A PROJECT REPORT ON
Study on building Customer Relationship by Offering Loan
and Driving Sales Workforce
Submitted for the partial fulfillment of the requirement for the award of degree of
Master in Business Administration
Under the guidance of
Dr. P.K CHOPRA
&
Dr. SHIKHA BHARGAV
Submitted by:
SHIVAM RATHORE
Scholar No.: 192580087
Department of Management Studies
ORIENTAL COLLEGE OF MANAGEMENT, BHOPAL (M.P.)
2018-2020
DECLARATION
I, the undersigned, hereby declare that the project report entitled Study on “Building
Customer Relationship by Offering Loan and Driving Sales Workforce” submitted to
Barkatullah University, Bhopal under the guidance of Mr. Raunak Gattani , is my
original work and the conclusions drawn therein are based on the material collected by
myself.
The report submitted is my own work and has not been duplicated from any other source.
I shall be responsible for any unpleasure moment or situation.
Name: Shivam Rathore
Scholar No: 192580087
Place: Bhopal
Date:
ACKNOWLEDGEMENT
I perceive this opportunity as a big milestone in my career development. I will strive
to use gained skills and knowledge in the best possible way, and I will continue to
work on their improvement, in order to attain desired career objectives. The
internship opportunity I had with Capital First was a great chance for learning and
professional development. Bearing in mind previous I am using this opportunity to
express my deepest gratitude and special thanks to the Sales Manager of Capital
First, Mr. Raunak Gattani who in spite of being extraordinarily busy with his
duties, took time out to hear, guide and keep me on the correct path and allowing
me to carry out my project at their esteemed organization and extending during the
training.
I express my deepest thanks to Mr. Amit Gulati, Cluster Head for taking part in
useful decision & giving necessary advices and guidance. I choose this moment to
acknowledge his contribution gratefully.
It is my radiant sentiment to place on record my best regards, deepest sense of
gratitude to Mr. Pramod Dubey (Relationship Manager), Mr. Anand Doke and Mr.
Sachin Bidkar (Sales Officers), for their careful and precious guidance, which were
extremely valuable for my study both theoretically and practically.
Last but not the Least I am deeply grateful, to my faculty guide Mrs. Poonam
Panchalar for her invaluable suggestions, comments, feedback and support
throughout the internship. They have served as a beacon of light. Her patience and
faith in my abilities always boosted my confidence.
Table of Contents
1.
AUTHORISATION…………………………………………………………………………………3
ACKNOWLEDGEMENT…………………………………………………………………………4
EXECUTIVE SUMMARY……………………………………………………….……………....7
ABSTRACT...............................................................................................8
INTRODUCTION…………………………………………………………………………………..9
1.1 THEORETICAL BACKGROUND...……………………………………………………..9
1.2 INTRODUCTION OF NBFC.............………………………………….……………10
1.3 ABOUT THE COMPANY...................................................................11
1.4 OBJECTIVE…………………………………………………………………………..........14
2. MAIN TEXT...........................................................................................15
2.1 VIJAY SALES (STATION ROAD) AND CAPITAL FIRST........................15
2.2 MARKETING OF FINANCIAL PRODUCTS.........................................17
2.3 THE PROCEDURE............................................................................21
2.4 ONLINE APPROVAL: “Sales Force” Portal...........................................23
3.
METHODOLOGY..................................……………………………………………..27
4. ANALYSED THE INDUSTRY AND COMPANY.........................................28
4.1 SWOT ANALYSIS...........................……………………………………………...28
4.2 PORTER’S FIVE FORCE MODEL......................................................30
4.3 PESTEL ANALYSIS...........................................................................31
5.
6.
7.
8.
9.
LOAN CRITERIA.....……………………………………………………………………………36
MEETINGS AND SEMINARS..................................................................38
ANALYSIS.............................................................................................40
RECOMMENDATIONS..........................................................................45
LEARNINGS..........................................................................................45
CONTRIBUTIONS..............................................................................46
11. CONCLUSION....................................................................................46
12. REFERENCES…………….…………………………………………………………………..46
10.
EXECUTIVE SUMMARY
The objective behind this project was to primarily focus on operations of Capital
First Ltd. for Finance of Consumer Durable products. This required a firsthand
experience in understanding end to end process flow of loans processing to
payment disbursement.
Also I have discussed about the EBC Card. Capital First which is one of the lending
company they also make available EBC Card option for the loan. I have worked on
primary data as well as secondary data which was collected from Company Annual
Report & internet Articles. I also focused on the surrogates required for loan
approval, which documents are necessary for approval of loan.
My report also shows the SWOT analysis, PESTEL Analysis and Porter’s Five Force
Analysis of the Industry. Through this project, I have learnt how to given a loan on
consumer durable product and how to solve customer difficulties about the
documentation. I was dealing with customers and help them provide loans by
pitching customers on floor, completing their files and getting the approval online
on Capital First Ltd. Server called as “Sales Force” Portal.
This process helped me to better understand the Loan procedure of Consumer
durable product at Capital First Lending.
ABSTRACT
The summer training programs are designed to help students to extract practical
knowledge from the corporate world. Training is usually required where advanced
theoretical knowledge that we have gained from the institute is backed up by
practical experience on the job and it’s because of this reason that summer training
programs are designed, that the future manager must be ready to take the future
responsibilities assigned and tackle the entire problem that he/she will face ahead
in his corporate life. This Summer Internship Program is designed for 3 months
from the College and my internship is at Capital First.
In this report I will share my experience of 100 days in the company. My role as an
intern in the company is to study and understand the loan schemes provided to
customers on consumer durable products. I need to have an in-depth knowledge of
all consumer durable products with its special features associated. I also have to
lure and convince the customers for lucrative loan offers and attractive schemes
made by Capital First.
Last but not the least to check and verify if customers are capable enough to repay
the loan. As an intern, I have to pitch customers on the floor, convince more number
of customers (especially at the time of footfall) and get more loan approvals for the
company.
1. INTRODUCTION
1.1 THEORETICAL BACKGROUND
CONSUMER FINANCE:
The division of retail banking that deals with lending.
The consumer finance is a win-win system in which everyone wins. For the
consumers it is an opportunity to upgrade standard of living here and now instead
of waiting for years of Savings to accumulate. For dealers it is one type of sales
booting. For finance company it is profit generation. Consumer finance has to do
with the lending process that occurs between the consumer and a lender. In some
instances, the lender may be a bank or financial institution. At other times, the
lender may be a business that offers in house credit in exchange for the business of
the consumer. Consumer finance can include just about any type of lending activity
that result in the extension of credit to a consumer.
CONSUMER DURABLE FINANCE:
“Consumer durable finance means to provide the finance on the consumer durable
product like, Washing machinist, TV etc. it is known as consumer durable Finance”.
The consumer durable finance provide the 0% interest on durable product to the
consumer, This gives customers another compelling reason to opt for 0% interest
Consumer Durables Finance for their durables purchases. Consumer durables
finance schemes are generally available at the dealer location (point of sale) or the
showroom. The beneficiaries are not just customers, lenders, manufacturers, and
retailers too benefit. Manufacturers gain from the resultant boost to sales and
increased consumer preference towards high-margin products. Financing schemes
enable customers, especially those with lower income levels, to use future income
streams to buy consumer products upfront and pay in instalments over a period.
The most popular finance scheme prevalent in the market currently is the 12/4
scheme, where the financier collects the amount for the first four months as initial
down payment from the buyer and then disburses the full amount to the dealer. The
financier then recovers the balance amount in 8 monthly instalments from the
buyer. The interest and processing charges are generally paid upfront by the
manufacturer to the financier. Consumer durables financing appears robust,
continued support from manufacturers (who are effectively bearing the interest
costs currently) would be critical to sustain high growth.
ADVANTAGES OF PROJECT:
● Schemes related to the consumer durable finance is always welcomed by the
customers.
● Tracking methodology of customer is very smooth (by using EMI card).
● Provision of easy, simple and adequate credit.
DEFINITION OF BANK:
“An establishment for custody of money, which it pays out on customer's order”
1.2 INTRODUCTION OF NBFC
TYPES OF NBFC COMPANIES: NBFCs are categorized:
1. In terms of the type of liabilities into Deposit and Non-Deposit accepting NBFCs.
2. Non deposit taking NBFCs by their size into systemically important and other
non-deposit holding companies (NBFC-NDSI and NBFC-ND).
3. By the kind of activity they conduct.
Asset Finance Company
An AFC is a company which is a financial institution carrying on as its principal
business the financing of physical assets supporting productive/economic activity,
such as automobiles, tractors, lathe machines, generator sets, earth moving and
material handling equipment, moving on own power and general purpose industrial
machines. Principal business for this purpose is defined as aggregate of financing
real/physical assets supporting economic activity and income arising there from is
not less than 60% of its total assets and total income respectively.
NON-BANKING FINANCIAL COMPANY:
Micro Finance Institution (NBFC-MFI):
NBFC-MFI is a non-deposit taking NBFC having not less than 85%of its assets in the
nature of qualifying assets which satisfy the following criteria:
A. Loan disbursed by an NBFC-MFI to a borrower with a rural household annual income
not exceeding Rs. 60,000 or urban and semi-urban household income not exceeding Rs.
1,20,000.
B. Loan amount does not exceed Rs. 35,000 in the first cycle and Rs. 50,000 in
subsequent cycles.
C. Total indebtedness of the borrower does not exceed Rs. 50,000.
D. Tenure of the loan not to be less than 24 months for loan amount in excess of Rs.
15,000 with prepayment without penalty.
E. Loan to be extended without collateral.
F. Aggregate amount of loans, given for income generation, is not less than 75 percent
of the total loans given by the MFIs.
G. Loan is repayable on weekly, fortnightly or monthly instalments at the choice of the
borrower.
1.3 ABOUT THE COMPANY:
Capital First has built a large network and provides financing in 222 locations across
the length and breadth of the country. The loan book of the company is of high
quality as compared to the industry, with Gross and Net NPA 1.07% and 0.55%
respectively. The company enjoys a high credit rating of AA+ which has been
achieved by very select financial institutions in India. Capital First is focused on
building an institution on strong pillars of ethics, values and high corporate
governance.
Capital First Ltd. is a leading financial institution in India focused on providing debt
financing to MSMEs and Indian consumers. Capital First was founded in its current
form in 2012 by Mr. V.Vaidyanathan by securing an equity backing of 8.1 bn from
global Private Equity player Warbur Pincus, by way of buyout of an existing listed
NBFC, and in the process the company got new shareholders, reconstituted a new
board, started new business lines, and created a new brand and entity called Capital
First. The founding theme of Capital First is that financing India’s 50 million MSMEs
and its emerging middle class, with a differentiated model, based on new
technologies provides a large and unique opportunity.
Capital First Limited is a diversified non-banking financial company. It is engaged in
the business of financing. The Company focuses on six areas: Consumer Durable
Loan, Small and Medium Enterprises (SME) Loan, Loan against Property, Business
Loan, Personal Loan and Two Wheeler Loan.
WHO WE ARE:
Capital First Ltd. is a provider of financial service across consumer and wholesale
businesses, with aspirations to grow into a significant financial conglomerate.
Capital First Ltd. is a systemically important NBFC with record of consistent growth
& profitability. “Capital First” has a comprehensive product suite to meet multiple
financial needs of customers including Consumer Lending, Corporate Lending.
VISION:
To be a leading financial service provider, admired for high level of customer
Micro, Small and Medium Enterprises in India with debt capital and services to
sumption
needs of the Indian consumers, which is driven by increased affluence, growing
aspirations and favourable demographics.
VALUES:
Responsibility:
We respect the fact that our investors have entrusted us with their capital, our
partners with their faith, our customers with their confidence and our employees
with their aspirations. We will measure our success by the success of our
stakeholders and will work diligently to ensure that we fulfill our fiduciary
responsibility.
Integrity:
We firmly believe that the difference between a good business and a great
organization is the integrity of its people. We will conduct ourselves ethically and
transparently in all our dealings, both internal and external.
Leadership:
We will maintain an environment which fosters creativity and encourages
innovation. We believe that this will enable us to attract, retain and nurture the best
talent and develop the business and thought leaders of tomorrow.
Mutual respect:
We will build an organization which has a positive mindset. By conducting every
interaction with respect and consideration, we will create a self-reinforcing culture
of success.
Community:
We believe that it is our responsibility to contribute to the environment in which we
operate. By investing in our community, we will not only improve our surroundings
today, but also provide better opportunities for future generations
REGISTERED OFFICE & CORPORATE OFFICE:
Capital First Ltd.
India Bulls Finance Centre,
Tower II, 15th floor,
Senapati Bapat Marg,
Elphinstone Road (W),
Mumbai - 400 013
Board line: +91 (22) 4042 3400
9thFloor,
City Tower,
Dhole Patil Road,
Pune,
Maharashtra - 411001
PRODUCTS OFFERED BY THE COMPANY
● Durable loan
● Loan against property
● Two wheeler loan
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Business loan
Life Insurance
General Insurance
Wholesale Credit
1.4 OBJECTIVE
PRIMARY OBJECTIVE:
● To understand B2C (Business to Consumers) marketing by meeting the
potential clients.
● To judge the client authenticity before sanction of loan.
● To provide them knowledge of loan through Capital First.
● To enhance the penetration of Capital First in the Consumer Durable
Loan sector.
SECONDARY OBJECTIVE:
● To understand and analyze marketing and business development
strategies for the company.
● Market Research (mostly secondary) to figure out the competitors and
potential clients.
● To find out and analyze various new and innovative techniques for
business development.
● Work with a motive of customer satisfaction to create a good rapport in
the market and also enhance the goodwill of the company.
● Analyzing the customer requirement there by maintaining current
customer and increasing market segment by attracting new customer.
2. MAIN TEXT:
2.1 VIJAY SALES (STATION ROAD) AND CAPITAL FIRST:
Vijay Sales is an Indian electronics retail store chain based out of Mumbai. It is
headquartered in Jogeshwari, Mumbai. Vijay Sales was started as a small TV showroom
at Mahim by Nanu Gupta in 1967. It currently operates 67 stores across the states
of Maharashtra, Haryana, UP, Gujarat and Delhi and has more than 9,000 Products to
choose and is located in prime location all over India and has 28 stores in Mumbai, 11
stores in Pune, 12 stores in Gujarat, 11 stores in Delhi, 4 stores in Haryana, 2 stores
in Uttar Pradesh. A New Concept of VS-DIGI stores (Powered by Vijay Sales) are opened
all across India.
I am placed at Vijay Sales Station Road which is the largest counter in Pune.
In last 3 months, Vijay Sales Station Road has made sales of:
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8 crores in March
7 crores 8 Lacs in April
3 crores in May (as on 23rd May)
Out of these 35% are for finance option and 65% are cash sales. March being the festive
month of Gudi Padwa, the sales were high and April being hot many people still used to
come to buy either refrigerators or air conditioners apart from the normal sales which
used to take place. But in the month of May I observed a drastic low sales as rains had
hit Pune also May being vacation and holiday time there were comparatively low sales
which as a result ended with low files.
Vijay Sales Station road have 4 store managers who assist the sales staff and customers
with their queries.
I am here engaged in selling loans on Consumer durable products of digital and nondigital products. Vijay Sales station road was started in 2008 and Capital First started its
counter at this store during Diwali in 2015. Since then Capital First has 2 Sales Officers
(Mr. Anand Doke and Mr. Sachin Bidkar) at this store along with 1 Relationship Manager
(Mr. Pramod Dube) . The working hours at Capital First are 11 am to 8 pm and the store
timings are 10:30 am to 9:30 pm.
In this field the main competitors for Capital First are Bajaj Finance Ltd and HDFC at this
store.
We as interns are the first face of the company. We have to interact with the customers
and understand the consumer needs and satisfy their needs with our management
skills.
Capital First has various Financial products which needs to be marketed and explained
to the customers at the time of loan. Few of them are “Cross sell” products which is the
practice of selling or suggesting related or complementary products to a prospect or
customer along with their loan.
2.2 MARKETING OF FINANCIAL PRODUCTS
I was responsible in marketing of financial products by the company such as Consumer
Durable Loans, Easy buy card, IHO and Credit Vidya report.
1. Consumer durable loan:
Loans on consumer durable products are known as consumer durable loans. The
benefits of Capital First Consumer durable loans are:
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0% Interest and low down payments
Easy repayment options
Minimal documentation required
Know your approval status instantly
No security deposit required
No foreclosure charges
8000 Rs-5lac Rs loan is provided
2. EASY BUY CARD
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The Easy Buy Card comes with a pre-approved limit.
No documentation is required once you become a EBC card member.
Use of an Easy Buy Card will be valid only at Capital First empanelled stores.
A credit limit provided to the customer will keep increasing on repayment of your
existing Consumer Durable Loan.
If you lose your Easy Buy Card it can be blocked/replaced easily.
3. IHO
IHO is a part of Aetna, a Fortune 100 company in the United States. Aetna is currently
serving an estimated 46.5 million people with information and resources to help them
make better-informed decisions about their health. With 160 years of experience, Aetna
also offers customized technological and health management solutions for healthcare
systems, government entities and large employers to improve public health, enhance
quality of care and contain costs.
Indian Health Organization (IHO) is one of India’s leading health care benefits company
enabling people to effectively manage their health and lead a happy life. IHO package
discounts prepaid health packages on consultancy, pharmacy, treatments and pathology
providing access to quality preventive and health solutions. With high level of service
standards, our highly qualified medical network offers standardized and transparent
concessional rates across hospitals, diagnostic centers, nursing homes, pharmacies,
home care providers and clinics. IHO card price is Rs 1500 and one card can be accessed
by 4 family members. The card limit is for a year which can be later renewed also. The
most interesting and positive factor is that there are no restrictions on age of customer.
Normally, people with the age of more than 65 years do not take this facility. Even
dental checkups are done at discounted rates with the help of this health card.
4. CREDIT VIDYA REPORT
A credit report is a detailed report of an individual’s credit history. Credit bureaus like
CIBIL (CIBIL Reports are the building block of your credit health as these reports
demonstrate Financial Discipline of an individual) collect information and create credit
reports based on that information and determine loan applicants creditworthiness. This
credit worthiness is determined by CIBIL (Credit Information Company) by checking the
credit score. So after the loan approval if the customer wants to know his CIBIL score
and get a detailed report then we offer Credit Vidya Report which is of 1500 Rs. The idea
behind this credit Vidya Report is:
5. Extended Warranty:
The warranty depends on the price of the product. Warranty is provided for 3
years for the product by the company. Extended Warranty is to provide extended
help to the customer. The company bears all kind of damages that the products
company used to bear. Physical damages are not covered under this scheme.
Vijay Sales provides its own warranty at least of a year free of cost and because of
this, Capital First has stopped giving customers this facility at Vijay Sales.
6. FG Insurance:
Future Generali has come up with a scheme to provide insurance for the product.
Insurance are provided for 1 or 2 years by the company. There are different slabs
for insurance based on different products.
CREDIT APPRAISAL PROCESS
Receipt of application from applicant
Receipt of documents (KYC process)
Assessment of proposal
Selection/Approval of proposal by appropriate sanctioning authority
Documentations, agreements, mortgages
Disbursement of loan
Post sanction activities such as receiving stock statements, review of accounts,
renew of accounts, etc. (On regular basis)
2.3 THE PROCEDURE:
The process followed for loan approval of the customer and the following tasks are done
by us:
1. Pitching customers: We pitch customers on the floor once the customer finalizes
the product and says they want to finance, then it is we who provide them the
necessary information about Capital First by giving the knowledge of EBC card and
giving them the best loan scheme as per their requirement.
2. Providing Loan schemes: The loan scheme basically gives the customer the idea
about the down payment they need to make at the cash counter and their EMI
amount for respective months.
3. Customer Verification: The ability and willingness of the customer to pay back the
loan amount is checked through verification of customer’s KYC documents (Pan
card, Aadhar card, light bill, bank statement, etc) CIBIL score, and Transaction
details through online system
4. Filling loan application: After verification the client fills a loan application and
submits the required documents with signatures and completes the process.
5. Generation of Delivery Advice: After sanction of loan amount by Capital First to
Vijay Sales, a delivery advice is issued to Vijay Sales stating approval by Capital
First Ltd. for delivery of product to the customer.
6. Final Payment: Customer pay the Down payment amount at Vijay Sales and the
balance payment of Loan amount is sanctioned to Vijay sales from Capital First
ltd.
2.4 Online Approval: “Sales Force” Portal
Approval:
Possibility 1: If the case gets approved:
DELIVERY ADVICE:
Possibility 2: If the case gets rejected
With the help of ‘Sales Force’ the company analyze the customer and verify the
Customer documents:-
a) Customer past performance of loan payments.
b) Customer Income.
c) Customer actual Data.
d) Customer Home Address.
e) Their Active Mobile Numbers.
f) Customer Bank account Detail
THE BASIC WORKFLOW OF THE LOAN APPROVAL
3. METHODOLOGY
INTRODUCTION:
The system of collecting and processing of data for project is known as
methodology. The study is made on basis of secondary data. The annual data of firm
also play a vital role in collecting necessary information. Information is collected with
the help of two sources-
Primary Data:
It is the information which is collected from finance department for further studies. It
was mainly through interview with concerned officer and staff.
Secondary Data:
Secondary data is published data. It is already available and save time. The main
source of secondary data is Market Survey, government publication, advertising
research report etc.
4. ANALYSED THE INDUSTRY AND COMPANY:
1. SWOT Analysis
2. Porter’s Five Force Model
3. PESTEL Analysis
4.1 SWOT ANALYSIS
Capital First as a company is still in its growing stage and will take few more years to
become a brand in this field. Following is the SWOT analysis of the company and this
need to be worked:
STRENGTH:
1. 0% interest on all CD Loans.
2. One time investment on EBC card.
3. After paying the down payment, balance Loan amount is sanctioned by Capital
first for customers.
4. Better schemes on few products compared to competitors.
5. The various Cross sells which company has is commendable and competitors
don’t have such cross sell options.
6. Easy repayment options.
7. No security deposit.
8. No foreclosure charges.
9. Soft skills training session provided by Mr. Saurat Gupta was beneficial.
10. Capital first was awarded by CNBC – Innovator of the year.
WEAKNESS:
1. EBC card price has been raised from 349Rs to 399Rs so it becomes difficult to
convince customers for card.
2. Cross sell prices are too high. Very few customers are willing to pay 1500Rs extra
above the product price.
3. No 2 digital products can be financed at a time by fresh customer.
4. Challenging to sell, compared to competitor Bajaj Finserv Ltd (BFL).
5. Lack of system connections and net problems.
6. Relations with store staff is not maintained that well.
7. All trainees Sales Officer are not so efficient at work and few Sales Officers also
lack dedication towards their work.
OPPORTUNITY:
1. Continuous growth in market for next 10 years is expected.
2. Lots of opportunity for increasing the market penetration in Vijay Sales Station
Road.
3. Market expansion is possible majorly in consumer durables and 2 wheeler sector
for Capital First ltd.
THREAT:
1.
2.
3.
4.
5.
Strongest competitor is Bajaj Finserv and their market segment is already 70%.
Easier to sell convince and offer loan through Baja Finserv Ltd.
Hiring of staff is on a large scale in Bajaj Finserv Ltd.
Few people don’t trust Capital first easily.
BFL has become a brand and Capital First is still an emerging and growing
company.
4.2 PORTER’S FIVE FORCE MODEL
1. BARRIERS TO ENTRY: LOW
LICENSING REQUIREMENT:
The licensing requirements of RBI for NBFCs are not that stringent as compared to
the banks. There are already 12159 registered NBFCs while there are only around
180 banks in India.
2. BARGAINING POWER OF CONSUMERS: HIGH
MANY ALTERNATIVES:
The consumers have got many alternatives for availing credit.
Large number of NBFCs: The consumers have a large spectrum to choose from like
Bajaj Finserv, Tata Capital, HDB (Housing & Development Board),
3. POTENTIAL THREAT OF SUBSTITUTES: MODERATE
1. BANKS: NBFCs were actually created by the government of India as it felt the need
to provide banking facilities to the poor and underprivileged who could not get
access to banks. Thus banks are a perfect substitute for NBFCs. 2. UNORGANIZED
MONEY LENDERS: The unorganized money lenders have a strong presence in the
rural markets. They pose a big threat to the NBFCs in the rural areas.
4. BARGAINING POWER OF SUPPLIERS: HIGH
● MANY ALTERNATIVES: The suppliers in this case are the depositors or the NBFC’s
funds. The suppliers have many alternatives at their disposal to invest their money
depending on their risk appetite. E.g.: High risk: stocks, low risk: banks
5. INTENSITY OF RIVALRY: HIGH
1. UNDIFFERENTIATED SERVICES: The service offerings by NBFCs are almost the
same. Thus there is a low level of service differentiation.
2. MARKETING STRATEGIES: Due to the increased rivalry among the NBFCs, there
has been use of aggressive selling & intensive marketing strategies by the companies
to gain the market share.
4.3 PESTEL ANALYSIS
PESTEL:
ECONOMIC FACTOR:
The Indian economy advanced 7 percent year-on-year in the last three months of 2016,
slowing from an upwardly revised 7.4 percent rise in the previous quarter but beating
expectations of a 6.4 percent growth. The expansion was mainly driven by a surge public
spending and agriculture. The GDP is expected to grow 7.1 percent in the fiscal year
ending in March 2017. GDP Annual Growth Rate in India averaged 6.10 percent from
1951 until 2016, reaching an all time high of 11.40 percent in the first quarter of 2010
and a record low of -5.20 percent in the fourth quarter of 1979.
At this juncture, economic indicators point to a revival of growth challenges such as the
steep current account deficit, tight liquidity and high food inflation have ebbed. Further,
measures have been taken by the government to expedite project clearances and boost
Capital Expenditure expansion. Most importantly, a fresh political mandate at the center
is expected soon, and has resulted in some optimism in businesses. At a consumer level,
demand continues to be sluggish, and a clearer picture will emerge on critical areas like
job and economy in the coming months. Car sales de-grew by 6.7% in FY14 (1.79 million
vehicles sold) compared to sales of 1.87 million in FY13.
Two wheeler sales rose by only 7% in FY14 at 14.81 million, as compared to 13.80
million in FY13. Commercial vehicles sales, traditionally seen as a lightning rod for the
economy de-grew by 20% to 6.32 lac vehicles, as compared to sales of 7.93 lac vehicles
in FY13.
POLITICAL FACTOR:
The government cleared over 300 projects entailing an investment of `6.6 lac Crore
during the last 1 year. This coupled with a possible reduction in interest rate during the
2nd half of FY15, will result in economic growth, albeit with a lag. However, as in the
past, the financial sector will be the first to benefit from positive initiatives. Accordingly,
we are optimistic about our business environment during FY15 and beyond.
PERFORMANCE AND POLICIES OF THE NBFC SECTOR:
According to the rating agency ICRA, NBFCs are expected to report a growth of around
8-10% in retail credit in FY14 compared to the 19% achieved in FY13. This was based on
the observation that credit by the sector had grown by only 5% during the first nine
months of FY14, as against the 15% posted during the same period of FY13. The CV and
CE sectors were impacted by the dip in economic growth, the government’s inability to
kick start projects and judicial interventions like the ban on mining. The demand for gold
loans too has been subdued due to regulatory interventions such as lower LTV ratios
which prevailed for a large part of the fiscal year.
Below are some of the major policy initiatives taken by the RBI during FY14 that impact
NBFCs in general:• Lending against Gold Jewellery: The RBI stipulated that loan amount (Loan to Value or
LTV) should be restricted to 75% of the base value of gold Jewellery. It clarified that only
the intrinsic value of gold Jewellery allowed as the base value for this purpose. Further,
the process of valuation of gold Jewellery was made transparent and standardized and
the disbursal of loans of `1 Lakh and above had to mandatorily be made by Cheque.
• Central registry of mortgages: The RBI mandated that all mortgages from March 31,
2011 were to be registered with the Central Registry under Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI Act). The SARFAESI Act, which allows banks and financial institutions to
auction residential and commercial properties when borrowers fail to repay their loans,
will enables banks to reduce their non-performing assets (NPAs) by adopting measures
for recovery or reconstruction.
TECHNOLOGICAL FACTOR:
Securitization: The central bank has allowed credit enhancement on loan resets, subject
to certain conditions.
Prepaid Payment instruments: Throwing open a new business opportunity, the RBI has
allowed the issue of prepaid cards.
Private Placements: The RBI issued a clarification regarding NBFCs raising money
through private placements of Non-Convertible Debentures (NCDs). Although the
industry believed that withdrawal of the current facility of issuing NCDs without any
restrictions would result in adversely impacting their Asset Liability Management (ALM),
it clarified that this freedom resulted in inadequate resource planning and higher
transaction cost. Nevertheless, in order to facilitate the process of moving to a more
robust ALM in a non-disruptive manner, it decided not to immediately operationalize
the instruction with regard to the minimum gap between two successive issuances of
privately placed NCDs.
The Company is focused on providing a number of financial services to Retail, MSME,
Consumer and Wholesale credit, which is expected to drive growth for the Company
going forward.
During the year under review, the Company has successfully grown its outstanding Loan
Assets under Management from 75.10 billion to `96.79 billion, a growth of 29%. The
Retail Assets under Management has grown from `55.60 billion to 78.83 billion, a
growth of 42%. As part of the plan to change the mix of assets, the Wholesale Book
reduced by 8% from 19.50 billion to 17.96 billion. The Net worth of the Company
increased from `9,607 million to `11,710 million as at March 31, 2014.
Consolidated Net Interest Income increased by 34% from 2,499 million during the
financial year ending March 31, 2013 to 3,361 million during the financial year ending
March 31, 2014.
The Profit before Tax, before exceptional items, increased from 519 million during the
financial year ending March 31, 2013 to 590 million during the financial year ending
March 31, 2014. The profit after tax was down by 17% from `631 million to `526 million.
This is essentially on account of an exceptional and one time item of `213 million
reported in previous year for sale of subsidiaries.
ENVIRONMENTAL FACTOR:
Keeping in mind the overall performance and the outlook for your Company, your
Directors are pleased to recommend a dividend of 2/- (Rupees Two only) per share i.e.
20% on each Equity Share of `10/- (Rupees Ten only). The dividend would be paid to all
the shareholders, whose names appear in the Register of Members/Beneficial Holders
list on the Book Closure/Record date.
Rating agency CRISIL said that revised guidelines for non-banking financial companies
could lower their return on asset by 0.25 per cent over next 2-3 years,
even though the new norms would structurally strengthen the sector and enhance
confidence of lenders in them.
CRISIL believes that tightening in bad asset recognition norms to 90 days from 180 days
and the increased standard provisioning requirement to 0.40 per cent from 0.25 per
cent will adversely affect the profitability of NBFCs. As a result, the return on asset is
expected to drop by 0.25 per cent over the next two-three years.
This will be primarily due to higher provisioning requirements on account of increase in
standard asset provisioning and revised recognition norms for bad assets.
"The new guidelines will enhance the systemic stability of NBFCs and enhance lender
confidence in them. NBFCs will be able to smoothly transit to the tighter regulatory
requirements, given the adequate time frame provided by RBI. The proposals like
increase in tier-I capital ratio, stronger liquidity management, and enhanced disclosure
requirements will structurally strengthen NBFCs over the medium term.
While the reported gross NPAs will increase in the near-term due to re-classification, the
enhanced focus of NBFCs on collections will lead to an improvement in asset quality
gradually over the medium-term.
On the proposal to hike the tier-I capital to 10 per cent and 12 per cent for select NBFCs
from 7.5 per cent, the report said it will improve the quality of capital and enhance the
cushion against asset-side risks.
While the existing tier-I capital ratio of most NBFCs is comfortably above the revised
regulatory requirement, the sector will have to raise around Rs 8,000 Crore. To maintain
the current cushion over regulatory minimum, under the revised norms, noted the
report.
SOCIAL
At Capital First, the focus on customers begins much before the actual interface, with
the Company regularly initiating measures to understand customer needs, develop
product offerings aligned to those needs, and to strengthen its delivery model and
servicing capabilities. The Company has instituted Business Intelligence systems to
secure the necessary intelligence that enables it to connect better with the customers.
It has also enhanced its CRM and accelerated its decision-making process to ensure high
customer satisfaction through regular feedbacks and other mechanisms. The Company
realizes the importance of delivering a good and positive experience to its customers,
and endeavors to engage with them on a regular basis through various communication
modes, including e-mailers, SMSs, letters and even direct and one to-one physical
interaction. The Company regularly reviews and acts on complaints, feedback &
compliments received from customers to improve customer service.
5. LOAN CRITERIA
Note:
Asset cost = is the Loan Amount
Funding Value = Loan Amount – Margin Money/Down Payment.
There are following things which are considered:
1. CFL’s decision system works on scorecard customized for CFL by Trans Union.
2. CFL approves CD customers for both CIBIL Hit as well as No Hit.
3. All the customers are assigned a custom TU score for decision.
4. For CIBIL No Hit customers, up to a certain custom score CFL approves without any
additional document requirement. Only for customers below a certain score band, the
cases get approved under Landline bill / Electricity bill or Debit card surrogate.
TRANS UNION PROGRAM:
• All the CIBIL Hit and CIBIL No Hit Applications approved through the Normal TU
Program.
• CIBIL Score and other demographic information are the underlying parameters basis
which Custom Scores are arrived at.
There are basically two types of Customers:
1. CIBIL Hit.
2. CIBIL Not Hit.
CIBIL HIT
Age >=
Funding value <=
Digital Products
25 years
Rs. 50000
CIBIL HIT Programs: Credit Card, HVP, and Trans Union
Non - Digital Products
21 years
Rs. 150000
CIBIL NOT HIT
Age >=
Digital Products
Cannot fund Digital
Products for NO HIT
Customers
Non Digital Products
25 years (21 to 25 years
with debit card)
Funding value <=
Cannot fund Digital
Products for NO HIT
Customers
Rs. 50,000
CIBIL NO HIT Programs: Trans Union Program, Debit Card, Landline Surrogate, Electricity
bill Surrogate
6. MEETINGS AND SEMINARS
There is once a week meeting conducted at head office to get to know the progress
and any new difficulties faced by us. This meeting is headed by:
⮚ Manager- MR. AMIT GULATI
⮚ Assistant Sales Manager (Company guide)- MR. RAUNAK GATTANI
⮚ Relationship Managers- Pramod Dubey, Aakash Prajapati, Imran Khan and
Vipul Vyas.
Also Seminar of Soft skills was conducted which was headed by SAURAT GUPTA who
was a sales trainer. This seminar helped us a lot and gave us inputs of how to pitch and
convince customers.
Training Program was also conducted on financial products IHO and Credit Vidya
Report for better understanding.
Apart from these meetings and seminars, there are also STORE MEETINGS on
weekends for the store staff members where they are given an insight of the expected
sale for the day and we get an idea of how many files to expect for finance out of the
total market share. Also we congratulate those staffs who have performed their best by
giving good sale to the store.
GUDI PADWA EVENT
This was a very big event for the store as well as for both the finance companies: Bajaj
Finserv Ltd and Capital First Ltd. Gudi Padwa is a festival that marks the traditional New
Year for Maharashtrians. On this day people buy something new for their house and so
there was a crowd at Vijay Sales Station Road.
On this day Capital First got highest number of logins from Vijay Sales Station road in
compared to other store locations and also the highest login it ever did in the history of
Capital first. We ended up crossing the expected target. We ended up doing 151 logins
and our competitor Bajaj Finserv did 285 logins on one single day!
Number of files increased from 325 in February to 500-600 in March due to Gudi Padva
festival and with the increasing demand of air conditioners and refrigerators in
summers.
We have 20-25% penetration in the market from this store as of now and I had
expected to get 35-40% by next month by driving my two Sales Officers.
And as per my target, I was able to achieve 40% penetration in the market in the month
of April. This was because of our 0 down payment schemes which we had on most of
the products; it was easy to convince customers for finance. Also in the month of April
too from this store, we had done about 600 files.
7. ANALYSIS:
This Questionnaire is an attempt to understand consumer satisfaction if the avail loan
for their product. All information provided is kept confidential and will be used
for project purpose only:
PART 1:
Interaction with Customers when we pitch customers on the floor:
Q1. Do you want to finance?
60% of customers say Yes
for Finance and 40% say
No.
If the customer says “Yes”, then we offer the loan schemes on Capital First Scheme pad.
If the customer says “No”, we try to convince them by saying we have 0% interest and
educate about the benefits of Capital First Ltd.
Q2. What is the loan scheme?
The standard loan scheme
which Capital First offers is
12/4 Scheme which says
40% down payment on
the price of the product
and 60% is financed and is
through EMI basis.
Q3. How many customers want low or 0 down payment schemes?
83% of customers say they
want low or 0 down
payment scheme whereas
only
17% many
are ready to
Q4.
How
make at least 40% down
customers
actually
payment
agree to finance from
Capital First?
41% agree to financed
from Capital First and 59%
disagree and go for other
competitors.
Q5. How many customers are aware about Capital First beforehand?
44% are aware about Capital
First beforehand and 56% are
still clueless about finance
through Capital First
PART 2:
The customer agrees and comes to fulfil the documentation and system process:
Q1. Age of Respondent
(a) 23-30
(b) 30-40yrs
(c) 40-50yrs
(d) 50-60yrs
Form this pie chart we
can say that
respondents who fall
between 23 year and
40 years prefer
finance.
Out of all respondents these are the following data:
1. 54% respondents who fall in the age of 23-30 year.
2. 28% respondents who fall in the age of 30-40 year
3. 11% respondents who fall in the age of 40-50year.
4. 7% respondents who fall in age of 50-65 year.
Q2. Profession of Respondent
From the pie chart we
can say that, 37% are
salaried respondents and
63% are self employed.
Q3. Gender
79% are male who want to
finance from Capital First and
21%are females who want to
finance.
Q4. Documents needed at Capital
First
Very high - 8%
Adequate - 40%
Minimal – 52%
Q5. Experience of Approval Time
5-10 mins
10-15 mins
15-20 mins
20 - 30 mins
18%
33.33
29%
19.67%
8. RECOMMENDATIONS
During my sip, I felt some of the things that CFL should do in order to achieve more
growth than its biggest competitor BAJAJ Finserv –
1. Improve on its digital product financing, because processing fees is high in digital
products.
2. Provide new down payment schemes with less down payment charges.
3. Provide attractive schemes such as long tenure schemes.
4. Capital First should promote their attractive schemes in local newspapers and online
portals
5. Capital First update their existing software so that approval time can reduce.
9. LEARNINGS
1. To handle the customers with ease.
2. To understand how to calculate EMI & down payments for different schemes. 3. Basic
understanding of consumer durables market.
4. Understood process of loan life cycle.
5. Basic understanding Company rules & regulations.
6. Time management
7. Work with pressure.
8. Work without holidays at long hours.
9. Financing of CD loans.
10. Maintaining good relationship with customers and sales staff.
11. To understand whom to finance & whom to not.
12. Basic understanding of different types of frauds happening in the financing. 13.
Managing conflicts.
14. Managing people.
15. Working for different customer types.
16. Doing business for company at the same time analyzing fraud customers & rejecting
them.
17. Basic Credit appraisal process for loan financing.
18. Basic understanding of company processes, culture & work pattern.
10.CONTRIBUTIONS
1. Did quick financing.
2. Worked within time limits.
3. Worked with rules.
4. Increased productivity to double growth rate.
5. Gave suggestions to improve the business by introducing new scheme structures.
11.CONCLUSION
In the last 100 days I have secured a good amount of knowledge and exposure about
the working at the store on different aspects.
The customers at store were from different background and I got a varied exposure.
Few who had low income opted for finance options and few who were from upper
middle class or high class and felt their amount could be invested in something else
rather than spending the whole amount at a time for a CD product, also opted for
finance. 35%-40% in the store opt for finance options and the rest go for payment by
cash.
Each and every day at internship it is all about setting a target and having a mindset to
work better. I also believe that if right people are assigned and trained well on the job
nothing is impossible for the company to achieve.
Every person needs to worship their work and be serious about getting results.
12.REFERENCES
1. http://www.capitalfirst.com/
2. Sales force portal
3. www.google.com