nbfc with new formation

8/6/2019 NBFC With New Formation

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A Report on

Comparison study on NBFC

SIDVIN SCHOOL OF BUSINESS & INSTITUTE OF TECHNOLOGY

BANGALORE

Under the guidance and supervision ofReport Guide:

Prof. K. Ashok Anand

[Faculty]

Submitted By

Sojitra Hiren

SIDVIN SCHOOL OF BUSINESS & INSTITUTE OF TECHNOLOGY

BANGALORE

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Company names

1. Housing DevelopmentFinance Corporation

Limited2. Sundaram FinanceLimited.

3. Birla Global FinanceLimited.

4. VLS Finance Limited.5. LIC Housing FinanceLimited.

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The study in tented to find out the comparisons of financial data of followingcompany. (1)Housing Development Finance Corporation Limited(2) Sundaram Finance Limited (3)Birla Global Finance Limited. (4) VLS Finance

Limited. (5) LIC Housing Finance Limited.

About NBFC

Non banking Finance Company (NBFC)It means (1) a financial institution that is a company, (2) a non-banking institution

that is a company whose principal business is the receive of deposits under anyscheme /arrangement /in any other manner or lending in any manner and (3)such other non-banking institution/class of institution as the RBI may specify, withthe prior approval of the Government and by notification in the official gazette.

The NBFCs are classified in to five categories.1. Equipment Leasing Company (ELC)2. Hire- Purchase Finance Company (HPFC)3. Investment Company (IC)4. Loan Company (LC)5. Mutual Benefit Company (MBC)/ Mutual Benefit Finance Company

(MBFC)

There are different types of institutions involved in financial services. Theseinclude commercial banks, development financial institutions (DFIs) and non-banking finance companies (NBFCs). Unlike DFIs e.g. ADBP and PICIC, that

have a specified objective at priority besides efficient business conduct, NBFCsare formed purely with the commercial objectives. NBFCs provide range offinancial services to their clients. Types of services that fall under the domain ofnon-banking finance services include the following;

1. Investment Finance Services2. Investment Advisory Services3. Asset Management Services

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4. Venture Capital Services5. Leasing Services6. Housing Finance Services7. Discounting Services8. Any other form of business activities which the Federal Government

may, by notification in the official gazette, specify from time to time.

Ministry of Finance, Department of Economic Affairs is the administrative Ministryin respect of foreign investment proposals in the non-banking finance sector.

Foreign equity investments in NBFCs are permitted in 17 categories of NBFCactivities so far approved for foreign equity investments such as merchant

banking, stock broking, venture capital, housing finance, forex broking, leasingand finance, financial consultancy etc. Guidelines for foreign investment in NBFCsector have been amended so as to provide for a minimum capitalization norm ofUS $ 0.5 million, for the activities which are not fund based and only advisory orconsultancy in nature, irrespective of the foreign equity participation level. Thisprovision would be applicable to Investment Advisory Services, FinancialConsultancy, Credit Reference Agencies, Credit Rating Agencies, Forex Brokingand Money Changing Business. It has also been decided that the foreign heldcompanies which had FIPB approval for undertaking specific activities on theirown prior to issue of NBFC guidelines, and which through restructuring dilutetheir holdings through JVs with domestic participation in downstreamsubsidiaries, may be allowed to undertake such "specific activities" confined torendering of support and facilities to only its downstream subsidiaries /JVs on an'arms length basis' with the option of charging fees for the same.

The study intended to comparison of financial data of followingcompany.

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1. Housing Development Finance

Corporation Limited.

HDFC is a unique example of a housing finance company which hasdemonstrated the viability of market-oriented housing finance in a developingcountry. It is viewed as an innovative institution and a market leader in thehousing finance sector in India. The World Bank considers HDFC a model privatesector housing finance company in developing countries and a provider oftechnical assistance for new and existing institutions, in India and abroad.HDFCs executives have undertaken consultancy assignments related to housingfinance and urban development on behalf of multilateral agencies all over theworld.

At the national level, HDFC executives have played a key role in formulatingnational housing policies and strategies. Recognizing HDFCs expertise, theGovernment of India has invited HDFCs executives to join a number ofcommittees and task forces related to housing finance, urban development andcapital markets

As we found out over two decades ago, in 1977, the solution for success iscustomer satisfaction. All you need is the courage to innovate, the skill tounderstand your clientele and the desire to give them your best. Today, over amillion satisfied customers whose dream we helped realize, stand testimony toour success. Our objective, from the beginning, has been to enhance residential

housing stock and promote home ownership. Now, our offerings range fromhassle-free home loans and deposit products, to property related services and atraining facility.

.

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Performance of the Company, during last Five years. Amount in local Currency(Rs. In Crores)

Particulars

Mar 06 Mar 05 Mar 04 Mar 03 Mar 02Operating Income 4,208.37 3,332.46 3,068.93 2,967.32 2,692.42Other Income 76.50 82.12 9.68 8.30 7.74Total Income 4,284.87 3,414.58 3,078.61 2,975.62 2,700.16Interest & Financial Charges 2,497.52 1,962.00 1,874.36 1,969.80 1,871.24Operating & Administrative Expenses 211.36 177.11 153.69 129.09 106.16Less: Preoperative ExpenditureCapitalized

0.00 0.00 0.00 0.00 0.00

Profit before Depreciation & Tax 1,575.99 1,275.47 1,050.56 876.73 722.76

Depreciation 18.69 18.69 23.58 25.70 31.83Profit Before Tax 1,557.30 1,256.78 1,026.98 851.03 690.93Tax 300.00 220.20 175.20 160.74 110.92Profit After Tax 1,257.30 1,036.58 851.78 690.29 580.01Adjustment below net profit 0.00 0.00 0.00 0.00 0.00P & L Balance brought forward 0.00 0.00 0.00 0.00 0.00Appropriations 1,257.30 1,036.58 851.78 690.29 580.01P & L Balance carried down 0.00 0.00 0.00 0.00 0.00Equity Dividend 499.13 423.50 332.93 268.85 304.28Preference Dividend 0.00 0.00 0.00 0.00 0.00Corporate Dividend Tax 70.00 60.25 42.66 34.45 0.00

Equity Dividend (%) 200.00 170.00 135.00 110.00 250.00Earning Per Share (Rs.) 47.58 39.19 32.81 26.83 47.66Book Value 179.05 155.87 137.62 124.54 222.07Extraordinary Items 46.30 56.20 0.00 0.00 0.00

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2. Sundaram Finance Limited

Sundaram Finance Limited, which was incorporated in 1954 with the objectof financing the purchase of commercial vehicles and passenger cars, hasgrown today into one of the most trusted financial services groups in India.Today, the activities of the Sundaram Finance Group span CommercialVehicle Finance, Car Finance, Insurance, Asset Management, HomeLoans, Equipment Finance, Fleet Card, InfoTech Solutions, Business

Process Outsourcing, Tyre Finance and Logistics Services.

Sundaram Finance has a Nation-wide presence with over 150 branches,0.65 million depositors and nearly 100,000 commercial vehicle and carfinance customers.

Products / Services Offered

Deposits Car Finance Commercial Vehicle Finance

Equipment Finance Fleet Card Tyre Finance

Today, the activities of the group span savings products like Depositsand Mutual Funds, Car and Commercial Vehicle Finance, Insurance,Home Loans, Software Solutions, Business Process Outsourcing,Tyre Finance, Fleet Cards and In freight . Sundaram Home Finance

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http://www.sundaramfinance.com/products/deposits/features-sf.asphttp://www.sundaramfinance.com/products/carfinance/carfinance.asphttp://www.sundaramfinance.com/products/commercialvehicles/commercialvehicles.asphttp://www.sundaramfinance.com/products/equipmentfinance/equipmentfinance.asphttp://www.sundaramfinance.com/products/fleetcard/fleetcard.asphttp://www.sundaramfinance.com/products/tyrefinance/tyrefinance.asphttp://www.sundaramfinance.com/products/carfinance/carfinance.asphttp://www.sundaramfinance.com/products/commercialvehicles/commercialvehicles.asphttp://www.sundaramfinance.com/products/equipmentfinance/equipmentfinance.asphttp://www.sundaramfinance.com/products/fleetcard/fleetcard.asphttp://www.sundaramfinance.com/products/tyrefinance/tyrefinance.asphttp://www.sundaramfinance.com/products/deposits/features-sf.asp


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Book Value 291.88 283.01 218.02 202.74 181.53Extraordinary Items -0.44 -1.39 0.64 -1.80 -1.67

3. BIRLA GLOBAL FINANCE LIMITED

With the opening up of the Indian Economy, the Aditya Birla Group promoted

Birla Global Finance Limited (BGFL) and became a committed player in the

Financial Sector. BGFL is listed on The National Stock Exchange and The Stock

Exchanges, Mumbai.The Company encompasses a range of services, each catering to a specific

need or segment. BGFL has the following major activities

Capital Market

Corporate Finance

Retail Finance

General Insurance AdvisoryOn behalf of the Aditya Birla Group, BGFL has been responsible for setting up

successful joint ventures with Sun Life of Canada viz: Birla Sun Life Insurance

Company Limited, Birla Sun Life Asset Management Company Limited, Birla Sun

Life Distribution Company Limited and Birla Sun Life Trustee Company Private

Limited.

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Vision Statement

To be the first preference of our customers as a leading integrated provider of

complete financial services through superior value creation and technology.

Retail Finance Group distributes the personal and institutional loans of variousinstitutions to meet requirements of Housing Loan, Car Loan, CommercialVehicle Loan, Equipment Finance and Personal Loans.

The services offered are:Home / Mortgage loan

Loan for buying a new house, plot, self-construction, renovation and repair.*Balance Transfer transfer your existing loan and save lacs of rupees. Youcan also avail additional loansLoan Against Property (Residential, Commercial)

No Income proof scheme (Specially designed for Self-Employed)No part pre-payment charges.

Performance of the Company, during last Five years. Amount in local Currency(in Crores)

Particulars

Mar 06 Mar

05

Mar

04

Mar

03

Mar

02Operating Income 68.90 54.81 33.12 46.97 63.33Other Income 9.70 3.09 4.06 6.56 60.95

Total Income 78.60 57.90 37.18 53.53 124.28Interest & Financial Charges 29.06 30.23 27.24 35.64 42.99Operating & Administrative Expenses 20.16 20.59 8.00 13.23 63.70Less: Preoperative ExpenditureCapitalized

0.00 0.00 0.00 0.00 0.00

Profit before Depreciation & Tax 29.38 7.08 1.94 4.66 17.59Depreciation 0.90 1.24 2.45 2.86 7.35Profit Before Tax 28.48 5.84 -0.51 1.80 10.24Tax -2.49 2.72 -2.04 -1.13 1.35Profit After Tax 30.97 3.12 1.53 2.93 8.89

Adjustment below net profit 15.43 0.00 0.00 -0.50 -0.08P & L Balance brought forward 6.83 3.14 5.12 8.42 10.69Appropriations 10.64 -0.57 3.51 5.73 11.08P & L Balance carried down 11.73 6.83 3.14 5.12 8.42Equity Dividend 3.22 1.58 0.00 0.79 2.36Preference Dividend 0.00 2.14 3.00 3.78 4.37Corporate Dividend Tax 0.45 0.48 0.20 0.06 0.70Equity Dividend (%) 12.50 10.00 0.00 5.00 15.00

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Earning Per Share (Rs.) 11.85 0.32 0.00 0.00 2.43Book Value 34.07 37.40 38.09 39.15 43.41Extraordinary Items -0.15 0.00 -0.01 0.02 57.58

4. VLS Finance Ltd.,

VLS Finance Ltd., the flagship company of the group, is a leading NBFC in thecountry with a strong net worth, and has carved for itself an enviable niche in thefiercely competitive financial sector in India.

VLS Group is a multi-faceted multi-divisional integrated financial services groupwith major presence in almost all areas of financial services such as AssetManagement, International Finance, Leasing & Hire Purchase etc., and moreparticularly in:

Structured Finance

Corporate Consulting & Advisory Services

Stock Broking

Privatization & infrastructure Finance

Equity Research

the flagship company of the group, is a leading NBFC in the country with astrong net worth, and has carved for itself an enviable niche in the fiercelycompetitive financial sector in India .

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VLS Grouphas in its fold, VLS Securities Ltd., a 100% subsidiary of VLS FinanceLtd. VLS Securities Ltd. is a leading financial consulting & advisory servicesprovider in India.

VLS gives its clients access to all the investment tools necessary to make

decisions, under the guidance of expert consultants.

VLS Securities is engaged in the business of Investment Banking and Stock

Broking services. The company is a full-fledged Investment Banking firm,

registered as a Category I MERCHANT BANKERwith the Securities & Exchange

Board of India. It has considerable expertise in providing financial advisory

services to prestigious clientele including leading corporates, private sector

enterprises, and banks.

Performance of the Company, during last Five years. Amount in localCurrency (Rs In Crores)

Particulars Mar06

Mar05

Mar04

Mar03

Mar02

Operating Income 2,171.74 1,340.74 402.54 131.69 413.16Other Income 1.42 4.90 -2.25 6.30 -26.49Total Income 2,173.16 1,345.64 400.29 137.99 386.67Interest & Financial Charges 0.00 0.00 0.95 0.01 0.00Operating & Administrative Expenses 2,164.78 1,337.54 398.65 139.04 393.31Less: Preoperative ExpenditureCapitalized

0.00 0.00 0.00 0.00 0.00

Profit before Depreciation & Tax 8.38 8.10 0.69 -1.06 -6.64Depreciation 0.53 0.56 0.58 2.31 1.17Profit Before Tax 7.85 7.54 0.11 -3.37 -7.81

Tax 0.34 0.08 -0.08 0.46 0.00Profit After Tax 7.51 7.46 0.19 -3.83 -7.81Adjustment below net profit 0.00 0.00 0.08 -0.06 0.04P & L Balance brought forward 0.20 0.25 0.00 0.00 0.00Appropriations 7.57 7.51 0.02 -3.89 -7.77P & L Balance carried down 0.14 0.20 0.25 0.00 0.00Equity Dividend 0.00 0.00 0.00 0.00 0.00Preference Dividend 0.00 0.00 0.00 0.00 0.00

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Corporate Dividend Tax 0.00 0.00 0.00 0.00 0.00Equity Dividend (%) 0.00 0.00 0.00 0.00 0.00Earning Per Share (Rs.) 1.88 1.87 0.05 0.00 0.00Book Value 38.60 38.72 38.35 38.29 39.26Extraordinary Items 0.00 -0.03 0.00 0.00 0.00

5. LIC Housing Finance Limited.

LIC Housing Finance Ltd. is one of the largest Housing Finance companies inIndia. Incorporated on 19th June 1989 under the Companies Act, 1956, thecompany was promoted by LIC of India and went public in the year 1994. TheCompany launched its maiden GDR issue in 2004. The Authorized Capital of theCompany is Rs.1000 Million (Rs.100 Crores) and its paid up Capital is Rs.850Millions (Rs.85 Crores). The Company is recognized by National Housing Bankand listed in the NSE & BSE and its shares are traded only in Demat format.

The main objective of the Company is providing long term finance to individualsfor purchase / construction / repair and renovation of new / existing flats / houses.The Company also provides finance on existing property for business / personalneeds and gives loans to professionals for purchase / construction of Clinics /Nursing Homes / Diagnostic Centres / Office Space.

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The Company possesses one of the industry's most extensive marketing networkin India: 6 regional offices and 115 area offices backed by chain of camp officesnationwide, an offshore office in Dubai and Registered and Corporate Office atMumbai. It has a team of 875 dedicated employees. In addition the company hasappointed over 5500 Direct Sales Agents (DSAs) and Home Loan Agents (HLAs)

to extend its marketing reach. 16 Back Offices spread across the country conductthe credit appraisal and administrative functions.

The Company has set up a Representative Office in Dubai to cater to the Non-Resident Indians in the GLCC countries covering Bahrain, Dubai, Kuwait, Qatarand Saudi Arabia.

Today the Company has a proud group of over 8, 00,000 prudent house ownerswho have enjoyed the Company's financial assistance. The Company has so fardisbursed Rs.250 Billion (Rs.25000 Crores). The Company also lends toCorporate Bodies and Companies under different schemes for purchase /

construction of office premises for their own use, construction of staff quartersand also for onward lending to meet the requirements of employees, and also toBuilders and Developers for residential and commercial projects. Differentproducts in home loans are Griha Prakash Griha Shoba Sampurna GrihaBuilders Corporate employees housing lian scheme.

Performance of the Company, during last Five years. Amount in localCurrency (Rs. In Crores)

Particulars Mar 06 Mar 05 Mar 04 Mar 03 Mar02Operating Income 1,272.44 1,058.32 1,012.43 1,031.91 874.91Other Income 17.85 11.74 41.80 24.06 23.80Total Income 1,290.29 1,070.06 1,054.23 1,055.97 898.71Interest & Financial Charges 859.43 682.08 637.80 684.18 644.45Operating & Administrative Expenses 164.65 180.37 225.48 139.46 69.73Less: Preoperative Expenditure 0.00 0.00 0.00 0.00 0.00

Profit before Depreciation & Tax 266.21 207.61 190.95 232.33 184.53Depreciation 4.47 3.30 2.71 1.66 1.32Profit Before Tax 261.74 204.31 188.24 230.67 183.21Tax 53.17 60.59 20.77 51.70 35.55Profit After Tax 208.57 143.72 167.47 178.97 147.66Adjustment below net profit 0.00 0.00 0.00 0.00 -0.11P & L Balance brought forward 13.94 34.01 29.80 23.83 20.81Appropriations 215.36 163.79 163.26 173.00 144.53

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P & L Balance carried down 7.15 13.94 34.01 29.80 23.83Equity Dividend 50.96 42.47 37.46 41.22 37.53Preference Dividend 0.00 0.00 0.00 0.00 0.00Corporate Dividend Tax 7.15 5.95 4.80 5.28 0.00Equity Dividend (%) 60.00 50.00 50.00 55.00 50.00

Earning Per Share (Rs.) 23.70 16.21 21.69 23.16 19.69Book Value 158.30 140.59 128.18 114.82 98.50Extraordinary Items -0.05 -0.09 -0.15 -0.12 -0.38

Comparison of financial data

Profit Before Tax

Companyname

March-2006

March-2005

March-2004

March-2003

March-2002

HDFC 1,557.30 1,256.78 1,026.98 851.03 690.93SundaramFin ltd

208.80 122.38 82.87 67.27 59.68

Birla Fin. 28.48 5.84 -0.51 1.80 10.24VLS Fin.ltd 7.85 7.54 0.11 -3.37 -7.81LIC Fin. Ltd 261.74 204.31 188.24 230.67 183.21

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C o m p a r i s i o n

- 2 0 0 . 0 0

0 . 0 02 0 0 . 0 0

4 0 0 . 0 0

6 0 0 . 0 0

8 0 0 . 0 0

1 , 0 0 0 . 0 0

1 , 2 0 0 . 0 0

1 , 4 0 0 . 0 0

1 , 6 0 0 . 0 0

1 , 8 0 0 . 0 0

2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6

Y e a

Profit

H D F C

S u n . F

B i r la F

V L S F

L IC F i

Profit After Tax

Company

name

March-

2006

March-

2005

March-

2004

March-

2003

March-

2002HDFC 1,257.30 1,036.58 851.78 690.29 580.01SundaramFin ltd

170.59 75.99 55.62 45.67 40.36

Birla Fin. 30.97 3.12 1.53 2.93 8.89

VLS Fin.ltd 7.51 7.46 0.19 -3.83 -7.81LIC Fin. Ltd 208.57 143.72 167.47 178.97 147.66

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Comparision of P

-200.00

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

2002 2003 2004 2005 2006

Year

Profit

HDFC

Sun Fin

Birla Fin

VLS Fin

LIC Fin

Equity Dividend %

Company

name

March-

2006

March-

2005

March-

2004

March-

2003

March-

2002HDFC 200.00 170.00 135.00 110.00 250.00SundaramFin ltd

135.00 75.00 70.00 75.00 60.00

Birla Fin. 12.50 10.00 0.00 5.00 15.00VLS Fin.ltd 0.00 0.00 0.00 0.00 0.00LIC Fin. Ltd 60.00 50.00 50.00 55.00 50.00

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C o m p a r is io n o f E q u ity D i

0

50

100

150

200

250

300

2002 2003 2004 2005 2006

Yea

Profit

H D F C

Sun F in .

B irla F i .

V LS Fi .

LIC Fin.

Earning Per Share

Company

name

March-

2006

March-

2005

March-

2004

March-

2003

March-

2002HDFC 47.58 39.19 32.81 26.83 47.66SundaramFin ltd

59.51 30.39 22.28 18.07 16.82

Birla Fin. 11.85 0.32 0.00 0.00 2.43VLS Fin.ltd 1.88 1.87 0.05 0.00 0.00LIC Fin. Ltd 23.70 16.21 21.69 23.16 19.69

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C o m p a r is io n o f E a r n i n

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6

Y e a

Profit

H D F C

S u n F

B i r l a

V L S F

L IC F i

Conclusion Finally I want to conclude that,if we see the performance of five Non Banking Finance Company one by one,HDFC have good brand name in market, Sundaram Finance also doing goodperformance, every year profit is increases. VLS Company in 2002 having notgood result, but company progress is Last year, LIC is also doing good profityear. Because it has good market share and also long history. Company wellperformed 24.56 is earns per share in 2006 as compare to other company. Butsundaram finance have earning per share is highest. HDFC is highest dividendpaid to shareholder. As per my knowledge HDFC is the best performer in the nonbanking sector as compared with other.

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nbfc with new formation

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