Aarti Project Final Copy

8/10/2019 Aarti Project Final Copy

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PROJECT REPORT ON

ASSET AND LIABILITIES MANAGAMENT IN

MUTHOOTH GOLD LOANS, NIZAMABAD

Project Report submitted to Jawaharl al Nehru Technological

Un iversi ty, H yderabad,

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATIONSubmitted by:

Mr./Ms._____________________________

H.T.No._____________________________ Under the esteemed guidance of

Mr./Ms._________________________

Associate/Assistant Professor

DEPARTMENT OF BUSINESS MANAGEMENT

VIJAY RURAL ENGINEERING COLLEGE, NIZAMABAD

(Approved by AICTE, New Delhi and Affiliated to JNTU Hyderabad)

2012-2014


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DECLARATION

I hereby declare that the work described in this project entitled -----------------

------------------------------------------------- carried out at ----------------------------

------- . which is being submitted by me in partial fulfillment for the award o f

degree of Master of Business Administration in the Dept. of Business

Management ,Vijay Rural Engineering College , Nizamabad to the

Jawaharlal Nehru Technological University Hyderabad, Kukatpally,

Hyderabad (Telanagana.) -500 085, is the result of investigations carried out

by me under the Guidance of Mr./Ms. --------------------------------------------.

The work is original and has not been submitted in full /partial for any

Degree/Diploma of this or any other university or institution.

Place: SignatureDate:

Name of the Candidate:

Hall Ticket No.:

Email-Id:


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COMPANY CERTIFICATE


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CERTIFICATE

This is to certify that the project report entitled CUSTOMER RELTIONSHIP

MANAGEMENT BIG BAZAR is being submitted by Mr ./Ms.-------------------------------(H.T.No. ------------------) in partial fulfillment for the award of the Masters Degree in

Business Administration (MBA) during the academic year 2014 to the JNTUH is a

recorded of bonafide work carried out by him/her under the guidance and

supervision.

The results embodies in this project have not been submitted to any other

university or institute for the award of any degree or diploma.

Signature of the Internal guide Signature of the HOD

( ) ( )

Signature of the External Examiner Signature of the Principal

(Dr.B.R.VIKRAM)


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ACKNOWLEDGEMENT

I take this opportunity to thank all who have rendered their full support

to my work. The pleasure, the achievement, the glory, the satisfaction, the

reward, the appreciation and the construction of our project cannot be thought

without a few, how apart from their regular schedule, spared a valuable time

for us. This acknowledgement is not just a position of words but also an

account of the indictment. They have been a guiding light and source of

inspiration towards the completion of the project.

I would like to express my hearted thanks to Mr. K.Narendhar

Reddy Garu Chairman, Mrs. Amrutha Latha Garu, Secretary and Dr.

B.R.Vikram Garu, Principal- Vijay Rural Engineering College for their kind

consent to carry out this project and also providing necessary infrastructure

and resources to accomplish my project work.

I express my profound sense of gratitude to Mr.---------------------------,

Associate Professor & Head of the Department of MBA, who has kindly permitted me to do major project in any area of my choice and providing me

all the facilities for the project.

I am deeply indebted to my project guide Mr. ----------------------------,

Assistant Professor in Department of MBA for his valuable guidance,

meticulous supervision, support and sincere advice to complete the project

successfully.

And I would like to express my sincere thanks to all the staff members

of MBA Department for their kind cooperation in completion of this project.

Finally, I thank to one and all those who have rendered help directly or

indirectly at various stages of the project and also my family members for

their care and moral support in finishing my project.

STUDENT NAME

H.T.NO


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ABSTRACT


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INDEX


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LIST OF TABLES


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INTRODUCTION

Asset Liability Management (ALM) is a strategic approach of managing the balance sheet dynamics in such a way that the net earnings are maximized.This approach is concerned with management of net interest margin to ensurethat its level and riskiness are compatible with the risk return objectives.

If one has to define Asset and Liability management without going intodetail about its need and utility, it can be defined as simply management ofmoney which carries value and can change its shape very quickly and has anability to come back to its original shape with or without an additional growth.The art of proper management of healthy money is ASSET AND

LIABILITY MANAGEMENT (ALM)

The Liberalization measures initiated in the country resulted in revolutionarychanges in the sector. There was a shift in the policy approach from thetraditionally administered market regime to a free market driven regime. Thishas put pressure on the earning capacity of co-operative, which forced them toforay into new operational areas thereby exposing themselves to new risks. Asmajor part of funds at the disposal from outside sources, the management isconcerned about RISK arising out of shrinkage in the value of asset, andmanaging such risks became critically important to them. Although co-operatives are able to mobilize deposits, major portions of it are high costfixed deposits. Maturities of these fixed deposits were not properly matchedwith the maturities of assets created out of them. The tool called ASSET ANDLIABILITY MANAGEMENT provides a better solution for this.

ASSET LIABILITY MANAGEMENT (ALM) is a portfolio managementof assets and liability of an organization. This is a method of matching variousassets with liabilities on the basis of expected rates of return and expectedmaturity patter n

In the context of ALM is defined as a process of adjusting s liability to meetloan demands, liquidity needs and safety requirements. This will result inoptimum value of the same time reducing the risks faced by them andmanaging the different types of risks by keeping it within acceptable levels.


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RBI revises asset liability management guidelines

February 6/2012In the era of changing interest rates, Reserve Bank ofIndia (RBI) has now revised its Asset Liability Management guidelines. Banks

have now been asked to calculate modified duration of assets (loans) and

liabilities (deposits) and duration of equity.

This was stated by the executive director of RBI, V K Sharma, and here

today. He said that this concept gives banks a single number indicating the

impact of a 1 per cent change of interest rate on its capital, captures the

interest rate risk, and can thus help them move forward towards assessment of

risk based capital. This approach will be a graduation from the earlier

approach, which led to a mismatch between the assets and liabilities.

The ED said that RBI has been laying emphasis that banks should

maintain a more realistic balance sheet by giving a true picture of their non

performing assets (NPAs), and they should not be deleted to show huge

profits. Though the banking system in India has strong risk managementarchitecture, initiatives have to be taken at the bank specific level as well as

broader systematic level. He also emphasized on the need for sophisticated

credit-scoring models for measuring the credit risks of commercial and

industrial portfolios.

Emphasizing on a need for an effective control system to manage risks,

he said that the implementation of BASEL II norms by commercial banks

should not be delayed. He said that the banks should have a robust stress

testing process for assessment of capital adequacy in wake of economic

downturns, industrial downturns, market risk events and sudden shifts in

liquidity conditions. Stress tests should enable the banks to assess risks more

accurately and facilitate planning for appropriate capital requirements.

Sharma spoke at length about the need to extend the framework of

integrated risk management to group-wide level, especially among financialconglomerates. He said that RBI has already put in place a framework for


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oversight of financial conglomerates, along with SEBI and IRDA. He also said

that at the systematic level efforts are being made to create an enabling

environment for all market participants in terms of regulation, infrastructure

and instruments.

NEED AND IMPORTANTS OF THE STUDY

The need of the study is to concentrates on the growth and performance of

MUTHOOT FINCORP and to calculate the growth and performance by using

asset and liability management and to know the management of

nonperforming assets.

To know financial position of MUTHOOT FINCORP

To analyze existing situation of MUTHOOT FINCORP

To improve the performance of MUTHOOT FINCORP

To analyze competition between MUTHOOT FINCORP with other

cooperatives.

SCOPE OF THE STUDY:

In this study the analysis based on ratios to know asset and liabilities

management under MUTHOOT FINCORP and to analyze the growth and

performance of MUTHOOT FINCORP by using the calculations under assetand liability management based on ratio.

Ratio analysis

Comparative statement

Common size balance sheet.


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GEOGRAPHICAL SCOPE :-

The same problem was with the all other branches of MUTHOOTFINCORP Bank even out of the NIZAMABAD city. The management isconducting the same research on a big ground while my contributionis tiny. Though my sample size and geographical area was definedand confine to a par ti cul ar te rri tor y but the application of output from theresearch are going to be wide.

PRODUCT SCOPE:-

Studying the increasing business scope.

Market segmentation to find the potential customers. To study how the various products are positioned in the market. Corporate marketing of products. Customers perception on the various products

OBJECTIVES OF THE STUDY

To study the concept of ASSET & LIABLITY MANAGEMENT inMUTHOOT FINCORP

To study process of CASH INFLOWS and OUTFLOWS in MUTHOOTFINCORP

To study RISK MANAGEMENT under MUTHOOT FINCORP

To study RESERVES CYCLE of ALM under MUTHOOT FINCORP

To study FUNCTIONS AND OBJECTIVES of ALM committee.


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METHODOLOGY OF THE STUDY

The study of ALM Management is based on two factors.

1. Primary data collection.

2. Secondary data collection

PRIMARY DATA COLLECTION:

The sources of primary data were

The chief manager ALM cell Department Sr. manager financing & Accounting System manager- ALM cell

Gathering the information from other managers and other officials of the

organization.

SECONDARY DATA COLLECTION:

Collected from books regarding journal, and management containing

relevant information about ALM and Other main sources were

Annual report of the MUTHOOT FINCORP Published report of the MUTHOOT FINCORP RBI guidelines for ALM.


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LIMITATION OF THE STUDY

This subject is based on past data of MUTHOOT FINCORP

The analysis is based on structural liquidity statement and gap analysis.

The study is mainly based on secondary data.

Approximate results: The results are approximated, as no accurate data isAvailable.

Study takes into consideration only LTP and issue prices and their differencefor Concluding whether an issue is overpriced or under priced leaving other.

The study is based on the issues that are listed on NSE only.

ASSET LIABILITY MANAGEMENT (ALM) SYSTEM:-

Asset-Liability Management (ALM) can be termed as a risk management

technique designed to earn an adequate return while maintaining a comfortable

surplus of assets beyond liabilities. It takes into consideration interest rates,

earning power, and degree of willingness to take on debt and hence is alsoknown as Surplus Management.

But in the last decade the meaning of ALM has evolved. It is now

used in many different ways under different contexts. ALM, which was

actually pioneered by financial institutions and banks, are now widely being

used in industries too. The Society of Actuaries Task Force on ALM

Principles, Canada, offers the following definition for ALM: "Asset Liability

Management is the on-going process of formulating, implementing,

monitoring, and revising strategies related to assets and liabilities in an attempt

to achieve financial objectives for a given set of risk tolerances and

constraints."


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Basis of Asset-Liability Management

Traditionally, banks and insurance companies used accrual system of

accounting for all their assets and liabilities. They would take on liabilities -

such as deposits, life insurance policies or annuities. They would then invest

the proceeds from these liabilities in assets such as loans, bonds or real estate.

All these assets and liabilities were held at book value. Doing so disguised

possible risks arising from how the assets and liabilities were structured.


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REVIEW OF LITERATURE

Paper Title:-Sovereign Risk and Asset and Liability

Management Conceptual Issues (SRALM)

Authour : - G. Papaioannou, and Author Iva Petrova(2000)

Findings:- Country practices towards managing financial risks on a sovereign

balance sheet continue to evolve. Each crisis period, and its legacy on

sovereign balance sheets, reaffirms the need for strengthening financial risk

management. This paper discusses some salient features embedded in in the

current generation of sovereign asset and liability management (SALM)

approaches, including objectives, definitions of relevant assets and liabilities,

and methodologies used in obtaining optimal SALM outcomes. These

elements are used in developing an analytical SALM framework which could

become an operational instrument in formulating asset management and

debtor liability management strategies at the sovereign level. From a portfolio

perspective, the SALM approach could help detect direct and derived

sovereign risk exposures. It allows analyzing the financial characteristics of

the balance sheet, identifying sources of costs and risks, and quantifying the

correlations among these sources of risk. The paper also outlines institutional

requirements in implementing an SALM framework and seeks to lay the

ground for further policy and analytical work on this topic.JEL

Paper Title: - Integrating Asset-Liability Risk Management with

Portfolio Optimization for Individual Investors II (IALRM)

Author: - Travis L. Jones, Ph.D.(2002)

Findings: - A majority of private client practitioners rely on mean-variance

optimization (MVO), rules of thumb, or model portfolios for making asset

allocation recommendations. Considerations for income levels and other

constraints figure into the typical approach. However, not enough attention is


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given to the nature of an investors multiple time horizons and implications for

cash flows. These are the future demands placed upon the portfolio. The risks

that these demands will not be met need to be clearly understood in order to

validate any asset allocation decision. This study presents an approach of

incorporating MVO within a multi-horizon, asset-liability Management risk

model. This approach allows for cash-flow matching of a portion of an

investors portfolio within the optimization framework. This allows an

individuals portfolio to provide short-term cash flow, as needed, while also

considering the longer-term demands on the portfolio.

Part Title: - Asset & liability management (ALM) modeling with risk

control by stochastic dominance.

Author name: - Xi Yang, Jacek Gondzi & Andreas Grothey(2001)

Findings:- An Asset Liability Management model with a novel strategy for

controlling the risk of underfunding is presented in this article. The basic

model involves multi-period decisions (portfolio rebalancing) and deals withthe usual uncertainty of investment returns and future liabilities. Therefore, it

is well suited to a stochastic programming approach. A stochastic dominance

concept is applied to control the risk of underfunding through modeling a

chance constraint. A small numerical example and an out-of-sample back test

are provided to demonstrate the advantages of this new model, which includes

stochastic dominance constraints, over the basic model and a passive

investment strategy. Adding stochastic dominance constraints comes with a price. This complicates the structure of the underlying stochastic program.

Indeed, the new constraints create a link between variables associated with

different scenarios of the same time stage. This destroys the usual tree

structure of the constraint matrix in the stochastic program and prevents the

application of standard stochastic programming approaches, such as (nested)

Benders decomposition and progressive hedging. Instead, we apply a

structure-exploiting interior point method to this problem. The specialized

interior point solver, object-oriented parallel solver, can deal efficiently with


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such problems and outperforms the industrial strength commercial solver

CPLEX on our test problem set. Computational results on medium-scale

problems with sizes reaching about one million variables demonstrate the

efficiency of the specialized solution technique. The solution time for these

non-trivial asset liability models appears to grow sub linearly with the key

parameters of the model, such as the number of assets and the number of

realizations of the benchmark portfolio, which makes the method applicable to

truly large-scale problems.


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PROFILE OF INDUSTRY & COMPANY

Muthoot Finance Ltd. is the largest player in the gold loan business inIndia. 76% of its business is generated from the 5 southern states in the

Country. The Company has a market share of 19.5% in the organized sector as

on FY10. It is facing major legal hurdle related to Kerala State Money lender

Act which, if implemented will substantially reduce the profitability of the

Company as Kerala accounts to 24% of Companys business. Moreover, there

is a good probability for gold price to get corrected after this prolonged bull

run which may reduce the ticket size of the loans, leading to a drop in growthand associated profitability. We are quite bullish on the growth potential of

this firm but we would like to avoid the scrip until the abovementioned factors

are sorted out and the scrip is available at a deep discount.

INTRODUCTION OF THE MUTHOOT FINANCE LTD

Incorporated in 1997, Muthoot Finance Ltd. is Indias largest gold loan

Company. It is a subsidiary of Muthoot Group which is headquartered atKochi, India. It 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. It has the largest branch network among gold loan providers in

India with 1921 branches and a strong presence in the underserved rural and

semi-urban markets. In 2010, it received a fund infusion of Rs.250 cr. from

private equity players like Baring India Private Equity, Matrix Partners India,

Kotak India Private Equity Fund and Well come Trust for a 6% stake in the

Company. In 2011, well comes Trust picked up an additional 1% stake from

the promoters, taking the total stake of private equity investors to 7%.


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HISTORY - MUTHOOT FINANCE LTD

Our Company was originally incorporated as a private limited

company on March 14, 1997 with the name The Muthoot Finance Private

Limited under the Companies Act. Subsequently, by fresh certificate of

incorporation dated May 16, 2007, our name was changed to Muthoot

Finance Private Limited. The Company was converted into a public limited

company on November 18, 2008 with the name Muthoot Finance Limited

and received a fresh certificate of incorporation consequent upon change in

status on December 02, 2008 from the RoC.

Merger with Muthoot Enterprises Private Limited Our Company, along

with Muthoot Enterprises Private Limited, filed a composite scheme of

arrangement bearing C.P. Nos. 48 and 50 of 2004 under the Companies Act

before the High Court of Kerala ( Scheme of Amalgamation). The Scheme of

Amalgamation was approved by the board of directors of our Company

through the board resolution dated April 28, 2004.

Pursuant to the approval of the Scheme of Amalgamation by the High

Court of Kerala by an order dated January 31, 2005, Muthoot Enterprises

Private Limited was merged with our Company, with effect from March 22,

2005 and the High Court of Kerala had instructed all the parties to comply

with the statutory and other legal requirements to make the Scheme of

Amalgamation effective.

The company on March 22, 2005 filed a certified copy of the order ofthe High Court of Kerala with the RoC. With the successful implementation of

the Scheme of Amalgamation, the undertaking of Muthoot Enterprises Private

Limited along with its assets and liabilities was transferred to and vested in

our Company.


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KEY EVENTS, MILESTONES AND ACHIEVEMENTS YEAR

1. 2001 RBI license obtained to function as an NBFC.

2. 2004 Obtained highest rating of F1 from Fitch Ratings for short term debt

of Rs. 200 million.

3. 2005 Retail loan and debenture portfolio of the Company exceeds Rs. 500

million.

4. Merger of Muthoot Enterprises Private Limited with the Company

5. 2006 F1 rating obtained from Fitch Ratings affirmed with an enhanced short

term debt of Rs. 400 million.

6. 2007 Retail loan portfolio of the Company crosses Rs. 10 billion.

7. RBI accords status of Systemically Important ND-NBFC.

8. Branch network of the Company crosses 500 branches.

9. Net owned funds of the Company crosses Rs. 1 billion.

10. 2008 Net owned funds of the Company crosses Rs. 2 billion.

11. Retail loan and debenture portfolio crosses Rs. 20 billion and Rs. 10

billion respectively.

12. F1 rating obtained from Fitch Ratings affirmed with an enhanced short

term debt of Rs. 800 million.

13. Overall credit limits from lending banks crosses Rs. 5 billion.

14. Conversion of the Company into a public limited company.

15. Fresh RBI license obtained to function as an NBFC without accepting

public deposits, consequent to change in name.

16. 2009 Retail loan and debenture portfolio crosses Rs. 30 billion and Rs. 15




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18. Gross annual income crosses Rs. 5 billion.


20. 2010 Retail loan and debenture portfolio crosses Rs. 50 billion and Rs. 20




23. ICRA assigns A1+ rating for short term debt of Rs. 2 billion.

24. CRISIL assigns P1+ rating for short term debt of Rs. 4 billion.

25. Branch network of the Company crosses 1,000 branches.

26. Demerger of the FM radio business into Muthoot Broadcasting Private

Limited.

27. Private equity investment of an aggregate of Rs. 1,575.45 million from

Matrix Partners India Investments, LLC and Baring India Private Equity Fund

III Limited.

BACKGROUND - MUTHOOT FINANCE LTD

Muthoot finance is a flagship company of the Muthoot Group based in

Southern India. The group has a presence in diverse businesses including

financing, healthcare, real estate, education, hospitality, forex, wealth

management services, money transfer services, power generation and

entertainment.

Muthoot Finance Ltd (MFL), incorporated in 1997, is the Kerala based

largest gold financing company in India in terms of loan portfolio. The

company offers gold loan to individuals like small businessmen, vendors,

traders, and salaried individuals who cannot access formal credit for reasons

like lack of credit history, documentation, accessibility. The company


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generally gives small ticket loans (average ticket size of ~`31000) with a tenor

not exceeding one year, thereby limiting interest risk and asset-quality

concerns. The loan-to-value varies from 60%-85%. Muthoot Finance Gold

Loan portfolio as of November 30, 2010 comprised approximately 4.1 mn

loan accounts in India which it serviced through 2263 branches across 20

states. The company has further increased its branch network to 2611 branches

as of February 28, 2011, servicing an average of 67,953 customers per day in

the month of February 2011. As of February 28, 2011, the company has

employed 15,664 persons. Other then Gold Loans business, the company

provides money transfer services through their branches as sub-agents of

various registered money transfer agencies.

PRODUCT AND SERVICES OF THE MUTHOOT FINANCE

1. GOLD LOAN

Muthoot Finance, Indias largest gold loan company is the first choice of

Indians who want to make their dream a reality. May the dream be to start

their own business or to buy their own home, for over 124 years Muthoot

Finance has helped almost every Indians dream come true. Trusted by over

70000 customers every day, Muthoot Finance Gold Loan has services and

products that fit the need of any customer, making it the quickest, most

convenient and safest way to take a gold loan.

Key features of Gold Loan:

Loan disbursal in 5 minutes Loans starts from 1,500 to 1 Crore Minimal documentation and credit assessment requirements High quality customer service in short response time Evaluation of gold ornaments takes place in house.


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Safety of Gold Ornaments: All branches as equipped with Strong

Rooms for keeping safe custody of Gold Ornaments

Gold Loan available at over 3,000 Muthoot Finance branches across

India

0% processing fees Pre-payment option-without any penalty

GOLD LOAN SCHEMES

Scheme Name Value (per gram) Interest (% p.a.)

True Value Personal Loan (TPL) Rs. 1,035/- 12%

Super Value Personal Loan (SPL) Rs. 2,260/- 24%

Real Value Personal Loan (RPL) Rs 1,960/- 18%

Express Personal Loan (XPL) Rs. 2,090/- 21%

2. GOLD COINS

Now invest your wealth in the ever rising power of Gold with the Muthoot

Precious Metals Corporation. 24 carat Pure Gold Coins: Muthoot Precious

Metals Corporation presents Gold Coins with 999% purity (24 Carat). Invest

in safe, secure and profitable Gold Coins.

The Gold Coins hold many advantages:

999% pure Finance schemes with easy monthly installments

Appreciating asset


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Higher return on investment with no risks Available in denominations such as 2g, 4g, 8g, 20g and 50g to suit

every pocket.

The ideal gift for your near and dear ones

Silver Coins

999% pure Silver Coins

One of India's few financial players that deals in Silver Coins

Available in 50 gm and 100 gm

Available at over3, 000 Muthoot Finance brances across India

3. MONEY TRANSFER

One of the finest Money Transfer services in India, with over 700,000

transfers annually, Muthoot Money Transfer is the largest payout centre inIndia. Muthoot Money Transfer allows real time money transfers from across

the seas, with the money reaching the receiver in less than 10 minutes. The

money can be transferred from First Remit/Coinstar, Xpress Money, Ez

Remit, Money Gram, Royar Money, Global Money Transfer, Western Union,

Transfast, Instant Cash and even Muthoot Finances own branches abroad.

The service boasts low costs, high exchange rates and NO additional service

charge to the receiver.

The key highlights of this service are:

Fastest Money Transfer facility No bank account needed for amounts up to Rs. 50,000 The receiver does not have to pay any service charge Certified by the RBI Access it in any of the 3000 branches across the country


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4. FOREIGN EXCHANGE

Muthoot Foreign Exchange offers you currency exchange facilities as well as

allows you to buy and sell foreign currency and Travellers cheques with

Muthoot Foreign Exchange service. With the wide network of almost 3000

branches, we ensure ease of transaction. Muthoot Foreign Exchange helps you

get competitive rates for all currencies and notes in 35 major currencies as

well as 100 miscellaneous ones!

A few features of our Foreign Exchange service:

Buying and selling of all major Travellers cheques and Travel Cards Commission free encashment of Travellers cheques Competitive rates for all currencies Remittance of funds abroad for various purposes

5. MPOWER CARD

Your life is made infinitely easier with the Muthoot MPower Card, which is

a unique identity card with numerous benefits:

Access it anywhere in India Earn Loyalty Points on every transaction at ANY Muthoot branch

Redeem these Loyalty Points for attractive gifts Get Rs. 20 per gram extra on Gold Loan Keep all your jewelry in our lockers free of cost (No locker charges!) Rs. 50,000 Personal Accident Insurance coverage Deposit and withdraw money from any branch on Real Time Special overdraft scheme for MPower Cardholders.


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6. TRAVEL SMART

Within just a few months of its launch Muthoot Travel smart has already become one of the leading IATA (International Air Transport Association)

accredited agencies and has got certified by IRCTC. Muthoot Travel smart

offers all the services of a travel agency and more, such as travel insurance

and foreig n exchange Muthoot Travel smart carries forward the groups core

values of helping India make the right decision with their money by helping

you during your travels, both familial and official. In addition to the 3000

branches of Muthoot Finance in India, the services of Muthoot Travel smart

can be accessed in 6 offices overseas as well.

The services offered under Travel smart include:

International & Domestic Ticketing Railway Ticketing Tours Passport, Emigration & Visa

Travel Insurance

VALUE ADDITION IN PRODUCT AND SERVICES OF THE

MUTHOOT FINANCE LTD

We have challenged ourselves to perform better than the best. We have

now launched a new venture in Gold Financing, offering Customers loan

against the security of Gold Exchange Traded Funds (ETFs) units. This willnot only add value to the services but also enable the Company to service

financial requirements of new Customer segment.

The visionary zeal, constant innovation and customer-oriented product

& service delivery deployed at every phase of its growth are indeed

exemplary. And Muthoot Group is now all set to go places, backed by its

assets built by extraordinary people and high values.

With the guiding principles of honesty, sincerity, confidence and service,Muthoot Group has indeed come a long way. These values continue to drive


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all business decisions of the Group Companies. With customer-centric

products and services to offer, the Group has been constantly innovating and

evolving to deliver superior products, transparent workplace practices, easy

accessibility and personalized services at all levels. Perhaps why, Muthoot

Group has earned the trust of millions of customers and associates across the

country.

1. Muthoot Finance launches new gold loan scheme

Indian non-banking finance company (NBFC) Muthoot Finance Ltd

Friday announced the launch of a new gold loan scheme that will provide

loans to public against the security of Gold Exchange Traded Fund (ETF)

across the country.

The new scheme Gold ETF Loan Scheme which will be made

available to the customers by July-end 2011 will help customers get loan

against their Gold ETF units to the extent of 85% of the net asset value (NAV)

of ETFs, said a press release issued by Muthoot Finance.

Gold ETFs are mutual fund units issued by Asset Management

Companies against 995 purity physical gold. They are listed and traded on

stock exchanges and can be bought and sold like stocks on a real-time basis.

Gold ETFs were valued at Rs 50 billion as of June 2011.

Loan again st Gold ETF is a scheme through which Muthoot Finance

plans to venture into totally new segment of gold financing which would not

only add value but also enable the company to service the financial

requirements of newer customer segments, said George Alex ander Muthoot,

managing director of Muthoot Finance during the launch.

2. MUTHOOT FINANCE LAUNCHES THE WESTERNUNION MONEY TRANSFER SM SERVICE:

May 27, 2011, Kochi, India: International money transfer consumers across

Kerala - Indias foremost remittance dri ven economy will now be able to


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receive their Western Union Money Transfer SM transactions from Muthoot

Finance - a leading Kerala based financial institution.

Muthoot Finance will now offer Western Union Money Transfer

services from its countrywide network of 2800 locations linking them to

Western Unions network of more than 400,000 locations in over 200

countries and territories across the world.

Launching the service, Mr George Alexander Muthoot Managing

Director, Muthoot Finance Ltd said, Her e, on this occasion, three of the

biggest players of the Indian Financial Services industry have come together

with the intention of providing a premium money transfer service to customers

across the country.

Muthoot Finance Ltd., through its extensive network of branches, aims

to capitalize the huge potential of the money transfer business in India.

With its expansive global network, Western Union is uniquely

positioned to deliver fast, reliable and convenient money transfer services to

consumers across remote geographical locations globally.

Through our agreement with Western Union we have facilitated anumber of classes of trade including retail and banks to offer Western Union

Money Transfer s services to the remotest corners of India. The collaboration

with Muthoot Finance is one more step in this direction which would

positively impact people across the 2,800 branches offering the service,

History of GOLD loan

Gold is a brilliant yellow precious metal that is resistant to air and watercorrosion. It is a very soft and pure metal. Gold is the most malleable andductile metal found on earth. Thats why it is expensive and it is alloyed withother metals, usually copper and silver to make it less expensive and harder, akarat is the unit that measures the purity of gold jewellery or else it ishallmarked with a three digit number that indicates the parts per thousand ofgold. Some countries hallmark gold with a three digit number that indicatesthe parts per thousand of gold. The alloyed gold comes in many colours andmay not be bright yellow all the time. It has long been a values commodity,

particularly in India where it is considered auspicious, and had been in use forcenturies in the form of jewellery, coins, bullions, electronics, and dentistry,


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also for other medical purposes. Though gold is a highly liquid asset, it wasntuntil recently that consumers leveraged it effectively to meet their liquidity

needs.

Lenders provide loans by securing gold assets as collateral. Compared with therest of the world in India the gold loan market is big business. Until a decade

back, most of the lending was in the unorganized sector through pawnbrokersand money lenders. However this scenario changed with the entrance oforganized sector players such as banks and non banking finance companies(NBFCs) which now command more than 25% of the market. The organizedgold loan market has grown at 40% CAGR form 2002 to 2010. NBFCs have

been a major driving force behind this growth given their extensive network.

Faster turnaround time, higher loan to value ratios and the ability to serve non- bankable customers. Of late, banks have improved their gold loan productfeatures and services. Coupled with comparatively lower interest ratescharges, bank stand to gain market share at the expanses of NBFCs in the nearfuture.

The eligibility criteria required to apply for gold lone in India includes threefactors. Firs-tly, the person has to be above 18 years of age. Secondly, the

person applying or a gold loan in India should have a ID & address proof andlast but not the least the applicant should be working on a regular salary basis ,means there should be a constant flow of income.

BACKGROUND: GOLD AND THE INDIAN SOCIETY

Gold has traditionally been among the most liquid asset and is an accepteduniversal currency. it has traditionally been consumed by individuals in theform of jewellery, especially in India were it is considered auspicious. Gold is

presumed to be a safe haven in times of economic uncertainty, a factexemplified by a 30% increases the value of gold over the past year India isone of the largest market of gold accounting for approximately 10% of thetotal world gold stock as of 2010. Rural India accounts for 65% of this goldstock. Though gold price have increased 19% CAGR from 2002 to 2010, goldstock in India has grown at 22% CAGR During the same period to 18000 tons(Rs.32000 billion). The demand for gold has followed a regional trend withsouthern India accounting for 40% of annual demand, followed by the west(25%), north (20-25%) and east (10-15%).

Looking for Gold Loan Market

The Key Players in the Indian gold loan market include the unorganizedsector, banks _ public/private/cooperatives and NBFCs. While theunorganised sector, comprising local pawnbroker and money leader has


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traditionally dominated the gold loan market for money decades and stillcommands nearly 75% of the market the organized sector led by NBFCs is

catching up fast. The organized sector has grown at rapid paces of 40% CAGRform the 2002 to 2010 and is expected to grow by 33% to41% CAGR in 2011

And in doing so these companies are challenges the dominance of the largeunorganized sector within the organized sector, NBFCs have grown at a repaidrate from 18.4% in FY to 32.2% in FY10. (Source: cognizant 20-20 insight

jan.2012)

Muthoot finance

With a tagline loan in just 5 minutes muthoot fiancs is a Indias largest goldloan company & is the fast choice of Indian who want to make their dream areality. May the dream be to start their own business or to buy their ownhome: muthoot finance has helped almost every Indians dream come true,trusted by over 76000 customer every day muthoot finance gold loan hasservices and products that fit the need of any customers, making it the quickest,most convenient and safest way to take gold loan

Headquartered in the southern Indian state of Kerala, their operating historyhas evolved over a period of 72 since M George muthoot (the father of our

promoter) founder a gold loan business in 1939 under the heritage of atreading business established by his father, ninan mathai muthoot in 1987.since our formation, we have broadened the scale and geographic scope oftheir retail leading operation so that, as of march 31, 2008, 2009, 2010, 2011and in the period ended September 30, 2011 revenue from their gold loan

business constituted 95.97% 96.71% 98.08% 98.75% and 99.01% respectively, of their total income,

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