Vishweshwar Education Society’s

Indira Institute of Business Management

PROJECT REPORT
ON

FINANCIAL PERFORMANCE AND GROWTH OF NBFC’S IN INDIA

SUMITTED TO
INDIRA INSTITUTE OF BUSINESS MANAGEMENT, NAVI MUMBAI
BY

GRACE VARGHESE
2022007
2023-24
IN PARTIAL FULFILLMENT OF
MASTER OF MANAGEMENT STUDIES [MMS], UNIVERSITY OF
MUMBAI

JULY, 2023

1
 DECLARATION

I, Mr./Ms. Grace Varghese hereby declare that this project report is the record of authentic
work carried out by me during the period from 2ND May 2023 to 7th, July 2023 and has been
not been submitted to any other university and institute for the award of any degree/ diploma
etc.

Signature
Name of the student

Date

2
CERTIFICATE FROM THE COMPANY/ORGANIZATION

3
 CERTIFICATE

This is to certify that the project entitled submitted by Mr/miss

of Indira institute of business management in partial fulfilment for the award of master of
management studies of Mumbai university is his/her original work and does not form any part
of the projects undertaken previously.

This project report is the record of authentic work carried out by him/ her during the period
from to .

He/ she has worked under my guidance.

Faculty guide name

dr.

Place: Navi Mumbai

Date:

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 ACKNOWLEGEMENT
The project is a golden opportunity to me for learning and self-development. I feel very and
blessed to have talented and wonderful people who lead me through in the completion of the
project.

My special thanks to my mentor prof. Febin Varghese for his valuable time and guidance. He
took time from busy schedule and guiding me to carry out summer internship project at
Hiranandani Financial Services.

A humble thanks to all other faculties for helping me whenever I need. I also feel delightful to
express my thanks to library staff and non-teaching staffs who helped me to complete my
project on time.

I express my sincere gratitude to Hiranandani financial services for giving this opportunity. My
special thanks to Mr. Samir Lotlikar, my guide at Hiranandani financial services (Powai,
Mumbai) for his guidance and support. I am thankful to the entire staff fraternity of
Hiranandani financial services for aiding me to complete the internship successfully.

My gratitude to my friends and family for motivating and encouraging me through the journey.
I express my heartfelt acknowledge for the guidance and support from them.

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 TABLE OF CONTENTS
CHAPTER NO. TITLE PAGE. NO
1 Executive summary
1.1 Relevance of the project
1.2 Introduction of the topic
1.3 Objectives of the study
1.4 Scope of the study
1.5 Rational of the study
1.6 Limitations of the study

2
2.1 Profile of the organization
2.2 History & general information
2.3 Company profile
Competitors analysis
3
3.1 Swot analysis of the project
Swot analysis of the project
4
4.1 Process/workflow study & analysis
4.2 Method
4.3 Data collection
methodology/process and
workflow details of the
organization under study.
Data presentation, data analysis &
interpretation/ workflow analysis,
process learning and interpretation.

5
5.1 Conclusion
5.2 Project work findings
Suggestions and recommendations
6
7 bibliography
Appendices/annexure

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 Executive summary

A non- banking financial company (NBFC) is a company registered under companies Act, 1956 engaged in the
businesses of loans and advances. Non- Banking Financial Companies are an important segment of the Indian
Financial system in extending credit to the unbanked segments of the society particularly to micro, small and
medium enterprises. They are categorized into different classes based on their status and principal activities. In
this report, an attempt has been made to analyse the performance of the five different categories of NBFCs in
India across 2018 to 2022. The performance is analysed by examining key indicators like Liquidity ratio,
Profitability Ratio and Debt to Equity Ratio. The findings indicate that the selected categories of NBFCs differ
significantly in terms of Liquidity and Profitability ratios from one another.

India is a developing country where large sections of the population are unbanked which give rise to several
forms of financial intermediaries including non - banking financial companies. A Non- Banking Financial
Company (NBFC) is a company registered under the Companies Act 1956 engaged in the business of loans and
advances acquisition of stocks, equities, debt etc issued by government or any local authority or other
marketable securities like leasing, hire purchase, insurance business, chit business. NBFC sector has evolved
considerably in terms of size, operations, technological sophistication, and entered into newer areas of financial
services and products. It is essential to analyse and measure the growth of NBFCs for better understanding
about the transformation of financial intermediaries in the context of Indian banking system. Financial
performance can be measured using solvency and profitability ratios and applying statistical tools to analyse the
results. NBFCs are playing a crucial role in economic development of a country. They cater to needs of people
in both rural and urban areas through various schemes which helps in bridging the credit gaps. NBFCs do enjoy
flexibility in operations when compared to banks. Some of the top NBFCs in India are Power Finance
Corporation Limited, Mahindra & Mahindra Financial Services Limited, Muthoot Finance Ltd. Etc.

This project ss is mainly focused on the studying the growth of NBFCs and finding the reasons or factors
behind their performance and non- performance. The financial performance is analysed through ratio analysis
technique and results are interpreted for 5-year period.

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 CHAPTER - 1

INTRODUCTION

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Relevance of the internship project:
SIP provides students to apply theoretical knowledge gained in MMS program in practical situations. This helps
bridge the gap between academic learning and the demands of the business world. Internship project helps
students in developing wide range of skills such as problem- solving, team work, project management and
communication.

Introduction of the topic

This project aims at studying of financial performance and remarkable growth of some NBFC’s in India. The
performance is analysed by calculating key indicators of financial performance like profitability ratio, liquidity
ratio and debt to equity ratio. This will help to find out the reasons of performance and Non- performance of
NBFC’s in India.

Objectives of the study

1.To analyse the short-term solvency of the selected NBFCS.
2. Financial performance of NBFCS in terms on profitability.
3. To study whether the NBFCs are different or similar in terms of debt-to-equity ratio, current ratio, return on
net worth ratio, return on equity ratio, net profit ratio.

Scope of the project

Rationale/contribution of the study

Limitations of the study

 The study is restricted only for five years i.e., 2019, 2020, 2021, 2022 and 2023
 The study is completely based on secondary data and the accuracy of the analysis depend on the data
obtained.
 The study may not be enough to cover all the ratios to be considered in evaluating the financial
soundness of the NBFCs in terms of profitability, liquidity and solvency.

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Top NBFCS in India
Bajaj finance LTD
Bajaj finance LTD. is a deposit-taking NBFC registered with the Reserve Bank of India (RBI) and is classified
as NBFC-investment and credit company. BFL is engaged in the business of lending and acceptance of the
deposit. It has diversified lending portfolio across retail, SMEs and commercial customers, with a significance
presence in

Revenue
Operating income
AUM
Total equity

Tata motors finance limited

Tata Motors Finance Limited (TMFL) and Tata Motors Finance Solutions Limited (TMFSL) are Non-Banking
Financial Companies (NBFCs) and subsidiaries of Tata Motors Finance Holdings Limited (TMFHL), which is
a core investment company (CIC). The dealer/vendor financing business and the refinance or repurchase of
used vehicles come within the purview of TMFSL. On the other hand, financing of new vehicles is undertaken
by TMFL.Tata Motors Ltd (TML) is a leading global automobile manufacturer with an expansive portfolio of
cars, sports vehicles, buses, trucks, and defence vehicles. Tata Motors Ltd is the 100% owner of TMF Holdings
Limited (TMFHL).

Revenue

Operating income

AUM

Total equity

10
 Revenue

Operating income

AUM

Total equity

Muthoot finance LTD

Muthoot Finance Ltd is an Indian financial corporation and the largest gold loan NBFC in the country. In
addition to financing gold loans, the company offers other forms of loans, insurance and money transfer
services, and sells gold coins. The company falls under the brand umbrella of the Muthoot Group. Its stocks are
listed on the BSE and NSE since its initial public offering in 2011. The target market of Muthoot Finance
includes small businesses, vendors, farmers, traders, SME business owners, and salaried individuals.

Revenue
Operating income
AUM
Total equity

LIC Housing Finance LTD

Incorporated in 1989, LIC Housing Finance Ltd (LICHFL) is one of the largest Housing Finance Companies in
India with a key objective of providing long term finance to individuals for the purchase or construction of
house/flat for residential purposes in India. LICHFL also provides finance on existing property for business/
personal needs and also gives loans to professionals for purchase/construction of Clinics/Nursing Homes/
Diagnostic Centres/ Office Space and also for purchase of equipment. The Company also provides finance to
builders and developers engaged in the business of construction of houses or flats for residential purpose and to
be sold by them.

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Adithya Birla capital

12
 CHAPTER - 2

PROFILE OF THE ORGANIZATION

HIRANANDANI FINANCIAL SERVICE

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History and General information
Hiranandani Financial Services PVT. Ltd addresses credit needs of India’s largely underserved segment, the
micro and small businesses. Their vision is to be a strategic partner in propelling growth of micro and small
entrepreneurs in India, and facilitating of a million dreams, supported by technology and innovation.
HFS is a new age NBFC, supported by leading corporation- House of Hiranandani, a brand synonymous with
excellence and always striving to create value for all stakeholders at every stage of development.

Company profile
Vision
We aim to be the preferred financial partner for the micro and small enterprises of India

Mission
Our mission is to empower Micro & Small Business entrepreneurs to grow by providing them with easy access
to capital, thereby improving their lives and livelihood. We aim to be their trusted financial partner by offering
them personalised solutions and helping them achieve their goals.

Background information of the company

Hiranandani Financial Services is a new age NBFC backed by a leading conglomerate – House of Hiranandani,
a brand that is associated with excellence and strives to create value for all stakeholders, every step of the way.

The MSME sector of India is growing rapidly and forms the backbone of the country’s economic and self-
sustainable goals. With millions of business dreams driving this sector, timely financial support and
trustworthiness is required for their expansion.

At HFS, we aim to fulfil the growth needs of micro and small enterprises in India in a seamless and transparent
manner through tailor made financial products that help in fulfilling their business ambitions. We currently
serve micro and small businesses in eight states through 70 branches, and we’re committed to continuing our
expansion.

Services offered
Business loans

Working capital loans

Mese loans

Commercial property loans

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Organizational departments
The organizational departments in this company are

1. Finance department
2. Credit department
3. Legal, secretarial and compliance department
4. Audit department
5. Treasury department
6. Risk & policy department
7. Human department
8. Collection department
9. Information technology department
10. Product department

Organizational hierarchy

Director

ceo

CHRO CFO CRO CBO COO CTO

Heads

Secretarial Risk and

Finance Credit Legal Compliance Treasury HR Collection Product
policy

Managers

Executives

Office locations
Branches of Hiranandani financial services are located in many states. There are 80 branches amongst 9 states.

Rajasthan, Tamil Nadu, Telangana, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Gujarat, Karnataka and
Maharashtra are the states where the branches are established.

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Company achievements and milestones

Expanded branch network to 50 across 7 states

Retail portfolio crossed Rs. 400Crores

Employees count reached to 597 as on march 31, 2022

The company got ratings from CARE

Short term” Care A2+/Stable” rating

Long term “Care A./Stable” rating.

Competitors analysis
The three major competitors of Hiranandani financial service are Veritas finance, 5 Star business finance and
Vistaar financial services.

Veritas finance
Veritas finance is one of the competitors of HFS. The company has 303 branches established, with customer
base of 1,27,507, loan disbursement of Rs. 2245crs and interest income of 19.3% as unsecured loans are higher
offered by the company

5 Star business finance

5star finance limited has 373 branches, with customer base of 217794, loan disbursed as of FY2023 is
Rs.33914mn. The interest income of the company 30.6% as the company offers more insecure loans.

Vistaar financial services

Vistaar finance services has 205 branches across 12 states, with customer base of 39,517. The company has
loan disbursement of 1383.74crs as of FY2023. The calculated interest income of the company is 19.3%.

HFS
Hiranandani financial services has 80 branches across 9 states, with customer base of 100000. The loan
disbursement amount of the company is Rs. 685crs and calculated interest income of the company is 17.3%.

Current market trends and sector wide best practices

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 Chapter - 3

Analysis of the company

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SWOT analysis of the company

Strength Weakness Opportunities Threats

Efficient workforce Highly competitive market Future expansion New competitors

Hardworking and Limited product line Market growth Natural calamities

committed employees e.g., Covid

Reputed brand positioning High demand for products Economic scale down

Secured portfolio Increase in scale (higher

disbursement and revenue)

Experienced management

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 Chapter - 4

Data Analysis

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Return on assets
Return on asset is a financial ratio that measures the profit

Companies 18-19 19-20 20-21 21-22 22-23

Bajaj finance
ltd

Muthoot
finance ltd

LIC housing
finance LTD

Tata motors
finance LTD

Aditya Birla
capital

Interpretation

Long term solvency

Debt-equity ratio
Debt to equity ratio is computed to assess long term financial soundness of the enterprise.

The ratio is computed as follows:

Debt to equity ratio = Debt/Equity

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A high debt to equity ratio means that the company is depending more on borrowings or debts as compared to
shareholder’s fund. On the other hand, low debt to equity ratio means that the enterprise is depending more on
shareholder’s funds than external equities. Here, it means that lender is at a lower risk and have high safety.

Companies 18-19 19-20 20-21 21-22 22-23

Bajaj finance 5.24 4.04 3.03 6.32 4.01

ltd
Muthoot 3.14 3.56 7.10 3.13 2.63
finance ltd
LIC housing 1542.20 10.84 10.41 9.26 9.20
finance LTD
Tata motors 9.93 8.31 7.10 6.04 5.74
finance LTD
Aditya Birla
capital

Interpretation

Profitability ratio
Net profit margin ratio
Net profit margin ratio establishes the relationship between net profit and revenue from operations i.e., Net
sales. It shows the percentage of net profit earned on revenue from operations. The ratio is computed as
follows:

Net profit margin ratio = Gross profit/Net sales

If the net ratio is higher the business will be better. The ratio helps in determining operations of a business.

Companies 18-19 19-20 20-21 21-22 22-23

Bajaj finance ltd 1.55 1.39 1.36 1.35 1.35

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 Muthoot 1.55 1.34 1.34 1.34 1.34
finance ltd

LIC housing 1.39 1.36 1.23 1.22 1.23

finance LTD

Tata motors 0.67 0.49 0.88 1.01 3.63

finance LTD

Aditya Birla
capital

Interpretation

Return on investment ratio (ROI)

Return on investment ratio is a profitability ratio that divides the net profit or (loss) from an investment by its
cost. The purpose of ROI is to measure the rates of return on invested capital in any economic organization.

Return on investment formula: Net income/Cost of investment *100

A high ROI indicates that the investment or business activity is generating a significant return over respective
cost. Whereas a low ROI suggests that the investment or business activity is not generating much profit over the
cost.

Companies 18-19 19-20 20-21 21-22 22-23

Bajaj finance 1329.7 113.9 3997.9 1871.4 2383.2
ltd
Muthoot 2734.6 3402.8 4174.5 415.3 2600.1
finance ltd
LIC housing 48.05 163.3
finance LTD
Tata motors
finance LTD
Aditya Birla
capital

Interpretation

22
Earnings per share
Earnings per share is a company’s net profit divided by the number of shares outstanding. EPS indicates how
much money a company earns for per share of its stock.

Earnings per share formula: Net operating profit after tax (NOPAT) – Preference dividend/ No. of outstanding
shares
When a company has higher EPS, it indicates that it is generating a significant amount of profit for each
outstanding share of stock. Whereas when EPS is lower, it indicates that the company is not generating enough
profit per share.

Companies 18-19 19-20 20-21 21-22 22-23 18-19

Bajaj finance
ltd
Muthoot
finance ltd
LIC housing
finance LTD
Tata motors
finance LTD
Aditya Birla
capital

Interpretation

23
 Chapter- 5

Conclusion

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