly impacts on the revenue of the company. Hence
the company needs to concentrate on its dividends.
9. The company should increase its gross profit ratio which reveals the
efficiency in the production.
10. The company should concentrate on net profit ratio which reveals the
profit margin on each sales dollar.
11. The company should increase the operating cash flow which will
generate more revenue to the company.
58
CONCLUSIONS
1. The Kotak Mahindra Net Profit is showing negative profit in the year 2015-2016. This
event is an expected one because since from the previous two years it is showing the
decline stage in Net Profit.
2. Profit Margin of Kotak Mahindra is decreasing and showing negative profit because
there is increase in the price.
3. The Kotak Mahindra Net Working Capital Ratio is satisfactory.
4. The Kotak Mahindra return on Total Assets shows a negative sign in the year 2012-13
5. The Operating Ratio of Kotak Mahindra increase in the year 2012-13, in the year
2014-15 and reached in the year 2015-16 so the company has to reduce its operating
costs.
6. The Operating cash of Kotak Mahindra satisfactory. Due to increase in cost of
production, this ratio is decreasing. So the has to reduce its office administration
expenses
7. The study is done using the Balance sheet, Profit and Loss account
and other financial information of Reliance communications. The
entire study is based on the secondary data only.
8. The financial information obtained was analyzed using the appropriate

techniques and it was found that the both operating cash flow and
short term debt coverage ratio is in decreasing trend. It is also found
that earnings per share and dividend per share is in increasing trend.
59
BIBLIOGRAPHY
BOOK
❖ Financial Management, Prasanna Chandra, 5/e, Tata McGraw-hill Publication
❖ Financial Management, I.M.Pandey, 8/e, Himalaya Publications.
❖ Financial Management, M.Y.Kahn & P.K.Jain, 3/e, Tata McGraw-hill Publication

Company.
❖ Financial Management, R.K.Sharma Shasi Guptha, 1/e, Kalyani publications.
❖ Financial Management, Dr.S.N.Maheshwari,7/e, Principals and practice Sultan chand

and sons.
❖ Financial Accounting, Horngreen, 8/e, Pearson education.
❖ Financial Accounting Reporting & Analysis, Stice & Stice 1/e, Thomas Publishers.
❖ Financial Accounting Management, Ambrish Guptha, 1/e, Pearson education
Websites
www.googlefinance.com
www.financeindia.com
www.cashflowstatement.com
www.kotak.com
60

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A SYNOPSIS ON

CASH FLOW ANALYSIS

HALL TICKET NO. 160717672029

Project submitted in partial fulfillment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

OSMANIA UNIVERSITY, Hyderabad – 500007

METHODIST COLLEGE OF ENGINEERING &TECHNOLOGY

• Cash collected from customers

People and groups interested in cash flow analysis include:

• Shareholders of the business.

The balance sheet is a snapshot of a firm's financial resources and obligations at a

2. improve the comparability of different firms' operating performance by eliminating

3. indicate the amount, timing and probability of future cash flows

NEED AND IMPORTANCE OF THE STUDY

SCOPE OF THE STUDY:

OBJECTIVES OF THE STUDY:

➢ To know the flow of cash in the organization Kotak Mahindra Group.

➢ To improve the financial performance of the company

1) Management information system published by Kotak Mahindra Group. (Formerly

LIMITATIONS OF THE STUDY:

The limitations of present study are as follows:

Indian banking industry is expected to witness better growth prospects in 2016 as a

Origin of the word

The earliest evidence of money-changing activity is depicted on a silver drachm coin

• Lok Capital, a private equity investor backed by US-based non-profit organisation

• The Bank of Tokyo-Mitsubishi (BTMU), a Japanese financial services group, aims to

• The Government of India is looking to set up a special fund, as a part of National

• To provide relief to the state electricity distribution companies, Government of India

Indian banking sector credit growth has grown at a healthy pace

The Kotak Mahindra Group

Kotak Mahindra is one of India's leading financial conglomerates, offering complete

2011-2015 Ahmedabad Derivatives and Commodities Exchange, a Kotak anchored

2009 Launched a Pension Fund under the New Pension System.

2004 Launched India Growth Fund, a private equity fund.

• Kotak Securities launched its on-line broking site.

• Commencement of private equity activity through setting up of Kotak Mahindra

1995 Brokerage and Distribution businesses incorporated into a separate company -

1992 Entered the Funds Syndication sector

1990 The Auto Finance division was started

Our Value Proposition

Kotak Mahindra Bank Ltd

Kotak Mahindra Old Mutual Life Insurance Ltd

Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint

Kotak Securities is one of the largest broking houses in India with a

Kotak Securities operate in five main areas of business:

o Stock Broking (retail and institutional)

Kotak Mahindra Capital Company (KMCC)

Kotak Investment Banking (KMCC) is a full-service investment

Kotak Mahindra Prime Ltd (KMPL)

Kotak Mahindra Prime Ltd is among India's largest dedicated

Kotak International Business specializes in providing a range of

Kotak Mahindra Asset Management Company offers a complete

• Kotak Private Equity Group helps nurture emerging businesses and

Kotak Realty Fund

• Kotak Realty Fund deals with equity investments covering sectors

Mr. Uday S. Kotak

Executive Vice Chairman and Managing Director

Joint Managing Director

Joint Managing Director

• Recognised as Highest Fundraising Company in Corporate Challenge category in

Kotak Mahindra Bank Ltd. (KMBL)

• Best Local Cash Management Bank 2012

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