Gaurav Shrivastava

SUMMER TRAINING PROJECT REPORT

(MBA - 035)
On
“A Comparative Analysis of Customer Perceptions of
Muthoot Fincorp Ltd. vs Mannapuram Finance Ltd.”
(A Study at Muthoot Fincorp Ltd., Lucknow)
Submitted in Partial Fulfillment of
Master of Business Administration (MBA)
Programme : 2011 -13
Of

Gautam Buddh Technical University, Lucknow

SUBMITTED BY

GAURAV SHRIVASTAVA
(MBA – IIIrd SEMESTER)
( ROLL NO. - 1101470016)

Faculty of Management Science

Shri Ram Murti Smarak College of Engineering & Technology, Bareilly

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Shri Ram Murti Smarak College of Engineering & Technology,

Bareilly (U.P.)

Faculty of Management Science

Certificate
This is to certify that Mr. Gaurav Shrivastava, a regular student of MBA 2011 Batch has

undergone Summer Training in Muthoot Fincorp Ltd., Lucknow on the topic of “A

Comparative Analysis of Customer Perceptions of Muthoot Fincorp Ltd. vs Mannapuram

Finance Ltd.” for a period of six week commencing from 11th June , 2012 to 21th July , 2012.

This Summer Training Project Report embodies the facts and figure collected and interpreted by

him during the course of Training.

This Certificate is issued by the undersigned on the basis of the Summer Training Certificate of the

organization in which the student completed the Summer Training during above period.

(Dr. Anant Kumar Srivastava) Date:

Head - Faculty of Management Science Place: Bareilly

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STUDENT DECLARATION

This project has been undertaken as a partially fulfill of the requirement for the

award of the degree of Master of Business Administration of U.P. Technical University,

Lucknow.

The project was executed after the second semester under the supervision of

Mr. Sarvesh Kumar Srivastava , Area Manager (UP).

Further I declare that this project is my original work and the analysis and finding

are for academic purpose only. This project has not been presented in any seminar or

submitted elsewhere for the award of any Degree or Diploma.

(Gaurav Shrivastava)

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ACKNOWLEDGEMENT

First of all I thank God for giving me this wonderful opportunity to undertake this

Training which is a part of my MBA programme.

I would like to thank Mr. Ratnesh Shrivastava Sir (HR Manager) for rendering

his help to me in this work.

I would also like to sincerely thank Mr. Sarvesh Srivastava Sir (Area Manager)

& Mr. Uma Kant Srivastava Sir (Branch Manager, Indira Nagar) for giving me the

wonderful opportunity to work under their able guidance and support throughout my

research.

I am also thankful to employees working at Muthoot Fincorp Ltd. Corporate

Office and Branch Offices for giving me their valuable time and vital information which

forms a part of this report.

I am grateful to Mr. Arun Kumar Kaushik Sir, Faculty of MBA Department,

SRMS CET, Bareilly who encouraged me to go beyond the scope of the project and this

broadened me learning on this project.

Last but not the least; I thank my parents for their prayers, help and advice which

helped me a lot to complete this project report.

With Sincere Regards

Gaurav Shrivastava

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Executive Summary

Gold has always been a valued commodity. Particularly in India, it is considered as

auspicious, and used in the form of jewelry, coins and other assets. Due to their high

value, people have been taking loans against gold ornaments for centuries. Till about a

decade ago, most of such lending activities used to take place in the unorganized sector

through pawnbrokers and money lenders. However, the scenario has changed with the

entry of organized players. According to our latest report, in the past few years, banks

and non-banking finance companies (NBFCs) have made a significant presence in the

gold loan market. It is anticipated that the organized gold loan market will grow at a

compound annual rate of 25.5% during FY 2012 to FY 2015.

My research report, finds that the organized gold loan market has grown tremendously

over a period of time, thanks to the changing consumer perception about gold loan, and

rising loan requirements. A new trend of gold financing for purchasing has also been

observed in the industry. I found that the consumer outlook is changing as people are

increasingly taking gold loans to meet their various short-term needs.

It has been observed that the organized players are exploring the potential, and expanding

their networks into North, East and West regions. My report analyzes the Indian gold

loan industry, including its market size, penetration, type of institutions, and share of

major players, and presents forecasts. I also studied how the government regulations are

impacting the industry.

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INDEX

Part – A : ABOUT THE ORGANISATION

Chapter – 1 ► Industry Profile

1.1 INTRODUCTION 1

1.2 INDUSTRIAL PROFILE 3

1.3 GOLD FINANCE INDUSTRY IN INDIA 6

1.4 AN OVERVIEW OF THE INDIAN NBFC SECTOR 8

Chapter – 2 ► Corporate Profile

2.1 OVERVIEW OF MUTHOOT GROUP 11

2.2 OVERVIEW OF MUTHOOT PAPPACHAN GROUP 15

2.3 FOUNDER & MANAGEMENT BOARD 16

2.4 MPG CORE VALUES 20

2.5 MPG ORGANIZATIONAL APPROACH 22

2.6 BUSINESSES OF MUTHOOT PAPPACHAN GROUP (MPG) 23

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Chapter – 3 ► Company Profile

3.1 INTRODUCTION OF MUTHOOT FINCORP LIMITED 34

3.2 KEY PEOPLE 35

3.3 VISION, MISSION & VALUES 39

3.4 COMPANY HISTORY 40

3.5 COMPANY PROFILE 42

3.6 PRODUCTES & SERVICES 46

3.7 GOLD LOAN SECTOR 52

3.8 ORGANIZED V/S UNORGANIZED GOLD LOAN SECOTR 54

3.9 GOLD LOAN PROCEDURE 55

3.10 EMPLOYEES & BRANCHES 57

3.11 OUTLOOK & SCOPE 59

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Part – B: ABOUT THE PROBLEM

Chapter – 4 ► Research Methodology

4.1 PROBLEM DEFINITION 65

4.2 OBJECTIVE OF RESEARCH PROJECT 65

4.3 SCOPE OF RESEARCH 66

4.4 RESEARCH PLAN 67

4.5 RESEARCH DESIGN 67

4.6 COLLECTION OF DATA 68

4.7 SAMPLING PLAN 71

Chapter – 5 ► Analysis & Interpretation

5.1 DATA ANALYSIS & INTERPRETATION 75

5.2 MUTHOOT V/S MANNAPURAM 93

Chapter – 6 ► Findings & Recommendation of the Study

6.1 FINDINGS 98

6.2 SUGGESTION 100

6.3 CONCLUSION 101

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Chapter – 7 ► Limitation of the Study

7.1 LIMITATIONS 103

BIBLIOGRAPHY 104

ANNEXURE

QUESTIONNAIRE 105

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LIST OF FIGURES

________________________________________________________________________

FIGURE NO TITLE PAGE NO

1.1 Words of Muthoot Pappachan 10

2.1 Promotion of MPG 13

2.2 Awards 21

2.3 MPG Apporach 22

2.4 Muthoot Automotive 28

3.1 Muthoot‘s Organisational Structure 36

3.2 Promotion of MFL 38

3.3 Gold Loan Advertisement 46

3.4 Smart + Gold Loan Advertisement 47

3.5 Appolo Health Insurance Advertisement 48

3.6 Money Transfer Advertisement 49

3.7 Foreign Exchange Advertisement 50

3.8 Auto Loan Advertisement 51

3.9 Swarn Vansham Advertisement 51

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3.10 Gold Loan Taking Procedure 56

3.11 MFL Employees Strength 57

3.12 MFL Branch Network 58

3.13 MFL Bridge Loan 62

5.1 Gold loan in a year 75

5.2 Rate of interest 77

5.3 Location of the institute 78

5.4 Staff behavior 80

5.5 Gold loan application procedure 81

5.6 Infrastructure facilities 82
5.7 Time taken for the whole gold loan procedure 84

(Muthoot Finance)

5.8 Time taken for the whole gold loan procedure 85

(Manappuram finance)

5.9 Security standards 86

5.10 Source of knowledge for Muthoot 88

5.11 Source of knowledge for Manappuram 89

5.12 Effective gold loans for Muthoot 90

5.13 Effective gold loans for Manappuram 91

5.14 Rate of interest 92

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LIST OF TABLES

________________________________________________________________________

TABLE NO. TITLE PAGE NO

5.1 Gold loan in a year 75

5.2 Rate of interest 77

5.3 Location of the institute 78

5.4 Staff behavior 79

5.5 Gold loan application procedure 81

5.6 Infrastructure facilities 82

5.7 Time taken for the whole gold loan procedure 84

5.8 Security standards 86

5.9 Source of knowledge 88

5.10 Effective gold loans 90

5.11 Long payback period 92

5.12 Rate of interest 93

5.13 Gold Portfolio of the different gold loan providers 95

5.14 Table on Net loans and Market share 96

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PART – A

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Chapter 1

1.1 INTRODUCTION

1.1.1 ABOUT INDUSTRIAL FINANCE CORPORATION

A Central Industrial Finance Corporation was set up under the Industrial Finance

Corporations Act, 1948 in order to provide medium and long term credit to industrial

undertakings which fall outside the normal activities of Commercial Banks. The State

Governments expressed their desire that similar Corporations be set up in States to

supplement the work of the Industrial Finance Corporation. State Government also

expressed that the State Corporations be established under special statute in order to

make it possible to incorporate in the Constitution necessary provisions in regard to

majority control by the Government, guaranteed by the State Government in regard to the

payment of principal. In order to implement the views expressed by the State

Governments the State Financial Corporation Bill was introduced in the Parliament.

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1.1.2 ABOUT GOLD MARKET

―India is one of the largest markets for gold and as of fiscal 2010, accounts for

approximately 10% of the total world gold stock with an annual demand of

approximately 700 tonnes. Several gold based financial products have been made

available to retail consumers in the Indian market from time to time with a view to bring

the gold holdings to the core financial market.

Lending against gold has been one of the most popular instruments based on gold, and it

works well with the Indian rural population, which typically views gold as an important

savings instrument that is liquid and can be into converted into cash instantly to meet

their urgent cash requirements. Moreover, traditionally gold owners in southern India are

more open than elsewhere in the country to accept and exercise the option of pledging

gold to borrow money.

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1.2 INDUSTRIAL PROFILE

1.2.1 OVERVIEW OF THE INDIAN ECONOMY

India is the fifth largest economy in the world after the European Union, the United

States, China and Japan with an estimated GDP of approximately US$3.56 trillion in

2009, on purchasing power parity ("PPP") basis. India is also one of the fastest growing

economies in the world. According to the Central Statistical Organization, India's GDP

grew at a rate of 7.4% in fiscal 2010.

According to India Brand Equity Foundation, India is one of the largest bullion markets

in the world. India is also the largest consumer of gold jewellery in the world

(approximately 20% of global gold consumption), and the largest importer of gold in the

world. Gold imports were approximately 739 tonnes in fiscal 2010.

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1.2.2 OVERVIEW OF THE INDIAN CONSUMER CREDIT MARKET

The consumer credit market in India has undergone a significant transformation over the

last decade and experienced rapid growth due to consumer credit becoming cheaper,

more widely available and increasingly a more acceptable avenue of funding for

consumers. The consumer credit market has developed in India due to the following

factors:

• Increased focus by banks and financial institutions on consumer credit resulting in a

market shift towards regulated lenders from unregulated moneylenders/financiers.

• Increasing trend of Indian consumers to acquire assets such as cars, goods and houses

on credit.

• Fast emerging middle class and growing number of households in our target segment.

• Improved terms of credit as interest rates in India fall in line with global interest rates.

• Legislative changes that offer greater protection to lenders against fraud and potential

default increasing the incentive to lend.

• Growth in assignment and securitization arrangements for consumer loans has enabled

non deposit based entities to access wholesale funding and compete solely on their ability

to originate, underwrite and service consumer loans.

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Credit availability, affordability and consumer confidence are the key drivers for

consumer loan growth. A variety of financial intermediaries in the public and private

sectors participate in India's consumer lending sector, including the following:

• Commercial banks.

• Long-term lending institutions.

• NBFCs, including housing finance companies.

• Other specialized financial institutions and state-level financial institutions and

• Lenders in the unorganized sector.

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1.3 GOLD FINANCE INDUSTRY IN INDIA

The recent economic boom and crash has sent shock waves throughout the economy,

creating radical change in business paradigms, consumer demands, and even in economic

cultures themselves. One of the greatest changes in the developing world has been a

change in the people's relationship with gold. Since the days of the Roman Empire, gold

has been seen as both a designer luxury and an immense store of value, and because of its

portability and use as jewelry, gold has been a traditional fashion and savings account for

people in Eastern Europe, India, and other foreign countries for a very long time.

But lately, old habits seem to be dying fairly easily. The pawning of gold, which has for a

long time been perceived as shameful, is rapidly becoming an acceptable practice. In

India, for example, this long-held tradition is being replaced by gold loan businesses,

which offer personal and business loans with gold as a security for lower interest rates

than one would have access to with an unsecured loan. Many of the borrowers are

women, who are now becoming more active members of society and are looking for

ways to finance things such as holiday trips, children's educations, and down payments

for homes.

Private lenders in India are making a killing off of this new trend. Once a very small

industry, the gold loan business has taken off and is now a booming trend in India. The

business is an easy way for people in impoverished areas to gain access to quick credit.

This is not to say that credit comes cheap; many of these gold loan businesses charge

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interest at rates as high as 18%; higher than many of the credit cards we are familiar with.

While this may seem a bit harsh, this is still a great leap forward both culturally and

economically for people in the third world. Historically, informal lending practices such

as these are the beginnings of developed credit markets in later stages of development.

This helps people like those in rural India gain access to the credit that they need to begin

building futures for themselves and their children.

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1.4 AN OVERVIEW OF THE INDIAN NBFCs SECTOR

1.4.1 SIGNIFICANCE OF NBFCs IN INDIA:

According to the Economic Survey 2011-12, it has been reported that NBFCs as a whole

account for 11.2 per cent of assets of the total financial system. With the growing

importance assigned to financial inclusion, NBFCs have come to be regarded as

important financial intermediaries particularly for the small-scale and retail sectors. In the

multi-tier financial system of India, importance of NBFCs in the Indian financial system

is much discussed by various committees appointed by RBI in the past and RBI has been

modifying its regulatory and supervising policies from time to time to keep pace with the

changes in the system.

NBFCs have turned out to be engines of growth and are integral part of the Indian

financial system, enhancing competition and diversification in the financial sector,

spreading risks specifically at times of financial distress and have been increasingly

recognized as complementary of banking system at competitive prices. The Banking

sector has always been highly regulated, however simplified sanction procedures,

flexibility and timeliness in meeting the credit needs and low cost operations resulted in

the NBFCs getting an edge over banks in providing funding.

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Since the 90s crisis the market has seen explosive growth, as per a Fitch Report1 the

compounded annual growth rate of NBFCs was 40% in comparison to the CAGR of

banks being 22% only. NBFCs have been pioneering at retail asset backed lending,

lending against securities, microfinance etc and have been extending credit to retail

customers in under-served areas and to unbanked customers.

However in terms of the NBFC Acceptance of Public Deposits (Reserve Bank)

Directions, 1988 with effect from December 6, 2006 the above NBFCs registered with

RBI have been reclassified as:

 Loan Company (LC)

Loan company means any company which is a financial institution carrying on as it‘s

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.

 Investment Company(IC)

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

principal business the acquisition of securities.

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Fig : 1.1

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Chapter 2

2.1 Overview of Muthoot Group

The Muthoot Group is an 125-year-old business house based in India. It has interests

in Financial Services, Information Technology, Media, Healthcare, Education, Power

Generation, Infrastructure, Plantations, Precious Metals and Hospitality. The Muthoot

Group operates in 23 states in India, and has a customer base of over 25 million. It is

wholly owned and managed by the Muthoot Family.

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 .

Thomas Pappachan who incorporated the Fincorp division of the group which was until

then primarily involved in wholesale of grains and timber. The company is now managed

by the third and fourth generation of its family members.

The group is headquartered in Kochi, Kerala.

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2.1.1 Management

The MUTHOOT PAPPACHAN GROUP Management Board is the backbone of

the conglomerate. Its members are highly qualified professionals, well experienced in

their respective fields.

2.1.2 Values

MUTHOOT PAPPACHAN GROUP business ethics promote higher levels of

excellence. The group‘s values of Customer Sovereignty, People Orientation, Innovation

& Entrepreneurship, Transparency & Integrity, and Passion for Superior Performance,

Anticipation, Speed and Flexibility propel it to perform and excel in all spheres of the

business.

2.1.3 Quality

For MUTHOOT PAPPACHAN GROUP quality determines success. Continuous

process improvements are carried out to ensure complete satisfaction of customer and

market requirements.

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Fig : 2.1

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2.1.4 History

The Muthoot Family is one of the foremost business houses in South India. The family

has interests in various sectors of business varying from Financial Services to Media. The

founder of the Muthoot Group was Ninan Mathai Muthoot, from whom the business

house was later taken over by his son, M. Thomas Pappachan. The family traces its

roots to the small town of Kozhencherry in Central Travancore.

The Muthoot family are Christians belonging to the Malankara Orthodox Syrian Church,

and is one of the most influential members among the Christian community in Kerala. M.

G. George Muthoot, the third son of M. George Muthoot became the Trustee of the

Malankara Orthodox Church in March 2007.

India Today rated the Muthoot Family among the most influential business houses in

Kerala. Dhanam (Wealth), a business magazine in Kerala, also rated Muthoot as one of

the foremost business families of Kerala.

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2.2 Overview of Muthoot Pappachan Group

Muthoot Pappachan Group (MPG) has been in the forefront of innovation and has come

up with new services & products throughout its journey of more than 12 decades,

fulfilling the needs and demands of generations after generations. Adapting to latest

technology and new ways to serve its customers without compromising on basic

principles and ethics, that it has been following since its inception, is the backbone of

Muthoot Pappachan Group.

Starting from retail trading business and moving to financial services, MPG has been

venturing into various sectors and making its presence felt in everything it laid its hands

on. MPG has further diversified its business into new industry segments like hospitality,

flight catering, travel services, IT infrastructure, property development, the automotive

sector and alternative energy.

MPG's customer-centric thinking has been able to provide new and improved products

and services that have been wholeheartedly accepted by the customers.

MPG has grown to encompass unimaginable proportions. Currently it has over 10,000

employees, serving over a million customers with an annual turnover of Rs. 20,000

crores.

Founded in 1887, it was the founders' vision to expand & grow the business across the

country. Today, the vision has really transformed into reality as a pan India business

conglomerate!
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2.3 Founder

Ninan Mathai Muthoot

Patron Founder ( 1873 - 1955 )

Muthoot Pappachan
Founder ( 1927 - 2004 )

A simple and devout man Muthoot Pappachan espoused a nine point formula that stood

by him in realising his goals. They are love, peace, happiness, kindness, helpfulness,

patience, pleasantness, faithfulness, and self control. These ethics have been a guiding

light to the path of his successors and have permeated every strata of the Muthoot

Pappachan Group. These 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.

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2.3.1 MANAGEMENT BOARD

The Management Board comprises of highly qualified and experienced

professionals from different business areas.

2.3.2 Board Of Directors

Mr. Thomas John Muthoot (Group Chairman & Managing Director)

With a vision for the future and rooted in the values imparted by his father, John Muthoot

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. Its flagship

company, Muthoot Fincorp now has a wide network of over 2200 branches (as on

31/3/12) branches pan India.

John Muthoot is also a member of the Chamber Of Commerce, Trivandrum, and

Treasurer of the Trivandrum Agenda Task Force.

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Mr. Thomas George Muthoot (Group Director & M. D., Muthoot Capital Services)

George Muthoot is the quiet strength behind the visionary growth of the group. George

Muthoot's 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.

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Mr. Thomas Muthoot (Group Director & Executive Director - Strategic Initiatives)

Thomas Muthoot is 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.

Thomas Muthoot is also the Vice President of Ernakulam District Cricket Association

and Managing Committee member of Kerala Cancer Care Society.

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2.4 Muthoot Pappachan Group Core Values (A culture of Ethics)

- Truth

Muthoot Pappachan Group is today at the top of its business and one of the main reasons

is its insistence on absolute truth, complete transparency and unquestionable fair dealings

in all its ventures. MPG also believes in providing all stakeholders regular and updated

report on all it's dealings.

- Integrity and quality

Muthoot Pappachan Group has a flawless reputation that has been molded over decades

of excellent advice, top-notch practices, total customer satisfaction and steady growth,

which are also the primary objectives of the Group. Therefore, MPG makes it a point to

rigorously adhere to applicable laws, rules, regulations, codes and standards of

impeccable business practices to uphold the reputation of the Group.

- People

Muthoot Pappachan Group's employees are its most valuable asset and one of the main

reasons for the Group's unimpeded growth. The undiminished satisfaction of its

employees is something the Group considers to be extremely essential. And the Group is

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extremely particular about maintaining high standards of creativity, teamwork and

dedication to commitment, which in turn leads to employee happiness.

- Social Responsibility

Every organization has a responsibility towards society and the bigger the business, the

greater is the duty. This is a fact that Muthoot Pappachan Group is acutely aware of, and

keeps promoting sustainable development, responsibility towards the environment and

the upliftment of local communities. But the Group's responsibility does not end with

Society. Muthoot Pappachan Group has been respecting each individual connected to it

and continuously learning from its experience with each individual.

2.4.1 AWARDS AND RECOGNITION

Fig : 2.2

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2.5 MPG ORGANIZATIONAL APPROACH

MPG Organizational Approach translates the group‘s organizational excellence

strategy through an effective 3-point program:

 Six Sigma

 TPM

 Continuous Improvement

Fig : 2.3

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2.6 BUSINESSES OF MUTHOOT PAPPACHAN GROUP (MPG)

Financial Services

 -Muthoot Fincorp
 -Muthoot Capital Services Ltd.
 -Muthoot Housing Finance Company Ltd.
 -Muthoot Mahila Mitra

Automotive

 -Muthoot Motors/JLR
 -Muthoot Yamaha
 -Muthoot Honda

Real Estate

 -MPG Real Estate

 -Muthoot Technopolis

Hospitality

 -Muthoot Plaza
 -Vivanta Kovalam
 -Muthoot Skychef

Alternate Energy

 -Muthoot Alternate Energy Resources

Other Businesses

 -Kripa Cinema
 -Muthoot Medicare
 -Muthoot Estate Investments

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A- FINANCIAL SERVICES

1- Muthoot Fincorp Ltd (The Financial Legacy of Muthoot Pappachan Group)

www.muthootfincorp.com

Muthoot Fincorp Ltd., the flagship Company of the Group, with strong fundamentals, is a

proactive Non-Banking Finance Company (NBFC) registered with the Reserve Bank of

India. Muthoot Fincorp is a mass provider of finance in the form of gold and other loans

with over 2200 branches (as on 31/3/12) branches pan India and an average of 40,000

customers a day.

At Muthoot Fincorp Ltd., the products are specifically planned & designed to serve

customers who are unable to access mainstream commercial banks. This unique structure

is a result of decades of research and experience in the company's rural strongholds. This

also allows the company to provide quick and customized finance options and investment

products.

MFL had revenue of Rs. 759 Crores with PAT (Profit After Tax) of Rs.209 Crores for

2010-11 and Net Worth of Rs.524.63 Crores.

The company recently announced plans for an IPO (Initial Public Offering) before the

year 2014.

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2- Muthoot Capital Services Ltd: Catering to all parts of the country

www.muthootcap.com

Whether it is non-convertible debentures or lease financing, auto loans or medium

enterprise loans, Muthoot Capital Services Ltd. (MCSL) has an enormous variety of blue-

ribbon services and products on offer. With an established base in rural and semi-urban

areas in South India, it's now looking to expand throughout the country.

MCSL is listed on the BSE with revenue of Rs.22.30 Crores and PAT of Rs.7.1 Crores

for 2010-11.

MCSL is rated at the highest level of P1+ and A1+ by the leading rating agencies,

CRISIL & IRCA.

3- Muthoot Housing Finance Company Ltd.: Your Keys To Home Finance

When it comes to home finance for the lower to middle-income informal sector, the

Muthoot Housing Finance Company has the keys to the home they dream of. An

emerging home financier in India, the Muthoot Pappachan Group plans to invest Rs

75Cr. in this venture over the next two years.

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The company plans to have 25 branches for the Housing Finance Business and, apart

from reaching out to customers at affordable project sites, would also leverage the

strength of the group's existing base of over 1 Million Gold Loan customers.

4- Muthoot Mahila Mitra ( Financing Friends In Need)

www.muthoot.com/mmm

Muthoot Mahila Mitra(MMM) is the microfinance arm of the Muthoot Pappachan Group.

With focus on inclusive growth, and operating under its flagship company Muthoot

Fincorp Ltd, Muthoot Mahila Mitra aims to serve the section of society which is at the

bottom of the pyramid. It aspires to provide customised financial services and solutions to

the needy and unserved who have limited access to regular financial institutions and

banks.

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B- AUTOMOTIVE

1- Muthoot JLR www.muthootjlr.com

Power. Speed. Status. attributes that symbolize the Jaguar and Muthoot Pappachan

Group(MPG), which is what led to it entering into a partnership with these brands.

With an initial investment of Rs. 25 crores, the aim was to develop a showroom and

service centre that would surpass international standards. In its first stage, the Kochi

centre covered the entire Kerala market and service centres have been established in other

key cities in Kerala.

2- Muthoot Yamaha www.muthootyamaha.com

One of India's leading business houses and one of the world's leading motorcycle brands,

definitely a partnership worth talking about. The Company has three outlets in

Trivandrum city, with the entire range of Yamaha bikes showcased on the premises.

3- Muthoot Honda www.muthoothonda.com

With a national reputation for extreme reliability and thorough service, it stands to reason

that MPG would choose a partner with similar qualities. Hence, Honda bikes. With this

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partnership, the company was able to introduce innovative customer care standards such

as 7am to 7pm service and 24/7 key drop facility.

In addition to this, MPG has also expanded its automotive section with its new Honda

cars showroom in Kollam. This purpose-built facility will provide state-of-the-art service

to customers, along with a vast product range, which includes the Honda Brio, Honda

Jazz, Honda City and the Honda Accord.

Fig :2.4

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C- HOSPITALITY

1- Muthoot Plaza www.muthoot.com/Vivanta_Kovalam

www.muthootplaza.com

Muthoot Plaza, the first five star hotel in Thiruvananthapuram is to become the Hilton

Garden Inn. The hotel is closed for renovation and will open as Hilton Garden Inn in the

last quarter of year 2012 with 127 rooms in the 5 star deluxe category. The iconic

Vivanta by Taj (earlier Taj Green Cove) at Kovalam, is one of the internationally

renowned Taj Hotels and also one of the jewels in Muthoot Pappachan Group's(MPG)

Hospitality Crown. With epitomes of luxury such as these, it's no wonder that its

hospitality segment is counted amongst the blue bloods of South India.

Rooms that open onto sandy beaches and lush greenery, hi-tech facilities that follow

international standards, a fully-trained staff at beck-and-call; here's all the luxury at your

fingertips.

MPG's upcoming properties include three business-class hotels and one five-star resort,

to be located in Chennai and Kochi. A separate project involves a luxury-serviced

apartment development in Trivandrum.

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2- MPG's Pie-In-The-Sky (Muthoot Skychef) http://www.muthootskychef.com

After conquering the ground, how could the skies be far behind? That's the point MPG

wished to make with the Muthoot Skychef.

Located in Trivandrum, the Skychef is a state-of-the-art flight kitchen, covering an area

of over 32,000 square feet. Uniquely designed to follow international specifications and

equipped to conform to AEA and HACCP standards, the unit has the capacity to cater

3,600 meals per day.

Muthoot Skychef serves a wide variety of airlines, such as Air India, Indian Airlines and

Qatar Airways. Other clients include charters and VVIP flights transiting Trivandrum.

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D- REAL ESTATE

1- Real Estate Built for comfort : MPG Real Estate www.mpg-realestate.com

Muthoot Pappachan Group(MPG) Hotels and Infrastructure Ventures is a progressive,

new age real estate developer with its headquarters in Trivandrum, India. The Group is

currently developing 6 hotels to be operated by international brands as well as

commercial and residential spaces in various Indian cities.

Keeping in line with its reputation for being an expert in a variety of fields, MPG has also

entered the housing sector. With a chain of major developments across the premium,

mid-segment, budget and low cost sectors in Kerala and Tamil Nadu, MPG has definitely

made a mark in this area.

Several towers replete with recreational facilities and hi-tech amenities, a seven-acre

property of villas in extremely exclusive locations; MPG is definitely here to stay.

2- Muthoot Technopolis http://www.muthootechnopolis.com

Muthoot Technopolis located in Kochi is one of the largest IT parks, which has made it

an icon for the Ministry of Commerce, Government of India.

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With a built-up area of 355,000 square feet, the park has been intricately designed by the

renowned JURONG Infrastructure Ltd. This gives it the distinction of being the first such

IT Park under the Public Private Partnership (PPP) model in a Special Economic Zone in

India.

E- ALTERNATE ENERGY

1- Muthoot Alternate Energy Resources http://www.muthoot.com/energy

As one of the largest business houses in India, Muthoot Pappachan Group(MPG) realizes

that it has a commitment towards the environment and society as a whole, which led it to

pioneer a whole new energy farming culture.

Wind energy being the most cost-effective resource in India today, MPG had established

wind farms in Tamil Nadu as early as 1993. Today, with its manifold farms, the total

installed capacity in wind power is 25 mega watts with an investment of Rs.125 crores.

Significantly, MPG has put plans in place to double its wind power generation capacity

by 2012.

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F- OTHER BUSINESSES

1- Kripa Cinema www.kripacinema.com

Kripa Cinema is located in downtown Trivandrum. It is acoustically a world-class theatre

with DTS sound technology, 943 comfortable seats, two cafeterias and extensive car

parking facilities. Online booking and reviews make cinema a great experience here.

2- Health Care: Muthoot Medicare

Muthoot Hospital and Trauma Care Centre initiated by Muthoot Pappachan Group is one

of the foremost trauma centers in Kottayam with an objective of providing advanced

orthopaedic and world class healthcare at affordable costs.It is manned team of highly

qualified, dedicated and experienced consultants who have proved their professional

caliber .

3- Muthoot Estate Investments

Muthoot Estate Investments has changed the face of many a town in Kerala. Muthoot

Towers, Cochin, Muthoot Arcade, Trivandrum are landmarks. They house major banks,

companies and department stores and are a testimony to superior quality construction and

aesthetic design.

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Chapter - 3

3.1 INTRODUCTION

Date of Establishment 19th Mar 2002

Revenue Rs. 4000-7200 Crores (FY 2011-12) – MFL Group

Market Cap 46 % of Total Gold Loan Market (2012) – MFL Group

Address Registered Office

Muthoot Center
Punnen Road, Trivandrum - 695 001
Kerala, India
Tel : 0471 3911550/560 (9.30am to 5.30pm)
Fax : +91-0471-2331560

Branches 1251- 2304 (PAN India)- (FY 2011-12) - MFL Group

Tag Line “Jab Zindagi Badalni Ho”

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3.2 KEY PEOPLE

Ninan Mathai Muthoot Patron Founder (1873 - 1955)

Muthoot Pappachan Founder (1927 - 2004)

Thomas John Muthoot Group Chairman & Managing Director

Thomas George Muthoot Group Director & Managing Director

Thomas Muthoot Group Director & Executive Director

3.2.1 MANAGEMENT TEAM

Suhas Soman CEO, Muthoot Fincorp Ltd.

Bejoi Anthraper Senior Vice – President (Sales- North)

G. Ramesh Kumar Vice – President (Sales- North)

Shiney Thomas Asstt. Vice – President (Operations)

Nitesh Lazaras Regional Manager

Sarvesh Srivastava Area Manager (Sales)

Abdul Hai Area Manager (Operation)

Ratnesh Shrivastava H R Manager

Uma Kant Srivastava Branch Manager (Indira Nagar)

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Fig : 3.1

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3.2.2 OVERVIEW

Muthoot Fincorp Limted (MFL) is a ―systematically important non-deposit taking

NBFC‖ that is involved in the business of providing loans against gold and is today,

considered to be the largest company in India (in terms of loan portfolio, with a gold loan

portfolio of Rs.22694 crores provided to over 5.5 million accounts) to be offering this

service. It is the flagship company of the Kerala based ―Muthoot Group‖. MFL has an

operating history of over seven decades having first started the gold loan business.

However it was only in 2002 that the company secured an NBFC license from the RBI.

In addition to the gold loan business, MFL also provides money transfer services through

their various branches by acting as sub-agents of various registered money transfer

agencies. Recently MFL has also got into the collection agency services. In addition to all

of that the company also operates three windmills in the state of Tamil Nadu. Currently

MFL has a branch network of 3480 brances (at the end of 9MFY12) with 64% of the

branches located in the Southern territories of the country. At the end of FY12 the

company had an employee strength of 16668 employees.

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Fig : 3.2

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3.3.1 VISION

To ensure total customer satisfaction

To build homes and office space that conforms to the best quality standards in design
and construction.

To conduct our business ethically and with the highest degree of integrity and adherence
to rules and regulations.

To offer opportunities to our team members through continuous training and

development.

To help our contractors and suppliers to develop and excel in their field of activity.

3.3.2 MISSION

To be Global Retail Conglomerate providing financial and other services catering to the

lifetime needs of people from all walks of life.

3.3.3 Values

 Integrity

o Innovation

 Customer

 Centric

o Commitment

 Accountability

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3.4 COMPANY HISTORY

YEAR EVENTS

1887- Incorporation of Muthoot Group.

1927- Economic depression. Business was Closed.

1939- Again revived 7 started Chit Fund Business.

1950- Started Gold Loan Business.

1979- Muthoot Pappachan Group was Born.

1993- Started Yamaha Dealership.

1995- Expansion in Other Businesses.

2000- Launched the Hotel ― The Muthoot Plaza‖.

2002- Incorporation Of Muthoot Fincorp Limited.

2003- Flight Kitchen in TVM (Muthoot Sky Chef)

2004- First Beach Resort tied up with Taj Group.

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MUTHOOT FINCORP LIMITED

Muthoot Fincorp Limited (MFL) is a non-deposit taking NBFC primarily involved in

financing personal and business loans secured by gold as collateral. The company has

been in this business for over seven decades and today enjoys market leadership in the

gold market estimated to be around 19.5%. The company‘s business model is well poised

to flourish in an era where people‘s appetite for gold (and the ensuing sentimentality

associated with possessing the metal) is increasing by the day .

Customer Challenges

Enable rapid business expansion

Improve performance

Add room for growth

Ensure IT systems' availability

Business Results

 Improved performance

 Increased scalability

 Ensured IT systems' availability

 Reduced space and power requirements

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3.5 COMPANY PROFILE

Muthoot Fincorp Limited, the flagship Company of the Muthoot Pappachan Group

(MPG), is a finance company that caters to the financial needs of retail and institutional

customers. We are 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

181.25 crores and a Net Owned Fund of Rs 824.00 crores as on 31.12.2011.

At Muthoot Fincorp Limited, we are focused on providing a host of financial services.

Our services comprise of a mix of retail offerings in the areas of gold loan & other loan

products including Auto loans, Investment products, Insurance & Advisory Services.

We have been offering these services to our customers across India with a wide network

of over 2200 branches (as on 31/3/12) and expanding more.

We believe in three parameters when it comes to financial services delivery, i.e. people,

process & technology. Heavy investments have been made in these three parameters, and

we expect these would propel our progress as a global retail financial conglomerate.

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Investment Rationale

The gold loan market is generating a lot of goodwill with the fast changing perception of

gold loans. Besides only 10% of the total gold loan stock in the country has found its way

into the gold loan market thereby offering plenty of scope for its growth potential.

MFL is a consummate proxy on the burgeoning gold loan market in India. It has

generated ample experience and goodwill for over 7 decades, has a branch network of

3480 branches that is becoming of a large PSU bank and is the market leader with an

AUM of Rs. 22694 crores and a market share of 19-20%.

MFL has a host of customer engagement practices that generate strong goodwill. In

addition to that it has also been diversifying its product offerings and geographical

presence.

We have employed a weighted average valuation approach of determining our share

target price of Rs.197. We have assigned 40% weights to our DCF and PBV targets with

a 20% weight for the PE target. Our buying level of <Rs.149 is a weighted average

buying price (equal weights for excess return on book value buying levels and DCF 30%

margin of safety buying level).

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Risks

MFL‘s loan book (loan book growth of 110% and 122% in the last two years) and branch

expansion (run rate of 800 to 900 branches a year) in the last couple of years has taken

place at meteoric rates and this may not be sustainable going forward. MFL runs the risk

of growing too soon.

It has been reported that the RBI is concerned with the pace of growth of gold loan

companies and is looking to implement measures (higher margin ratios, restrictions on

branch expansion) that could curb their growth.

The success of MFL‘s business model is founded on the fascination associated with the

gold metal. Were gold prices to crash MFL would be adversely affected by dwindling

sales and higher margin requirements.

If MFL‘s due diligence and recruitment and training of HR in certain branches is not up

to the mark, they could suffer at the hands of fraudulent employees who can misuse their

positions.

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Customer Profile

MFL‘s customer profile mainly includes the middle and lower income class of people

such as small businessmen, vendors, traders, farmers and salaried individuals who tap the

gold loan financing platform for reasons of convenience, accessibility and necessity by

pledging their gold jewellery. A gold loan company such as MFL with the expertise and

goodwill of over seven decades is well positioned to cater to the needs of these people as

procuring loans from banks tends to be quite a cumbersome process with lengthy

documentation and procedures and various other constraints in complying with the

eligibility norms ( MFL disburses an average loan ticket size of Rs.20000 within five

minutes from the time the gold is tendered to the appraiser). On the other hand, the local

moneylenders tend to charge usurious rates of interest and also lack a degree of structure

and standardization to their lending process.

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3.6 PRODUCT & SERVICES

Express 3 Minute Gold Loan (3 Minutes. All It Takes for Your Gold to Generate

Cash)

Let's not make things complicated! Everybody has to face times when quick finance is

required, be it for your business, your child's education, a new home or an emergency.

That's why we have financial offerings that have been designed to meet the quick and

easy need for liquidity.

Our simple and uncomplicated procedure ensures you have your loan in 3 minutes. So

fast but you will get better rates per gram of gold compared to other institutions; part

redemption allowed; part payment allowed.

Fig : 3.3

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Smart + Gold Loan

What is the Smart + Gold loan scheme?

So you have taken the decision! Let Muthoot Fincorp be the first to wish you good luck

in your new venture. With Muthoot Fincorp, you can make a head start by availing loans

against your gold the easiest and smart way.

With Smart + Gold Loan, you have the advantage of paying back in Equated Monthly

installments; the EMI is apportioned such that the larger amount goes toward repaying

the principal; no applicable charges; part release and repledge is allowed.

Fig : 3.4

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Insurance

Appolo Munic Health Insurance Fig : 3.5

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Money Transfer (As Easy As Snapping Your Fingers!)

Muthoot Fincorp has partnered with Western Union Money Transfer, MoneyGram,

Xpress Money, EzRemit and Trans-Fast to offer you this special service. We can help

you to receive money the quick and reliable way. It's a safe way of inward transfer of

money instantly with minimum service charge.

Visit your nearest Muthoot Fincorp branch and meet your family's financial requirement

instantly. Only duly filled application form and id proof will be required. Other features

of this service includes: Inward remittance of money from foreign countries; Fast service-

transaction time is less than 10 minutes; Amount payable at a time is equivalent of

USD2,500/-. However, cash payment is allowed only up to Rs.50,000/- (Higher amount

will be paid by cheque only); Receive money within minutes of transfer; Repeat

customers do not need to produce ID proof; No bank account required for sender or

beneficiary; Issuance of loyalty number is a unique facility offered by us which avoids

submission of ID proof each time.

Fig : 3.6

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Foreign Exchange (Be equipped with the currency of the place you travel !)

Because you just don't want to be a spectator in that foreign land. Of course, you would

want to indulge yourself in the place wherever you are. At Muthoot Fincorp, we offer you

the best rates through our intimate knowledge of the wholesale and retail financial

markets.

We are an experienced team of advisors supported by the latest technology & are abreast

with the trends in the industry. Individual or corporate, a dedicated customer service

person is assigned to each customer. You can easily buy and sell all major currencies

with zero per cent commission (currently 25 destination currencies available). We are

bound by and follow KYC norms as per the regulator's guidelines.

Fig : 3.7

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Auto Loan

Fig : 3.8

Swarn Vansham

Fig : 3.9

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3.7 GOLD LOAN SECTOR - Gold- India’s favourite drug

The Indian gold market is a market that has grown at an impressive pace and is still

currently brimming with opportunities. While since FY02 till FY10 the gold stock in

India is estimated to have grown at a CAGR (Compounded Annual Growth Rate) of 35-

40% (It is estimated that in FY11 alone the country imported 900-1000 tonnes of gold)

there is every reason to believe that these rates can be sustained or even bettered going

forward. The World Gold Council believes that gold demand in the country will continue

to grow at 30% in real terms driven by urbanization, rapid GDP growth, burgeoning

middle class incomes and a sustained and potentially rising savings rate of 35-40%.

3.7.1 Gold loan market- Opportunities galore for the organized segment

The reason for the optimism of the Indian gold loan market is essentially founded on the

location of the gold loan market itself- India- which has an exceptionally strong

association with the metal. The country is estimated to be the largest importer of gold and

currently owns 10% of the total gold stock in the world at 18000-20000 tonnes. While

this mammoth figure only highlights the scope of the gold loan market, the opportunity

lies in the fact that only 10% of the gold loan stock in the country has come into the gold

loan market. The remaining 90% still remains dormant and herein lies the opportunity for

gold loan players. What makes things particularly interesting is that while 10% of the

stock has been captured by the total gold loan players only a meagre 1-2 % is estimated

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to have been captured by the organized players, thereby offering plenty of scope for the

organized listed players to gain market share.

Customer‘s perception of gold loans is improving due to organized presence

While the potential size and the scope of the gold loan market are very admirable, that

alone is not enough. There has to be an undercurrent of strong demand to lend credence

to the scope and even on this count there is much to be optimistic. In fact there has been a

radical shift in the perception of gold loans by the average Indian. Earlier while pledging

gold for loans was frowned upon and was largely looked upon as a last resort, these days

gold loans are being taken even for the most elementary reason (or as bridge loans), such

that they have come to be known in common parlance as ―the loan of convenience‖.

Strong consumerism levels has only contributed to the boom of gold loans. In addition to

that while initially the gold loans were only taken by the rural class, these days a broader

class of people encompassing office goers in metros and semi urban places, the elderly

and the youth have all embraced this product. One only need to look at the whopping

gold loan growth rates seen by established players such as Muthoot Fincorp and

Manappuram Finance. From FY07-FY11, aggregate gold loans for Muthoot Fincorp and

Manappuram Finance have grown at CAGRs of 70% and 197% respectively. HDFC

Bank which only stepped into the business just 3-4 years before has seen tremendous

momentum and actually saw their gold loan portfolio double in the last fiscal.

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3.8 Organized gold loan NBFCs are better positioned than banks

and the unorganized sector

The gold loan players are broadly divided into the unorganized segment (pawn brokers,

fund brokers, money lenders), the organized gold NBFC players and organized banks. It

is estimated that 70% of the gold loan market is unorganized with only 30% accounting

for the organized segment. The greater influx of the organized sector is responsible for

bringing a degree of standardization to the gold loan market and this has helped stoke

demand. Of these three segments, the NBFC gold loan players are better placed than the

other two. While the unorganized segment charge usurious rates of interest and

undervalue the gold in the name of impurity, banks lack a sense of expediency in the

disbursal of loans and lack ample gold appraisers. The NBFC gold players recognized

these flaws in their competitors and were able to build a suitable business model that

eluded these flaws.

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3.9 GOLD LOAN PROCEDURE

 The prospective gold loan customer is first explained the different gold loan

schemes available.

 After selecting a certain scheme, proof of identity is procured from the customer

even as the resident gold appraiser , appraises the ornaments using a calibrated

weighing machines. Other preliminary and additional tests are done without

damaging the ornaments.

 The rate per gram is fixed by the corporate office and this is used to determine the

final loan amount though the branch manager also has the discretion to approve

higher rates of upto Rs.10 per gram.

 Computerized records of the applicant are maintained and the gold is taken to the

in-house safety vaults even as the loan is prescribed at a particular rate.

 The loans which are of a standard period of 12 months are usually repaid within

three to six months after which the ornaments are handed back. Loans that are

repaid in less than 12 months are usually charged a lower rate of interest than

initially prescribed.

 If the loans are not repaid back within 12 months, MFL informs the customer

through registered letters or legal notices. If the loan is still not repaid after 18

months, the gold is liquidized and the account is classified as NPA.

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1) CUSTOMER
SELECTS SCHEME

8) CUSTOMER 2) PROOF OF
OFFERED THE INDENTITY IS
CHANCE TO TAKE
ANOTHER LOAN SECURED

7) LOAN REPAID AND 3-APPRAISAL OF

GOLD HANDED BACK GOLD BY MFL

4) COMPUTERIZED
6)LOAN DISBURSED
AT PRESRIBED RATE RECORDS
MAINTAINED

5) GOLD
TRANSFERRED TO
SECURITY VAULT

Fig : 3.10

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3.10 EMPLOYEES

MFL‘s in-house personnel are of utmost importance in the success of its business model

as they should be competent enough to appraise the quality of gold and disburse the

appropriate amount based on standardized practices. Also a great deal of integrity is

required on the employee‘s part as he/she is responsible for ensuring that the gold is well

protected in the in-house vaults and safely returned without any damage. To facilitate a

strong degree of professionalism and standardization in their process, MFL runs 2 staff

training colleges in New Delhi and Cochin and 3 regional learning centres in Chennai,

Bangalore and Hyderabad. Employees are trained in the areas of loan appraisal, customer

service and communication skills. In addition to in-house employees, the company also

has 900 customer services employees who are in charge of carrying out customer loyalty

and customer relations programmes. At the end of 9MFY12, the company had a total

employee strength of 23219 employees.

Fig : 3.11

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3.10.1 BRANCHES

MFL‘s branch network is quite huge and well spread out though there is quite a obvious

bias towards the Southern territories (65% of branch network) where the company is

originally based and enjoys strong brand value. Over the last few years, armed with a

strong advertising campaign (that includes sponsorship deals with the IPL team-Delhi

Daredevils) the company has made impressive strides to successfully expand towards the

Northern and Western regions of the country where the average customer‘s mindset is

significantly different from their Southern counterparts. At the end of 9M FY12, MFL‘s

branch network stood at 3480 branches.

Fig : 3.12

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3.11 OUTLOOK AND SCOPE

Expansion into Hindi-speaking States

MFL has over the years, developed a very strong customer base and brand equity (having

been around in this business for over seven decades), but this has largely been limited to

the Southern territories which accounts for 65%. In keeping with its tag of being the

largest gold loan company in the country, the company has sought to reduce its exposure

to the Southern territories and broaden its reach towards the Northern and Western areas.

This change in strategy has worked well for the company with the dependence on

Southern territories coming down from 85% in FY08 to 65% in FY12. The company is

now looking to continue this strategy with a sizeable portion of its incremental branch

additions coming from regions other than the Southern areas. MFL is seeing good

business opportunities in markets such as Haryana, Punjab and Delhi and is looking to

replicate this success in other similar markets. Armed with an aggressive advertising and

promotional campaign that included sponsoring the IPL cricket team- Delhi Daredevils

the company which had a branch network of 1300 branches is looking to get to more than

1500 branches by the end of the fiscal. According to the management, earlier while the

gold loan financing mechanism was viewed with a lot of skepticism, things have changed

for the better. According to the management lately people have been pledging their gold

to take a loan to purchase vehicles.

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In addition to its traditional loan products, MFL has also recently entered the money

transfer business through a tie-up with Western Union. MFL is well positioned to carry

out this business due to its large-scale branch network of around 3400 units. This will be

linked with Western Union‘s network of branches across 40,000 locations across the

world. There is tremendous scope for this business as India is the largest remittance

receiving country in the world. According to the World Bank, India received an estimated

$55 billion as remittances in 2010.

3.11.1 FUND RAISING AND DIVESTING STAKE

In the fiscal so far MFL has been actively raising funds through the NCD (Non

Convertible Debentures ) route. The company has been tapping this route to diversify its

borrowing profile. Historically most of its funds come through privately placed Gold

bonds, bank loans and securitization. In August 2011 the company had raised Rs.693

crores through NCDs and resorted to this route once again in December raising a further

Rs.452crore. The funds are estimated to be used for working capital and general

purposes. The management recently announced a new NCD issue of Rs.250 crore due to

take place in March. Going forward the management is targeting an ROA (Return on

Assets) of 4% as against the historical level of more than 5%. The management feels that

if they can generate an ROA of 4% they will not be in need of external funds but

anything more than that might warrant the need for external funds. In addition to that,

there is also a good chance that one could see a QIP (Qualified Institutional Placement)

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as the promoters will have to bring down their stake from the existing 80% to the

mandated level of 75%.

3.11.2 RECENT AND POTENTIAL REGULATORY REQUIREMENTS

FOR NBFCs

 NBFCs to maintain an additional provision of 0.25% on standard assets at all times (as

this will serve as a financial buffer during any particular crisis).

 CAR (Capital Adequacy Ratio) for both deposit taking and non-deposit taking NBFCs

on par at 15% (Earlier non deposit taking NBFCs had to maintain a CAR of 15% while

their deposit taking counterparts had to maintain a lower CAR of 12%).

 The RBI has also expressed concerns that the banks have been extending more than

necessary loans to the NBFC sector (close to 50%) and are seeking to limit this as these

funds provided to the NBFCs tend to reach the capital market and the real estate sector

(sectors which the banks are supposed to have limited exposure).

 There has been talk about increasing the risk weights on loans provided to NBFCs and

the RBI has already removed the priority sector lending status of providing funds to

NBFCs.

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 One of the most challenging regulations likely to be imposed is the recognition of

NPAs on a 90 day basis rather than a 180 day basis. Previously only banks were required

to recognize NPAs on a 90 day basis.

Fig : 3.13

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PART - B

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RESEARCH METHODOLOGY
AND
LIMITATIONS

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Chapter - 4

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.

4.1 PROBLEM DEFINTION

One of the most discussed topics in the present competitive gold loan market is

about the best gold loan company. The two stand out names in this context is Muthoot

Fincorp Limited and Manappuram General Finance and Leasing Ltd, Both companies

face a cut throat competition among each other to reach the top position of this

market. In order to maintain and increase the market share both companies have to

find out their weakness and turn it into their strengths. Satisfied customers are vital

for the existence of the firms. This study aims to bring out the reasons which make

customers choose one company over the other.

4.2 OBJECTIVES OF THE RESEARCH PROJECT

4.2.1 PRIMARY OBJECTIVES

 The primary objective of this study is to compare the gold loans provided by

Muthoot Fincorp Limited and its competitors.

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 To analyze the gold loan facility provided by Muthoot Fincorp limited.

 To observe the working of the various departments in relation with the study.

 To analyze the rate of customer satisfaction.

 To know about the preferences of the customers.

 To study the behavioral factors of customers in choosing a particular gold loan.

4.2.2 SECONDARY OBJECTIVE

 To suggest various factors to improve customer satisfaction. Thus, increasing

the market share of the company.

4.3 SCOPE OF THE RESEARCH PROJECT

The scope of the study is to identify and analyze the factors which make the gold loan

provided by Muthoot Fincorp 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 Fincorp Limited.

 Indentify 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.

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4.4 RESEARCH PLAN

4.4.1 PRELIMINARY INVESTIGATION

Preliminary investigation involves the following:

 Direct visit to the company.

 Discussions with the branch manager.

 Analysed about the scope and viability of the existing facilities.

 Secondary data were used to get an overview about the two companies.

4.4.2 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 both Muthoot Fincorp

and Manappuram Finance.

4.5 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).

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4.5.1 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.

4.6 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.

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PRIMARY DATA

The data collected directly by the investigator are called primary data. They are

original and give first hand information. It can be collected by different methods viz.

direct personal investigation, indirect oral investigation etc. Primary data were

collected through

- Questionnaire

- Personal interview

- Survey method

- Observation

- Expert opinion

 Questionnaire

The primary data was collected mainly by using a questionnaire. In study,

structured questionnaire consisting of a list of questions pertaining to the dichotomous

questions, multiple choice questions and questions for recommendations and

suggestions. This facilitates the respondents to fill up the questionnaire is an easy and

fast manner.

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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

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SECONDARY DATA

The collected by the investigator from the data already collected by others for some

other purpose are called secondary data. Thus secondary data are refined data from

primary data. It is also called second hand data because data is collected from

previous reports about the organization from the internal books, magazines and World

Wide Web. Secondary data are collected through

- Annual reports

- Websites

- Journals and magazines

4.7 SAMPLING PLAN

Sample Frame

In a present study, convenience sampling method is used for collecting the primary

data. In the survey, 100 customers are selected as sample.

Tools for collection of data

A questionnaire is developed to collect data from the respondent under the sample.

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Analysis of Data

The primary data are analyzed by using statistical techniques like percent

STATISTICAL TOOLS

The tools used for the analysis are Simple percentage and Diagrammatic

representation.

 Simple Percentage

Percentage refers to a special of ratio percentage are used in the making

comparison between two or more data. Percentage is used to describe relationship.

Since the percentage reduce everything to a common base thereby allow meaningful

comparison to be made

Number of frequency
 100
Total number of frequency

 Diagrammatic Representation

Diagrams are used to represent the tabulated data diagrammatically as they will

give a vivid picture about the information collected. The diagrams include.

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 Simple Bar diagram

 Multiple Bar diagram

 Pie diagram

 In this particular study the attitudes of a selected sample have been analyzed.

There is a note of relevance to primary data .since the research objectives can

only be achieved through collecting primary data.

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DATA ANALYSIS
&
INTERPRETATION

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Chapter – 5
5.1 DATA ANALYSIS
Que 1- How often do you take a gold loan in a year?
Table 5.1

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Once 11 13 36.67 43.33

2-5 times 19 9 63.33 30

6-10 times 0 8 0 26.67

More than 10 times 0 0 0 0

20
18
16
14
12
10
8 Muthoot Response
6 Manappuram Response
4
2
0
Once 2-5 times 6-10 More
times than 10
times

Fig. 5.1

INTERPRETATION

The above chart was designed to understand number of times a customer applies
for a gold loan in Muthoot and Manappuram.

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The response of the customers suggest that 36.67% of Muthoot‘s customers

applies for a gold loan just once while the rest of the 63.33% applies for a gold
loan 2-5 times.

In case of Manappuram, Customers who choose their gold loan facility once
stands at 43.33% and those who choose the same 2-5 times a year stands at
30%. Rests 26.67% of the customers choose this facility 6-10 times a year.

Both Muthoot and Manappuram don‘t have any customers who apply for gold
loan more than 10 times.

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Que 2- As per the scale below, rate the following factors of

Muthoot Fincorp Limited and Manappuram General Finance
and Leasing Limited:

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

I. Rate of interest
Table 5.2

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Excellent 6 6 20 20

Very good 10 6 33.33 20

Good 9 11 30 36.67

Fair 5 7 16.67 23.33

Bad 0 0 0 0

12
10
8
6
Muthoot Response
4
Manappuram Response
2
0

Fig. 5.2

INTERPRETATION

The above chart was designed to understand the satisfaction of the customers
with the interest rate on gold loan offered by Muthoot and Manappuram.

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Here, 20% of the customers of both Muthoot and Manappuram believe that the
interest offered by both companies is excellent. While 33.33% and 20% of
customers of Muthoot and Manappuram think the rate of interest is very
good.30% (Muthoot) and 36.67% (Manappuram) of the respondents believe the
interest rate is good.

16.67% (Muthoot) and 23.33% (Manappuram) of the respondents believe the

interest rate is fair. None of the respondents thought that interest rate offered by
both companies was bad.

II. Location of the institute

Table 5.3

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Excellent 8 5 26.67 16.66

Very good 17 11 56.67 36.67

Good 5 8 16.66 26.67

Fair 0 5 0 16.67

Bad 0 1 0 3.33

18
16
14
12
10
8 Muthoot Response
6
Manappuram Response
4
2
0

Fig. 5.3

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INTERPRETATION

The above chart shows the customer response on the location of both the
institutes.

Here, Muthoot has a superior lead over Manappuram. This is easily

recognisable as 26.67% of Muthoot‘s respondents believe that location of the
institutes is excellent while 56.67% of them believe it is very good.

On the other hand, 16.66% and 36.67% of Manappuram‘s respondents

considered the location factor excellent and very good respectively.

The share of customers who choose ‗Good‘ as their choice to this question
stands as 16.66% (Muthoot) and 26.67% (Manappuram).

None of Muthoot‘s customers selected fair and bad as their option while
16.67% and 3.33% of Manappuram‘s clients opted for fair and bad respectively.

III. Staff behavior

Table 5.4

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Excellent 7 7 23.33 23.33

Very good 9 12 30 40

Good 10 7 33.33 23.33

Fair 4 4 13.34 13.34

Bad 0 0 0 0

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12

10

6
Muthoot Response
4
Manappuram Response
2

Fig. 5.4

INTERPRETATION

Staff behavior is interpreted in the above chart. About 23.33% of both the
organizations thought that the behavior of staff is excellent.

The share of customers who choose very good as the option stands at 30% for
Muthoot and 40% for Manappuram.

33.33% and 13.34% of Muthoot‘s respondents believe that staff behavior was
good and fair respectively. This preference was selected by 23.33% and 13.34%
in case of Manappuram.

None of the respondents to the questionnaire believe that the behavior of staff in
both these institutes was bad.

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IV. Gold loan application procedure

Table 5.5

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Excellent 12 6 30 20

Very good 3 7 10 23.33

Good 11 14 36.67 46.67

Fair 4 3 13.33 10

Bad 0 0 0 0

14
12
10
8
6 Muthoot Response
4 Manappuram Response

2
0

Fig. 5.5

INTERPRETATION

The above chart was designed to interpret the response of customers to

Muthoot‘s and Manappuram‘s gold loan procedure.

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It was interpreted that 30% and 10% of Muthoot‘s respondents as well as 20%
and 23.33% of Manappuram‘s respondents believed that this factor was
excellent and very good respectively.

As for option ‗Good‘ and ‗Fair‘ the share stands at 36.67% and 13.33%
(Muthoot) and 46.67% and 10% (Manappuram).

No one selected ‗Bad‘ in response to this question for either company.

V. Infrastructure facilities

Table 5.6

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Excellent 8 4 26.67 13.33

Very good 14 6 46.67 20

Good 5 12 16.66 40

Fair 3 7 10 23.34

Bad 0 1 0 3.33

14
12
10
8
6 Muthoot Response
4 Manappuram Response

2
0

Fig. 5.6
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INTERPRETATION

The above chart represents the rating given by the customers on the
infrastructure facilities of both institutes.

26.67% was the share of Muthoot customers who thought that these facilities
were excellent and almost half of the total respondents (47.67%) believed it is
very good.

And as for Manappuram, those who believed this facility is excellent stands at
20% and 40% of the total thought it is very good.

The option ‗Good‘ was selected by 16.66% (Muthoot) and 40% (Manappuram)
respectively.

The option ‗Fair‘ was selected by 10% (Muthoot) and 23.34% (Manappuram)
respectively.

It was suprising to see 3.33% of Manappuram‘s respondents believed that the

infrastructure facility provided by the organization was bad.

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Que 3- Time taken for the whole gold loan procedure?

Table 5.7

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Less than 5 minutes 4 0 13.33 0

5- 10 minutes 9 6 30 20

11- 30 minutes 15 19 50 63.33

31- 60 minutes 2 5 6.67 16.67

Others (Please mention) 0 0 0 0

Muthoot Response

Less than 5 minutes

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

Fig. 5.7

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 Gaurav Shrivastava

Manappuram Response

Less than 5 minutes

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

Fig. 5.8

INTERPRETATION

The above pie diagrams represents one of the main factors which decides the
fate of any gold loan financing company i.e. time taken for clearing a gold loan.

13.33% of Muthoot‘s respondents believed that it takes less than 5 minutes for
the whole gold loan procedure. But this option was not at all selected by any of
the Manappuram‘s respondents.

Those respondents who thinks the whole gold loan procedure takes 5- 10
minutes stands at 30% (Muthoot) and 20% (Manappuram).

The option ‘11-30 minutes‘ was selected by 50% (Muthoot) and 63.33%
(Manappuram) respectively.

The option ‘31-60 minutes‘ was selected by 6.67% (Muthoot) and 16.67%
(Manappuram) respectively.

None of the respondents believe that the whole gold loan procedure takes more
than 1 hour.

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Que 4- How satisfied are you with the security standards of

Muthoot Fincorp Limited Manappuram General Finance and
Leasing Limited?
Table 5.8

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

100% 2 0 6.67 0

80- 99% 12 14 40 46.67

60- 79% 9 8 30 26.66

40- 59% 6 6 20 20

>40% 1 2 3.33 6.67

>40%

40- 59%

60- 79% Manappuram Response

Muthoot Response
80- 99%

100%

0 5 10 15

Fig. 5.9

INTERPRETATION

The above bar diagram is also another important determinant of a gold

financing company‘s success.

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 Gaurav Shrivastava

It is interpreted that 6.67% of Muthoot‘s respondents are 100% satisfied with

their security standards while none of the Manappuram‘s respondents are fully
satisfied with the company‘s security standards.

It is also interpreted that 40% (Muthoot) and 46.67% (Manappuram) of the

respondents are 80% - 99% satisfied with the security facilities.

Those respondents who trusted Muthoot‘s and Manappuram‘s security

standards 60% - 79% stands at 30% and 26.66% respectively.

Both the institutes had 20% of the total respondents who believed that the
security standard was 40% - 59% trustable.

Both the institutes had 3.33% (Muthoot) and 6.67% (Manappuram) of the total

respondents who believed that the security standard was less than 40% trustable.

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Que 5 -How did you come to know about Muthoot, Manappuram

and its facilities?
Table 5.9

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Newspapers 9 6 30 20

Journals and Magazines 5 3 16.67 10

T.V Advertisements 11 12 36.67 40

Notice 2 5 6.66 16.67

Friends and relatives 3 4 10 13.33

Others (Please specify) 0 0 0 0

Muthoot Response

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

Fig. 5.10

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 Gaurav Shrivastava

Manappuram Response

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

Fig. 5.11

INTERPRETATION

The 1st pie diagram shows the mediums through which the public came to know
about Muthoot Fincorp Limited while the 2nd pie diagram shows the same for
Manappuram General Finance and Leasing Limited.

Here, it is interpreted that newspaper as a medium penetrates about 30% for

Muthoot and 20% for Manappuram.

The main medium of advertising for both the companies is T.V. advertisements
which stand at 36.67% for Muthoot and 40% for Manappuram

Other sources like journals and magazines- Muthoot (16.67%) and Manappuram
(10%), notice- Muthoot (6.66%) and Manappuram (16.67%), friends and
relatives- Muthoot (10%) and Manappuram (13.33%) also play vital roles in
penetrating the market share for both the companies.

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Que 6- . Taking into consideration, the recent fluctuations of gold

rates. Do you think Muthoot Fincorp and Manappuram Finance
are successful in providing effective gold loans?
Table 5.10

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Strongly agree 7 3 23.33 10

Agree 14 14 46.67 46.67

Neutral 6 9 20 30

Disagree 3 4 10 13.33

Strongly disagree 0 0 0 0

Muthoot Response

Strongly agree
Agree
Neutral
Disagree
Strongly disagree

Fig. 5.12

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Manappuram Response

Strongly agree
Agree
Neutral
Disagree
Strongly disagree

Fig. 5.13

INTERPRETATION

It is interpreted from the above 2 pie diagrams that a majority of the respondents
(46.67%) both of Muthoot Fincorp as well as Manappuram Finance agrees to
the fact that both companies were able to provide effective gold loans even after
the recent fluctuations in gold rates.

Those respondents who strongly agree to this fact constitute 23.33% and 10% of
the respondents of Muthoot and Manappuram respectively.

20% (Muthoot) and 30% (Manappuram) opted for neutral while rest 10%
(Muthoot) and 13.33% (Manappuram) disagreed to this fact.

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7. In case of default, Does Muthoot Fincorp and Manappuram

Finance assist by providing long payback period?
Table 5.11

Opinion Muthoot Response Manappuram Response % of Muthoot % of Manappuram

Strongly agree 12 5 40 16.67

Agree 14 16 46.67 53.33

Neutral 4 9 13.33 30

Disagree 0 0 0 0

Strongly disagree 0 0 0 0

20 16

12 14
15 9
5
10
5 4 0
0
0 0
0
Strongly
Agree
agree Neutral
Disagree
Strongly
disagree

Muthoot Response Manappuram Response

Fig. 5.14

INTERPRETATION

Here, it is interpreted a majority of the respondents agrees that both financial

institutions assist by providing long payback period.

This was closely followed by the opinion that the respondents strongly agrees
that both financial institutions assist by providing long payback period.

Followed by neutral with 13.33% (Muthoot) and 30% (Manappuram).

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MUTHOOT V/S MANAPPURAM

1. RATE OF INTEREST

Table 5.12

Name of institute Muthoot Fincorp Manappuram Finance

Interest rate (% p.a.) 12.0-24.48 12.0-28.08

Financing (In %) 60-80 88-93

Maximum loan amount 1,00,00,000 1,00,00,000

Max Tenure (In years) 0.25 1

Interest rate type Fixed Fixed

The above table is a very important determinant of in the comparative study of gold
loans offered by Muthoot and Manappuram.

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2. BRANCHES IN LUCKNOW

Muthoot (7): Indira Nagar, Gomti Nagar, Hussainganj, Alambagh,

Rajajipuram, Aliganj, Chinhat

Manappuram (3): Charbaag, Alambaag, Indira Nagar

The above list of the names of branches of both institutes shows that Muthoot has a far
superior lead over its rival Manappuram in terms of number of branches within
Lucknow district.

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DATA COLLECTED FROM SECONDARY SOURCES

Table 5.13

The above chart shows the Estimated Gold Portfolio of the different gold loan
providers in India.

It is interpreted that Muthoot Fincorp is 1st with an estimated portfolio of Rs. 2,220
Crores in F.Y. 2009- 10.

Manappuram Finance which has shown a steady growth in the past few years still lags
behind Muthoot Fincorp in the 2nd position with an Estimated Gold Portfolio of Rs.
2,560 Crores.

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Table 5.14

Net NPA /
Net Loans 2008 2009 2010
(%)

Manappuram
1.6% 0.94% 0.49%
Finance

Muthoot
0.47% 0.57% 0.56%
Fincorp

Market Share 2008 2009 2010

Manappuram
3.7% 4.9% 6.8%
Finance

Muthoot
11.0% 13.4% 19.5%
Fincorp

Manappuram/
2.97 2.73 2.87
Muthoot

The above table was compiled from figures collected from the financial report of
Muthoot Fincorp and Manappuram Finance.

It is interpreted that Manappuram's earlier higher NPA's had to do with vehicle loans.
NPA's strictly on gold loans are much lower than that of Muthoot Fincorp.

Muthoot seems to be doing a good job based on ROE. It's advantageous to

Manappuram if Muthoot can't raise capital.

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FINDINGS,
SUGGESTIONS
AND CONCLUSION

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Chapter - 6

6.1 FINDINGS

The present study “Comparative study on gold loan provided by Muthoot Fincorp
and its competitor (Manappuram finance)” is conducted considering both primary
and secondary data. 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 of both

companies among public i.e. 36.67% (Muthoot) and 40% (Manappuram)
respectively.

 Majority of the respondents‘ have the opinion that the behaviors of both
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 both the companies are more than satisfied
with the security standards on their gold jewellary.

 It was indentified from the customer response that both companies were
successful in proving effective gold loans even after the recent fluctuations in
the prices of gold.

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The study was also aimed at finding best gold loan financing company. After
analyzing and interpreting the data collected through primary and secondary
sources, the following conclusions were made:

 The estimated gold loan portfolio of Muthoot Fincorp Limited (7,342 Crores) is
far superior to Manappuram General Finance and leasing Limited (2,560
Crores) which indicate the sound market position of Muthoot Fincorp Private
Limited.

 It was also interpreted that Muthoot Fincorp Limited has more regular
customers than Manappuram General Finance and Leasing Limited. This is an
important indicator of the bigger market base that Muthoot Fincorp Limited has
over his closest rival Manappuram General Finance and Leasing Limited.

 The interpretation of data also indicated that the public are more satisfied with
the interest on gold loan offered by Muthoot Fincorp Limited over
Manappuram General Finance and Leasing Limited. 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. Although Manappuram is on a branch establishment drive it
still lacks in the number branches per area.

 The graph 5.4 shows neck to neck competitions between the two gold loan
giants to satisfy the customers. Here it is difficult to differentiate the two and
find the best on staff behavior.

 The graph 5.5 is also a clear indicator of the close competition between the two
institutes on the requirements for a gold loan as well as the whole gold loan
procedure.

 It has been interpreted that Manappuram General Finance and Leasing Limited
lacks a little bit on the infrastructure side of business. Muthoot being the more
established among the two knows the infrastructure requirements to grow in
this industry.

 The pie charts 5.7 and 5.8 are very important to any gold loan financing
companies. It indicates that the time taken for the whole gold loan procedure is
very less compared to Manappuram General Finance and Leasing Limited.
This gives Muthoot an all important edge over Manappuram.

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 This graph 5.9 shows the satisfaction of customers on the safety provided by
the two institutes on their gold. Here too, Muthoot has an important edge over
Manappuram on the safety of the securities according to the public opinion.

 It was also interpreted that Muthoot Fincorp was successful in providing long
pay back periods to its customers. This is also an another reason for its success
in this industry.

6.2 SUGGESTIONS

6.2.1 FOR MANAPPURAM FINANCE

 They should take up more promotional measures to increase the market share
of their products.

 They should concentrate on expansion plans and open new branches in

unexplored areas.

 Manappuram should work on improving their gold loan processing time.

 Infrastructure facilities should also be improved and should be of international

standards to compete with Muthoot Fincorp.

 Security standards and Interest rates are the other areas where Manappuram
Finance should work on.

6.2.2 FOR MUTHOOT FINCORP

 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.

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 The company can also look into new ventures as it has established itself as the
leader in gold loan financing field.

 Muthoot should also speed up its process in offering IPO as it lags behind
Manappuram which has already came up with IPO‘s.

6.3 CONCLUSION

The comparative study between gold loan offered by Muthoot Fincorp and
Manappuram Finance was aimed at finding out the reasons which makes these two
companies stand out among other gold loan financing companies and also to identify
the best gold loan provider among these two financing giants.

It helped me to find out the different factors responsible for the success of these two
companies.

The major finding that can be concluded from this study is that Muthoot Fincorp
Limited is still the best gold financing company in India and its toughest competitor-
Manappuram General Finance and Leasing Limited still lacks in many areas although
it has grown rapidly in the past few months and given Muthoot a run for its money.

This experience has helped me gain knowledge about the business of gold loan
financing in India.

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LIMITATIONS OF THE
STUDY

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Chapter - 7

7.1 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.

 Open questions can take a lot of time to collect and analyse.

 People are not always willing to fill questionnaires in so they may just throw
them always.

 Sometimes questions used are too standardised (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.

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 Gaurav Shrivastava

BIBLIOGRAPHY

BOOKS

 Philip Kotler, ―Marketing Management‖ ‖, Prentice- Hall of India, New Delhi,

8th Edition, August 1994

 Text Book of Marketing Research written by ―C. R. Kothari‖.

JOURNALS

 17th Annual Report of Manappuram General Finance and Leasing Limited

 Draft Red Herring Prospectus of Muthoot Fincorp Limited.

WEBSITES

 http://www.muthoot.com/

 http://www.muthootgroup.com/

 http://www.manappuram.com/

 http://www.thehindubusinessline.in/2010/11/27/stories/2010112751420600

 http://www.theequitydesk.com/forum/forum_posts.asp?TID=2635&PN=1

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 Gaurav Shrivastava

A Study on Customer Preferences Towards Gold Loan Provided

by Muthoot Fincorp Ltd. & Mannapuram Finance

Objective- It is constructed to understand the preferences of the customer between

Muthoot Fincorp Ltd. & Other Non Banking Financial Corporation‘s
Companies.

(All data collected through the questions will be used for academic purpose only and not to be
disclosed.)

Name of Researcher : Gaurav Shrivastava ( MBA Trainee at SRMS CET, Bareilly)

Respondent Profile :

Name : ____________________________________________

Contact No. : ____________________________________________

E-Mail : ____________________________________________

Age : ____________ Gender:_______________

Education:

[ ] Undergraduate [ ] Post graduate

[ ] Graduate [ ] Professionally Qualified

Occupation:

[ ] Businessman [ ] Private Job

[ ] Government Official [ ] Student

Monthly Income:

[ ] <5000 [ ] 5000 – 20,000

[ ] 20,000 – 50,000 [ ] > 50,000

105
 Gaurav Shrivastava

 It is requested to answer as per question.

1. How often do you take a gold loan in a year?

a) Once
b) 2- 5 times
c) 6- 10 times
d) More than 10 times

2. As per the scale below, rate the following factors of Muthoot Fincorp Limited:

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

I. Rate of interest :
II. Location of the institute :
III. Staff behavior :
IV. Gold loan application procedure:
V. Infrastructure facilities :

3. Time taken for the whole gold loan procedure?

a) Less than 5 minutes

b) 5- 10 minutes
c) 11- 30 minutes
d) 31- 60 minutes
e) Other (Please mention) ________________

4. How satisfied are you with the security standards of Muthoot Fincorp Limited?

a) 100%
b) 80-99%
c) 60-79%
d) 40-59%
e) >40%

5. How did you come to know about Muthoot Fincorp Limited and its facilities?

a) Newspapers
b) Journals and Magazines
c) T.V. Advertisements
d) Notice
e) Friends and relatives
f) Others (Please specify)

106
 Gaurav Shrivastava

6. Taking into consideration, the recent fluctuations of gold rates. Do you think Muthoot
Fincorp was successful in providing effective gold loans?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

7. In case of default, Does Muthoot Fincorp assists by providing long payback period?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

8. Why do you prefer Muthoot Fincorp Limited over other Gold loan institutes and
Government organisations?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

9. Any complaints about Muthoot Fincorp Limited?

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

10. Any suggestions to improve the services offered by Muthoot Fincorp Limited?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

Date:

Signature:

107
 Gaurav Shrivastava

A Study on Customer Preferences Towards Gold Loan Provided

by Muthoot Fincorp Ltd. & Mannapuram Finance

Objective- It is constructed to understand the preferences of the customer between

Muthoot Fincorp Ltd. & Other Non Banking Financial Corporation‘s
Companies.

(All data collected through the questions will be used for academic purpose only and not to be
disclosed.)

Name of Researcher : Gaurav Shrivastava ( MBA Trainee at SRMS CET, Bareilly)

Respondent Profile :

Name : ____________________________________________

Contact No. : ____________________________________________

E-Mail : ____________________________________________

Age : ____________ Gender:_______________

Education:

[ ] Undergraduate [ ] Post graduate

[ ] Graduate [ ] Professionally Qualified

Occupation:

[ ] Businessman [ ] Private Job

[ ] Government Official [ ] Student

Monthly Income:

[ ] <5000 [ ] 5000 – 20,000

[ ] 20,000 – 50,000 [ ] > 50,000

108
 Gaurav Shrivastava

 It is requested to answer as per question.

1. How often do you take a gold loan in a year?

a) Once
b) 2- 5 times
c) 6- 10 times
d) More than 10 times

2. As per the scale below, rate the following factors of Manappuram General Finance
and Leasing Limited:

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

I. Rate of interest :
II. Location of the institute :
III. Staff behavior :
IV. Gold loan application procedure:
V. Infrastructure facilities :

3. Time taken for the whole gold loan procedure?

a) Less than 5 minutes

b) 5- 10 minutes
c) 11- 30 minutes
d) 31- 60 minutes
e) Other (Please mention) ________________

4. How satisfied are you with the security standards of Manappuram General Finance
and Leasing Limited?

a) 100%
b) 80-99%
c) 60-79%
d) 40-59%
e) >40%

5. How did you come to know about Manappuram General Finance and Leasing Limited
and its facilities?

a) Newspapers
b) Journals and Magazines
c) T.V. Advertisements
d) Notice

109
 Gaurav Shrivastava

e) Friends and relatives

f) Others (Please specify)

6. Taking into consideration, the recent fluctuations of gold rates. Do you think
Manappuram Finance was successful in providing effective gold loans?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

7. In case of default, Does Manappuram Finance assists by providing long payback

period?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

8. Why do you prefer Manappuram General Finance and Leasing Limited over other
Gold loan institutes and Government organisations?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

9. Any complaints about Manappuram General Finance and Leasing Limited?

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
10. Any suggestions to improve the services offered by Manappuram General Finance
and Leasing Limited?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

Date:

Signature:

110