MIRA
INFORM REPORT
|
Report Date : |
17.07.2013 |
IDENTIFICATION DETAILS
|
Name : |
KOTAK MAHINDRA BANK LIMITED |
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Formerly Known
As : |
KOTAK MAHINDRA FINANCE LIMITED (KMFL) |
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Registered
Office : |
36-38 A, Nariman Bhavan,
227, D, Nariman Point, Mumbai – 400 021, |
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Country : |
India |
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Financials (as
on) : |
31.03.2013 |
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Date of
Incorporation : |
22.11.1985 |
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Com. Reg. No.: |
11-038137 |
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Capital Investment
/ Paid-up Capital : |
Rs.3733.045
Millions |
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CIN No.: [Company Identification
No.] |
L65110MH1985PLC038137
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TAN No.: [Tax Deduction &
Collection Account No.] |
MUMK01323A |
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PAN No.: [Permanent Account No.] |
AAACK4409J |
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Legal Form : |
A Public Limited Liability company. The company’s Shares are Listed on
the Stock Exchanges. |
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Line of Business
: |
Banking
Activities |
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No. of Employees
: |
13500 (Approximately) |
RATING & COMMENTS
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MIRA’s Rating : |
Aa (72) |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 370000000 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is the flagship company of the “Kotak Group”. It is a well established bank in private sector. It has
been Promoted by well – known banker Mr. Uday Kotak and well-known industrial
house Mahindra and Mahindra (automobile giant). Available information
indicates high financial responsibility of the Bank. Financial position is
very good. Trade relations are trustworthy. Payments are regular and as per
commitments. Subject can be
regarded as a promising business partner for any normal business
dealings. |
NOTES :
Any query related to this report can be made on
e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31st, 2013
|
Country Name |
Previous Rating (31.12.2012) |
Current Rating (31.03.2013) |
|
India |
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
EXTERNAL AGENCY RATING
|
Rating Agency Name |
CRISIL |
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Rating |
Lower Tier II Bonds : AA+ |
|
Rating Explanation |
High degree of safety and very low credit
risk. |
|
Date |
11.06.2013 |
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Rating Agency Name |
CRISIL |
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Rating |
Certificate of Deposits : A1+ |
|
Rating Explanation |
Very strong degree of safety and lowest
credit risk. |
|
Date |
11.06.2013 |
RBI DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available RBI Defaulters’ list.
EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of
31-03-2012.
LOCATIONS
|
Registered Office : |
36-38 A, Nariman Bhavan,
227, D, Nariman Point, Mumbai – 400 021, Maharashtra, India |
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Tel. No.: |
91-22-66581100/66056825 |
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Fax No.: |
91-22-22855577/66215757 |
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E-Mail : |
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Website : |
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Location : |
Owned |
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Head Office : |
Vinay Bhavya Complex, 4th Floor, 159 – A, |
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Tel. No.: |
91-22-66426666/ 66426300 |
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Fax No.: |
91-22-26542876/ 2824 |
DIRECTORS
As on: 31.03.2013
|
Name : |
Dr. Shankar Nath Acharya |
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Designation : |
Non Executive Part- Time Chairman |
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DIN No.: |
00033242 |
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Name : |
Mr. Uday Suresh Kotak |
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Designation : |
Executive Vice Chairman and Managing Director |
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DIN No.: |
00007467 |
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Name : |
Mr. Deepak Gupta |
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Designation : |
Joint Managing Director |
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DIN No.: |
00004771 |
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Name : |
Mr. Chengalath Jayaram |
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Designation : |
Joint Managing Director |
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DIN No.: |
00012214 |
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Name : |
Mr. Asim Ghosh |
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Designation : |
Director |
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DIN No.: |
00116139 |
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Name : |
Mr. Prakash Krishnaji Apte |
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Designation : |
Director |
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DIN No.: |
00196106 |
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Name : |
Mr. Narendra Pansukhlal Sarda |
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Designation : |
Director |
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DIN No.: |
03480129 |
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Name : |
Mr. Amit Krishnakant Desai |
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Designation : |
Director |
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DIN No.: |
00310510 |
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Name : |
Prof. S. Mahendra Dev |
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Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Ms. Bina Chandarana |
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Designation : |
Company Secretary and Executive Vice President |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
As on: 30.06.2013
|
Category of Shareholder |
No. of Shares |
Percentage of
Holding |
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(A) Shareholding
of Promoter and Promoter Group |
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308784064 |
40.34 |
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|
26897060 |
3.51 |
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335681124 |
43.86 |
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|
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Total
shareholding of Promoter and Promoter Group (A) |
335681124 |
43.86 |
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(B) Public
Shareholding |
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|
|
|
|
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|
9782287 |
1.28 |
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|
6959627 |
0.91 |
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|
239490700 |
31.29 |
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|
256232614 |
33.48 |
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|
23962992 |
3.13 |
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|
30984022 |
4.05 |
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|
55438745 |
7.24 |
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|
63068710 |
8.24 |
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|
3906256 |
0.51 |
|
|
4358680 |
0.57 |
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|
79865 |
0.01 |
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|
1045661 |
0.14 |
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|
871448 |
0.11 |
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|
32800000 |
4.29 |
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Foreign Bodies – DR |
6800 |
0.00 |
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Foreign Corporate Bodies |
20000000 |
2.61 |
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|
173454469 |
22.66 |
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Total Public
shareholding (B) |
429687083 |
56.14 |
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Total (A)+(B) |
765368207 |
100.00 |
|
(C) Shares held
by Custodians and against which Depository Receipts have been issued |
|
0.00 |
|
Public |
1883000 |
0.00 |
|
|
1883000 |
0.00 |
|
Total
(A)+(B)+(C) |
767251207 |
100.00 |
(1) Indian
Individuals / Hindu Undivided Family
Individual shareholders holding nominal
share capital up to Rs.0.100 millionBUSINESS DETAILS
|
Line of Business : |
Banking
Activities |
GENERAL INFORMATION
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No. of Employees : |
13500 (Approximately) |
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Bankers : |
Not Available |
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Banking
Relations : |
-- |
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Auditors : |
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Name : |
S.R. Batliboi and Company Chartered Accountants |
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Address : |
6th Floor, |
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PAN No.: |
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Subsidiaries : |
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Associates : |
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CAPITAL STRUCTURE
As on: 31.03.2013
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
800000000 |
Equity Shares |
Rs.5/- each |
Rs.4000.000 Millions |
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Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
746609026 |
Equity Shares |
Rs.5/- each |
Rs.3733.045
Millions |
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|
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
PARTICULARS |
31.03.2013 |
31.03.2012 |
31.03.2011 |
|
Capital and Liabilities |
|
|
|
|
Capital |
3733.045 |
3703.448 |
3684.358 |
|
Reserves and Surplus |
90736.517 |
75755.942 |
64280.362 |
|
Employees' Stock Options (Grants) Outstanding |
175.336 |
348.207 |
369.172 |
|
Deposits |
510287.663 |
385365.206 |
292609.686 |
|
Borrowings |
204106.221 |
165955.205 |
117239.484 |
|
Other Liabilities and Provisions |
27898.086 |
25539.915 |
30323.596 |
|
Total |
836936.868 |
656667.923 |
508506.658 |
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|
|
|
|
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Assets |
|
|
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Cash and Balances with Reserve Bank of |
22079.033 |
20164.945 |
21077.242 |
|
Balances with Banks and Money at Call and Short Notice |
14812.575 |
6180.601 |
3632.607 |
|
Investments |
288734.270 |
215668.123 |
171214.395 |
|
Advances |
484689.828 |
390792.322 |
293293.067 |
|
Fixed Assets |
4644.222 |
4499.658 |
4256.073 |
|
Other Assets |
21976.940 |
19362.274 |
15033.274 |
|
Total |
836936.868 |
656667.923 |
508506.658 |
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
31.03.2013 |
31.03.2012 |
31.03.2011 |
|
|
I. Income |
|
|
|
|
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Interest earned |
80424.896 |
61802.362 |
43035.582 |
|
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Other Income |
11606.649 |
9773.458 |
6330.373 |
|
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Total |
92031.545 |
71575.820 |
49365.955 |
|
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|
|
|
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II. Expenditure |
|
|
|
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Interest expended |
48368.183 |
36677.460 |
20584.854 |
|
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Operating expenses |
22097.310 |
18348.299 |
15533.202 |
|
|
Provisions and
Contingencies |
7958.880 |
5699.531 |
5066.078 |
|
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Total |
78424.373 |
60725.290 |
41184.134 |
|
|
|
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III. Profit |
|
|
|
|
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Net Profit for the year |
13607.172 |
10850.530 |
8181.821 |
|
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Add: Surplus brought forward from previous year |
21627.912 |
14945.189 |
9659.053 |
|
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Total |
35235.084 |
25795.719 |
17840.874 |
|
|
|
|
|
|
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IV. Appropriations |
|
|
|
|
|
Transfer to Statutory Reserve |
3401.800 |
2712.700 |
2045.500 |
|
|
Transfer to Capital Reserve |
680.400 |
542.600 |
6.900 |
|
|
Transfer to General Reserve |
0.000 |
0.200 |
409.100 |
|
|
Transfer to Investment Reserve Account |
285.000 |
250.000 |
(268.300) |
|
|
Transfer to
Special Reserve u/s 36(1)(viii) of Income Tax Act,1961 |
105.200 |
145.200 |
290.000 |
|
|
Proposed Dividend |
523.754 |
444.929 |
368.831 |
|
|
Corporate Dividend Tax |
72.943 |
72.178 |
43.645 |
|
|
Balance carried over to Balance Sheet |
30165.987 |
21627.912 |
14945.189 |
|
|
Total |
35235.084 |
25795.719 |
17840.874 |
|
|
|
|
|
|
|
|
V. Earnings Per Share (Face Value of Rs. 5/-) |
|
|
|
|
|
Basic |
18.31 |
14.69 |
11.35 |
|
|
Diluted |
18.24 |
14.61 |
11.28 |
LOCAL AGENCY FURTHER INFORMATION
|
Sr. No. |
Check List by Info
Agents |
Available in Report
(Yes / No) |
|
1] |
Year of Establishment |
Yes |
|
2] |
Locality of the firm |
Yes |
|
3] |
Constitutions of the firm |
Yes |
|
4] |
Premises details |
No |
|
5] |
Type of Business |
Yes |
|
6] |
Line of Business |
Yes |
|
7] |
Promoter's background |
Yes |
|
8] |
No. of employees |
Yes |
|
9] |
Name of person contacted |
No |
|
10] |
Designation of contact person |
No |
|
11] |
Turnover of firm for last three years |
Yes |
|
12] |
Profitability for last three years |
Yes |
|
13] |
Reasons for variation <> 20% |
-- |
|
14] |
Estimation for coming financial year |
No |
|
15] |
Capital in the business |
Yes |
|
16] |
Details of sister concerns |
Yes |
|
17] |
Major suppliers |
No |
|
18] |
Major customers |
No |
|
19] |
Payments terms |
No |
|
20] |
Export / Import details (if applicable) |
No |
|
21] |
Market information |
-- |
|
22] |
Litigations that the firm / promoter involved in |
-- |
|
23] |
Banking Details |
No |
|
24] |
Banking facility details |
No |
|
25] |
Conduct of the banking account |
-- |
|
26] |
Buyer visit details |
-- |
|
27] |
Financials, if provided |
Yes |
|
28] |
Incorporation details, if applicable |
Yes |
|
29] |
Last accounts filed at ROC |
Yes |
|
30] |
Major Shareholders, if available |
Yes |
|
31] |
Date of Birth of Proprietor/Partner/Director, if available |
No |
|
32] |
PAN of Proprietor/Partner/Director, if available |
No |
|
33] |
Voter ID No of Proprietor/Partner/Director, if available |
No |
|
34] |
External Agency Rating, if available |
Yes |
CHARGES
|
ENTITY |
COMPETENT AUTHORITY |
REGULATORY CHARGES |
REGULATORY
ACTION(S) / DATE OF ORDER |
|
Kotak Mahindra Bank Limited |
RBI |
Did Not Adhere To Instructions Issued By RBI In Respect of Derivatives, Such As Failure To Carry out Due Diligence In Regard To Suitability of Products, Selling Derivative Products To Users Not Having Risk Management Policies And Not Verifying Underlying/Adequacy of Underlying And Eligible Limits Under Past Performance Route |
|
|
Kotak Mahindra Bank Limited (Agent of Tata Aig General Insurance Company Limited) |
IRDA |
Did Not Produce Details of Income Tax Permanent Account Number (Pan) |
|
|
Kotak Mahindra Bank Limited |
SEBI |
Opened Various Demat Accounts Sharing Common Addresses |
OPERATIONS
The Bank scaled up the momentum on network expansion including a much wider coverage in semi-urban and rural India and now has 437 full-fl edged branches and 961 ATMs, covering 255 locations. The Bank added over six hundred thousand new customers this year across core banking products of savings and checking accounts, term deposits, overdrafts and non-resident accounts.
The Bank’s decision to respond to the opportunity presented by deregulation on interest rates on savings account last year and offer higher rates to their customers extended the gains this year as well in the form of an accelerated growth in the savings book.
The Bank rolled out several initiatives aimed to offer superior and differentiated customer experience. Some key ones are:
A) Products
• The Bank launched a special Savings Program for Women under the title ‘Silk’. This program has been designed to systematically improve the acquisition rates of women-held accounts. The decision to launch these accounts was taken basis the distinctly better behavior of the existing women-held accounts. This program provides a host of additional features and benefits, including rewards on debit card spends, discounts on gold and lockers and lifestyle benefits. The Bank has acquired approx. 30,000 customers under this program.
• The Bank has also launched a white labeled solution for Personal Finance Management called Kotak Money Watch. This portal would also be developed to have community features and have educational content about finance for the user.
• Privy League, the program for the affluent and mass affluent customer segment, was revamped and extended to branch customers, non individual customers and non-resident customers. The Bank now services approx. 40,000 Households and Businesses under this program.
• The Bank made significant progress in the enrolments under NPS (New Pension System) product. The Bank is now the corporate agent to more than 119 corporate and facilitates registration of their employees to this program. The Bank is the first POP (point of presence) to offer online PRAN (Permanent Retirement Account Number) generation facility.
• General Insurance: The Bank has enhanced the bouquet of products offered under General Insurance through the corporate tie up with Tata AIG General Insurance. New products introduced are in the health, travel and motor insurance space and would be offered to customers through the network of bank branches and corporate salary channel.
• Trade and Retail FCY: The Bank enhanced the Trade and Forex Services proposition during the year with launch of ‘GTA’ (Global Trade Account), an exclusive current account that caters to the requirement of the exporters and importers with a simplistic and transparent tariff structure. The same was well received by the customers.
• Another customer friendly initiative aimed at providing total transparency in FX dealings was the launch of forex platform ‘FX LIVE’, which offers complete fl exibility and convenience to the clients in tracking FCY rates.
B) Process
• Savings Account Instakit: The Bank now offers instant account opening to savings account customers through InstaKit. This initiative has reduced the end to end delivery time by 2 to 3 days in customer’s ability to transact on a new account and has also brought in cost saves.
• Currency Chest- The Bank set up its second Currency Chest in Delhi. This unit will facilitate effective cash management services for all branches in the NCR and service all business divisions of the Bank.
• The Bank launched complete online application for Saving Account, Privy and Term Deposit. The customer gets the account number instantaneously and also has the option to fund the account from existing account.
• The Bank also launched paperless account opening using the Tablet. The pilot was launched in 3 cities with about 30 sales members and will be rolled out to larger audience this year.
C) Technology
The Bank was in the forefront of technology enhancement across multiple dimensions. Some of the key initiatives being:
1. POS (Point of Service) systems for collections for Business Loans: This technology enables online acknowledgment to customers for money collected off-location and a confirmation of the same through sms. All transactions so done can be monitored centrally.
2. Switch Upgrade: They have migrated their Cards Switch from BASE24 to Electra Switch which enables then to have more features on ATMs, superior interface and direct connectivity with National Financial Switch of NPCI (National Payments Corporation of India).
3. Debit Card enabled for online transaction: They have enabled their Debit Card to be used online for e-commerce.
4. Net Banking - Revamp of screens of Investment, Demat, Billpay: This has made usage compatible with browsers like Internet Explorer, Opera, Google Chrome, Safari and Mozilla.
5. Immediate payment System through USSD platform of NPCI: This enables their customer to do IMPS (Interbank Mobile Payment Service) transaction, Balance Inquiry, and last 3 transactions inquiry by using any mobile handset.
6. Cash Deposit Machine: This machine enables customer to deposit cash without waiting in the queue at teller counters. Customer account gets credited real time and receipt is issued. Machine has features of card enabled usage and card less usage when customer does not come in person.
7. Tax Collection Platform: This module has enabled tie up with various State Governments to collect tax online from their customers. Currently they have integrated for collecting tax for Delhi VAT and CST, Gujarat VAT and CST, Andhra Pradesh all commercials taxes and Punjab VAT and CST.
8. Courtesy Call back on IVRS: This feature enables customers to leave a call back on IVRS (on the same number as the call-in number or on a different mobile number (System gives a prompt if the wait time is more than 45 seconds). IVRS will call the customer back as soon as a Customer Care Officer is available.
9. Cheque Deposit Kiosk: This machine enables customer to deposit cheques through a self service mode and issues acknowledgement in the form of a scanned image of the cheque. Machine also does validation of account details online.
D) Service Quality
• The Bank has achieved the ISO 10002:2004 Certification for Complaints Management System in Consumer Banking - Retail Liabilities, Retail Assets and Credit Cards. The Bank is only the second bank and fourth organization in India to achieve this certification. This endorses their commitment to customer service by building a world class Complaints Management System and adopting global standards prescribed in this regard.
• The Bank’s Service Quality improvement program – “SPIRIT- Bank on great service” was nominated in the Qimpro Awards 2011-12. The initiative qualified for the finals of the Qimpro Convention under the Innovation category and was very well received.
• The Bank has started the annual customer satisfaction tracking by an external accredited market research agency, IMRB, to track their customers’ satisfaction and loyalty levels.
• The Bank has been monitoring the mention of Kotak Bank in the online space and responds to customer queries through social channel of face book and twitter. The Bank plans to enhance its presence multi-fold in the social media in the coming year.
E) Business Lines
a) Non Resident Business
The Bank continues to put a significant focus on reaching out to the NRI community and succeeded in establishing itself as important player in this customer segment. Some of the noteworthy achievements / initiatives are:
1. Kotak NRI Banking won 2 prestigious awards at the Banking and Payment Asia trailblazer awards 2013, Singapore:
a. Click2Remit - Winner in the Product excellence in P2P payments category.
b. Privy league program for NRIs - Winner in the Service excellence in mass affluent Banking category.
2. Launched 3 tier Privy offerings for affluent customers with round the clock dedicated service desk with an industry first loyalty reward program which matches the requirement of this segment and encourages customer to primarily transact through the Bank.
3. Launched Platinum Signature Credit Card for NR customers.
4. Launched online account opening which integrates money transfer service – Click2remit.com.
5. Launched FCNR deposits in CHF (Swiss francs) currency and Rupee Advantage Plan for tenure of 5 years.
6. The Bank entered into a strategic partnership with Foreign Banks like Bank of Nova Scotia in Canada for facilitating NRIs and PIOs to open Bank accounts with Kotak Bank and to facilitate inward remittances to India. Further, through its tie-up with CIMB, Malaysia, it has set up platform which facilitates Indians in Malaysia to remit money back to its account in India.
7. As a platform to reach out to the Overseas Indian Community and Global Business Partners, the Bank participated at various International Business Forums like Pravasi Bhartiya Diwas (PBD)-2013, Global Organization of People of Indian Origin (GOPIO)
- 2013, India Mauritius Business Round Table - Mauritius, Confederation of Indian Industries (CII) and GOPIO Business Delegation to Kenya, American Association of Physicians of Indian Origin (AAPI) Annual Convention– California, North American Telugu Association (NATA) Convention – Houston etc.
b) Priority Banking Business
This business launched few innovative products for its customers under the ‘Smart Series’, namely ‘Smart Overdraft facility’, an asset product for Salaried customers, that provides unsecured overdraft facility up to ` 15 Lakhs and ‘Smart Equity’ in association with the Kotak Securities Business.
c) Corporate Salary Business
The Bank continued to make significant progress in the Corporate Salary segment, with its Salary2Wealth proposition, and acquired reasonable presence in many of the top Private companies, PSUs and Government undertakings. Further deepening the relationship in the Defense segment, the Bank also signed an MOU with the Indian Navy (besides the MOU signed in the previous financial year with the Indian Army) for offering the Salary2Wealth proposition to navy personnel.
d) Retail Institutional and Government Banking Business
The Bank has gained significant momentum in the Retail Institutional and Government Banking Business and grew the CASA book by 75% over last financial year largely driven by their ability to offer customized solutions to client’s diverse banking needs. This included innovative offerings for Municipal Corporations, Housing Development Authorities, Embassies including agency business.
e) Consumer Assets Business
The Bank made significant progress across all product lines in the Consumer Assets business.
Credit Card: The Bank’s credit card business has issued 0.330 million cards by March 2013 and is in its fifth year of operations. Customer spends per card across all variants of cards have been amongst the top three in industry. The premium range of their products – VISA Signature and VISA Platinum have driven the spend growth in the portfolio and it contributes to 45% of the spend while accounting for 30% of customer base. This has reaffirmed the customer acceptability of the product. Credit card business clocked 85% growth in the spends in the year with a book size of ` 326 crore. Industry credit card spends has also shown sign of growth. As per RBI data on electronic payments released for January 2013, total credit card spends till January for this financial year showed a growth of 28%.
Home Finance: Home Finance business has shown a significant growth during the year with strong demand from both Tier I and Tier II cities. Capitalizing on Cross Sell Opportunities through bank branches and continued focus on Self Employed segment led to a sustained growth during the year. The year witnessed very low losses on account of efficient and effective recovery and collection processes and policies adopted.
Business Loans: The Bank offers secured and unsecured Business loans, Loans against Properties and Working Capital Finance to self employed professionals / non-professionals and Small Enterprises. This Business continued to witness robust growth. The Bank successfully bought out a business loan portfolio of MNC bank to the tune of Rs.7000.000 Millions. The Bank continues to maintain its best in class portfolio quality through its effective and efficient risk management and recovery policies and practices. Capitalizing on the retail branch network the Bank managed to expand its product offerings across many new locations.
Bank’s Treasury actively contributes to the Bank by way of:
• Proprietary Trading: The various proprietary trading desks actively trade in products such as Fixed Income, Money Markets, Derivatives, Foreign Exchange and Bullion.
• Customer Transactions:
· Facilitating access to foreign currency markets through cash and derivatives products and providing fi ne market rates to Clients for Remittance and Trade transactions.
· Client solutions - standardised and structured, pertaining to Debt Capital Markets including Syndication of Loans, Bonds, Mezzanine financing, Promoter funding and acquisition financing and Securitisation.
• Balance Sheet Management: The Balance Sheet Management Unit (BMU) manages the Asset Liability mismatches, Interest rate and Liquidity gaps and implementation of Funds Transfer Pricing between various business units. The Correspondent Banking Division within Treasury actively builds upon relationships with offshore banks towards improving quality and international reach for its customers.
During the year, the Bank continued its strategy of upgrading the foundation technology to ensure scalability and augmented functionality. Last year, the Core Banking system was upgraded. This year the “Switch” which drives ATMs was upgraded. The new State of the Art system will enable high volumes and will also provide a large number of enhanced functions such as RTGS/NEFT on the ATMs.
Improved productivity through automation of internal processes was a focus area. Straight Through Processing was enabled for Trade Finance operations, resulting in decreased manpower needs. Most reconciliation processes within the Bank were automated, leading to improved operational accuracy and speed. Also, internal budgeting functions were automated to provide granular and up-to-date information.
Keeping abreast of Information Security changes, the Bank implemented innovative solutions for Distributed Denial of Services and Web Application Firewalls to protect against threats from Internet access. The Bank was also recognized by the Data Security Council of India (DSCI) by being conferred the DSCI Excellence Award for Security in the Bank.
Management Discussion
and Analysis
Macro-economic
environment
The fundamentals of the Indian economy weakened significantly in FY13 on the back of global financial market volatility and overall weak demand conditions in the global arena, with inflation levels remaining relatively sticky. Further, India tended to show signs of a twin deficit problem with a worsening fiscal and a higher current account deficit. A direct reflection of this could also be found in a sharp drop in the savings rate over the years, down to 30.8% by end-March 2012 compared to 36.8% in end-March 2008. While savings in physical assets increased to 14.3% by end-March 2012 from 10.8% in end- March 2008, there was a sharp drop in the financial savings to 8.0% in end-March 2012 from 11.6% in end-March 2008.
The economy slowed to a real GDP growth of 6.2% in FY12 and this slowdown phase continued into FY13. In Q1FY13, the economy grew by 5.5% but slowed further to 5.3% and 4.5% in the subsequent two quarters. The slowdown was broad-based with even the services sector (including the construction sector) slowing to 7.4% in Q1FY13 and further to 7.1% in Q2FY13 and to 6.0% in Q3FY13. Private consumption expenditure slowed significantly to average a growth of 2.9% in the first three quarters of FY13 compared to 7.4% in the same period last year. Further, investment demand remained weak with an average growth of 0.1% in Gross Fixed Capital Formation down from an average of 5.3% in the same period last year.
Headline WPI inflation had ended FY12 at 7.7% and was perceived to be falling in FY13. On the basis of this, the RBI had reduced the Repo rate by 50 bps at its April monetary policy review. However, Headline WPI inflation after remaining more or less stable till August 2012, jumped back to 8.0% in September 2012 before cooling off again to 7.2% by December 2012 and witnessing an even more significant drop to 6.0% by March 2013. The significant erosion in growth to below trend levels, the relatively tighter monetary policy that the RBI followed, a relatively stable currency and also softening in the global prices of items such as metals and chemicals led to the core Headline WPI inflation coming off to 3.4% by March 2013 compared to 5.0% in April 2012 and 5.8% in August 2012. Importantly, already fighting with a slowdown in the demand conditions, most companies appear not to have risked passing on the rising input cost of diesel to their output prices. This implied that the second round impact of the diesel price hikes in September 2012 was relatively muted. Over and above all the above reasoning, the relatively tight monetary policy that the RBI had followed is possibly now showing up in its lagged implications for pulling inflationary pressures down.
Contrary to the trends in the Headline WPI inflation, that showed a gradual easing bias, the retail level inflation, measured by the new CPI index has remained on the firmer side, averaging at 10.2% for the year. This also implied that the wedge been Headline WPI inflation and the CPI inflation has been widening. The upside bias for the retail inflation came principally from the food component, averaging at 11.8% for the year. However, even the ex-food CPI inflation, a measure of core retail inflation remained higher than the core WPI inflation.
In FY13, RBI’s monetary policy maintained focus on the growth-inflation dynamics via a combination of measured steps for liquidity easing and policy rate cuts. During the year, reserve money growth was muted mainly on account of no addition to the system via foreign resource infusion. With the structural liquidity constraints evident in the credit growth for the banking sector being higher than the deposit growth, the liquidity deficit of the system also increased (especially during Q3 and Q4 of the year) due to frictional factors of the government maintaining higher surpluses with the RBI. This was mainly on account of the efforts by the government to restrict its expenditures and bring the fiscal deficit within manageable limits of around 5.2-5.3%. To tide over these liquidity constricting factors, the RBI had to infuse liquidity into the system via CRR cuts and OMOs. Over the full FY, the RBI infused liquidity of Rs. 1271800.000 crore via its OMO operations. The CRR was reduced by 75 bps through the financial year in September 2012, November 2012 and February 2013. Further, the mandated SLR requirement of banking sector was also reduced by 100 bps in August to 23%.
The benchmark policy interest rate (Repo rate) was reduced by RBI by 50 bps in April 2012. However, with inflation surprising on the higher side, the RBI had to pause for a significant period before providing the market with any further cuts on the Repo rate. Finally, with Headline WPI inflation tapering off in Q4, RBI cut the repo rate by 25 bps at its monetary policy meeting on 29th January 2013 and further by 25 bps on 9th February 2013.
A significant stress area that emerged in FY12 and aggravated in FY13 is the pressure on the Current Account Deficit (CAD) that also led to certain policy changes to attract more capital flows into the economy to finance the CAD. The CAD/GDP ratio reached a historic high of 6.7% in Q3 of FY13. The trade gap as a proportion of GDP worsened to 12.3% in this quarter on account of weak external demand. While the worsening of the trade gap was on account of weak external demand that affected merchandise exports adversely, the imports of oil and gold increased sharply due to the higher price of oil and gold and also with gold viewed as a hedge against the high inflation levels in India. Even as non-oil and non-gold imports tended to show a drop, reflecting the domestic slowdown story, this was not enough to neutralize the sharp rise in the imports of oil and gold. Steps taken by the government to provide a push to export growth such as the extension of the interest subvention scheme for select employment oriented sectors till end-March 2014, broadening the scope of the Focus Market Scheme and the Market-linked Focus Product Scheme etc. failed to have much positive impact. Further, the large depreciation of the rupee against the USD also failed to have much positive impact on the export dynamics. Further negatives for the CAD were a gradual worsening of the exports of software services over the last few quarters, a plateau in the “Private Transfers” over the last 7 quarters at about US$15-17 billion and a
significant worsening of net interest income outgo from the Indian economy.
Important to note, over the full year of FY13, the flows through the capital account were sufficient to finance the CAD. While the continuing strong dose of global liquidity remained a positive for the flows into India, the overall risk perception on India changed dramatically with certain policy announcements (liberalized FDI norms for retail, insurance and pension sectors, a roadmap for fiscal consolidation supported by a hike in the price of diesel and capping of subsidized LPG cylinders, increase in FII limits in the corporate and the G-sec segments etc.) from around September 2012. While flows through the FII route (equity+debt) were at just US$4.3 bn in April-August 2012 with S and P having downgraded India’s rating outlook to negative in end-April and Fitch following up with a similar action in June 2012. Subsequent to the reforms oriented measures announced by the government, FII inflows improved dramatically to US$26.8 billion in September 2012-March 2013. Based on the first 3 quarter BoP data published by the RBI, increases were also noticed in the NRI deposits and the short-term trade capital flows. Overall, capital flows in the first 3 quarters of FY13 were at US$71.7 bn, higher than US$51.2 bn in the same period last year.
USD-INR remained volatile in FY13 with a range of 50.72-57.16. Consequent to the negative investor perceptions in the first 5 months of the FY, a sharp depreciation pressure was noted for the rupee against the USD in this period. USD-INR weakened to an all-time low of 57.22 on 27 June 2012, depreciating by 10.6% over the end-March 2012 levels. However, INR recovered in September 2012 with the announcement of various policy measures by the Government that changed the risk perception on India and also pushed back threats of an immediate ratings downgrade. Further, there were improvements in the global risk appetite during this period. However, this period of strength failed to sustain for too long and rupee depreciated once again in October and November 2012 and subsequently remained in a broad range thereafter.
Awards and
Recognitions
During the year the Group won the following awards:
• Kotak Mahindra Bank’s Board has been adjudged as one of the ‘Best Managed Board’ in the Aon Hewitt-Mint study of 2012.
• Kotak Mahindra Bank has made it once again in the list of the prestigious Forbes Asia’s Fab 50 Companies in 2012 for the 3rd consecutive year (2010-12).
• Kotak Wealth Management has won the following prestigious awards:
- Best Private Bank, India by World Finance Banking Awards, 2012
- Outstanding Private Bank, South Asia - Private Banker International Global Wealth Awards 2012.
- Winner in multiple categories by Euro money Private Banking Survey 2013:
- Private Banking Services Overall, Globally – Among Top 25.
- Private Banking Services Overall, Asia – Among Top 10.
- Second Best Family Office Services Provider, Asia.
- Best Private Banking Services Overall – India.
- Best Family Office Services Provider, India.
• Kotak Mahindra Bank won the Silver Shield at the ‘ICAI Awards for Excellence in Financial Reporting’ for the year 2011-12 under the Category II: Private Sector Banks (including Co-operative Banks and Foreign Banks). –
second year in a row
• Kotak Mahindra Bank has been rated amongst the Top 10 in Top Companies for Leaders to work, in Asia Pacifi c in a Study conducted by RBL Group, Aon Hewitt and Fortune in 2011.
• Kotak Mahindra Bank’s 6% campaign featuring Subbu won the Silver Effie - a prestigious advertising effectiveness award in the financial services category.
• Best Local Cash Management Bank In India, as voted by corporate for Small companies (turnover < $ 100 Mn) by Asia money in 2012
• Kotak Mahindra Bank won the Asian E-payment Awards for the following categories at the Asian Leadership Awards –
- Best E-Payment Bank Award.
- Best Online Payment Platform Award.
- E-Payment Market Leadership award.
• Kotak Mahindra Bank has been rated amongst the Top 25 Best Employers in India for 3 consecutive studies conducted since 2007 by Aon Hewitt.
• Kotak Mahindra Bank’s NRI Banking won the following 2 awards at the Banking and Payments Asia Trailblazer Awards 2013
- Click2Remit: Winner in Product Excellence, in the P2P Product Category.
- Privy League for NRIs: Winner in Service Excellence, in the Mass Affluent Banking Category.
• Awarded Gold in the “Best Local Trade Bank in India” category of Trade and Forfaiting Review Awards 2012.
• Kotak Mahindra Bank received the award for Innovative Use of Data Storage at the ‘India Innovation Award 2013’ by CNBC TV18 from Hon’ble Minister of State for IT and Communication Mr. Milind Murli Deora.
• Won the Celent Model Bank Award for its core banking implementation in the category of Infrastructure and Architecture.
• KMCC was ranked the #1 Book Running Lead Manager for Initial Public Offerings in FY13. KMCC was ranked #2 across all Equity Offerings (IPO, FPO, QIP, OFS, IPP, Rights) in FY13. (Source: PRIME Database).
• In the MandA league tables, KMCC was ranked #4 by volume of deals and #12 by value of deals in FY13 (Source: Bloomberg).
• Kotak Institutional Equities analysts ranked #1 in financial services; #3 in the media sector in the Wall Street Journal survey of Asia’s best analysts – 2012
Outlook
Kotak Mahindra Group’s results for the financial year demonstrate the strong fundamental growth in the India story. However, concerns remain on inflation and the twin deficits – fiscal and current account. The group believes with sound risk management and strong Capital adequacy ratio, the India of the future offers opportunities for growth.
BACKGROUND
In February 2003, Kotak Mahindra Finance Limited was given license for banking business by the Reserve Bank of India (RBI). It was the first NBFC Company in India to be converted into a Bank. Kotak Mahindra Bank provides the full suite of banking services to its customers encompassing Retail Banking, Treasury and Corporate Banking.
Description of
Contingent Liabilities:
|
Sr. No. |
Contingent
Liability* |
Brief Description |
|
1. |
Claims not acknowledged as debts |
This includes liability on account of income tax, sales tax, lease tax demands, property tax demands and legal cases filed against the Bank. The Bank is a party to various legal proceedings in the normal course of business. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Banks’ financial conditions, result of operations or cash flows. Against the above Rs. 427.400 millions have been paid, which shall be refunded to the Bank, if the outcome of the legal proceedings will be in the favour of the Bank. |
|
2. |
Liability on account of outstanding forward exchange contracts |
The Bank enters into foreign exchange contracts with inter Bank participants on its own account and for customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. |
|
3. |
Guarantees on behalf of constituents in India |
As a part of its Banking activities, the Bank issues guarantees on behalf of its customers. Guarantees generally represent irrevocable assurances that the Bank will make payments in the event of customer failing to fulfill its financial or performance obligations. |
|
4. |
Acceptances, endorsements and other obligations |
These includes: • Documentary credit such as letters of obligations, enhance the credit standing of the customers of the Bank. • Bills re-discounted by the Bank and cash collateral provided by the Bank on assets which have been securitised. • Underwriting commitments in respect of Debt Syndication. |
|
5. |
Other items for which the Bank is contingently liable |
These include: • Liabilities in respect of interest rate swaps, currency swaps, forward rate agreements and options contracts. The Bank enters into these transactions with inter Bank participants on its own account and for customers. Currency Swaps are commitments to exchange cash flows by way of interest / principal in one currency against another, based on predetermined rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional amounts that are recorded as contingent liabilities are amounts used as a benchmark for the calculation of interest component of the contracts. • Liability in respect of Capital commitments relating to fixed assets and undrawn commitments in respect of investments. |
PRESS RELEASE
KOTAK ANNOUNCES FIRST CLOSE OF ITS INDIA INFRASTRUCTURE FUND
SUMITOMO MITSUI BANKING CORPORATION AND BROOKFIELD ASSET MANAGEMENT ARE
CORNERSTONE INVESTORS
Mumbai, March 12, 2013: The Kotak Mahindra group ("Kotak") announced a first close of its infrastructure private equity fund (the "Fund") raising commitments of approximately US$ 90 million (Rs 490 crore). In addition to Kotak, commitments have been received from the Sumitomo Mitsui Banking Corporation, Japan ("SMBC"), an affiliate of Brookfield Asset Management ("Brookfield"), Japan Bank for International Co-operation ("JBIC") and a leading insurance group.
The Fund, Core Infrastructure India Fund Pte Limited, will invest in companies engaged in power generation/ transmission, transportation (roads, ports, airports), water treatment and supply, waste management, gas transmission, distribution and storage etc. in India. Kotak Mahindra (UK) Limited, Singapore branch is the investment manager of the Fund.
SMBC, the core financial institution of Japan's second largest financial services group in terms of market capitalization, with a significant presence in infrastructure project finance globally and Brookfield, a global alternative asset manager with over US$175 billion in assets under management and over a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity, have participated in the Fund as Cornerstone Investors. Additionally, JBIC, the policy financing financial institution of the Government of Japan, with a track record of financing infrastructure globally, has committed to the Fund, and this investment marks its first ever direct commitment to a fund dedicated to financing only Indian infrastructure. In the first close, Kotak, SMBC and Brookfield have committed in excess of US$ 50 million (Rs. 2750.000 millions). Further, they have nominated experienced professionals to the investment team and to the investment committee.
Mr. C Jayaram, Joint Managing Director, Kotak Mahindra Bank said, "We are delighted to announce the first close of our India dedicated infrastructure fund. This is an important milestone for the Kotak Mahindra group as we are now in a position to address a significant market opportunity as well as add a key platform to our existing alternate assets business. We have marquee institutions like SMBC and Brookfield investing along with us in the Fund and they will contribute their immense experience and knowledge in infrastructure. We are also privileged to receive commitments from a leading insurance group and from JBIC, both of who are prestigious investors. We are very proud that most of our investors have elected to invest in a fund meant only for Indian infrastructure for the first time ever, and have chosen to partner with Kotak in doing so, and we expect to benefit from their guidance and insight".
About Kotak Mahindra group:
Established in 1985, the Kotak Mahindra group is one of India's leading financial services conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group's flagship company, received a banking license from the Reserve Bank of India (RBI). With this, KMFL became the first non-banking finance company in India to become a bank - Kotak Mahindra Bank Limited.
The consolidated balance sheet of Kotak Mahindra group is
over Rs 1 lakh crore and the consolidated net worth of the Group stands at Rs
145680.000 millions (approx US$ 2.6 billion) as on December 31, 2012 . The
Group offers a wide range of financial services that encompass every sphere of
life. From commercial banking, to stock broking, mutual funds, life insurance
and investment banking, the Group caters to the diverse financial needs of
individuals and the corporate sector. The Group has a wide distribution network
through branches and franchisees across India, and international offices in
London, New York, Dubai, Abu Dhabi, Mauritius and Singapore. For more
information, please visit the company's website at http://www.kotak. com/.
About SMBC:
SMBC is the core financial institution of Sumitomo Mitsui Financial Group ("SMFG"), the second largest banking group in terms of market cap in Japan with approximately JPY 143 trillion of total assets as of March 31, 2012 and JPY 518.5 billion of net profit in fiscal year ended March 2012. SMBC is engaged in the business of providing financial services by itself, and through its affiliates and group companies, spanning commercial, retail and wholesale banking, securities businesses, asset management, project finance, consumer finance and credit card services. It was established in April 2001 through the merger of two leading Japanese banks, Sakura Bank of the Mitsui group and Sumitomo Bank of the Sumitomo group, both of which have had a long business tradition globally as well as domestically for nearly 100 years each. SMBC, as a core member of SMFG, works together with other member firms in the Group to offer customers highly sophisticated, comprehensive financial services. For more information, please visit the company's website at http://www.smbc.co jp/global/index. html
About Brookfield:
Brookfield Asset Management Inc., focused on property,
renewable power and infrastructure assets, has over $175 billion of assets
under management and is co-listed on the New York and Toronto Stock Exchanges
under the symbol BAM and on NYSE Euro next under the symbol BAMA. For more
information, please visit the company's website at www.brookfield.com.
This press release is for information and record purposes only and is not intended as a recommendation or for the purpose of soliciting any action in relation to the Fund or any investments and is not intended as an offer to sell shares in the fund. Just as the potential rewards for investing in emerging markets like India are higher than returns expected from the developed markets, so too are the risks. Market volatility is significantly higher, liquidity can be variable and market infrastructure and regulations are generally less well developed. In addition, emerging markets all face local geopolitical risks. Normal risks applicable to investments such as risk of loss of capital and exchange rate risks also apply.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No exist to suggest that subject is or was
the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market survey
revealed that the amount of compensation sought by the subject is fair and
reasonable and comparable to compensation paid to others for similar services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws, regulations
or policies that prohibit, restrict or otherwise affect the terms and
conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 59.39 |
|
|
1 |
Rs. 89.90 |
|
Euro |
1 |
Rs. 77.72 |
INFORMATION DETAILS
|
Report Prepared
by : |
DPH |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
8 |
|
PAID-UP CAPITAL |
1~10 |
8 |
|
OPERATING SCALE |
1~10 |
8 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
8 |
|
--PROFITABILIRY |
1~10 |
8 |
|
--LIQUIDITY |
1~10 |
8 |
|
--LEVERAGE |
1~10 |
8 |
|
--RESERVES |
1~10 |
8 |
|
--CREDIT LINES |
1~10 |
8 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
NO |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
NO |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
DEFAULTER |
|
|
|
--RBI |
YES/NO |
NO |
|
--EPF |
YES/NO |
NO |
|
|
|
|
|
TOTAL |
|
72 |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.