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ANIRUDDH KESWANI
ROLL NO. 12309
DECLARATION
I hereby declare that the Project Report FINANCE PENETRATION AT CPR DISTRIBUTORS for BAJAJ FINSERV LENDING Submitted for the PGDM at International School of Business and Media, Pune - Nande is my original work and the dissertation has not formed the basis for the award of any degree, associate ship, fellowship or any other similar titles.
CERTIFICATE
This is to certify that Mr. Aniruddh Keswani a student of BBA in Prestige Institute Of Management and Research, Indore Under Graduate Programme has received Summer Training in our organization from 01/06/10 to 19/07/10 for a period of 07 weeks. It is further certified that Summer Training period, the candidate attended the factory/office regularly and punctually and he has received training in following departments/sections of our organization:
1. Marketing and Sales. During training period he/she was absent on following working days 29/06/10 (1 Day). During training period his behavior and conduct were good. Place: Bhopa
Dated: 19/07/10
ACKNOWLEDGEMENT
Acknowledgement is an art, one can write glib stanzas without meaning a word, on the other hand one can make a simple expression of gratitude.
Summer Inrernship is an integral part of any Business Administration program and for that purposes I had joined a company what else can be as good as Bajaj Finserv Lending, India's premier finance company. I take the opportunity to express my gratitude to all of them who in some or other way helped me to accomplish this challenging project in Bajaj Finserv Lending, No amount of written expression is sufficient to show my deepest sense of gratitude to them. I am very thankful to Mr. Devendra (Regional Sales Manager), Mr. Ajay Sharma (Area Sales Manager), Mr. Pranab Roy (Manager) Bhopal and
very grateful to all my faculties at ISB&M Pune Nande for their everlasting support and guidance on the ground of which I have acquired a new field of knowledge. The course structure created for this curriculum has benefited with the inclusion of recent development in the organizational and managerial aspects. Lastly, I am thankful to all the member of Bajaj Finserv Lending, Bhopal, which has given me valuable information in the part of my project. ANIRUDDH KESWANI ROLL NO. 12309
TABLE OF CONTENTS
Title
EXECUTIVE SUMMARY BAJAJ GROUP STRUCTURE KEY BUSINESS LINES WHAT DIFFERENTIATES BAJAJ FINANCE BUSINESS MODEL AND DISTRIBUTION RESEARCH TECHNOLOGY AND RISK MANAGEMENT MANAGEMENT STRUCTURE PRODUCT LINE STRATEGY FINANCIAL PERFORMANCE AND STATEMENT BAJAJ FINANCE HISTORY INTRODUCTION TO BAJAJ FINSERV LENDING CONSUMER DURABLE LOANS
Pg. No.
IT PRODUCT LOANS INSURANCE SERVICES PRODUCT CATEGORIES AND DEALINGS ACHIEVEMENTS AND MILESTONES TOTAL SALE TO FINANCE CASES AT CPR DISTRIBUTORS KOH E FIZA FINDINGS AND LIMITATIONS SWOT ANALYSIS SUGGESTIONS & RECOMMENDATIONS CONCLUSION BIBLIOGRAPHY
Executive Summary
Promoted by the Bajaj Auto group in 1987 Demonstrated consistent profitability track record in lending space for the last 24 years. A UM of ` 75.71 billion, with a history of disbursing over 6.00 million loans, as of FY11. Disbursed 1.57 million loans in FY11 A diversified lending business with 9 product lines focusing on consumer finance & SME business Strong distribution reach with more than 225 points of presence and more than 4,000 distribution partner s and dealers across India Strategy is to focus on mass affluen t customers in consumer businesses and affluent and HNI customers in small businesses, through a judicious mix of: Lower risk and lower returns products, for building scale and stability Moderate risk and higher return products, for profit maximization Stable and deep management structure with top 100 management team members having experience from leading Multi National Companies and Transnational companies.
31.49%
38.69%
74%
74%
100%
55.98 %
Lending
Key Features
12% of the portfolio as of FY11 One of the few organized players with cutt ing edge technology archi tecture & robust risk management framework.
Consumer finance
6% of the portfolio as of FY11 Loans to existing cus tomer with very good credit performance track record.
26% of the portfolio as of FY11 Captive financing. Financin g only Bajaj auto vehicles.
Mass customers
Mortgage
Small business
Maturity :12 - 36 months (SBL) Maturity : 1 - 24 months (VF) Repayment : EMI (SBL & VF)
10% of the portfolio as of FY11 (SBL) 4% of the portfolio as of FY11 (VF) SBL to affluent small businessmen. VF to vendors of lar ge auto manufacturer 4% of the portfolio as of FY11 Launched retail loans to HNI customers in FY11.
HNIs
Commercial
8% of the portfolio as of FY11 Launched in FY11. Assets backed funding to Small, Mid & strategic contractors.
Infrastructure financing
Launched in FY12.
More tha n 225 points of presen ce across India More tha n 4,000 distribution partne rs and dealers
100% dea ler Point of Sale terminalisation and E2E ente rprise dat a wa rehous e for risk management and dat a mining capabilities Distinct business, underwriting & risk management structure for robust risk management.
Top 100 management tea m membe rs from leadin g MNCs. SBU business structure allows scalability. Top management vintage of 3 years.
Small business
2011 -12 Launch SBS cross sell to cross collateralize portfolios and deepen wallet size.
Launched PSBL & Mortgages in n 16 cities. Unique sales & collect model.
Insurance services
EM I card
+
+
Acquisition
Cross-sell
Acquisition
Cross sell
Competitive Advantage Data Mart and Cross sell capabilities Customer Lifecycle Management Low ticket - high vol ume transaction domain
specialization
Premium customer exper ience model Cross sell to Small Business segment
Distribution
Business Line
Sales Finance Dealer 2W Dealer/ASCs Small Businesses Partner Small Businesses Support
Dee p distribution, sizeable acqui sition engin e and growing balance shee t t
14
Data Entry
a
1
Credit bureau
b
De-dupe Engine
c
Application Score
12
Data moves to Datamart and B2B / B2C
Dealer
7 7
11
Disbursal
3
Central / national operation centre
10 4
Customer TVR i
15 minut es TAT
Courier
1 day
F i l e
8
3 -4 days Product Delivere d at Home By
Rajee v Jain
Chief Executive Officer
Amit Gainda
Business Head Mortgages
Deepak has over 20 years of exper ience in distributing Financial Services & Consumer Durables. He joined us from American Express, wher e he held various positions in their Per sonal Loans & Consumer Card businesses for over 9 years. Deepak manages our unsecured business & per sonal loans.
Ashish has 13 years of rich and varied work exper ience across manufacturing, FMCG and Retail Banking in large multi-national organizations across cred it cards, secure d and unsecure d assets as well as liabilities. He join the Company from Barclays & would be responsible for launching cred it card business.
Ashish Panchal
Business Head Credit Cards
A charter ed accountant by profession, Devang brings with him 15 years of exper ience in consulting and financial services. Joining us from AIG, wher e he worked as Vice President Business Development & CRM for the consumer finance business. Earlier he worked with GE money for 8 years.
Devang Mody
Business Head Sales Finan ce
Diwakar Pundir
Chief Credit Officer
Rakesh Bhatt
Chief Information Officer
Pankaj Thadani
Chief Financial Officer
Pankaj joined Bajaj Finserv Lending in 2006, bringing with him a rich exper ience of 28 years in financing, financial accounting, cost accounting, tax, and systems He is a Mathematics Graduate and a Chartered Accountant Pankaj has provi ded invaluable advice and direction that has help ed the Company grow from a single business company to a diversified NBFC. Rajesh is a management graduate with over 14 years of exper ience in financial services across consumer and commercial lending. Rajesh joins us from HSBC wher e he was handling the portfolio risk management unit for HSBCs consumer cred it risk function. Rajesh is responsible for maintaining portfolio quality. He earlier worked with GE money and Standard Chartered.
Sanjee v Vij
Rajesh K
Chief Risk Officer
Vivek Likhite e
Corporate Audit Services
Vivek joined Bajaj Finserv Lending in 2007. He is a Chartered Financial Analyst and holds a Cost Accountant degree from ICWAI. He has an exper ience of 22 years in strategic planning, process and operations management, accounts, funds management, budgeting, and MIS He worked across operations, LA S business & is currently responsible for setting up corporate audit services.
Scale Builders
Relatively lower RoA Hig her asse t base and higher capital requirement s Lower risk & return
Non qualifiers
Low ROE Lack of competitive advant age Customer segment ation
Consumer
Relatively higher RoA Not a banks business Large cross sell opportunity Credit Card partn ership (WIP) Relatively high RoA Critical to full scale SF business
Relatively low RoA Captive financing E2E Integration play leadin g to higher ROA
2 Wheeler Finance
Sales Finance
Gold loa ns & Micro finance Customer segmentation issues Relatively low RoA Un-penetrated space Mee t working capita l needs of M S M & SME clients E
Mortgage
Small business
Relatively higher RoA Mee t working capita l needs of M SM & SME clients E
Relatively higher RoA Regulatory advantage. Mee t working capita l needs of M SM & SME clients E
Construction Equipment Infra ancillary
Commercial
Relatively low RoA Dominated by non banks. Large upstream opp. Relatively low RoA High growth rate s and high deman d potential
Disbursements (` billion)
106 %
94 .35
FY-08
FY-09 2 Wheelers
FY-11
FY-08
FY-09 2 W heelers
FY-11
AUM (` bi llion)
88%
40 .32 24 .78 8.31 16 .47 FY-08 25 .39 13 .64 11 .75 FY-09 2 W heelers 26 .39 13 .93 FY-10 Others Total 19 .53 FY-11 FY-08 75 .71 56 .18 5.03
Revenue (` billion)
53 %
9.16 5.99 14 .06
FY-09
FY-10
FY-11
52.3
Disbursement
FY 1014P CAGR : 28%
Market Share
5% 19% 33%
28 .8 FY-05
32 .8 FY-06
FY-07
85
12 0
FY-05
FY-06
FY-07
FY-08
FY-09
FY-10
FY-11
FY-09E
FY-10E
FY-14P
9.1%
30% 478
33%
65 7
4,765 9.0%
5,58 8
400 200 0
295
84 FY11-P FY15-P
New 2W Finance
Source: CRISIL Rese arch (Update Retail Finance Housing, Feb. 2011) and CSO
Source: CRISIL Rese arch (Update Retail Finance Auto, May 2011)
Auto Loans
Credit Cards
Home Loans
NBFCs
Banks
Bajaj Finance
Bajaj Finance
Banks
NBFC
Bajaj Finance
Banks
NBFC
Introduction
Bajaj Finserv Lending offers loans for various needs. We offer loans for Bajaj Auto Two Whee lers under the name of Bajaj Auto Finance Ltd. We off er 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 mo re than 5 milli on cust omers ac ross the coun try. Apart from bei ng a well recognized organization, we pride ourselves for holding the highest credit rati ng of FAAA/Stable for any NBFC in the country today. Our product offerings include Consumer Durable Loans, Personal Loans, Loan against Pr operty, Small Business Loans, Two-wh eel er and Three -whee ler Loans, Construction Equipment Loans, Loan against Securities and Insurance Services. Our unique products fea ture across all categories and offer a compelli ng value proposition to our customers. Our strong p resence in the Indian market for over 23 years has enabled us to establish a strong foothold here and we aim to continuou sly provide our customers with premium service and exclusive benefits.
Bajaj Finserv Lending is one of the leading financiers in the market offering consumer durable loans on EMI.
Now you can easily avail a loan for products like LCD, LED, Color TV, Refrigerator, Washing Machine, Air Conditioner, Music System, Microwave etc amongst a host of other products.
Bajaj Finserv Lending consumer durable loan comes with 0% financing and with a small fee. You can apply online on our website and get an instant approval or visit a dealership to easily avail a loan. We provide on the spot approval with minimum documentation & fast processing.
F e atu r e s
Bajaj Finance, the sole organized financier in the market offering Consumer Durable loans offers you Dreams on EMI, with 0% finance options also available. CD loans are EMI loans for Consumer Durable items like Washing Machines, Refrigerators, Color TV's, LCD's etc. These CD loans come at a very reasonable pr ice, with a very simple process. You can just walk into one of our Dealer partner showrooms and avail of this facility for the item of your choice. Loans are available for amounts more than Rs.7000. Multiple Credit programs are also available to suit your fitment. Avail loans ranging from Rs. 7,000 to Rs. 5,00,000 for Washing Machines, Refrigerators, Color TVs, LCDs and other consumer durables. Apply Online or walk in to one of our Dealer Partner showrooms and get your loan approved in 15 minutes.
Benef it s
0% finance options available (for select schemes). Simple process with minimum documentation. On the spot approvals with fastest processing. Flexible repayment options. ECS clearing, reducing hassle of arranging cheques. Extended Warranty available.
E l i g i b i l i t y & D o c u me n t s
E l i g ibil i t y
If you are a salaried person your age should be between 21 years to 60 years. If you are Self Employed your age should be between 21 years to 65 years.
Doc um ent s
Salaried yes Yes Yes Self Employed Yes Yes Yes
Documents required Photo Id Proof Residence proof One Cheque in case of ECS
Credit program specific documents ( Any one of the following) Credit Card front side photocopy Visiting Card & Employee Id proof Photocopy of RC book (Not applicable for vehicles registered after 2004 & commercial cars) Bajaj Finserv Lending existing loan Repayment Loan Account Number / Schedule (subject to not later than 18 months old) Yes Yes Yes Yes No Yes
Yes
Yes
Any other Bank/NBFC Repayment Schedule Salary Slip Banking Details (latest 6 months) Account Type- OD/ CC
Yes No Yes
F ee s & Ch a r g e s
Amount Financed Slab Upto 15000/Between Rs.15001/- & upto Rs.30,000/-* Rs.30,001/- & above OTHER CHARGES Foreclosure Charges PDC Swapping NIL Rs. 500 Cheque Bounce - Rs. 350 per cheque Late payment penalty - Rs. 150 Processing Fees Rs.499/- to Rs.599/-* Rs.599/- to Rs.699/Rs.699/- to Rs.799/-* AMOUNT
Bounce Charges
IT Product Loans
Features
Bajaj Finance, the sole organized financier in the market offering IT Product loans, offer s you Dream Desktop/Laptop on EMI, with 0% options also available. These IT Product loans come at a very reasonable price, with a very simple process. You can just walk into one of our Dealer partner showrooms and avail of this facility for the item of your choice. PC loans are available up to 100% of the product price. Loans are available for amounts above Rs. 20000.
Benefits 0% finance options available (for select schemes). Simple process with minimum documentation. On the spot approvals with fastest processing. Flexible repayment options. ECS clearing, reducing hassle of arranging cheques. Extended Warranty available.
Eligibility
If you are a salaried person your age should be between 21 years to 60 years. If you are Self Employed your age should be between 21 years to 65 years.
Documents Salaried Yes Yes Yes Self Employed Yes Yes Yes
Credit program specific documents ( Any one of the following) Credit Card front side photocopy Visiting Card & Employee Id proof Photocopy of RC book (Not applicable for vehicles registered after 2004 & commercial cars) Bajaj Finserv Lending existing loan Repayment Loan Account Number / Schedule (subject to not later than 18 months old) Yes Yes Yes Yes No Yes
Yes
Yes
Yes Yes
Yes No
Insurance Services
Bajaj Auto Finance Limited (BAFL) has tied up with Bajaj Allianz Life (part of Bajaj Group), to offer a rich bouquet of world class life insurance products to suit the financial needs of all segments of buyers through different stages of their lives. With its successful track record and its highly acclaimed standing, Bajaj Allianz Life Insurance Company (BALI C) prides on serving over 8 million Indian customers. BAFL shares BALIC's philosophy of providing insurance solutions relevant to the customer's needs.
Pr o du ct Cat egor i e s
From luxury to comfort, from indulgence to practical, from difficult to easy - we have simplified the many little joys you wish to buy for your family. Be it the top-end LCD to bring a smile on your loved ones face or that high-end home theatre for your cricket match party or even that AC you want for your little one's room - our comprehensive loans make everything easy.
TV / CTV Washing Machine Refrigerator / Fridge Microwave Oven Home Theater Systems Product Categories LCD / LED /Plasma TV Air Conditioner
Etc..
CERDIT RATINGS: Highest Credit Rating of FAAA/Stable from CRISIL for Fixed Deposits. P1+ rating from CRISIL for Short-Term Debt Programme. AA+/Stable from CRI SIL and LAA+ from ICRA f or Long-Term Debt Programme.
We have a network of over 2,500 Bajaj Auto and consumer durable dealerships and over 63 branch offices throughout the country to cater to all the requirements of our customers. We have earned the trust and loyalty of over 50 lacs satisfied customers across the country.
The client base at CPR distributors Koh E Fiza is mostly of Business Profession. Repeat sale for existing customers is increasing day by day hence this holds a great scope in future. Finance demand for products at their peak sale season is very high urging for special schemes for those categories at that time. Example Air Coolers & ACs in summers and Washing Machines in Rainy Season. Customers are unclear about the documentation requirement which creates frustration among them leading to loss of sales. Incentives to the Sales Force at CPR dist. for their Finance conversions is not provided timely which is creating disinterest in them for finance.
Limitations -
Verification process in case of IT products gets delayed very often. Potential customers unaware of the the various schemes provided by Bajaj Finserv Lending. CPR Dist. Sales Executive support is low in some sections like Microvave and Air Conditioners. Initiative taken for the sale of Insurance Product (Group Suraksha Plan) is low among the Bajaj Executives.
SWOT ANALYSIS
Strengths Monopoly player in the Consumer durable finance market. Insurance Product (Group Suraksha Plan) is an incredible product also providing cross sale. 0% finance facility.
EMI Card provided for existing customer is one of a kind service. BFL has presence at all the major retail counters throughout the country. Strong network of executives with a responsible managerial hierarchy.
Weakness -
Low Control on the Payment Default by customers. Concentration needed on cross selling. Lot of dependence on the Online Support System. Customer Service and handling needs improvement.
Opportunities -
Market has a lot of growth opportunities. Consumer Finance being an untapped market holds great scope. Use the market as a good platform for cross selling.
Opportunities available to reach the top position amongst the Finance Companies and establish itself internationally.
Threats -
New competitors entering the market with similar offerings. (HDFC, Shriram). There is always a threat of Losses due to payment defaults in such business.
Processing fees should not be charged from the EMI card holders in the case of Consumer Durables as it will create loyalty among customers and will help build a strong customer base even before the competitors entering the market.
A single agency must be hired for the verification purpose for the entire BFL to improve the uniformity of the process. Also, there is a great need of proper control over the verification process to reduce the lag time in verification.
Conclusion
Bajaj Finserv Lending provides consumer credit services which are helpful for the financial stability. Financial stability is very important not only for the businesses but also for the consumers. The businesses and as well as the consumers need the stability regarding the financial matters because without the stability no one could be very innovative in the longer run. Consumer Finance market being an untapped one in India holds a great scope for progress and market capture and BFL has been exceptional in that till date.
Bibliography