SVKM’s Narsee Monjee Institute of Management Studies – Hyderabad

 

 

Post Graduate Diploma in Management 2017-19

 

 

 

Industry Analysis – Finan?ial Servi?es Industry

?ompany Name – Muthoot Finan?e Servi?es

 

 

 

 

Guided By – Dr. Kavita Kulkarni                             Created By –
Shubham Patil

Assistant Professor (Marketing)                                     SAP ID –
80303170087

 

Table
Of Contents:

 

Serial No.

Parti?ulars

Page No.

1

Key Obje?tives

3

2

Introdu?tion

4

3

Market Size & ?hara?teristi?s

5

4

Break-up of Finan?ial Servi?es

6

5

Company Profile & Produ?t
Offerings

8

6

Competitor Analysis

11

7

Re?ent Trends & Road Ahead

13

 

 

 

Key
Obje?tives

 

“Analysis is the starting point of strategi?
thinking” – Keni?hi Ohmae

 

In todays’s ?ompetitive era the word ‘Analysis and
Strategy’ is very ?ru?ial for all business organization. Organizations have
started realizing that ?ustomer ?entri? and aggressive marketing strategies
play vital role to be?ome su??essful leaders.This ne?essitates managers to make
a detailed diagnosis of a ?ompany’s immediate industry and ?ompetitive
environment. Without per?eptive understanding of the strategi? aspe?ts of a ?ompany’s
external and internal environments, the ?han?es are greatly in?reased, that the
managers will ?on?o?t a strategi? game plan that doesn’t fit the situation
well, that holds little prospe?t for building ?ompetitive advantage , and that
is unlikely to boost ?ompany’s performan?e.

Managers are not prepared to de?ide on a long term dire?tion
or a strategy until they have a keen understanding of the industry.

The obje?tive of this report is to do a ?omprehensive
analysis of the Finan?ial Servi?es industry with major fo?us on the ?ompetition
in the NBFC se?tors.

 

INTRODUCTION

 

Finan?ial servi?es are the e?onomi? servi?es
provided by the finan?e industry, whi?h en?ompasses a broad range of businesses
that manage money, in?luding ?redit unions, banks, ?redit-?ard ?ompanies,
insuran?e ?ompanies, a??ountan?y ?ompanies, ?onsumer-finan?e ?ompanies, sto?k
brokerages, investment funds, individual managers and some government-sponsored
enterprises. ?ompanies in the finan?ial servi?es industry are in
the business of managing money.

                              Globally, the
finan?ial servi?es industry leads the world in terms of earnings and equity market
?apitalization. ?ommer?ial banking servi?es form the foundation of the finan?ial
servi?es group. The operations of a ?ommer?ial bank in?lude the safekeeping of
deposits, issuan?e of ?redit and debit ?ards, and the lending of money.
Investment banking is the se?ond pillar of finan?ial servi?es group. These
banks underwrite deals, se?ure a??ess to ?apital markets, offer wealth
management and tax advi?e, advise ?ompanies on mergers and a?quisitions, and fa?ilitate
the buying and selling of sto?ks and bonds. Hedge funds, mutual funds and
investment partnerships invest money in the finan?ial markets and ?olle?t
management fees in the pro?ess. These organizations require ?ustody servi?es
for trading and servi?ing their portfolios, as well as legal, ?omplian?e and
marketing advi?e.

 

 

Market
Size & Chara?teristi?s

 

Introdu?tion:

India has a diversified finan?ial se?tor undergoing
rapid expansion, both in terms of strong growth of existing finan?ial servi?es
firms and new entities entering the market. As mentioned earlier this se?tor ?omprises
of ?ommer?ial banks, insuran?e ?ompanies, non-banking finan?ial ?ompanies (NBFC’S),
pension funds, mutual funds and other finan?ial entities. The finan?ial se?tor
of India is pre-dominantly a banking se?tor with ?ommer?ial banks a??ounting
for 64 per?ent of the total assets held by the finan?ial system.

The finan?ial servi?es industry usually en?ompasses ?ompanies
in one or more of the following lines of business:

·        
Banking

·        
Insuran?e

·        
Se?urities brokerage or finan?ial
advisory servi?es

·        
Investment banking

·        
Se?urities trading

·        
Investment management or money
management

·        
Se?urities analysis

·        
Finan?ial planning

 

The Government of India has introdu?ed several
reforms to liberalize, regulate and enhan?e this industry. The Government and
Reserve Bank of India (RBI) have taken various measures to fa?ilitate easy a??ess
to finan?e for Mi?ro, Small and Medium Enterprises (MSMEs). These measures in?lude
laun?hing ?redit Guarantee Fund S?heme for Mi?ro and Small Enterprises, issuing
guideline to banks regarding ?ollateral requirements and setting up a Mi?ro
Units Development and Refinan?e Agen?y (MUDRA). With a ?ombined push by both
government and private se?tor, India is undoubtedly one of the world’s most
vibrant ?apital markets.

 

 

 

 

 

 

 

 

Break-up
Of Finan?ial Servi?es

 

 

 

 

 

 

 

 

NBFC’s
Growing Prominen?e:

 

·        
Traditionally, India has had a
bank-dominated finan?ial se?tor. Even so, there have always been NBFCs. These
were in the early times small family-run businesses for deposits a??eptan?e and
lending a?tivities.

·        
The NBFC se?tor ?overs 14 per?ent of
that of s?heduled ?ommer?ial banks. However there is no denying that the se?tor
has grown tremendously over the years in terms of size, form & ?omplexity.

·        
NBFCs being finan?ial intermediaries are
engaged in the a?tivity of bringing the saving and the investing ?ommunity
together.

·        
NBFCs bring the mu?h needed diversity to
the finan?ial se?tor thereby diversifying the risks, in?reasing liquidity in
the markets thereby promoting finan?ial stability and bringing effi?ien?y to
the finan?ial se?tor.

·        
The total number of NBFCs as on Mar?h
31, 2016 is 12,029 of whi?h deposit taking NBFCs are 241 and non-deposit taking
NBFCs with asset size of Rs.100 ?rore and above are 465. This shows that this
sub-se?tor of the finan?ial servi?es industry is on a growth ?urve.

 

 

Company
Profile & Produ?t Offerings

 

Muthoot
Finan?e:

·        
Muthoot Finan?e Limited is a gold finan?ing
?ompany. The ?ompany is a non-banking finan?ial ?ompany (NBFC), whi?h is
engaged in providing loan (finan?ing) against ?ollateral of gold jewelry.

·        
The ?ompany operates through two
segments: Finan?ing and Power Generation.

·        
The ?ompany offers gold loans, foreign
inward money transfer servi?es, foreign ex?hange servi?es, insuran?e broking,
home loans, personal loans, ?olle?tion servi?es, mi?rofinan?e, wind mill power
generation, white label automated teller ma?hine, instant money transfer servi?es
and domesti? money transfer servi?es.

·        
The ?ompany has a network of
approximately 4,294 bran?hes all over India. In Sri Lanka, the ?ompany offers ?orporate
loans, mortgage loans, fa?toring, business loan and short term loans, among
others.

·        
?urrently the sto?k pri?e of the ?ompany
is 419.80 INR.

 

Produ?ts
Offered:

1)      Gold
Loan:

·        
Muthoot Finan?e’s Gold Loan portfolio is
the largest in India as well as around the globe.

·        
More than 2, 53,000 people avail this
servi?e of Gold Loan every day.

·        
This servi?e offered by Muthoot Finan?e
is rapidly growing around the ?ountry.

·        
Among all its ?ompetitors, Muthoot Finan?e
has gained the highest ?ustomer ?ommitment and loyalty be?ause of its fast and
se?ure loan disbursal pro?ess and brand value.

 

2)      Foreign
Ex?hange Servi?es:

·        
Muthoot Finan?e deals in all the major ?urren?ies
around the world in?luding Euro, US Dollar, British Pound and Japanese Yen.

·        
This servi?e has a ni?he ?ustomer base
in?luding avid travellers.

·        
?ompany also allows ?ustomers to obtain
Travel ?urren?y ?ards from its outlets spread all a?ross India.

·        
Muthoot Finan?e also allows ?ustomers to
send money abroad for Edu?ation, Immigration, Medi?al Servi?es et?.

 

 

3)      Mutual
Funds:

·        
?ompany offers variety of s?hemes
depending upon the ?ustomer’s investment needs and his appetite of taking
market risks.

·        
Some of the s?hemes offered are Equity
Linked S?hemes, Debt Funds, Tax Saving S?heme, Balan?e Fund, Systemati?
Investment Plan (SIP) et?.

 

4)      Personal
Loan:

·        
Muthoot Finan?e also provides Personal
Loans starting from 50,000.

·        
They offer attra?tive interest rates as ?ompared
to PSU’s or Private ?ommer?ial Banks.

 

5)      Gold
?oin:

·        
Muthoot Finan?e helps the investor to
invest their fund in the best possible form, that is, gold and silver ?oins
with best-in-?lass quality.

·        
It is one of the rare finan?ial ?ompanies
that deal in silver ?oins also.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Among all the Servi?es provided by Muthoot Finan?e,
Gold Loans and Personal Loans are the major ?ontributors to its revenue.
Revenue has shown a ?onsiderable in?rease over the last few years. This ?an be ?learly
seen in the graph representation shown below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Competitor
Analysis

Top
5 NBFC’s of the  Indian Finan?ial Servi?es
Market:

1.      Bajaj
Finserv:

·        
Bajaj Finserv is the largest NBFC in
India with a Market ?ap. Of Rs.78,173.53 ?rores.

·        
However it does not deal with Gold Loans
as mu?h as Muthoot Finan?e or Mannapuram Finan?e.

 

2.      AB
?apital:

·        
AB ?apital is the se?ond largest NBFC in
India with a Market ?ap. Of Rs.38,196.74 ?rores.

·        
Similarly like Bajaj Finserv, AB ?apital
does not deal with Gold Loans as mu?h as Muthoot Finan?e.

 

3.      L
& T Finan?e:

·        
L & T Finan?e has a Market ?ap. Of
Rs.32,451.16 ?rores.

 

4.      Bajaj
Holdings:

·        
Bajaj Holdings has a Market ?ap. Of
31,353.61 ?rores.

 

5.      Muthoot
Finan?e:

·        
Muthoot Finan?e is the 5th
largest NBFC in India with a Market ?ap. Of Rs.16,788.39 ?rores.

 

Top
?ompetitor Of Muthoot Finan?e:

·        
The biggest ?ompetitor of Muthoot Finan?e
is a NBFC ?alled Mannapuram Finan?e. Mannapuram also deals with Gold Loans as
its primary o??upation.

·        
Shares of gold loan ?ompanies Muthoot
Finan?e and Manappuram Finan?e have outperformed the broader indi?es over the
last few months.

·        
Muthoot Finan?e reported 61 per ?ent in?rease
in its profit for the January-Mar?h quarter at Rs. 265 ?rore while Manappuram
Finan?e’s net profit surged 86 per ?ent to Rs. 131 ?rore.

·        
Improved ?olle?tion me?hanism and an in?rease
in profitability helped these ?ompanies post strong results. In?rease in the
gold pri?es also a?ted as a sentimental boost for their business.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Re?ent
Trends & Road Ahead

 

·        
India is today one of the most vibrant
global e?onomies, on the ba?k of robust banking and insuran?e se?tors. The
relaxation of foreign investment rules has re?eived a positive response from
the insuran?e se?tor, with many ?ompanies announ?ing plans to in?rease their
stakes in joint ventures with Indian ?ompanies.

·        
Over the ?oming quarters there ?ould be
a series of joint venture deals between global insuran?e giants and lo?al
players.

·        
The Asso?iation of Mutual Funds in India
(AMFI) is targeting nearly five fold growth in assets under management (AUM) to
Rs 95 lakh ?rore (US$ 1.47 trillion) and a more than three times growth in
investor a??ounts to 130 million by 2025.