A PROJECT REPORT ON
“A COMPARATIVE ANALYSIS OF 7 KEY PLAYERS IN THE MICROFINANCE INDUSTRY IN UJJIVAN FINANCIAL SERVICES PRIVATE LIMITED AT JAKKASANDRA, BANGALORE” A project report submitted to the Visvesvaraya Technological University in partial fulfillment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATION
Submitted by SHREEJA. G. MENON REG. NO.: 1CR08MBA98
Under the guidance of EXTERNAL GUIDE Mrs. Sudha. Suresh CA Chief Financial officer
INTERNAL GUIDE Prof. Sonal Gupta M.B.A., M.C.A Professor
CMR INSTITUTE OF TECHNOLOGY Department Of Management Studies #132, AECS Layout, IT Park Road, BANGALORE - 560 037
APR 2010/ 2008-10
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C.M.R. INSTITUTE OF TECHNOLOGY 132, AECS Layout, IT Park Road Bangalore – 560037 DEPARTMENT OF MANAGEMENT STUDIES CERTIFICATE Certified that the project work entitled
“A Comparative analysis of Ujjivan Financial Services Private Limited with seven key players in the Microfinance industry” Is a bonafide work carried out by Shreeja. G. Menon at Ujjivan Financial Services Limited in partial fulfillment for the award of degree of Master of Business Administration to the Visvesvaraya Technological University, Belgaum in the year 2010. It is certified that all corrections/suggestions indicated for internal assessment have been incorporated in the report deposited in the department library. The project report has been approved as it satisfies the academic requirements in respect of project work prescribed for the award of Master of Business Administration Degree.
Signature of the Guide Prof. Sonal .Gupta MBA, MCA CMRIT, Bangalore
Signature of the HOD Dr. C.Girish MBA, PhD. CMRIT, Bangalore
Signature of the Director Dr.Col. (Retd) Mukesh.Kumar.V MBA, MCA, PhD. CMRIT, Bangalore
Name of Student: Shreeja. G. Menon (1CR08MBA98) External Viva Name of Examiners
Signature with Date
1. 2. ii
DECLARATION
I, Shreeja.G.Menon, fourth semester, student of the MBA Dept. in C.M.R. Institute Of Technology, do hereby declare that this project report entitled “ COMPARATIVE ANALYSIS OF UJJIVAN FINANCIAL SERVICES PRIVATE LIMITED WITH SEVEN KEY PLAYERS IN THE MICROFINANCE INDUSRY”, at UJJIVAN FINANCIAL SERVICES PRIVATE LIMITED , has been submitted by me in partial fulfillment of the requirement, for the award of the degree of MASTER OF BUSINESS ADMINISTRATION by the Visvesvaraya Technology University, Belgaum, Karnataka. The project is an independent work and has not been submitted to any other university for the award of any degree or diploma.
Signature:
Date:
Apr '2010
Shreeja.G.Menon
Place: Bangalore
1CR08MBA98
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ACKNOWLEDGEMENT I wish to pledge and reward my deep sense of gratitude for all those who have made this project come alive. I am gratefully indebted to my internal faculty guide Prof. Sonal Gupta; MBA, MCA Senior Lecturer for MBA dept. at CMR Institute of Technology, for encouraging me and for her constant support throughout the course of the project and helping me complete it successfully. A special note of gratitude goes to my external guide Mrs. Sudha Suresh; CA, CFO At Ujjivan Financial Services Private Limited for providing me an opportunity to work in this corporate exposure and for his support and guidance in this endeavor. I would like to express my heart-felt gratitude to thank Dr. Col. (Retd.). Mukesh Kumar.V, MBA, MCA, Phd. Director at CMRIT for his valuable suggestions and moral support throughout the course of my project. I wish to thank Mr. Rajath Singh, Finance Manager at Ujjivan Services Private Limited for all that he has done, to help me work on my project. I finally thank my family and friends for their constant support and guidance.
Shreeja. G. Menon
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TABLE OF CONTENTS
Serial No.
Contents
Page No.
Executive Summary 1
PART A Chapter I
Introduction
1
1.1 .Industry Profile
5
1.2. Company Profile
8
1.2.1. Background and inception
8
1.2.2. Nature of the business carried.
9
1.2.3. Vision, Mission and Quality Policy.
9 10
1.2.4 Products/service profile
12
1.2.5. Area of operation
13
1.2.6. Ownership pattern
14
1.2.7. Competitors information
14
1.2.8. Achievement / Award
15
1.2.9. Work flow model 1.2.10. Future growth and prospects 1.2.11 Functional analysis
2
17 18
Chapter II McKinsey’s 7S frame work 26
3
Chapter III SWOT analysis 31
4
Chapter IV 34
Analysis of Financial Statements
v
Chapter V 5
6
40
Learning experience
PART B Chapter VI Introduction
41
6.1. Statement of the problem
48
6.2. Objectives
48
6.3.Scope
49
6.4. Methodology
49
6.4.1. Sample size
50
6.4.2. Sampling technique
50 50
6.4.3. Limitations 7
Chapter VII Analysis & Interpretation
8
51
Chapter –VIII Findings, Suggestion, Recommendations and Conclusion
9
Appendix
10
Bibliography
vi
80
LIST OF TABLES SERIAL
TABLE
CONTENTS
PAGE
NO.
NO.
1
1.2.1
Loan products, amount and its description
11
2
1.2.2
Insurance products provided by the company
11
3
1.2.11.3
Employee head count
22
4
7.4
Social impact parameters
54
5
7.5
Comparison based on products offered
6
7.6
MFI benchmark
NO.
60-62 67
LIST OF GRAPHS SERIAL
GRAPH
CONTENTS
PAGE NO.
NO.
NO.
1
7.1
Industry growth trend
6
2
7.2
Comparison of the number of customers
7
3
7.3
Presence in the number of states and the number of
7
branches 4
7.4
Comparison on the variety of loans offered
55
5
7.5
Business loan interest rates comparison
55
6
7.6
Comparison of operational self-sufficiency ratio
56
7
7.7
Comparison of return on asset
67
8
7.8
Comparison of return on equity
69
9
7.9
Comparison of debt to equity
70
10
7.10
Comparison of write-off ratio
72
11
7.11
Comparison of risk coverage ratio
73
12
7.12
Comparison of operating expense ratio
74
13
7.13
Comparison Of Cost Per Active Client
76
14
7.14
Comparison of average outstanding loan size
78
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LIST OF CHARTS SERIAL
CHART
CONTENTS
PAGE NO.
NO.
NO.
1
1.2.9.1
Work flow model
15
2
1.2.11.2
Organizational structure of operations
23
department 3
1.2.11.3
Organizational structure of credit department
24
4
2.4
National organization structure
28
5
2.5
Regional organization structure
28
LIST OF ABBREVIATIONS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
CAR CRISIL GDP INR MFI MSE MSME NABARD NBFC NGO NPL PAR RBI ROA ROE RRB SHG CRM CRS CGT GRT
Capital adequacy ratio Credit Rating Information Services of India Limited Gross domestic product Indian rupees (national currency) Microfinance institution Micro and small enterprise Micro, small, and medium enterprise National Bank for Agricultural and Rural Development Nonbank finance company Nongovernmental organization Non-performing loan Portfolio at risk Reserve Bank of India Return on assets Return on equity Regional rural bank Self-help group Customer Relationship Manager Customer Relations Staff Compulsory group training Group Recognition Test
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EXECUTIVE SUMMARY Micro finance refers to- small savings, credit and insurance services extended to socially and economically disadvantaged segments of society, for enabling them to raise their income levels and improve living standards. The main aim of Micro-finance is to provide loan to poor people or to below poverty line, who are not able to borrow from other sources and to make their standard of living better. Micro-finance’s concept was first given by the Nobel laureate Prof. Mohammad Yunus in 1976 and Standard Grameen Bank in that year and since then many countries has followed Grameen bank model. First a short overview of the development of the microfinance sector will be given, showing that the concept of providing financial services to low income people is a much older concept than is believed by many development practitioners and bankers around the world. This is important as it underlies the contribution that microfinance institutions (MFIs) can make to the development of the financial sector in their respective countries. It also gives an overview of Ujjivan Financial Services Private Limited, a microfinance institution which provides loans to poor working women in urban and semi-urban areas to areas to enable them to be free of poverty. In the second part, the topic “Comparative analysis of Ujjivan Financial Services Private Limited with seven key players in the Microfinance Industry” is discussed in detail. The aim of the project is to analyze the performance of Ujjivan Financial Services Limited at par with the industry as a whole. Several microfinance institutions have been established and have been operating towards resolving the credit access problem of the problem. In light of this, this study has attempted to look at MFIs performance in the country from outreach and financial sustainability angles using data obtained from secondary sources.
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