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A Detailed Analysis of the Conglomerate
Group 4
Ankit Goel 20/2009
Lokesh Yadav 38/2009
Mounis Parwaiz 47/2009
Ina Arora 76/2009
Saurabh Agarwal 78/2009
Submitted to: Prof. Ram Adhar Chopra
Presented by:
Date: 3rd October 2010
• Objectives of the Study• Overview of Bajaj Group • Bajaj Auto Limited• Bajaj Allianz Life Insurance Limited • Bajaj Allianz General Insurance Limited • Bajaj Finserv Lending• Wind Energy Business• Diversification Plans and their Prospects• Conclusion• References
Primary Objective:
To analyze the strategy and performance of Bajaj Finserv (BFSL) over the past few years and identify the prospects of its diversification plans
Secondary Objectives:
To analyze growth of the Life Insurance and General Insurance businesses of BFSL
To analyze the prospects of wind energy business of the company To gauge the financial strength and adequacy of Bajaj Finserv Lending, a
subsidiary of BFSL, as per RBI norms
Founder: Jamnalal Bajaj Founded in: 1926Employee Strength: 36,000 Market Cap.: ` 276 bn*
*At exchange rate: 1US$= ` 46.00
Overview of the Group
Businesses: (34 companies) Auto (two & three wheelers) Manufacturing Home Appliances Insurance and Finance Steel and allied products
Holding Company: Bajaj Holdings and Investments Ltd. (BHIL)
Flagship Company: Bajaj Auto Limited (Turnover of `120 bn)
Bajaj Auto Ltd. (BAL): Manufacturing services of the groupBajaj Finserv Ltd. (BFSL): Strategic businesses consisting of wind farm and financial services
Joint Ventures:
Flagship company of the group
Date of Incorporation: Corporate Office: Pune Employee Strength: 2,265 Listings: BSE, NSE
THRUST AREAS• Industry• Introduction to Non Banking Financial Companies (NBFCs) in India• Company History• Company Profile and Business• Performance on the Street• Company Performance (last 5 years)• Competition• Risk Management
•
• Company registered under Companies Act 1956• Not allowed demand (CASA) deposits, cash credits , overdrafts, etc.• Modes to access public funds: public deposits (only for NBFCs- D), CPs,
debentures, inter-corporate deposits and bank finance • No prudential norms for cap on exposure to parent group or co. i.e. intra group
transactions (ITEs), but have exposure limits to single/ group borrowers
• Similar norms applied except CRR, cap on exposure capital market, financing M&As, etc.
• Unlike customers of banks, NBFC customers not allowed deposit insurance Source: www.rbi.org.in (CC.No. 86/ 03.02.089 /2006-07)
ASSET BASED CLASSIFICATION CLASSIFICATION BASED ON BUSINESS
Asset Finance Companies NBFC- D
Investment Companies NBFC- ND
Loan Companies NBFC- ND- SI
Infrastructure Finance Companies Residuary NBFC (RNBFC)
Company History
Source: Company Web Site
Company Profile & Business
Erstwhile called Bajaj Auto Finance Ltd. (BAFL), changed name because portfolio widened
Credit Portfolio: Two Wheeler Loan (under the name of BAFL) Consumer Durable Loan Small Business Loan Personal Loan Loan Against Property Loan Against Securities Construction Equipment Finance
Source: Company Web Site
2009-10 2008-09 2007-08 2006-07 2005-06Deployment 45,851 24,509 30,363 26,313 19,545
Operating Income 9,100 5,947
Total Income 9,161 5,993
Interest and Finance Charges
2,017 1,643
PAT 893 339
ROE (%) 7.75 3.11
RoA (%) 2.05 1.31
EPS (`) 24.43 9.27
DPR (%) 24.64 21.54
Growth Rate (%) 5.84 2.44
CAR (%) 26
Company Performance
Figures in ` mn unless specified otherwise
Company Performance
Source: Company Web Site
Loan Book Analysis: • High credit growth: 87% increase yoy• Robust auto demand (75%)• Rising demand for home loans (266%)• SMEs, MSMEs (71%)• Cautious Retail lending (-54%)
`mn
Deposits’ Details:
2009-10 2008-09 2007-08 2006-07 2005-06 2004-05Tenor (months) 36
No. of Depositors 794 128
Amount of FDs (` mn) 24.48 2.2
NIM (%) 4.35 0.62
Source: Company Web Site
Company Performance
Performance on the Street
Source: Company Web Site and www.bseindia.com
Good performance due to robust industrial activity causing high credit demand
Scrip has outperformed BSE Sensex over past 1 year
Share has gained 26% since January 2010
Competition
Competition:
Company Market Cap. (`bn)
Income(`bn)
PAT (`mn)
Net NPAs
Manappuram 50.25 4.76 1,120
Bajaj Finserv Lending 28.34 9.11 893 Cholamandalam 18.81 9.26 154
M&M Financial Services (Tractors) 60.75 15.30 3,427
Shriram Transport Finance (Comm. Vehicles)
173.64 44.39 8,731
Risk Management
Associated Risks: Credit Risk Market Risk Operational Risk
Increased investments in Credit Analytics, Credit Bureau and technology for upgradation
ALCO set up in line with RBI’s recommendations to tackle liquidity issues
Multi Layered Audit Structure: Internal Audit Deptt. (IAD): Checks compliance with all laid down norms Audit Committee of BoD: Supervises and reviews working of IAD
WIND ENERGY BUSINESS
Installed Capacity: 65 MW Plants
Wind Energy 138 windmills in Maharashtra with installed capacity of 65.2 MWStarted to reduce dependence on conventional sources Investments in non conventional energy is totally tax freeMarket leader: SuzlonAt 3,100 MW, the industry is growing at 30% annually