Role of Bajaj Finance in consumer durable sales I
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SUMMER INTERNSHIP PRO...
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Table of Contents
T...
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2.7.1.1. Company ...
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6.15. SWOT Analysis...
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List of Figures and G...
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Figure 6.14 Weaknes...
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List of Tables
Ta...
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1. EXECUTIVE SU...
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2. INTRODUCTION TO ...
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2.1.2. Areas of Finan...
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2.2. COMPANY PROFIL...
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Figure 2.1: Value...
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displays the or...
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2.5. HISTORY OF B...
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Figure 2.3: Corpora...
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Organization Stru...
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Figure 2.5: Baj...
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2.6. BRAND ID...
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The brand deliver...
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platform which resu...
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2.7.2. Reliance C...
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Figure 2.7: Boa...
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3. REVIEW OF ...
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tenors, ranging...
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gives customers a...
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kit, quote his ...
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4. PROJECT OB...
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5. PROJECT ...
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Figure 5.1: Cat...
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Considering the i...
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6. DATA COLLECT...
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Figure 6.1: M...
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Figure 6.2:...
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Figure 6.3: C...
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6.3. QUICK RATI...
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Figure 6.4: Q...
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 Industry...
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INDUSTRY...
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 The constan...
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Figure 6.7: Assets ...
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 Total debt to o...
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6.8. INVESTMENT...
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As the graph ...
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Figure 6.10: Pr...
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Figure 6.11: Divi...
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Unique Customer...
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Figure 6.12: ...
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6.12. RECOM...
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10. Last 3 mont...
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3.11 – 35k
3.21 – 15k...
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6.15. SWOT ANALYSIS...
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Figure 6.14: Weak...
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Figure 6.16: Th...
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7. FINDINGS
7.1. ...
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8. From the abo...
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8. RECOMMENDA...
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REFERENCES
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 Market: Finan...
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 Bajaj Finserv L...
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 Reliance Capi...
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Role of bajaj finance in consumer durable finance

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A brief analysis of BFL with industry and its peer along with ratio analysis to examine the current situation followed by findings and recommendations.

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Role of bajaj finance in consumer durable finance

  1. 1. Role of Bajaj Finance in consumer durable sales I Fortune Institute of International Business Page I SUMMER INTERNSHIP PROJECT “ROLE OF BAJAJ FINANCE IN CONSUMER DURABLE SALES” CORPORATE INTERNSHIP PROGRAM PROJECT REPORT SUBMITTED IN PARTIAL FULFILMENT OF PGDM PROGRAM 2012-14 SUBMITTED BY: PRAVEEN KUMAR Roll no. 99 SUBMITTED TO: Mr. GAUTAM GUPTA FM.A. KHAN Area Sales Manager Professor Sales Finance FIIB
  2. 2. Role of Bajaj Finance in consumer durable sales II Fortune Institute of International Business Page II Table of Contents TABLE OF CONTENTS.........................................................................................I-III LIST OF FIGURES AND GRAPHS.................................................................IV-V LIST OF TABLES........................................................................................................VI Chapter 1: EXECUTIVE SUMMARY.....................................................................1 Chapter 2: INTRODUCTION TO SECTOR/COMPANY...............................2 2.1. Introduction......................................................................................................2-3 2.1.1. Financial Sector....................................................................................2 2.1.2. Areas of Finance...................................................................................3 2.1.2.1. Personal Loan…………………………..…………….3 2.1.2.2. Financial Risk Management.................................................3 2.1.2.3. Intangible Asset Finance.......................................................3 2.2. Company Profile..................................................................................................4 2.2.1. Introduction……………………………………………….……...4 2.2.2. Present Status…...................................................................................4 2.2.2.1. Our Values..............................................................................4 2.3. Product Profile……………………………………...……….………….5 2.4. Organizational Hierarchy…………………………………...……………….5-6 2.4.1. Introduction………………………………………………………...5-6 2.5. History of Bajaj Finserv Lending.................................................................7-10 2.6. Brand Identity…………………………………...………….....……………11-12 2.7. Peers Background……………………………………………………….…12-15 2.7.1. Capital First………………………………………………...……12-13
  3. 3. Role of Bajaj Finance in consumer durable sales III Fortune Institute of International Business Page III 2.7.1.1. Company Overview……………………………………12-13 2.7.2. Reliance Capital………………………………………………….14-15 2.7.2.1. Company Overview……………………………………14-15 Chapter 3: REVIEW OF LITERATURE........................................................16-19 Chapter 4: PROJECT OBJECTIVES..................................................................20 Chapter 5: PROJECT METHODOLOGY ADOPTED…........................21-23 5.1. Methodology………………………………………………………….…….…21 5.1.1. Primary Data………………………………………………………..21 5.1.2. Secondary Data……………………………………………………...21 5.2. Research Design……………………………………………………………21-23 5.2.1. Exploratory Research……………………………………………….22 5.2.2. Descriptive Research………………………………………………..22 5.2.3. Empirical Research…………………………………………………22 Chapter 6: DATA COLLECTION………………………………….................24-54 6.1. Description of the Work Performed……………………………………...24-26 6.2. Financial Analysis using Ratios……………………………………….…..26-27 6.3. Quick Ratio…………………………………………………………….......28-29 6.4. Earnings per Share.......................................................................................29-30 6.5. Management Efficiency Ratio.....................................................................30-31 6.6. Assets Turnover Ratio..................................................................................32-33 6.7. Debt Coverage Ratio....................................................................................33-34 6.8. Investment Valuation Ratio.........................................................................34-35 6.9. Price Earning Ratio......................................................................................35-36 6.10. Dividend Payout Ratio...............................................................................36-37 6.11. Process Adopted.........................................................................................37-39 6.11.1. Documentation..................................................................................37 6.12. Recommendations Proposed for Each Stage.................................................40 6.13. Documents Required for Loa Approval........................................................40 6.14. Surrogates Requirements for Loan Approval.........................................41-42
  4. 4. Role of Bajaj Finance in consumer durable sales IV Fortune Institute of International Business Page IV 6.15. SWOT Analysis of Bajaj Finserv Limited...............................................43-44 6.15.1. Strengths............................................................................................43 6.15.2. Weakness...........................................................................................43 6.15.3. Opportunities....................................................................................44 6.15.4. Threats...............................................................................................44 6.16. Learning............................................................................................................45 6.16.1. Dealing with Customers...................................................................45 6.16.2. Pitching Customers towards Various Other Products..................45 6.16.3. Process of Granting Loan................................................................45 Chapter 7: FINDINGS…………………………………………………................55-56 7.1. Advantages of BFL scheme over its competitors………….……….…….55-56 Chapter 8: RECOMMENDATIONS……………………………………..........….57 REFERENCES………………………………………………………..............……58-61
  5. 5. Role of Bajaj Finance in consumer durable sales V Fortune Institute of International Business Page V List of Figures and Graphs Figure 2.1 Values of Bajaj Finserv lending.............................................4 Figure 2.2 Organizational Hierarchy.......................................................6 Figure 2.3 Corporate Hierarchy...............................................................8 Figure 2.4 Organization Chart.................................................................9 Figure 2.5 Bajaj Finserv Group Summary.............................................10 Figure 2.6 Board Members of Capital First...........................................13 Figure 2.7 Board Members of Reliance Capital.........................................15 Figure 5.1 Categories of Research Design.............................................22 Figure 6.1 Marketing & Selling Ratio...................................................24 Figure 6.2 Employees v/s Sales Ratio...................................................26 Figure 6.3 Current Ratio........................................................................27 Figure 6.4 Quick Ratio...........................................................................28 Figure 6.5 Earnings per Share................................................................30 Figure 6.6 Debtors Turnover Ratio........................................................31 Figure 6.7 Assets Turnover Ratio..........................................................32 Figure 6.8 Total Debt to Owner Fund....................................................34 Figure 6.9 Dividend per Share...............................................................35 Figure 6.10 Price Earnings Ratio.............................................................36 Figure 6.11 Dividend Payout Ratio..............................................................37 Figure 6.12 Flowchart of Application Process...................................38-39 Figure 6.13 Strengths of Bajaj Finserv Limited……………….…………...43
  6. 6. Role of Bajaj Finance in consumer durable sales VI Fortune Institute of International Business Page VI Figure 6.14 Weakness of Bajaj Finserv Limited………………...……….43 Figure 6.15 Opportunities in Bajaj Finserv Limited………….………...44 Figure 6.16 Threats to Bajaj Finserv Limited…………………………..44
  7. 7. Role of Bajaj Finance in consumer durable sales VII Fortune Institute of International Business Page VII List of Tables Table 2.1 Management Committee........................................................8 Table 6.1 Industrial Analysis: Marketing & Selling Expenses............24 Table 6.2 Employees v/s Sales Analysis..............................................26 Table 6.3 Current Ratio………...................................................................27 Table 6.4 Quick rate of Industry Bajaj & Peer group...........................28 Table 6.5 Earnings per Share…………................................................29 Table 6.6 Debtors Turnover Ratio........................................................30 Table 6.7 Assets Turnover Ratio..........................................................32 Table 6.8 Total debt to Owner Fund....................................................33 Table 6.9 Dividend per Share…...........................................................34 Table 6.10 Price Earnings Ratio……………………………………….35 Table 6.11 Dividend Payout Ratio.........................................................36
  8. 8. Role of Bajaj Finance in consumer durable sales VIII Fortune Institute of International Business Page VIII 1. EXECUTIVE SUMMARY The project allotted to me with the title was “Role of Bajaj Finance in Consumer Durable Sales.” The objective behind this project was to primarily focus on Modus Operandi of Bajaj Finance for Finance of Consumer Durable products. This required a fist hand experience in understanding end to end process flow for loans processing to payment disbursement and coming with Suggestions to make experience more Delightful for customers and channel partners. I was also focusing on way of operations at 2 types of Outlets: Owner Driven and LFR’s and Bajaj Finance’s SWOT analysis at both these outlets. Competitors working (CC or Capital First), Reliance Capital Ltd viz a viz BFL and stress areas will have to focused along with. During the project I have analyzed major financial areas of Bajaj with its peer group and observed their trend with respect to the Industry trend which helped me to gain better insight of market condition of these companies. My sip started with placing me at Croma Store, South – Ex, where I have learned basic things about consumer durable goods and how it is offered to customers. ’, I had to go daily from morning 11:00 am to evening 8:00 pm. Where I have to deal with the customer and tell them about 0% finance plan which is available easily on almost all brands of consumer durable goods. Time to Time I have asked the customers for their suggestions and feedback to improve this service in better way. This process helped me to understand customer behavior and a way to approach them. As customers are of different types with different attitude, so overall this experience was good for me. In third phase of project I was working as an Employee of Bajaj Finserv Lending. I was dealing with proper customer, provided them loans by completing their files and getting the approval online form Bajaj Server called as “Galaxie” Portal. This process helped me to better understand the service procedure of Bajaj Finserv Lending.
  9. 9. Role of Bajaj Finance in consumer durable sales IX Fortune Institute of International Business Page IX 2. INTRODUCTION TO SECTOR/COMPANY 2.1 INTRODUCTION: India is undergoing rapid development. This means that there are millions of people who dream of better home, better infrastructure and a better life. This opens several avenues of potentially limitless growth in the infrastructure and construction sector. Bajaj Finserv Lending will help grab this opportunity to grow real estate businesses. 2.1.1. Financial Sector: A category of stocks containing firms that provides financial services to commercial and retail customer. This sector includes banks, investment funds, insurance companies and real estate. Financial services perform best in low interest rate environments. A large portion of this sector generates revenue from mortgages and loans, which gain value as interest rates drop. Furthermore, when the business cycle is in an upswing, the financial sector benefits from additional investment improved economic condition usually lead to more capital projects and increased personal investing. New projects require financing, which usually leads to a large number of loans. “Finance” is often defined simply as the management of money or “funds” management. Modern finance, however, is a family of business activity that include the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created for transaction and trading assets, liabilities, and risks. Finance is conceptualized, structured, and regulated by a complex system of power relation within political economies across state and global market.
  10. 10. Role of Bajaj Finance in consumer durable sales X Fortune Institute of International Business Page X 2.1.2. Areas of Finance: 2.1.2.1. Personal loan  How much money will be needed by an individual (or by a family), and when?  How can one plan for a secure financial future in an environment of economic instability? 2.1.2.2. Financial Risk Management Financial risk management is the practice of creating and protecting economic value in a firm by using financial instrument to manage exposure to risk, particularly credit risk and market risk. It focuses on when and how to hedge using financial instruments; in this sense it overlaps with financial engineering. Similar to general risk management, financial risk management requires identifying its sources, measuring it, and formulating plans to address these, and can be qualitative and quantitative. 2.1.2.3. Intangible Asset Finance Intangible asset finance is the area of finance that deals with intangible assets such as patent, trademarks, etc.
  11. 11. Role of Bajaj Finance in consumer durable sales XI Fortune Institute of International Business Page XI 2.2. COMPANY PROFILE 2.2.1. Introduction: What started off as a sugar manufacturing factory in 1931 has grown to become one of the country’s largest business houses? With activities that encompass a whole range of industries, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and steel, insurance, travel and finance. 2.2.2. Present Status: 2.2.2.1. Our values: • We respect the opinions and decisions of others. • We encourage and back people to do their best. Empowerment • We are willing to learn and adapt to the environment, our partners and customers evolving needs. Flexibility • We always strive to change the status quo. • We innovate with new ideas and energies with a strong passion and entrepreneurial skills. Enterpreneurship • We believe we must work with honesty, truth and the inmate desire to do well. Transparency • We are driven by the desire to create a meaningful difference in society. Impact
  12. 12. Role of Bajaj Finance in consumer durable sales XII Fortune Institute of International Business Page XII Figure 2.1: Values of Bajaj Finserv lending 2.3. PRODUCT PROFILE Bajaj Finserv Lending offers loans for various needs. We offer loans for Bajaj Auto Two Wheelers under the name of Bajaj Auto Finance Ltd. We offer Consumer Durable Loans, Personal Loans, Loan against Property, Small Business Loans, Construction Equipment Loans, Loan against Securities and Insurance Services under the name of Bajaj Finserv Lending. Bajaj Finserv Lending is one of the most diversified NBFCs in the market catering to more than 5 million customers across the country. Apart from being a well-recognized organization, they pride us for holding the highest credit rating of FAAA/Stable for any NBFC in the country today. The product offerings include Consumer Durable Loans, Personal Loans, Loan against Property, Small Business Loans, Two-wheeler and Three – Wheeler Loans, Construction Equipment Loans, Loans against Securities and Insurance Services. 2.4. ORGANIZATIONAL HIERARCHY 2.4.1. Introduction: A key issue in accomplishing the goals identified in the planning process is structuring the work of organization. Organizations are group of people, with ideas and resources working toward common goals. The purpose of the organizing function is to make the best use of the organizations resources to achieve organizational goals. Organizational Structure is the formal decisions making framework by which job tasks are divided, grouped and coordinated. Formalization is an important aspect of structure. It is the extent to which the unit of organization is explicitly defined and its policies, procedures and goals are clearly stated. It is the official organizational structure conceived and built by top management. The formal organization can be seen and represented in chart form. An organization chart
  13. 13. Role of Bajaj Finance in consumer durable sales XIII Fortune Institute of International Business Page XIII displays the organizational structure and shows job titles, lines of authority and relationship between departments. Organizational Structure allows the expressed allocation of responsibilities for different functions and processes to different entities. Ordinary description of such entities is as branch site, department, work group and single group of people. Figure 2.2: Organizational Hierarchy BH NSMZSM SMMO ASM EAST WEST NORTH SOUTH RMS KOLKATTA DELHI MUMBAI BANGALORE ORISSA GUJARAT RAJASTHAN ANDHRA PRADESH JHARKHAND MAHARASHTRA UTTAR PRADESH TAMIL NADU CEO
  14. 14. Role of Bajaj Finance in consumer durable sales XIV Fortune Institute of International Business Page XIV 2.5. HISTORY OF BAJAJ FINSERV LENDING Bajaj Finserv was formed in April 2007 as a result of its demerger from Bajaj Auto Limited to act as a pure play financial services business. The process of demerger was completed in Feb 2008. This demerger was not only to unlock values in the high growth business areas of Auto, Insurance, Finance sectors and Wind Power but also to run independently these core businesses and to strengthen the competencies. The wind power project, the stakes in the life and general insurance companies and consumer finance along with their respective assets and liabilities got vested in Bajaj Finserv Limited. In addition to that cash and cash equivalent of INR 8,000 million (then market value) was also transferred to the company. The demerger has enabled investors to hold separate focused stocks and also facilitate transparent benchmarking of the companies to their peers in their respective industries. The constantly changing demographics and dynamics of the Indian economy, has led to creation of various needs of the average Indian customer. The Indian customer now demands proper avenues of channelizing their savings, financial protection and is also desirous of spending more on valuable goods and services. All these wants need to be met by dynamic players in the financial services space. Bajaj Finserv was formed specifically to cater to these needs. The company was also formed to touch and improve the lives of a growing number of people in the country, and in doing so, deliver superior corporate values to its shareholders. The operating companies carry with them the Bajaj brand, which carries with it decades of commitment to business ethics, integrity and highest standards of fiduciary responsibility.
  15. 15. Role of Bajaj Finance in consumer durable sales XV Fortune Institute of International Business Page XV Figure 2.3: Corporate Hierarchy Table 2.1: Management Committee NAME DESIGNATION Rahul Bajaj Chairman Sanjiv Bajaj Managing Director Rajiv Bajaj Director S H Khan Director Nanoo Pamnani Vice Chairman Madhur Bajaj Director D J Balaji Rao Director Naresh Chandra Director Rajeev Jain Chief Executive Officer Anant Damie Company Secretary RAHUL BAJAJ CHAIRMAN RAJEEV JAIN CEO ANANT DAMIE CS DALAL & SHAH CA NANOO PAMNANI VICE CHAIRMAN
  16. 16. Role of Bajaj Finance in consumer durable sales XVI Fortune Institute of International Business Page XVI Organization Structure Figure 2.4: Organization Chart
  17. 17. Role of Bajaj Finance in consumer durable sales XVII Fortune Institute of International Business Page XVII Figure 2.5: Bajaj Finserv Group Summary • A 25 year old non bank finance company • Diversified consumer, SME & commercial lender in india • 82 cities presence with over 4,200 distribution franchise BAJAJ FINSERV|LENDING • 2nd largest private general insurer in India • Offer wide range of general insurance viz. Motor, Health & Corporate in India • Strong franchise built on fast & efficient customer services BAJAJ|ALLIANZ • Bajaj finserv is the financial services arm of the Bajaj group with business interest in "Lending", "Protection" and "Wealth management" through its various subsidiaries BAJAJ FINSERV • 2nd largest policy acquire amongst private insurers.10.5 lac policies in FY12 • 2nd largest profitable life insurer in private sector in FY12 • 1,044 Branches with over 173K agents BAJAJ|ALLIANZ • A new business diversification for BFS • Launched retail financial advisory business in 04 cities in FY11 • Recieved SEBI approval to launch mutual fund business. proposed JV with Aaalianz BAJAJ FINSERV|WEALTH MANAGEMENT
  18. 18. Role of Bajaj Finance in consumer durable sales XVIII Fortune Institute of International Business Page XVIII 2.6. BRAND IDENTITY Bajaj Finserv is the financial services company of the Bajaj Group. Its current business lines include Protection through Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance, Lending through Bajaj Finance Limited and Wealth Management through Bajaj Financial Solutions Limited. All underlying businesses currently operate with their independent brands. With the intention to build a set of financial services businesses in coming years that share the Bajaj Finserv Group’s common values of Reliability, Innovation and Efficiency and provide customers with high quality products and services, Bajaj Finserv has created its brand identity. The new identity is easily identifiable and yet distinct. All the businesses under Bajaj Finserv would use the common identity in a coherent manner such that consumers experience through each business, the Bajaj Finserv values and identify the new brand identity with the same. Brand ‘Bajaj Finserv’ is symbolized by a unique visual identity that aligns our various businesses for our consumers and business partners, distinguishes it from competitors and promotes the strong values that Bajaj Finserv stands for. Bajaj Fiserv’s brand completely embodies its growth and services. The current Bajaj logotype identifies and stands on the very established and respected Bajaj identity and the 3 dimensional seal with the B and F makes the new identity uniquely recognizable. The color blue in the logo indicates confidence & strength. The round ball symbolizes the world with focus on India.
  19. 19. Role of Bajaj Finance in consumer durable sales XIX Fortune Institute of International Business Page XIX The brand delivers a distinctive and contemporary identity, which communicates Bajaj Finserv values in dynamic and consistent manner and is designed to be easily recognizable and yet differentiated so as to build an enriching and sustainable relationship with all who experience it. 2.7. PEERS BACKGROUND 2.7.1. Capital First 2.7.1.1. Company Overview: In 2006 the company receives certificate of registration from RBI as to function as an NBFC Conversion from a private limited company to a public limited company. In 2008 Future capital holding announces the fixing of the price band for its IPO and in the same year it changed its name from KB Infin Pvt. Ltd to Future Capital Holdings Ltd. In 2010 Company gets its new Vice Chairman and Managing Director Mr. v. Vaidyanathan and afterward Company started Mortgages business. In 2011 company expands its business and launches Gold loan business. In the same year Future capital have faces many new changes like getting merge with its parent company i.e. Future Capital Holdings, it launches automation of consumer Durable Financing business at stores with 3 minutes approvals, it launches property broking services and wealth management business and many more other services. In 2012 its launches Two – Wheeler loans business to give a competition to its competitors like Bajaj Finance, Reliance Capital, etc. To make this tougher its launches online broking
  20. 20. Role of Bajaj Finance in consumer durable sales XX Fortune Institute of International Business Page XX platform which resulted in Rs. 200 crores of subordinated debt. In the same year a big merger takes place between FCH Securities & Advisory Limited (FSAL) and Future Capital Investment Advisors Limited (FCIAL) with Kshitij Investment Advisory Company Limited (KIACL), a 100% subsidiary of FCH. Name of the Company has been changed from Future Capital holdings Limited to Capital First Limited. The company has a team of over 1000 employees, who are experienced in the financial industry. Capital first invested in people, process and technologies and has placed a strong credit and risk management team. The credit team is a separate vertical within the Organization, which undertakes detailed credit analysis, and processes files after checking credit performance with credit bureaus. Figure 2.6: Board Member of Capital First V. Vaidyanathan Chairman and MD NC Singhal Independent director Anil Singhvi Independent Director Hemang Raja Independent Director M S Sundara Rajan Independent Director Vishal Mahadevia Non Executive Director
  21. 21. Role of Bajaj Finance in consumer durable sales XXI Fortune Institute of International Business Page XXI 2.7.2. Reliance Capital: 2.7.2.1. Company Overview: Reliance Capital Limited (RCL) was incorporated in year 1986 at Ahmedabad in Gujarat as Reliance Capital & Finance Trust Limited. The name RCL came into effect from January 5, 1995. In 2002, RCL shifted its registered office to Jamnagar in Gujarat before it finally moved to Mumbai in Maharashtra, in 2006. In 2006, Reliance Capital Ventures Limited merged with RCL and with this merger the shareholder base of RCL rose from 0.15 million shareholders to 1.3 million. RCL entered the Capital Market with a maiden public issue in 1990 and in subsequent years further tapped the capital market through rights issue and public issues. The equity shares were initially listed on the Ahmedabad Stock Exchange and The Stock Exchange Mumbai. Presently the shares are listed on The Stock Exchange Mumbai and the National Stock Exchange of India. RCL in the initial years engaged itself in steady annuity yielding businesses such as leasing, bill discounting, and inter-corporate deposits. Later, in 1993 diversified its business in the areas of portfolio investment, lending against securities, custodial services, money market operations, project finance advisory services, and investment banking. RCL was accredited a Category 1 Merchant banker by the Securities Exchange Board of India (SEBI). It had lead managed/co-managed 15 issues of an aggregate value of Rs. 400 crores and had underwritten 33 issues for an aggregate value of Rs. 550 crore. All these companies were listed on various exchanges. RCL obtained its registration as a Non-banking Finance Company (NBFC) in December 1998. In view of the regulatory requirements RCL surrendered its Merchant Banking License. RCL has since diversified its activities in the areas of asset management and mutual fund; life and general insurance; consumer finance and industrial finance; stock broking; depository services; private equity and proprietary investments; exchanges, asset reconstruction; distribution of financial products and other activities in financial services.
  22. 22. Role of Bajaj Finance in consumer durable sales XXII Fortune Institute of International Business Page XXII Figure 2.7: Board Members of Reliance Capital Shri Anil Ambani Chairman Shri Rajendra Chitale Director Dr. Bidhubhusan Samal Director Shri V. N. Kaul Director Shri Amitabh Junjhunwala Vice-Chairman
  23. 23. Role of Bajaj Finance in consumer durable sales XXIII Fortune Institute of International Business Page XXIII 3. REVIEW OF LITERATURE Bajaj Finserv Lending bets big on 0% interest finance India Info line News Service / 17:22, Apr 17, 2012 The service economy continues to be the silver lining in an economic environment riddled with volatility and uncertainty. Today, 0% finance holds an over 11% share in the total consumer durables industry. Out of the total sales of over INR 36850 Cr annually, over 4053 Crore are bought on 0% interest finance. While the industry is growing at 9% YOY, 0% interest finance is growing at 13 times as much with over 118% growth YOY. In turn, Bajaj Finserv Lending continues to be the largest driver of this growth with over 9% share and growing at 88% YOY. This puts Bajaj Finserv Lending in a clear leadership position. Today, one out of every 5 flat panel TVs is bought on the 0% interest consumer durables loans option from Bajaj Finserv Lending. This growth has come at the back of significant investments made in distribution, technology and process automation. They have invested deep in technology and process innovations to create long term sustainable advantages. This has allowed them to create win-win propositions for all members in the ecosystem. Available at over 4,000 outlets across the country across metros, tier 2&3 cities, Bajaj Finserv Lending 0% interest consumer durables loans are available in places where other finance options like credit cards may have low penetration. Even where other finance options are available, Bajaj Finserv Lending 0% interest option offers a far better experience. All a customer needs to do is to walk into any of the consumer durables stores in the country, choose the desired product, and approach the in-store Bajaj Finserv Lending representative. Within a few minutes, the person gets an approval on the loan. The customer pays the defined down payment for the selected product and the remaining amount, is divided into equal monthly installments. The customer can also choose from a range of loan
  24. 24. Role of Bajaj Finance in consumer durable sales XXIV Fortune Institute of International Business Page XXIV tenors, ranging from 12 to 18 months. This brings down the cost of ownership and also helps the customer trade up. For example, if a person had a budget of 40,000, in case of a cash- down option, he would have managed to get a 32inch LED. With 0% interest consumer durable loan, he can now trade up to a 46 inch LED and bridge the gap with the 0% interest consumer durable loan. In the case, he may choose to pay down an even lesser amount than 40,000 as the down payment and keep the rest as his savings. They have developed credit policies and created partnerships to ensure the customer goes through a simple, hassle-free and quick process. Their technology platforms allow them to approve loans in as low as 3 minutes while he is in the shop, selecting his favorite product. For the customer, this life-event should be about buying his aspirational device without having to worry about the money he may need. The company has gone a step further and introduced an innovative offering through the EMI card. Available only for existing 0% interest consumer durable loans customers, the EMI card allows an existing customer to go to any of the Bajaj Finserv Lending affiliated stores and pay for his next consumer durable purchase with a simple swipe of the EMI card. The customer already has a pre-assigned loan line on his account that is determined through the internal policy framework and past behavior on his previous loan. EMI card is a proof point of how their approach innovation and internal policy framework has created compelling long term brand propositions for customers. Bajaj Finserv Lending launches Extended Warranty with its 0% interest Consumer Durables Finance Another innovation from Bajaj Finserv Lending, Extended Warranty will provide additional 1 year coverage for products after the expiry of the manufacturer warranty period Mumbai, Maharashtra, June 2, 2012 /India PR wire/ -- Bajaj Finserv Lending, the market leader in Consumer Durables Finance, has launched 'Extended Warranty' plan with its 0% interest Consumer Durables Finance. This
  25. 25. Role of Bajaj Finance in consumer durable sales XXV Fortune Institute of International Business Page XXV gives customers another compelling reason to opt for 0% interest Consumer Durables Finance for their durables purchases. Extended Warranty launch is an affirmation of the company's active pursuit of innovations and commitment to continuously enhancing the value bundle. Product maintenance post the manufacturer's warranty is a challenge faced by the consumers. Bajaj Finserv Lending envisages a huge scope in Extended Warranty as an opportunity to further consolidate long term customer relationship even after the financing tenure concludes. "Extended Warranty is a proof of their commitment to continuously enhancing the role in customer’s life, beyond just being another financier. Extended Warranty will provide complete protection of the cost towards repair and replacement of the consumer durable appliances arising out of unexpected defects in material or workmanship, post the expiry of manufacturer's product warranty period. The existing Extended Warranty market in India is completely unorganized, with some retailers offering it with lots of terms and conditions. Bajaj Finserv Lending, which holds over 80% share of the consumer durables installment finance segment, has tied up with another Bajaj Finserv Group company, Bajaj Allianz General Insurance Company Ltd., to offer Extended Warranty for consumer durable appliances on Group Platform basis The offer is available for the customers who are already availing the 0% finance services from Bajaj Finserv Lending. The 12 month policy period of the Extended Warranty plan will commence after the expiry of manufacturer's product warranty period. Bajaj Finserv Lending plans to leverage on its established network of 0% interest Consumer Durable Loans with presence across over 80 cities. Extended Warranty plan from Bajaj Finserv Lending would cover the range of consumer durable appliances available through the 0% interest consumer durable finance from the company. The Sum Insured under the plan shall be equal to the invoice price of the particular consumer durable appliance and the maximum claim amount payable under it would be the Sum Insured. The claim process is simple and hassle free. The consumer needs to simply call the dedicated Toll Free Call Centre Number shared in his Extended Warranty
  26. 26. Role of Bajaj Finance in consumer durable sales XXVI Fortune Institute of International Business Page XXVI kit, quote his policy number and provide details of his loss. Once the call is logged in, the Customer Service Executive will direct the consumer to the nearest authorized service center of the manufacturer. The Extended Warranty plan will then sponsor the cost of repair or replacement of the particular appliance for an admissible claim. Bajaj Finserv Lending launches ‘Retailer Finance’ – exclusive finance option for its retail partners in the consumer durable industry  Pre-approved credit line for the partners  No collaterals required to avail this option  will benefit more than 3000 partners across India Pune, March 20, 2013: Bajaj Finserv Lending, one of the most diversified non-banks in the country, has introduced exclusive finance option for its retail partners in the consumer durable industry. A leader in 0% interest consumer finance with 14% share in the market, the company launched the innovative Retailer Finance, which will help its partners avail finance for acquiring inventory from the manufacturers. The unique attribute about Retailer Finance is the fact that Bajaj Finserv Lending is leveraging on its trust relationship with its partners for disbursing the loans. The retailers are assigned a pre-approved credit line which they can use any time they want. Thus unlike other finance options, they don’t have to undergo the cumbersome due-diligence process and get quick finance without submitting any collaterals or documentation. This is the first time ever that a non-collateral based financing option has been introduced for the retailers. Retailer Finance will be available for retailers of all sizes, having a minimum of 1 year relationship with Bajaj Finserv Lending. Through this offering, the company is targeting to disburse approximate Rs. 250 crore monthly with a target of Rs.1500 for the first year. The minimum finance available will be to Rs. 5 lacs up to a maximum of Rs. 15 crore. With a transparent and easy process of enrolment and documentation, it also has a completely online mode of disbursement and fulfillment.
  27. 27. Role of Bajaj Finance in consumer durable sales XXVII Fortune Institute of International Business Page XXVII 4. PROJECT OBJECTIVES 1. This project will primarily focus on Modus Operandi of Bajaj Finance for Finance of Consumer Durable products. This will require a fist hand experience in understanding end to end process flow for loans processing to payment disbursement and coming with Suggestions to make experience more Delightful for customers and channel partners. 2. Focus on way of operations at 2 types of Outlets: Owner Driven and LFR’s and Bajaj Finance’s SWOT analysis at both these outlets. Competitors working (CC or Capital First), Reliance Capital Ltd viz a viz BFL and stress areas will have to focused along with.
  28. 28. Role of Bajaj Finance in consumer durable sales XXVIII Fortune Institute of International Business Page XXVIII 5. PROJECT METHODOLOGY ADOPTED 5.1. METHODOLOGY: The study is made on the basis of secondary data. The annual report of the firms was a great help in collection of necessary information. Methodology is a systematic procedure of collecting information in order to analyze and verify a phenomenon. The collection of information is done through two principal sources. 5.1.1. Primary Data: It is the information collected directly from sales finance department for further studies, it was mainly through interviews with concerned officers and staff, either individually or collectively, sum of the information has been verified or supplemented with personal observation and real timework experience. 5.1.2. Secondary Data: Secondary data is the published data. It is already available for using and its saves time. The mail source of secondary data are published market surveys, government publications advertising research report and internal source such as sales, sales records orders, customers complaints and other business record etc. the study has also depended on secondary data to little extent, which is collected through internal source. 5.2. RESEARCH DESIGN: A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure Research Design is the conceptual structure within which research is conducted. It is the overall operational pattern or framework of the project that stipulates what information is to be collected from which sources by which procedure.
  29. 29. Role of Bajaj Finance in consumer durable sales XXIX Fortune Institute of International Business Page XXIX Figure 5.1: Categories of Research Design 5.2.1. Exploratory Research: To gain familiarity with a phenomenon or to achieve new insight into it. Studies with this object in view are termed as exploratory or formularize research studies. 5.2.2. Descriptive Research: To portray accurately the characteristics of particular individual, situation of a group. Studies with this object are view is known as descriptive research studies. 5.2.3. Empirical Research: To gain knowledge by means of direct and indirect observation or experience. Empirical evidence can be analyzed quantitatively or qualitatively. RESEARCH DESIGN EXPLORATORY RESEARCH DESIGN DESCRIPTIVE AND DAIGNOSTIC EMPIRICAL RESEARCH
  30. 30. Role of Bajaj Finance in consumer durable sales XXX Fortune Institute of International Business Page XXX Considering the importance of decision areas, it was decided to undertake an exploratory survey. Exploratory research is concerned with discovering the general nature of the problem and the variables that relates to it. When I was making this project the prime thing was to study Balance sheet and P & L accounts of different firms. I have done that by collecting the required information through firm’s manual and data available on internet. During the SIP, the Research Method which I applied was Exploratory and Descriptive research which help me to gain more insight of the operation which is done during the Consumer Durable goods financing. During the project I got to know how Bajaj Finserv Lending approves a Loan to various Customers on the basis of different Document available with them. I explored different tools and techniques to convert a Credit Card & Cash buyer into Finance buyer, and also how to build a good relationship with the sales person as they are main key to get customer and not to let the competitors win. In Finance sector there is always a win-lose situation exist but during the peak season I observed that win-win situation comes into picture but only for a short duration. I also learned how the sales executive use their instinct to judge a customer is genuine or not but this not always help, sometime a genuine customer becomes a fraud customer which directly harm the Sales Executive incentive status as there is company policy to stop the incentive whenever there is fraud case pop up from the concern SE.
  31. 31. Role of Bajaj Finance in consumer durable sales XXXI Fortune Institute of International Business Page XXXI 6. DATA COLLECTION 6.1. DESCRIPTION OF THE WORK PERFORMED: Table 6.1: Industry Analysis with Bajaj Finserv & Reliance Capital (Marketing &Selling Expenses) 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 Marketing&Selling FY 2008-12 INDUSTRY BAJAJ FINSERV RELIANCE CAPITAL MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 0.07 0.05 0.06 0.07 0.06 BAJAJ FINSERV 0.01 0.05 0.03 0.04 0.04 Reliance Capital 0.05 0.02 0.02 0.01 0.01
  32. 32. Role of Bajaj Finance in consumer durable sales XXXII Fortune Institute of International Business Page XXXII Figure 6.1: Marketing & Selling Ratio From the above graph (Figure 6.1), it can be clearly seen that:  There has been decrease in the ratio of marketing and selling expenses viz a viz sales in industry with a fall of 14% from FY 08-09 to 11-12, which is good for the industry as it shows that there has been shift in expenses from high to low.  On the other hand when we compare the industry trend with Bajaj and Reliance we can observe that Bajaj is not able to control its expenses throughout the years with an increase of 30%. Whereas Reliance shows a remarkable result as it passes industry trend in cutting down the expenses with decrease of 80%, and it may have happened due to increase in sales and control of expenses. Table 6.2: Employees v/s Sales Analysis of Bajaj Finserv Lending MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 0.08 0.06 0.08 0.07 0.26 BAJAJ FINSERV 0.56 0.82 0.99 0.10 0.08 RELIANCE CAPTIAL 0.07 0.05 0.05 0.05 0.04  Bajaj and Reliance have the same trend in FY 2011 and 2012 but industry has got a different trend in the same period.  It has been observed from the graph (Figure 6.2) that Reliance capital is very closely following the Industry trend up to FY’11 whereas Bajaj Finserv has gone too far from the Industry trend because of inconsistency in their sales.
  33. 33. Role of Bajaj Finance in consumer durable sales XXXIII Fortune Institute of International Business Page XXXIII Figure 6.2: Employees v/s Sales Ratio 6.2. FINANCIAL ANALYSIS USING RATIOS: Table 6.3: Current Ratio Analysis of Bajaj Finserv with Industry & Its Peer’s Group 0 0.2 0.4 0.6 0.8 1 1.2 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 Employee/SalesRatio FY 2008-12 INDUSTRY BAJAJ FINSERV RELIANCE CAPITAL MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 5.61 1.95 6.76 9.59 1.33 BAJAJ FINSERV 1.59 1.17 0.79 0.15 0.43 CAPITAL FIRST 2.24 1.90 1.28 1.72 1.82 RELIANCE CAPITAL 10.18 1.57 2.48 6.50 1.92
  34. 34. Role of Bajaj Finance in consumer durable sales XXXIV Fortune Institute of International Business Page XXXIV Figure 6.3: Current Ratio  As per the rule of thumb says that the current ratio should be at least “2” that is the current assets should meet current liabilities at least twice. But here we are not applying this rule; here we are taking industry inputs as a standard for comparison.  From the graph (Figure 6.3), we can conclude that Industry has been very conservative with regard to maintaining its current ratio with a decrease of 76%. Reliance capital as usual is close to industry trend. Here Bajaj Finserv has also shown decrease in its current ratio which reflects that it’s also following industry trend with a decline of 73%. 0 2 4 6 8 10 12 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 CurrentRatio FY 2008-12 INDUSTRY BAJAJ FINSERV CAPITAL FIRST RELIANCE CAPITAL
  35. 35. Role of Bajaj Finance in consumer durable sales XXXV Fortune Institute of International Business Page XXXV 6.3. QUICK RATIO: Table 6.4: Quick Ratio of Industry, Bajaj & Peer Group 0 5 10 15 20 25 30 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 QuickRatio FY 2008-12 INDUSTRY BAJAJ FINSERV CAPITAL FIRST RELIANCE CAPITAL MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 5.74 11.08 13.7 16.87 3.13 BAJAJ FINSERV 1.21 0.91 0.72 0.15 0.40 CAPITAL FIRST 3.28 9.30 21.69 12.09 5.48 RELIANCE CAPITAL 10.14 26.31 7.43 13.81 3.36
  36. 36. Role of Bajaj Finance in consumer durable sales XXXVI Fortune Institute of International Business Page XXXVI Figure 6.4: Quick Ratio (Bajaj Finserv)  As the quick ratio represents the ability of the firm to cover its current liabilities without considering its inventories and it also provides us with an insight much clear and deeper than the current ratio.  It shows the performance of quick assets in compensating the current liabilities. From the graph (Figure 6.4), it can been observed that Industry shows decrease in quick ratio by 45% along with Bajaj Finserv with decrease of 83% a little higher than Industry decline trend. From 2010-12 Reliance capital has been very close to Industry. Whereas Capital first shows increase in quick ratio. . 6.4. EARNINGS PER SHARE (EPS): Table 6.5: EPS  As we can observe from the graph (Figure 6.5) that firms have shown a mix trend in their respective earning per share ratio. This means that the firms not constantly but have earning power in the industry and they contribute positively to the earnings of the whole industry as well as to the return to their respective shareholders. MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 45.2 23.44 15.46 15.95 18.39 BAJAJ FINSERV 2.86 2.35 13.02 5.29 3.20 CAPITAL FIRST 1.41 1.47 2.73 8.53 14.29 RELIANCE CAPITAL 41.75 39.41 13.82 9.33 21.13
  37. 37. Role of Bajaj Finance in consumer durable sales XXXVI I Fortune Institute of International Business Page XXXVII  Industry has shown a decrease of 59% in its EPS whereas Bajaj Finserv has improved by 9% because of controlled expenses in totality and we can see that because of following the same trend as of Industry by Reliance capital it also decline in its EPS whereas Capital first increased. Figure 6.5: EPS 6.5. MANAGEMENT EFFICIENCY RATIO: Table 6.6: Debtors Turnover Ratio MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 0 5 10 15 20 25 30 35 40 45 50 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 EarningsperShare FY 2008-12 INDUSTRY BAJAJ FINSERV CAPITAL FIRST RELIANCE CAPITAL
  38. 38. Role of Bajaj Finance in consumer durable sales XXXVI II Fortune Institute of International Business Page XXXVIII INDUSTRY 113.55 58.28 103.73 150.26 42.94 BAJAJ FINSERV 30.23 38.76 68.33 112.50 83.81 CAPITAL FIRST 9.03 11.17 9.09 48.82 25.69 RELIANCE CAPITAL 9.41 22.05 23.35 26.69 31.17 Figure 6.6: Debtor Turnover Ratio  Debtor turnover ratio basically represents average collection period of a firm from its debtors. 0 20 40 60 80 100 120 140 160 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 DebtorTurnoverRatio FY 2008-12 INDUSTRY BAJAJ FINSERV CAPITAL FIRST RELIANCE CAPITAL
  39. 39. Role of Bajaj Finance in consumer durable sales XXXIX Fortune Institute of International Business Page XXXIX  The constant increase in DTR of Bajaj Finserv help him to remain at top at the end of FY’12, but when we analyze the Industry trend it shows a decline by 61% whereas Bajaj Finserv DTR has increased by 170% . Whereas Reliance capital and Capital first has been very close to Industry trend in the FY’12 (See Figure 6.6). 6.6. ASSETS TURNOVER RATIO: Table 6.7: Assets Turnover Ratio MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 5.07 1.23 2.48 2.58 0.39 BAJAJ FINSERV 0.33 0.07 0.08 0.08 0.10 CAPITAL FIRST 15.20 1.30 5.36 3.04 1.34 RELIANCE CAPITAL 6.39 0.16 0.12 0.08 0.13
  40. 40. Role of Bajaj Finance in consumer durable sales XL Fortune Institute of International Business Page XL Figure 6.7: Assets Turnover Ratio  This ratio measures the efficiency and profit earning capacity of the firm. The higher the ratio, the grater is the intensive utilization of fixed assets. Lower ratio means underutilization of fixed asset and excessive investment in these assets.  As we can see from the graph (Figure 6.7), none of the company’s is able to satisfy the criteria of Assets Turnover Ratio, which means that none of them has been able to generate profit from their ATR. 6.7. DEBT COVERAGE RATIO: Table 6.8: Total Debt to Owner Fund 0 2 4 6 8 10 12 14 16 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 AssestTurnoverRatio FY 2008-12 INDUSTRY BAJAJ FINSERV CAPITAL FIRST RELIANCE CAPITAL MAR’08 MAR’09 MAR’10 MAR’11 MAR’12
  41. 41. Role of Bajaj Finance in consumer durable sales XLI Fortune Institute of International Business Page XLI  Total debt to owner fund represents the total debt of a firm upon the owner funds employed. A normal situation is said to be when it is equal to 1.  From the graph given in Figure 6.8, we can analyse that in FY’12, industry shows a ratio of 2.29 (debt to owner fund) which is double the amount of owner fund. But when we see the figures of Bajaj over its peer and industry, it’s been observed that Bajaj is playing conservatively due to which its debt to owner fund ratio is pretty low, which shows Bajaj doesn’t want to take risk and it has no significant better plan compare to other company and not aggressively moving forward. Figure 6.8: Total Debt to Owner Fund 0 1 2 3 4 5 6 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 TotalDebtToOwnerFund FY 2008-12 INDUSTRY BAJAJ FINSERV CAPITAL FIRST RELIANCE CAPITAL INDUSTRY 2.11 2.38 2.32 3.06 2.29 BAJAJ FINSERV 0.26 0.26 0.26 0.28 0.32 CAPITAL FIRST 0.14 0.64 0.59 3.76 4.87 RELIANCE CAPITAL 1.55 2.02 1.72 2.63 1.30
  42. 42. Role of Bajaj Finance in consumer durable sales XLII Fortune Institute of International Business Page XLII 6.8. INVESTMENT VALUATION RATIO: Table 6.9: Dividend per Share MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 4.3 4.5 4.7 5.05 7.1 BAJAJ FINSERV 1.00 1.00 1.00 1.25 1.50 CAPITAL FIRST 0.00 0.00 1.00 1.50 1.50 RELIANCE CAPITAL 5.50 6.50 6.50 6.50 7.50  From the above chart (Table 6.9), we can observe that the firms like Bajaj and capital have shown a constant trend in their DPS. This means that they are able to keep their shareholders satisfied. Figure 6.9: Dividend per Share 0 1 2 3 4 5 6 7 8 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 DividendPerShare FY 2008-12 INDUSTRY BAJAJ FINSERV CAPITAL FIRST RELIANCE CAPITAL
  43. 43. Role of Bajaj Finance in consumer durable sales XLIII Fortune Institute of International Business Page XLIII As the graph given in Figure 6.9 state the outstanding result of Reliance Capital, Bajaj still lacking far behind it which can proved to be a very big problem for him as well as for Capital first as Industry trend is very high so they have to seriously think about paying higher DPS to their shareholders 6.9. PRICE EARNING RATIO (PE RATIO): Table 6.10: Price Earnings Ratio (PE RATIO) MAR’09 MAR’10 MAR’11 MAR’12 MAR’13 INDUSTRY 26.11 58.39 32.96 39.66 60.20 BAJAJ FINSRV 51.83 143.97 40.51 118.95 251.03 RELAINCE CAPITAL 6.73 20.20 34.79 42.86 16.77 CAPITAL FIRST 68.29 118.84 54.15 14.93 9.74 0 50 100 150 200 250 300 MAR'09 MAR'10 MAR'11 MAR'12 MAR'13 PriceEarningRatio FY 2008-12 INDUSTRY BAJAJ FINSERV RELIANCE CAPITAL CAPITAL FIRST
  44. 44. Role of Bajaj Finance in consumer durable sales XLIV Fortune Institute of International Business Page XLIV Figure 6.10: Price Earnings Ratio From the graph in Figure 6.10, we can observe that Bajaj Finserv is doing really well in term of P/E ratio than Industry and its peer group and has been a leader in stock market. That’s why people are ready to pay more for Bajaj Finserv, as Bajaj Finserv is very old player than its peer so it’s enjoying its brand loyalty and also due to its Dividend payout ratio is higher and close to the industry. 6.10. DIVIDEND PAYOUT RATIO (DPR): Table 6.11: Dividend Payout Ratio in % (DPR) MAR’08 MAR’09 MAR’10 MAR’11 MAR’12 INDUSTRY 14.68 15.02 32.30 27.82 35.27 BAJAJ FINSERV 22.77 23.80 30.15 8.19 27.77 RELIANCE CAPITAL 15.15 18.88 52.24 66.18 35.04 CAPITAL FIRST 0.00 0.00 41.74 18.90 11.86 0 10 20 30 40 50 60 70 MAR'08 MAR'09 MAR'10 MAR'11 MAR'12 DividendPayoutRatio FY 2008-12 INDUSTRY BAJAJ FINSERV RELIANCE CAPITAL CAPITAL FIRST
  45. 45. Role of Bajaj Finance in consumer durable sales XLV Fortune Institute of International Business Page XLV Figure 6.11: Dividend Payout Ratio In the FY’12 we can see in Figure 6.11 that Bajaj Finserv is very close to the Industry trend, whereas Reliance capital as usual more close to the Industry and Capital first after a jump in FY’10, still lags behind. It shows that Bajaj Finserv as well as Reliance capital, both are able to give a good percentage of profit shares to their investors whereas capital first has to take this situation seriously and come up with a better pay-out ratio. 6.11. PROCESS ADOPTED: 6.11.1. Documentation: 1. ID Proof- Driving License, PAN card, Passport, Ration Card, Voter ID, etc. 2. Address Proof- Needed to be permanent address, if not, then salaried person can give letterhead of his/her company’s HR manager (only Limited companies). 3. Cancelled Cheque- One cancelled Cheque which is checked on tracker, Cheque number needed to be found out in tracker.
  46. 46. Role of Bajaj Finance in consumer durable sales XLVI Fortune Institute of International Business Page XLVI Unique Customer Case ID is generated Loan is approved from company side Executive have to complete the Application form along with ECS Mandate Form and Loan Term Sheet and take the signature of customer Customer is pitched finance Custom er Agreed Tell them about the benefits of finance at 0% that is given in easy installments Ask for customer to give some documents such as ID-proof, Address proof and a signed cancelled Cheque Customer have credit card Application form is filled after verification of ID Customer details is entered in SSP Form is accepted Yes No No Yes Check for another segment under which customer is lying by seeing Gov./employee card, RC Surrogate, Existing customer, CIBIL, salaried, debit card or instant customer Yes No START
  47. 47. Role of Bajaj Finance in consumer durable sales XLVII Fortune Institute of International Business Page XLVII Figure 6.12: Flow Chart of the Application Process, To Loan Approval to File Documentation and File Send Loan is approved from company side Invoice and Disbursal Memo is also attached with other documents on the file File is then couriered to the main office, Pitampura branch File is again checked and then it is send to Head office, Pune Branch Stop If there is any case of fraud is found No Yes
  48. 48. Role of Bajaj Finance in consumer durable sales XLVIII Fortune Institute of International Business Page XLVIII 6.12. RECOMMENDATIONS PROPOSED FOR EACH STAGE: There are several recommendations: 1. Bajaj Finserv will give some more emphasis on advertising so that more number of peoples will attract. As many of them don’t know about it so they are a bit conscious when our executives told them about the plan. If they know well in advance, then obviously they will come prepared to take the financial help from Bajaj Finserv. 2. Every mega store required minimum of 3 executives, with 3 separate systems so that customer don’t have to wait for some other customer to finish their procedure. 3. Some customers were facing problem that they are not getting EMI card even after 3 installments, I think that should be checked because it will tamper the goodwill of the company. 4. Also one more thing can be changed is that women can be given some more emphasis as an executive as customers will have more belief in them. 6.13. DOCUMENTS REQUIRED FOR THE LOAN APPROVAL: Documents Required for Loan Approval are: 1. Residential proof 2. ID Proof 3. Cancelled Cheque 4. Credit Card 5. Office ID (For Govt. Employee) 6. Visiting Card (For Govt. Employee) 7. Salary Slip Latest (For Govt. Employee and salaried) 8. KYC Documents (For RC Surrogates) 9. RC Copy (For RC Surrogates)
  49. 49. Role of Bajaj Finance in consumer durable sales XLIX Fortune Institute of International Business Page XLIX 10. Last 3 months Bank Statement (Salaried) 11. Phone Bill, latest , original and delivered by courier (Instant) 6.14. SURROGATES REQUIREMENTS FOR LOAN APPROVAL: a. WOW 2.1 Credit Card Silver – 25k Gold – 50k Platinum, Titanium, Visa Signature, Diner, American Express – 100k-125k 2.2 Listed Company (Government employee and listed company) Junior level – 25k Middle level – 50k Senior level – 100k 2.3 RC Surrogate (4 Wheeler Private use) Lower – 30k Middle – 50k Upper – 100k 2.5 Existing Customer – 50k 2.6 CIBIL Score < 700 – Rejected >700 but < 800 – 50k > 800 – 100k 2.7 Salaried 15, 000 to 24, 999 – 25k 25, 000 to 49, 999 – 50k Above 50, 000 – 50k 2.11 Instant – 35k 2.21 Debit Card Normal – 15k Salaried – 35k 2.22 EMI Card – Upto 1 lakhs b. B. WOW Lite 3.1 – 35k 3.2 – 35k 3.3 – 35k 3.5 – 35k 3.6 – 35k 3.7 – 35k
  50. 50. Role of Bajaj Finance in consumer durable sales L Fortune Institute of International Business Page L 3.11 – 35k 3.21 – 15k 3.14 – 35k 3.22 – 35k c. C. WOW Extension 5.1 – 75k 5.2 – 75k 5.3 – 35k 5.5 – 50k 5.6 – 75k 5.7 – 75k 5.11 – 35k 5.14 – 75k 5.21 – 15k 5.22 – 75k
  51. 51. Role of Bajaj Finance in consumer durable sales LI Fortune Institute of International Business Page LI 6.15. SWOT ANALYSIS OF BAJAJ FINSERV LIMITED- AT FLR & OWNER DRIVEN STORES: 6.15.1. Strengths Figure 6.13: Strengths of Bajaj Finserv Limited 6.15.2. Weaknesses
  52. 52. Role of Bajaj Finance in consumer durable sales LII Fortune Institute of International Business Page LII Figure 6.14: Weakness of Bajaj Finserv Limited 6.15.3. Opportunities Figure 6.15: Opportunities in Bajaj Finserv Limited 6.15.4. Threats
  53. 53. Role of Bajaj Finance in consumer durable sales LIII Fortune Institute of International Business Page LIII Figure 6.16: Threats to Bajaj Finserv Limited 6.16. LEARNING: 6.16.1. Dealing with Customers: I got to know about how to deal with customers, how to offer them different schemes and how to handle their queries effectively. 6.16.2. Pitching Customers towards Various Other Products: Other products include extended warranty, EMI card; Health Risk cover, etc. are being provided by Bajaj Finserv. We got to know how to approach customers and how to pitch them accordingly. 6.16.3. Process of Granting Loan: I. Documentation- Documentation like Credit card, driving license, PAN card, etc. is required to provide loan to the customers. II. Various requirements- As mentioned in surrogates various slabs are there according to which customers are provided loan.
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  65. 65. Role of Bajaj Finance in consumer durable sales LXV Fortune Institute of International Business Page LXV 7. FINDINGS 7.1. Advantages of BFL scheme over its competitors: As there are some disadvantages in going through BFL, but there are some advantages as well over its competitors. 1. BFL provides loan on consumer durable products at 0%, only a nominal amount of file charge is taken from the customers. So any customer can take this scheme, therefore they don’t have to pay the complete amount and also they can enjoy interest on that amount. 2. While paying through credit card, that much amount is blocked from the card. As there is monthly limit in each card, so it is wise to go for BFL 3. If a customer uses credit card on payment, and doesn’t able to maintain the minimum balance on the next month, them he has to pay fine on the complete amount, whereas BFL customers don’t have to pay fine on the whole amount if they unable to pay next time. Fine is being charged on the next month installment only. 4. Credit card is not given to every customer, so those customers who can’t afford credit card can definitely go for BFL. 5. BFL provided loan on many type of surrogates, not all company provides loan on these many surrogates. 6. If a company is taking finance from BFL then he will get easily insurance policy from Bajaj Alliance without any verification on insurance part. 7. Flexible EMI scheme in many products are available. BFL provides many schemes such as 12/4, 10/2, 18/6, 24/6 etc. Customer can choose any EMI option according to their paying capability.
  66. 66. Role of Bajaj Finance in consumer durable sales LXVI Fortune Institute of International Business Page LXVI 8. From the above ratios we can find that instead of not performing in several areas Bajaj still got a good market price, this can be because of being an old player in the market with huge brand loyalty. 9. It has also been observed that Bajaj is showing more conservative behavior by not taking loan instead cheaper interest rate and still going for owner funds, this will not help them in tapping new markets. BFL regularly provides offers to its customers in festive season. Some offer even consist schemes such as 10/0; in which customer doesn’t have to pay anything as the down payment.
  67. 67. Role of Bajaj Finance in consumer durable sales LXVII Fortune Institute of International Business Page LXVII 8. RECOMMENDATIONS 1. Filling up of questionnaire from customer is very hectic from customer point of view. The questionnaire should be attractive so that it wouldn’t affect the sales. 2. Unawareness of customer about 0% finance scheme. Therefore, Bajaj should make its customers aware about the new schemes. 3. Customer thinking that Bajaj will take some hidden charges from them, if they take loan at 0% from Bajaj. This can be possible by removing wrong myth in the minds of the customers. Therefore, Bajaj should promote them as a good brand. 4. Customers don’t carry all the required documents all the time and some of them don’t want to come again. This happens mainly due to lack of proper information. 5. Customer executives have to sell Bajaj Allianz insurance along with the finance scheme. So they focus mainly on those customers who are interested in taking insurance plan. 6. Bajaj should work on its HR part as I found it bit demotivating for the employees when they don’t receive their incentive when any file get blocked, they have to work out any other way to deal with these situations. 7. The quality of hiring of support staff is not up to the mark as they fail to serve the customer in absence of SE. 8. More scheme plan should be incorporated for non-Credit card user as they are more in number and are more prospecting customer. 9. Bajaj Finserv initially have the system of swiping of EMI card but due to some difficulty they stopped it, I think Bajaj should work upon this as this can save more time for customer as well as for SE and he can serve more non-EMI card user and convert them into EMI card holder.
  68. 68. Role of Bajaj Finance in consumer durable sales LXVIII Fortune Institute of International Business Page LXVIII REFERENCES  Bajaj Finserv Ltd. (2012). Retrieved June 14, 2013, from The Economic Times: http://economictimes.indiatimes.com/bajaj-finserv-ltd/stocks/companyid-21426.cms  Board Members. (2012). Retrieved June 18, 2013, from Capital First: http://www.capfirst.com/board-members  Board of Directors. (2012). Retrieved June 17, 2013, from Reliance Capital: http://www.reliancecapital.co.in/cg_bod.html  Board of Directors. (2012). Retrieved June 8, 2013, from Bajaj Finserv: http://www.bajajfinserv.in/au-boardofdirectors.asp  Capital First. (2012). Retrieved June 19, 2013, from Moneycontrol: http://www.moneycontrol.com/financials/capitalfirst/ratios/FCH  Capital First Ltd. (2012). Retrieved June 21, 2013, from The Economic Times: http://economictimes.indiatimes.com/future-capital-holdings-ltd/stocks/companyid- 19384.cms  Company Facts- Bajaj Finserv. (2012). Retrieved June 7, 2013, from Moneycontrol: http://www.moneycontrol.com/companyfacts/bajajfinserv/management/BF04#BF04  Company History. (2012). Retrieved June 9, 2013, from Bajaj Finserv: http://www.bajajfinserv.in/au-company-history.asp
  69. 69. Role of Bajaj Finance in consumer durable sales LXIX Fortune Institute of International Business Page LXIX  Market: Financial- Ratios. (2012). Retrieved June 16, 2013, from Moneycontrol: http://www.moneycontrol.com/financials/bajajfinserv/ratios/BF04#BF04  Muthoot Finance. (2012). Retrieved June 22, 2013, from Moneycontrol: http://www.moneycontrol.com/financials/muthootfinance/ratios/MF10  Muthoot Finsnce Ltd. (2012). Retrieved June 23, 2013, from The Economic Times:http://economictimes.indiatimes.com/muthoot-finance-ltd/stocks/companyid- 33218.cms  Organizational Structure. (2012). Retrieved June 9, 2013, from Bajaj Finserv: http://www.bajajfinserv.in/au-boardofdirectors.asp  Reliance Capital. (2012). Retrieved June 20, 2013, from Moneycontrol: http://www.moneycontrol.com/financials/reliancecapital/ratios/RC  Reliance Capital Ltd. (2012). Retrieved June 17, 2013, from The Economic Times:http://economictimes.indiatimes.com/reliance-capital-ltd/stocks/companyid- 13189.cms  Tata Investment Corporation. (2012). Retrieved June 13, 2013, from Moneycontrol: http://www.moneycontrol.com/financials/tatainvestmentcorporation/ratios/TIC  Tata Investment Corporation Ltd. (2012). Retrieved June 24, 2013, from The EconomicTimes:http://economictimes.indiatimes.com/tata-investment-corporation- ltd/stocks/companyid-13540.cms  Bajaj Finserv Limited. (2008-09). 2008-09 Annual Report. Bajaj Finserv Limited Online Database.
  70. 70. Role of Bajaj Finance in consumer durable sales LXX Fortune Institute of International Business Page LXX  Bajaj Finserv Limited. (2009-10). 2009-10 Annual Report. Bajaj Finserv Limited Online Database.  Bajaj Finserv Limited. (2010-11). 2010-11 Annual Report. Bajaj Finserv Limited Online Databse.  Bajaj Finserv Limited. (2011-12). 2011-12 Annual report. Bajaj Finserv Limited Online Databse.  Cholamandalam Investment and Finance Company Ltd. . (2009-10). 2009-10 Annual Report. Cholamandalam Investment and Finance Online Databse.  Cholamandalam Investment and Finance Company Ltd. . (2010-11). 2010-11 Annual Report. Cholamandalam Investment and Finance Online Database.  Cholamandalam Investment and Finance Company Ltd. . (2011-12). 2011-12 Annual Report. Cholamandalam Investment and Finance Online Databse.  Cholamandalam Investment and Finance Company Ltd. (2008-09). 2008-09 Annual Report. Cholamandalam investment and Finance Online Databse.  L&T Finance Ltd. (2008-09). 2008-09 Annual Report. L&T Finance Online Database.  L&T Finance Ltd. (2009-10). 2009-10 Annual report. L&T Finance Online database.  L&T Finance Ltd. (2010-11). 2010-11 Annual Report. L&T Finance Online Databse.  L&T Finance Ltd. (2011-12). 2011-12 Annual Report. L&T Finance Online Databse.  Relaince Capital Ltd. (2010-11). 2010-11 Annual Report. Relaince Capital Ltd. Online Database.
  71. 71. Role of Bajaj Finance in consumer durable sales LXXI Fortune Institute of International Business Page LXXI  Reliance Capital. (2011-12). 2011-12 Annual Report. Reliance Capital Online Databse.  Reliance Capital Ltd. (2008-09). 2008-09 Annual Report. Reliance Capital Ltd Online Database.  Reliance Capital Ltd. (2009-10). 2009-10 Annual Report. Rekiance Capital Ltd. Online Database.  Religare Enterprise Ltd. (2008-09). 2008-09 Annual Report. Religare Enterprise Online Database.  Religare Enterprise Ltd. (2009-10). 2009-10 Annual Report. Religare Enterprise Online Database.  Religare Enterprise Ltd. (2010-11). 2010-11 Annual Report. Religare Enterprise Online Database.  Religare Enterprise Ltd. (2011-12). 2011-12 Annual Report. Religare Enterprise Online Database.

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