First Draft of the Project report

Company profile:

The Background:
The Muthoot Group is a 123 years old business based in India and interested in financial
services, Information technology, Media and Entertainment, Health care, Education, Power
generation, Infrastructure, Plantations, Precious metals and Hospitality. The Group takes its
name from the Muthoot Family based in Kerala. The Company was set up by Muthoot Ninan
Mathai in 1887 at Kozhencherry , a small town in the erstwhile Kingdom of Travancore
(Kerala). It was then later taken over by his son M John Muthoot who incorporated the Finance
division of the group which was till then primarily involved in wholesale of grains. The company
is now managed by the third and fourth generation of its family members.
Muthoot Fincorp Limited (MFL) the flagship Company of the 20,000 Crore Muthoot
Pappachan Group . A market leader in the gold loan business Muthoot Fincorp has over 1280
branches spread across the cities, towns and villages of India, the Company serves an average of
45,000 customers a day. Muthoot Fincorp’s long-standing experience, expertise and stronghold
in the semi urban and rural areas have enabled the Company to provide quick, customized
finance options and investment products, maximizing returns to the population. The loan
products of Muthoot Fincorp are uniquely structured to serve people who do not have easy
access to mainstream commercial banks.

MFL counts the satisfaction and long-service of its people as a cornerstone of its success.
Fostering teamwork, nurturing creativity and rewarding dedication to commitment are
systematically and professionally managed. Excellence and innovation are encouraged and
rewarded. Ensuring MFL’s people remain at the competitive edge, best practice in the area and
unique motivational programs are regularly carried out by the Training and HR departments.

The company recently announced plans for an IPO (Initial Public Offering) before the year
2014. In addition there are plans to implement an ESOP (Employee Stock Ownership Plan)
before 2012
 Muthoot Fincorp is a subsidiary of Muthoot Groups was established in 1939 and primarily
involved in financial sector of the country. Muthoot Fincorp falls under the category of Non
Banking Financial Company (NBFCs) of the RBI guidelines. Muthoot Fincorp limited is a
finance company catering to the financial needs of retail and institutional customers. It is
registered with the Reserve Bank of India as a systemically important non-deposit taking non-
banking finance company (NBFC) with a paid up capital of Rs. 60 crores and a Net Owned Fund
of Rs. 403 cores. Muthoot Finance is also the highest credit rated Gold Loan company in India,
with a credit rating of AA-(CRISIAL) for its long term debt and P1+ (CRISIAL) and A1+
(CRISIAL) for its short term debt Instrument. It has a diverse mix of retail offerings in the areas
of Consumer loan products and investment advisory services. These include Gold loans, Home
loans, Auto loans, Business loans, Loans against Property, Investment products and Advisory
Services, Secured Debentures etc.

Profile of Founder of Muthoot Group:

In 1887, in Kozhencherry a quiet hamlet surrounded by plantations in the Southern state of

Kerala, India, Mr. Ninan Mathai started a retail business along with his plantation ventures.In
time, his sons took over the reins and re-established the business. With their youthful vision and
combined strength it soon flourished. In 1939, the brothers established the Muthoot Chit Fund
Enterprises, providing small and medium loans to farmers and merchants. In a short span of 10
years it became the largest business house of its kind in Kerala.

They soon moved into full fledged banking operations. They specialised in gold loans and
advances to small enterprises and individuals on quick and easy terms. This ensured rapid
growth. The brothers then decided it was time to bifurcate and thus was born the Muthoot
Pappachan Group, founded by his youngest son Mathew M. Thomas or Muthoot Pappachan as
he is fondly known. Under his watchful eye the group has since diversified into financial
services, hospitality, flight catering, travel services, IT infrastructure, property development, the
automotive sector and alternate energy. A simple and devout man Muthoot Pappachan espoused
a nine point formula that stood by him in realising his goals. They are love, peace, happiness,
kindness, helpfulness, patience, pleasantness, faithfulness, and self control.
These ethics have been a guiding light to the path of his successors and have permeated every
strata of the Muthoot Pappachan Group. The same values still govern every decision in the
Group. When asked for his formula to success he quipped, “unflinching faith in the Almighty
and unshakeable determination to face and overcome challenges.”  In dire circumstances and
sometimes in the face of loss he was heard to quote that a debit on earth will be a credit in
heaven. A man, known to adhere to his word, he instilled these values throughout the
organisation he nurtured. The Muthoot Pappachan Group carries Muthoot Pappachan’s legacy on
with his words in our hearts “I am because God is with me.”

About the Board of Directors:

Thomas John Muthoot

The Muthoot Pappachan Group is headed by Chairman and Managing Director, Thomas
John Muthoot. With a vision for the future and rooted in the values imparted by his father, he has
effectively spearheaded the group over the past twenty five years into one of Kerala’s leading
financial powerhouses. He also paved the way for the diversification of the group into other
major industries like power, hospitality, automotive and more. He is also a member of the
Chamber Of Commerce, Trivandrum, and Treasurer of the Trivandrum Agenda Task Force.

Thomas George Muthoot

Thomas George Muthoot is the quiet strength behind the visionary growth of the group.
The twin of John Muthoot, Managing Director of Muthoot Capital Services and Director of all
other units of the Muthoot Pappachan Group, his penchant for technology and efficient
administrative skills ensures the group stays on the cutting edge of development. He is also the
Chairman of Kerala Non-Banking Finance Companies Welfare Association, Kochi and on the
managing committees of Indo-American Chamber of Commerce-Kerala Branch, Kochi and
Equipment Leasing Association of India (ELAI), Chennai.
Thomas Muthoot

Thomas Muthoot is Director- Strategic Initiatives and Director of other units of the group.
An expert in Micro credit and Micro saving business with a great desire to serve the masses, he
is innovative with need based financial products. His knowledge of emerging markets and their
functions have been harnessed in structuring the business interests of the group. He is also the
Vice President of Ernakulam District Cricket Association and Managing Committee member of
Kerala Cancer Care Society.

Organizational Structure:

In every Muthoot Fincorp branch there are five employees which includes one branch
manager, three customer care executive and one cashier.

The Company Product Line and Features of the product:

As far as services are concerned, Muthoot Fincorp provides various services according to
the needs and requirements of its customers. Basically its core services are gold loan and
swarnavarsham. Muthoot fincorp has strategic alliances with leading companies which grant its
customers access to premium services at affordable costs. For money transfer –Western Union
money transfer ,Motilal Oswal –For investment advisory services and share broking, For Mutual
Fund -Franklin Templeton. Muthoot Fincorp also provides SD (secured debenture) and FD
(fixed deposits). In gold loan it provides various types of schemes for customer like 3 minutes
express gold loan, smart plus gold loan. In 3 minutes express gold loan one can get loan up to 90
per cent of gold depending upon the purity level of gold within three minutes on an monthly
interest of 2 per cent. But in Smart plus gold loan the benefit of paying back in Equated Monthly
Instalments, The EMI is apportioned such that the larger amount goes toward repaying the
principal, no foreclosure charges,Part release and repledge is allowed, and Rebates on prompt
payment. Apart from EMI option it also provides different interest rate depending upon time
period and loan amount, here interest is also calculated on diminishing balance method. In smart
plus gold loan more flexibility is there as compared to 3 minute express gold loan.
In FD (fixed deposits) one get double its money in five years and the minimum amount in FD is
Rs 10,000/. In case of secured debenture company provides security of property and assets which
attract the customer’s attentions.

Marketing strategies:

As its marketing strategies suggest Muthoot Fincorp provides attractive offers to its
customers at the time of festivals like Akshaya Trithiya. Apart from it advertisement is given in
News papers and FM, celebrities and sport stars also used in the advertisement campaign.
Muthoot Fincorp also host some local events(20-20 cricket tournament,Israel open tournament )
in Kerala and other states in south India.

Competitors:

In gold loan market there are different players like banks, NBFC and local pawn brokers
and jewelries. In banking sector HDFC, Bank of India, Axis Bank, SBI, syndicate Bank etc. are
providing gold loan. In Non-Banking Financial Sector there more competitions among the
competitors and also there big competitors name like Muthoot Finance, Mannapuram gold loan,
Karvy Finance, Future capital gold loan, Reliance gold loan, Mahindra Finance, and also some
other players are involved. In India nearer about 70 per cent of market share is in the hands of
local jewelries and pawn brokers. Muthoot Fincorp objectives is to capture these 70 per cent
market share and its biggest competitors is Muthoot Finance and Mannapuram gold loan. Some
of the new players like Karvy Finance, Mahindra Finance gold loan, Future Capital comes into
market which is a threat for Muthoot Fincorp. Though there are many competitors in gold loan
market but still Muthoot Fincorp is successfully running its business more than six decades and
earned a profit of more than 200 cores in the fiscal year 2010-11.

Achievements:

Muthoot Finance is the highest credit rated Gold Loan company in India, with a credit
rating of AA-(CRISIAL) for its long term debt and P1+ (CRISIAL) and A1+ (CRISIAL) for its
short term debt Instrument. Its Mahila Mitra loan portfolio touches 10,000 women micro
entrepreneurs. In last two months it successfully opened 200 branches in northern part of India.
Future prospects:

Earlier Muthoot Fincorp was only in Kerala, and then it slowly expands its business and
now having more than 700 branches in south India. Then in the early 2000 it expand its business
Gujarat and in north India. At the same time this NBFC Company provides a wide choice of
services to its customers. Now its next step will be to open another 200 branches in north India
and then to shift east India. So one can say that Mthoot Fincorp is on expansion mode and in next
10 year it wii open its branches in entire India.

About my project:

We are three students doing a projects on “COMPETITORS ANALYSIS OF GOLD

LOAN MARKET” and this project only covers Delhi and NCR. As we know the demand of gold
is increasing day by day and particularly in last three to five years its demand and price are
increasing in an increasing rate. India’s biggest and oldest organization deal in gold and gold
loan is Muthoot Groups. Towards the end of 18th century onwards Muthoot is dealing in gold and
gold loans. After doing 10 years of business in early 90th century the business is divided among
its sons, then Muthoot Pappachan Group comes into picture. Muthoot is a Kerala company and
its head office is in Trivandrum Kerala. Slowly it expands its business in other states and cities in
South India like Cochin, Bengaluru, Coimbatore, Hyderabad, Chennai etc. Then is shifted to
Gujarat and other states in north east, the now it is expanding its business in north India and
going to open 210 new branches in Delhi and NCR within next six months. So for that reason
Muthoot Fincorp is doing five projects and one of the project is our project which objectives is to
find out the different services provided in gold loan market by different organizations and to
find out the market shares in the hand of local pawn brokers. Also this research project includes
in finding out policies and strategies of existing and upcoming competitors in this sector.

We visited entire Delhi and some part of NCR to collect information. For which we
visited 10-12 branches of every competitors for primary data collection and also went through
competitor’s websites and other related websites and links for secondary data collection. During
this research we visit local jewelries and big show rooms also visited local pawn brokers in Delhi
and NCR reason for collection of information. We found that all the NBFC companies have all
most equal policies and procedures and interest rate but local pawn brokers and jewelries have
different rate of interest and different policies. It is very difficult to get information from local
pawn brokers and jewelries, because they don’t have proper record like banks and NBFCs. Local
pawn brokers have higher interest rate as compared to banks and NBFCs also provides less
amount of loan per gram gold. But on the other hand in NBFCs the interest rate is less and
provides good amount of loan up to 90 percent of the value of gold. In Banks interest rate is less
and loan amount is less per gram.

Objectives of the project:

 To find out the different services provided in gold loan market by different organizations.
 To find out upcoming competitors in the gold loan market.
 To find out the initiatives taken by the organizations to attract new customers as well as
retain their old customers.
 To find out the core services avail by the customers.
 To find out the amount of gold available in organized and unorganized sector.
 Understand the competitors operating in the Gold Loan Market.    

Research design:
Exploratory research design: -Exploratory Research method will be followed for the study so as
to know various factors affecting the gold loan market.

Data used

Both primary data and secondary are used in this study

Sources of data:

1. Primary data

2. Secondary data
Primary Data: -

Primary data will be collected by visiting different organizations and institutions providing gold
loan.

Personal interviews will be used as the method of data collection.

Secondary Data: - Secondary data will be collected from websites of organizations and
institutions providing gold loan.

Literature Review:
Gold- Gold is the most malleable and ductile of all metals. Pure gold has a bright yellow color.
Now a day the demand of gold is increasing day by day and lots of players are involved in
buying and selling of gold and gold loan.

Gold loan- It is the kind of loan provided by NBFCs (non-Banking Financial Companies), Banks
and local pawn brokers. People mortgaged there gold in this companies and take loan and there
are different policies and schemes provided by different companies. After payment of all
amounts, this includes interest as well a customer can release his gold /jewelries.

Competitors-Competitors are the persons or organizations with whom one competes, in every
field there is competition. In gold loan market there are many competitors like Muthoot finance,
Muthoot Fincorp, Karvy finance, Mannapuram gold loan, Future capital, Reliance gold loan,
Mahindra Finance etc.

Gold purity- There are different types of gold is available in market like 22 cared , 24
cared.While giving gold loan Muthoot Fincorp test the purity level of gold with the help of black
stone, salt and nitric acid. According to the purity level loan amount is decided.