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DECLARATION
I, hereby declare that this project report entitled, “THE STUDY ON KOTAK
MAHINDRA PRIME LIMITED”, submitted to MAHATMA GANDHI University,
in partial fulfillment of the requirements for the award of the degree of the Master
of Business Administration is an original work done by me. I further declare that
the said work has not previously been submitted to any other university or academic
body.
Place: RESHMI FRANCIS
Date
1
LIST OF TABLES
SL NO. TITLE REF NO PAGE NO.
1BANKING AND FINANCIAL INSTITUTIONS IN INDIA Tab 2-1 14
2
COMPETITOR’S STATUS Tab 2-2 16
3 COMPARISON WITH COMPETITORS
Tab 2-3 17
4 BOARD OF DIRECTORS Tab 3-1 19
5 APPRAISAL CRITERIA Tab 3-2 44
2
LIST OF FIGURES
SL NO CAPTION REF NO PAGE NO.
1 Major players Fig 2-1 13
2 Corporate Structure Fig 4-1 47
3 Marketing Department Structure Fig 4-2 49
4 Finance Department Structure Fig 4-3 50
5 Customer Relations Department Structure
Fig 4-4 51
6 HR Department Structure Fig 4-5 52
7 Operations Department Structure Fig 4-6 53
8 Marketing Flow Fig 5-1 56
9 Sales Flow Fig 5-2 67
3
TABLE OF CONTENTS
CHAPTER NO. TITLE PAGE NO.
ACKNOWLEDGEMENT i
EXECUTIVE SUMMARY ii
LIST OF TABLES iii
LIST OF FIGURES iv
I INTRODUCTION 1
1.1 An Introduction to the study 2
1.2 Scope of the Study 2
1.3 Objective of the Study 3
1.4 Methodology 3
1.5 Limitations of the study 4
CHAPTER NO.
TITLE PAGE NO
4
II BUSINESS ENVIRONMENTAL
ANALYSIS
5
2.1 Business Environmental Analysis 6
2.2 Industry Profile 10
2.2.1 Global Scenario 10
2.2.2 Indian Finance Industry. 11
2.2.3 Finance Industry in Kerala 12
2.3 Industry Analysis 13
2.3.1 Industry Key Players 13
2.3.2 Competitor Analysis 15
III ORGANIZATIONAL PROFILE 18
3.1 Background and History 19
3.2 Vision 27
3.3 Products and Markets 28
5
CHAPTER NO TITLE PAGE NO
3.4Certifications,Awards, Recognitions 38
3.5 Business Performance 43
IV ORGANIZATIONAL STRUCTURE 44
4.1 Corporate Structure 46
4.2 Business Level Structure 48
4.2.1 Marketing Department Chart 49
4.2.2 Finance Department Chart 50
4.2.3Customer Relations Department Chart 51
4.2.4 Human Relations Department Chart 52
4.2.5 Operations Department Chart 53
V FUNCTIONAL ANALYSIS 54
5.1 Marketing Department 55
5.2 Finance Department 57
6
5.3 Customer Relations Department 59
5.4 Operations Department 62
5.5 Human Resource Department 64
5.6 Collection Department 65
5.7 Sales Department 67
5.8 Customer Credit Department 68
VI ORGANIZATIONAL ANALYSIS 71
SWOT Analysis 72
VII FINDINGS AND CONCLUSIONS 75
BIBLIOGRAPHY 78
7
I. INTRODUCTION
8
1.1 AN INTRODUCTION TO THE STUDY
In a general perspective, an organization can be defined as the rational and logical
coordination of the activities of man power for the accomplishment of common goals,
through division of labor and function, and through a hierarchy of authority and
responsibility. In a more specific approach, the use of the word organization means
the weaving together of the various functional components in the best possible
combination so that the enterprise can accomplish its objectives to the optimum level
in the most efficient manner. It is the back bone of management.
Organization is a process of fixing duties and responsibilities of persons in an
enterprise so that business goals are achieved. It is the creation of relationship among
persons and work so that it may be carried on in a better and efficient way.
1.2 SCOPE OF THE STUDY
The study is done to know the organization in depth. It is focused functioning of the
Kochi branch of Kotak Mahindra. All the departments in the organization is covered
which includes the marketing department, finance department, customer relations
department, operations department, human resource department, collection
department, sales department and the customer credit department. Since the study is
limited to the Kochi branch, the transactions of some departments are done in a
narrow sense like the Human Resource Department where in all the recruitments are
made at the Mumbai Head office and not at the Kochi office.
An organization is the mechanism through which the management directs,
coordinates and controls its business. A good organization is important because:
It facilitates administration.
It makes growth and diversification possible.
It stimulates independent, creative thinking and initiative through well defined
areas of work.
9
It facilitates the optimum use of technological improvement
1.3 OBJECTIVE OF THE STUDY
- To know how a business organization works.
- To know the various departments and its functioning in an organization.
- To understand the challenging fields in business and suggest ways to mitigate and overcome them.
- To identify the opportunities and suggest ways to take its advantage to the maximum.
- To know the strengths, weakness, opportunities and threats of the business.
1.4 METHODOLOGY
The study mainly utilized two methods for data collection. They are survey
questionnaires method and interview method. The survey questionnaire is done in
narrow sense as it covered only a limited number of employees. The employees were
given a small questionnaire with 10 questions (except the personal details) on their
job nature. The interview method was the one which had been given more
importance. Both the primary data and secondary data is utilized for the facilitation of
the study. Thus the methodology used for the study mainly involves both the primary
and secondary data collected through the interview method. Primary data involved the
direct question answer session. The employees of the organization were very
supportive as they sincerely answered all the questions put to them. Secondary data
involved the reference of their books and accounts. Also some relevant details were
abstracted from their official website in the internet.
10
1.5 LIMITATIONS OF THE STUDY.
a) Head Office at Mumbai , Limited transactions at Kochi:
Kotak Mahindra Group is a well established and reputed
organization. It has more than 50 braches all over the country which has a number of
business operations. They have business roots in private finance, car finance and so
on. The organization chosen for the study is the Kotak Mahindra Prime Limited at
Palarivattom, Kerala. KMPL is a wing of the Kotak Mahindra Group which deals
with the Automobile finance and Personal finance. Their headquarters is at Mumbai
where all their important dealings are held. Thus one of the main limitations of the
study was that KMPL had limited dealings of some of their department like Human
Resource related to new recruits. The organization had all their appointments made at
their headquarters in Mumbai. They just directed their applicants to the Mumbai
office where the actual appointment is made.
b) Limited time :
The study is done in a limited time period of 2 weeks which made it difficult to cover the organization in detail.
11
II BUSINESS ENVIRONMENT ANALYSIS
12
2.1 BUSINESS ENVIRONMENTAL ANALYSIS
Business Environmental Analysis is done with PEST analysis. A PEST analysis is
concerned with the environmental influences on a business. The acronym stands for
the Political, Economic, Social and Technological issues that could affect the
strategic development of a business. Identifying PEST influences is a useful way of
summarizing the external environment in which a business operates. PEST analysis of
any industry investigates the important factors that affect the industry and influence
the companies operating in the sector. The PEST Analysis is a tool to analyze the
forces that drive the industry and how those factors can influence the industry.
POLITICAL FACTORS
Government and RBI policies affect the finance sector. Sometimes looking into the
political advantage of a particular party, the Government declares some measures to
their benefits like waiver of short-term agricultural loans, to attract the farmer’s votes.
By doing so, the profits of the bank get affected. Various banks in the cooperative
sector are open and run by the politicians. They exploit these banks for their benefits.
Sometimes the government appoints various chairmen of the banks.
Various policies are framed by the RBI looking at the present situation of the country
for better control over the financial institutions.
ECONOMIC FACTORS
Banking and Financial sector is as old as authentic history and the modern
commercial banking and financial service sector are traceable to ancient times. In
India, banking has existed in one form or the other from time to time. The present era
in banking may be taken to have commenced with establishment of Bank of Bengal in
1809 under the government charter and with government participation in share
capital. Allahabad bank was started in the year 1865 and Punjab National Bank in
13
1895, and thus, others followed. Whereas the financial institutions also do take a
prominent role in the industry along with these recognized banks.
SOCIO CULTURAL FACTORS
Socio-culture factors also affect the business. They show how people behave in a
country. Socio-cultural factors like taboos, customs, traditions, tastes, preferences,
buying and consumption habit of people, their language, beliefs and values affect the
business. Finance industry also operates under this social environment and it is also
thus affect by this factor.
The pattern of the people’s lifestyle, their behavior, consumption pattern etc. is
changing and also creating opportunities and threat for financial service industry.
There are some socio-culture factors that affect financial sector in India which have
been analyzed below :
TRADITIONAL MAHAJAN PRATHA
Before the birth of the banks, people of India were used to borrow money from local
moneylenders, shahukars, shroffs. They were used to charge higher interest and also
mortgage land and house. Farmers were exploited by these shahukars. But farmers
need money. So, they did not have any choice other than going to shahukar and
borrowing money from them in spite of exploitation by these people. But after the
emergence of banks, the attitude of people was changed. Traditional mahajan pratha
still exist in India specially in rural areas. This affects the banking sector. Rural
people are afraid to go to bank to borrow money instead they prefer to borrow from
shahukar with whom they have relationships from the time of their fore fathers.
Banking infrastructure is also week in some interior areas of India.
14
SHIFT TOWARDS NUCLEAR FAMILY
Attitude of people of India is changing. Now, younger generation wants to remain
separate from their parents after they get married. Joint families are breaking up.
There are many reasons behind this. But banking sector and financial sector is
positively affected by this trend. A family needs home consumer durables like
freezers, washing machine, television, bike, car etc so they demand these products
and consequently borrows money from these institutions. Recently there is boost in
housing finance and vehicle loans. As they do not have money in full settlements they
go for installments. So, banks and financial institutions satisfy nuclear families wants.
CHANGE IN LIFE STYLE
Life style of India is changing rapidly. They are demanding high class products. They
have become more advanced. People want everything car, mobile, etc.. what their
fore father had not even dreamt off. Now even teenagers who are dependent on their
parents too have mobile phones and vehicles. Even middle class people also want to
have well furnished home, television, mobile, vehicle and this has opened
opportunities for banking sector to tap this change. Everything is available so it has
become easy to purchase anything even if you do not have lump sum.
POPULATION
Increase in population is one of the important factor, which affect the private sector
banks. Banks would open their branches after looking into the population
demographics of the area. Percentage of deposit in any branches of banks depends
upon the population demographic of that particular area. The population of India is
about 102.90 and is expected to reach about 119.70 cores in 2011. About 70% of
population is below 35years of age. They are in the prime earning stage and this
increase the earning of the banks. Total Deposits mobilized by the Private Sector
Banks increased from Rs, 2,52,335 crore as on 31st March 2004 to Rs. 3,12,645 crore
15
as on 31st March 2005. Deposits showed a subdued growth during 2004-05.Income
distributions also affects the operations and overall business of private sector banks.
TECHNOLOGY IN BANKS
Technology plays a very important role in financial institution’s internal control
mechanisms as well as services offered by them. It has in fact given new dimensions
to the institutions as well as services that they cater to and the private institutions are
enthusiastically adopting new technological innovations for devising new products
and services.
ATM
The latest developments in terms of technology in computer and telecommunication
have encouraged the bankers to change the concept of branch banking to anywhere
banking. The use of ATM and Internet banking has allowed ‘anytime, anywhere
banking facilities.
IT SERVICES & MOBILE BANKING
Today these institutions are also using SMS and Internet as major tool of promotions
and giving great utility to its customers. For example SMS functions through simple
text messages sent from your mobile. The messages are then recognized by the bank
to provide you with the required information.
All these technological changes have forced the bankers to adopt customer-based
approach instead of product-based approach. Technology advancement has changed
the face of traditional banking systems. Technology advancement has offer 24X7
banking even giving faster and secured service.
16
2.2 INDUSTRY PROFILE
2.2.1 GLOBAL FINANCE INDUSTRY
Financial services refer to services provided by the finance industry. The finance
industry encompasses a broad range of organizations that deal with the management
of money. Among these organizations are credit unions, banks, credit card
companies, insurance companies, consumer finance companies, stock brokerages,
investment funds and some government sponsored enterprises. As of 2004, the
financial services industry represented 20% of the market capitalization of the S&P
500 in the United States.
According to the Global 2000 (annual report by Forbes), seven of the world’s top 10
companies belonged to the financial industry. These included Citigroup, Bank of
America, HSBC Holdings and JPMorgan Chase. Their combined revenues in 2007
were worth $645 billion, down from the 2006 high of $785 billion.
According to the Fortune 500 rankings, in 2006 financial services generated $257
billion in profits, a third of total Fortune 500 profits. In 2008, however, they lost a
staggering $213 billion, a total swing of $470 billion. Big players on the list, such as
Citigroup and Bank of America, may only be alive today thanks to government
money.
The finance industry is an industry in itself as well as an ancillary that supports other
industries. Trade and commerce across the world would come to a standstill if there
was no means to fund, pay and protect the transactions, hence the need for
governments to support the financial services industry when companies that are ‘too
big to fail’ are close to collapse.
17
2.2.2 INDIAN FINANCE INDUSTRY
Financial services organizations are striving to achieve increasingly ambitious profit
and growth targets against a background of heightened risk, regulation and market
pressures.
Customer needs and expectations are evolving in the face of increasing personal
wealth, more private funding of pensions and health care and the desire for ever more
accessible and personalized financial products and services. In turn, intense
competition has squeezed industry margins and forced organizations to cut costs
while still seeking to enhance the quality of client choice and service. The battle for
talent is also heating up as companies seek to enhance innovation, customer loyalty
and investment returns.
The corollary of this market evolution is increasing risk as products become more
complex, organizations more diffuse and the business environment ever more
uncertain. Regulation is also tightening in the wake of public and government
pressure for improved governance, transparency and accountability.
In this environment, the winners will be companies that can turn the challenges into
opportunities to build stronger and more enduring customer relationships; sharpen
process efficiency; unlock talent and creativity; use improved risk management
processes to deliver more sustainable returns; and use new regulatory demands as a
catalyst for strengthening the business and enhancing market confidence.
The Automotive industry in India is one of the largest in the world and one of the
fastest growing globally. India manufactures over 17.5 million vehicles (including 2
wheeled and 4 wheeled) and exports about 2.33 million every year. It is the world's
second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million
in 2009. India's passenger car and commercial vehicle manufacturing industry is the
seventh largest in the world, with an annual production of more than 3.7 million units
in 2010. According to recent reports, India is set to overtake Brazil to become the
18
sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell
around three million units in the course of 2011-12. In 2009, India emerged as Asia's
fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.
As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million
automotive vehicles were produced in India in 2010 (an increase of 33.9%), making
the country the second fastest growing automobile market in the world. According to
the Society of Indian Automobile Manufacturers, annual car sales are projected to
increase up to 5 million vehicles by 2015 and more than 9 million by 2020. By 2050,
the country is expected to top the world in car volumes with approximately 611
million vehicles on the nation's roads.
A chunk of India's car manufacturing industry is based in and around Chennai, also
known as the "Detroit of India" with the India operations of BMW, Ford, Hyundai
and Nissan headquartered in the city. Chennai accounts for 60 per cent of the
country's automotive exports. Gurgaon and Manesar in Haryana are hubs where all of
the Maruti Suzuki cars in India are manufactured. The Chakan corridor near Pune,
Maharashtra is another vehicular production hub with companies like General
Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz,
Fiat and Force Motors having assembly plants in the area. Ahmedabad with the Tata
Nano plant, Halol with General Motors, Aurangabad with Audi, Kolkatta with
Hindustan Motors, Noida with Honda and Bengaluru with Toyota are some of the
other automotive manufacturing regions around the country.
2.2.3 FINANCE INDUSTRY IN KERALA
The most essential element in the process of development and growth of the country
is finance. The economy of a country becomes crippled without the flow of finance
and the economic growth is stunted. Monitory resources can be channelized only with
the help of a proper financial infrastructure. An effective financial system in the form
of banks and financial institutions offer economical lending and borrowing.
19
Kerala boasts of a well-developed financial infrastructure. With progressing time
Kerala financial system has attained a high benchmark. There are many prominent
participants in the finance sector in kerala . They includes Kotak Mahindra Prime
Limited, HDFC, Sundaram Finance and so on.
2.3 INDUSTRY ANALYSIS
KEY PLAYERS IN FINANCE INDUSTRY
Indian Automobile Loan Industry involves a lot of credit providers. It is because of
Indian automobile market is one of the fast growing largest markets in the world.
Compared with the European market, American market and the Japanese market, the
specialty of Indian market is that it accepts all price range of vehicles .On the basis of
nature of business, automobile car providers are mainly classified as follows :
2.3.1 MAJOR PLAYERS
The major players of the Finance Industry can be categorized into 2 groups. They are
as shown in Fig 2-1 :
Fig 2-1 MAJOR PLAYERS IN FINANCE INDUSTRY
20
Non-Banking Financial Institutions Banking Financial Institutions
Major players
2.3.2 BANKING AND FINANCIAL INSTITUTIONS :
There are many Banking and Financial institutions in India. The major institutions
among them are stated in Tab 2-1 :
Tab 2-1 BANKING AND FINANCIAL INSTITUTIONS IN INDIA
LEADING NATIONAL BANKS LEADING PRIVATE BANKS
State Bank group ICICI Bank
Axis Banks HDFC Bank
Union Bank Kotak Mahindra Prime Limited
Saraswat Coperative Bank Tata Motors finance Limited
Standard Chartered Bank Financial Services Company of Fiat
Citi Bank
Citicorp MarutI
Sundaram Finance
21
Associate Finance
2.3.3 COMPETITOR ANALYSIS
The industry holds a number of efficient and eminent competitors. The major
competitors involves :
ICICI Bank.
HDFC Bank.
Reliance Capital Limited.
Axis Bank .
State Bank Group.
Mahindra Finance.
Co-operative Bank.
KSFE.
Sundaram Finance.
South Indian Bank Limited.
22
The financial status of various competitors are :
Tab 2-2 COMPETOTOR’S STATUS
Last Price Market Cap.(Rs. cr.)
Net InterestIncome
Net Profit Total Assets
ICICI Bank 1,060.20 122,110.91 25,974.05 5,151.38 363,399.71
HDFC Bank 2,559.15 119,058.23 19,928.21 3,926.39 277,352.61
Axis Bank 1,305.95 53,789.58 15,154.81 3,388.49 242,713.37
Kotak Mahindra 480.90 35,436.15 4,303.56 818.18 50,850.66
IndusInd Bank 287.50 13,396.64 3,589.36 577.32 45,635.85
YES BANK 322.25 11,186.82 4,041.74 727.13 59,007.00
Federal Bank 460.55 7,873.78 4,052.03 587.08 43,675.61
Karur Vysya 420.20 4,913.82 2,217.69 415.59 21,993.49
JK Bank 849.20 4,116.73 3,713.13 615.20 50,508.15
ING Vysya Bank 328.35 3,972.60 2,694.06 318.65 33,880.24
Tab 2-3 COMPARISON WITH COMPETITORS
23
KMB KMF price KMB
Balance Sheet
Kotak Mahindra
ICICI Bank
HDFC Bank
Axis Bank
Mar '11 Mar '10 Mar '11 Mar '11Capital and Liabilities:Total Share Capital 368.44 1,114.89 465.23 410.55Equity Share Capital 368.44 1,114.89 465.23 410.55Share Application Money 0.00 0.00 0.00 0.00Preference Share Capital 0.00 0.00 0.00 0.00Reserves 6,464.95 50,503.48 24,914.04 18,588.28Revaluation Reserves 0.00 0.00 0.00 0.00Net Worth 6,833.39 51,618.37 25,379.27 18,998.83Deposits 29,260.97 202,016.60 208,586.41 189,237.80Borrowings 11,723.95 94,263.57 14,394.06 26,267.88Total Debt 40,984.92 296,280.17 222,980.47 215,505.68Other Liabilities & Provisions
3,032.36 15,501.18 28,992.86 8,208.86
Total Liabilities 50,850.67 363,399.72 277,352.60 242,713.37Kotak
MahindraICICI Bank
HDFC Bank
Axis Bank
Mar '11 Mar '10 Mar '11 Mar '11AssetsCash & Balances with RBI
2,107.72 27,514.29 25,100.82 13,886.16
Balance with Banks, Money at Call
363.26 11,359.40 4,568.02 7,522.49
Advances 29,329.31 181,205.60 159,982.67 142,407.83Investments 17,121.44 120,892.80 70,929.37 71,991.62Gross Block 831.80 7,114.12 5,244.21 3,426.49Accumulated Depreciation
406.20 3,901.43 3,073.56 1,176.03
Net Block 425.60 3,212.69 2,170.65 2,250.46Capital Work In Progress 0.00 0.00 0.00 22.69Other Assets 1,503.33 19,214.93 14,601.08 4,632.12Total Assets 50,850.66 363,399.71 277,352.61 242,713.37Contingent Liabilities 12,291.30 694,948.84 559,681.87 429,069.63Bills for collection 4,470.06 38,597.36 28,869.10 57,400.80Book Value (Rs) 92.74 463.01 545.53 462.77
24
III. ORGANIZATIONAL PROFILE
25
3.1 BACKGROUND AND HISTORY
Kotak Mahindra is one of India's leading financial organizations, offering a wide
range of financial services that encompass every sphere of life. From commercial
banking, to stock broking, to mutual funds, to life insurance, to investment banking,
the group caters to the diverse financial needs of individuals and corporate.
The group has a net worth of over Rs. 6,523 crore and has a distribution
network of branches, franchisees, representative offices and satellite offices across
cities and towns in India and offices in New York, London, San Francisco, Dubai,
Mauritius and Singapore. The Group services around 6,2 million customers accounts.
3.1.1 BOARD OF DIRECTORS
Tab 3-1 BOARD OF DIRECTORS OF KOTAK MAHINDRA
Mr. K.M.Gherda - Executive Chairman
Mr. Uday Kotak - Executive Vice Chairman and
Managing Director
Mr. Anand Mahindra - Co Promoter of Kotak Mahindra
Bank And Vice Chairman and
Managing Director of Mahindra
and Mahindra
Mr. Cyril Shroff - Co Promoter
Mr. Pradeep N Kotak - Agri Division of Kotak and
CompanyLimited
Mr. Shivaji Dam - Managing Director Kotak
Mahindra Old Mutual Life
26
Insurance Limited.
Mr. C.Jayaram Executive Director
HISTORY
Kotak Mahindra group was started in the year 1985 as Kotak Capital Management
Finance Limited. Uday Kotak Sidney and Pinto are the promoters of the company.
Industrialist Harshath Mahindra and Anand Mahindra took a stake in 1986. After that
the company changed its name to Kotak Mahindra Finance Limited.
1986 - Kotak Mahindra Finance limited starts the business of Bill Discounting.
1987 - Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market.
1990 - The Auto Finance division is started.
1991 - The Investment Banking Division is started. Takes over
FICOM, one of India’s largest financial retail marketing
networks .
1992 - Enters the Funds Syndication sector.
1995 Brokerage and Distribution businesses incorporated into a separate company -
Kotak Securities. Investment Banking division incorporated into a separate company
- Kotak Mahindra Capital Company .
1996 - The Auto Finance Business is hived off into a separate company - Kotak
Mahindra Primus Limited. Kotak Mahindra takes a significant stake in Ford Credit
Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix
Information Services Limited marks the Group’s entry into information distribution.
27
1998 - Enters the mutual fund market with the launch of Kotak
Mahindra Asset Management Company.
2000 - Kotak Mahindra ties up with Old Mutual plc. for the
Life Insurance business.
Kotak Securities launches kotakstreet.com - its on-line broking
site. Formal commencement of private equity activity through
setting up of Kotak Mahindra Venture Capital Fund.
2003 - Kotak Mahindra Finance Ltd. Converts to bank
Kotak Mahindra Finance Limited (KMFL), the Non-Banking Financial Corporation
(NBFC) started its operations in the year 1985 as car financers and since then has
come a long way. Kotak Mahindra Finance Limited was converted into a bank as a
conglomeration of six entities. They are Kotak Mahindra Capital
Company( Investment Banking ), Kotak Securities (broking), Kotak Mahindra
Limited (Auto finance), Kotak Mahindra Asset Management (Mutual funds) old
Mutual Kotak Mahindra (Life Insurance) and Kotak Mahindra Primus ( Auto
Finance) .
Kotak Group
The ventures of Kotak group involves the following :
Kotak Mahindra Bank Limited.
Kotak Mahindra Capital Company.
Kotak Mahindra Old Mutual Life Insurance Limited.
Kotak Mahindra Asset Management Company Limited.
Kotak International Business.
Kotak Securities Limited.
28
KOTAK MAHINDRA BANK LIMITED
Kotak Mahindra Bank is the flagship company of the Kotak group. The company was
incorporated as Kotak Mahindra Finance Company Limited in the year 1985. In
February 1003, the company was given the license to carry on banking business by
Reserve Bank of India ( RBI). It was the first company to convert to a bank. With the
conversion into a bank, retail liabilities , treasury and corporate banking segments
have been also added company to convert to bank. With the conversion into a bank,
retail liabilities, treasury and corporate banking segments have also been added.
The products of the bank include the following:
Retail Banking.
Commercial Vehicles.
Home Loans.
Personal Loans.
Wealth Management.
Corporate Banking.
Treasury.
KOTAK MAHINDRA CAPITAL COMPANY LIMITED
Kotak Mahindra Capital Company Limited (KMCO) , India’s premier investment
bank is a strategic joint venture between Kotak Mahindra Bank ( holding 55%) and
Gold Sachs ( holding 25% ) KMCC offers full services investment banking solutions
to its clients by combining the global reach and expertise of the Goldman Sachs and
the local knowledge and skills of Kotak Mahindra.
29
KMCC identifies structures and executes diverse transactions and provide innovative
solutions to corporate and government enterprises. Transactions include mergers and
acquisitions , divestitures and issuance and debt and equity.
Within mergers and acquisitions, KMCC structures and executes a wide range of
domestic and cross border transactions including acquisitions divestitures merger
joint venture corporate restructuring tender offers and defenses against unsolicited
takeover attempts.
KOTAK SECURITIES LIMITED
Kotak Securities limited , a strategic joint venture between Kotak Mahindra Bank
Limited ( holding 75% ) and Goldman Sachs ( holding 25%) is one of India’s largest
brokerage and securities distribution house in India.
The Private Client Group (PCG) of the company provides value added investment
advisory services to the high net worth individuals. NRI investors, trusts , corporate
and Banks. The investment product range offered by PCG covers investment and
trading, equity derivatives, portfolio management IPO’s and Mutual Funds.
Kotak Securities is also a Depository Participant with National Securities Depository
limited ( NSDL) and Central Depository Services Limited (CDSL) providing dual
benefit service wherein the investors can use the brokerage services of the company
for executing the transactions and the depository services for settling them.
OM KOTAK MAHINDRA LIFE INSURANCE LIMITED
OM Kotak Mahindra Life Insurance company limited ( OMKM) is a joint venture
between Kotak Mahindra Bank ( holding 74%) and Old Mutual ( holding 26%). Old
Mutual Plc, a UK based financial services group with 158 years of experience in
insurance and banking is a fortune 500 company listed London Stock Exchange.
30
OMKM offers a wide range of innovative life insurance products aimed at making the
Indian consumer financially independent. It operates through a wide networks of 40
branches across the country. The company has 14 products including 3 group
insurance products and 7 riders that can be added into the basic policy. The company
now has a full range of products from pure insurance to saving products and market-
linked products from children’s insurance to retirement solutions.
KOTAK MAHINDRA ASSET MANAGEMENT COMPANY LIMITED
Kotak Mahindra Asset Management Company ( KMAMC) is the asset manager for
Kotak Mutual Fund ( KMMF), which started operations in December 1998, manages
assets of over Rs. 3900 crore contributed investors in various schemes. It operates
through 23 branches all over the country.
KMMF offers schemes catering to investors with varying risk appetites and return
desires. It was the first house in the country to launch a dedicated gilt scheme
investing only in government securities.
The Mutual Fund’s mission is to offer a family of schemes for building investor
wealth. The family of schemes compromise of diverse portfolios to suit different risk/
reward expectations of investors.
KOTAK MAHINDRA PRIME LIMITED
Retail Finance in commercial vehicles, cars and personal loan is a traditional area of
strength for Kotak Mahindra . As for most finance companies, Kotak Mahindra has
invested a considerable amount of resources in vehicle financing. Kotak Primus the
car-financing unit is more impressive.
Kotak Mahindra Prime Limited (KMPL) started with a joint venture between Kotak
Mahindra Bank Limited (KMBL) and Ford Credit International Inc. (USA) (FCII)
formed to finance all non-Ford passenger vehicles. The joint Venture is dedicated to
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financing and supporting automotive and automotive related manufacturers, dealers
and retail customers. The Company was incorporated on 28th February 1996 and
commenced its operations on 1st November 1996. After incorporation and subsequent
commencement of the business by the joint venture. The business of financing non-
Ford passenger cars and its related activities, previously carried out by KMFL are
being undertaken by KMPL. In 2007 Kotak Mahindra Prime Limited because Kotak
Mahindra Prime Limited and the Joint Venture has been cancelled.
KMPL has retained its market leadership by developing and maintaining close
relationship with manufacturers, dealers, direct marketing associates and individual
customers. Currently KMPL is the preferred financier for Hyundai. Mercedes Benz ,
Toyota, General Motors, Honda and Fiat. Additionally , it has good relationship and
market share with Maruti, Telco and M & M.
Highlights of the Company
The company started with a joint venture between Kotak Mahindra Bank Limited ( formerly, Kotak Mahindra Finance Limited ) which holds 60 % of the equity share capital and Ford Credit International Inc., USA that holds the balance 40 % of the equity and 2007 it cancellers the joint venture.
The company has been a significant player in the car finance market in the last 10 years.
The company has been able to maintain increased disbursements year over year due to increased geographic reach and improved depth of distribution.
The company gives inventory funding to dealers.
The company has a distribution network across 53 locations in the country covering over 100 towns.
The company enjoys good relationship with major automobile manufacturers.
The delinquency ratios of the company are the best among the auto finance industry.
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The company has been consistently improving its profits since the last three years.
The existing major competitors in the car finance are:
Reliance Capital Limited.
Axis Bank.
HDFC Bank Limited.
ICICI Bank Limited.
Federal Bank.
State Bank Of India.
Sundaram Finance.
Mahindra and Mahindra Finance.
Kotak Cochin division started its operations in 1997. This Cochin Branch office
operates as head office to other branches in Kerala. It controls the entire operations in
the state. It has four branches in Kerala. They are in Kottayam, Trichur, Calicut and
Thiruvananthapuram. Trichur and Calicut branch started its operations in 1998 and
Thiruvananthapuram branch started in 1999.
Features :
It is a profit centre of KMPL.
The business attitude towards customers is based on IRR.
High level of automation.
It controls the entire business of Kerala.
Profit Centre
Cochin branch is a profit centre of KMPL. Since it’s a profit centre it can decide its
own lending rates. The Cochin division decides the rates and sends it to the corporate
office Mumbai for approval. The corporate office may approve or disapprove it and
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inform the cent, which it takes reasonable. It is only in the case of minimum lending
rate. Highest rate can go up to any figure. The Corporate Office’s decision is based on
certain parameters. They are:
Operations cost.
Delinquency rate.
Margin ( difference between lending rate and borrowing rate )
Product mix.
3.2 VISION
The vision of KMPL is:
The Global Indian Financial Services Brand | Our customers will enjoy the benefits
of dealing with a global Indian brand that best understands their needs and delivers
customized pragmatic solutions across multiple platforms. We will be a world class
Indian Financial service group. Our technology and best practices will be
benchmarked along international lines while our understanding of customers will be
uniquely Indian. We will be more than a repository of our customers’ savings. We,
the group, will be a single window to every financial service in customer’s universe.
The most preferred employer in financial services | A culture of empowerment and a
spirit of enterprise attracts bright minds with an entrepreneurial streak to join us and
stay with us. Working with a home-grown, professionally- managed company, which
has partnership with international leaders, gives our people a perspective that in
universal as well as unique.
The most trusted financial services company | we will create an ethos of trust across
all our constituents. Adhering to high standards of compliance and corporate
governance will be an integral part of building trust. Value Creation | Value Creation
rather than size alone will be our business driver.
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3.3 PRODUCTS AND MARKETS
PRODUCTS AND SERVICES
New Car Financing.
Used Car Financing.
Personal Loan.
Refinancing.
Insurance Services.
New Car Financing :
It is the financing of new cars and maximum funding is 100 %.
Used Car Financing : It is for financing the second hand or used cars and the maximum funding available is 80 %.
Personal loan :
Only existing customers can avail this facility. Those customers who paid over rage half of the total installments and did not make default in the payments of EMI will get personal loans.
Refinancing :
If the customer is a good customer and does not have a background of
committing defaults, he will get refinancing facility after the payment of loan
or when the hypothecation is over.
Insurance :
This is a service by Kotak to its own customers and others also. Kotak works as an intermediary or an agent between the client and the insurance company. Kotak has tie up with 3 insurance companies. They are HDFC CHUBB , Royal Sundaram , and Oriental Insurance. Through this service the non-customers of Kotak will become its customers. For the
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customers it makes the processing very easy not only at the time of opening the insurance but also when the case of claim occurs. Kotak gets commission for this service. It collects premium from customers and pay it to the insurance company. This service is for cars as well as for the two-wheelers also.
KOTAK MAHINDRA PRIME LIMITED
Kotak Mahindra Prime Limited is a subsidiary of Kotak Mahindra Bank Limited
primarily formed to finance all passenger vehicles. KMPL is India’s largest car
finance company. The company is dedicated to financing and supporting the
automobile form of loan for the entire range of passenger cars, multi utility vehicles
and pre-owned cars. The company also offers inventory funding and infrastructure
funding to car dealers. KMPL has preferred financer relationship with the various car
manufacturers in India such as General Motors, Honda, Hyundai, Maruti, Toyota , M
& M etc. KMPL has a robust delivery platform which is critical for a sustained
growth.
PRODUCT PROFILE
Kotak Car Finance is one of the big player in the area of car finance. They extend
finance to all models of cars. Kotak group extends finance to all cars through their
company, KMPL.
Types of Services
KMPL has different types of services like:
1. Car Finance.
2. Dealer Finance.
3. Inventory Funding.
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# CAR FINANCE
KMPL offers a very flexible scheme to suit our needs, a hassle free documentation
and quick processing. This causes the company’s relations with the car manufacturers
to give the maximum benefit of the most attractive deals in the market.
“our commitment is to get you into the driver’s seat quickly while giving you some
really smart options to choose from”
KMPL offers:
the widest range of new and pre-owned cars.
Attractive interest rate.
Flexible schemes.
Speedy loan processing.
New Car Finance
The company offers loans up to 90 % of the ex-showroom price and flexible
repayment theories as per the customer’s convenience.
Margin money scheme
The company provide finance for the acquisition of new cars up to 90% of the
invoice value for certain models. The customer should pay the margin money
(invoice value minus the finance amount) to the dealer directly. He also has an option
to pay the margin of KMPL upon which we would release the entire invoice value to
the dealer.
Set up scheme.
Increase in EMI after every year, 6 months or quarterly( depending upon your needs )
Best suited for the people who want luxury car experience.
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Make payment on time with your growing income ( starting with low EMI’s in the early period of repayment)
Low EMI , Balloon Scheme.
10%-25% of the cost of the car to be paid as last EMI.
Reduced EMI for the entire tenure.
Best for customers who want to dispose off their vehicle at the end of the tenure and are looking at affordable EMIs during the tenure.
Advance EMI Scheme
Make the payments of few monthly installments upfront.
Balance payable through EMIs.
Repay your loan much faster with the advance installments.
Used Car Finance
Owning a car can be a simple, easy and reliable experience with KMPL used car
finance. The company offers up to 90% funding of the car value. The customers may
also avail finance against your existing car.
Pre-approved Loan
Low ticket size loans:
- Loan amount up to 1.5 lacs.
- Minimum documentation.
Preferred Segment Loan
- Loan amount between 1.5 – 15 lacs.
- Hassle free processing.
Funding up to 85% with maximum tenure of 60 months.
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Approve your own loan
For salaried employees:
- Monthly installments equals 40 % of net salary.
- Loan amount equals up to 3 times of your annual salary.
Cash against your car.
Avail this loan by pledging your existing car which is free from any loan/
hypothecation.
Takeover of your existing car loan and generate cash
It’s a loan taken over from the bank where the foreclosure amount is lesser than what
KMPL actually funds on the assets. That is how the cash is generated and the
customer get more than 100% finance.
# Dealer Finance
KMPL has vast experience in providing comprehensive solution to the wholesale
funding requirement of over 125 automobile dealers across the various
manufacturers. KMPL offers superlative experience to automobile dealers by catering
to their entire spectrum of financial requirement through ‘Single Window’ . This
results in better response time to KMPL’s esteemed customers.
The various financial options available to the KMPL customers are:
- Inventory Funding
- Project Funding – Term Loans.
- Setting up of CC/BG/LC through Kotak Mahindra Bank Limited.
KMPL also offers value added services such as Dealer Finance Restructuring and Specific Advisory Services to Dealers.
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Term Loan Options
Term loan is available to automobile dealers for setting up of new dealership
expansion / renovation of showroom / workshop / supplementary working capital
requirement.
Equipment term loan is available to automobile dealers for purchasing the equipments
for their service centre.
Amortizing term loans is available to automobile dealers for purchasing the properties
for The business expansions and new dealerships.
Working capital term loan is available to automobile dealers to find core working
capital / supplement the working capital requirements.
# Inventory Funding
Inventory Funding is available to automobile dealers to finance the working capital
requirement.
Retail linked trade Advance :
Dealer inventory funding facility is linked to retail business source through dealership
counter. It is unsecured / semi-secured advances. Generally the exposure is capped at
Rs. 1 crore based on the dealer’s working capital requirement and credit assessment.
Wholesale finance facility :
It is a semi secured advance available to automobile dealers and is linked with the
Retail business. The maximum exposure under this is Rs. 5 Crore based on the
dealers working capital requirement and credit assessment.
Floor Finance / Single Payment Gateway Plan :
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This caters to the entire working capital requirements. The facility is similar to the
Cash Credit / Over Draft products of banks. The credit exposure is based on the
dealers working capital requirement of credit assessment. Under this products ,
KMPL is the exclusive financier for inventory funding needs of the dealership.
Criteria for applying loan through KMPL
The following is the list stating the person, trust or companies who can avail loan
from KMPL :
- Salaried individuals in the age group of 21 years – 65 years.
- Self employed individuals in the age group of 21 years – 65 years.
- Partnership Firms
- Public and Private Limited Companies.
- HUF’s and Trusts.
Salaried Individuals
Eligibility criteria :
- Minimum age of applicant must be 21 years.
- Maximum age of applicant at the time of loan maturity is 65 years.
- Minimum income should be at least Rs. 1,00,000 per annum.
- Minimum employment of 6 months.
Documents required.
Identity proof - passport , PAN card, election ID card or license.
Income Proof – latest salary slip with form 16.
Address proof - ration card, license, ID card, passport, phone bill or PAN card.
Salary Bank Statement.
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Self Employed
Eligibility Criteria
- Minimum age of the applicant must be 21 years.
- Maximum age of applicant at the time of loan maturity must be 65 years.
- Minimum employment – at least 2 years in business.
Documents Required.
Identity proof - passport, PAN card, election ID card or license.
Income Proof – latest ITR
Address proof - ration card , license, ID card, passport, phone bill or PAN card.
Business Bank Statement
Application Process.
The process of applying loan in KMPL is a 7 steps process. The steps involved
are :
1. Getting Information :
The prospect can get the information on KMPL in a number of ways .
this includes :
- Send Mail to [email protected]
- Visit KMPL or call up any Branch Office.
- Apply on-line.
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- Can send SMS CF < followed by name of your city > at 5675788.
2. Receiving KMPL office :
Kotak offers tailor made schemes based on the customer needs and they are free
to Choose from the schemes made available.
3. Documentation :
Once the vehicles, product and scheme are finalized it will be fine for us to
initiate the process of making finance available to the customers as soon as
possible. In order to process the loan the application smoothly, the previously
mentioned statements of the customers are essential.
4. Credit Evaluation :
A field investigation officer will visit the customer for additional information that
will help the company to process the customer’s loan. A KMPL credit officer will
evaluate the customer’s proposal based on the documents submitted by the
customer along with the FI report.
5. Processing of finance :
After the credit approval, the company will enter into an agreement with the
customer and collect the post dated cheques and ECS mandate.
6. Delivery of Car :
The time has finally arrived at this step, since at this point of time the customer
can take the delivery of their own car.
7. Recovery Agreement :
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At the time of delivery, the customer must ensure that he collects the invoice from
the dealer. Usually registration takes minimum 9 days to 10 days hence the
customers are expected to follow up with their dealer / DSA for the receipt of the
same. The customer must also make sure that the vehicle is insured under
comprehensive insurance plans giving the during the loan period. The company
will send the agreement copy and repayment schedule to the customer at their
correspondence address within 15 days of the loan disbursal.
ALLIANCES AND PARTNERHIP
KMCC is a strategic joint venture between Kotak Mahindra Bank limited and the
Goldman Sachs group . The Brokerage, Distribution and Research functions are
looked after by the Kotak Securities (KS) another joint venture with Goldman Sachs .
KMCL together with KS is a full Service Investment Bank bringing to our clients.
The global reach and enterprise of Goldman Sachs and the local knowledge and the
skills of Kotak Mahindra.
For the employees:
The company also has tie-ups with various external training bodies and institutions
and provide our employees an easy access to open market programs on diverse topics
through the year.
INDUSTRY AFFILIATIONS :
As an investment bank KMCC is registered with the SEBI and is also registered as a
non-banking financial company with RBI. KMCC has a subsidiary company, Kotak
Mahindra Securities Limited ( KMSL ) which looks after the debt broking and which
is registered with NSE .The company is an active member of the Association of
Merchant Bankers of India ( AMBI) . KMSL is a member of the Association of NSE
members of India. The U.K subsidiary with the securities and futures Association and
the US subsidiary with the Securities Exchange Commission.
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3.4 CERTIFICATIONS, AWARDS AND RECOGNITIONS
Kotak Mahindra has received a number of Awards and Certifications at both the
national and international levels. These recognitions is on its various field of
functions including Banking, Insurance, securities, investment banking, asset
management, International asset management. Miscellaneous and wealth
management.
Banking :
ICAI Award :
Excellence in Financial Reporting under Category 1 - Banking
Sector for the year ending 31st March, 2010 .
Asiamoney :
Best Local Cash Management Bank 2010
IDG India :
Kotak won the CIO 100 'The Agile 100' award 2010.
IDRBT :
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Banking Technology Excellence Awards Best Bank Award in IT
Framework and Governance Among Other Banks' - 2009
Banking Technology Award for IT Governance and Value Delivery, 2008.
IR Global Rankings :
Best Corporate Governance Practices - Ranked among the top 5
companies in Asia Pacific, 2009 .
FinanceAsia :
Best Private Bank in India, for Wealth Management business,
2009.
Kotak Royal Signature Credit Card :
Was chosen "Product of the Year" in a survey conducted by
Nielsen in 2009
IBA Banking Technology Awards :
-Best Customer Relationship Achievement - Winner 2008 & 2009
- Best overall winner, 2007
- Best IT Team of the Year, 4 years in a row from 2006 to 2009
- Best IT Security Policies & Practices, 2007
Euromoney :
Best Private Banking Services (overall), 2009 .
Insurance :
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- Outlook Money
Kotak Platinum Advantage Plan - Ranked 1st in Type II ULIP category, 2008
Kotak Long Life Wealth Plus Plans - Ranked 4th in the Type I ULIPs
category
Securities :
FinanceAsia
Best Broker in India - 2010
CNBC Financial Advisor Awards
Best Performing Equity Broker, 2008 & 2009
Asiamoney Brokers Poll
Best Local Brokerage, 2006, 2007, 2008 & 2009
Best Analyst in India – Sanjeev Prasad, 2005, 2006, 2007, 2008 & 2009
FinanceAsia Country Awards for Achievement
Best Broker in India, 2006, 2009 & 2010
Thomson Extel Surveys Awards
India's Leading Equity House, 2007
SuperBrands Council of India
Business Super brand India, 2008
Investment Banking:
Finance Asia
Best Investment Bank in India, 2010
Best Equity House in India, 2010
Best Broker in India, 2010
Asia money
Best Domestic Equity House, 2010
Best Local Brokerage in the Asia money Brokers Poll – 2010
Global Finance
Best Investment Bank in India, 2010
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Euromoney Real Estate Poll
Best Bank for Equity Finance in India, 2010
Asset Asian Awards
Best Domestic Investment Bank, 2010
FinanceAsia Country Awards for Achievement
Best Investment Bank in India, 2006, 2007, 2008, 2009 & 2010
Best Equity House in India, 2008 & 2010
Asiamoney Best Domestic Bank Awards
Best Domestic Equity House, 2008, 2009 & 2010
IFR Asia
India Equity House of the Year, 2008
Global Finance
Best Investment Bank in India, 2008, 2009 & 2010
Asset Asian Awards
Best Domestic Investment Bank, 2006, 2007, 2008 & 2009
Asset management :
ICRA Mutual Fund Awards 2009
Kotak Liquid (Regular Plan) - Ranked as a Seven Star Fund for its 1 year
performance
Kotak Flexi Debt Fund - Ranked as a Five Star Fund for its 1 year
performance
Kotak Flexi Debt Fund - Ranked as a Five Star Fund for its 3 year
performance
Kotak 30 - Ranked as a Five Star Fund for its 3 year performance
International Asset Management :
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Global Investor (Editorial Award)
Asian Asset Manager of the Year, 2009
Miscellaneous:
Businessworld
'Most Valuable CEO' overall, 2010 awarded to Mr. Uday Kotak, Executive
Vice Chairman & Managing Director
CNBCTV 18
'Best Performing CFO in the Banking/Financial Services sector by CNBCTV
18 CFO Awards 2010 awarded to Mr. Jaimin Bhatt
GIREM
GIREM awarded Kotak Realty Funds Group, the "Investor of the Year"
Award for 2009
IBA Banking Technology Awards
Best Use of Business Intelligence - up, 2008
Best Enterprise Risk Management - Runner up, 2008
The Great Places to Work Institute, India
Best Workplaces in India, 2008
Hewitt
10th Best Employer in India, 2007, 2008 & 2009
Financial Insights Innovation Award
Best Innovation in Enterprise Security Management in the Asia Pacific
Region, 2009
Frost & Sullivan
Best Passenger Vehicle Finance Company in India, 2006
CNBC TV 18
Indian Business Leader of the Year, 2008 awarded to Uday Kotak, Executive
Vice Chairman & Managing Director .
Wealth Management
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FinanceAsia
Best Private Bank India – FinanceAsia 2010
3.5 BUSINESS PERFORMANCES
PRODUCT MIX
Product Mix contains mainly the following 2 contents :
1. High yield products where the risk is high like :
- Personal loan.
- Used Car Financing.
2. Low yield products where the risk is low like :
- New car financing.
SCHEMES
A ) Margin Money Scheme –
In this scheme KMPL part finance the car from 65% - 90% for
certain models. The customer will have to make down payment for the margin
amount. The financed amount can be repaid through Equated Monthly Installments.
B) Advanced EMI Scheme –
In this scheme the customer has to pay few installments upfront.
The balance is payable through EMI. It helps the customer to pay off the loan faster.
CUSTOMERS OF KMPL
The customers of KMPL are of two types :
1. External customers: includes the customers and dealers.
2. Internal customers: includes all the employees.
MARKET SEGMENTATION
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It can be in two ways. They are product wise segmentation and customer wise
segmentation.
Product wise segmentation like luxury cars, premium cars, standard cars, new cars
and used cars. Customer wise segmentation like government, employees.
Businessmen. NRIs etc.
MANAGEMENT STYLE OF KOTAK ( Working of MBO)
The entire working of Kotak Mahindra is based on MBO ( management by
objectives). In each quarter every division has to decide its own objectives and
targets. This target is fixed by superiors and subordinates jointly. So each person has
Key Results Area (KRA ) and that person is reasonable for achieving his targets.
KRA can be function wise and target wise. Sometimes they may have to redefine
KRA’s due to the impact of external environment. For example, if KRA is defined on
the basis of expectation that the industry will grow by 10 and it may decline by that
much percentage instead of growing. In such cases KRA’s will be redefined. Senior
sales manager is responsible for state wise sales target and Senior Sales Executive is
responsible for functional targets. In each quarter company makes appraisal on the
performance of that quarter. It follows 360 degree methods of appraisal . So each one
will be evaluated by himself, superiors and subordinates. As per the appraisal they
categorize the performances as mentioned below :
Tab 3-2 APPRAISAL CRITERIA
Outstanding – 150% above target
Exeeds expectation – 100%-150% above target
Meets expectation – 80%-100% of target
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Below expectations – below 80% of target
The salary and incentives in Kotak is based on performance. So outstanding and
exceeds expectation performance will invite higher salary, incentives and promotion,
performance below expectation will be counted as bad performance.
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IV ORGANIZATIONAL STRUCTURE
4.1 CORPORATE STRUCTURE
The Corporate Structure of Kotak Mahindra is as shown in Fig 4-1 :
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Fig 4-1 CORPORATE STRUCTURE OF KOTAK MAHINDRA
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CHIEF EXECUTIVE OFFICER
REGIONAL MANAGER
OPERATIONS DEPARTMENT
COLLECTIONS DEPARTMENT
MARKETING DEPARTMENT
CUSTOMER SERVICE DEPARTMENT
OPERATIONS EXECUTIVES
FIELD COLLECTION STAFF SALES PERSON CUSTOMER SERVICE EXECUTIVE
4.2 BUSINESS LEVEL STRUCTURE
4.2.1 MARKETING DEPARTMENT
55
Since Kotak Mahindra is an automobile finance company, the role of marketing
department is very important. It focus on those activities which places the company in
to the minds of its prospects. The department structure is a four level hierarchical
structure headed by the Marketing Manager. The marketing department has about 30
– 35 employees. The other employees include the Chief Marketing Executives,
Marketing Executives and Marketing Executive trainees.
FIG 4-2 MARKETING DEPARTMENT STRUCTURE
4.2.2 FINANCE DEPARTMENT
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Marketing Manager
Chief Marketing Executives
Marketing Executives
Marketing Executive Trainees
Finance Department controls the monetary transactions of the company. The
department comprises of a Finance Manager, Asst. Manager (Finance), executives
and accountants headed by the Finance Manager. There are 10-15 employees in this
department.
Fig 4-3 FINANCE DEPARTMENT STRUCTURE
4.2.3 CUSTOMER RELATIONS DEPARTMENT
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Finance Manager
Assistant Manager (finance)
Executives ( finance)
Accountants
Customer Relations Department deals with the customer relations and all other
customer related issues. If the customers are not satisfied with the services the
organization cannot sustain in the market. The head of this department is the
Customer Relations Executive. He is the person who deals with the grievances and
other related concerned problems. Other employees includes Asst. Customer
Relations Office, Office assistant and Receptionist.
Fig 4-4 CUSTOMER RELATIONS DEPARTMENT STRUCTURE
4.2.4 HUMAN RESOURCE DEPARTMENT
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Customer Relations Officer
Asst. Customer Relations Officer
Receptionist Office Assistant
Human Resource Department deals with the needs and wants of the employees of the
organization. This department takes decisions regarding the appointment of the staff
in the organization and also regarding the duties to be assigned to the staff in the
organization. The department is headed by the HR Manager, other employees
includes HR Executive, Asst. Manager and the Department staffs.
Fig 4-5 HUMAN RESOURCE DEPARTMENT STRUCTURE
4.2.5 OPERATIONS DEPARTMENT
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H R MANAGER
H R EXECUTIVE ASSISTANT MANAGER DEPARTMENT STAFF
The Operations Department does the duties related to the processing of loans and
other concerned affairs with the customers. Thus, the department is in charge for the
processing of loans of the customers. It is also in charge of entering details of the
customers in the database of the company. The department has a Branch Operations
Head, staffs and their assistants.
Fig 4-6 OPERATIONS DEPARTMENT STRUCTURE
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Branch Operations Head
Staffs
Assistant
V . FUNCTIONAL ANALYSIS
5.1 MARKETING DEPARTMENT :
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Marketing department is the back born of the company. The department is headed by
a Marketing Manager , who the executives under him. The head of the department
gives instructions to the executives regarding the tools to increase the sales and
selection of the customers.
The main duty of this department is to market their products and make the company
more profitable. This department is marketing the different types of loans to the
customers and they are making the top in this industry. The Manager will guide the
executives and all the final decisions are taken by him regarding the granting of loans
and the other related affairs. The executives who are appointed in the marketing field
are supposed to obey the guidelines given by the department head. The manager will
assign certain jobs for different executives and they are given clear guidelines also.
This department is also interested to increase the market share of the company and
they are succeeding in that effort. The top management is enquiring about the sales to
the marketing manger only. They are supposed to give all the details regarding the
concerned field to the management. Kotak Mahindra is having a very effective
marketing wing and all these wings are under the control of the Marketing Manager.
Fig 5-1 Marketing Flow
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Framing the Scheme
Not satisfied
If satisfied
The marketing flow of Kotak Mahindra starts with the framing of various schemes
which is available on the loans offered on the various automobiles. Once these
Schemes are framed, the company starts thinking about the marketing channels that
can be used to make the customers aware of the newly framed Schemes. The
company usually uses the channels like internet, Television, direct marketing,
hoardings and also used to hold counters on various fairs and festivals. Once the
schemes are communicated to the customers, they have the freedom to accept or
reject. If the customers feels satisfied on the Schemes, they will accept the offer and
takes loan. If he or she is not satisfied, then the customer rejects the offer and the loan
is not taken.
The marketing department has about 30 – 35 employees . The employees includes the
Marketing Manager, Chief Marketing Executives, Marketing Executives and
Marketing Executive trainees. The Marketing Manager sets the sales target for the
time period as per the decision of the management and communicates it to the other
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Marketing channels used
Informing the Customers
No loan is taken
Takes the loan
employees of the department. The employees are provided with incentives if the
targets are met on time as specified.
5.2 FINANCE DEPARTMENT
The finance department deals with the financial activities of the organization. Here,
the officials are experts in the financial fields. This department is headed by an
eminent Financial Manager, who can make the financial details of the organization up
to date. Every year an audit will be conducted for checking the financial position of
the organization and to check the corrections of the accounts.
The Finance Manager will give proper guidelines to the accounting staff and he will
go through the accounts for verification .The accountant and all the other accounts
related staffs are included in this department of the organization. Every day all the
accounting details will be included in the day book. And these details will be signed
by the Financial Manager.
At the time of auditing , the accounts will be presented before the auditor appointed
by the Management. The Finance Department gives clear idea to the top management
regarding how the company is running. Every day all accounts will be settled by the
Finance Department.
Here the details regarding the given loan amount, repayment from the customer and
all are being recorded. The finance department will give clear instructions to the top
management and to the concerned officers regarding the financial position of the
organization by reporting it to the top management only they can take necessary
steps.
The Assistant Manager ( finance ) will be having the charge in the absence of the
Finance Manager. He is supposed to take all the decisions in the absence of the
finance manager. The executives will be assisting the finance manager in his duties.
They all will help the manager in taking actions in the office. The accountants are the
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people who records the financial details into the books of accounts. The mistakes will
be found at the time of audit. The auditor will be checking all the accounts.
The Finance Department will be dealing with the interest rates and the other related
areas. They all are giving information to all the top management in all the matters
regarding the financial stability and the other concerned areas.
AUDIT DETAILS
Audit Committee
The Audit Committee consists of Mr. Deepak Gupta, Chairman, Mr Jaimin Bhatt and
Mr. Chandrashrekhar Sathe. The Quorum comprises of any two Directors.
Auditors
The Company’s auditors Messrs. Deloitte Haskins & Sells, Chartered Accountants,
Baroda, retire at the Eleventh Annual General Meeting. Messrs. Deloitte Haskins &
Sells, Chartered Accountants, Baroda, have consented to act as Auditors of the
Company and are eligible for reappointment.
The audit works of Kotak Mahindra is outsourced to Delloite. The following is the
Auditor’s report submitted to the Kotak Mahindra by them in the financial year 2007:
To The Members of Kotak Mahindra Prime Limited
1. We have audited the attached Balance Sheet of Kotak Mahindra Prime
Limited as at 31st March, 2007, and also the Profit and Loss Account
and the cash flow statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
company’s management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards
Generally accepted in India. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether
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the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956 and on the basis of such
checks of the books and records of the company as we considered
appropriate and according to the information and explanations given
to us, we give in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
5.3 CUSTOMER RELATIONS DEPARTMENT
Customer Relations Department deals with the customer relations and all other
customer related issues. Nowadays , customers are very important for the
organization. If the customers are not satisfied with the services the organization
cannot survive. Thus the head of this department is the Customer Relations
Executives. He is the person who deals with the grievances and other related
concerned problems.
A Customer Relations officer will be appointed under him to solve the problems of
the customers. This department is very essential for the smooth functioning of the
organization. If this department is not functioning properly many problems will be
there for the customers.
The Customer Relations Department is very essential in an organization as this
department is deals with all the matters concerned with the customer satisfaction. So
for making the customers satisfied, this department must function properly. In every
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organization, a customer relations officer is selected with due care. Thus the customer
relations officer is appointed next to the customer relations executives. He is having
the charge in the absence of the customer relations executives.
The main duties of the department are:
Clarifying the doubts of the customers.
Give support for the customers when they come to the office.
Helping them in solving the problems.
Report them the matters or affairs concerned with them that occurs in the office.
Taking actions according to the customer’s interest.
Making the customers at ease when they are approaching the office.
Kotak gives much importance to their Customer Relations Management. It has much application in the field of financial services. In most cases old customers will become new customers or they bring new customers. Company sends feedback forms to customers to collect their opinion as part of maintaining customer relations, it provides three customer oriented products. They are :
1. Pre – approved loan. (Personal loan)
2. Loyalty Scheme: when old customer comes for a new loan he gets 1.5 of the value of old vehicle or 85 % of the vehicle value whichever is higher.
3. Advantage in rate: when an old customer becomes new customer he will get the loan at a rate, which is, less than the prevailing rates.
The customer care department has mainly 3 functions:
A) Customer Queries :
On the balance outstanding, date and amount of EMI foreclosure amount, validating foreclosure, RTO confirmation etc.
B) Closing of loans :
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When customers close their loan the company has to issue No
Objection Certificate (NOC) to cancel the hypothecation. Issuing NOC
is a function of Customer Care Department.
C) Balancing Confirmation :
Customers may enquire about the balance remaining as principal,
interest paid and payable for various purposes like filing tax returns. They
may ask for account statement, repayment chart etc.
Customer Complaints
The different types of complaints are:
- Agreement copy not received.
- Sales Complaint.
- Collection Complaint.
- EMI banking Complaint.
- Operations Related Complaint.
Complaint handling process
The process involved in handling the complaints are as mentioned
below :
Discuss the complaint with the customers
Entering into the complaints log.
Forward to another department.
Close the entry in the complaint book with a note of action taken.
Review by the branch manager.
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Customer requests:
Repayment schedule.
Statement of account.
Letter for penal charges.
NOC on termination of contract / foreclosure.
Foreclosure statement.
NOC for duplicate RC book.
5.4 OPERATIONS DEPARTMENT :
Operations Department plays an important role in the organization. This
department deals with all the accounts of the firms and with the customers.
The Operations Department does the duties related to the processing of loans
and other concerned affairs with the customers. Thus, the department is in
charge for the processing of loans of the customers. It’s also in charge of
entering details of the customers in the database of the company.
Role of Operations department in Kotak Mahindra:
Regional operations control department is situated in Chennai. It is the
topmost body of the Operations Department. All the payments and receipts
regarding the loans are all recorded in this department. From this department,
NOC’s are issued to the customers. If a customer closes his entire loan
account he or she will ask for their NOC. Then from the custom service
department, a request for NOC will be sent to the head of the department in
Chennai showing all the details of the repayment of the loan. From these, the
NOC will be sent to the customer service. The Operations Department is a
controlling mechanism and service department to other departments.
Company has policies for everything. For example, the branch head can issue
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a loan up to a specified amount. Above that limit it needs permission from the
corporate office. Operations Department checks whether all these policies are
being followed or not. So it’s a policy checking functions too.
The 3 basic functions of Operations Department are:
1) Folder checking and disbursements :
Folder checking means checking that all various required documents are
there or not. After checking all documents it sanctions amount of loan and
disburses it to the dealer through the Demand Draft.
2) Banking Function :
Operation Department sends cheques given by customer on due date foe
collection. Also it collects all dues and penalties from customers directly
as well as from collection agent.
3) NOC on termination of hypothesis :
Issuing the NOC in the case of period over foreclosure.
Legal compliance is also a function of the Operations Department. All the legal
compliance like sales tax, service tax, tax liabilities of employees and liaison with the
bank is dealt by the Operations Department.
5.5 HUMAN RESOURCE DEPARTMENT :
Human Resource Department deals with the needs and wants of the employees of the
organization. This department takes decisions regarding the appointment of the staff
in the organization and also regarding the duties to be assigned to the staff in the
organization. The department plays an inevitable part in the organization since it
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takes actions for making the employees satisfied with the working atmosphere and the
environment as such.
The head of this department is the Human Resource Manager (HR Manager ). He
takes all the important decisions in the Human Resource Department. Some of the
main duties of the Human Resource Department are:
Appointing appropriate people for the appropriate jobs in the organization.
Making good working atmosphere for the employees n the organization.
Meeting the needs and wants of the employees.
Conveying the needs and wants of the employees to the top management.
Providing necessary needs for the employees for performing them better in their assigned tasks.
Conducting interviews and tasks for the employees and also for the people who are applying for the certain jobs.
Making a good selection from the group.
Giving promotion to the right person at the right time.
These are the main duties and functions that are concerned with this
department. It’s very essential for the employees of the organization to be
satisfied with the services provided by the company. Otherwise they will not
do their duties properly. This department acts as a Link between the top
management and the employees. Under the Human Resource Manager, an
executive will be there to help the Manager in coordinating all these affairs.
The Human Resource is one of the vital factor behind the success of every
organization. So for managing these manpower, an eminent person is very
essential. So the manager will be more close to the employees and he will
know all the problems related to the employees. The HR Manager will try to
provide as much as the facilities to the employees of the concern.
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All the final appointments of the company is made at the head office at
Mumbai. The job aspirants can apply directly to the branch office. The branch
office will forward their application to the Mumbai office. The HR manager at
the head office will scrutinize the application forms and will accept the
candidate if he is qualified and stands with the job specification and job
description. Thus the final appointment will be made at the Mumbai office.
5.6 COLLECTIONS DEPARTMENT :
Collection Department does the duty of collecting the money from the customers as the repayment of loans and also as down payment and other sort of cash inflows to the organization. The main duties of this department are as follows :
Collecting down payment from the customers.
Collecting the monthly installments.
Sending the collection agents to the particular destinations.
Making sure that the people are correctly repaying the amounts.
Informing people regarding the cheques and other concerned details.
Allocate collection agents to different locations.
In other words, collection department mainly deals with default in
installments and its collections. The functioning of the department is as
follows :
Customer has to give post-dated cheques while obtaining loan. Operations
Department sends these cheques to banks for collection. Collection
department’s work starts when the cheque bounces. When the 1st cheque
bounces , the company will allow the customer to settle down it . If the
customer doen not pay it in time and if the 2nd cheque too bounce, the
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company will send legal notice to the client. If the third cheque also bounce,
the company will start recovery steps.
Once the recovery steps starts the customers has to pay off the entire amount
which includes the principal amount , interest and other costs.
Costs include :
o Rs. 259 per each bounced cheque as dishonor fee.
o 3% of EMI per month as overdue expenditure.
o Commission of collection agents as collection expenses
o Legal costs and other expenses.
Once the vehicle is recovered , company will start to sell it off to get back its
money. Before that it gives an opportunity to the customer to repay the entire
amount within a period of 7-14 days. If the company gets excess amount
through sales then the excess portion will be passed to the customer. And if
there is loss and such loss is less than Rs. 50,000, it will be written off. If it is
more that Rs.50,000 , legal actions is taken. Collection of default is done
through private collection agencies.
5.7 SALES DEPARTMENT :
Sales Department is responsible for achieving the sales target. The department
deals with financing of new cars and used cars, personal loans, refinancing etc. It
functions mainly through Direct Marketing Associates (DMA’a). Thus DMA’s are
the core part who brings sales to the company.
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Fig 5-2 SALES FLOW
The following is the Sales Flow Process at KMPL:
If satisfied If not
Satisfied
Sales Flow starts with the Customer. When the customer decides to take an
automobile loan, he can contact the dealers of Kotak Mahindra. The dealers are
available at almost every car showrooms. The dealer informs the customer about the
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Customer Dealers
No loan taken
Scheme 1
Scheme 2
Scheme 3
Agreement Down payment
Down payment
Delivery
Installments Follow up
various schemes of loans available to them on different cars. If the customer is
satisfied and impressed with the scheme available, the agreement is signed between
the customer and the company. The agreement will clearly specifies the amount of
loan taken, down payment amount and the number and amounts of installments.
After signing the agreement, the customer pays the down payment and makes the
delivery of the car. Then the customer pays the first installment as per the agreement
made and this is continued till the loan amount is paid in full.
5.8 CUSTOMER CREDIT DEPARTMENT :
Customer Credit Department has a Credit Officer who will evaluate credit worthiness
of the customer based on the documents submitted by him along with the field
investigation report. A field investigation officer will visit the customer for additional
information that will help to process the loan.
Credit Evaluation is mainly based on 5 C’s. They are:
1) Character
2) Commitment
3) Consistency
4) Capacity
5) Collectability
Each department docket must contain the following:
Application form
Field investigation report
Pricing matrix showing the scheme
Credit Evaluation Scorecard.
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Functional documents obtained for taking credit direction like:
- Salary Certificate (form 16).
- Land Ownership Forms.
- Audited annual accounts.
- Income tax return
Credit Approval Process
Credit Approval Process is a 16 step process. It includes the
following :
1) Application with other document.
2) Credit evaluation.
3) Credit history of customer with Kotak or any other group company.
4) Field Investigation Report.
5) Identity Proof.
6) Signature Verification.
7) Finance Company / Bank Reference .
8) Employment / business.
9) Rejection.
10) Score Card – Company has a Score Card to assess the customer and the risk. Financial Information
11) CIBIL
12) Guarantor’s financials
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13) Exposure approval ( it’s the amount financed by KMPL to its customers )
14) Credit evaluation.
15) Approval /
16) Credit Appraisal Report: Prepared by the credit appraisal officer after credit evaluation.
QUALITY
KMPL has established a centralized customer service activity to ensure high quality and timely responses to the customer needs. The robust system platform ensures the above standards are met. KMPL’s launch of the website is a commitment by the organization to provide all the stakeholders including customary accurate and up to date information. These all are very useful. The company is giving loans for the loans for the customers on the basis of their repaying capacity and their financial background too. The different services offered by Kotak Mahindra are :
Collection agents to collect the cash from the customers home or office.
Easy documentation procedure.
Fast and flexible finance schemes.
Eminent executives to give correct information.
Very efficient customer care department.
Website to give all details regarding the organization.
Offices in all parts of the state for easy access.
Well organized management.
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VI . ORGANIZATIONAL ANALYSIS
SWOT ANALYSIS
6.1 STRENGTH
Processing Speed:
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The loan processing speed is very high at Kotak Mahindra. It takes
maximum 1 week for the KMPL customers to access their automobile finance
from the company since their application.
Customer Satisfaction:
Kotak Mahindra Prime Limited (KMPL) is a customer centric organization having
dedicated customer service personnel servicing our customers keeping in mind the
following values:
-Ownership
-Accuracy
- Transparency
KMPL has dedicated customer service desks at Kochi providing personalized service
thereby ensuring faster resolution and minimum turnaround time. KMPL has
evolved into centralized customer service activity to ensure high quality and timely
response to customer needs. The robust system platform ensures the above
standards are met.
Ranked 6th among the private players out of the best 10 in India :
KMPL is rated as the 6th Best Automobile Finance Company in India. This is
one of the strength of the company.
4th in Brand Awareness :
KMPL is ranked as the 4th in the Brand Awareness in Automobile Finance
industry in urban area.
6.2 WEAKNESS
Limited branches :
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The company is having a very limited branches in face only a branch at
cochin. This is one of the limiting factor of the company.
Slow Career development:
Even though the company is offering a good package to its employees , the
career path for its employees is very slow moving. The company demands
years of experience in the concerned department to get promoted to the next
higher level.
Preference of people for nationalized banks :
The customers still show a preference to the nationalized banks because of its
assurity. This is one of the most important weakness of KMPL.
6.3 OPPORTUNITIES
The company provide limited automobile financial services abroad. There is a
great opportunity for the company to expand its business abroad.
Changing lifestyles of the people is another big opportunity for KMPL to
explore its business .
Getting close to the customers is the key element of KMPL. Its well exercised
by the company at the present status and its also an opportunity for the
company to proceed with.
6.4 THREAT
Managing Multi cultural and multi geographical workforce :
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The multi cultural and multi geographical workforce is a major threat for the
company. It’s high time for KMPL to cope up with these societal changes.
The scenario prefers change in the government policies. There is a very
limited support from the government for the improvement of private financial
players.
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VII FINDINGS AND CONCLUSION
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The study helped to understand the working style of KMPL. The company facilitates
its business through its various departments. It was understood that the
departmentalization at KMPL is very apt and its one of the core factor that facilitates
the functioning of their business activities. The crux of the company’s structure is
undoubtedly their perfect bonding with customers and employees. It was also seen
that the company is offering very healthy and friendly services to their customers.
The organization do hold a separate wing for their customers which always keeps in
touch with their customers. The organization has a separate wing for their customers
itself. Apart from the customer care, the company provides a good and friendly
working environment for their employees. The Human Resource department is very
active in the organization. The employees are free to approach their department heads
at times of any emergencies and can also give their suggestions to the management
which will accepted for sure if it support the status on demand. The focus on the
betterment of the customers and employees is the forcing factor that keeps the
company and their employees and customers together forever resulting in the
prosperity of the business both in terms of profitability and satisfaction. The
opportunities of the company involves the changing lifestyle of the people. The
people in the current society, especially the young generation is now demanding a
better lifestyle in which owning an automobile is a vital part. The company must
utilize this opportunity and introduce attractive options to their customers. The
company has a lots of challenges on its way, wherein the competitor’s challenge form
the major part. The major competitors are the HDFC bank and ICICI bank. Its
recommendable to the company to focus more on the statistical methods to mitigate
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and overcome these challenges like the trend analysis and moving averages to
identify the trend of automobile sales. It is a fact that the company is doing its best to
incorporate all its strengths and that is the main reason that made the company to fit
into the list of the BEST TOP 10 AUTOMOBILE FINANCE COMPANIES in India.
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BIBLIOGRAPHY
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3. Sharma R.K., Shashi K. Gupta. ‘Management Process & Organizational Behavior’. Kalyani Publishers, 2009.
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accounts”
5. http://www.kotak.com/Kotak_GroupSite/annual_reports_flash/fy06-07/
report/kmprime.html ( Access : May 20110
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