CHAPTER – 1

INDUSTRY PROFILE AND COMPANY PROFILE

INDIAN GOLD LOAN INDUSTRY

India’s formal gold loan market is growing at 30 to 40 per cent annually and attracting global
interest. Abu Dhabi Investment Authority and a Goldman Sachs fund are among investors in
MUTHOOT FINANCE, India’s largest specialist gold lender, which starts trading on Friday
after a popular $200 million IPO. The opportunity is clear: Indians have traditionally used
gold as a store of wealth and hold 10 per cent of the global supply, much of it in jewelry. At
the same time, more than half of Indian adults operate outside of the formal financial sector,
according to the Reserve Bank of India. The risk for the industry is that high interest rates
and margins and the potential excesses of accelerating competition will draw a regulatory
backlash of the sort that has crippled India’s once-soaring microfinance sector.
Although gold is currently trading at more than $1,500 an ounce and hit a record $1,575.79
on Monday, a plunge in gold prices would erode the value of collateral held by lenders and
undermine demand as borrowers receive less cash. The short loan tenors involved in gold
loans mitigate risk. The longer the term, the lower the loan-to-value ratio, which is typically
75 per cent for three months. Gold loans are safe if branches are secure and the lender
properly appraises the collateral, which can be liquidated in case of default. Sentimental
value means default rates are low. Non-performing assets accounted for less than half a per
cent of MUTHOOT FINANCE’s retail loan book in recent years. Its gold loans stood at $2.9
billion at the end of November, about six times their total in March 2008, a listing document
showed.
RS View: Provided the gold items are indeed truly sequestered under lock and key while
serving as collateral for the duration of the monetary loan (thus allowing these same items to
be returned essentially non-fungible (!) at the completion of the cash repayment), then what
you are seeing take shape here is one aspect of the retail/customer side of the new face of the
evolving gold-centric banking system in which gold (as store-of-wealth, as reserves) co-exists
in a sustainable floating paradigm with the common national currency. For more of the big
picture, simply review everything I’ve said over the past decade concerning central banks and
the paradigm shift toward mark-to-market gold reserves — particularly well exemplified by
the very deliberate yet quiet forefront actions and accounting structure of the ECB.
Bank of Mexico buys 100 tons of gold in two months

The purchase–reported in the International Monetary Fund’s statistics on international

reserves–follows a shift in the gold market to net central bank buying, following years of
official sector sales, and should be welcomed as a positive boost for the yellow metal, said
Jonathan Spall, Director of Commodities Distribution at Barclays Capital.

“Prior to this, they [Mexico] held very little metal, so it is a decent size change,” Spall said.
“People are going to view this as bullish, and will now be closely watching other countries in
the region, and elsewhere, for further changes.”

“Mexico seems to be following the trend established by several other central banks recently
and is moving toward restoring a prior balance between gold and currency reserves,” said
George Milling-Stanley, Managing Director of Government Affairs at the WGC.

The Daily Market Report

Gold Softens Despite Renewed Dollar Weakness

The brief respite in the dollar’s recent slide seems to have come to an end, yet gold is
maintaining a corrective tone. Renewed weakness is the greenback is reflected in new 17-
month highs in the euro and a new all time high in the Swiss franc. Recent talk from US
Treasury Secretary Neither and Fed Chairman Ben Bernanke about a “strong and stable”
dollar appears to have been — as expected — merely more lip-service.

The euro is firming following the announcement that a deal had been struck on Portugal’s
bailout. Despite rather damning evidence — courtesy of Greece — that bailouts at best just
buy some time, the EU and IMF are going to provide €78 bln ($116 bln) in aid to Portugal.
Even with the bailout deal, yields on 3-month Portuguese T-bills climbed 60bps at today’s
auction. In exchange for the bailout, Portugal will face higher sales, property and health
service taxes as well as cuts to state pension plans. On top of that, unemployment benefits are
to be halved to 18-months from 3-years.

While Portugal’s caretaker PM Jose Socrates claims to have negotiated a better deal than
Greece and Ireland got last year, obviously these additional austerity measures will be
devastating to the Portuguese economy. According to Euro stat, the unemployment rate in
Portugal stood at 11.1% in Mar and is likely quite a bit higher in reality; what happens to all
those that will lose their unemployment benefits? Likely they will just fall into the next lower
social safety net. The increase in sales tax will further weigh on discretionary spending.
Higher property taxes will negatively impact demand in a housing market already reeling
from weak demand and a substantial inventory overhang. My guess is that tax revenues
actually decrease .The Swiss franc is benefiting from its increasing status as a safe-haven
currency, which is being largely garnered at the expense of the ever-weaker dollar. The recent
suggestion by Swiss National Bank Chairman Philipp Hildebrand that CHF strength was
helping contain inflation, seems to have been read as a reduction in the risk for SNB
intervention. Interest in the CHF has also increased in light of the recent volatility in the
precious metals, particularly silver. However, as we noted earlier in the week, the
fundamentals that have been underpinning both gold and silver have not changed. A big part
of that is their safe-haven aspect.

Rob McEwen, founder and former head of Goldcorp, says that “China is out to have more
gold than America, and Russia is aspiring to the same.” To accomplish that, China would
have to increase its reserve holdings of gold by 672%, Russia by 927%. McEwen suggests
gold could reach $2,000 an ounce this year, largely driven by central bank demand. Any way
you slice it, if that truly is the goal of countries like China and Russia — and there is plenty
of evidence to suggest it is indeed — it will be a long term source of demand and you could
also reasonably argue that it makes gold cheap at $1,500.

Hedge fund legend John Paulson told investors this week that gold could go as high as $4,000
an ounce over the next 3-5 years. You can bet he’s aware that central banks are no longer
selling gold and have turned net buyers in recent years. According to World Gold Council
statistics, Portugal has 382.5 metric tons of gold; Greece has 111.5 metric tons; and Ireland
has 6.0 metric tons. Despite their dire fiscal situations, there haven’t been any serious
demands that they sell any of their gold, although apparently there was such an appeal today
by Norbert Bartle, Germany’s governing coalition budget speaker. I’d be willing to wager the
Bunds bank would be willing to take those tones off Bunco de Portugal’s hands.

Cost and benefit analysis

A cost benefit analysis finds, quantifies, and adds all the positive factors. These are the
benefits. Then it identifies, quantifies, and subtracts all the negatives, the costs. The
difference between the two indicates whether the planned action is advisable. The real
trick to doing a cost benefit analysis well is making sure you include all the costs and
all the benefits and properly quantify them.

The MUTHOOT FINANCE strongly believes that its human resource is the most precious
asset and the best of investments. For grooming skilled manpower, we have a full-fledged
training establishment with few parallels in the industry, and with the best available teaching
aids. This enables us to equip our employees with the skills to maintain our ever-growing
branch network and to render prompt customer service. The objective of this Induction
Manual is to orient you towards the profile of the Company, the general rules and regulations
to be followed by all the staff, and basic business etiquette. By joining the MUTHOOT
FINANCE, you have taken the right decision towards a future with brighter prospects and
faster career growth. The Management of the MUTHOOT FINANCE believes that with the
sincere and whole hearted support and involvement of its employees, we should be able to
scale new heights in business.
MUTHOOT FINANCE is also committed to self-regulation in all its activities while
scrupulously adhering to all regulatory requirements. Our vision is to “Make Life Easy”—
this is the cherished dream of our Founder and promoters to transform the Company into a
high-tech financial institution providing complete financial solutions to the increasing
numbers of our customers and other stakeholders, in order to bring convenience to their lives
and make it easier.
With an organizational culture marked by professionalism, the company is certain to
overcome the hurdles in its path to growth and expansion. And so, let us dedicate ourselves to
making the company a role model in its field of activity.
COMPANY PROFILE

ORIGIN OF THE MUTHOOT FINANCE

Muthoot Finance Ltd.

Type Public

Traded as BSE: 533398

BSE SENSEX Constituent

Industry Finance
Hotels & Resorts
Information technology
Broadcast Media
Healthcare
Education
Energy & Power Generation
Infrastructure

Founded Kerala, India 1939

Headquarters Kochi, India

Key people M G George Muthoot (Chairman)

George Alexander Muthoot (MD)
George Jacob Muthoot (Whole-Time Director Director)
George Thomas Muthoot (Whole-Time Director)

Employees 30,000
HISTORY OF MUTHOOT FINANCE:

Muthoot Finance Ltd is the largest gold company in India. The company provides 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. The company is headquartered in Kerala. In addition to their Gold Loans
1business, the company provides money transfer services through their branches as sub-
agents of various registered money transfer agencies.

They have commenced providing collection agency services. They also operate three
windmills of 1.25 MW each in the state of Tamil Nadu. Muthoot Finance Ltd was
incorporated on March 14, 1997 as a private company with the name The Muthoot Finance
Pvt Ltd. The company is promoted by M G George Muthoot, George Thomas Muthoot,
George Jacob Muthoot and George Alexander Muthoot. The company's operating history
evolved over a period of 70 years since M George Muthoot (the father of the promoters)
founded a gold loan business in 1939 under the heritage of a trading business established by
his father, Ninan Mathai Muthoot, in 1887. In the year 2001, the company obtained the
license from RBI to function as an NBFC. In the year 2005, as per the scheme of
amalgamation.

Muthoot Enterprises Private Ltd was amalgamated with the company with effect from March
22, 2005. In May 16, 2007, the name of the company was changed from The Muthoot
Finance Pvt Ltd to Muthoot Finance Pvt Ltd. During the year 2008-09, the company opened
278 new branches across various states. Also, they opened regional offices in Sales and
Visakhapatnam. In November 18, 2008, the company was converted into public limited
company and the name was changed to Muthoot Finance Ltd. They obtained fresh RBI
license to function as an NBFC without accepting public deposits, consequent to change in
name. During the year2009-10, the company added 620 new branches. As per the scheme
of de-merger, the radio business of the company was de-merged and transferred to Muthoot
Broadcasting Pvt Ltd with effect from January 01, 2010. The company opened 316 new
branched between April 2010 to August 2010. As of August 31, 2010, they had 1,921
branches located in 20 states and two union territories in India. The Company intends to
continue to grow their loan portfolio by expanding their network through the addition of new
branches. The company in the year 2018 totally have in 29 states, 4303 branches, 22000 team
members.

BUSINESS DIVISIONS

Muthoot Finance promotes “GOLD POWER”, a concept which emphasizes mobilizing

household Gold possessions (ornaments), estimated to be more than 20000 tones, in times of
financial crunch. The services can be used by anyone from any economic section of society,
with minimal paperwork and hindrances. 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. In terms of market
capitalization, Muthoot Finance Ltd is the second largest company in Kerala, first
being Federal Financial institutes.

Muthoot Finance Chickaballapur

Muthoot Finance restricted may be a gold finance company. the corporate may be a non-
banking monetary company (NBFC), that is engaged in providing loan (financing) against
collateral of gold jewelers. The corporate operates through 2 segments: finance and Power
Generation. it's came upon its branch in Chickaballapur district that was started on 2011 and
settled at pillappa advanced, Chickaballapur city. it's with success in operation from past six
years by providing totally different services like finance gold transactions, the corporate
offers interchange services, cash transfers, wealth management services, travel and touristy
services, and sells gold coins at Muthoot Finance Branches .loans against collateral of gold
jewelry primarily to people having no access to formal credit from the bank among cheap
amount to satisfy their short term capital necessities. the target market of Muthoot Finance
incorporates non-public firms, merchants, agriculturists, dealers, SME entrepreneurs, and
salaried individuals.
Established - 05-06-2011
Number of accounts
Opened - 3356 accounts
Profit - 750000
Number of employees - 8 members

PROMOTERS
 Name Holding Dec 2018 No of holders

% shares

Individuals/Hindu undivided 73.51 294,463,872 13

Family

M G George Muthoot 11.62 46,551,632 1

George Alexander Muthoot 10.89 43,630,900 1

George Jacob Muthoot 10.89 43,630,900 1

George Thomas Muthoot 10.89 43,630,900 1

Susan Thomas 7.49 29,985,068 1

George M Jacob 3.76 15,050,000 1

Anna Alexander 3.73 14,935,068 1

Elizabeth Jacob 3.73 14,935,068 1

Sara George 3.37 13,519,336 1

Eapen Alexander 1.88 7,525,000 1

George M Alexander 1.88 7,525,000 1

George M George 1.69 6,772,500 1

Alexander M George 1.69 6,772,500 1

VISION, MISSION AND QUALITY POLICY

Vision

Touching the lives of millions with customer-centric approach nourished in a milieu that
enables creation and innovation
Mission

The concentrate of the organization is on making liquidity with a benefit class, to be specific
gold, which has the biggest customer advertise in India. They consider it to be one of the
superior methods for making riches in the economy.

QUALITY POLICY

Muthoot Finance Ltd,our quality policy will carry out it's activities in the economic
development, society progress and environmental hazards with the and core objective of
improving quality of life. It has been a constant endeavour of the company to rightfully
follow our vision and values up keeping it with good corporate governance to meet the
expectations of our customers, employees, shareholders and society at large.

 We will do a transparent and a honest business and maintain privacy in handling our
stakeholders
 We will continue to improvise our quality of service for our customers and ensure
customer satisfaction at all levels
 We will work towards in maintaining a employees, customer, and society friendly
environment in our day to day activities.

PRODUCTS/ SERVICE PROFILE

Information Technology

Muthoot Systems and Technologies Pvt Ltd: Operating under the brand Emsyneis the
Information technology arm of the Muthoot Group, is headquartered in Cochin. The company
has been operating for over the past 14 years in the IT sector. Their client list includes US
companies such as ARC group, PA, Court Port LLC, SVM, and JAL International.

 Precious Metals

Muthoot Precious Metals Corporation: Established in May 2006, the company sells coins &
bars of 999 Pure 24 Carat gold and silver throughout India. They carry out the sales of these
bars and coins through more than 4000 branches of Muthoot Finance Ltd. MPMC
imports gold bullion from Switzerland and converts them into gold coins of smaller
denominations so as to suit the investment requirements of people from different income
groups. MPMC is one of the leading sellers of Gold Coins in retail market. Gold Coins/Bars
are sold in different denominations up to 50gms and silver coins in 20, 50 & 100gms
denominations.

Company offers the unique and one of its kind schemes to book gold on today's rate and pay
later in flexible installments. Most of the gold & silver coins are imprinted with the images of
deities and monuments such as Goddess Lakshmi, LordGanesha, Lord Ayyappan,
Venkateswara Swami (Bajaj), Our lady of Velankanni, St.Alphonsa, St.Gregarious, Lord Sri
Padmanabha, GoldenTemple, Chatrapathi Shivaji, Mary Matha, St.George, etc. MPMC also
launched a special Collector’s Edition 8gms Gold Coin for the Muthoot Group's partnership
with the Delhi Daredevils, Delhi's IPL team.

 Money transfer Muthoot Finance Ltd: Money transfer is a service provided by

Muthoot Finance since 2002. As of December 2012, there are 7 inward remittances
that Muthoot Finance offers Union, express Instant Cash, Transfect, Money gram
Global Money.

 Foreign exchange

Muthoot Exchange Company Pvt. Ltd: The Foreign exchange division of the Muthoot
Group is head quartered in Kerala. Customers can avail this service at select Muthoot Finance
Ltd. Outlets across India.

 Securities

Muthoot Securities Ltd: Established on 28 May 2008, Muthoot Securities Ltd. is a

member of various stock exchanges namely NSE, BSE and MCX-SX. MSTL. It operates
over 200 business centers in Kerala, Tamil Nadu, Andhra Pradesh and Karnataka. Its product
offerings comprise financial products and services namely equity, commodity & currency
trading, internet based trading, Portfolio Management Services, depository services, mutual
funds, PAN services, market research etc. Company recently tied up with UTI Infrastructure
Technology and Service Ltd to issue PAN card through its network of branches all over
India, which will now act as Muthoot PAN processing centre.

Travel & Tourism Muthoot Travel Smart: Headquartered in Kochi, Muthoot Travel
Smart is the travel division of Muthoot Group. The services offered by this division include
international and domestic ticketing, railway ticketing, tour, passport, emigration & visa,
travel desk, travel insurance, bus ticketing and foreign exchange.

 Healthcare

Medical Centre: Established in 1988, the Group operates a medical centre and
specialty clinics. It also provides a number of health services round the clock. Health check-
up schemes, cashless treatments and community health programs also fall under the
healthcare spectrum of Muthoot Group. The Group also operates several Diagnostic & Scan
centers throughout Kerala and 2 multi-specialty hospitals
in Kozhencherry and Pathanamthitta.

 Hotels and hospitality

Muthoot Leisure & Hospitality Services (P) Limited: Established in 1978, The Group
runs 2 luxury resorts viz. Pampa Villa and Cardamom County, as well as 12 houseboats in
Kerala, which operate under the brand 'Muthoot River Escapes'. Muthoot Hotels runs a chain
of South Indian coffee outlets as well. Muthoot River Escapes has been given a five star
rating by Trip Advisor. All of these combined are referred to as Raxa Collective.

 High lights of the products

 The scheme provides finance for any personal need or requirement. The
total amount being determined on the basis of repaying capacity of the
applicant.

 Lowest interest rates in the industry.

 Interest charged on daily reducing balance (which in essence lowers the

effective rate of interest).

 Low processing charges.

 No margin.

 No security required-which minimal documentation.

 Long repayment period up to 48 months.

  No repayment penalties. Interest burden can be reduced by optimally
utilizing surplus funds for repaying the loan.

 Total transparency with regard to rate of interest and fees charged-no

hidden costs.

 The scheme is liberal, broad based, customer oriented and competitive.

 The products help the customer to confidently face the challenge of

meeting any kind of personal expenses.

 With the withdrawal of big buy scheme loans can be granted for purchase
of consumer durables under personal loan scheme.

 With the withdrawal of the scheme of loans to individuals for purpose of

home computers, loans for purchase of computers can be given under this
scheme.

 GOLD LOAN

The Muthoot Gold loan portfolio is the largest in India as well as all around the globe.
It is humbling to know that more than 78000 people avail our trusted services on a daily
basis.

For the past 125 years, the company has been serving the interests of customers as its
top most priority. Our journey through centuries coupled with the fact that we are still a
rapidly growing company highlights the trust and commitment that our customers worldwide
have shown in us. With Muthoot Finance Ltd. gold loan services, it takes no more than a few
minutes for your gold to generate cash.

The simple procedure that we follow allows:

 0% processing fees

 Quick Loan disbursal

 Loan limit stretches from Rs. 1500 to Rs. 1 crore

 Pre-payment option-without any penalty

  Minimal documentation

 In-house gold evaluation

 Improves customer service in a shorter response time

 Strong rooms for providing safe custody for gold ornaments

Being India’s largest gold loan service provider, safeguarding the deposits of gold
ornaments is our primary concern. A flexible interest rate policy is what helps us cope with
volatile markets. Our gold loan range starts from Rs. 1500 and stretches up to Rs. 1
crore. Serving over 78,000 customers daily, we assist almost every section of the society in
obtaining quick cash for leveraging their dreams.

OBJECTIVES OF MUTHOOT FINANCE GOLD LOAN:

 Among the largest gold loan provides in India.

 More than 14 years in Finance business.

 Over 70,000 satisfied customers

 Customized Muthoot finance gold loan scheme loans for different customers.
This includes small loans for poor customers as well as high amount for high profile
customers.

Factors of Muthoot Finance Gold Loan

 Fastest gold loans. The loans are delivered within 5 minutes.

 The loan denomination varies from 1 Crore to 1 thousand.

 Muthoot finance gold loan are granted after minimal credit assessment and
documentation.

 High quality customer service provided to customers.

 Gold ornaments are evaluated at customer’s home for their convenience and
safety.
  Over 3000 branches of Muthoot Finance extending gold loans to customers.

 Muthoot finance gold loan interest rates are very competitive.

 Other than Muthoot finance gold loan interest rate, no processing fee is charged
from customers.

GOLD LOAN SCHEMES

PER GRAM RATE AND RATE OF INTEREST OF VARIOUS SCHEMES

SL.NO CATEGORY CEILING RATE RS.1967/- KERALA OUTSIDE

W.E.F 19.07.2017-18 KERELA

1 One Percent Upto 1 month N.A. N.A.

Loan (MOL)
Above 1 months upto 3 months N.A. N.A.

Above 3 months upto 6months N.A. N.A.

Above 6 months upto 12months N.A. N.A.

Above 12 months(Penal Interest N.A. N.A.

-3% addnl)

2 Mahila Loan Upto 1 month 12% 12%

(MML)
Above 1 months upto 3 months 15% 15%

Above 3 months upto 6months 20% 20%

Above 6 months upto 12months 24% 24%

Above 12 months(Penal Interest 24% 24%

-2% addnl)

3 Delight Loan Upto 1 month N.A. N.A.

(MDL)
Above 1 months upto 3 months
 Above 3 months upto 6months

Above 6 months upto 12months

Above 12 months(Penal Interest

-3% addnl)

4 Super loan Rebate 6%/ 3M(18%) - 3%/ 24% Rebate 2%/1

(MSL) 6M(21%) - 2% 9M(22%) Upto M(21.5%)(DLH)
12 months 24%

Above 12 months(Penal Interest 24% 24%

-2% addnl)

5 Premier Loan Upto 1 month N.A. N.A.

(MPL)
Above 1 months upto 3 months

Above 3 months upto 6months

Above 6 months upto 12months

Above 12 months(Penal Interest

-3% addnl)

6 High value Rebate 6%/ 3M(16%) - 6%/

Loan (MHL) 6M(18%) - 2%
9M(20%)(South) Upto 1
month(Delhi)

Above 1 m upto 3 m (Delhi)

Above 3 months upto 6

months(Delhi)

Above 6 months upto 9

months(Delhi)
 Above 9 months upto 12 22% 22%
months

Above 12 m(Penal Int.-2% 22% 22%

addnl & 3% for Delhi)

7 High value Rebate 8% /3 M(14%) - 4% / 22% 22%

Loan (MHL 9M(18%) - 2% / 12M(20%)
Plus) (Above Upto 12 months
20 L)
Above 12 months(Penal Interest 22% 22%
-2% addnl)

8 Interest 3 months (After 3 months,22% 17% p.a. 17% p.a.

Prepaid Loan p.a.)
(IPL)
6 months (After 6 months,22% 16% p.a. 16% p.a.
p.a.)

12 months (After 12 12% p.a. 12% p.a.

months,22% p.a.)

Premature closure-22% p.a.

9 Advantage Rebate 5% /3 month(17%)- for

loan (MAL) South
Rebate 3% /6 months(19%) -
for South Upto 3 months(DLH)

Above 3 months upto 6

months(DLH)

Above 6 months upto 12 22% 22%

months

Above 12 months(Penal Interest 22% 22%

-2% addnl)
10 Muthoot Upto 12 months 19% 19%
Overdraft
Above 12 months(Penal Interest 19% 19%
Scheme
-2% addnl)
(MOS)

11 Zero Interest 0% interest 0% 0%

Loan (ZIL)
24% for delayed EMI for the
delayed Period

12 Freedom Gold Rebate 2% / 1M(18%-NACH) - N.A. 20%

Loan (FGL) 1% /1M(19%-Non NACH)
Upto 12 months

Above 12 months(Penal Interest 20%

-2% addnl)

13 Muthoot EMI >6/12 instalments 21% p.a. 21% p.a.

Scheme
(MES)

LOAN SCHEMES FOR REPLEDGERS Kerala Outside Kerala

14 Xpress Upto 6 month 17% p.a. 18% p.a.

Business Loan
Above 6 months upto 9 months 19% p.a. 20% p.a.
(XBL)

Above 9 months upto 12 23%p.a 24% p.a.

months

Above 12 months(Penal Interest 24% p.a. 24% p.a.

-2% addnl)

Scheme Kerala & Other South Indian Branches

MSL Rebate 2%/1month

MPL Rebate 2%/1month

MSL Rebate 4%/3month

Rebate 1% /6 months

SERVICE CHARGES RELATING TO GOLD LOANS

SL CATEGORY SERVICE CHARGE

NO

1 Service charge for gold loans under Rs.10/- for loans upto Rs.10,000/- and
normal schemes (except loans under Rs.20/- for loans above Rs.10,000/- every
MHL and MLS schemes) Applicable time a loan is sanctioned/renewed and a
only in South India Branches) pledge form is printed.

2 Processing charges for loans under South Branches - 0.5% of the loan
MHL (Muthoot High value Loan) amount
scheme.
North Branches - Loan amount below
Rs.5 lakhs-1% of the loan amount, Loans
of Rs.5 lakhs and above and less than
Rs.10 lakhs-1% of the loan amount,
Loans of Rs.10 lakhs and above and less
than Rs.25 lakhs-0.5% of the loan
amount, Loans of Rs.25 lakhs and above-
0.25% of the loan amount

3 Documentation charges for limits Rs.1500/- per account (For renewals

sanctioned under MOS (Muthoot within 12 months Rs.750/- per account)
Overdraft scheme)

4 Processing charges for loans under Rs.50/- per loan account

MSS (Muthoot Samsung Scheme)

5 Processing charges for loans under Rs.50/- per loan account

ZIL (Zero Interest Loan) scheme
6 Charges for lost tokens (Applicable Rs.25/- (in addition to the cost of stamp
for loans under all schemes) paper applicable)

7 Notice charges South Branches:- Ordinary Notice -

Rs.10/-
(Applicable for loans under all
schemes) Registered Notice - Rs.40/-

Auction Notice - Rs.70/-

North branches:-

Ordinary Notice(3 times) - Rs.10/-

*3=Rs.30/-

Registered Notice - Rs.40/-

Auction Notice - Rs.100/-

(whenever a loan is marked for auction,

the charges will be recovered)

8 Administrative charges 0.15% of loan amount(Minimum Rs.40/-

,maximum Rs.600/-) for all schemes in
(applicable only in North branches)
North branches

9 Stamp duty levied by State Actuals wherever applicable

Governments

10 SMS Charges Rs.2/- per account at the time of closure /

renewal

MUTHOOT FINANCE PERSONAL LOAN

Muthoot finance is biggest gold financing structure in India in regards with loan
portfolio as per 2010 report by IMACS industry. Business as well as personal loans is
provided by Muthoot against gold jewelry; Muthoot finance personal loan are offered to
those who have gold. For those people, who can’t get any type of loan, Muthoot finance
personal loan is just the right choice. Good thing about Muthoot finance is that least
documents for Muthoot finance personal loan are required as well as Muthoot finance
personal loan interest rate is quite reasonable. Some points of Strength in Muthoot Finance
Personal Loan Are:

 Muthoot Finance personal loan is the only loan that asks for minimum documents
for Muthoot finance personal loan.

 Muthoot finance is leading NBFC with nominal Muthoot finance personal loan
interest rate in India.

 Outstanding of gold as on 30th November 2018 was Rs 128978

 Currently there are more than 4.1 million account of loan with Muthoot finance

 Flexibilities like minimum documents for Muthoot finance personal loan as well
as nominal Muthoot finance personal loan interest rate has enabled Muthoot to lead
the market with huge network of branches.

 Muthoot finance personal loan has its feet deep dug in under estimated semi
urban and rural areas of south India. Big percentage of population from under
developed region have least access to credit facilities.

 Branch of network include 4303 branches in south region, 297 branches in west
region, 465 branches in north region and 96 branches in east region.

PERSONAL LOAN SCHEME

Benefits

 It Transacts with more than 70000 clients per day

 It continues to act with same profile for past 124 years

 It is a huge unit to provide gold loan facilities to let people convert their dreams
in to reality like initiating own business or purchasing own home Muthoot Finance
net grows 7% Muthoot's total income rose 11 per cent to Rs 1,365 crore, while
capital adequacy ratio was at 19.5%.
AREA OF OPERATIONS

In India

The company's headquarters are located in Kerala, India, and it operates over 4,303 branches
throughout the India.

Outside India

Muthoot Finance is established in the UK, the US, and the United Arab Emirates.

COMPETITION OF MUTHOOT FINANCE

Name Last Price Market Cap. Sales Net Profit Total Assets
(Rs. cr.) Turnover
Bajaj Finserv 1,500.95 23,883.89 144.49 83.39 2,463.05
Bajaj Holdings 1,363.70 15,177.10 799.61 733.35 5,529.63
Rel Capital 474.25 11,674.14 3,169.00 409.00 30,516.00
L&T Finance 65.20 11,216.26 257.57 196.38 5,187.27
Muthoot Finance 211.05 8,399.08 4,927.88 780.07 17,233.47
ReligareEnterp 377.35 6,729.28 184.53 -129.50 3,295.35
CPSE ETF 24.35 4,186.03 - - -
JM Financial 50.30 3,940.12 86.52 71.05 1,629.83
Tata Inv Corp 579.65 3,193.60 220.88 178.68 2,065.57
Future Consumer 13.35 2,212.29 342.86 30.41 963.61
JSW Holdings 1,094.10 1,214.41 43.33 32.96 724.17
VisagarPolytex 702.80 1,179.75 70.61 1.01 33.00
SE Investments 275.00 1,115.40 207.93 56.25 871.66
Indiabulls Sec 35.70 932.57 76.31 87.26 403.69
Kalyani Invest 1,828.70 798.28 0.20 17.91 295.87
8K Miles Soft 695.50 712.48 7.22 0.09 25.66
BF Investment 184.40 694.59 6.69 19.95 664.45
ILandFS 19.35 607.65 115.12 53.76 103.22
PNB Gilts 32.05 576.93 346.26 61.38 4,433.00
INFRASTRUCTURE FACILITY

In muthoot, we trust consistent up-degree of advanced instruments and innovations is

essential to improve business esteem against the finance ground of India's computerized
insurgency. Digitization, driven by savvy advances, encourages us achieve a more extensive
client base, convey better client encounter and enhance profitability. Amid the year, we
concentrated on honing the IT biological system to upgrade the accommodation of clients in
more courses than one.

 Web pay; in the digital era, people find online medium more convenient to make
transactions and payments. In line with the growing social trend, we offered such a
facility, ‘muthoot web pay’, for our gold loan customers.
 Missed call service; in august 2015-16, we launched the ‘missed call service’ for our
customers. As soon as any customer gives a missed call on 08040751515, that person
receives a text message showing the gold loan outstanding and interest due as on date.
 Online gold loan (OGL); OGL is yet another online product that meets urgent loan
requirement of customers at any place and any time. The loan amount directly gets
credited to bank accounts of customers and has the facility to repay online.
 Unique customer ID; customer are required to submit their ID or address proof each
time they transact with a different branch.
 E-mail and SMS alerts; real- time cyber receipts are generated and sent to customers
through text messages and emails, instead of print receipts. Transaction details and
repayment reminders through these platforms ensure customer comfort and security.
 Auto debit for EMI product; we have launched NPCI’s automated debit system for
our customers of ‘gold loan installment scheme’ to provide flexibility and
convenience to customers.
 Comprehensive asset recovery module; we have developed a comprehensive asset
recovery module, integrated with the core banking system. This enables timely
 follow-up by our branch and field staff, and ensures on-time repayment of loans,
leading to a substantial reduction in NPA.

FUTURE GROWTH AND PROSPECTUS

Leading gold loan provider muthoot finance ltd, wants a sector shot at getting a bank license
once the draft guidelines for on-top blank licenses are finalized by the RBI. Muthoot said that
it is in a stronger position that before and stands a better chance of getting a license this time,
once RBI finalize the framework for license. Muthoot expects a business growth of 10-15%
over the next two years. The company has gone through some rough patches in previous
years.

FINANCIAL STATEMENT

BALANCE SHEET OF MUTHOOT FINANCE LIMITED - 2017-18

Equity and liabilities Amount Assets Amount
Shareholders Fund Non-current assets
a) Share Capital 39904755490 a. Fixed assets
b) Reserves and 61385640575 i . Tangible assets 2262400317
surplus
Non –current liabilities ii. Intangible assets 99918994
a) Long-term 48451337451 iii. Capital work in 99783210
borrowings progress
b) Other-long term 6719692255 iv. Intangible assets under 211495018
liabilities development
c) Long-term 97051810 b. Non-current 159073494
provisions investment
Current liabilities c. Deferred tax 635146885
assets(net)
a) Short – term 127658658528 d. Long-term loans 8365977780
borrowings and advances
b) Trade payables amd 65047407170 Current assets 806252984
other current liabilities Current investments
c) Short-term 6792030215 a. Trade receivable 12769313382
provisions
d) Total outstanding 975466934 b. Cash and bank 16448756373
dues of creditors balance
c. Short-term loans 279923226507
and advances
d. Other current assets 60075257

Total 321841420204 Total 321840420204

STATEMENT OF PROFIT AND LOSS ACCOUNT - 2017-18

Particulars Amount
Revenue from operations 59,108,007,360
Other income 275,902,209
Total revenue 59,383,909,569
Expenses
Employee benefit expenses 7,642,315,188
Finance cost 23,688,649,487
Other expenses 4,623,649,487
Directors remunerations 358,000,000
Depreciations and amortization 519,208,989
expenses
Provisions and write offs 2,966,497,773
Total expenses 39,798,071,402
Profit before tax 19,585,838,167
Tax expenses
Current tax 7,569,922,592
Deferred tax (54,947,717.87)
Taxes relating to previous years (1,740,48434
Profit for the year 12,072,603,777

CHAPTER – 2

1. MCKINSEYS 7S FRAME

The McKinney’s 7s framework essentially looks at seven elements of an organization that

must be understood when seeking to work out how it works and how to bring about any sort
of change in the organization.

These are:-

Style

Systems
 Staff’

Structure

Strategy

Shared Vision

Skills

STRATEGY

Here strategy, structure and system can be considered as the hardware of success of an
organization while style, staff, skills, and shared value can be considered as the soft ware in
the case of an organization. The 7s diagram illustrate the multiplicity of interconnection of
elements that define an organization ability to acting,. These have been identified as 7
interdependent factors that influence organizational effectiveness.

The hard Ss

Strategy

Structure

System

The soft Ss

Style

Staff
Skills
Shared values

SYSTEM

The system of work will be usually defined by the nature of the work taken up by the
department.
The nature of work taken up by the rock machines instrumentation department of Muthoot
Finance.

Performance evaluation of the support systems

Monitoring the stability around underground excavations
Large power house/transformer hall caverns, desilting /surge chambers
Tunnels
Assessment of ground stability in metal mines
Strata and support monitoring in coal mines
Long wall faces blasting gallery panels
Depillaring areas

Main systems on Muthoot Finance. are as follows:

Inventory systems
Quality control systems
Production system
Marketing system
Welfare and human resources system

STYLE

Style refers to the cultural style of the organization and how key managers behave in
achieving the organization goals.

Leadership style refers o leader behavior. It is the result of the philosophy, personality and
experience of the leader.

Muthoot Finance adopts democratic/ participative and supportive leadership style

The democratic leadership style is also called the participative style as it encourages
employees to be a part of the decision making. The democratic manger keeps his or her
employees informed about everything that affects their work and shares decision will impart
a better decision for the welfare of the booth the organization and the customers, these days’
employees have also been given opportunities to represent their views in such type of
participative decisions. Hence, organization style of working has become more transparent.

STRUCTURE
Structure is the organization chart and associated information that shows who reports to
whom and how tasks are both divided up and integrated. In other words, structures describe
the hierarchy of authority and accountability in an organization.
STAFF:
Refers to the number and types of personnel within the organization. At present, Muthoot
Finance has manpower strength of 82 (including 56 scientists) which is proposed to be
enhanced to 200 during the next 5 years.

SKILLS
Skills are the distinctive capabilities of personnel or of the organization as a whole.
The general skill of Muthoot Finance employees are:
Scientific staff
Head of discipline/ division
Scientists
Scientific assistants
Administrative staff
Head of administration
Head finance
Office assistants
Liaison services
Head of division
Project monitoring
Library and documentation
Maintenance and support staff
Campus and assets maintenance
Electrical maintenance
Drivers/ record clerks
Sub-committees
Purchase matters

Vision

Touching the lives of millions with customer-centric approach nourished in a milieu that
enables creation and innovation
Mission

The concentrate of the organization is on making liquidity with a benefit class, to be specific
gold, which has the biggest customer advertise in India. They consider it to be one of the
superior methods for making riches in the economy.

QUALITY POLICY

Muthoot Finance Ltd,our quality policy will carry out it's activities in the economic
development, society progress and environmental hazards with the and core objective of
improving quality of life. It has been a constant endeavour of the company to rightfully
follow our vision and values up keeping it with good corporate governance to meet the
expectations of our customers, employees, shareholders and society at large.

 We will do a transparent and a honest business and maintain privacy in handling our
stakeholders
 We will continue to improvise our quality of service for our customers and ensure
customer satisfaction at all levels
 We will work towards in maintaining a employees, customer, and society friendly
environment in our day to day activities.

2. SWOT analysis

SWOT ANALYSIS
Strength
1. Leading position in gold loan business.
 2. High quality customer’s services and short response time.
3. Strong capital raising capability.
4. Geographic diversification which aids business scalability.
5. Low average loan tenure shields against gold price volatility.

Weakness

1. Any major in gold price in future can adversely impact the company’s
revenue.
2. Deterioration in asset quality is a key risk to investment call.

Opportunity

1. The gold market is under net rated and is predictable to carry on rising at the
speed of 35 to 40% in prospect.
2. To venture into banking sectors.
3. Now customer segments.

Threat

1. Rising interest scenario.

2. Increased competition from NBFC’s and banking in gold financing business.
3. Major part of business concerted in south India. any disturbance in the
financial system of the area can unfavorably affect the company’s operation

CHAPTER - 3

INTRODUCTION

Introduction
A research design is a plan of action to be carried out in connection with a research project.
The design may be a logical presentation of the various steps in the process of research.
These steps include the statement of problem, objectives of the study, scope of the study,
tools and techniques of data collection, plan of analysis, limitation, operational definitions
and chapter scheme.
Research design is a logical & systematic plan prepared for directing a research study.
Research design pertains to decisions regarding what, were, when, how much, by what
concerning an inquiry
Research design is the conceptual structure within which research is conducted. It constitutes
the blueprint for the collection, measurement and analysis of data.

Title of the study

A STUDY ON PERFORMANCE OF GOLD LOANS AND ITS IMPACT

ON PROFITABILITY AT MUTHOOT FINANCE LTD, CHINTAMANI

NEED OF THE STUDY

Present study need of annual statement and the financial statement of the gold pledged by
company and the interest gain by company. The complete portfolio of gold loan statement.
REVIEW OF LITERATURE
A number of Committees and Commissions appointed by the RBI,
Central and State Governments have submitted their reports on UCBs incorporating therein
several invaluable suggestions to improve the functioning of the UCBs in India. The first and
foremost study with regard to urban co-operatives has been made by Maclagan Committee
(1915) on Co-operation. The development of urban co-operative societies did not receive
much attention until 1915 when the Maclagan Committee referred to the potentialities for the
organization of such societies as a means of training the upper and middle classes in ordinary
Financing principles. The failure of local joint-stock banks in the country at that time gave an
impetus to the growth of urban co-operative credit societies. It was felt by the Committee that
urban credit societies were eminently suitable institutional agencies for collecting local
savings and to provide relief to those who were in the clutches of money lenders by providing
them with financial accommodation.
All India Rural Credit Survey Committee (1954), while identifying the reasons for the failure
of the co-operative credit, made an attempt to discuss the role of urban banks. The Committee
pointed out that, in the matter of loans against pledge of gold and agricultural produce, urban
banks may be allowed to extend their share of operations to villages within a radius of five
miles of the area of towns in which they are located there are no primary agricultural credit
societies in the villages concerned.
The Working Group on Industrial Finance through Co-operative Banks (1968), recognizing
the key role of urban banks in providing finance to cottage and small industries,
recommended that high priority to be given to the organization of such banks in areas where
there was a sufficient concentration of cottage and small scale industries carried on by
individuals as well as by firms and joint-stock companies
Government of Andhra Pradesh appointed an Expert Committee (2002) to review the
functioning of UCBs in the state under the chairmanship of K.Narasimha Murthy. The
suggestions of the Committee including co-opting six to seven directors from among the
shareholders, three to five from among the depositors and three professionals from the
banking, finance, auditing and legal fields to the Boards of Banks, limiting the term of each
director to a maximum of eight years instead of an unlimited period, appointment of a
qualified person as a chief executive and capping establishment expenditure up to 10 per
cent. The panel also recommended that Committees be formed for dealing with the procedure
on auditing, giving loans and asset liability management and suggested that no loans be given
for real estate business, stock market operations, and film production. It also recommended
payment of a maximum dividend of 25 per cent to the shareholders and also limiting the term
of deposits to 10 years.
The RBI constituted an Expert Committee (2011) on Licensing of Urban Cooperative Banks
under the Chairmanship of Sri. Y. H, Malegam, the Committee submitted its report to the
RBI with many observations as well as very valuable recommendations. Reserve Bank
followed liberal licensing policy between May 1993 and March 1999. However, many UCBs
licensed during this period became financially weak. In the Annual Policy Statement for
2004-05, RBI announced licensing discontinuance and entered in to MOU with State
Governments for co-ordination of regulatory policies. Since then, there has been considerable
improvement in the functioning of UCBs. The signing of MOU between the State
Governments and RBI and the setting up of TAFCUBs has resulted in a significant
improvement in the health of the UCB sector.
The RBI has been conducting meetings of the Standing Advisory Committee (SAC) for
UCBs annually. The first meeting was held on 23rd May, 1983. On various aspects of the
UCBs’ functioning such as organizational matters, mobilization of resources and their
deployment in various aspects, modalities on the rehabilitation of weak banks, introduction of
professional management, training and education of personnel of the UCBs. RBI issues from
time to time instructions/guidelines regarding, operations and functioning of UCBs which are
published in the form of Compendium of Instructions/Guidelines issued by RBI. In addition,
some studies have been carried out by academicians at macro and micro level to evaluate the
performance of co-operative credit movement in general and urban co-operative banks in
particular.

STATEMENT OF THE PROBLEM

The Title of the undertaking is 'Scientific investigation of gold credits'. There is wide
vacillation between various segments. While issuing gold advances by various plans on
various areas, investigate the outside factor which is influencing to the specific segment.
Muthoot back should consider increment the net salary and diminish the NPA level of the
fund, while issuing gold credits, significant part of the pay is gotten from the gold advances
of the fund.

OBJECTIVES OF THE STUDY

The main aim of the present study is to accomplish the following objectives:

 The primary objectives of this study are to expose the student into the practical
applicability with respect to the theoretical concepts in decision making.
 To study the procedure of issuing gold loans of the finance.
 To study the impact of gold loans on net profit.
 To study the general terms & conditions for repayment of gold loans.
 To know the models of payments & repayment periods.

SCOPE OF THE STUDY

The study is based on gold loan in Muthoot finance. Many institutions and banks were
providing gold loan facility. But mainly Muthoot finance provides the convenience to
customers in the form of affordable installment payable monthly, low rate of interest and the
facility to liquidity ones gold any time and availing different alternative choice to his
customers. With Muthoot finance Ltd. Gold loan benefit, it takes close to a couple of minutes
for your gold to create money.

RESEARCH METHODOLOGY
A research is considered as the framework or plan for a study that guides as well as helps the
data collection and analysis of data. Present study is an analytical and descriptive in nature
and based on empirical study. The data was collected through annual report & some
information through the books & also from the website.

a) PRIMARY DATA

They are collected by interview with the branch manager for the first time, about the
statistical investigation and used by them in statistical analysis of formed as primary.

b) SECONDARY DATA

The data collected from the company record published of books, newspapers, websites &
some other officials of the finance company. The study is basically confined to secondary
data obtained from the annual reports of the company, books of accounts, periodical, statistics
given by officials, websites etc. the source of data used for the study was Balance sheet and
Profit and loss account of company. The secondary data was collected from annual reports of
the company from 2016-17 to 2017-18.

Tools and techniques

The collected data has been analyzed and interpretation is drawn and same is shown by way
of graphs, diagrams.

Analysis and interpretation of data has been prescribed with the help of percentage tables and
statistical tools such as chi-square test were used to test the hypothesis

LIMITATIONS OF THE STUDY

 The Study is part to only 10 weeks

 The time duration for conducting the study is limited.
 Inability of the finance personnel to provide adequate information due to their
preoccupation with their work
 Limited sample size which cause to variation in the analysis and interpretations.
  Some of the details are not provided by the finance officials because of their
confidentiality.

CHAPTER 4

DATAANALYSIS AND INTERPRETATION

INTRODUCTION:

Analysis of data is a procedure of reviewing, cleaning, changing, and demonstrating

information with objective of featuring valuable data proposing conclusions and supporting
basic leadership. Information examination various realities and methodologies, enveloping
assorted systems under an assortment of names, in various business, science and sociology
domains.

ANALYSIS:

It is a procedure of setting up the significant connection between the things of two financial
statements with the targets of identified the monetary and operational quality and weakness

INTERPRETATION:

It refers to the examination of different segments and definite conclusion might be drawn
about acquiring limit effectiveness benefit liquidity dissolvability trend etc.

ANALYSIS AND INTERPRETATION: It is process of establishing the meaningful

relationship between the items of financial statements with the objectives of identifying the
financial strength and weaknesses. This process includes both analysis and interpretation.
4.1 Table showing Gold loan assets
FORMULA of Trend analysis

PRESENT YEAR – PAST YEAR *100

YEAR AMOUNT (CRS) GROWTH

2013-14 26,387 ---

2014-15 21,862 -17.148

2015-16 23,408 7.071

2016-17 24,379 4.148

2017-18 27,278 11.891

PAST YEAR

ANALYSIS

The above table shows that gold loan assets under management is in 2014-15 16.923, 2015-
16 7.071, 2016-17 -4.148, 2017-18 -11.891.

4.1 Graph showing Gold loan Assets

 30,000
27,278
26,387
24,379
25,000 23,408
21,862

20,000

15,000

10,000

5,000

0
2013-14 2014-15 2015-16 2016-17 2017-18

INCRS

INTERPRETATION

From the above table we watch that the aggregate gold credit resources of Muthoot fund has
been expanded and diminished there development from year to year when contrast with their
earlier years. 2013-14 take as base year in 2014-15 decreased- 17.148%, 2015-16 increased -
7.071%, 2016-17 - 4.148% and in 2017-18 - 11.891%.

4.2 Table showing Gold jewelers kept as security

YEAR AMOUNT ( in tons) GROWTH

2013-14 134 ----

 2014-15 118 -11.940

2015-16 131 11.016

2016-17 142 8.396

2017-18 149 4.929

ANALYSIS

The above table shows that gold jewelers kept as security is in 2014-15 -118 tons, 2015-16 -
131 tons, 2016-17 - 142 tons, and in 2017-18 - 149 tons.

4.2 Graph showing Gold jewelers kept as security

 Gold jewelers kept as security
Series 3

134
118 131 142 149

2013-14
2014-15
2015-16
2016-17
2017-18

INTERPRETATION

From the above table indicates that the customers who are prefer gold loan increases year by
year in muthoot In 2014-15 decreased- 11.940%, 2015-16 increased- 11.016%, 2016-17 -
8.396% and in 2017-18 increased to 4.929%.

4.3 Table showing Average gold loan per branch

YEAR AMOUNT (%) GROWTH

 2013-14 63.2 ----

2014-15 56.93 -9.920

2015-16 55.01 -3.372

2016-17 50.63 -7.962

2017-18 63.39 25.20

ANALYSIS

The above table shows that Average gold loan per branch is 2013-14 taken as base year 2014-
15 -56.93, 2015-16 -55.01, 2016-17 -50.63, and 2017-18 -63.39.

4.3 Graph showing Average gold loan per branch

 Average gold loan per branch

70 63.39
63.2
60 55.01 56.93
50.63
50

40

30
Series 1
20
10
0
2013-14 Series 1
2014-15
2015-16
2016-17
2017-18

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 decreased- 9.920%, 2015-16 decreased- 3.372%, 2016-17 -7.962% and in
2017-18 increased up to 25.20%.

4.4 Table showing interest income on average loan assets

YEAR AMOUNT (%) GROWTH (%)

 2013-14 21.43 ----

2014-15 19.72 -7.979

2015-16 19.31 -1.774

2016-17 20.27 4.971

2017-18 21.66 6.857

ANALYSIS

The above table shows that interest income on average loan assets 2013-14 - 21.43, 2014-15 -
19.72, 2015-16 - 19.31, 2016-17 - 20.27, and 2017-18 - 21.66.

4.4 Table showing interest income on average loan assets

 interest income on average loan assets
In %

21.66
21.43

20.27

19.72

19.31

13-Mar 14-Mar 15-Mar 16-Mar 17-Mar

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous years
due to increase in activates of business in 2014-15 decreased-7.979%, 2015-16 decreased- -
1.77%4, 2016-17 increased- 4.971%and in 2017-18- 6.85%7.

4.5 Table showing interest expense on average loan assets

YEAR AMOUNT (%) GROWTH

2013-14 8.69 -----

 2014-15 9.25 6.444

2015-16 9.52 2.918

2016-17 10.84 13.865

2017-18 11.38 4.981

ANALYSIS

The above table shows interest income on average loan assets 2013-14 - 8.69, 2014-15 - 9.25,
2015-16 -9.52, 2016-17 - 10.84, and 2017-18 - 11.38.

4.5 GRAPH SHOWING INTREST EXPENSE ON AVERAGE LOAN ASSECTS

 11.38
12 10.84
9.52 9.25
10 8.69

2
in %
0
2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 increased- 6.44%4, 2015-16 increased- 2.918%, 2016-17- 13.865%and in
2017-18- 4.981%.

4.6 Table showing net interest margin

YEAR AMOUNT (%) GROWTH

 2013-14 12.74 -----

2014-15 10.47 -17.582

2015-16 9.70 -7.354

2016-17 9.42 -2.886

2017-18 10.27 9.023

ANALYSIS

The above table shows net interest margin 2013-14 -12.74, 2014-15 -10.47, 2015-16 -9.70,
2016-17 -9.42, and 2017-18-10.27.

4.6 Graph showing NET INTEREST MARGIN

 14 12.74

12 10.27 10.47
9.42 9.79
10

0 NET INTEREST MARGIN

2013-14 2014-15 2015-16 2016-17 2017-18

NET INTEREST MARGIN

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 decreased- -17.582% , 2015-16 decreased-7.354%, 2016-17-2.886% and in
2017-18 increased - 9.023%.

4.7 Table showing return on average loan assets

YEAR AMOUNT (%) GROWTH (%)

 2013-14 4.05 ----

2014-15 3.22 -20.493

2015-16 3.03 -5.900

2016-17 3.32 9.570

2017-18 4.47 34.638

ANALYSIS

The above table shows return on average loan assets 2013-14 -4.05, 2014-15 -3.22, 2015-16 -
3.03, 2016-17 -3.32, and 2017-18 -4.47.

4.7 Graph showing RETURN ON AVERAGE LOAN ASSETS

 4.5 4.47
4.05
4
3.5 3.22 3.32
3.03
3
2.5
2
1.5
1
0.5
0
2013-14 2014-15
2015-16
2016-17
2017-18

(%)

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 decreased- 20.493%, 2015-16 decreased- 5.900%, 2016-17 increased -
9.570% and in 2017-18 - 34.638%.

4.8 Table showing operating expenses to average loan assets

YEAR AMOUNT (%) GROWTH

 2013-14 4.08 ----

2014-15 4.46 9.313

2015-16 5.01 12.331

2016-17 5.1 1.796

2017-18 5.63 10.392

ANALYSIS

The above table shows that operating expenses to average loan assets 2013-14 - 4.08, 2014-
15 - 4.46, 2015-16 -5.01, 2016-17 - 5.1, and 2017-18 - 5.63.

4.8 Table showing operating expenses to average loan assets

 6

5.63
5
5.01 5.1

4.46
4
4.08

0
2013-14 2014-15 2015-16 2016-17 2017-18

(%)

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 increased- 9.313%, 2015-16 increased- 12.331%, 2016-17 - 1.796% and in
2017-18 - 10.392%.

4.9 Table showing profit before tax

YEAR AMOUNT (crs) GROWTH (%)

 2013-14 1,511 ---

2014-15 1,193 -21.045

2015-16 1,028 -13.830

2016-17 1,317 28.112

2017-18 1,921 45.861

ANALYSIS

The above table shows that profit before tax 2013-14 - 1,511, 2014-15 - 1,193, 2015-16 -
1,028, 2016-17 - 1,317, and 2017-18 - 1,921.

4.9 Graph showing Profit before tax

 19,210
20,000

18,000
15,114
16,000
13,168
14,000
11,936
12,000 10,279

10,000

8,000

6,000

4,000

2,000

0
2013-14 2014-15 2015-16 2016-17 2017-18

PBT

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 decreased- 21.045%, 2015-16 decreased - 13.830%, 2016-17 increased-
28.112% and in 2017-18 also increased 45.861%.

4.10 Table showing provision for taxation

YEAR AMOUNT (IN CRS) GROWTH

 2013-14 507 ---

2014-15 413 -18.540

2015-16 357 -13.559

2016-17 507 42.016

2017-18 741 46.153

ANALYSIS

The above table shows that provision for taxation 2013-14 - 507, 2014-15 - 413, 2015-16 -
357, 2016-17 -507, and 2017-18 - 741.

4.10 Graph showing PROVISION FOR TAXACTION

 IN CRS

741

507 507

413
357

2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 decreased- 18.540%, 2015-16 decreased- 13.559%, 2016-17 - 42.016%and
in 2017-18 - 46.153%.

4.11 Table showing profit after tax

YEAR AMOUNT (IN CRS) GROWTH

 2013-14 1,004 ---

2014-15 780 -22.310

2015-16 671 -13.974

2016-17 810 20.715

2017-18 1,180 45.679

ANALYSIS

The above table shows that profit after tax 2013-14 -1,004, 2014-15 - 780, 2015-16 - 671,
2016-17 - 810, and 2017-18 - 1,180.

4.11 Graph showing PROFIT AFTER TAX

 IN CRS
IN CRS

1,004 1,180

780
810
671

2013-14
2014-15
2015-16
2016-17
2017-18

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 decreased- 22.310%, 2015-16 decreased- -13.974%, 2016-17 increased -
20.715%and in 2017-18 increased - 45.679%.

4.12 Table showing number of branches increase

YEAR AMOUNT GROWTH (%)

 2013-14 4,082 ----

2014-15 4,270 4.605

2015-16 4,245 -0.585

2016-17 4,275 0.706

2017-18 4,307 0.748

ANALYSIS

The above table shows that number of branches increase 2013-14 - 4,082, 2014-15 - 4,270,
2015-16 -4,245, 2016-17 - 4,275, and 2017-18 - 4,307.

4.12 Graph showing number of branches increase

 NO OF BRANCHES

4350
4300
4270 4307
4250 4275
4245
4200
4150
4100 4082
4050
4000
3950
2013-14
2014-15
2015-16
2016-17
2017-18

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 increased- 4.605%, 2015-16 decreased-0.585%, 2016-17 - 0.706%and in
2017-18 - 0.748%.

4.13 Table showing number of employees

YEAR N0 of peoples GROWTH (%)

 2013-14 24,881 ----

2014-15 25,012 0.526

2015-16 22,882 -8.515

2016-17 22,781 -0.441

2017-18 24,205 6.250

ANALYSIS

The above table shows that number of employees 2013-14 -24,881, 2014-15 -25,012, 2015-
16 -22,882, 2016-17 -22,781, and 2017-18 -24,205.

4.13 Graph showing NUMBER OF EMPLOYEES

 2013-14, 24.881

2017-18, 24,205 2014-15, 25,012

2016-17, 22,781 2015-16, 22,882

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 increased- 0.526%, 2015-16 decreased- 8.515%, 2016-17 decreased-
0.441%and in 2017-18 increased- 6.250%.

4.14 Table showing reserves and surplus

YEAR AMOUNT (crs) GROWTH (%)

 2013-14 3,364 ----

2014-15 3,893 14.833

2015-16 4,686 20.369

2016-17 5,220 11.395

2017-18 6,117 17.183

ANALYSIS

The above table shows that reserve and surplus 2013-14 -3,364, 2014-15 -3,893, 2015-16 -
4,686, 2016-17 -5,220, and 2017-18 -6,117.

4.14 Graph showing Reserves and surplus

 7,000
6,117
6,000 5,220
4,686
5,000
3,893
4,000 3,364

3,000

2,000

1,000 Column2

IN CRS
0
2013-14 2014-15 2015-16 2016-17 2017-18

Column2

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 increased 14.833%, 2015-16 increased20.369%, 2016-17 11.395%and in
2017-18 17.183%.

4.15 Table showing net worth

YEAR AMOUNT( crs) GROWTH

 2013-14 3,736 ----

2014-15 4,265 14.159

2015-16 5,084 19.202

2016-17 5,619 10.523

2017-18 6,516 15.963

ANALYSIS

The above table shows that net worth 2013-14 -3,736, 2014-15 -4,265, 2015-16 -5,084, 2016-
17 -5,619, and 2017-18 -6,516.

4.15 Graph showing net worth

 in crs

6,516

5,619
5,084
4,265
3,736

2013-14 2014-15 2015-16 2016-17 2017-18

INTERPRETATION

From the above table we observe that the total gold loan assets of Muthoot finance has been
increased and decreased there growth from year to year when compare to their previous
years. In 2014-15 increased14.159%, 2015-16 increased 19.202%, 2016-17 decreased 10.523
%and in 2017-18 increased 15.963%.

CHAPTER-5

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

All through this study I have found numerous things and in light of those findings, given a
few proposals to enhance the activities of the Muthoot company ltd and finally the entire
investigation's decision is given, which given the opposition for their task. The findings,
suggestions r and conclusion are as per the following.

Findings

 It is founded that most of the respondents who prefer gold loan because of easily quick
getting money.
 That the gold loan assets is increased compare to previous year by increase of good
opinion about the company to the customers.
 Compare to previous year the tons of gold kept as security is increased due to increase in
number of customers.
 The normal gold credit per branch is fluctuating from year to year.
 From the collected data it was found that interest income on average loan assets is
increased compare to two previous year due to rate of gold is fluctuating.
 The interest expenses cost on average loan assets are expanded year by year.
 The net interest margin on gold loans of Muthoot finance fluctuating compared to past
years.
 The return on average loan assets is fluctuating year by year in previous year was
increased.
 Theoperating expenses on average loan assets gold loans of Muthoot finance fluctuating
compared to past years.
 The profit before tax on gold loans of Muthoot finance fluctuating compared to past
years but increased in previous year.
 The provision for tax on gold loans of Muthoot finance fluctuating compared to past
years but increased in previous year.
 The profit after tax on gold loans of Muthoot finance fluctuating compared to past years
but high rate of increased in previous year.
 From the collected data it was found that the number of branches of muthoot finance is
increased year by year due to increase in business operations of company in country.
 The number of employees is increased of Muthoot finance due to increase in branches.
 The reserves and surplus are increased compare to previous years.
 The net worth of company is increased year by year due to increase in assets and profit
of the company.
SUGGESTIONS

 The manager are require to give should give details information about the muthoot
services..
 It is suggested that the one-time settlement plan ought to present again for the
convenience of existing clients and for pulling in new client.
 The detail information about financing policies to the customers.
 The duration of repayment principal amount along with the interest should be extended
as the customers feel difficulty in repaying within a specified period.
 Most of the clients are expecting that not should bring about the service charges towards
the endorsing of gold credit.
 Informing to the customers about the different gold loan schemes in the muthoot finance.
 The interest rates on gold loans are important, so the financers have to give detail
information about the interest rates.
 Giving the terms and conditions of gold loans to the muthoot finance to the customers.
 The muthoot finance should increase its loans to maximum extent to increase its
profitability.
 The organization should utilize advanced technologies to check the purity of gold credit
as opposed to utilizing outdated strategy. By utilizing such old systems the gold
ornaments weightage may diminish.
 The muthoot finance should extend the repayment period for the some gold loan
schemes.
 The muthoot should extend lending maximum amount on some gold loan schemes.

CONCLUSION

The main function of financing is itself lending loans and providing other services. As other
financing companies are providing various services under different schemes it very helpful
for the public for providing to fulfill their financial requirements. The main aim of lending
loans is to mobilize savings from the public.

The finance reinvests the same deposits for the development of the country through lending
loans & other services. This analysis portrays the eligibility, terms & conditions to use the
fund tenure of repayment and come across with how the finance manages its capacity to meet
the loans and earn profits even though maintaining the bad debts, which are not recovered
from the public. So this project is very helpful to the Muthoot finance manager regarding
their operations in maintaining loan accounts of the public.

Moreover we had find certain problems faced by Muthoot in lending gold loans & other
loans, given certain recommendations to overcome these problems and also to make several
changes in the schemes adopted by the muthoot in order to attract more customers for making
use of these loans.
 ANNEXURE

BALANCE SHEET OF MUTHOOT FINANCE LIMITED - 2017-18

Equity and liabilities Amount Assets Amount
Shareholders Fund Non-current assets
c) Share Capital 39904755490 e. Fixed assets
d) Reserves and 61385640575 i . Tangible assets 2262400317
surplus
Non –current liabilities ii. Intangible assets 99918994
d) Long-term 48451337451 iii. Capital work in 99783210
borrowings progress
e) Other-long term 6719692255 iv. Intangible assets under 211495018
liabilities development
f) Long-term 97051810 f. Non-current 159073494
provisions investment
Current liabilities g. Deferred tax 635146885
assets(net)
e) Short – term 127658658528 h. Long-term loans 8365977780
borrowings and advances
f) Trade payables amd 65047407170 Current assets 806252984
other current liabilities Current investments
g) Short-term 6792030215 e. Trade receivable 12769313382
provisions
h) Total outstanding 975466934 f. Cash and bank 16448756373
dues of creditors balance
g. Short-term loans 279923226507
and advances
h. Other current assets 60075257

Total 321841420204 Total 321840420204

STATEMENT OF PROFIT AND LOSS ACCOUNT - 2017-18
Particulars Amount
Revenue from operations 59,108,007,360
Other income 275,902,209
Total revenue 59,383,909,569
Expenses
Employee benefit expenses 7,642,315,188
Finance cost 23,688,649,487
Other expenses 4,623,649,487
Directors remunerations 358,000,000
Depreciations and amortization 519,208,989
expenses
Provisions and write offs 2,966,497,773
Total expenses 39,798,071,402
Profit before tax 19,585,838,167
Tax expenses
Current tax 7,569,922,592
Deferred tax (54,947,717.87)
Taxes relating to previous years (1,740,48434
Profit for the year 12,072,603,777
 BIBLIOGRAPHY

Text book Author Edition Publishes

Management
Pillai & Bagavathi 2nd Sulthan chand & co ltd
Accounting
Financial Vikas publishing house pvt
I.M.Panday 1st
Accounting ltd
Anil kumar
Financial
Rajesh kumar 1st Himalaya publishing house
Accounting II
Mariyappa

Ramachandra and
Business
Chandrashekara Himalaya
Research
1st Publishing
Methods
House

Web sites;
www.muthoot.com