Introduction-NEED FOR STUDY Finance The origins of Muthoot Finance can be traced back to 1939 when [M.

George Muthoot] ventured into financial services through a partnership firm under the name of Muthoot M. George & Brothers (MMG). MMG was a Chit Fund based out of Kozhencherry. In 1971, the firm was renamed as Muthoot Bankers, and had begun to finance loans using gold jewellery as collateral. The operations of Muthoot Bankers was then renamed and incorporated as Muthoot Finance in 2001. Muthoot Finance falls under the category of Systematically Important Non Banking Financial Company (NBFCs) of the RBI guidelines. The company has more than 3,510 branches spread across 23 states of the country and is the largest gold loan company in India.[1]. Muthoot Finance, according to the IMaCS Research & Analytics Industry Reports [Gold Loans Market in India, 2009 (IMaCS Industry Report 2009) and the 2010 update to the IMaCS IndustryReport 2009 (IMaCS Industry Report (2010 Update))], is the largest Gold Loan NBFC and has the largest network of branches for a Gold Loan NBFC in India.[4]. Muthoot Finance is also the highest credit rated Gold Loan company in India, with a credit rating of AA- (CRISIL) and LAA(ICRA) for its Long Term Debts and P1+ (CRISIL) [5] & A1+ (ICRA) [6] for its Short Term Debt Instruments.

Muthoot Gold Power is the lifestyle product of Muthoot Finance aimed at mobilizing the Household gold in India which is estimated to be more than 15000 tonnes. Muthoot Finance according to its company website has "the largest gold loan portfolio in the country". Muthoot also provides various financial services such as Insurance distribution, Wealth Management, Foreign Exchange, Money Transfer and Vehicle & Asset Finance. Muthoot Finance was selected as one of the Top 10 Finance companies to work for in India by Naukri.com[7] Muthoot Finance privately placed 4% of its paid up capital to Private Equity players - Barings India and Matrix Partners India for Rs.1.57 billion, hence valuing the earlier privately held company at over $1 billion.[8] In terms of market capitalisation, Muthoot Finance is the second largest company in Kerala, first being Federal Bank. Information technology Emsyne, the information technology wing of the group develops products for the service, education and healthcare industry. Emsyne offers on site and offshore services, whether project-based outsourcing / assignments, or based on time and materials. The Core Products of Emsyne are Edge - Educational Institutions Management System Finex Innovative Banking Automation System

Precious Metals Muthoot Precious Metals Corporation (MPMC) is one of the Group companies of Muthoot Group, selling Coins & Bars of 999 Pure 24 Carat gold and silver across India through the outlets of Muthoot Finance. MPMC is importing gold bullions from Switzerland and converts them into gold coins of smaller denominations so as to suit the investment requirements of people from different income groups. The coins are sold through more than 3400 outlets of Muthoot Finance Ltd. MPMC is one of the leading sellers of Gold Coins in retail market. Gold Coins/Bars are sold in denominations of 0.5, 1, 2, 4, 8, 10, 20 and 50grams denominations. MPMC has silver coins in 20, 50 & 100grams denominations. Coins are marketed in attractive blister packings with Muthoots certificate of Purity and MPMCight. MPMC has the gold & silver coins imprinted with the images of deities and monuments such as Goddess lakshmi, Lord Ganesha, Lord Ayyappa, Lord Sri Venkateswara (Balaji), Our lady of Velankanni, St. Alphonsa, St. Gregorious, Lord Sri Padmanabha, Golden Temple, Chatrapathy Sivaji, Mary Matha, St.George and Normal Coins etc..

From January 2012 MPMC is expanding its horizons, from a Trading company to a gold Investment Company. Securities Media Chennai Live 104.8 is India's first talk radio FM station. The station would be focusing on knowledge centric and local content and will be targeting the information and entertainment needs of Chennai's intelligent community.[9] Healthcare The Group operates several Diagnostic & Scan centers throughout Kerala and 2 multi-specialty hospitals in Kozhencherry and Pathanamthitta.[citation needed] Hotels & hospitality Muthoot Hotels operates a 4 star resort in Thekkady (Kerala)[10] and also operates 12 houseboats in the backwaters of Kerala under the brand Muthoot River Escapes.[11] Kaapi Club is a chain of South Indian coffee outlets managed by Muthoot Hotels.[12] Muthoot Hotels is in the process of constructing a 5 star luxury hotel in the city of Kochi and 5 star beach resort in Mararikulam.[13]

Housing & infrastructure The projects of Muthoot Builders are primarily situated in central and south Kerala, Muthoot has a track record of more than 30 completed projects including commercial and residential spaces.[14] Other divisions Muthoot has interests in Power Generation through windmill farms in the state of Tamil Nadu. The group also manages a school in New Delhi[15] and 2 Nursing Colleges in Kerala. In the year 2008 the group re-entered the plantation business, the group has acquired 1000 acres of land in Sawantvadi, Maharashtra as a pilot planting of rubber. Philanthropy Muthoot M George Charity Foundation Set up in memory of the Late M. George Muthoot, the Foundation has been extending financial aid for its employees as part of the Staff Welfare measures. Every branch of The Muthoot Group is actively involved in Community Development and Social Welfare. The Muthoot Foundation frequently grants medical and financial aid to deserving individuals through its welfare programs. Community support is a corporate responsibility. The Muthoot Group maintains its position as a valued and responsible corporate citizen by enhancing the quality of life in the communities where they do business. It is very important for a corporate to support the community in which it

operates. The Muthoot M. George Charitable Foundation is approached by numerous organizations and individuals requesting financial and medical assistance. Muthoot Medical Centers at Kozhencherry and Pathanamthitta are super specialty hospitals set up in the rural areas of Kozhencherry and Pathanamthitta. They are both organizations established in 1989. Environment research foundation The Periyar Foundation set up by Muthoot Hotels is based in the town of Thekkady, near the Periyar National Park has undertaken several projects for the conservation of the national park including 'vasantha sena' [16] and a research study along with the National Institute of Advance Studies for the conservation of 'Nocturnal Flying Squirrels'.

Initial public offering (IPO), also referred to simply as a "public offering", is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

In an IPO, the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market. Initial Public Offering (IPO) in India means the selling of the shares of a company, for the first time, to the public in the country's capital markets. This is done by giving to the public, shares that are either owned by the promoters of the company or by issuing new shares. During an Initial Public Offer (IPO) the shares are given to the public at a discount on the intrinsic value of the shares and this is the reason that the investors buy shares during the Initial Public Offering (IPO) in order to make profits for themselves. IPO in India is done through various methods like book building method, fixed price method, or a mixture of both. The method of book building has been introduced in the country in 1999 and it helps the company to find out the demand and price of its shares. A merchant banker is nominated as a book runner by the Issuer of the IPO. The company that is issuing the Initial Public Offering (IPO) decides the number of shares that it will issue and also fixes the price band of the shares. All these information are mentioned in the company's red herring prospectus. During the company's Initial Public Offering (IPO) in India, an electronic book is opened for at least five days. During this period of time, bidding takes

place which means that people who are interested in buying the shares of the Company makes an offer within the fixed price band. Once the book building is closed then the issuer as well as the book runner of the Initial Public Offering (IPO) evaluate the offers and then determine a fixed price. The offers for shares that fall below the fixed price are rejected. The successful bidders are then allotted the shares IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value. Different kinds of Issues:

IPO VALUATION & DATA INTERPRETATION

Initial Public Offering - 2011 This IPO report provides information about the IPO's came in to India stock market in year 2011. The report tells the amount raised by companies through public offerings in primary stock market in 2011. Summary of IPO market activities:

Capital raised through different IPO:

Case Study: Muthoot Finance IPO

Objects of the Issue: 1. To augment capital base to meet future capital requirement to provide for funding of loans to customers;

2. General corporate purposes. Company Background: Muthoot Finance Ltd is a non-deposit taking NBFC in the business of lending against household used gold jewellery to individuals. Muthoot Finances operating history has evolved over a period of 70 years since Mr. M. George Muthoot founded a gold loan business in 1939. MFL received the NBFC licence from the RBI in 2001. Issue Details:

The NBFC has the largest branch network among gold loan providers in India with 2,611 branches and a strong presence in under-served rural

and semi-urban markets in India with total Assets under Management of Rs 12,897 Cr as of November 2010. During 2010, the company received fund infusion amounting to Rs 2.5 bn from private equity players like Baring India Private Equity, Matrix Partners India, Kotak India Private Equity Fund and Wellcome Trust for a 6% stake in the company. Further, in 2011 Wellcome Trust picked up additional 1% stake from the promoters, taking the total stake of private equity investors to 7% in the company. The NBFC raised Rs 130 Cr from 11 Anchor investors at Rs 170/share. The anchor investors include Citigroup, Goldman Sachs, Credit Suisee amongst others. Company Financials: Muthoot Finances AUM increased at a CAGR of 74% from Rs 8 bn. in FY06 to Rs 74 bn. in FY10 driven by a rise in pledged gold and a significant spurt in gold prices. On the back of growth in AUM, interest income increased at a CAGR of 66% from Rs 1.4 bn. in FY06 to Rs 10.8 bn. in FY10. Profit after tax (PAT) improved from Rs 271 mn. to Rs 2,276 mn. in FY10. The adjusted EPS and adjusted book value of the company increased at a CAGR of 53% and 43% respectively over FY06-10. Gross NPAs have

been contained to less than 0.5% in the past three years. Muthoot Finance enjoys a strong capital to risk adjusted ratio (CRAR) of 15% which is in excess of the RBIs requirement of 12%.The company frequently sells its portfolio under bilateral direct assignments which also helps it keep its capital ratio strong. In 2010, the company raised Rs 2.5 bn. from private equity players, which will help it shore up capital base and fund its growth. Below are the balance sheets and P/L account details of Muthoot Finance:

Key Positives: Muthoot - Established Brand: MFL has an established track record in the niche Gold loan segment, and has a gold loan portfolio of Rs. 12,897 Cr as on November 30 2010. The Muthoot Group enjoys strong market knowledge and a good franchise in southern India on the back of significant experience of the promoters of the Group since 1939. An early entry in this business, not only in South India but also in other regions, has helped the company develop a strong brand image, wide distribution network and AUM. The growth of the company is also aided by the fact that gold loans are commonly accepted form of financing amongst households in southern India.

Niche Business Model: MFL is the largest player in the niche business of gold financing, both in terms of AUM and distribution network. The gold loan asset class is characterized by small ticket size loans secured against gold ornaments. The average ticket size is of around Rs 30,000 for MFL. While the contractual tenure of the loan contract is 12 months, the loan tenure is typically around 3-4 months. MFLs AUM has grown at a four-year CAGR of 74% to Rs 74 bn in FY10. The company has grown its market share by 9% during FY07- FY10 backed by its strong presence in the South India Market. Robust Industry Outlook: According to the IMACs industry report, based on the assessment of the emerging dynamics and competitive landscape, the Gold Loans market is expected to grow at between 35% and 40% over the next three years. Moreover, as the market is currently under-penetrated, it is expected that the Gold Loans market will offer enough opportunities for portfolio expansion and retain attractive margins for all existing specialized NBFCs, banks and new entrants. The branch expansion and marketing initiatives of various specialized NBFCs are anticipated to give a strong boost to the acceptability of Gold Loans and lead to further growth in the Gold Loans market.

Healthy Asset Quality: Muthoot Finance has maintained strong asset quality supported by its comfortable loan-to-value (LTV) ratio at origination, robust systems and processes, and the highly secured nature of the LAG business. Strong underwriting standards have resulted in very low gross non-performing assets (NPA) of 0.46% for the company. Sentiment attached to the household ornament also support low NPA. Diversified Sources of Funds: Muthoot Finance has access to a diversified resource profile. As of FY10, it had a total debt outstanding of Rs 52 bn. Its established track record helps to mobilise funds from retail investors by issuing nonconvertible debentures (NCD) through its branches offering interest rates of 11-11.5%. Stringent Internal Controls System: The internal audit team of the company consists of 500 members and is spread out in different locations. The company conducts regular audits of branches to check the efficacy of the gold assessment quality of the branches and other operational processes of the branches. MFL is exposed to operational risks, as its transactions mainly involve gold

jewellery and cash. MFL maintains its gold ornaments in strong rooms that are insured against fire, theft and employees frauds. Risks: Downturn in Gold prices: A significant rise in gold prices along with the increase in loan requirement by customers has boosted Muthoot Finance's AUM. Any sharp fall in gold prices could pose challenges. However, Muthoot Finance has a comfortable LTV ratio in line with other gold financing NBFCs ranging from 60-85%, which helps it to combat the downside in gold prices. Also, the shorter tenure of gold loans (usually ranging from three to six months) offers flexibility of resetting the LTVs. Business Concentration in the Southern India: Muthoot Finance derives 98% of revenues from the gold loan business. Also, it is expected to remain concentrated in South India, which accounts for 75% of AUM for the short to medium term despite aggressive growth plans in the northern and western states. Royalty Payment to Promoters: The company has a royalty clause which is not implemented yet, in favour of promoters for allowing the company to use the Muthoot

trademarks, which is fixed at 1% of the annual income, subject to a maximum of 3% of annual profit. Regulatory Hitches: The impact of the State Money Lenders Act for NBFCs, the decision on which is awaited from the Supreme Court, could not only adversely affect Muthoot Finance's lending rates but also increase its operational expenditure, given the requirements (under the act) of registering all establishments with state authorities and complying with state regulations. The decision of the Supreme Court regarding this issue remains a sensitive factor for the company.

Valuations

Muthoot Finances market cap is coming to Rs 5,847 Cr Rs 6,505 on a price band of Rs 160 Rs 175. The company is asking for a price to

earnings multiple of 13.6-14.9 times its annualized FY11 EPS of Rs 11.7 which is at a discount to Manappurram General Finance despite the former having a higher market share of 20% while Manappurram just has a market share of 6.8% as on FY10. The price to book value is 2.93.04 times its post issue book value which is at marginal premium to Manappurram General Finance. At the upper price band of `175 and lower price band of `160, the issue is priced at around 4.95x and 4.53 times its 8MFY11 book value of `35.3. On its post issue book value of `54.68 the issue is priced at around 3.2x and 2.93x (at the higher band and lower band respectively). Manappuram General Finance & Leasing Limited (MGF), the only listed company in India which is in the similar business of gold financing with less than half of its size in terms of income is tradingat a P/B of 2.81x. We believe Muthoot Finance which has a better reach than its competitors in terms of branch network and higher return on networth compared to MGF, deserves a premium valuation. On the Price to earning methodology, the issue is priced at around 14.9x and 13.6x on the post issue annualized EPS of 11.76 for 8MFY11, which is ~20% cheap when compared to MGF which is trading at a P/E of 18.8x on its annualized 9MFY11 EPS of 6.76. Muthoot finance enjoys superior

return ratios with ROAE at ~ 50.0% and ROAA at ~3.9% mainly driven by it superior credit rating (which enables it to borrow at competitive rates thereby leading to healthy 10%+ NIMs) coupled with its high leverage of ~9.0x. The current equity raising initiative by the company will improve its capital adequacy ratio in excess of 23% from 15.06% in November 2010, thereby helping it to maintain loan growth and support NIM going forward. We believe the companys leadership position in the gold loan business (market share of ~20.0%), strong capital raising ability, superior NIMs and return ratios, established brand image and opportunity in the gold financing business are key value drivers for Muthoot Finance going forward. Muthoot Finance annualized EPS for 8M FY 2011 on post-issue equity works out to Rs 11.8. At the price band of Rs 160 to Rs 175 P/E works out to 13.6 to 14.9 times. Manappuram General Finance and Leasing Company (MAGFIL) another Gold loan company with less than half of its size in terms of income is currently trading at P/E of 22.4. Current book value of Muthoot Finance is just Rs 35. Post-issue Book Value works out to Rs 52.6 and Rs 54.7 at issue price of Rs 160 and Rs 175, respectively. P/BV at both the bands works out to be 3.0 and 3.2 times, respectively. MAGFIL is currently trading at a P/BV of 2.9.

Valuation (Methodology) - This is fair price? At the upper price band of `175 and lower price band of `160, the issue is priced at around 4.95x and 4.53 times its FY11 book value of `35.3.

 Manappuram General Finance & Leasing Limited (MGF), the only listed company in India which is in the similar business of gold financing with less than half of its size in terms of income is trading at a P/B of 2.81x. Muthoot Finance: Better reach than its competitors compared to MGF, deserves a premium valuation.

Why to invest? Balance Sheet Valuation:

Growth Rate: Muthoot Finance Ltd. is expected to grow at to have CAGR of 48 %, We take fixed growth rate of 48% for DCF valuation for coming 5 years. Reinvestment Rate: How much equity the firm reinvests back into its businesses in the form of net capital expenditures and investments in working capital. Equity Reinvestment Rate = Growth Rate / ROE = 48/52 = 92.29 % Discounted Cash Flow Valuation (Why to invest): A valuation method used to estimate the attractiveness of an investment opportunity. Discounted cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment.

 If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one. Calculated as:

Free cash Flow: Free cash flow represents the actual amount of cash that a company has left from its - for example, developing new products, paying dividends to investors or doing share buybacks.

A wide variety of methods can be used to determine discount rates, but in most cases, these calculations resemble art more than science. Still, it is better to be generally correct than precisely incorrect, so it is worth your while to use a rigorous method to estimate the discount rate. A good strategy is to apply the concepts of the weighted average cost of

capital (WACC). The WACC is essentially a blend of the cost of equity and the after-tax cost of debt. Weighted Average Cost of Capital (WACC) The WACC is the weighted average of the cost of equity and the cost of debt based on the proportion of debt and equity in the company's capital structure. WACC = Cost of Equity + Cost of Debt

Present Value: The present value of a single or multiple future payments (known as cash flows) is the nominal amounts of money to change hands at some future date, discounted to account for the time value of money, and other factors such as investment risk. A given amount of money is always more valuable sooner than later since this enables one to take advantage of investment opportunities. Present values are therefore smaller than corresponding future values.

When future cash flow of the company is divided by the discount rate we get the present value of that predicted years cash flow.

Where, n = year Terminal Value: Perpetuity Growth Model: The Perpetuity Growth Model accounts for the value of free cash flows that continues into perpetuity in the future, growing at an assumed constant rate. Here, the projected free cash flow in the first year beyond the projection horizon (N+1) is used. We have assumed perpetuity growth rate for Muthoot Finance Ltd. as 6%. Beyond 2016 Muthoot Finance Ltd. is expected to grow at 6% p.a i.e. at its perpetuity rate, hence net income for the year 2016 will be: Net income of 2016 (1+ perpetuity growth rate) = 54051 (1+0.06)

= Rs. 57295 mn Reinvestment rate after 2016 (Terminal Point): Here, return on equity is rate at which company expect to get returns on its investments after terminal point i.e. 2012. Return on equity will drop to the stable period cost of capital of 9.5%. Reinvestment rate (terminal point) =Perpetuity Growth rate / Return on Equity = 6/9.5 = 63% Free cash flow = EBIT - [EBIT x Reinvestment Rate] Therefore, Free cash flow 2017 = 57295 - [57295 x 63%] = Rs. 21109 mn Gordon Growth Model: The model uses this formula: Free cash flow of the year after the terminal year/ (Discount Rate Perpetuity Growth Rate) Therefore, Terminal Value = (21109 100)/12 = Rs 175904 mn Present value of Terminal year = 175904 / (1.10) ^6 mn Calculating Total Enterprise Value = Rs. 100100

Total Enterprise = Present value of Terminal- Debt = 100100 - 90830 = Rs. 9270 mn Fair value = Rs 9270 mn Number of outstanding shares = 51.5 mn Fair value of per share = Rs. 180.

On 29th Feb 2012:

Unchanging values...in changing time We are the largest gold financing company in India in terms of loan portfolio, according to the 2010 update to the IMaCS Research & Analytics Industry Reports, Gold Loans Market in India, 2009 ("IMaCS Industry Report, (2010 Update)"). We provide personal and business loans secured by gold jewellery, or Gold Loans, primarily to individuals who possess gold jewellery but could not access formal credit within a reasonable time, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements. According to the IMaCS Industry Report (2010 update), as of March 31, 2010 our branch network was the largest among gold loan NBFCs in India. Our Gold Loan portfolio as of September 30, 2011 comprised approximately 5.5 million loan accounts in India that we serviced through more than 3,274 branches across 20 states, the national capital territory of Delhi and four union territories in India. As of September 30, 2011, we employed 21,543 persons in our operations.

We are a "Systemically Important Non-deposit taking NBFC" headquartered in the southern Indian state of Kerala. Our operating history has evolved over a period of 72 years since M George Muthoot (the father of our Promoters) founded a gold loan business in 1939 under the heritage of a trading business established by his father, Ninan

Mathai Muthoot, in 1887.Since our formation, we have broadened the scale and geographic scope of our retail lending operations so that, as of March 31, 2010, we were India's largest provider of Gold Loans. In the years ended March 31, 2008, 2009, 2010, 2011 and in the period ended September 30, 2011, revenues from our Gold Loan business constituted 95.97%, 96.71%, 98.08%, 98.75% and 99.01%, respectively, of our total income. In addition to our Gold Loans business, we provide money transfer services through our branches as sub-agents of various registered money transfer agencies, and recently have commenced providing collection agency services. We also operate three windmills in the state of Tamil Nadu.

We issue secured non-convertible debentures called "Muthoot Gold Bonds" on a private placement basis. Proceeds from our issuance of Muthoot Gold Bonds form a significant source of funds for our Gold Loan business. We also rely on bank loans and subordinated debt instruments as our sources of funds. As per our audited financial statements as of September 30, 2011 we had Rs. 50,415 million in outstanding Muthoot Gold Bonds and Rs.122,152 million in other borrowings. We also raise capital by selling a portion of our loan receivables under bilateral assignment agreements with various banks. We also raise capital by issuing commercial paper and listed & credit

rated non-convertible debentures under private placement mode to various institutional investors.

Our customers are typically small businessmen, vendors, traders, farmers and salaried individuals, who for reasons of convenience, accessibility or necessity, avail of our credit facilities by pledging their gold jewellery with us rather than by taking loans from banks and other financial institutions. We provide retail loan products, primarily comprising Gold Loans. We also disburse other loans, including those secured by Muthoot Gold Bonds.Our Gold Loans have a maximum 12 month term. As per our audited financial statements, our average disbursed Gold Loan amount outstanding was Rs. 37,765 per loan account as of September 30, 2011. For the period ended September 30, 2011, our retail loan portfolio earned, on average, 1.82% per month, or 21.87% per annum.

As per our audited financial statements, as of March 31, 2008, 2009, 2010, 2011 and as of September 30, 2011, our portfolio of outstanding gross Gold Loans under management was Rs. 21,790.1 million, Rs. 33,000.7 million, Rs. 73,417.3 million, Rs.157,280.7 million and Rs. 207,666.2 million, respectively, and approximately 30.1 tons, 38.9 tons, 65.5 tons, 112.0 tons and 129.5 tons, respectively, of gold jewellery was

held by us as security for our Gold Loans. Gross non-performing assets ("NPAs") were at 0.42%, 0.48%, 0.46%, 0.29% and 0.59% of our gross retail loan portfolio under management as of March 31, 2008, 2009, 2010, 2011 and as of September 30, 2011 respectively.

As per our audited financial statements, in the years ended March 31, 2008, 2009, 2010 and 2011, our total income was Rs. 3,686.4 million, Rs. 6,204.0 million, Rs. 10,893.8 million, and Rs. 23,158.7 million, respectively, demonstrating an annual growth rate of 57.56%, 68.29%, 75.59% and 112.59%, respectively. As per our audited financial statements, in the six months ended September 30, 2011, our total income was Rs. 20,245.4 million.As per our audited financial statements in the years ended March 31, 2008, 2009, 2010 and 2011our profit after tax was Rs. 630.6 million, Rs. 978.7 million, Rs. 2,285.2 million and Rs. 4,941.8 million, respectively, demonstrating an annual growth rate of 43.80%, 55.20%, 133.49% and 116.25%, respectively. As per our audited financial statements, our profit after tax in the six months ended September 30, 2011 was Rs. 4,060.06 million.As per our audited financial statements as of March 31, 2008, 2009, 2010, 2011 and September 30, 2011, our networth was Rs. 2,131.1 million, Rs. 3,614.5 million, Rs. 5,841.9 million, Rs. 13,341.9 million, and Rs. 26,120.3 million respectively.

Our Strength We believe that the following competitive strengths position us well for continued growth:

Market leading position in the Gold Loan business with a strong presence in under-served rural and semi-urban markets Gold loans are the core products in our asset portfolio. We believe that our experience, through our Promoters, has enabled us to have a leading position in the Gold Loan business in India. Highlights of our market leading position include the following:

We are the largest gold financing company in India in terms of loan portfolio, according to the IMaCS Industry Report, (2010 Update). As per our audited financial statements, our loan portfolio as of September 30, 2011 comprised approximately 5.5 million loan accounts, in India with Gold Loans outstanding of Rs. 207,666.2 million.

We have the largest branch network among gold loan NBFCs, according to the IMaCS Industry Report (2010 update). As of September 30, 2011, we operated 3,274 branches across 20 states, the national capital territory of Delhi, and four union territories in India. Our branch network has expanded significantly in recent years from 373 branches as of March 31, 2005 to 3,274

branches as of September 30, 2011, comprising 589 branches in northern India, 2,114 branches in southern India, 422 branches in western India and 149 branches in eastern India covering 20 states, the national capital territory of Delhi and four union territories in India.

We believe that due to our early entry we have built a recognizable brand in the rural and semi-urban markets of India, particularly in the southern Indian states of Tamil Nadu, Kerala, Andhra Pradesh and Karnataka. As of September 30, 2011, the southern Indian states of Tamil Nadu, Kerala, Andhra Pradesh, Karnataka, and the Union Territory of Pondicherry constituted 71% of our total Gold Loan portfolio.

We have a strong presence in under-served rural and semi-urban markets. A large portion of the rural population has limited access to credit either because of their inability to meet the eligibility requirements of banks and financial institutions because credit is not available in a timely manner, or at all. We have positioned ourselves to provide loans targeted at this market.

We offer products with varying loan amounts, advance rates (per gram of gold) and interest rates. The principal loan amounts we disburse usually range from Rs. 2,000.0 to Rs. 200,000.0 while

interest rates on our Gold Loans usually range between 12.00% and 26.00% per annum..

Strengths Here we will analyze the strengths of the MUTHOOT FINANCE as a whole. The most important factors are: Technology is advanced and easy to implement: For MUTHOOT FINANCE is really advanced and more and more investment is done on technology to get world class infrastructure and knowhow to put in this field. Recently the MUTHOOT FINANCE is going to add 3G spectrum as its latest up gradation. Management Team has prior experience: The management team controlling Indian telecom sector in really efficient. Thank goes to the IITs which produce world class engineers. So Indian telecom sector has abundance of technological know how.

Weakness

The weaknesses of the MUTHOOT FINANCE are as follows. High Cost of Infrastructure: The infrastructure cost of telecom industry is very high. Low customer retention power: The customer retention power for telecom industry is really low and the customer changes their service provider company very soon.

Opportunity Population: The population of India is really an opportunity of telecom service providers, as the number of population without telecom service is also very high. The industry has to target Indias huge population to grow. Changing Population psychograph: Population psychograph is also changing. Previously telecom service was thought as an emergency service, now it has become an essential part of life in our country. Increased Penetration Level: All the organizations of the industry are trying to increase their penetration level, in other word to increase the tele-density of the country. The urban Indian population gives a real growth prospect to the industry. FDI: The foreign direct investment in telecom has been hiked up from 49% to 74%. This move is positive for the sector, as it requires investments of Rs 700 900 million over the next 5

years. FDI inflow by 2004 was 9950.94 cores in telecom. Countries like Europe, Korea, and Japan telecom are likely to enter India, as India is seen as fastest growing telecom market in world.

Threats

The treats to the MUTHOOT FINANCE are the following: Government Policies Government may provide licenses to many foreign operators, which may already have pose a threat for the existing players in the industry. New Technology can change the market dynamics: A lot of new technologies are coming. Then even have the potential of changing the entire industry dynamics or even create substitute of the telecom services existing. Some of the examples are follows: . VOIP (Skype, Messenger etc.)

. Online Chat . Email . Satellite phones to summarize the SWAT analysis we can draw the following framework for telecom industry:

Objective of study are:

Will I get any tax benefit if I invest in these NCDs?

No, these NCDs do not entitle you to any tax benefit nor are these any "infrastructure bonds", which make you eligible for an additional tax deduction under section 80 CCF. Is interest on these NCDs Tax Free?

No, the interest on these NCDs is not tax free - it is chargeable to tax. The interest income will be taxed under "income from other sources", and will be brought to tax at the respective income tax rates you fall under. However no tax will be deducted at source as these NCDs are issued in demat form and are listed on the exchange. What is the Tax Treatment on Capital Gains for these NCDs?

If you happen to sell these NCDs before 365 days, you will have to pay short term capital gain tax (@ applicable to you as per your tax slab) arising on the profit. Provisions of long term capital gain tax will be applicable for any sale of securities after 365 days. Any long term capital gain on these securities will be taxable @ 10% without indexation benefits or 20% with indexation benefits.

 Can a minor apply to these NCDs?

Yes, a minor can apply for these NCDs, but only and only through a guardian. Can one apply in joint names?

Yes, one may apply in a joint name. However, the demat account will also be required to be held in joint name and the order of applicant shall be the same as appearing in the demat account. Moreover, all payments will be made out in favour of the first applicant as well as all communications will be addressed to the first named applicant whose name appears in the application form and at the address mentioned therein. Who will get the interest in case of joint application?

In case of joint application, interest will be accounted to the first holder only. My demat account is in joint name, but I want to apply is a single name?

In case of a single application, demat account of the same single applicant would be necessary. Joint demat account would not do.

 If Im an NRI can I invest in these NCDs?

No, NRIs are not eligible to invest in these NCDs. Is there a lock-in period while investing?

No. There is no lock-in period for these NCDs. In terms of providing liquidity, these NCDs are proposed to be listed on the National Stock Exchange and the Bombay Stock Exchange. In whose favour the cheque is to be made?

Cheques/Drafts have to be made in the favour of "Escrow Account Muthoot Finance NCD- Public Issue" and crossed "A/C PAYEE ONLY" "

RESEARCH METHODOLOGY

Definition of Research

The word research is derived from the Latin word meaning to know. It is a systematic and a replicable process, which identifies and defines problems, within specified boundaries. It employs well-designed method to collect the data and analyses the results. It disseminates the findings to contribute to generalize able knowledge. The characteristics of research presented below will be examined in greater details later are: Systematic problem solving which identifies variables and tests relationships between them, Collecting, organizing and evaluating data. Logical, so procedures can be duplicated or understood by others Empirical, so decisions are based on data collected Reductive, so it investigates a small sample which can be generalized to a larger population Replicable, so others may test the findings by repeating it.

Discovering new facts or verify and test old facts. Developing new scientific tools, concepts and theories, which would facilitate to take decision. For the proper analysis of data simple statistical techniques such as percentage were use. It helps in making more generalization from the data available. The data which was collected from a sample of population was assumed to be representing entire population was interest. Demographic factors like age, income and educational background was used for the classification purpose.

Sample size

For carrying out any research or study on any subject it is very difficult to cover even 10% of the total population. Therefore the sample size has to be decided for a meaningful conclusion. For designing the sample size, it was thought proper to cover a very small percentage of population in various age groups. The method used for sample technique was non probability convenience sampling method. This method is used because it is known previously as to whether a particular person will be asked to fill the questionnaire. Convenient sampling is used because

only those people will be asked to fill the questionnaires that were easily accessible and available to the researcher. Considering the constraints, it was decided to conduct the study based on sample size of 50 retailers in specific Area. Scientific method is not adopted in this study because of financial constraints and also because of lack of time; also the basic aim of doing the research is academic; hence most convenient way is selected.

TYPES & TECHNIQUES

The study conducted is a conclusive descriptive statistical study; the researcher comes to the decision which is precise and rational. The study is conclusive because after doing the study the researcher comes to a conclusion regarding the position of the brand in the minds of respondents of different firms groups. The study is statistical because throughout the study all the similar samples are selected and group together. All the similar responses are taken together as one and their percentages are calculated. Thus, this, conclusive descriptive statistical study is

the best study for this purpose as it provides the necessary information which is utilize to arrive at a concrete decision.

TOOLS USED To know the response I have used the questionnaire method in sample survey. If one wishes to find what people think or know, the logical procedure is to ask them. This has lead marketing researchers to use the questionnaire technique for collecting data more than any other method. In this method questionnaire were distributed to the respondents and they were asked to answer the questions in the questionnaire. The questionnaires were structured no disguised Questionnaire because the questions, which the questionnaire contained, were arranged in a specific order besides every question asked were logical for the study, no question can be termed as irrelevant. The questionnaire, were non-disguised because the questionnaire were constructed so that the objective is clear to the respondent. The respondents were aware of the objective. They knew why they asked to fill the questionnaire.

LIMITATIONS OF THE STUDY

The research will be conducted in a limited area. The internet information can be irrelevant. Time will be a major constraint. The respondent will be limited so cannot be treated as a whole population. The respondent may be biased. Due to language problem it is possible that the respondents are not be able to Understand the questionnaire and can cause misleading results.

FINDING :At the question of my survey I asked with respondent that are they satisfied with MUTHOOT FINANCE than most of the respondent response me that the demand of Muthoot Finance in the market is very low and there is major problem of network so the customer are not willing to buy Muthoot Finance.

RECOMMENDATION :By the about explanation I am able to say that our product and services has unique feature and the users of our services are satisfied with services so I can say there is no any flaw in our services .We have only to promotion our product for much sale and we have to make new market strategy.

Conclusions

By above survey report I found many facts which are affecting the present scene of Muthoot Finance .And many things are present which will help us to increase sale of our product and service. By using these things we can improve our service and increase our sell. People knew about our product by name but they do not know essential features of our product by which they visit the shop for our product or services. So we have to make much promotional activities and we have to make mass campaign for making people aware with our product and services. By this way we become able to create a picture in mind of common people by which they will move on Muthoot Finance. And

only this is a way to make a new and large market for Muthoot Finance. I hope the honorable and responsible person of the company will must take interest to solve the problems coming in progress of Muthoot Finance, what I have indicated in my project.

Bibliography

Internet

WEB SITE www.google.com