University of Mumbai

PROJECT REPORT ON

“A STUDY OF FINANCIAL SERVICES GIVEN BY MUTHOOT FINANCE”

A Project Submitted To
UNIVERSITY OF MUMBAI
FOR PARTIAL COMPLETION OF THE DEGREE
OF BACHELOR OF MANAGEMENT STUDIES
UNDER FACULTY OF COMMERCE

BY

MR. SUNNY SANJAY MAHADIK

Under The Guidance Of

PROF. MR. RAJESH VALEJA

SATISH PRADHAN DNYANASADHANA COLLEGE, THANE

(ARTS, SCIENCE & COMMERCE)
Off Eastern Express Highway, Dnyanasadhana Marg,
Thane – 400604
ACADEMIC YEAR (2018-2019)
 SATISH PRADHAN DNYANASADHANA COLLEGE, THANE
(ARTS, SCIENCE & COMMERCE)
Off Eastern Express Highway, Dnyanasadhana Marg,
Thane - 400604

CERTIFICATE

This is to certify that Ms/Mr ____________________________________________has worked

and duly completed her/his Project Work for the degree of Bachelor of Management studies
under the Faculty of Commerce in the subject of
_________________________________________and her/his project is entitled,
____________________________________________________________________________”
under my supervision.

I further certify that the entire work has been done by the learner under my guidance and that no
part of it has been submitted previously for any Degree or Diploma of any University.
It is her/ his own work and facts reported by her/his personal findings and investigations.

Seal Name and Signature of

Guiding Teacher

Date of Submission
 Declaration by learner

I the undersigned Miss / Mr. ______________________________________here by, declare that

the work embodied in this project work titled _________________________________________
_____________________________________________________________________________,
forms my own contribution to the research work carried out under the guidance of
_________________________________________ is a result of my own research work and has
not been previously submitted to any other University for any other Degree/ Diploma to this or
any other University.
Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by

Name and signature of the Guiding Teacher

 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would like to thank my Principal, Dr. C.D. Marathe sir for providing the necessary facilities
required for completion of this project.
I take this opportunity to thank our Coordinator Prof. Rajesh Valeja, for his moral support and
guidance.
I would also like to express my sincere gratitude towards my Project Guide Prof. Rajesh
Valeja whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially My Parents and Peers who supported me throughout my
project.
 INDEX

SR.NO PARTICULARS PAGE

NO
1 CHAPTER-I INTRODUCTION 1
1.1 INTRODUCTION 2
1.2 MEANING 3
1.3 DEFINATION 4
1.4 COMPANY PROFILE 5-14
1.5 FINANCIAL SERVICE 15-24
1.6 PRODUCT PROFILE 25-32
2 CHAPTER-II RESEARCH METHODOLOGY 33
2.1 OBJECTIVE OF STUDY 34
2.2 SCOPE OF STUDY 34
2.3 LIMITATION 34
3 CHAPTER-III REVIEW OF LITERATURE 38-40
4 CHAPTER-IV DATA ANALYSIS AND INTERPRETATION 41
4.1 TABLE ANALYSIS AND INTERPRETATION 42-62
4.2 ANALYSIS OF FINANCIAL STATEMENT 63-64
5 CHAPTER-V FINDING, SUGGESTION AND CONCLUSION 65
5.1 FINDING 66-67
5.2 SUGGESTION 68
5.3 CONCLUSION 69
6 CHAPTER-VI BIBLIOGRAPHY 70
6.1 BIBLIOGRAPHY 71
6.2 QUESTIONAIRE 72-73
 CHAPTER – I
INTRODUCTION

1|Page
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.

2|Page
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 the arrangement of finance for

all business activities. 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.

3|Page
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”.

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 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 Fincorp’s 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
5|Page
managed. Excellence and innovation are encouraged and rewarded.
Ensuring MFL’s 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, and 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 jewelry, or Gold
Loans, primarily to individuals who possess gold jewelry 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
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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 India’s
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
7|Page
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 jewelry 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 jwellery 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
8|Page
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
re-established 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 specialized 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 realizing 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 organization he nurtured.
The Muthoot Pappachan Group carries Muthoot Pappachan’s legacy on
with his words in our hearts “I am because God is with me.”

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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 Kerala’s 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 Indo-American
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.

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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 a 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 replete 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
customer’s 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 Newspapers and FM, celebrities and sport
stars also used in the advertisement campaign. Muthoot Fincorp also hosts

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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. A Muthoot Fincorp objective 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 come 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
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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 Muthoot Fincorp is
on expansion mode and in next 10 year it will 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.
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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, and 000.0 while interest rates on our
Gold Loans range between 12.00% to 30.00% per annum.

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 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.

IMPORTANCE’S 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.

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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

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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 with 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 these 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. All these assets can be disposed off and
thus working capital can be arranged. However, this may be fully irregular
and non-dependable source

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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 that is,
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 meet the cost of
18 | P a g e
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 provides 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
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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.

20 | P a g e
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 up to 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 for
meeting their short-term financing requirements. 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 short-term 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

21 | P a g e
finance, bank does not provide finance; rather it assumes the risk of non-
payment 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. Normally, no interest is paid on this amount. 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.

22 | P a g e
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 a 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:
23 | P a g e
For augmenting funds for working capital along with long-term purposes,
there is one more source, i.e. the issue of convertible debentures. It has
been gaining popularity since last two decade or 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 from 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 banker’s 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.
24 | P a g e
 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.

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;
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Muthoot Plantation boasts cloves, coconut and Rubber.

3.EDUCATION DIVISION
Since 1962
St. George’s School, Alakananda, New Delhi
St. George’s 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.

26 | P a g e
6. MUTHOOT VEHICLE & ASSET FINANCE DIVISION
Since 1992
Kerala’s 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
Headquarters 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) Wire money

10. MUTHOOT WEALTH MANAGEMENT SERVICES PVT. LTD.

Life Insurance
27 | P a g e
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.

(A) MUTHOOT SECURITIES LTD.

Muthoot Group has forayed into the market, helps the customers to
multiply their fortune in Share Trading.

28 | P a g e
(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 our 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, anywhere for any purpose.
Simple hassle free loan with least documentation.
Unmatched safety of security of Gold pledged.
Flexible payment option on easy installments.

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.

29 | P a g e
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 any time. 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 affected 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

30 | P a g e
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.

We have never defaulted or delayed over a single interest payment, not to

mention principal

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 selected 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.
31 | P a g e
All Muthoot Finance branches can buy foreign currencies.
Travel cheques are issued for all major currencies and also can be
encashed. 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.
32 | P a g e
 CHAPTER-II
RESEARCH METHODOLOGY

33 | P a g e
 RESEARCH METHODOLOGY

OBJECTIVE OF THE STUDY

To make an analytical study of various financial products
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

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:
To know the present market share of Muthoot Finance Limited.
Identify the factors responsible for the high customer satisfaction.
To evaluate the social security and empowerment process of the company.
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 a 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.

34 | P a g e
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.
Analyzed 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.

35 | P a g e
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
36 | P a g e
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 it’s 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
37 | P a g e
 CHAPTER -III
REVIEW OF LITERATURE

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1). R.N. Amadi, &G.B. Nsereka (2016): In their article titled ‘The Role
of Advertising in Motivating Consumer Brand Preference for Banking
Services in Eco bank Nigeria Ltd’ stated that advertising is the most
motivating factor of the consumer’s purchasing power of Eco bank
Services, the preference for Eco bank as a brand is not significantly tied to
their exposure to advertising messages. That means that advertising, as
should naturally be expected, is one but not the only factor in the
motivation of consumers in their preference for the Eco bank brand.

2). S.Riaz, M.Furqan and S.Siddique (2015): in their article titled

‘Advertising Influence on The Profitability of Public and Private Sector
Commercial Banks’ Confirmed that the effect of advertising on banks
profitability, controlling for the effects of operational efficiency, credit
risk, total results show advertising has positive has significant effect on
ROE of public sector banks.

3). Pallavi & Rishi Raj Sharma (2015): in their article titled ‘Evaluating
the Impact of Advertisement on Buying Behaviour: A Study of Financial
Service Sector’ investigated to find the major factors which will impact the
customer's decision making. Study found the five prompting factors that
played a significant part in the buying process of the respondents. The
research show that factors such as Celebrity Endorsement, Decision
making, Knowledgeable, Publicity effects, Promotion about new schemes
had major impact on the attitude, mind set and approach towards buying
behaviour. 59

4). MD. Daoud Ciddikie and N. U. K. Sherwani, (2015): in their article

titled ‘Marketing Practices of Service Sector in India: The Role of
Advertising’ explored limitations and problems faced by the service sector
and advocates that advertising industry can provide a platform for
improvement and success of the service sector, advertising can play a role
to overcome the problems and help to achieve and sustain growth,
productivity, trade and investment. . As service sector deals with intangible
items, advertising helps portray the right picture. There always lies
39 | P a g e
difference between the customer expectation and firm’s perception.
Identification and reduction of this gap will result in maximizing the total
customer lifetime value and will give them satisfaction against their
expectations. When the customers get a good deal, they become a keen
customer. But a simple approach to give clients a free treatment after they
purchase a product or service helps build loyalty.

5).Kara Chan & Fei Fan (2015): in their article titled ‘How Consumers
Perceive Environmental Advertising in the Banking Context’ conducted to
investigate how the bank’s brand name, environmental issue featured in a
corporate advertising, and type of environmental claim may influence
consumers’ responses. Results found that the corporate bank advertisement
featuring global warming generated more favourable consumer attitudes
toward the advertisement than the ad featuring air pollution in Hong Kong.
Use of a substantive claim was able to generate a more favourable
advertising effect than use of an associative claim in both advertisements
featuring global warming as well as featuring air pollution. Environmental
advertising in the banking sector benefits both a well-known bank and a
less-known bank.

40 | P a g e
 CHAPTER- IV
DATA ANALYSIS AND INTERPRETATION

41 | P a g e
TABLE-1: SHOWING THE CLASSIFICATION OF
RESPONDENTS ON THE BASIS OF THEIR INCOME
GROUP

INCOME (RS.) NO. OF PERCENTAGE

RESPONDENTS

Below 2000 15 30

2000-4500 13 26

4500-6000 12 24

6000 and above 10 20

TOTAL 50 100

30

25

20
PERCENTAGE,
15 Below 2000, 30 PERCENTAGE, 2000- PERCENTAGE, 4500-
4500, 26 6000, 24 PERCENTAGE, 6000
10 and above, 20

0
Below 2000 2000-4500 4500-6000 6000 and above

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

42 | P a g e
monthly income between 4500-6000 and 12 of them earned
above 6000.

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 TABLE-2 SHOWING THE CLASSIFICATION OF
RESPONDENTS ON THE BASIS OF AGE GROUP

AGE GROUP (IN NO. OF PERCENTAGE

YEARS) RESPONDENTS

30-35 23 46

35-40 18 36

40-45 5 10

45-50 4 08

TOTAL 50 100

50
45
40
35
30
25 PERCENTAGE, 30-
35, 46
20 PERCENTAGE, 35-
40, 36
15
10
PERCENTAGE, 40- PERCENTAGE, 45-
5 45, 10 50, 8
0
30-35 35-40 40-45 45-50

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

44 | P a g e
respondents have the age group between 40-45, 4 of the respondents are in
the age group of 45-50.

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 TABLE-3 SHOWING THE CLASSIFICATION OF
RESPONDENTS ON THE BASIS OF
OCCUPATION

OCCUPATION NO. OF RESPONDENTS PERCENTAGE

Govt. employee 10 20

Businessmen 20 40

Agriculturist 7 14

Professional 13 26

TOTAL 50 100

percentage, percentage,
Professional, 26, Govt. employee,
26% 20, 20%

percentage,
Agriculturist,
14, 14%
percentage,
Businessmen, 40,
40%
Govt. employee Businessmen Agriculturist Professional

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
professional.

46 | P a g e
4. TABLE SHOWING THE HOW OFTEN YOU TAKE
GOLD LOAN IN A YEAR

Opinion No of Respondent Percentage

Once 28 56

2-5 times 22 44

6-10 times 0 0

More than 10 0 0
times

Total 50 100

60

50

40

percentage,
30
Once, 56 percentage, 2-5
times, 44
20

10
percentage, 6-10 percentage, More
0 times, 0 than 10 times, 0
Once 2-5 times 6-10 times More than 10
times

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

47 | P a g e
5. TABLE SHOWS THAT THE CUSTOMERS OPINION
REGARDING THE RATE OF INTEREST
CHARGEABLE BY THE MUTHOOT FINANCE

Opinion No of respondents Percentage

Excellent 22 44

Very good 12 24

Good 10 20

Fair 06 12

Bad 0 0

Total 50 100

Percentage,
Excellent, 44
45
40
35
Percentage, Very
30 good, 24 Percentage,
25 Good, 20
20 Percentage, Fair,
12
15
10 Percentage, Bad,
5 0
0
Excellent Very good Good Fair Bad

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

48 | P a g e
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.

49 | P a g e
6. TABLE SHOWS THAT THE MUTHOOT FINANCE
STAFF BEHAVIOR TOWARDS THE CUSTOMER
REGARDING VARIOUS FINANCIAL PRODUCTS.

Opinion No of respondents percentage

Excellent 25 50

Very good 12 24

Good 10 20

Fair 03 06

Bad 0 0

Total 50 100

50
45
40
35
30 percentage,
25 Excellent, 50
20
15 percentage, Very
10 good, 24 percentage,
5 Good, 20
0 percentage, Fair,
Excellent 6
Very good percentage, Bad,
Good 0
Fair
Bad

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

50 | P a g e
respondents believe that the fair respectively. None of the respondents to the
questionnaire believe that the behavior of staff was bad.

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7. CUSTOMERS OPINION TOWARDS THE VARIOUS
FINANCIAL LOAN APPLICATION PROCEDURE
OFFERED BY THE MUTHOOT FINANCE.

Opinion No of respondents Percentage

Excellent 22 44

Very good 13 26

Good 10 20

Fair 05 10

Bad 0 0

Percentage, Fair, Percentage, Bad,

10, 10% 0, 0%

Percentag
e, Good, Percentage,
20, 20% Excellent, 44,
44%

Percentage, Very
good, 26, 26%

Excellent Very good Good Fair Bad

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 Muthoot’s respondents believed that this factor was excellent and very
good respectively. As for option ‘Good’ and ‘Fair’ the share stands at 20%

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and 10% Muthoot finance. None of the respondents to the questionnaire
believe that the Bad.

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 8. TIME TAKEN FOR THE VARIOUS AND WHOLE
LOAN PROCEDURE OF MUTHOOT FINANCE

Opinion No of respondents Percentage

Less than 5 minutes 03 06

5- 10 minutes 07 14

11- 30 minutes 18 36

31- 60 minutes 22 44

Others (Please 0 0
mention)

Total 50 100

Sales

6%
14%
0%
44%

36%

LESS THAN 5 MIN 5-10 MIN 11-30 MIN 31-60 MIN OTHERS

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%

54 | P a g e
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.

55 | P a g e
9. HOW SATISFIED ARE YOU WITH THE SECURITY
STANDARDS OF MUTHOOT FINANCE LIMITED

OPINION NO OF PERCENTAGE
RESPONDENTS

100% 5 10

80- 99% 06 12

60- 79% 18 36

40- 59% 15 30

>40% 06 12

Total 50 100

40
percentage, 60-
35 79%, 36
percentage, 40-
30
59%, 30
25

20

15
percentage, 80- percentage,
percentage, 99%, 12 >40%, 12
10
100%, 10
5

0
100% 80- 99% 60- 79% 40- 59% >40%

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%

56 | P a g e
trustable the institutes had 12% of the respondents who believed that the
security standard was greater than 40% trustable.

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10. TABLE SHOWING THAT HOW THE CUSTOMER WILL COME
TO KNOW ABOUT MUTHOOT FINANCE FACILITIES

Opinion No of respondents Percentage

Newspapers 08 16

Journals and Magazines 06 12

T.V Advertisements 24 48

Notice 2 04

Friends and relatives 10 20

Others (Please specify) 0 0

Total 50 100

OPINION

NEWSPAPER
0% 16%
20% JOURNALS AND MAGAZINES

4% 12% T.V ADVERTISEMENT

NOTICE
FRIEND AND RELATIVES
48%
OTHERS

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
magazines- Muthoot finance is 12%. notice is 04%, friends and relatives

58 | P a g e
is 20% is also play vital roles in penetrating the market share of the
company.

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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 respondents percentage

Strongly agree 10 20

Agree 30 60

Neutral 08 16

Disagree 02 04

Strongly disagree 0 0

percentage,
Agree, 60

percentage,
Strongly agree,
20 percentage,
Neutral, 16

percentage, percentage,
Disagree, 4 Strongly
disagree, 0

Strongly agree Agree Neutral Disagree Strongly

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.

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Those respondents who strongly agree to this fact constitute 20% and 16%
opted for neutral while rest 04% disagreed to this fact.

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12. TABLE SHOWS THAT IN CASE OF DEFAULT, DOES
MUTHOOT FINANCE ASSIST BY PROVIDING LONG PAYBACK
PERIOD

Opinion No of respondents Percentage

Strongly agree 12 24
Agree 28 56
Neutral 10 20
Disagree 0 0
Strongly disagree 0 0

Percentage,
Agree, 56
60

50

40 Percentage,
Strongly agree,
30 24 Percentage,
Neutral, 20
20
Percentage,
10 Percentage, Strongly disagree,
Disagree, 0 0
0
Strongly Agree Neutral Disagree Strongly
agree disagree

Interpretation:
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%.

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 ANALYSIS OF FINANCIAL STATEMENT

------------------- in Rs. Cr. -------------------

Balance Sheet of Muthoot Finance
Mar 18 Mar 17 Mar 16 Mar 15 Mar 14

12 months 12 months 12 months 12 months 12 months

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 400.04 399.48 399.00 397.97 371.71
Total Share Capital 400.04 399.48 399.00 397.97 371.71
Reserves and Surplus 7,360.37 6,116.97 5,220.25 4,685.54 3,892.86
Total Reserves and Surplus 7,360.37 6,116.97 5,220.25 4,685.54 3,892.86
Total Shareholders Funds 7,760.41 6,516.44 5,619.25 5,083.50 4,264.58
NON-CURRENT LIABILITIES
Long Term Borrowings 4,511.60 4,231.19 5,276.26 6,712.56 6,904.60
Other Long Term Liabilities 278.29 671.97 1,126.83 1,207.81 897.51
Long Term Provisions 17.17 0.53 0.24 0.75 1.87
Total Non-Current Liabilities 4,807.06 4,903.69 6,403.33 7,921.12 7,803.98
CURRENT LIABILITIES
Short Term Borrowings 14,187.78 12,754.91 8,363.52 7,760.65 6,064.29
Trade Payables 126.28 111.47 6,150.02 5,705.18 7,243.19
Other Current Liabilities 3,604.20 5,775.66 0.00 0.00 0.00
Short Term Provisions 895.92 650.90 512.62 298.80 217.84
Total Current Liabilities 18,814.18 19,292.94 15,026.16 13,764.63 13,525.31
Total Capital And Liabilities 31,381.65 30,713.07 27,048.73 26,769.25 25,593.87
ASSETS
NON-CURRENT ASSETS
Tangible Assets 192.23 202.18 213.81 251.85 311.97
Intangible Assets 8.23 6.05 4.67 5.45 0.61
Capital Work-In-Progress 5.74 9.97 8.89 6.33 8.38
Intangible Assets Under Development 0.00 0.00 0.00 0.53 6.03
Fixed Assets 206.20 218.21 227.37 264.17 326.99
Non-Current Investments 382.80 209.12 98.26 38.49 4.67
Deferred Tax Assets [Net] 34.00 56.02 51.97 34.84 21.05
Long Term Loans And Advances 340.33 113.14 100.30 98.42 101.95
Other Non-Current Assets 0.19 0.21 0.00 0.00 0.00
Total Non-Current Assets 963.52 596.69 477.91 435.92 454.65
CURRENT ASSETS
Current Investments 1.04 0.00 0.00 0.00 30.70
Trade Receivables 961.09 1,270.60 1,467.26 1,153.90 1,163.97
Cash And Cash Equivalents 486.79 1,534.05 679.11 1,736.62 2,048.93
Short Term Loans And Advances 28,967.82 27,311.07 24,423.77 23,442.81 21,894.49
Other Current Assets 1.39 0.66 0.68 0.01 1.14
Total Current Assets 30,418.13 30,116.38 26,570.83 26,333.33 25,139.22
Total Assets 31,381.65 30,713.07 27,048.73 26,769.25 25,593.87
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS

63 | P a g e
Contingent Liabilities 628.36 585.27 537.65 523.24 32.74
CIF VALUE OF IMPORTS
Capital Goods 0.00 0.00 0.00 0.00 0.05
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency 0.14 0.10 0.34 0.71 1.22
REMITTANCES IN FOREIGN CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign Currency 1.33 - 7.93 3.20 6.08
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods - - - - -
Other Earnings - - - - -
BONUS DETAILS
Bonus Equity Share Capital 252.00 252.00 252.00 252.00 252.00
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market Value 64.78 36.61 49.58 31.45 0.01
Non-Current Investments Unquoted Book Value 308.33 163.61 49.58 4.67 4.67
CURRENT INVESTMENTS
Current Investments Quoted Market Value 1.04 - - - -
Current Investments Unquoted Book Value - - - - 30.70

64 | P a g e
 CHAPTER –V
FINDING, SUGGESTION AND CONCLUSION

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FINDINGS:

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
company’s 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 jewelry.
It was identified 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:

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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.

67 | P a g e
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 investigate 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.

68 | P a g e
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.

69 | P a g e
CHAPTER-6
BIBLIOGRAPHY

70 | P a g e
 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/2010112
751420600.htms

http://www.theequitydesk.com/forum/forum_posts.asp?TID=26
35&PN=1

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 QUESTIONNAIRE

1. SHOWING THE CLASSIFICATION OF RESPONDENTS ON THE BASIS OF

THEIR INCOME GROUP
 BELOW 2000
 2000-4500
 4500-6000
 6000 AND ABOVE

2. SHOWING THE CLASSIFICATION OF RESPONDENTS ON THE BASIS OF

AGE GROUP
 30-35
 35-40
 40-45
 45-50

3. SHOWING THE CLASSIFICATION OF RESPONDENTS ON THE BASIS OF

OCCUPATION
 GOVT . EMPLOYEE
 BUSINESSMAN
 AGRICULTURIST
 PROFESSIOINAL

4. TABLE SHOWING THE HOW OFTEN YOU TAKE GOLD LOAN IN A

YEAR
 ONCE
 2-5 TIMES
 6-10 TIMES
 MORE THANM 10 TIMES

5. TABLE SHOWS THAT THE CUSTOMERS OPINION REGARDING THE

RATE OF INTEREST CHARGEABLE BY THE MUTHOOT FINANCE
 EXCELLENT
 VERYGOOD
 GOOD
 FAIR
 BAD

6. TABLE SHOWS THAT THE MUTHOOT FINANCE STAFF BEHAVIOR

TOWARDS THE CUSTOMER REGARDING VARIOUS FINANCIAL
PRODUCTS.
 EXCELLENT
 VERY GOOD
 GOOD
 FAIR
 BAD

72 | P a g e
7. CUSTOMERS OPINION TOWARDS THE VARIOUS FINANCIAL LOAN
APPLICATION PROCEDURE OFFERED BY THE MUTHOOT FINANCE.
 EXCELLENT
 VERY GOOD
 GOOD
 FAIR
 BAD

8. TIME TAKEN FOR THE VARIOUS AND WHOLE LOAN PROCEDURE OF

MUTHOOT FINANCE.
 LESS THAN 5 MINUTES
 5-10 MINUTES
 11-30 MINUTES
 31-60 MINUTES
 OTHERS (PLEASE MENTION)

9. HOW SATISFIED ARE YOU WITH THE SECURITY STANDARDS OF

MUTHOOT FINANCE LIMITED.
 100 %
 80-99%
 60-79%
 40-59%
 >40%

10. TABLE SHOWING THAT HOW THE CUSTOMER WILL COME TO KNOW
ABOUT MUTHOOT FINANCE FACILITIES.
 NEWSPAPER
 JOURNALS AND MAGAZINES
 T.V ADVERTISEMENTS
 NOTICE
 FRIENDS AND RELATIVES
 OTHERS (PLEASE SPECIFY)

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.
 STRONGLY AGREE
 AGREE
 NEUTRAL
 DISAGREE
 STRONGLY DISAGREE

12. TABLE SHOWS THAT IN CASE OF DEFAULT, DOES MUTHOOT

FINANCE ASSIST BY PROVIDING LONG PAYBACK PERIOD.
 STRONGLY AGREE
 AGREE
 NEUTRAL
 DISAGREE
 STRONGLY DISAGREE

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