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Submitted to:
Satyug Darshan Institute of Engineering and Technology

Roll No. – ( )
Batch 2016 - 2019

In Partial Fulfillment of

Bachelor of Business Administration

(Specialization: Financial Services and Banking)


(April, 2018)

Satyug Darshan Institute of Engineering and Technology

Bhupani Lalpur Road, Village Bhupani
Faridabad - 121002, NCR, Haryana, India

I, Ms. Preety Poddar, student of Satyug Darshan Institute of Engineering & Technology here
by declare that this training report titled “Analysis of Vechile loan of Au finance .” is the record
of authentic work carried out by me during the period from 8th JANUARY 2018 to 14th
APRIL 2018 and has not been submitted to any other University or Institute for the award of
any degree / diploma etc.

Preety Poddar


This is to certify that Ms. Preety Poddar, student of Satyug Darshan Institute of
Engineering and Technology has successfully completed the project work titled “ANALYSIS
OF VEHICLE LOAN OF AU FINANCE.” in partial fulfillment of requirement for the
completion of Bachelor in Business Administration (BBA II-FSB) course as prescribed by
the Maharshi Dayanand University, Rohtak, (HARYANA).

This project report is the record of authentic work carried out by her during the period from 8th
JANUARY 2018 to 14th APRIL 2018. She has worked under my guidance.

Mr. Sajid Khan
Assistant Professor, BBA Department
Project Guide (Internal)

Perseverance, inspiration and motivation have always played a great role in the success of any
venture. At this level of understanding it is often different to understand the wide spectrum of
knowledge without proper guidance and advice.

I have great pleasure and privilege in expressing my deep sense of gratitude to my Project
Guide, Mr Sajid Khan for his guidance and support in completing this project and giving his
valuable insights and suggestion regarding the same, which has helped my project to shape up
the way, it is now. It was only because of his helpful nature that I was given absolute freedom
to explore new directions in this project.

I would take this opportunity to thank Mr. Subhash Arora.

Finally, I would like to thank all my friends and family members who have helped me for the
completion of this project.

Preety Poddar

Many students may have work on this project in different way/styles. I have also tried to work
on this project in a different way.

It was for the first time I got the opportunity to work in such a prestigious and well-known
organization. And things which I have experienced in my training time are going to help me
throughout my life time. I have worked on this project with great enthusiasm and zeal.

Preety Poddar


1 Introduction to the study

2 Company Profile

3 Literature review

4 Research Methodology
 Objectives of the Study
 Research Design
 Method of Data Collection
 Limitations of the Study

5 Data Analysis & Interpretation

6 Findings, Conclusion and Suggestions

7 Bibliography

Non-Banking Financial Companies (NBFC’s)

A non-banking financial company (NBFC) is a company registered under the Companies Act,
1956 and is engaged in the business of loans and advances, acquisition of
shares/stock/bonds/debentures/securities issued by government or local authority or other
securities of like marketable nature, leasing, hire-purchase, insurance business, chit business,
but does not include any institution whose principal business is that of agriculture activity,
industrial activity, sale/purchase/construction of immovable property.
A non-banking institution which is a company, and which has its principal business of receiving
deposits under any scheme or arrangement or any other manner, or lending in any manner is
also a non-banking financial company (residuary non-banking company).
NBFC in India are registered companies conducting business activities similar to regular banks.
Their banking operations include making loans and advances available to consumers and
businesses, acquisition of marketable securities, leasing of hard assets like automobiles, hire-
purchase and insurance business.
Though they are similar to banks, they differ in a couple of ways. NBFC‟s cannot accept
demand deposits (deposits that can be withdrawn at immediate notice), they cannot issue
checks to customers and the deposits with them are not insured by the DICGC (the India
equivalent of FDIC in the US system). Either the RBI (Reserve Bank of India) or the SEBI
(Securities and Exchange Board of India) or both regulate NBFC‟s.
Though the NBFC‟s has been around for a long time, they have recently gained popularity
amongst institutional investors, since they facilitate access to credit for semi-rural and rural
India where the reach of traditional banks has traditionally been poor.
NBFC‟s have also had a major impact in developing small business in rural India through local
presence and strong customer relationships. Usually the loan officers in such NBFC‟s know
the end customer or have a strong “informal” understanding of the credibility of the borrower
and are able to structure their loans appropriately.

Classification of NBFCs based on the Nature of its business:

 Equipment Leasing Company
 Hire-purchase company
 Loan company
 Investment company
 Infrastructure finance company

TheNBFCs that are registered with RBI are basically divided into 4 categories depending upon
its nature of business:

Reclassification of NBFCs:

However, in terms of the NBFC Acceptance of Public Deposits (Reserve Bank) Directions,
1988 with effect from December6, 2006 the above NBFCs registered with RBI have been
reclassified as:

1. Loan Company (LC)

Loan company means any company which a financial institution is carrying on as its principal
business the providing of finance whether by making loans or advances or otherwise for any
activity other than its own but does not include an Asset Finance Company.
2. Investment Company (IC)

Investment Company is a company which is a financial institution carrying on as it’s principal

business the acquisition of securities.
Investment Companies are further divided into following sub- categories:

• Core Investment Companies:

Core Investment Companies in terms of RBI’s Notification mean:
A non-banking financial company carrying on the business of acquisition of shares and
securities and which satisfies the following conditions as on the date of the last audited balance
sheet: -
(i) It holds not less than 90% of its net assets in the form of investment in equity shares,
preference shares, bonds, debentures, debt or loans in group companies.
(ii) It’s investments in the equity shares (including instruments compulsorily convertible
into equity shares within a period not exceeding 10years from the date of issue) in group
companies constitutes not less than 60% of its net assets.

Net assets, for the purpose of this provision, would mean total assets excluding –

• cash and bank balances;

• investment in money market instruments and money market mutual funds
• advance payments of taxes; and
• deferred tax payment.

(iii)It does not trade in its investments in shares, bonds, debentures, debt or loans in group
companies except through block sale for the purpose of dilution or disinvestment;

(iv)It does not carry on any other financial activity referred to in Section45I(c) and 45I (f) of
the Reserve Bank of India Act, 1934 except:
a) investment in
i. bank deposits,
ii. money market instruments, including money market mutual funds,
iii. government securities, and
iv. bonds or debentures issued by group companies;

b) granting of loans to group companies; and

c) issuing guarantees on behalf of group companies.

• Other Companies

 Asset Finance Company (AFC)

AFC would be defined as any company which is a financial institution carrying on as its
principal business the financing of physical assets supporting productive / economic activity,
such as automobiles, tractors, lathe machines, generator sets, earth moving and material
handling equipment, moving on own power and general purpose industrial machines.
Financing of physical assets may be by way of loans, lease or hire purchase transactions.
 Mutual Benefit Financial Company (MBFC)

Mutual Benefit Financial Company means a company which is a financial institution notified
by The Central Government under section 620A of The Companies Act 1956.

Non-Banking Financial Companies in India:

Non-Banking Financial Companies (NBFCs) have come a long way from the era of
concentrated regional operations, lesser credibility and poor risk management practices to
highly sophisticated operations, pan-India presence and most importantly an alternate choice
of financial intermediation. Today, NBFCs are present in the competing fields of vehicle
financing, housing loans, hire purchase, lease and personal loans. More often than not, NBFCs
are present where the risk is higher (and hence the returns), reach is required (strong last-mile
network), recovery needs to be the focus area, loan-ticket size is small, appraisal and
disbursement has to be speedy and flexibility in terms of loan size and tenor is required.
NBFCs‟ growth had been constrained due to lack of adequate capital. Going forward, we
believe capital infusion and leverage thereupon would catapult NBFCs‟ growth in size and
NBFCs are not required to maintain cash reserve ratio (CRR) and statutory liquid ratio (SLR).
Priority sector lending norm of 40% (of total advances) is not applicable to them. While this is
at their advantage, they do not have access to low cost demand deposits. As a result, their cost
of funds is always high, resulting in thinner interest spread.

NBFCs are different from Banks:

 NBFCs cannot accept demand deposits (Demand deposits are funds deposited in an
institution, that are payable immediately on demand e.g.: Savings account, Current account
 A NBFC cannot issue cheques, to their customers and is not a part of the payment and
settlement system.
 Deposit insurance facility of Deposit Insurance Credit Guarantee Corporation (DICGC) is
not available for NBFC depositors
 They cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to
 They cannot offer gifts/incentives or any other additional benefit to the depositors.
 They should have minimum investment grade credit rating, from the credit rating agencies.

Type of Services provided by NBFCs:

NBFCs provide range of financial services to their clients. Types of services under non-
banking finance services include the following:
1. Hire Purchase Services
2. Leasing Services
3. Housing Finance Services
4. Asset Management Services
5. Venture Capital Services
6. Mutual Benefit Finance Services (Nidhi) banks.

The above type of companies may be further classified into those accepting deposits or those
not accepting deposits.

Now we take a look at each type of service that an NBFC could undertake.

Hire Purchase Services

Hire purchase the legal term for a conditional sale contract with an intention to finance
consumers towards vehicles, white goods etc. If a buyer cannot afford to pay the price as a
lump sum but can afford to pay a percentage as a deposit, the contract allows the buyer to hire
the goods for a monthly rent. If the buyer defaults in paying the instalments, the owner can
repossess the goods. HP is a different form of credit system among other unsecured consumer
credit systems and benefits. Hero Honda Motor Finance Co., Bajaj Auto Finance Company is
some of the HP financing companies.

Leasing Services

A lease or tenancy is a contract that transfers the right to possess specific property. Leasing
service includes the leasing of assets to other companies either on operating lease or finance
lease. An NBFC may obtain license to commence leasing services subject to , they shall not
hold, deal or trade in real estate business and shall not fix the period of lease for less than 3
years in the case of any finance lease agreement except in case of computers and other IT
accessories. First Century Leasing Company Ltd., Sundaram Finance Ltd. is some of the
Leasing companies in India.

Housing Finance Services

Housing Finance Services means financial services related to development and construction
of residential and commercial properties. An Housing Finance Company approved by the
National Housing Bank may undertake the services /activities such as Providing long term
finance for the purpose of constructing, purchasing or renovating any property, Managing
public or private sector projects in the housing and urban development sector and Financing
against existing property by way of mortgage. ICICI Home Finance Ltd., LIC Housing
Finance Co. Ltd., HDFC is some of the housing finance companies in our country.

Asset Management Company

Asset Management Company is managing and investing the pooled funds of retail investors
in securities in line with the stated investment objectives and provides more diversification,
liquidity, and professional management service to the individual investors. Mutual Funds are
comes under this category. Most of the financial institutions having their subsidiaries as Asset
Management Company like SBI, BOB, UTI and many others.
Venture Capital Companies

Venture capital Finance is a unique form of financing activity that is undertaken on the belief
of high-risk-high-return. Venture capitalists invest in those risky projects or companies
(ventures) that have success potential and could promise sufficient return to justify such
gamble. Venture capitalist not only provides finance but also often provides managerial or
technical expertise to venture projects. In India, venture capital concentrate on seed capital
finance for high technology and for research & development. ICICI ventures and Gujarat
Venture are one of the first venture capital organizations in India and SIDBI, IDBI and others
also promoting venture capital finance activities.

Mutual Benefit Finance Companies (MBFC's)

A mutual fund is a financial intermediary that allows a group of investors to pool their money
together with a predetermined investment objective. The mutual fund will have a fund
manager who is responsible for investing the pooled money into specific securities/bonds.
Mutual funds are one of the best investments ever created because they are very cost efficient
and very easy to invest in. By pooling money together in a mutual fund, investors can
purchase stocks or bonds with much lower trading costs than if they tried to do it on their
own. But the biggest advantage to mutual funds is diversification.

There are two main types of such funds, open-ended fund and close-ended mutual funds. In
case of open-ended fund, the fund manager continuously allows investors to join or leave the
fund. The fund is set up as a trust, with an independent trustee, who keeps custody over the
assets of the trust. Each share of the trust is called a Unit and the fund itself is called a Mutual
Fund. The portfolio of investments of the Mutual Fund is normally evaluated daily by the
fund manager on the basis of prevailing market prices of the securities in the portfolio and
this will be divided by the number of units issued to determine the Net Asset Value (NAV) per
unit. An investor can join or leave the fund on the basis of the NAV per unit.

In contrast, a close-end fund is similar to a listed company with respect to its share capital.
These shares are not redeemable and are traded in the stock exchange like any other listed
securities. Value of units of close-end funds is determined by market forces and is available at
20-30% discount to their NAV.

Financial Sector Reforms & Liberalization measures for NBFCs:

During the period from 1992-93 to 1995-96 Indian Government took many steps to reform
the financial sector like liberalized bank norms, higher ceiling on term loans, allowed to set
their own interest rates, freed to fix their own foreign exchange open position subject of RBI
approval and guidelines issued to ensure qualitative improvement in their customer service.

Foreign equity investments in NBFCs are permitted in more than17 categories of NBFC
activities approved for foreign equity investments such as merchant banking, stock broking,
venture capital, housing finance, forex broking, leasing and finance, financial consultancy
etc. Guidelines for foreign investment in NBFC sector have been amended so as to provide
for a minimum capitalization norm for the activities, which are not fund based and only
advisory, or consultancy in nature, irrespective of the foreign equity participation level.

The objectives behind the reforms in the financial sector are to improve the efficiency and
competitiveness in the system.
Recent trends in Non-Banking Financial Companies Sector:

NBFCs initially cater to the needs of individual and small savings investors and later
developed into financial institutions, providing services similar to those of banks. NBFCs
have many tailor made services for their clients with lesser degree of regulation. They have
offered high rate of interest to their investors and atrracted many small size investors. In
1998, Reserve Bank of India implemented unprecedented regulatory measures to safeguard
the public deposits.

The Bank has issued detailed directions on prudential norms, vide Non-Banking Financial
Companies Prudential Norms (Reserve Bank) Directions, 1998. The directions interalia,
prescribe guidelines on income recognition, asset classification and provisioning
requirements applicable to NBFCs, exposure norms, constitution of audit committee,
disclosures in the balance sheet, requirement of capital adequacy, restrictions on investments
in land and building and unquoted shares.

The RBI has issued guidelines for entry of NBFCs into insurance sector in June 2000 .
Accordingly no NBFC registered with RBI having owned fund of Rs.2 Crore as per the last
audited Balance Sheet would be permitted to undertake insurance business as agent of
insurance companies on fee basis, without any risk participation.

The focus of regulatory initiatives in respect of financial institutions (FIs) during 2004-05
was to strengthen the prudential guidelines relating to asset classification, provisioning,
exposure to a single/group borrower and governance norms. Business operations of FIs
expanded during 2004-05. Their financial performance also improved, resulting from an
increase in net interest income. Significant improvement was also observed in the asset
quality of FIs, in general. The capital adequacy ratio of FIs continued to remain at a high
level, notwithstanding some decline during the year.

Regulatory initiatives in respect of NBFCs during the year related to issuance of guidelines
on credit/debit cards, reporting arrangements for large sized NBFCs not accepting/holding
public deposits, norms for premature withdrawal of deposits, cover for public deposits and
know your customer (KYC) guidelines. Profitability of NBFCs improved in 2003-04 and
2004-05 mainly on account of containment of expenditure. While gross NPAs of NBFCs, as a
group, declined during 2003-04 and 2004-05, net NPAs after declining marginally during
2003-04, increased significantly during 2004-05

How do NBFCs facilitate Economic Development.

. 1. Greater Employment Opportunities and Standard of Living

NBFCs help attain the objective of macroeconomic policies of creating more jobs in the
country by promoting SMEs and private industries through lending them loans. This increase
in new businesses consequently raises the demand for manpower and creates employment.
Furthermore, the Purchasing Power Parity (PPP) of people rises and so does their standard of
2. Strengthening of Financial Market
The financial market relies heavily on Non-banking financial institutions for raising capital.
The start-ups and small-sized businesses are dependent on funds offered by NBFCs and also
in order to maintain liquidity. For an effective functioning and balance in the financial market,
NBFCs play a significant role.

3 Supplying long-term credits

Unlike the regular banks, NBFCs extend long-term credits to infrastructure, commerce and
trade companies. The traditional banks expect timely, schedules and short-term repayment of
loans that may not always suit the requirements of these industries. NBFCs, on the other hand,
fund large projects and so promotes economic growth. They also allow industries to participate
in equity.

4. Mobilisation of Funds
Non-banking financial companies help in rotation of resources, asset distribution and
regulation of income to shape the economic development. They enable converting saving into
investments and thus helps in the mobilisation of funds/resources in the economy.

5. Growth of National Income

As NBFCs aim to build capital for several industries – private and otherwise – they aid in
accumulating a capital stock for the country. This directly adds on to the national income and
results in the progression of Gross Domestic Product (GDP).

AU FINANCIERS is a NBFC (Non-Banking Financial Company). A non-banking financial

company (NBFC) is a company registered under the companies Act,1956 and is engaged in the
business of loans and advances, acquisitions of shares/stock/bonds/debentures/securities issued
by the government or local authority or other securities of like marketable nature, leasing, hire
purchase, insurance business, chit business, but does not include any institution whose principal
business is that of agriculture activity, industrial activity, sale/purchase/construction of
immovable property.


AU Financiers (India) Private Limited, registered with Reserve Bank of India as a Non-
Banking Finance Company (NBFC) and this company was promoted by Mr. Sanjay Agarwal
in the year 1996. Originally the Company was incorporated as ‘L.N. Finco Gems Private
Limited’ but in 2005 Company has changed its named into ‘AU Financiers (India) Pvt.
Ltd’. The objective was to align the Company name with business line of the Company.

AU Financiers is a fast-growing financing company with our roots in Rajasthan, and branches
spread in Maharashtra and Gujarat and planning to increase our presence to pan India.
Company facilitates access too easy, affordable financing options for small road transport
operators and fleet owners. Company extensive network in semi-urban and rural areas of
Maharashtra and Gujarat has brought the benefit of growth to people outside the usual scope
of organized finance and allowed us to propagate the motto of inclusive growth.

Its biggest area of operation is commercial vehicle financing where we serve the requirements
of various categories of the market right from three wheelers to multi-axle trucks. From first
time buyers of new vehicles to refinancing of running vehicles, our extensive product portfolio
allows us to cater to a broad cross section of the market.

It also engaged in small secured business loan products for personal and business needs. Our
excellent track record of high-quality lead generation, high collection ratio and low
delinquencies has attracted the attention of high-quality stakeholders and today, besides the
promoters, our principal investor is Motilal Oswal Private Equity Advisors Private Limited.
The support of our investors and our enhanced management bandwidth has given us the
impetus to forge ahead in new geographies and expand our product portfolio.

 In just first few years from inception, we disbursed, 150 crores in vehicle loans, SME
loans, etc.
 Exhibiting fabulous unlimited potential and quick growth prospects, we entered into
the channel business with a strategic relationship with HDFC bank.
 This was an immensely crucial year for the company as Motilal Oswal Private Equity
Advisors Pvt. Ltd. Infused Rs. 20 Crores worth of equity and strategic acumen on board
with a strong product support and constant process development, we expanded our base
to Gujarat.
 Established a relationship with IDBI, Central Bank of India and State Bank of Patiala.
 Recorded an all-time high PAT of Rs. 5.2 crores and AUM of Rs 244.17 crores. The
international Finance corporation, (a member of the world Bank Group) Motilal Oswal
Private Equity Advisors Pvt. Ltd. and other promoters infused a whopping Rs. 60
Crores of shares Capital into the company.
 Recorded a PAT of Rs. 11.85 crores and AUM of Rs. 485.58 crores.
 RBI classified the company as the only “Systematically Important Asset Finance
Company” in Rajasthan.
 Our exceptional long-term facilities was were rated (A-) by CARE.
 Based on high performance and consistent growth, CRISIL has upgraded its rating to
BBB+/ Positive.


• Mr. Sanjay Agarwal, Promoter & Managing Director

• Mr. Uttam Tibrewal, Executive Director
• Mr. Krishan Kant Rathi (Director)
• Mr. Vishal Kumar Gupta (Investor Director)


 Marketing Department.
 Accounts Department.
 Collection Department.
 Credit Departments.
 Human Resources Departments.
 IT Department.
 Insurance Department.

AU means gold which is precious and worthy across all cultures and times. It symbolizes in
service, wealth and happiness. Financiers mean those who finance. As the name of the company
suggests, we are the company who finance thorough imperil service to create happiness in the
lives our precious and worthy customers. We have launched the new logo of our company
which is having manifolds.

Firstly, it is symbolic to Swastik, the most prominent auspicious symbol of the present era.
Swastik symbolizes auspiciousness, well-being and let good prevail.

Secondly, it is made up with 4 F’s which means- Fast, Fair, Flexible & Friend.

Thirdly, the color associated with it has deep meaning. Blue color is considered to be a
corporate color which symbolizes calmness, peace, confidence, intelligence, stability, unity,
trust, loyalty, wisdom, faith, tranquility and sincerity. Red color which a very emotionally
intense color is associated with energy, strength, courage, power, determination as well as
passion, desire, and love.


o Relationship based origination model:

We meet every borrower in person before disbursing a loan. The company works on the
concept of ‘touch and feel’ which helps to understand background, profile & needs of the
customers which are overlooked by the organized sector. Company provides easy finance
with hassle (difficulty) free documentation, speedy and transparent process.

 Centralized & Independent credit verification:

It highly focused on credit quality of the borrowers. Each file has to go through layered
filtration process of the company including credit verification at different levels and
final approval from head office. Company assesses the synergy & viability between
product, customer profile and product’s proposed use.
 Robust collection process:
Company has in house collection team with expert legal advisors who on regular basis
follows up with delinquent accounts. Company has layered process which includes tele
calling, personal visit, legal actions, repossession of vehicles etc.
The company has a policy of releasing of REPO vehicles which boosts customers
confidence is us. The company’s collection efficiency is very strong and has on of the
lowest delinquency ratios of in the industry.
 Grass root penetration:
Many analysts believe that the rural economy will grow strongly in the coming years.
There is strong focus by the Government of strengthen the rural economy. AU
Financiers could be a significant beneficiary of this trend. As it diversifies its loan
products and offers other forms of secured financing it could augur very well for growth
prospects of the Company.
 High vintage of team:
AU has a strong, highly motivated and enthusiastic team with rich experience and
knowledge of on-the-ground business. The core team has worked with each other for
the past several years. The team has been able to establish strong relationships in the
marketplace, as well as with various authorities/establishments.

Investor Relation:

IFC is a dynamic organization, constantly focusing in creating opportunity to the people to

escape poverty and to improve their lives. To achieve this Purpose, IFC offers development-
impact solutions though firm-level interventions direct investments, advisory services, and the
IFC Asset Management Company; standard-setting; and business enabling environment work.
IFC is the financially and legally independent private sector arm of the World Bank Group.

It also coordinates with the other institutions of the World Bank Group for its activities. IFC’s
operations are carried out by its departments, most of which are organized by world region or
global industry/sector. IFC has over 3,400 staff, of which 51% work in field offices and 49%
at headquarters in Washington, D.C.

IFC continues to develop new financial tools that enable companies to manage risk and broaden
their access to foreign and domestic capital markets. IFC has launched a broad and targeted set
of initiatives to help private enterprises cope with the global financial and economic crisis.

IFC investment in AU financiers will expand borrowing to low-income and underserved

customers. Alliance of IFC with AU financiers will enables us to mutually attain the purpose
by strengthening the business model of AU Financiers.


The company continues to contribute to the economic well-being of the communities it

interacts with and enhances their social well-being. The company during the year continued to
involve itself in social welfare activities by contributing to recognized charitable institution,
which specifically benefits the economically disadvantaged and socially weaker sections of the
society. The Company has regularly contributed to the “Akshay Patra Foundation”.

Akshay Patra Foundation runs “Nutritious food for children in schools” a well-known mid-day
meal program targeted towards school going children from the under privileged sections of
society. In the current year the company donated a Mahindra Vehicle to Akshay Patra

Company is frontrunner in state of Rajasthan in phasing down old Diesel and Petrol 3 wheelers
with new upgraded LPG/CNG based 3 wheelers. Thereby, Company is supporting Govt. of
India vision of save energy and environment friendly vehicles on road for better future of our
next generation. Company’s 99% of lending is concentrated to vehicle financing and
Company’s is focused on financing of vehicles with greater fuel efficiency, lower emission of
pollutants and new technology including CNG/LPG. Company’s is looking forward to do
“concentrated financing” of vehicles which shall lead to:

1. Saving of fuel with better fuel efficiency with new technology vehicles.
2. Improvement by way of reduction in remission of polluting gases by funding of EURO
certification vehicles.
3. Funding of vehicles run on LPG / CNG with little or no atmospheric pollution. Company
has been financing following vehicles which leads to lower emission of pollutants and Higher
fuel efficiency and with sophisticated technology.

Company also promoting education by reimbursing the cost of education of children of our
employees who belong to economically weaker section of the society.

Vehicle Financing:

Commercial vehicle loans will continue to remain the mainstay for the Company. Company
primarily offer our services for financing various types of heavy commercial vehicle, light
commercial vehicle, multi-utility offer our services for financing various types of heavy
commercial vehicle, light commercial vehicle, multi-utility vehicle, cars, three wheeler
loading, three wheeler passenger, tractor etc. of different reputed brands like Mahindra &
Mahindra, Tata Motors, Piaggio vehicles, Force Motors, Maruti, Chevrolet, Toyota, etc.


• Touch & Feel Policy

• Takeover/ Top-up Loans
• Simple documentation
• Quick credit decision
• Speedy approval & Disbursement
• Loan approval on NIP also i.e. Non-Income Proof
• Wide repayment options such as Cash/FPDC/RPDC/ECS• Variable guarantor facility i.e.
guarantor can be Existing Customer/Family, Member/Govt. Employee/Any transporter etc.

Loan against property:

AU FINANCIERs supports your pressing need for capital and offers loans against property.
Whether it is an investment in new property or a crucial input for your business, we
understand your requirements and raise you a loan against your property as collateral.
Shubharambh (meaning-an auspicious start), by AU Financiers is a one of its kind product
that provides loans against your properties registered with the Gram Panchayat. Its features
1. Personalized verification and assessment
2. Fast processing
3. Business establishment support
4. Easy and flexible installment repayment

Small & Medium Enterprises Loan:

An ability to nurture and support small entrepreneurs is our forte, and for substantiating our
words we provide financial solutions in the form of small secured loans to small businesses
and other income generation activities. The typical tenure of these loans is three to five years.
Its features are:
1. Loans starting from as low as Rs.50,000
2. Flexibility to choose and EMI based loan
3. Least processing time in the industry
4. Complete guidance and hand-holding for the customer
5. Transparent services

According to RBI Non Banking Finance Companies (NBFCs) is a constituent of the
institutional structure of the organized financial system in India. NBFCs perform a significant
and important role in our financial system. They facilitate the process of channelising of public
savings and provide better return to the depositors. We are aware that due to liberalization and
globalisation, banking industry and financial sector has gone through many reforms. In the
present economic environment it is very difficult to cater need of society by Banks alone so
role of Non Banking Finance Companies and Micro Finance Companies become indispensable.
The activities of non-banking financial companies
(NBFCs) in India have undergone qualitative changes over the years through functional
specialisation. The role of NBFCs as effective financial intermediaries has been well
recognised as they have inherent ability to take quicker decisions, assume greater risks, and
customise their services and charges more according to the needs of the clients. While these
features, as compared to the banks, have contributed to the proliferation of NBFCs, their
flexible structures allow them to unbundle services provided by banks and market the
components on a competitive basis. The distinction between banks and non-banks has been
gradually getting blurred since both the segments of the financial system engage themselves in
many similar types of activities. At present, NBFCs in India have become prominent in a wide
range of activities like hire-purchase finance, equipment lease finance, loans, investments, etc.
By employing innovative marketing strategies and devising tailor-made products, NBFCs have
also been able to build up a clientele base among the depositors, mop up public savings and
command large resources as reflected in the growth of their deposits from public, shareholders,
directors and their companies, and borrowings by issue of non-convertible debentures, etc.
According to KPMG survery The Indian Non Banking Finance Company (NBFC) sector has
often been relegated to the shadows, in most discussions on the Indian Financial Services (FS)
industry. Banks, insurance companies and capital market players take centre stage and
invariably, NBFCs attract public attention only during times of crisis. Little attention has been
paid to the silent but effective manner in which NBFCs have spread their operations across the
country. NBFCs have provided financial solutions to sections of society who hitherto were at
the mercy of unorganized players for credit and savings products, which were delivered on
economically and socially usurious terms. ronically, in recent times, NBFCs are once again in
the spotlight for their perceived strengths and capabilities rather than their problems. While
this re-rating ought to bring cheer to a much maligned sector, a degree of caution needs to be
instilled within potential investors in NBFCs, who need to clearly understand the true drivers
of value for finance companies. This understanding is imperative to enable a better judgment
of the intrinsic worth of NBFCs. This article proceeds to illustrate the key factors responsible
for the strong re-rating of the NBFC sector, as well as discuss the validity of each of these
factors, as actual drivers of value. Today, the NBFC sector is as financially sound as it has ever
been.To an extent, this can be attributed to the very problems affecting the sector which have
resulted in the purging of several players, leaving the fittest few to dominate the landscape.
Taking the Reserve Bank of India‘s (RBI) definition of ‗reporting NBFCs‘ as a proxy for non-
dormant players, a mere 24 NBFCs held 92.7 percent of the total assets of all NBFCs in 2005-
2006. The balance assets, amounting to less than 8 percent of the total, were fragmented across
439 NBFCs. In addition to this consolidation, at present, NBFCs in general are well-capitalized
with strong parent support. A majority of active NBFCs reported capital adequacy ratios
exceeding 12 percent

According to EPW Research Foundation (EPWRFThe Indian economy is going through a
period of rapid `financial liberalisation'. Today, the `intermediation' is being conducted by a
wide range of financial institution through a plethora of customer friendly financial products.
The segment consisting of Non-Banking Financial Companies (NBFCs), such as equipment
leasing/hire purchase finance, loan and investment companies, etc. have made great strides in
recent years and are meeting the diverse financial needs of the economy. In this process, they
have influenced the direction of savings and investment. The resultant capital formation is
important for our economic growth and development. Thus, from both the macroeconomic
perspective and the structure of the Indian financial system, the role of NBFCs has become
increasingly important. The crucial role of Non Banking Finance Institutions (NBFIs) in
broadening access to financial services, and enhancing competition and diversification of the
financial sector has been well recognized. The main advantages of these companies lie in their
ability to lower transactions costs of their operations, their quick decision-making ability,
customer orientation and prompt provision of services. While NBFIs are sometimes seen as
akin to banks in terms of the products and services offered, this is strictly not accurate, as more
often, NBFIs play a range of roles that complement banks. Further, Status Note on NBFCs
NBFIs can add to economic strength to the extent they enhance the resilience of the financial
system to economic shocks. A well developed and properly regulated NBFI sector is thus an
important component of broad, balanced, efficient financial system that spreads risks and
provides a sound base for economic growth and prosperity.

According to CARE: NBFC sector faced significant stresses on asset quality, liquidity and
funding costs due to the global economic slowdown & its impact on the domestic economy.
While all the NBFCs were affected, the impact varied according to the structural features of
each NBFC. Asset-liability maturity (ALM) profiles, type of assets financed and origination /
collection models followed were the primary differentiators within NBFCs. The support
provided by the Reserve Bank of India (RBI) highlighted the explicit acceptance of the
systemic importance of the sector. FY10 was marked by re-aligning of the liability profiles,
tightening of lending norms coupled with closing down of many of the unsecured loan
segments. On a structural basis, the sector is now more robust due to the lessons learned by
NBFCs from this crisis. Profitability is expected to be lower than historical levels due to
conservative ALM management, higher provisioning and avoidance of high yielding unsecured
loan segments. However profits are at the same time expected to be much more stable & less

Redman and Mory define research as a “systemized effort to gain new knowledge.” Some
people consider research as a movement, a movement from the known to the unknown.

Research is an academic activity and as such the term should be used in a technical sense.
According to Clifford Woody, research comprises defining and redefining problems,
formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.

Research Methodology
Research methodology is a way to systematically study &solve the research problems. If
research wants to claim his study as a good study. He must clearly state the methodology
adopted in conducting the research so that it may be judged by the reader whether the
methodology of work done is so or not.
Research tools:

 Line diagrams
 Tables
 Percentages


This project has been made to study about the company (i.e., tata motors), so the purpose of
study includes following objectives-
1. To understand the working of AU Finance.
2. To check the credit worthiness of the company.
3. To study the process for Vehicle loan.
4. To find out financial position of the company (AUFIPL).

The formidable problem that follows the task of defining the research problem is the
preparation of the design of the research project, popularly known as “Research Design”.
Research design is a plan, structure and strategy of investigation conceived to obtain answers
to research questions and to control variance.
The research used here is descriptive research.


Information can be collected through both primary and secondary sources.

Primary Data: In some cases, the researchers may realize the need for collecting the first-hand
information. As in the case of everyday life, if we want to have first-hand information or any
happening or event, we either ask someone who knows about it or we observe it ourselves, we
do the both. Thus, the two methods by which primary data can be collected is observation and

Secondary Data: Any data, which have been gathered earlier for some other purpose, are
secondary data in the hands of researcher. Those data collected first hand, either by the
researcher or by someone else, especially for the purpose of the study is known as primary

The data collected for this project has been taken from the secondary source.
Sources of secondary data are:-
 Internet

 Magazines

 Publications

 Newspapers

 Brouchers

Limitation of the Study:

Although the project aims data making in depth study of loan process at AU Finance but there
are some practical limitation regarding the methodology followed & the overall procedure
these can be summed up under the following points:

 The study is limited to the analysis of vehicle loan of AU Finance.

 The study is based on secondary data available from monthly fact sheets, websites and
other books.

 As the study was for short span i.e., 3 years and due to lack of time other areas could
not be well focused.

 No direct access to company data.

Financial Position of the company

Comparative Analysis
Particulars 31st March 31st March Increase/Decrease/Rs. Increase/Decrease
2017 2018 Percentage
Total Current 10,415.43 23,448.29 13,032.86 125.13
Total Current 824.12 2165.65 1341.53 162.78
Total Assets 10835.00 24443.08 13,608.08 125.59
Cash and 3,7745.05 2845.12 (899.93) (24.03)
other bank
Loans & 4,000.03 15,144.80 11,144.76 278.62
Total Capital 10,010.88 22,277.43 12,266.55 122.53

Secured Loans
Particulars 31st
March 31stMarch Increase/Decrease/Rs Increase/Decrease
2017 2018 Percentage
Term Loan 4740.06 6337.53 1597.47 33.70
Cash Credit 1267.03 4468.67 3201.64 252.69
Total 6007.09 10,806.21 4799.12 79.89

Particulars 31st March 31st March Increase/Decrease/Rs Increase/Decrease

2017 2018 Percentage
Operating 1,132.56 2301.71 1619.15 103.23
Total 101.47 240.67 139.20 137.18
write offs
Total Expenditure = Operating Expenses + Total Provision/Write offs
Total 1234.03 2542.38 1308.35 106.02
Total Income 2,284.46 5426.99 3,142.53 137.6
PAT 565.53 129.12 727.59 128.66
Net Profit 596.07 1338.93 742.86 124.63

 The comparative analysis reveals that during 2018 there has been an increase in current
asset of Rs. 13,032.86 Lacks i.e. 125.13% and in the current liabilities have increased
by Rs. 1,341.53 Lacks i.e. 162.78% so the current financial position has increased.

 The liquid Asset that is cash in hand, cash in bank shows a decrease in 2018 over 2017
this will not improve the liquidity position of the concern.

 The other assets loans & advances have increase by Rs. 11,144.76 Lacks it’s show that
company business improved, and long-term liabilities increase in form of secured loan
then it show that company have good relationship with the banks in India.

 The overall financial position of the company is satisfactory.

 The comparative analysis reveals that there has been increase in Operating Expenses
103.23% and total expenditure increased by Rs. 106.02%

 The total income of the bank has increased by 137.6% and the company earns the profit
of Rs. 1338.93/- Lacks which is 124.63% more than the previous year.
Ratio Analysis

Profitability Ratio:

The primary objective of business undertaking is to earn profit is the words of Lord
Keynes: “profit is the engine that drives the Business enterprise”. Profit is not only
needed for its existence but also for its expansion and diversification. The investors
want an adequate return on their investment; workers want higher wages, creditor want
high security for their interest and loan soon.

Following are the important overall profitability ratios, which relevant to the business
concerns are:

 Return on Assets
 Return on Capital Employed
 Return on Equity Capital
Return on Assets:

It states the relationship between net profit and total asset.

Return on Asset = Net Profit*100/Total Asset

Year Net Profit Total Asset Percentage

2016 294.74 2894.71 10.18
2017 596.07 10835.00 5.50
2018 1338.93 24,443.08 5.48

Relation of Net Profit and Total Asset by Diagram:







1 2 3

Net Profit Total Asset


The Return on asset of AU Financier’s (India) Pvt. Ltd is not satisfactory. The Assets are not
utilized properly.
Return on Capital Employed:
It is widely used to measure the overall profitability and the efficiency of the business

Return on Capital Employed = Net Profit*100/Total capital employed

Year Net Profit Capital Employed Percentage

2016 294.74 2,613.11 11.28
2017 596.07 10,010.88 5.95
2018 1,338.93 22,277.43 6.01

Relation of Net Profit & Capital employed by diagram






1 2 3

Net Profit Capital Employed

Return on Equity Capital:
The equity shareholders are the real owner of the company. They assume high risk in the

Return on Equity Capital = Net Profit*100/Equity capital

Year Net Profit Equity Capital Percentage

2016 294.74 1000.02 29.47
2017 596.07 1,000.02 59.61
2018 1,338.93 1393.29 96.10

Relation of Net Profit & Equity Capital Diagram







1 2 3

Net Profit Equity Capital

The company has taken funds in the form of loans and advances irrespective of issuing equity
capital and hence, the cash has been paid in the form of interest which has increased manifold
times from the last year.
Liquidity Ratio:

1. Current Ratio

Current ratio = current assets/current liabilities

Current Ratio for 2018: 10,415.43/824.12 = 12.64

Current Ratio for 2017: 23,448.29/2165.65 = 10.83


The company has sufficient and excess funds available with it to repay its debt (in case) in both
the financial years 2017 and 2018. This implies that company has excess of cash in the form of
advances and cash and bank balances.

1. The company has taken funds in the form of loans and advances irrespective of issuing
equity capital and hence, the cash has been paid in the form of interest which has
increased manifold times from the last year.

2. It is found during survey that company is not investing money in advertising and
promotion activities. All the customers got to know about Au through their friends and

 Some extra benefits can be introduced for the existing customers.
 It will reduce switching of customers
 It will attract new customers.
Suggestion: Since Au Financiers doesn’t provide two wheeler loans; it is recommended that
company should provide it so that it can capture more market.

 More emphasis should be laid on advertising of the products.
 It will increase the awareness among the customers.
Suggestion: Au Financiers needs aggressive marketing and business strategy to
compete with other NBFC. It is suggested that company should formulate competitive
policies and apply push strategy.

 Focus on reducing the interest rates.
If the customers are getting more benefits on comparatively lesser rate of interest, they
would surely prefer the company.

AU Financiers (India) Pvt. Ltd. is growing company with roots in Rajasthan, Maharashtra &
Gujarat. The financial profile of the company is good because company has good relationship
INDUSIND, & SBOP. The number of people and customers is increasing very fast and the
number of the branches across the state is increasing very fast. Also the net worth of the
company showing that company is on good track.
Company is totally depended upon fund because company’s business is providing loans to
customers. Fund is the oxygen for the company because if company don’t have fund then it
can’t disburse loans to its customers.
The biggest USP of the company I found was it provide loan or it sanction loan at very less
documentation. Good coordination between organization and customers, which reveals the
importance of fair and clear business.

1. “C.R. KOTHARI”-Research Methodology

(Second Revised Edition)




1. Au finance annual report

2. Magazines
Comparative balance sheet:

Assets. 31th March 31th March Increase/Decrease/ Increase/Decrease

2017 2018 Rs. Percentage
Current Assets.

Debtors Less than 6 201.03 131.81 (69.23) (34.44)

Debtors More than 6 45.44 6.00 (39.44) (86.80)
Loans & Advances 4,000.03 15,144.80 11,144.76 278.62

Accrued Interest on 31.62 113.10 81.48 257.71

Trade Advances 450.88 566.53 115.65 25.65

Term Deposits 1,850.69 4,201.33 2,350.63 127.01

Cash and other bank 3,745.05 2,845.12 (899.93) (24.03)

Advances 38.83 337.53 298.71 769.33
recoverable in
Other current assets 51.86 102.08 50.22 96.83

Current Assets Total 10,415.43 23,448.29 13,032.86 125.13

Fixed Assets.
Owen Assets. 191.32 764.46 573.14 299.57

Depreciation 89.44 112.04 22.60 25.27

Net Block = Owen Assets. – Depreciation

Net Block 101.88 652.42 550.54 540.38

Investments 317.69 342.37 24.68 7.77

Net Block + 419.57 994.79 575.22 548.15


Total Assets = Total Current Assets. + Total Fixed Assets

Total Assets 10,835.00 24,443.08 13,608.08 125.59

Current Liabilities
Sundry Creditors 114.37 211.56 97.19 84.98
Other current 375.82 612.75 236.93 63.04

EMI Payable 182.77 1,001.67 818.90 448.05

Securitisation /

Provisions 151.16 339.67 188.51 124.71

Provisions for 44.92 41.02 (3.91) (8.70)


Provision for 52.50 183.34 130.84 249.23

Estimated Loss for
Securitisation /
Other Provisions 53.74 115.31 61.57 114.58

Current Liabilities 824.12 2,165.65 1,341.53 162.78


Net Current Assets. = Current Assets – Current Liabilities

Net Current Assets. 9,591.31 21,282.64 11,691.33 121.89

Total Capital Employed = Net Block + Investments + Net Current Assets

Total Capital 10,010.88 22,277.43 12,266.55 122.53

Represented By
Equity Share Capital 1,000.02 1,393.29 393.27 39.33

Share Application 146.00 - (146.00) (100.00)

Compulsory 2,000.00 7,549.99 5,549.99 277.50
Preference Shares
Reserves and 891.50 2,612.23 1,720.73 193.02

Less : intangibles - - - #DIV/0!

DTA 37.86 84.29 46.43 122.63

Tangible Net worth 3,999.66 11,471.22 7,471.56 186.80

Secured Loans
Term Loan 4,740.06 6,337.53 1,597.47 33.70

Cash Credit 1,267.03 4,468.67 3,201.64 252.69

Total 6,007.09 10,806.21 4,799.12 79.89

Unsecured Loans
From Banks 4.13 - (4.13) (100.00)

Others - - - #DIV/0!

Total 4.13 - (4.13) (100.00)

Deferred Tax - - - -

Total Liabilities 10,835.00 24,443.08 13,608.08 125.59

Channel Business 15,417.00 13,630.00 (1,787.00) (11.59)

Assigned Portfolio 5,348.00 19,839.87 14,491.87 270.98

Off Balance Sheet 20,765.0 33,469.9 12,704.87 61.18


Assets Under 24,765.03 48,614.67 23,849.63 96.30

Comparison of income statement:

31th March 31th March Increase/Decrease Increase/Decrease

2017 2018 Rs. Percentage
Salaries and staff 451.38 803.18 351.80 77.94
Admn. and Misc. 681.18 1,498.53 817.34 119.99
expenses (incl. raw
Operating 1,132.56 2,301.71 1,169.15 103.23

Provision for NPAs 1.37 (3.91) (5.28) (385.53)

Provision for 52.50 130.84 78.34 149.23

Credit Loss on
Provision for 8.21 (5.21) (13.41) (163.44)
Overdue Debtors
Loan Written Off 39.40 66.68 27.28 69.23

Debtors Off - 52.27 52.27 5227

Total Provision / 101.47 240.67 139.20 137.18

Write offs
Total Expenditure = Operating Expenses + Total Provision/Write offs
Total Expenditure 1234.03 2542.38 1308.35 106.02

Interest on own 546.82 1,556.14 1,009.32 184.6

Income under 912.67 972.86 60.19 6.595

Channel Business

Income from 537.84 2,082.89 1,545.05 287.3


Interest on FDR 105.59 191.84 86.25 81.68

Income from 2,102.92 4,803.73 2,700.81 128.4


Other Income 181.54 623.26 441.72 243.3

Total Income 2,284.46 5,426.99 3,142.53 137.6

PBIDT = Total Income – Total Expenditure

Less:- Depreciation 1,050.43 2,884.61 1,834.18 174.61

and Impairment of
Fixed Assets
PBIT 30.53 45.81 15.28 50.04

Less:- Interest 1,019.90 2,838.80 1,818.90 178.34

Less:- Prior Period 185.10 914.06 728.95 393.81


Less:- Misc. expn. (2.15) 0.40 2.55 (118.60)

written off
PBT 12.75 - (12.75) (100.00)

Less:- Tax 824.19 1,924.35 1,100.15 133.48

PAT 258.66 631.22 372.56 144.03

Total Expenses = 565.53 1,293.12 727.59 128.66

Total Income –
Profit After Tax

Total Exp.
Add : Depreciation 1,718.93 4,133.87 2,414.94 140.49

Gross cash accruals 30.53 45.81 15.28 50.04

= Profit After Tax +

Gross cash accruals

Less : Dividends - 608.82 1,338.93 730.12 119.92

Pref. (Rs.)

- - - - -
Equity (Rs.)

Net cash accruals - - - -

Net cash 608.82 1,338.93 730.12 119.92

Income (%)