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Rajagiri College Of Management And Applied Sciences

GENERAL INTRODUCTION
Credit appraisal is a skill which has to be acquired by study and supplemented by practice. Intuitive
guess work has little place in appraising the credit rating or credit needs of a corporate unit. The credit
managers of banks and Non Banking Finance Companies (NBFCs) are duty bound to accept or reject a
proposal on the basis of its viability or non - viability.
Credit appraisal is done by banks or financial institutions by obtaining credit information of the
borrowing company.
Credit information of the borrowing individual or company can be obtained by the following
sources:
Banks and Financial Institution
Bank References
Trade References
Credit Rating Agencies
Published Books: Basic information about a company may be taken from printed sources like
the Stock Exchange Year book, Corporate Path finders data base, etc.
Company Financial Reports
Press Reports
Stock Market Opinion
Charges Registered: Charges created on the assets of a company have to be registered with the
Registrar of Companies.
Personal discussion
Field/Factory Visit
Study of Financial Statements: Financial analysis determines the significant operating and
financial characteristics of a firm form accounting data and financial statements. Analysis can
be done through:
Ratio Analysis

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Trend analysis: Trend analysis can be through: Intra firm comparison that is review of the
trend of the ratios over the years within the firm and Inter firm comparison.
Reading of notes to accounts and other information: Careful reading and analysis of the
notes on accounts, one can gauge the policies of the management, performance of the company
and its future planning.
Information required to be submitted by the Company (Borrower) to the Bank or
financial institution
The company should make sure that the following information required for processing credit requests
are collected by the company for submitting it to the bank or financial institution in order to obtain the
required credit facility:
Basic background information on the company:
Required facility
Key industry dynamics:
Management: Management information system: Details of the planning, controlling and
monitoring systems which have been put in place have to given.
Financial Details of the Security to be pledged:
Present banking relationship: The bank requires full details of the present credit facilities
being enjoyed at the moment.

BASIC TYPES OF CREDIT


There are four basic types of credit. By understanding how each works, you will be able to get the most
for your money and avoid paying unnecessary charges.
1. Service credit is monthly payments for utilities such as telephone, gas, electricity, and water.
You often have to pay a deposit, and you may pay a late charge if your payment is not on time.
2. Loans let you borrow cash. Loans can be for small or large amounts and for a few days or several
years. Money can be repaid in one lump sum or in several regular payments until the amount you
borrowed and the finance charges are paid in full. Loans can be secured or unsecured.

Rajagiri College Of Management And Applied Sciences

3. Installment credit may be described as buying on time, financing through the store or the easy
payment plan. The borrower takes the goods home in exchange for a promise to pay later. Cars, major
appliances, and furniture are often purchased this way. You usually sign a contract, make a down
payment, and agree to pay the balance with a specified number of equal payments called installments.
The finance charges are included in the payments. The item you purchase may be used as security for
the loan.
4. Credit cards are issued by individual retail stores, banks, or businesses. Using a credit card can be the
equivalent of an interest-free loan--if you pay for the use of it in full at the end of each

The aim of the project was to study the credit appraisal of auto-loans in Muthoot Capital Services Ltd.
The Credit Appraisal is a holistic exercise which starts from the time a prospective borrower walks into
the branch and culminates in credit delivery and monitoring with the objective of ensuring and
maintaining the quality of lending and managing credit risk.
The process of Credit Appraisal is multidimensional and includes- Management Appraisal, Technical
Appraisal, Commercial Appraisal, Financial Appraisal and Economic Appraisal.
Management Appraisal has received lot of attention these days as it is one of the long term factors
affecting the business of the concern.
Technical Appraisal emphasizes on the technical feasibility of the venture and also finds out the
possible economic life period of the present technology.
Commercial Appraisal focuses on the commercial viability of the project .It tries to find matters
regarding demand in market, the acceptance of product in market. It also focuses on the presence of
other substitutes of the product in the market. It also focuses on the multiple scope of the product.
Financial Appraisal is done to find out whether the promoter is having the capacity to raise finance
both own equity and debt? What are the sources of margin? Will the business generate sufficient funds
to service the debt and other stakeholders? Is the capital structure optimal?
Economic Appraisal examines level of cost/ benefit and IRR (Internal Rate of Return).
The scope of credit structure is incomplete without examination of credit proposal. Credit proposal has
to be examined from the point of 6 Cs viz. Character, Capacity, Capital, Condition, Collateral and
Cash flow.

Rajagiri College Of Management And Applied Sciences

The Credit Policy of MSCL has undergone many changes to cope with the environmental changes, tap
the available opportunities, achieve their commercial objective, fulfill social obligations and adhere to
mandatory directed lending norms. The credit policy consists of fund based credit exposure.
The credit policy is studied under Coverage, Clientele, Marketing.
The organization has over the years designed and adopted the Best Practices Code. This in effect
represents the organizations philosophy towards effective Corporate Governance.
MCSL has a unique type of credit facility in which the creditor can pay their EMIs in any of the
Muthoot Fincorp branches across the globe with help of their unique HP number.

One of the important monitoring aspects in the credit portfolio is the periodic review of advance
accounts. The vital decision to deploy the organizations resources should necessarily be based upon
the thorough assessment and evaluation of the needs of the borrower. For this, a proper periodical
review of any account is inevitable.
MCSL has introduced Fair Lending Practices Code which helps the organization to provide
professional, efficient, courteous, diligent and speedy services in matter of financing. The Fair Practices
Code codifies the procedures to ensure clarity, transparency, timeliness and responsiveness in
organizations relationship with the borrower customers at all stages like marketing, processing,
sanctioning, monitoring and administration. With the kind of transformation that is taking place in this
industry and in the country, it is imperative for us to be conscious of our earnings and asset quality.
Further, as profit is reward for risk bearing capacity, the spread available in case of high quality assets
are thin. With the ushering in an era of liberalization in the economy, new opportunities are available
and for a NBFC like of our size, it is important that we realize our market share through better
understanding of these developments.
INDUSTRIAL PROFILE

Non banking finance companies form an integral part of the Indian financial system. NBFC in India are
registered companies conducting business activities similar to banks. But the main difference these two
is, NBFC cannot accept demand deposits and they cannot issue cheque to customers. A non financial
company is a company registered under the Companies act 156 and is engaged in the business of banks

Rajagiri College Of Management And Applied Sciences

and advances, acquisition of shared, bonds, debentures, securities issued by government or local
authority or other securities of like marketable nature, leasing, hire purchase, insurance business, chit
business, and foreign exchange transactions.
INDIAN NON BANKING FINANCE COMPANIES
Non-banking financial companies (NBFC) form an integral part of the Indian financial system. The
history of the NBFC industry in India is a story of under-regulated followed by over-regulation. Policy
makers have swung from one extreme position to another in their attempt to set control and them so
that they do not reduce the growth of the industry. Non Banking Financial Companies or NBFC in
India are registered companies conducting business activities similar to regular banks. Their banking
operations include making loans and advances available to consumers and businesses, acquisition of
marketable securities, leasing of hard assets like automobiles, hire purchases and insurance business.
Though they are similar to banks, they differ in couple of things. NBFCs cannot accept demand
deposits (deposits that can be withdrawn at immediate notice), they cannot issue cheque to customers
and the deposits with them are not insured by the DICGC (The India equivalent of FDIC in the US
system). Non-banking Financial Companies are financial institutions that provide banking services
without meeting the legal definition of bank. That is the non banking finance company and the banks
are not the same. In other words it does not hold a banking license. These institutions are not allowed to
take deposits from the public. None the less, all operations of these institutions are still exercised under
bank regulation. Though the NBFCs have been around for a long time, they have recently gained
popularity amongst institutional investors, since they facilitate access to credit for semi-rural and rural
India where the reach of traditional banks has been traditionally been poor. NBFCs have also had
major impact in developing small business in rural India through local presence and strong customer
relationships. Usually the loan officers in such NBFCs know the end customer or have a strong
informal understanding of the credibility of the borrower and are able to structure their loans
appropriately.
With the next wave of growth in India expected to come from the semi-rural and rural sectors, the
unique access of NBFCs to these sector puts them in a great position to benefit from this growth. As of
their attractiveness, Goldman Sachs bought 20% stake in Sriram Credit for 75 mUSD in Q1 2008.
Credit Suisse is planning to take a majority stake in Bokdia Marketing and finance as reported in May

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2008). Foreign Institutional Investors (FII) are also setting up their own NBFCs in India to offer
corporate banking and private banking operations. As an example, Society General got approval for its
NBFC launch in the country in October 2007. The French Financial Services group plans to strengthen
its brand in India through NBFCs.
A non banking financial company is a company registered under companies act of 1956 and is engaged
in the business of banks and advances , acquisition of shares, bonds, debentures, securities issued by
government or local authority or other securities of like marketable nature, leasing , hire purchases,
insurance business, chit business and foreign exchange transactions. But this does not include any
institution

whose

principal

business

is

that

of

agriculture

activity,

industrial

activity,

sale/purchase/construction of immovable property. A non banking institution which is a company and


which has its principal business of receiving deposits under any scheme or arrangements or any other
manner, or lending in any manner is also a non banking financial company.
NBFCs are doing functions to that of banks, however there are few differences:I.

A NBFC cannot accept demand deposits from the public. Demand deposits are funds deposited
at a depository institution that are payable on demand made by the depositor. That is
immediately or within a short period like current or savings accounts that are maintained in the
banks.

II.

It is not a part of payment and settlement system and as such cannot issue cheques to its
customers

III.

Deposit facility of DICGC (Deposit Insurance and Credit Guarantee Corporation) is not
available for NBFC depositors unlike in case of banks.

TYPES OF NBFCs
With effect from December 6, 2006 NBFCs registered with RBI have been classified as:
I.
II.
III.

Asset Finance Company


Investment Company
Loan Company

Rajagiri College Of Management And Applied Sciences

I.

Asset Finance Company (AFC) would be defined as any company which is a financial
institution carrying as its principal business the financing of physical asset supporting
productivity/ economic activity, such as automobiles, tractors, lathe machines, generator sets,
earth moving and material handling equipments, moving on own power and general purpose
industrial machines.

II.

Investment Company is any financial intermediary whose principal business is that of buying
and selling of securities.

III.

Loan Company means any financial institution whose principal business is that of providing
finance, whether by making loans or advances or otherwise for any activity other than its own
(excluding any equipment leasing or hire-purchase finance activity)

ORGANIZATION PROFILE
Muthoot Capital Service Ltd is a public limited Non Banking Financial Company registered with the
Reserve Bank of India. The company offer non-convertible debentures, auto loans, small and medium
enterprise loans, gold loans, lease financing and bonds. They also offer capital market services like
financial advisor services, wealth management, insurance products of leading insurance and mutual
funds companies. The company is one of the leading financial institutions in the capital market
operations. They have a strong presence in the banking and finance sector in rural and semi-urban areas
in south India. The companys shares are listed on the Bombay Stock Exchange. The companys
operations are classified into two reportable business segments, via Financing Activities (Advancing of
Gold Loan, hire purchases and hypothecation loans etc.) and Insurance Services (as a corporate agent of
HDFC Standard Life Insurance and data sharing partner of Birla SunLife Insurance) and the segment
information I reported accordingly. Muthoot Capital Service Ltd was incorporated on February 18 th
1994 as a Public Limited Company. In March 23, 1994, the company obtained the certificate of
Commencement of Business. In February 1995, the company came out with the Public Issue and their
shares were listed on the Bombay Stock Exchange. In the year 1995, the company started auto loans
business. In the ear 1998, they obtained the category A- Deposit accepting NBFC License. In the year
2001, they started Gold Loan Business. In the year 2007, the company obtained license from IRDA to

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act as a Corporate Agent. In the year 2009, they entered into agreement with Birla SunLife Insurance
Company Ltd for data sharing.

A CULTURE OF ETHICS
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 was to serve its customers without
compromising on basic principles and ethics, which it has been followed since the inception, is the
backbone of Muthoot Pappachan Group.
Starting from retail trading business and moving to financial services, MGP has been venturing into
various sectors and making its presence felt in everything it laid its hands on. MGP 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.
MGPs customer-centric thinking has been able to provide new and improved products and services
that have been wholeheartedly accepted by the customers.
MGP has grown to encompass unimaginable proportions. Currently it has over 20,000 employees,
serving over a million customers. Founded in1887, it was founders vision to expand & grow the
business across the country. Today, the vision has really transformed into reality as a pan India business
conglomerate.

-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.
MGP also believes in providing all stakeholders regular and updated report on all its dealings.

Rajagiri College Of Management And Applied Sciences

-INTEGRITY AND QUALITY


Muthoot Pappachan Group has 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, MGP makes its 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 Groups employees are its most valuable asset and one of the main reasons for the
groups unimpeded growth. The undiminished satisfaction of its employees is something the group
considers to be extremely essential. And the group is 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 up liftment of local communities. But the
Groups 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.
COMPANYs SNAPSHOT

Date of Establishment

18-2-19494

Revenue

1.6442(USD in millions)

Market Cap

1964.4305625(Rs in millions)

Corporate Address

Muthoot Towers, M G Road, Kochi- 682035


www.muthootcap.com

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Management Details

Chairperson Thomas John Muthoot


MD- Thomas George Muthoot
Directors-

A P Kurian, AP Kurian, Malathy N, Philip

Thomas, R K Nair, R Manomohanan, Syamkumar R, Thomas


Muthoot, Varun T V
Business Operation

Finance - NBFC

Background

Muthoot Capital Services Ltd (MCSL), established in


February 1994, is a Non Banking Financial Company
(NBFC) registered with the Reserve Bank of India (RBI) and
is listed on the Bombay Stock Exchange.

Established in Kerala, MCSL offers capital market solutions


that include leasing& hire purchase, vehicle loans and bonds
& deposits among others, with cost effective value-added
services for the benefit.
Financials

Total income Rs 1072.171 Million (year ending march


2013)
Net Profit Rs 217.53 Million ( year ending march 2013)

Company Secretary

Syamkumar R

Bankers

City Union bank, Dhanalakshmi Bank, Federal Bank,


Indusland Bank, Kotak Mahindra Bank, South Indian Bank,
State Bank of India, State Bank of Hyderabad.

Auditors

K Venkatachalam Aiyer & Co

ORGANISATIONAL STRUCTURE

10

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MD

CEO

ACCOUNTS
MANAGER

Accounts
OfficersAccounts
Executive

SENIOR
MANAGER

Legal Officer
Legal Assistant

FM

PRODUCT HEAD

Management Trainee

Auto loan
Department

Software Engineer

Collection
Department

HR Executive

Credit Department

Executive Assistant to
CEO

Operations
Department

Front Office

COMPANY
SECRETARY

Sales Department

Other Support Staff

11

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COMPANY HISTORY
Muthoot Capital Services (MCSL), established in February 1994, is a Non Banking Financial Company
(NBFC) registered with the Reserve Bank of India (RBI) and is listed on the Bombay Stock Exchange.
Established in Kerala, MCSL offers capital market solutions that include leasing & hire purchase,
vehicle loans and bonds & deposits among others, with cost-effective value-added services for the
benefit of their customers.
To augment its fund base, MCSL came out with a public issue in February 1995. The issue was
oversubscribed by 8.5 times -- at a time when the Indian capital market was sluggish. Almost the entire
subscription was received from the state of Kerala.
MSCL has also diversified into fund and non-fund based activities laying equal emphasis on the
corporate and non-corporate sectors of Kerala.
Promoted by the Muthoot Pappachan Group, MCSL has today emerged as one of the leading financial
institutions in the capital market operations, with its foundations dating back to the year 1939, with a
stronghold in the banking and finance sector especially in the rural and semi-urban areas in South India.
Over the last decade, MCSL has established itself as the clear service leader in the capital market. The
MCSL team comprises seasoned business professionals and we have recruited management and support
staff with years of experience in the relevant disciplines and markets in order to provide our customers
with informed, competent and responsive service and advice.
Services offered by the company:
MCSL has actively entered into the areas of capital market operations, to focus mainly on the potential
corporate clients based in Kerala. Whatever your finance requirements may be, MCSL's direct
approach is to help you work out which of the finance plans would best suit the requirements:
Inter Corporate Deposits
Leasing
Hire Purchase
12

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Bill Discounting
Disbursing Loan against Shares

KEY EXECUTIVES
Name

Designation

Thomas John Muthoot

Chairman

Thomas George Muthoot

Managing Director

Syam Kumar R

Company Secretary

A P Kurian

Non Executive & Independent Director

R K Nair

Non Executive & Independent Director

Radha Unni

Non Executive Independent Director

Thomas Muthoot

Non Independent & Non Executive Director

COMPETETORS
Sales

Current

Change

(Rs.Million)

Price

(%)

78800.97

1055.65

0.40

19.88

239508.76

1085/550

49216.32

302.10

-1.61

20.53

171823.89

356/230

Bajaj Finance

40314.20

3076.90

-0.90

19.66

154298.10 3375/1341

Sundaram Finance

22154.82

1239.35

-0.61

30.18

137696.57

1594/550

2575.71

72.35

0.00

264.35

124378.44

88/62

Reliance Capital

31820.00

502.65

0.22

28.58

123467.33

668/305

Shriram City Union

31734.99

1737.10

1.31

21.12

114483.87

1828/935

Indiabulls Fin Serv.

29292.55

272.30

0.00

10.41

85096.79

283/249

Company
Shriram Trans. Fin
Mah & Mah Finl.
Services

L&T Finance
Holdings

13

P/E Ratio

Market

52-Week

Cap.(Rs.Million) High/Low

Rajagiri College Of Management And Applied Sciences

Muthoot Finance

49278.82

189.80

-0.08

10.38

75362.71

221/102

Chola. Invest & Fin.

32617.79

462.80

-0.17

17.91

66454.14

525/225

53.40

56.25

0.00

0.00

49263.54

57/55

SKS Microfinance

5189.92

339.55

-0.82

27.68

42802.42

373/164

Edelweiss Financial

2149.09

52.40

-2.51

37.77

40747.31

67/25

21004.28

38.05

0.53

14.30

32007.93

39/14

5461.38

56.50

0.00

13.04

31757.71

60/11

720.92

221.75

-0.31

46.90

30784.93

255/70

1.62

227.00

-0.37

0.00

21829.31

259/32

17989.70

42.80

-0.93

25.12

21532.10

58/19

2.22

297.40

0.47

0.00

11021.92

300/71

204.10

17.35

-4.14

225.14

10185.49

48/16

Geojit BNP Paribas

1730.27

36.20

0.42

71.38

8343.83

45/16

Trinity Tradelink

1173.93

23.10

-1.91

0.00

6065.09

110/24

22.42

51.55

-0.77

0.00

5178.90

67/42

NA

336.80

4.89

0.00

5008.22

356/11

1493104.36

27.80

3.15

7.98

5004.28

29/15

271.06

45.00

-0.44

0.00

4650.12

57/15

271.06

45.00

-0.44

0.00

4650.12

57/15

NA

42.85

-0.58

0.00

4370.70

54/35

24.65

24.80

0.00

0.00

4344.41

0/0

Bengal & Assam

201.58

467.35

-0.38

8.04

4058.26

565/262

Fortune Financial

40.38

138.70

-4.93

136.51

3931.59

176/61

TTI Enterprise

22.34

26.70

0.19

0.00

3391.49

32/21

Summit Securities

61.79

274.00

-1.70

41.40

2987.09

317/64

Microsec Finl. Serv

23.23

82.50

0.00

339.50

2624.37

100/22

India Securities

Manappuram
Finance
PTC India Fin. Serv
Motilal Oswal Fin
Mangalam Indl. Fin.
SREI Infra Fin
Premier Capital Serv
Kailash Auto Fin.

Alps Motor Finance


Golden Legand
Lease
PNB Gilts
Mishka Fin &
Trading
Mishka Fin &
Trading
Sam Leaseco
Seagull Leafin

14

Rajagiri College Of Management And Applied Sciences

Muthoot Capital

1582.30

203.40

0.17

11.58

2536.92

276/73

40.55

40.60

-4.92

0.00

2219.03

99/25

1738.10

107.30

0.00

0.00

2174.30

108/106

Mahanivesh India

0.68

211.00

4.98

0.00

2110.00

214/50

Database Finance

44.65

38.25

0.00

0.00

2039.99

0/0

0.00

197.20

0.00

0.00

1972.00

293/269

1551.06

107.00

-2.68

14.72

1965.19

119/70

5.93

22.95

0.22

945.49

1853.16

25/7

Banas Finance

56.20

15.65

1.95

230.61

1780.34

64/12

Comfort Fincap

28.05

139.50

0.36

69.92

1513.76

383/136

Arnold Holdings

74.70

292.75

-0.10

148.98

1467.41

350/186

RLFL

3.98

27.55

-0.72

0.00

1409.51

39/18

Finkurve Financial

3.03

14.45

0.00

0.00

1395.87

22/6

708.21

53.05

-3.11

0.00

1296.42

57/13

NA

220.00

4.81

442.18

1202.72

265/72

4.50

24.60

0.00

0.00

1018.46

25/24

Serv
KDJ Holidays.
Resort
GE Capital

Kojam
Fininvest[Mer]
Intec Capital
First Fin Service

EmkayGlobal
Finl.Ser
Pro Fin Capital Serv
TVS Finance

BUSINESS IN MUTHOOT GROUP

MUTHOOT FINCORP THE FINANCIAL LEGACY OF MUTHOOT PAPPACHAN GROUP


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 3600 branches pan India and
an

average

of

40,000
15

customers

day.

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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 also has a microfinance product named the Muthoot Mahila Mitra, which felicitates the
upliftment of the weaker sections of society by providing small loans to female clients engaged in small
income generating activities. The product is based on the Grameen model of lending; it is designed to
promote entrepreneurship among female clients and to promote inclusive growth of clients who are at
the bottom of the pyramid.
MFL had revenue of Rs. 1,975.32 Crores with PAT Profit after Tax (PAT) of Rs. 63.27 Crores for
2013-2014 and net worth of Rs 1249.85 Crores
MFL's short term instruments/debts are rated at A1 and long term instruments/debt at a negative by the
leading rating agency CRISIL.
www.muthootfincorp.com
MUTHOOT CAPITAL SERVICES LTD: CATERING TO ALL PARTS OF THE COUNTRY.

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. 158.76 Crores and PAT of Rs. 22.21 Crores for half
year ended September 30, 2014.
MCSL's short term instruments/debts are rated at CRISIL A1, long term instruments/debt at CRISIL
A/Negative, fixed deposit programme at FA/Negative by the leading rating agency CRISIL.
www.muthootcap.com
MUTHOOT HOUSING FINANCE COMPANY LTD.: YOUR KEYS TO HOME FINANCE

16

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When it comes to home finance for the lower middle and lower income group, the Muthoot Housing
Finance Company (MHFCL) has the keys to the home they dream of.
MHFCL is headquartered in Mumbai with operations presently in Maharashtra, Gujarat, Madhya
Pradesh, Kerala, Tamil Nadu, Karnataka and Uttar Pradesh.
MHFCL mainly caters to the housing finance needs of customers whose income ranges from Rs.
10,000 to Rs. 30,000- per month and offers loans ranging from Rs. 3 lakhs to 15 lakhs, up-to 80% of
the property value with a loan repayment period of upto 15 years. The Company offers loans for the
purchase of ready property, under-construction house / flats, for self construction on owned plot of land
and for home extension.
MHFCL is a subsidiary of the Group's Flagship Company, Muthoot Fincorp Limited and is registered
with the National Housing Bank
MHFCL's long term debts are rated at BBB-by the leading rating agency CRISIL.

MUTHOOT EXIM PRECIOUS METALS


Muthoot Exim - Precious Metals division is a newly formed vertical of the Muthoot Pappachan Group.
It specialises in developing and marketing of precious metals related products and services.
Swarnavarsham Jewellery, a unique product would allow customers to purchase, in an affordable
manner, hallmarked gold jewelry of low ticket sizes (2 to 8 grams) in tamper proof packaging, and a
first of its kind in India.
THE BEST IN WHEELS: MUTHOOT AUTOMOTIVE

The Automotive division of Muthoot Pappachan Group has tie ups with leading auto brands for 2
wheeler & 4 wheeler dealerships. Starting with the Yamaha dealership in 1992, the automotive division
has come a long way in establishing itself as a dominant player in the automobile retailing space
Muthoot Yamaha

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Rajagiri College Of Management And Applied Sciences

One of India's leading business houses and one of the world's leading motorcycle brands! Definitely, a
partnership worth talking about, Started in 1992, The Company has three outlets in Trivandrum city,
with the entire range of Yamaha bikes showcased on the premises.
www.muthootyamaha.com
Muthoot Honda
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 partnership, the company
was able to introduce innovative customer care standards such as 7am to 7pm service and 24/7 key
drop facility. MPG's Honda 2 Wheeler showrooms are at Cochin, Kolenchery, Adimaly and Kattappana
in

Kerala

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, Honda Amaze and the
Honda Accord.
www.muthoothonda.com
Muthoot JLR
Power, Speed and Status attributes that symbolize the Jaguar & Land Rover and Muthoot Pappachan
Group (MPG), which is what led to it entering into a partnership with these brands. The aim was to
develop a showroom and service centre that would surpass international standards. In its first stage
itself, the Kochi centre covered the entire Kerala market and service centres have been established in
other key cities in Kerala.
Muthoot Ford
In line with our commitment to make world class products and services available to our customers, the
Muthoot Pappachan Group recently entered into a partnership with the renowned Ford Motors. As a
result, we will now be offering cars from the Ford stable at our resplendent showroom in Calicut,
Kerala.
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Rajagiri College Of Management And Applied Sciences

Muthoot Vespa
In another major automotive breakthrough, the Muthoot Pappachan Group has acquired the rights to
bring the Iconic Vespa brand to our consumers in Kerala through our showrooms in Kollam as well as
Alleppey.

MGP HOSPITALITY
The Muthoot Pappachan Group's hospitality venture - MPG Hotels and Infrastructure Ventures Private
Limited is a proactive investor and developer of hospitality assets in the Indian sub-continent. MPG
Hotels and Infrastructure Ventures Private Limited has formed strategic alliances with leading
international brands and service providers such as Indian Hotels Company Limited (Taj) and Hilton
Worldwide for the operation of its hotel units.
Hilton Garden Inn, Trivandrum.
Hilton Garden Inn Trivandrum strategically located in the city center; is near prime government
institutions and commercial establishments, a 20-minute drive from the airport and 12 kilometers from
the IT Technopark at Kazhakkottam. Owned by Muthoot Hotels & Infrastructure Ventures (P) Ltd. and
managed by Hilton Worldwide, Hilton Garden Inn Trivandrum features 134 guest rooms and suites,
Garden Grille all-day restaurant, a bar, outdoor swimming pool, Precor certified 24-hour fitness
centre and 3,600 square feet of conference and events space that can accommodate up to 500 people.
Vivanta by Taj, Kovalam
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. Its seafood restaurant "Bait" was recently rated the best restaurant in Kerala. Click to
view The Bait cafe at its serene best.
Sky chef: Culinary Delights in the Sky
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Rajagiri College Of Management And Applied Sciences

After conquering the ground, how could the skies be far behind? That's the point MPG wished to make
with the Muthoot Sky chef.
Located in Trivandrum, the Sky chef 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 Sky chef serves a wide variety of airlines, such as Air India, Indian Airlines and Qatar
Airways.

Other

clients

include

charters

and

VVIP

flights

transiting

Trivandrum.

www.muthootskychef.com
Villa Maya: A fabled kitchen awaits you
MPG's Villa Maya offers a unique culinary experience that is bound to leave you craving for more.
Located in Trivandrum, Villa Maya, 5 star accredited restaurant, indulges in flavors from across the
globe and allows you to soak in an environment of grace and tranquility - perfect for an elegant and
enchanting dining experience.
At Villa Maya, you will discover the art of surrendering to the immediacy of your senses.
www.villamaya.in
MGP REAL ESTATES
MPG Hotels and Infrastructure Ventures (P) Ltd 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. The real estate
division has also residential properties across cities in Kerala. The MPG Maple is Luxury Apartments
nearing completion and open for bookings. The division also owns land banks in prime locations in
various parts of the country.

www.mpg-realestate.com
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Rajagiri College Of Management And Applied Sciences

MUTHOOT TECHNOPOLIS - A TRENDSETTER IN TECHNOLOGY


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.
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

Special

Economic

Zone

in

India.

http://www.muthootechnopolis.com

MUTHOOT ESTATE INVESTMENTS


Muthoot Estate Investments, a firm within the group is engaged in real estate and hospitality
investments, with branches spread across Kerala. It aims to provide excellent customer service to its
dedicated clientele.

ITS INFRASTRUCTURE
Muthoot Pappachan Technologies
Information Technology is transforming our world at a stunning pace. Simplifying life in several ways,
IT has emerged as the fulcrum around which the whole world is rotating. Muthoot Pappachan Group
has already made a foray into the exciting world of IT with Muthoot Pappachan Technologies Limited,
(MPT). Launched at Technopark in Trivandrum, the primary objective of the company is to provide
cutting edge IT support to the group companies. But as it builds on its expertise, the company wants to
showcase its skills to the wider world, serving outside customers as well. Very soon, MPT will offer a
wide portfolio of services in the IT space, hoping to emerge as a key player in this sector. With the right
alliances and partnerships, the company intends to provide a variety of services including Data
warehousing & Business Intelligence, Cloud solutions, Virtualization and Green Technologies.

CONSERVING THE GIFTS OF NATURE: MUTHOOT ALTERNATE ENERGY RESOURCES


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.
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Rajagiri College Of Management And Applied Sciences

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.

http://www.muthoot.com/energy

HEALTHCARE
Muthoot Life brigade
The Muthoot Pappachan Group entered the healthcare arena with Muthoot Life Brigade Specialty
Hospital and Orthopedic Centre in Kottayam, Kerala. This hospital specialises in orthopaedic treatment
and also has a dedicated Diabetes Centre. Muthoot Life Brigade is a 24 x 7 Trauma Care centre that has
emergency operating capabilities, on-site trauma-related implant stores and on-site availability of
critical equipment that ensures immediate and superior patient care by a world-class team. Supporting
departments are General Medicine, General Surgery, Paediatrics, Dentistry and ENT.

GLOBAL SERVICES
Muthoot Pappachan Universal
The Muthoot Pappachan Group recognizes the present needs and future aspirations of the Global Indian
and through Muthoot Universal we now have the entity to plan and execute all their wants and needs
back in India.
Muthoot Universal's teams of dedicated professionals and seamless operations with the other MPG
Group of companies make us a one stop solution for the global Indian. Muthoot Universal's global
operations are managed from its Head Office in Dubai and they have definitive plans to expanding their
reach through a direct presence at all geographies having a significant Indian diaspora.

OBJECTIVES OF THE STUDY


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Rajagiri College Of Management And Applied Sciences

GENERAL OBJECTIVE: The primary objective of the study is to understand the credit appraisal of auto-loans in MCSL

SPECIFIC OBJECTIVE:-

To understand the process by which MCSL appraises the creditworthiness of the prospective
borrowers
Classifications of credits in MCSL.
Factors taken to determine the credit-ness of a customer.
Finance process and accounting of credit system.

RESEARCH METHODOLOGY
During the study, the researcher worked under the guidance of Credit Appraisal Team. The researcher
worked on the existing and past proposals for credit facilities- analyzing the financial statements,
assessment of Working capital requirement and application of project appraisal techniques in case of
appraising term loans. The researcher also interacted with the commercial borrowers of the George
Town branch, Chennai which gave an insight about their perception about the branch and the expected
demand of credit in the near future. The branch performance has been evaluated on 4 parametersManaging the account, Handling Queries, Financial guidance and Staff of the branch.
Data collection Both primary and secondary data was collected for the purpose of this study. Primary
data was collected from the commercial borrowers and the senior managers, Secondary data was
collected from official website, circulars and other records; data was also collected from text books and
other websites for theoretical knowledge.
Method of collecting Data Primary data was collected through Structured Questionnaire/Interview
method from the commercial borrowers of the branch. Primary data was also collected directly from the
senior managers of Credit Appraisal Team through Unstructured Direct Communication. Number of
borrowers surveyed Census method was used for the purpose of 2nd part of the study. All the 26
commercial borrowers of the branch were surveyed for the purpose of the study.
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Rajagiri College Of Management And Applied Sciences

Review of Literature Machiko Nissanke, Ernest Aryeetey in their book:


Financial Integration and Development explained about the loan administration and risk reduction by
formal lenders (i.e. banks), Credit Analysis Standards, Increase Project equity requirements, Loan
screening of banks and assessing creditworthiness during screening. Banks consider return on project as
an important indicator for appraising the projects.

i.

A research was conducted by Mr. V.M.V.Subba Rao, B.Com. FCA, DISA (ICA), MICA on
Monitoring of Advances -- A New Look. The researcher gave two views on the
commencement of monitoring process-(i)Narrow view- the monitoring starts only after the
advance is disbursed, (ii)Broad view- at the time of conducting credit investigation of the
borrower and continue in all other stages of credit cycle. Mritunjay Kumar Pandey conducted
a study on Financial Performance Apprasial of TISCO, the paper of which was published in
Accounting World, September 2008, The ICFAI University Press.

The Objectives of the study was to check the profitability and efficiency of the firm in the near future,
to give brief summery about the ratios which affect the organizations financial structure and to point
out the relationship between ratios and reasons behind it. Eleanor Charles in his paper Appraising
the Role of the Appraiser Published: September 3, 1995, talked about the centralized function of the
appraiser to grant the loan and virtually every loan applicant will have to rely on an appraisal to set a
value on the property against which the loan is to be made.

Discussions and analysis Credit Appraisal process at MSCL


Credit Appraisal at MSCL can be categorized under 4 heads-

I.

SALES DEPARTMENT

II.

CREDIT DEPARTMENT

III.

OPERATIONS DEPARTMENT

IV.

COLLECTION DEPARTMENT
RISK DEPARTMENT

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Rajagiri College Of Management And Applied Sciences

SALES DEPARTMENT

(1) Executive
A MSCL executive in very dealer house across the state
Executive deals with the customers after they opt for financing mode of payment.
Executives calls the telecaller for special cases of borrowers
Gives loan application form and collects the required informations.

CREDIT DEPARTMENT

(1)Receipt of proposal from the borrower

The borrower can be


Muthoot Preferred Customer

The proposal is made for Auto-Loan

(2)Modes of funding
No Docs funding
Asset Based Funding
Income Based Funding

(3)Forms and statements to be submitted by the borrower


The following documents are to be submitted by the borrower to avail a credit facility-

Essential documents
ID proof
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Rajagiri College Of Management And Applied Sciences

Address
Bank statement (atleast six transactions)
Photo proof (both borrowers and guarantor/nominee)

Added documents
Added documents asked by company ( in case of No Docs funding)
Latest land /building tax receipt ( in case of Asset Based Funding)
Salary statement/ salary credited to bank statement or pay slip ( in case of Income Based
Funding)
Latest Income Tax Receipt (ITR) ( in case of self employed persons)

(4) Credit department checks


I.

Ist stage
Evaluation of soft copies submitted by borrower

II.

IInd stage
CIBIL CHECK Previous credit history of the customer.
First time user result will be NO HIT

III.

IIIrd stage
Sends the information to Field Investigation (FI team) for physical investigation of documents

IV.

FI goes for investigation


FI results come within 24 hours
FI REPORT

Applicant details

Applicant job details

Guarantor details

Residence details
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Rajagiri College Of Management And Applied Sciences

Income and liability details

Neighbourship details

END user ( who will be the user of vehicle)

Final status- APPROVED / REJECTED

CREDIT RISK
Credit risk means the possibility of loss associated with diminution in the credit quality of borrowers.
In a banks or financial institutes portfolio, losses stem from outright default due to inability or
unwillingness of a customer or counter party to meet, commitments in relation to lending, trading,
settlement and other financial transactions.

CREDIT RISK MANAGEMENT SYSTEM IN MCSL


A comprehensive credit risk management system is adopted by the organization to meet its risk.
Since the organization is limited to auto-loans to 2 wheelers only, following are the steps taken to
tackle risk.
Identification and Detection of Credit Risk
Enquiry of Credit Risk
Reporting and analysis of rating related data
Execution of steps against the risk

CREDIT RISK IDENTIFICATION AND DETECTION


In order to take informed credit decisions, it is necessary to identify the areas of credit risk in each
borrower. Risk Management Division, in coordination with Credit and Collection department is
involved in disbursal of credit. Risk management departments of identifies risks related areas and
develops necessary tools and processes to measure and monitor the risk.

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LENDER TASK
Identify the risk factors, and
Mitigate the risk
RISK ARISES IN CREDIT:
In the business world, Risk arises out of
Deficiencies / lapses on the part of the management (Internal factor)
Uncertainties in the business/market environment (External factor)
Uncertainties in the industrial environment (External factor)
Weakness in the financial position (Internal factor)

ENQUIRY OF CREDIT RISK


Once the risk is detected by the risk department, an enquiry system is set up to investigate the issue.
The investigation department is a combined by fraud department and vigilance department. They go for
a thorough investigation of the issue and get the report of the risk in detail. The risk area is located or
the risk factor is enquired upon. The defaulter, whether it is the customer, employee or any other third
party, is identified and action is taken by the management.

REPORTING AND ANALYSIS OF RATING RELATED DATA


The enquiry report is then again evaluated by the top management and the corrective action is taken
against the issue.

EXECUTION OF STEPS AGAINST THE RISK


The final step in risk management is taking actions against the risk to avoid its occurrence in future.
Following are the actions generally taken: Decrease in LTV in a particular area or for a particular period of time.
Close or stopping of sales in a particular area.
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Rajagiri College Of Management And Applied Sciences

Action against the person who has made default.


Changes in credit policy with regard to risk.

CONTROLS
The Credit Risk Management process encompasses the following management Control techniques
which help in mitigating the adverse impacts of credit risk in its credit portfolio.
i. Credit Approving Authority
a. Credit Department
b. Field investigation
ii. Risk Based Pricing
a. Fixing on loan amount
b. Sanctioning the amount

iii. Portfolio Management


iv. Loan Review Mechanism
v. Legal documentation
vi. Preventive Monitoring System
vii. Others
a. Use of CIBIL data and RBI defaulters list
b. Tele calling as reminders

CREDIT & RISK


Go hand in hand.
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They are like twin brothers.


They can be compared to two sides of the same coin.
All credit proposals have some inherent risks, excepting the almost negligible volume of
lending against liquid collaterals with adequate margin.

POST SANCTION FOLLOW UP OF LOANS

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