CHAPTER 1 INTRODUCTION As per the VTU ordinance students has to submit the project report during the fourth semester of the MBA program
CHAPTER 1
INTRODUCTION
As per the VTU ordinance students has to submit the project report during the fourth semester of the MBA program, here based on the specialization, students’ needs to be ascertain the definite problem in an individual organization and conduct the research on that by scrutinizing the financial data as well as arranging the questionnaire. The basic objective of this project work is in order to evaluate the issues and find the solution for the same. It also assistance to the students to understand by functioning in the organization. It disclosures the core as well as outward operation of a particular organization, so that students can learn the basic business practices as well as it support them to implements theoretical knowledge in practical way. In addition student will exposes them to the specific organization culture and assist them to learn organization disciplinary procedure. This project report is focuses on cash management system in NBFCs.
This project report was undertaken at Mahindra Finance Mangalore from 15 January 2018 to 24th March 2018. Report brief about the cash management system in Mahindra Finance by verifying the various years financial reports of the company. The information collected to this work is from direct interview, as well as ancillary statistics are collected by denoting annual report and company websites. Cash management system has evaluated by applying the different ratios as well as by estimating the cash flow statements of the company.
1.1 Industry profile
Non-Banking Financial Corporation or Asset Management Companies is one of the dominating and growing industry not only India but also worldwide. NBFCs are quietly different in process as compared with the traditional core banking transaction, where it satisfies the various needs of customer where a bank fails to do. Generally NBFCs do the banking transaction but it doesn’t comes under the finance parameter act more over it comes under the company’s act 1956. It not only plays major role in common people life but also contributes the economic development of the country. In India NBFCs working according to the RBI regulations, for the purpose of operation RBI notified the various norms in order to healthy practices and smooth function.
1.1.1 Antiquity of NBFCs in India
NBFCs in India formulated based on the recommendation various committee, following are the two committees which plays major role in Indian NBFCs framework.
James S. Raj Committee
This commission determined on the accomplishments which related to the chit endowment and additional non-banking activities.
Chakravarty Committee
Chakravarty Committee studied the financial and non-financial system which effects credit system of Indian economy.
1.1.2 Forms of NBFC in India
Asset Finance Company
Asset Finance Companies provides the financial assistances to purchase tangible asset like equipment’s, machinery and vehicles etc.
Investment Company
Investment Company is another part of NBFCs business where it deals with securities on behalf of its customers.
Loan Firm
Loan Corporation is one form of NBFCs, it carries business like advances and providing the financial assistances to the various activities but it differs from the asset investment company.
Infrastructure Finance Company
Infrastructure finance company mainly emphases on the invest in the infrastructure and its related activities.
Infrastructure Obligation Reserve: Non-Banking Financial Corporation
These establishments run the monetary provision to the long term infrastructure developments. Only infrastructure Finance Companies can involve debt funding.
NBFC-Factors
NBFCs also do the activities like factoring where it provides the debt on the center of certain documentation.
Golden Advance NBFCs in India
Now a days golden credit is one portion of NBFCs where it does lots of transaction in gold like granting the advances for poor people by taking into the gold.
Residuary Non-Banking Companies
These are the companies which are mainly concentrates on the getting deposits under the several schemes. These companies follow the RBI directives about the investments activities.
1.1.3 Market size
There is a huge potential to the NBFCs in India, the market size of the NBFCs or mutual fund business increasing continuously also foreign investment happening in a huge way. Nearly 30 to 40 percent increase in the industry every year. In India NBFCs threatening to the public sector bank by in taking their market share, NBFCs providing additional loan and advance to the general public as compared to the public bank. The supreme market portion is nearly 49% it’s because of today NBFCs more focusing on the customer oriented financial products and quick delivery of services. After LPG (liberalization, privatization and Globalization) the NBFCs in India a drastic development had been happened, the regime and norms which has been implemented by the government before introducing LPG was substantial so that there was lot of restriction within an industry for advancement.
1.1.4 Problem faced by NBFC in India
? The main problem is regulatory norms which are issued by the RBI, where NBFC cannot act as bank and restricted to do several banking activities.
? The competition which is faced by the NBFCs recent is epic because of all private and public sector banks providing similar service which NBFCs provides.
? Due to the increase in the lending NBFCs facing NPA (Non-Performing Assets) Problems.
? Cost of the fund increases now days is another problem faced by the NBFC.
1.2 Company Profile
1.2.1 Promoters of Mahindra Finance
Almost 51.9% stake of Mahindra finance hold by the its promoter in that 51.2% portion goes to the its parent company Mahindra and Mahindra Ltd and remaining 0.7% hold by ESOP.
1.2.2 Vision
To be a leading financial services provider in semi-urban and rural India.
1.2.3 Mission
To transform rural lives and drive positive change in the communities.
1.2.4 Product and Service profile
a) Personal loans
Mahindra finance provides personal loans fir various purpose some of are:
? Wedding
? Children’s education
? Medical Treatment
? Working capital
b) Vehicle Financing
Following are the list of the names for which Mahindra finance provides financial aids.
? Auto and Utility Vehicles
? Tractors
? Cars
? Commercial Vehicles
? Construction Equipment
c) Pr¬e-Owned vehicle Financing
? Cars
? Multi Utility Vehicles
? Tractors
? Commercial vehicle
d) Insurance broking
? Retail customers
? Corporates
e) SME Financing
? Project Finance
? Equipment Finance and Working Capital Finance
f) Housing Finance
? New House
? House Renovation and improvements
g) Investments and Advisory
? Investment Products
– Fixed Deposits
? Advisory Services
– Investment Planning
h) Mutual Fund Schemes
? Liquid Scheme
? Equity Linked Saving Scheme
? Equity Oriented Balanced Scheme
? Short Term Debt Scheme
1.2.5 Area of operation
Mahindra finance operates in 27 states and 4 union territories with 1181 offices.
1.2.6 Infrastructure Facilities
? Company has the entire basic infrastructure which required performing the day to day operation (like Computers, CC TV etc.)
? All the office of Mahindra finance linked to the integrated system of data operation in Mumbai.
? All the system of every branch is associated by the GPRS system of central based transaction.
? On time collection of customer feedback through SMS.
? Online gathering of Management Information System.
1.2.7 Competitors of Mahindra Finance
Competitors of Mahindra finance are as follows…
1. Reliance Capital Limited
Reliance Capital Ltd is one of the companies related to the Reliance Group of companies. It is started its financial service business in the year of 1986. Company spreads its wings to the several financial product i.e broking and distribution, asset management, commercial finance etc.
2. L&T Finance
L&T provides all the financial services which normally NBFCs provides. Some of the financial services which provided by the L&T Finance are commercial vehicle loan, personal vehicle loan and corporate loans etc. it’s also received company of the year award in 2010 which had been given by the Economic Times.
3. Sundaram Finance
Sundaram Finance also one of the leading companies in NBFC business in India. The majority of the stake owned by the parent company TVS. Sundaram finance mainly concentrating on the funding commercial and business vehicles. Also company expert on general insurance, mutual fund activity as well as broking house.
4. Bajaj Finance Limited
Bajaj Finance Limited is famous with the name of Bajaj financial services it offers the various financial products and services to its customer some of the financial products are wealth management service, advisory, insurance etc. it spreads its business wing all over India and opened many branches in rural and urban areas to provide effective financial services.
5. Muthoot Finance Ltd
A Kerala based financial company now started its business all over India and focusing on spread its business division to abroad. Currently company dealing in foreign exchange, gold loan, transfer of money, also in wealth management. Company has business head quarter in Kerala and opened several branches all over India.
6. HDB Finance Services
Company provides so many kinds financial services to its customers. It has over 1000 branches all over India and other union territories. Company currently active in personal and business loans as well as provides vehicle loan and gold loan. Now firm concentrated to offer finances to consumer durable goods, old and new vehicles.
7. Cholamandalam Investment and Finance Company Ltd
Company provide the loan facility to SME and other financial support like home loan, vehicle loan, loan on home equity, broking services, advisory services etc. company has more than 700 branches all over India and concentrating on huge investment in rural area. Initially company started providing the financial assistance to equipment later it started to provide the other financial support to its customers.
8. Tata Capital Financial Services Ltd
Tata Capital considers as one of the top financial service provider in India started business in 2007. It provides services to retail and corporate as well as institutional clients. It also provides financial assistance to all kinds of customers and deals with common financial products.
9. Aditya Birla Finance Ltd
Company offers customized financial products for its entire client so it is named as largest private company which concentrates customer needs. It systematic business strategy and well marketing structure made its function more smooth and active than its competitors.
10. LIC Housing Finance Ltd
LIC Housing Finance Ltd is government owned company main finance provider for housing and other housing related finance need. At the beginning LIC focuses on the general life insurance later it concentrates other financial services because of more competition from other company.
1.2.8 SWOT Analysis of Mahindra Finance
Following points shows the SWOT analysis of Mahindra finance
a) Strength
? Mahindra finance is part of Mahindra group due to that enjoys huge brand value.
? Large number of assets.
? Huge number of distribution channel and branches in PAN India.
? Considered and awarded as best place to work.
? Company expanding its operations by issuing the shares to public.
? Good connection with farmers.
? Prominent company in NBFC operation all over India.
? Ranked 2nd in customer loyalty.
b) Weakness
? Lack of awareness in remote area about company and its operation
? Company not providing any advertisement for its product.
c) Opportunities
? Company can concentrate more on remote area and provide the required services.
? Expand its operation not only in India but also worldwide.
? It can diversify it’s by offering the different financial services.
? Technology implementation may help company to reach the ultimate customer.
d) Threats
? New entry of foreign non-banking financial institutions.
? Tough competition from large banks like State Bank of India, ICICI etc.
? Threats from different kind financial product which offered by the competitors.
1.2.9 Future growth and prospects
The operational activities of Mahindra mainly linked with Mahindra and Mahindra because 51.9% stakes held by the Mahindra and Mahindra. There will be the chance of reduce in the stake of Mahindra and Mahindra stakes on Mahindra finance in future it reflects that without support of Mahindra and Mahindra, Mahindra finance will raise the equity capital.
As portion of its growth strategy Mahindra finance concentrating more on providing the financial aid to other vehicle manufacturer than Mahindra and Mahindra. Mahindra finance now a days more engaged in providing the financial support to the commercial and UV vehicles.
1.2.10 Financial Statements
Consolidated Statement of Profit and Loss Rs. in Lakhs
Particulars Year ended March 31
Revenue from operations
Other income
Total Revenue (A)
Employee benefits expense
Finance costs
Depreciation and amortization expense
Loan provisions and write offs
Other expenses
Total Expenses (B)
Profit before exceptional items and taxes (C =A-B)
Exceptional items income / (expense) (D)
Profit before extraordinary items and tax (E= C-D)
Extraordinary items (F)
Profit before tax (G= E-F)
Tax expense (H)
(1) Current tax
(2) Deferred tax
Profit/(Loss) for the period from the continuing operations(I=G-H)
Minority interest (J)
Profit /(Loss) for the period (K=I-J)
2017 2016
714620.43
5444.65
720065.08
88663.96
318617.44
5372.32
138955.10
84680.81
636289.63
83775.45
———-
83775.45
———-
83775.45
46353.48
(15548.01) 655386.74
4358.25
659744.99
70409.22
286834.73
4569.78
109819.07
65700.21
537333.01
122411.98
————-
122411.98
————-
122411.98
61439.44
(17768.11)
30805.47 43671.83
52969.88 78740.15
1806.31
51163.67 1510.79
77229.36
Consolidated Balance Sheet Rs in lakhs
Particulars Year ended March 31
I. Equity & Liabilities
1. Shareholders fund
a) Share capital
b) reserves and surplus
Minority interest
2. Non-current liabilities
a) Long term borrowing
b) Other long term liabilities
c) Long term provisions
3. Current Liabilities
a) Short term borrowing
b) Trade payables
1)M&S Enterprises
2)Other than M&S Enterprises
c) Other current liabilities
d) Short term provisions
Total
II. Assets
1. Non-current assets
a) Fixed assets
1) Tangible assets
2) Intangible assets
3) Capital work in progress
4)Intra assets underdevelopment
b) Non-current investments
c) Deferred tax assets (net)
d) Long term loans and advances
e) Other non-current assets
2017 2016
11300.83
684714.72
11292.03
635647.75
696015.55 646939.78
9980.11
2498492.31
41741.10
62168.69 6752.75
2034120.59
43263.99
49171.91
2603402.10 2126558.49
721762.80
————
69442.05
1068206.83
171847.71 521753.28
————-
49638.93
992112.79
156930.35
2031259.39 1720435.35
5340657.15 4500684.37
12931.37
407.81
55.67
58.21
79794.03
75717.77
2817526.07
11283.88
12345.94
559.35
1.85
——
65220.87
59923.93
2294643.63
5236.44
2997774.81 2437932.01
