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CHAPTER 1

INTRODUCTION

CHAPTER 1
INTRODUCTION
INTRODUCTION
This is an art of preparing an educative project report
offers to provide some aspects and details regarding to
Analytical Study of Various Financial Products with the
special reference to Muthoot finance, Sagar. In this project
report, the marketing financial activity has been brought out in
abroad & also the details regarding the financial services & its
marketing activities.
In this project report an attempt is made to bring out
the details regarding the history and achievements for the
dynamic growth of the Muthoot finance. The era of finance
which has been taken a talkative role has also been described.
As we know finance plays a vital role in the market
and development of economy. Financial services are needed for
every organization to run the business efficiently. It is required
in all sectors of the market i.e., education, Govt, business,
trading, agriculture small scale business etc. Finance plays a
main role in day to day life. Finance includes money, financial
policy, financial services and financial consultants. Finance is
considered as life blood of an organization. It is important in
development of economy. Finance increases the savings and
mobilization of funds. It is very useful in new innovations in
service sector.

MEANING OF FINANCE
Finance is considered to be the foundation of basic
activities of any business.
Particularly in production and marketing activities. The
finance functions in the same way as oil functions in the
operation of machine or
blood functions in the human body.
In the absence of finance, nobody can image either of
setting up a business or its operations and development. Not
only this, finance is needed in those areas where economic
activities of any type are performed.
Generally

speaking,

business

finance

means

arrangement of finance for all business activities.

the

Since the

objective of the business is to earn profit and for the operations


of

business

activities,

organization

of

any

type

(sale

proprietorship, firm or company is very much needed, it can


easily be deduced that the business finance is related to the
financial arrangement of the organizations set up and operated
for the objective of earning profit.
Finance often signified the money and it studies as how
do an individual, businessman, investor, financial institutions
and also government manage and operate the finance, i.e.

Money. Experts have never held common opinion with regard to


finance.

DEFINITIONS OF FINANCE
According to Husband and Duckeny:
Something must be there for directing the flow of
economic activities and their conduct without any bottleneck.
Finance is the only means which can perform their function.
According to Osborn, R.C
The finance function is the process of acquiring and
utilizing funds by a business.
According to Bonneville and Dewey
Financing consists in raring, providing, managing, of all
money, capital or funds of any kind to be used in connection
with the business.

CHAPTER-II
FINANCIAL SERVICES

CHAPTER-2
FINANCIAL SERVICES

The financial services can also be called financial


intermediation is a process by which funds are mobilized from a
large number of savers and make them available to all those
who are in need of it and particularly to corporate customers.
Thus, financial services sector is a key area and it is very vital
for industrial developments.

A well developed financial

services industry is absolutely necessary to mobilize the


savings and to allocate them to various investable channels
and thereby to promote industrial development in a country.
FEATURES OF FINANCIAL SERVICES
Some of the characteristic features of financial services
are as follows.
Customer oriented
Intangibility
Simultaneous performance
Dominance of human element
Perish ability
Inseparability
Lack of special identity.
IMPORTANCES OF FINANCIAL SERVICES

Following are the some of the points which shows the


importance of the financial services.
Finance is lifeblood of an organization.
Financial services need for every organization to run the
business.
Agricultural sector need financial services.
It is important in development of the economy of the
country.
Increases the savings and mobilization of funds.
It is useful in the new innovation in service sector.
it helps to increase the productivity of the agriculture.
REASONS FOR GROWTH OF FINANCIAL SERVICES
Financial services stimulating growth of the system of a
country. Reasons for growth of financial services are as follows,
DEMOGRAPHY
Population growth stimulating the requirement of basic
needs, such as food, shelter, education, health care facility.
These needs are fulfilled we required financial systems.
ECONOMIC
Financial services growth directly related with the growth
of the economy of the nation.
POLITICAL AND LEGAL

When

the

country

improves

financially

growth,

automatically the political and legal condition of the country


also improves.
SOCIAL AND CULTURAL
When the country stands financially fit then the living
standard of the peoples also increases automatically and also
the culture of the nation is saved.
TYPES OF FINANCIAL SERVICES
1) Long-Term Finance Sources
2) Medium-Term Finance Sources
3) Short-Term Finance Sources
I. Long-Term Finance Sources:
Normally,

this

source

is

resorted

to

finance

that

part/portion of working capital which is of permanent character,


i.e. it is believed that this type of working capital will be
needed constantly for a longer period. Long-term sources for
permanent working capital financing may have the following
components.
1) Owned Sources:
The following may be included under their component
a) Issue of Shares:
Issue of shares is an important source for raising
fund/finance for permanent working capital. These shares may
be both equity shares and preference shares. Since issue of
equity shares does not create any fixed burden on the earnings

of the business therefore normally equity shares should be


issued for raising funds for financing permanent working capital
b) Retained earnings:
That part of earned profits. In a business which is not
distributed as divided is called or retained earnings and it is
considered as regular and costless source of financing working
capital.
Working capital requirements to increase wit the growth
of business concern and which can be met by reinvesting the
profits in business itself.
c) Reserves:
Like retained earnings, various types of reserve also do
not involve any fixed charge on business earnings and
therefore the use of such reserves in financing working capital
is also considered as proper and profitable.
d) Sale of fixed assets:
Some fixed assets owned by the business concern may
become

obsolete

and

some

of

there

are

available

as

scrap/residual At the same time, some are being purchased


due to faulty planning and forecasting and thus become as
surplus or superfluous. Al these assets can be disposed off and
thus working capital can be arranged. However, this may be
fully irregular and non-dependable source
e) Retiring current liabilities below book-value:

A business concern may avail some discount while


making payments against current liabilities i.e. discharging the
current obligations.

Similarly, provisions for taxes and other

known expenses are created and it is just possible that actual


payment on these score may be less than their book values
should be considered as non-recurring source for financing
working capital.
II Borrowed Sources/External Sources:
Under this component of long-term sources, the following
are included.

a) Debentures:
Business concern may also raise funds for financing the
working capital by issue of debentures in the same way as the
issue of shares.

It is, however, noticeable that issue of

debenture created fixed burden (in the firm of interest) on the


business used after considering the progress of the business,
stability of business earnings, risk factor etc.
b) Long-term Loans/debts:
In addition to the issue of debenture, a business concern
may also obtain funds for working capital as loans from
financial corporations, trusts and investment companies.
II. Medium Term finance:

On the basis of terms of duration. The business finance is


classified into 3 types of Medium Term of finance is that,
Medium Term finance:
To finance a business for a period of more than a year but
less than 10 years is called intermediate financing. Such type
of finance is obtained for expansion and modernization of
existing plant.

It is also needed for the purchase of assets.

Costly raw-material.

It may be used to met the cost of

maintenance, repair, improvement and betterment of plant.


Lastly it can be used to repay the short term loans.

Sources of Medium term finance:


1) Commercial banks:
Commercial banks provide medium term finance to
traders and manufacturers against security.
2) Insurance companies:
The

insurance

companies

also

provide

loan

to

manufacturers against the security of assets.


3) Industrial development bank of Pakistan:
IDBP was established in1961 to provide medium and long
term finance to establish and expand industries.
4) Pakistan industrial credit and investment corporation
CPICIC)
This corporation was set up in 1957 and is one of the
major sources of providing finance for medium and long term
projects. It also provides finance in technical and managerial
fields. It also provider loans for working capital.
III. SHORT TERM FINANCE
As mentioned in the preceding chapter, variable working
capital

is

normally

financed

through

short-term

sources

including spontaneous ones. Following may be included in this


category.

1) Trade Credit
2) Bank Credit
3) Public Deposits
4) Inter-corporate Deposits
5) Advances from customers
6) Internal sources
7) Some new and innovative sources (Non-Bank) such as
a) Commercial Paper
b) Convertible Debentures
c) Factoring
1) Trade Credit:
Sellers/suppliers

of

different

kinds

of

product/raw

materials provide credit to their customers spontaneously as


per trade conventions.

It is a common experience that a

substantial part of purchaser of goods and services in business


are on credit terms rather than against cash payment. While
the seller or supplier of goods and services may perceive credit
as a lever for increasing the sales volume, the buyer customer)
may look upon it as an alternative to loaning for the purchase.
The credit offered by the seller/supplier in known as Trade
credit or Bills payable also as Accounts payable or Notes
payable in America).

Depending upon the nature of credit

allowed.
All the successful business concerns which have good
record of payment and/or good credit rating are availing this
trade credit continuously.

One point should always be

remembered, i.e. trade credit is extended in connection with


goods or raw materials bought for resale or processing and
resale and it is different from consumer credit which is offered
to individual for buying goods for ultimate are/consumption. It
is also different form installment credit.

Trade credit is an

example of spontaneous source of capital which flows in


natural course of the business in keeping with established
trading practices. It does not require any loan-negotiation or
security margin.

In India, trade credit is considered to be a

very important source of short-term finance and 20 to 25


percent of short-term sources are obtained from trade credits.
2) Book credit or Bank Finance (Short-term):
Banks provide short-term finances in the following forms
a) Overdraft:
Customer/clients having current account in the bank may
avail the benefit of overdraft upto a certain limit from their
bankers. Customer can overdraw to that extent any time and
may repay the amount any time. Interest is charged by the
banker only on that amount which has been overdrawn by the
customer subject to a minimum charge.

Overdraft account

operates against security in the form of pledge of shares and


securities, assignment of life insurance policies and sometimes
even the mortgage of fixed assets.
b) Cash credit:

Commercial bank provides cash credit facilities to its


customers/clients
requirements.

for

meeting

their

short-term

financing

It is such regular system under which bank

offers the facilities to clients to withdraw the money within the


limits pre-fixed by the bank. The security offered by the clients
is in the nature of hypothecation of stocks or promissory notes
bearing signatures of other persons also.
c) Discounting trade bills:
Sellers often draw bills on their customers purchasing
goods on credit. The purchases give their acceptance. Such
bills are being discounted by the sellers for arranging shortterm funds.

In other words, bank provides finance to the

customers either by outright purchasing or by discounting bills


receivables held by the customers.

Obviously, bank will not

pay the full amount and therefore charges something as


discount
d) Opening of letters of Credit:
Letter of credit is opened by a bank in favors of its
customer undertaking the responsibility to pay the supplier of
goods if its customer fails to pay for goods purchased within
the stipulated time. Under this scheme of bank finance, bank
does not provide finance; rather it assumes the risk of nonpayment by its customer.

Bank provides short-term credit in the above forms to its


customer.

However, bank credit system is subjected to a

number of regulations as discussed at the end of this chapter.


3) Public Deposits:
Regulations imposed on the availability of bank credit
induced many concerns to explore alternative sources of
financing the working capital and the mobilization of savings
from the general public was rated to be a very important
alternative source. Funds thus mobilized form general public
deposits by non financial and non-banking companies is a very
old system. A number of textile mills of Ahmadabad, Surat and
Mumbai started to avail this source of finance which became
very popular later on.
In or country the evolution of inter corporation deposits
took place in the seventh decade of the twentieth century.
Both demand and supply were equally responsible for this.
There is no control on the short-term market of inter-corporate
deposits
However, long-term deposits are made (covered under
sec 58 A) of the Indian Co, AC and accepted freely among the
corporate bodies.
5) Advances from customers:
Many times some produces/sellers receive whole or part
of the amount of gods quite in advance and such amount

remains with them till the supply of goods.


interest is paid on this amount.

Normally, no

Therefore, it is the cheaper

source of short-term financing but resort to their method can


be made only by some reputed and well-settled concerns. In
case of industries, where tough competition is noticed, no
advance can be received rather goods are to be sold to
customers on credit terms.
6) Internal Sources:
When a business concern establishes a depreciation
fund/reserve, this can be used to provide for working capital
financing at least till these are needed for replacing the assets.
Similarly, the plough-back of profit or retained earnings can be
useful for providing working capital finances. Again provision
for tax can also be utilized I the same way.
7) New and innovative Sources:
A number of significant changes have taken place in
short-term finance or money market in India during the last 10
to 15 years. Some
more important are as under.
a) Commercial paper Corporation {C.P. C }:
Commercial

paper

is

short-term

money

market

instrument which is considered as most ideal both for investors


as well as for corporate sector borrowing from banks for
working capital requirements. While high-rate companies may

take advantage of this source the investors too can earn profit
by using their short-term funds.
As a source of short-term fund, commercial paper is most
popular in Japan and western countries.

In the USA, it is in

vogue. For over 100 years, while in European countries and


Japan its origin is of recent one. In our country, Reserve Bank
of India permitted the issue of commercial papers in the year
1989
3) Commercial paper is a promissory note which is negotiable
by endorsement and fit for delivery with a fixed maturity
between one month to one year and it is issued on discount
basis
It helps to raise short-term debt at attractive rates. It is
an unsecured instrument and is not tied up to any specific
business transaction. It does not carry any collateral security.
Thus, commercial paper becomes a substitute source and not
an additional source.
b) Convertible debentures:
For augmenting funds for working capital along with longterm purposes, there is one more source, i.e. the issue of
convertible debentures.
last

two

decade

or

It has been gaining popularity since


so.

Since

banks

generally

grant

loans/advances only on the security of current assets, the issue


of debentures is regarded as the only other appropriate
alternative source for raising capital including working capital

The issue of bearer debentures in normally not permitted.


Similarly, the issue of debentures is not permitted just to
prevent an enterprise from closing down due to recurring
losses.
Even the permissible rater of interest on convertible and
non-convertible debenture is notified by the government form
time to time.
c) Factoring:
One most recent source for financing working capital in
factoring. In fact, factoring is also a business activity in which
a financial intermediary called factor) takes the responsibility of
collecting the debtors or receivables of a manufacturing trading
concern called Seller or Clint.
In other words chief financial executive instead of
discounting the bills from bankers seller the debtors and
receivables to a special financial institution.

Factor, i.e.

financial institution assumes total responsibility of sales ledger


administration and collections from debtors. Thus, Factoring is
a continuing arrangement between a financial intermediary
called factory and seller of goods and services (called client).
Factors are generally subsidiary of either Bank or private
Finance companies.
It is also important to note that factoring should not be
considered as related only to a specific transaction rather it
should be considered as a continuous arrangement. In fact, it
takes care of all receivables emanating from the credit sales of

its client. In this sense, factoring is a financial service designed


to help companies in managing the receivables in a better
way.

CHAPTER -3
COMPANY PROFILE

CHAPTER -3
COMPANY PROFILE
COMPANY BACKGROUND:
The Muthoot Group is a 123 years old business based in
India

and

interested

in

financial

services,

Information

technology, Media and Entertainment, Health care, Education,


Power generation, Infrastructure, Plantations, Precious metals
and Hospitality. The Group takes its name from the Muthoot
Family based in Kerala. The Company was set up by Muthoot
Ninan Mathai in 1887 at Kozhencherry , a small town in the
erstwhile Kingdom of Travancore (Kerala). It was then later
taken over by his son M John Muthoot who incorporated the
Finance division of the group which was till then primarily
involved in wholesale of grains. The company is now managed
by the third and fourth generation of its family members.
Muthoot Fincorp Limited (MFL) the flagship Company of
the 20,000 Crore Muthoot Pappachan Group . A market leader
in the gold loan business Muthoot Fincorp has over 1280
branches spread across the cities, towns and villages of India,
the Company serves an average of 45,000 customers a day.
Muthoot Fincorps long-standing experience, expertise and
stronghold in the semi urban and rural areas have enabled the
Company to provide quick, customized finance options and
investment products, maximizing returns to the population. The
loan products of Muthoot Fincorp are uniquely structured to
serve people who do not have

easy access to mainstream commercial banks.


MFL counts the satisfaction and long-service of its people
as a cornerstone of its success. Fostering teamwork, nurturing
creativity

and

rewarding

dedication

to

commitment

are

systematically and professionally managed. Excellence and


innovation are encouraged and rewarded. Ensuring MFLs
people remain at the competitive edge, best practice in the
area and unique motivational programs are regularly carried
out by the Training and HR departments.
The company recently announced plans for an IPO (Initial
Public Offering) before the year 2014. In addition there are
plans to implement an ESOP (Employee Stock Ownership Plan)
before 2012
Muthoot Fincorp is a subsidiary of Muthoot Groups was
established in 1939 and primarily involved in financial sector of
the country. Muthoot Fincorp falls under the category of Non
Banking Financial Company (NBFCs) of the RBI guidelines.
Muthoot Fincorp limited is a finance company catering to the
financial needs of retail and institutional customers. It is
registered with the Reserve Bank of India as a systemically
important non-deposit taking non-banking finance company
(NBFC) with a paid up capital of Rs. 60 crores and a Net Owned
Fund of Rs. 403 cores. Muthoot Finance is also the highest
credit rated Gold Loan company in India, with a credit rating of
AA-(CRISIAL) for its long term debt and P1+ (CRISIAL) and A1+
(CRISIAL) for its short term debt Instrument. It has a diverse

mix of retail offerings in the areas of Consumer loan products


and investment advisory services. These include Gold loans,
Home loans, Auto loans, Business loans, Loans against
Property, Investment products and Advisory Services, Secured
Debentures etc.
Muthoot Finance a

subsidiary of Muthoot Group was

established in 1939, and is primarily involved in the financial


sector of the country. We are the largest gold financing
company in India in terms of loan portfolio. We provide
personal and business loans secured by gold jewellery, or Gold
Loans, primarily to individuals who possess gold jewellery but
could not access formal credit within a reasonable time, or to
whom credit may not be available at all, to meet unanticipated
or other short-term liquidity requirements. Our Gold Loan
portfolio as of March 31, 2010 comprised approximately 2.8
million loan accounts in India that we serviced through 1,605
branches across 20 states and two union territories in India.
According to the IMaCS Industry Report 2009, as of March 31,
2010 our branch network was the largest among gold loan
NBFCs in India. We have since increased our branch network to
1,921 branches as of August 31, 2010, and used our branch
network to serve an average of 53,989 customers per day in
the month of August 2010. As of August 31, 2010, we
employed 12,220 persons in our operations. Muthoot also
provides

various

financial

services

such

as

Insurance

distribution, Wealth Management, Foreign Exchange, Money


Transfer and Vehicle & Asset Finance. Muthoot Finance was
selected as one of the Top 10 Finance companies to work for in

India by Naukri.com. Muthoot Finance privately placed 4% of its


paid up capital to Private Equity players - Barings India
and Matrix Partners India for Rs.1.57 billion, hence valuing the
earlier privately held company at over $1 billion.
We are a Systemically Important Non-deposit taking NBFC
head quartered in the southern Indian state of Kerala. Our
operating history has evolved over a period of 70 years since M
George Muthoot (the father of our Promoters) founded a gold
loan business in 1939 under the heritage of a trading business
established by his father, Ninan Mathai Muthoot, in 1887. Since
our formation, we have broadened the scale and geographic
scope of our retail lending operations so that, as of March 31,
2010, we were Indias largest provider of Gold Loans. In the
years ended March 31, 2008, 2009 and 2010, revenues from
our Gold Loan business constituted 95.97%, 96.71% and
98.08%, respectively, of our total income. In addition to our
Gold Loans business, we provide money transfer services
through our branches as sub-agents of various registered
money transfer agencies, and recently have commenced
providing collection agency services. We also operate three
windmills in the state of Tamil Nadu.
We issue secured non-convertible debentures called
Muthoot Gold Bonds on a private placement basis. Proceeds
from our issuance of Muthoot Gold Bonds form a significant
source of funds for our Gold Loan business. We also rely on
bank loans and subordinated debt instruments as our sources
of funds. As of March 31, 2010, we had Rs.27,192.5 million in

outstanding Muthoot Gold Bonds and Rs.25,612.7 million in


other borrowings. We also raise capital by selling a portion of
our loan receivables under bilateral assignment agreements
with various banks that purchase our portfolio primarily for
meeting their priority sector lending commitments.
Our customers are typically small businessmen, vendors,
traders, farmers and salaried individuals, who for reasons of
convenience, accessibility or necessity, avail of our credit
facilities by pledging their gold jewellery with us rather than by
taking loans from banks and other financial institutions. We
provide retail loan products, primarily comprising Gold Loans.
We also disburse other loans, including those secured by
Muthoot Gold Bonds. Our Gold Loans have a maximum 12
month term. Our average disbursed Gold Loan amount
outstanding was Rs.26,183.0 per loan account as of March 31,
2010. In the year ended March 31, 2010, our retail loan
portfolio earned, on average, 1.67% per month, or 19.94% per
annum.
As of March 31, 2008, 2009 and 2010, our portfolio of
outstanding

gross

Gold

Loans

under

management

wasRs.21,790.1 million, Rs.33,000.7 million and Rs.73,417.3


million, respectively, and approximately 30.1 tons,38.9 tons
and 65.5 tons, respectively, of gold jewellery was held by us as
security for our Gold Loans . Gross non-performing assets
("NPAs") were at 0.42%, 0.48% and 0.46% of our gross retail
loan portfolio under management as of March 31, 2008, 2009
and 2010, respectively.

In the years ended March 31, 2008, 2009 and 2010, our
total income was Rs.3,686.4 million Rs.6,204.0 million and
Rs.10,893.7 million, respectively, demonstrating an annual
growth rate of 57.56%, 68.29% and 75.59%, respectively. Our
profit after tax in the years ended March 31, 2008, 2009 and
2010 was Rs.636.0 million, Rs.977.2 million and Rs.2,275.7
million, respectively, demonstrating an annual growth rate of
44.61%, 53.65% and 132.88%, respectively. Our net worth as
of March 31, 2008, 2009 and 2010 was Rs.2,131.1 million,
Rs.3,614.5 million and Rs.5,841.9 million, respectively. We
believe that the following competitive strengths position us
well for continued growth:
PROFILE OF FOUNDER OF MUTHOOT GROUP
In 1887, in Kozhencherry a quiet hamlet surrounded by
plantations in the Southern state of Kerala, India, Mr. Ninan
Mathai started a retail business along with his plantation
ventures.In time, his sons took over the reins and reestablished the business. With their youthful vision and
combined strength it soon flourished. In 1939, the brothers
established the Muthoot Chit Fund Enterprises, providing small
and medium loans to farmers and merchants. In a short span of
10 years it became the largest business house of its kind in
Kerala.
They soon moved into full fledged banking operations.
They

specialised

in

gold

loans

and

advances

to

small

enterprises and individuals on quick and easy terms. This


ensured rapid growth. The brothers then decided it was time to

bifurcate and thus was born the Muthoot Pappachan Group,


founded by his youngest son Mathew M. Thomas or Muthoot
Pappachan as he is fondly known. Under his watchful eye the
group has since diversified into financial services, hospitality,
flight catering, travel services, IT infrastructure, property
development, the automotive sector and alternate energy. A
simple and devout man Muthoot Pappachan espoused a nine
point formula that stood by him in realising his goals. They are
love,

peace,

happiness,

kindness,

helpfulness,

patience,

pleasantness, faithfulness, and self control.


These ethics have been a guiding light to the path of his
successors and have permeated every strata of the Muthoot
Pappachan Group. The same values still govern every decision
in the Group. When asked for his formula to success he
quipped, unflinching faith in the Almighty and unshakeable
determination to face and overcome challenges.

In dire

circumstances and sometimes in the face of loss he was heard


to quote that a debit on earth will be a credit in heaven. A man,
known to adhere to his word, he instilled these values
throughout

the

organisation

he

nurtured.

The

Muthoot

Pappachan Group carries Muthoot Pappachans legacy on with


his words in our hearts I am because God is with me.
ABOUT THE BOARD OF DIRECTORS:
Thomas John Muthoot
The Muthoot Pappachan Group is headed by Chairman
and Managing Director, Thomas John Muthoot. With a vision for
the future and rooted in the values imparted by his father, he

has effectively spearheaded the group over the past twenty


five years into one of Keralas leading financial powerhouses.
He also paved the way for the diversification of the group into
other major industries like power, hospitality, automotive and
more. He is also a member of the Chamber Of Commerce,
Trivandrum, and Treasurer of the Trivandrum Agenda Task
Force.
Thomas George Muthoot
Thomas George Muthoot is the quiet strength behind the
visionary growth of the group. The twin of John Muthoot,
Managing Director of Muthoot Capital Services and Director of
all other units of the Muthoot Pappachan Group, his penchant
for technology and efficient administrative skills ensures the
group stays on the cutting edge of development. He is also the
Chairman of Kerala Non-Banking Finance Companies Welfare
Association, Kochi and on the managing committees of IndoAmerican Chamber of Commerce-Kerala Branch, Kochi and
Equipment Leasing Association of India (ELAI), Chennai.
Thomas Muthoot
Thomas Muthoot is Director- Strategic Initiatives and
Director of other units of the group. An expert in Micro credit
and Micro saving business with a great desire to serve the
masses, he is innovative with need based financial products.
His knowledge of emerging markets and their functions have
been harnessed in structuring the business interests of the
group. He is also the Vice President of Ernakulam District

Cricket Association and Managing Committee member of Kerala


Cancer Care Society.

THE COMPANY PRODUCT LINE AND FEATURES OF THE


PRODUCT
As far as services are concerned, Muthoot Fincorp
provides

various

services

according

to

the

needs

and

requirements of its customers. Basically its core services are


gold loan and swarnavarsham. Muthoot fincorp has strategic
alliances with leading companies which grant its customers
access to premium services at affordable costs. For money
transfer Western Union money transfer ,Motilal Oswal For
investment advisory services and share broking, For Mutual
Fund -Franklin Templeton. Muthoot Fincorp also provides SD
(secured debenture) and FD (fixed deposits). In gold loan it
provides various types of schemes for customer like 3 minutes
express gold loan, smart plus gold loan. In 3 minutes express
gold loan one can get loan up to 90 per

cent of

gold

depending upon the purity level of gold within three minutes on


an monthly interest of 2 per cent. But in Smart plus gold loan
the benefit of paying back in Equated Monthly Instalments, The
EMI is apportioned such that the larger amount goes toward
repaying the principal, no foreclosure charges,Part release and
repledge is allowed, and Rebates on prompt payment. Apart
from EMI option it also provides different interest rate
depending upon time period and loan amount, here interest is

also calculated on diminishing balance method. In smart plus


gold loan more flexibility is there as compared to 3 minute
express gold loan.
In FD (fixed deposits) one get double its money in five years
and the minimum amount in FD is Rs 10,000/. In case of
secured debenture company provides security of property and
assets which attract the customers attentions.
MARKETING STRATEGIES
As its marketing strategies suggest Muthoot Fincorp
provides attractive offers to its customers at the time of
festivals like Akshaya Trithiya. Apart from it advertisement is
given in News papers and FM, celebrities and sport stars also
used in the advertisement campaign. Muthoot Fincorp also host
some

local

events(20-20

cricket

tournament,Israel

open

tournament ) in Kerala and other states in south India.


COMPETITORS
In gold loan market there are different players like banks,
NBFC and local pawn brokers and jewelries. In banking sector
HDFC, Bank of India, Axis Bank, SBI, syndicate Bank etc. are
providing gold loan. In Non-Banking Financial Sector there more
competitions among the competitors and also there big
competitors name like Muthoot Finance, Mannapuram gold
loan, Karvy Finance, Future capital gold loan, Reliance gold
loan, Mahindra Finance, and also some other players are
involved. In India nearer about 70 per cent of market share is in
the hands of local jewelries and pawn brokers. Muthoot Fincorp
objectives is to capture these 70 per cent market share and its

biggest competitors is Muthoot Finance and Mannapuram gold


loan. Some of the new players like Karvy Finance, Mahindra
Finance gold loan, Future Capital comes into market which is a
threat for Muthoot Fincorp. Though there are many competitors
in gold loan market but still Muthoot Fincorp is successfully
running its business more than six decades and earned a profit
of more than 200 cores in the fiscal year 2010-11.
ACHIEVEMENTS
Muthoot Finance is the highest credit rated Gold Loan
company in India, with a credit rating of AA-(CRISIAL) for its
long term debt and P1+ (CRISIAL) and A1+ (CRISIAL) for its
short term debt Instrument. Its Mahila Mitra loan portfolio
touches 10,000 women micro entrepreneurs. In last two
months it successfully opened 200 branches in northern part of
India.
FUTURE PROSPECTS
Earlier Muthoot Fincorp was only in Kerala, and then it
slowly expands its business and now having more than 700
branches in south India. Then in the early 2000 it expand its
business Gujarat and in north India. At the same time this NBFC
Company provides a wide choice of services to its customers.
Now its next step will be to open another 200 branches in north
India and then to shift east India. So one can say that Mthoot
Fincorp is on expansion mode and in next 10 year it wii open
its branches in entire India.

MARKET

LEADING

POSITION

IN

THE

GOLD

LOAN

BUSINESS WITH A STRONG PRESENCE IN UNDER-SERVED


RURAL AND SEMI URBAN MARKETS
Gold loans are the core products in our asset portfolio. We
believe that our experience, through our Promoters, has
enabled us to have a leading position in the Gold Loan business
in India. Highlights of our market leading position include the
following:
We are the largest gold financing company in India in terms of
loan portfolio. Our loan portfolio as of March 31, 2010
comprised approximately 2.8 million loan accounts in India with
Gold Loans outstanding of Rs.73,417.3 million.
We have the largest branch network among gold loan
NBFCs. As of March 31, 2010, we operated 1,605 branches
across 20 states and two union territories in India, and in the
month of August 2010, we served an average of 53,989
customers

daily.

Our

branch

network

has

expanded

significantly in recent years from 373 branches as of March 31,


2005 to 1,921 branches as of August 31, 2010, comprising 335
branches in northern India, 1,322 branches in southern India,
197 branches in western India and 67 branches in eastern
India.
We believe that due to our early entry we have built a
recognizable brand in the rural and semi-urban markets of
India, particularly in the southern Indian states of Tamil Nadu,

Kerala, Andhra Pradesh and Karnataka. As of March 31, 2010,


the southern Indian states of Tamil Nadu, Kerala, Andhra
Pradesh and Karnataka constituted 75.38% of our total Gold
Loan portfolio.
We have a strong presence in under-served rural and
semi-urban markets. A large portion of the rural population has
limited access to credit either because of their inability to meet
the eligibility requirements of banks and financial institutions
because credit is not available in a timely manner, or at all. We
have positioned ourselves to provide loans targeted at this
market.
We offer products with varying loan amounts, advance
rates (per gram of gold) and interest rates. The principal loan
amounts we disburse usually range from Rs.2,000.0 to
Rs.100,000.0 while interest rates on our Gold Loans range
between 12.00% to 30.00% per annum.

2.2.1.1 Muthoot Organisational Structure


fig. 2.1

CHAPTER -4
PRODUCT PROFILE

CHAPTER -4
PRODUCT PROFILE

INTRODUCTION
The year 1939 saw the emergence of the present day
corporate giant- The Muthoot Group. It embarked on its
unending

mission

of

providing

excellent

services

to

its

customers by establishing its first unit in Kozhencherry.


The clear-cut vision and ideals of our founder patron late
Shri. Ninan Mathai Muthoot and Founder chairman late Shri. M
George Muthoot has made the Muthoot Group the Largest
financial Group of its kind in India.
Undoubtedly the mission is to win the confidence of the
customer

through

unmatched,

prompt

and

personalized

service.
ADMINISTRATIVE SET UP OF MUTHOOT GROUP
The Registered Office of the group is situated at
kozhenchenrry In

kerala. The Corporate Office (South) is in

Kochi, Kerala and the Corporate Office: (North) is situated at


Lajpat Nagar New Delhi.

THE GROUP HAS FORTY FOUR REGIONAL OFFICE


Kerala
Tamilnadu
KARNATAKA ANDHRAPRADE
SH
Trivendrum north

South

Bangalore

Hyderabad

Trivendrum south

tamilnadu
Sivagangai

North
Bangalore

Secunderabad

Kollam
Kottarakkara
Kozhenchery
Ernakulam
Trichur
Alleppey
Idukki
Calicut
KOLKATTA
KARNAL
MUMBAI

Trichy
Madurai
Coimbatore
Chennai South
Chennai north
Pondichery
Salem
Theni
Thirunelveli
Thanjavur
WESTBEGAL
HARIYANA
MAHARASTR

AHAMADABAD
DELHI
WEST DELHI
JAIPUR

A
GUJRAT
DELHI
DELHI
RAJASTHAN

South
Hubli
Mangalore
Mysore
Goa

vijayawada
Kurnool
Vishakapatanam
Thirupathi
Rajamundry

VARIOUS DIVISIONS OF MUTHOOT GROUP


1. BANKING & FINANCE DIVISION (MFIN)

Started in 1939
ISO 9001-2000 Company
Deals in Gold Bond (Deposits) , Gold Loan, & M Power
Card
2. MUTHOOT PLANTATION DIVISION
Since 1939
Commitment of Muthoot Group to pollution free world
Our Estates are St. Mathews Estate, Koodal & St. Mathews
Estate, at Kulasekharam Nagercoil;
Muthoot Plantation boasts cloves, coconut and Rubber.
3. EDUCATION DIVISION
Since 1962

St. Georges School, Alakananda, New Delhi

St. Georges School, Defence colony, New Delhi


MGM

Muthoot

Nursing

School,

Kozhencherry,

Pathanamthitta
Staff Training Colleges at Ernakulam & New Delhi
4. MUTHOOT HOSPITALITY & HOTEL DIVISION
Cardamom County
Started in 1978 & Our Group purchased this project in
2000
Just 1 Km from famous Periyar Tiger Reserve

All Spice the multi-cuisine restaurant offers finest


international dishes

Ayura-Ayurvedic center helps you for natural therapy.

Green Leaf certificate from Dept. of Tourism Government


of Kerala
Company certified with 4 star classification and First ISO
9001-2000 Resort in Kerala.
Muthoot Pampa Villa
River side cottage at champakulam, Alleppey on the
banks

of

Pampa

river.

Muthoot Back Water Cruises


Fleet of House boats at Alleppey
5. HEALTH CARE DIVISION
Since 1988

Mar

Gregorios

Memorial

Muthoot

Medical

centre,

Kozhenchery with ISO 9001 2000 Certification


Mar

Gregorios

Memorial

Muthoot

Medical

centre,

Pathanamthitta
Muthoot MRI Scan & Research Centre.
6. MUTHOOT VEHICLE & ASSET FINANCE DIVISION
Since 1992
Keralas largest I-lire Purchase & Leasing Finance
Company

Over Drive Car Loan Facility provides loans with lowest


rates with easy and flexible repayment.
Loan also given to used Vehicles
7. MUTHOOT BUILDERS
Head quarters at Trivandrum.
Throughout

its

fifteen

years

of

operation,

Muthoot

Builders have
built

several

meticulously

planned

residential,

commercial, hospital and hospitality buildings which are known


for the quality of construction, utility value and aesthetic
beauty
8. MUTHOOT SYSTEMS AND TECHNOLOGIES PVT LTD.
(EMSYNE)
IT Division of the Muthoot Group
Since 1993
Strong focus on custom application development

Developing custom application ranging from medium to


large-scale

9. MONEY TRANSFER DIVISION.


Started in200l
Facilities include (Inward Remittance)
1) Trans Cash
2) Xpress Money

3) First Remit
4) Instant Cash
5) Money Gram

Outward Remittance
1) Wiremoney
10. MUTHOOT WEALTH MANAGEMENT SERVICES PVT.
LTD.
Life Insurance
Mutual Funds

General Insurance

11. MUTHOOT FOREIGN EXCHANGE DIVISION


Since 2001
All major currencies and travelers cheques accepted for
encashment
Commission free encashment
Sale of major currencies and travelers cheques
Possess Authorized Dealer Category II license from RBI
12. MUTHOOT PRECIOUS METALS CORPORATION
Sale of 999.99 Pure Gold coin imported from Switzerland.
Easy to buy and store
13. POWER GENERATION
The group has also ventured into power generation by
tapping into non conventional energy resources. The group in
association with Suzlon Energy Corporation has installed two
wind power units at Thirunelveli
to generate electricity from wind.
14. MEDIA
Muthoot Group has made a grant entry into the world of
media & broad casting by setting up an FM radio station at
Chennai.

15. MUTHOOT TRAVEL SMART


Helps the customers to book their national as well as
international flight tickets. It also helps people to have passport
and visa, and also to book train tickets.
16.

A. MUTHOOT SECURITIES LTD.


Muthoot Group has forayed into the market, helps the

customers to multiply their fortune in Share Trading.


(B) MUTHOOT COMMODITIES LTD.
Latest venture from the Muthoot Group, being a member
of MCX,

NCDEX and NMCE Muthoot Commodities provides a

platform for commodity future trading.


USP - GOLD LOAN
High per gram rate offered
Quick and fast service extended
Interest rate, monthly I Rupee on words.

8 different schemes, suitable for various categories of


customers

Need to produce, only Identity proof and address proof


Your assets (gold ornaments) are kept in out strong rooms
under 100% insurance protection.
Interest only for the actual days
Easily available - No need to maintain an account.

Super Bullet Points


We provide instant cash loan in 5 minutes
loan for any amount available any time, any where for
any purpose.
Simple hassle free loan with least documentation.
unmatched safety of security of Gold pledged.
Flexible payment option on easy installments.
1. USP - GOLD BOND
We mobilize resource, not through fixed deposits as in
Banks, but through Debenture called Gold-Bonds which are
fully secure, redeemable and non-convertible instrument
1. The resources mobilized are given out as gold Loans to
customers. This investors money is guaranteed by 120% of
gold kept in our strong rooms.
2. We offer the best rate of interest- up to 12%. In our Doubling
Bond, We give 17% interest and in 72 months the bond amount
doubles.
3. The Bond holder is free to close the deposit at anytime.
Investors in shares and insurance do not have this facility.
4. Since it is a Debenture, it cannot be converted in to other
instruments like shares etc.
5. Interest can be availed monthly or annually.

6. Higher interest rate is offered to senior citizens, Muthoot


employees, Ex-service me state and central government
pensioners, freedom fighters and state and central award
winners.
7. Gold Bond investments can be shifted to any branch of the
company.
8. Also you can avail interest from any branch
9. Customer can avail a loan up to 90% the Bond amount,
through any of our branches.
10. You can suggest a nominee for your investment.
11. Closing of the gold Bond can be effected through any of our
branches.
Super Bullet Points
1. For every 100 crs. of investment in Bonds, we have 140
crores of gold with us.
2. Unmatched liquidity. Premature closure of Bonds & Loans up
to 90% available at anytime
3. Our rate of interest is 2.5% to 3% higher than the interest
rates of nationalized /schedule banks.

4. We have an unblemished track record 01124 years. Wide


network of over 2500 branches across the country facilities
customers to withdraw the amount of Bonds/Interest from any
part of the country.
5. We have never defaulted or delayed over a single interest
payment, not
to mention principal
2. USP - MUTHOOT TRAVEL SMART
Tie -up with all important National and international Air
ways Companies.
Category A- IATA recognized travel agent.
Can purchase Air Tickets through any Branch of Muthoot
Finance and other out lets and divisions of Muthoot group.
Door delivery facilities for tickets you purchase.
Service extensions at some of the seleced Air Ports
Kochi, Dubai, London, Heethru.
Maintain offices at London, Metro Dubai, Karama.
National and International Tour Packages.
Passport, Visa arrangements at an affordable rate and in
reasonable

time.

4. USP - PRECIOUS METAL CORPORATION


Can buy, 24 Karat pure gold coins and biscuits
Installment schemes for purchasing ornaments

Less risk and easy to encash.

Gold coins in Pillfur proof packing.

Imported from Switzerland


Favorable for owners of jewellery shops and high value
customers.
5. USP - Forex
Can y and sell all important currencies.
Accepted as Authorized Dealer by the RBI (License for
sending money to foreign countries) category II.
All Muthoot Finance branches can buy foreign currencies.
Travel cheques are issued for all major currencies and also
can be en cashed.
We issue electronic travel cards for all major currencies
and the same can be used in foreign countries, as ATM
card or Debit Card.
You can Send money to foreign countries through
Muthoot. Exchange Companies.
6. USP Money Transfer
It is an on time transfer

For transferring money up Rs. 50000/ the sender or


receiver needs to maintain a bank account.

Up to Rs. 50000 can be received as cash by the Indian


receiver.
A customer can accept money from any branches of
muthoot in India.
A foreigner can receive cash, in Indian currency up to an
equivalent of 2500 US Dollars from any Muthoot branch.

Services of Six money transfer companies are made


available
through Muthoot Branches.
7. USP- M.Power Card
This card will be accepted in all Muthoot Finance
branches.
Holder gets an accidental insurance cover up to Rs.
100000/ Can enjoy on line Air tickets Booking and Shopping
300 shops in Kerala give the holder, up to 25% discount in
shopping
Referral rewards and Bonus points can be converted as
gifts.
Recharging facilities for mobile phone
Bill

payment

facilities

at

KSEBs

and

major

phone

companies.
8. USP-MWMS
Dealing in life Insurance Investment Products
Advice on best insurance product of all major Insurance
Companies
Market Linked Products which are consistently delivering
good return
Unit linked and Investment oriented Insurance Plans
Provides Flexibility gives Protection to savings of life

Liquidity, high returns, Tax benefits, Insurance Cover,


option to switch among funds and continued advices to
maximize health.
Excellent after sales service and redemption advises.
ANALYSIS OF FINANCIAL STAEMENT

CHAPTER -5
RESEARCH
METHODOLOGY

CHAPTER -5
RESEARCH METHODOLOGY
OBJECTIVE OF THE STUDY

To make a analytical study of various financial products

To know the effective utilization of various financial products


by Muthoot finance corporation ltd.

To study the problems connected with granting Muthoot


finance to customer

To study establishment, growth and progress of customer


service provided analytical study of various financial
products

To know opinion of customer regarding CTF provided by


Muthoot finance for the CTF.

SCOPE OF THE STUDY


The scope of the study is to identify and analyze the
factors which make the gold loan provided by Muthoot Finance
Limited the best and most sought after. The reason behind the
huge success of this facility is unlimited. This study intends to:
1. To know the present market share of Muthoot Finance
Limited.
2. Indentify the factors responsible for the high customer
satisfaction.

3. To evaluate the social security and empowerment process


of the company.
4. To evaluate the suggestions of the customers which is
necessary

for

the

further

development

of

the

organization.
LIMITATIONS
Time allowed for the study was not sufficient.
A sample survey was selected.
The data provided by the respondent may not be correct or
accurate.
Some of the samples selected for the study did not respond
properly to the questionnaire. However proper care had
taken to make the analysis and interpretations more
meaningful.
Questionnaires are impersonal, this means that it may be
difficult to understand answers and thus to act on them.
Also,

there

is

chance

that

the

question

may

be

misinterpreted, rendering the answer useless.


Questionnaires also invite people to lie and answer the
questions very vaguely which they would not do in an
interview.
Open questions can take a lot of time to collect and analyze.
People are not always willing to fill questionnaires in so they
may just throw them always.
Sometimes questions used are too standardized (closed) so
some peoples preferred answers may not be included, and
this also does not allow for much detail.

Peer pressure of embarrassment may cause people to not


want to answer certain questions, or they may want to
impress the researcher and fabricate the truth by filling in
untrue

answers,

making

questionnaires

unreliable

and

sometimes invalid.
RESEARCH PLAN
In this chapter, explains the structural frame work .The
research methodology considered as a blue print of the study. It
determines the strengths, reliability and accuracy of the
project. Methodology can be said as the methods used by
researchers in selecting samples, sample size, data collection
and various tools in data collection.

PRELIMINARY INVESTIGATION
Preliminary investigation involves the following:
Direct visit to the company.
Discussions with the branch manager.
Analysed about the scope and viability of the existing
facilities.
Secondary data were used to get an overview about the
two companies.
EXPLORATORY STUDY
Personal interviews with branch manager, staff and the
customers.
Questionnaires were used to understand various factors
affecting the gold loan financing decision.

To analyse and interpret the data collected using figures


and tables.
The last phase of this project is to give suggestions to
Muthoot Finance.
RESEARCH DESIGN
A research design is the plan, structure and strategy of
investigation conceived so as to obtain answers to research
questions and to control variance by F.N. Kerlinger (1959)
PHASES OF RESEARCH DESIGN
Sample design
Sample design deals with the method of selecting items to
be observed for the given study.

Observational design
Observational design relate to the conditions under which
the observations are to be made while conducting research
studies.
Statistical design
These design concern with the quantitative and statistical
aspects of the design such as technique of study, the methods
of model building etc.
COLLECTION OF DATA

The successes of the study are based upon the proper


collection of data. Normally data collected comes under two
categories; Primary and Secondary.

PRIMARY DATA
The data collected directly by the investigator are called
primary data. They are original and give first hand information.
It can be collected by different methods viz. direct personal
investigation, indirect oral investigation etc. Primary data were
collected through
- Questionnaire
- Personal interview
- Survey method
- Observation
- Expert opinion
Questionnaire
The primary data was collected mainly by using a
questionnaire. In study, structured questionnaire consisting of a
list of questions pertaining to the dichotomous questions,
multiple choice questions and questions for recommendations
and suggestions. This facilitates the respondents to fill up the
questionnaire is an easy and fast manner.
The questions are divided in two following sections: Personal details
Inquiry details
Personal Interview

The personal interview was taken from half of the


respondents. This was mainly to elicit information that was left
out in the questionnaire opinions and suggestions were asked
for the betterment of the project.
Survey method
Survey is the most commonly used method of primary
data collection in marketing research. This is widely used
because its extreme flexibility. Survey research is a systematic
gathering of data from respondents through questionnaire.
Survey technique used in the study is personal interview. The
advantages of this method are:
It requires relatively shorter period of time to complete
Researcher

can

procure

many

different

types

of

information
The amount of information produced on each aspect is
larger.
There is a possibility of more accurate reply
SECONDARY DATA
The collected by the investigator from the data already
collected by others for some other purpose are called
secondary data. Thus secondary data are refined data from
primary data. It is also called second hand data because data is
collected from previous reports about the organization from the
internal books, magazines and World Wide Web. Secondary
data are collected through
- Annual reports
- Websites

- Journals and magazines

CHAPTER - 6
DATA ANALYSIS &
INTERPRETATION

CHAPTER - 6
DATA ANALYSIS & INTERPRETATION

TABLE-1 SHOWING THE CLASSIFICATION OF


RESPONDENTS ON THE BASIS OF THEIR INCOME GROUP
INCOME (RS.)

NO. OF RESPONDENTS

PERCENTAGE

Below 2000

15

30

2000-4500

13

26

4500-6000

12

24

6000 and above

10

20

TOTAL

50

100

interpretation
Chart showing classification of respondents on their
monthly income.

out of 50

respondents among the 15

respondents were having a monthly income of less than 2000


while 13 of them earned between 2000-4500, and 12 of
respondents have a monthly income between 4500-6000 and
12 of them earned above 6000.

TABLE-2

SHOWING

THE

CLASSIFICATION

RESPONDENTS ON THE BASIS OF AGE GROUP


AGE GROUP (IN

NO. OF

PERCENTAG

YEARS)
30-35

RESPONDENTS
23

E
46

35-40
40-45
45-50

18
5
4

36
10
08

TOTAL

50

100

OF

Interpretation:
Chart showing the classification of respondents according
to their age group 23 of the respondents among the 50
respondents have age group of less than 30-35, while 18 of
then age group of between 35-40, 05 of the respondents have
the age group between 40-45, 4 of the respondents are in the
age group of 45-50.
TABLE-3

SHOWING

THE

CLASSIFICATION

RESPONDENTS ON THE BASIS OF OCCUPATION

OF

OCCUPATION

NO. OF

percentage

Govt. employee

RESPONDENTS
10

20

Businessmen

20

40

Agriculturist

14

Professional

13

26

TOTAL

50

100

interpretation
Chart

showing

the

classification

according

to

their

occupation out of 50 respondents, 10 of respondents are Govt.


employee,

20

of

respondents

are

businessmen,

07

of

respondents are agriculturist, and 13 of respondents are


professionals.
4. TABLE SHOWING THE HOW OFTEN DO YOU TAKE A
GOLD LOAN IN A YEAR
Opinion

No Of

percentage

Once
2-5 times
6-10 times
More than 10

Respondent
28
22
0
0

56
44
0
0

50

100

times
total
Interpretation

The above chart shows that the out of 50, the opinion of
the 28 respondents suggest that 56% of Muthoots customers
applies for a gold loan just once, while the rest of the 44%
applies for a gold loan 2-5 times.

5. THE TABLE SHOWS THAT THE CUSTOMERS OPINION


REGARDING THE RATE OF INTEREST CHARGEABLE BY
THE MUTHOOT FINANCE
Opinion

No of

Percentage

Excellent
Very good
Good
Fair
Bad
Total

respondents
22
12
10
06
0
50

44
24
20
12
0
100

Interpretation
The

above

chart

was

designed

to

understand

the

satisfaction of the customers with the interest rate on gold loan


offered by Muthoot finance. Here, 44% of the customers
believe that the interest offered by the muthoot finance
company

is excellent. While 24% of customers of Muthoot

finance think that the rate of interest is very good.20% of the


respondents believe that the interest rate is good. 12% of the
respondents believe the interest rate is fair. None of the

respondents thought that interest rate offered by companies


was bad.
6. TABLE SHOWS THAT THE MUTHOOT FINANCE STAFF
BEHAVIOR TOWARDS THE CUSTOMER REGARDING
VARIOUS FINANCIAL PRODUCTS
Opinion

No of

percentage

Excellent
Very good
Good
Fair
Bad
Total

respondents
25
12
10
03
0
50

50
24
20
06
0
100

Interpretation
Staff behavior is interpreted in the above chart. About
50% of the organizations thought that the behavior of staff is
excellent. The share of customers who choose very good as the
option stands at 24% for Muthoot finance.20% of respondents
believe that staff behavior was good and 06% of respondents

believe that the fair respectively. None of the respondents to


the questionnaire believe that the behavior of staff was bad.
7. CUSTOMERS OPINION TOWARDS THE VARIOUS
FINANCIAL LOAN APPLICATION PROCEDURE OFFERED BY
THE MUTHOOT FINANCE.
Opinion
Excellent
Very good
Good
Fair
Bad

No of respondents
22
13
10
05
0

Percentage
44
26
20
10
0

Interpretation
The above chart was designed to interpret the response
of customers to Muthoot finance gold loan procedure .It was
interpreted that 44% and 26% of Muthoots respondents
believed that this factor was excellent and very good
respectively. As for option Good and Fair the share stands at

20% and 10% Muthoot finance. None of the respondents to the


questionnaire believe that the Bad.
8. TIME TAKEN FOR THE VARIOUS AND WHOLE LOAN
PROCEDURE OF MUTHOOT FINANCE

Opinion

No of

Percentage

Less than 5 minutes


5- 10 minutes
11- 30 minutes
31- 60 minutes
Others (Please

respondents
03
07
18
22
0

06
14
36
44
0

mention)
Total

50

100

Interpretation
The above diagrams represents one of the main factors
which decides the fate of any loan financing company i.e. time

taken for clearing a loan. 06% of respondents believed that it


takes less than 5 minutes for the whole loan procedure.
respondents who thinks the whole loan procedure takes
5- 10 minutes stands at 14%. the option 11-30 minutes was
selected by 36%.
The option 31-60 minutes was selected by 44% respectively.
None of the respondents believe that the whole loan procedure
takes more than 1 hour.

9.

HOW

SATISFIED

ARE

YOU

WITH

THE

SECURITY

STANDARDS OF MUTHOOT FINANCE LIMITED


Opinion

No of

percentage

100%
80- 99%
60- 79%
40- 59%
>40%
Total

respondents
5
06
18
15
06
50

10
12
36
30
12
100

Interpretation

It is interpreted that 10% of respondents are 100% satisfied


with their security standards. It is also interpreted that 12% of
respondents

satisfied

with

the

security

facilities.

18

respondents trusted Muthoot security standards is 60% - 79%


respectively. The institutes had 30% of the respondents who
believed that the security standard was 40% - 59% trustable
the institutes had 12% of the respondents who believed that
the security standard was greater than 40% trustable.
10. TABLE SHOWING THAT HOW THE CUSTOMER WILL
COME TO KNOW ABOUT MUTHOOT FINANCE FACILITIES

Opinion

No of

Percentag

Newspapers
Journals and

respondents
08
06

e
16
12

Magazines
T.V Advertisements
Notice
Friends and relatives
Others (Please

24
2
10
0

48
04
20
0

50

100

specify)
Total
Interpretation

The diagram shows the mediums through which the


customer came to know about Muthoot Finance Limited, Here it
is interpreted that newspaper as a medium penetrates about
16% for Muthoot finance. The main medium of advertising for
the company

is T.V. advertisements which stand at 48% for

Muthoot finance. Other sources like journals and magazinesMuthoot finance is 12%.

notice is 04%, friends and relatives is

20% is also play vital roles in penetrating the market share of


the company.
11. TABLE SHOWS THAT THE CUSTOMER RESPONSES
TAKING INTO CONSIDERATION THE RECENT
FLUCTUATIONS OF VARIOUS FINANCIAL SERVICES OF
MUTHOOT FINANCE ARE SUCCESSFUL IN PROVIDING
EFFECTIVE LOANS

Opinion

No of

percentage

Strongly agree
Agree
Neutral
Disagree
Strongly

respondents
10
30
08
02
0

20
60
16
04
0

disagree

Interpretation
It is interpreted from the above diagrams that a majority
of the 60% respondents of Muthoot Finance agrees to the fact

that the company are able to provide effective loans even after
the recent fluctuations in rates.
Those respondents who strongly agree to this fact constitute
20% and 16% opted for neutral while rest 04% disagreed to
this fact.
12. TABLE SHOWS THAT IN CASE OF DEFAULT, DOES
MUTHOOT

FINANCE

ASSIST

BY

PROVIDING

PAYBACK PERIOD

Opinion

No of

Percentage

Strongly agree
Agree
Neutral
Disagree
Strongly

respondents
12
28
10
0
0

24
56
20
0
0

disagree

Interpretation

LONG

Here, it is interpreted a majority of the respondents


agrees that financial institutions assist by providing long
payback period. This was closely followed by the opinion that
the respondents strongly agrees that 56% financial institutions
assist by providing long payback period. Followed by neutral
with 20% and strongly agree is 24%.

CHAPTER 7
FINDINGS,
SUGGESTION
&

CONCLUSION

CHAPTER 6
FINDINGS, SUGGESTION & CONLUSION

FINDINDS
The major finding of the study can be summarized as follows:
The management and employees of both the companies
maintains a good relationship.
Most of the respondents (58.33%) have monthly income
range between Rs.5000 Rs 10,000.
Media advertisement has an important role in spreading
popularity Incase of Muthoot Finance.
Majority of the respondents have the opinion that the
behaviors of companys staff are cordial and friendly.
Majority of the customers were satisfied with the services,
hence there was no need of complaints to be lodged.

NBFCs score over banks on two fronts despite charging


higher interest - quick approval and disbursal of loans,
and less documentation. An NBFC at the most takes 30
minutes to give the loan after verifying the gold, and the
only document required is an identification proof of the
person pledging the gold.

It was also found that customers of the companies are


more than satisfied with the security standards on their
gold jewellary.
It was indentified from the customer response that the
companies are successful in proving effective gold loans
even after the recent fluctuations in the prices of gold.

The study was also aimed at finding best gold loan financing
company. After analyzing and interpreting the data collected
through primary and secondary sources, the following
conclusions were made:
The estimated gold loan portfolio of Muthoot Finance
Limited (7,342 Crores) is far superior and leasing Limited
(2,560 Crores) which indicate the sound market position
of Muthoot Finance Private Limited.
It was also interpreted that Muthoot Finance Limited has
more regular customers.
The interpretation of data also indicated that the public
are more satisfied with the interest on gold loan offered
by Muthoot Finance. This might be a result of its
experience in the gold loan market and its objective to
provide gold loans at cheaper and affordable rates.
Another important finding was presence of Muthoot
throughout the country as well as aboard.

Muthoot being the more established among the two


knows the infrastructure requirements to grow in this
industry.

It

was

also

interpreted

that

Muthoot

Finance

was

successful in providing long pay back periods to its


customers. This is also an
another reason for its success in this industry.

SUGGESTIONS
FOR MUTHOOT FINANCE
Muthoot should work on its marketing strategies to
improve its market share.
Most of the people are unaware of the different financial
products offered by Muthoot. So the company should take
necessary steps to create awareness among the public.
The company can also give attractive offers to old
customers as well as prospective new customers.
The company can also look into new ventures as it has
established itself as the leader in gold loan financing field.
Muthoot should also speed up its process in offering IPO.
CONCLUSION

It helped me to find out the different factors responsible


for the success of the muthoot finance companies.
The major finding that can be concluded from this study is
that Muthoot Finance Limited is still the best gold financing
company in India.
This experience has helped me gain knowledge about the
business of gold loan financing in India.

QUESTIONNAIRE
&
BIBLIOGRAPHY

GOLD LOAN MARKET SURVEY QUESTIONNAIRE


FOR MUTHOOT FINANCE
1. Name of the customer:
2. Age:
3. Occupation:
4. Sex: Male

Female

5. Monthly salary:
6. How often do you take a gold loan in a year?
a)
b)
c)
d)

Once
2- 5 times
6- 10 times
More than 10 times

7. As per the scale below, rate the following factors of


Muthoot Finance Limited:

5- Excellent 4- Very Good 3- Good 2- Fair 1- Bad


I.
II.
III.
IV.
V.

Rate of interest
:
Location of the institute
:
Staff behavior
:
Gold loan application procedure:
Infrastructure facilities
:

8. Time taken for the whole gold loan procedure?


a)
b)
c)
d)
e)

Less than 5 minutes


5- 10 minutes
11- 30 minutes
31- 60 minutes
Other (Please mention) ________________

9. How satisfied are you with the security standards of


Muthoot Finance Limited?
a)
b)
c)
d)
e)

100%
80-99%
60-79%
40-59%
>40%

10.

How did you come to know about Muthoot Finance

Limited and its facilities?


a)
b)
c)
d)
e)
f)

Newspapers
Journals and Magazines
T.V. Advertisements
Notice
Friends and relatives
Others (Please specify)

11.

Taking into consideration, the recent fluctuations of

gold rates. Do you think Muthoot Finance was successful


in providing effective gold loans?
12.

In case of default, Does Muthoot Finance assists by

providing long payback period?


13.

Why do you prefer Muthoot Finance Limited over

other Gold loan institutes and Government organisations?


__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
____________________________________________

14.

Any complaints about Muthoot Finance Limited?

__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
____________________________________________
15.

Any suggestions to improve the services offered

by Muthoot Finance Limited?


__________________________________________________________
__________________________________________________________
__________________________________________________________

__________________________________________________________
____________________________________________

Date:
Signature:

BIBLIOGRAPHY
BOOKS

Philip Kotler, Marketing Management , Prentice- Hall of


India, New Delhi, 8th Edition, August 1994

JOURNALS
17th Annual Report of Manappuram General Finance and
Leasing Limited
Draft Red Herring Prospectus of Muthoot Finance Limited
issued on 30th September 2010
WEBSITES
http://www.muthootfinance.com/
http://www.thehindubusinessline.in/2010/11/27/stories/20
10112751420600.htms
http://www.theequitydesk.com/forum/forum_posts.asp?
TID=2635&PN=1