Indian Institute of Planning and Management, New

Indian Institute of Planning and Management, New Delhi.
THESIS
ON
BUSINESS MODELS OF NBFC`S IN INDIA
INTERNAL GUIDE: EXTERNAL GUIDE:

PROF. VIJAY KR. BODDU MR. ASHISH SHARMA.
SUBMITTED TO:
PROF. SUMANTA SHARMA
DEAN (PROJECTS)
SUBMITTED BY:
NAMRATA GUPTA
ALUMNI ID NUMBER: DS/08/10-M-227
PGP/SS/2008-10
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Table of Contents
Letter of Approval ………………………………………………………………………7
Letter of Originality …………………………………………………………………….8
Thesis Synopsis ………………………………………………………………………..9
Abstract…………………………………………………………………………………14
Micro Finance Sector and Religare…………………………………………………15
Infrastructure Sector and why IDFC………………………………………………..15
Literature Review ………………………………………………………………..…...17
IDFC Product
Structure………………………………………………………………………………..17
Senior Debt
Management…………………………………………………………………………..17
Mezzanine products ……………………………………………………………… 17
Proprietary
equity………………………………………………………………………………….18
Private
Equity…………………………………………………………………………………18
Treasury……………………………………………………………………………..19
Advisory……………………………………………………………………………. 19
Project
Equity…………………………………………………………………………………21
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Debt Capital………………………………………………………………………………
21
Project Development………………………………………………………………..
……...22
PPP Initiatives…………………………………………………………………… 22
Results…………………………………………………………………………… 23
Key findings……………………………………………………………………… 26
Future Outlook……………………………………………………………………27
Report
Card…………………………………………………………………………………29
Approvals and
Disbursements……………………………………………………………………..30
Future Outlook and Growth Prospects……………………………………….

………………………………….31
Importance of the business model to Indian

Growth……………………………………………………………………………..32
IDFC Strategy……………………………………………………………………………
32
Recession
Strategy………………………………………………………………………........33
Information gathered on Religare…………………………………………….. .35
Equity and Commodity

trading…………………………………………………………............................36
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The competitive
edge……………………………………………………………………………….36
Online investment
portal……………………………………………………………………………...36
Personal finance
services…………………………………………………………………………..37
Product
offerings…………………………………………………………………………..37
The edge…………………………………………………………………………..37
Loans………………………………………………………………………………38
SME
loans………………………………………………………………………………..38
Commercial Vehicle Loans

………………………………………………………………………………………38
Construction Equipment finance

………………………………………………………...........................................38
Loan against
Property……………………………………………………………………..……..39
The Religare
Edge………………………………………………………………………………..39
Insurance
Solutions…………………………………………………………………..............39
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Life Insurance…………………………………………………………………40
General Insurance………………………………………………………………………
40
Institutional
Spectrum………………………………………………………………………..41
Institutional
broking………………………………………………………………………….41
The Religare
Edge…………………………………………………………………………….41
Investment
Banking………………………………………………………………………….42
The Religare
Edge………………………………………………………………………….…43
Insurance Advisory……………………………………………………………………..
…43
Our Service
Offerings………………………………………………………………………..45
Wealth Spectrum………………………………………………………………46
Portfolio Management
Services………………………………………………………………………...46
The Edge……………………………………………………………………..…46
Arts Initiative…………………………………………………………………….47
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The Film
Fund………………………………………………………………………………47
Results and Future

Outlook…………………………………………………………….....................48
Corporate social
Responsibility…………………………………………………………………….50
Primary Research (IDFC) ………………………………………………………52
Religare……………………………………………………………………………55
Recommendation…………………………………………………………………58
Conclusion…………………………………………………………………………61
Response Sheet 1…………………………………………………………..……65
Response Sheet 2………………………………………………………………..68
Response Sheet 3………………………………………………………………..71
Bibliography
……………………………………………………………………………………….72
Appendix …………………………………………………………………………...73
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Letter of Approval
Dear Chetan Sharma,
This is to inform that your thesis proposal on “Business Model of NBFCs in

India”, to be conducted under the guidance of Mr. Ashish Sharma is hereby
approved and the registration number is DS/08/10-M-227
Make it a comprehensive thesis by ensuring that all the objectives as stated by

you in your synopsis are met using appropriate research design; a thesis should
aim at adding value to the existing knowledge base.
You are required to correspond with your internal guide Prof. Vijay Kr.Boddu
at boddu.vijay@iipm.edu Ph.-0124-3917414 by sending at least four response
sheets (attached along with this mail) at regular intervals before 15 th February
2010 (the last date for thesis submission).
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Letter of originality
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THESIS SYNOPSIS
DETAILS OF THE STUDENT
Name Chetan Sharma (2825)
Section FN-5
Phone No 9910084918
Email Address Chetanpoda2000@gmail.com
Thesis Topic Analysis of Business Models of Indian

NBFC`s
- Conservatism or Growth.
Specialization Area Finance
INTRODUCTION
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The desired area of research is the working of Indian NBFC`s, their Business
Models and the effectiveness of those Models in changing Global Environment.
Analysis of the importance of the Capital Adequacy Ratio for leading Indian
NBFC`s like IDFC, Religare.
A comparative analysis between the conservative approach of PSU NBFC`s and

aggressive approach of private players.
Effectiveness of these models in diverse economic situations like boom and

recession.
RESCERCH OBJECTIVES
1. Through analysis of the business models followed by PSU NBFC`s in

India and Private players.
2. Comparative study between the models.
3. Analyzing the effectiveness of these models in relation to growth and risk.
4. Study of the importance of Capital Adequacy Ratio and reinvestment
strategies of NBFC`s.
5. Average growth in Net worth of these companies by following their
respective business models.
HYPOTHESIS
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Conservatism in Business Models of PSU NBFC`s in India should be preferred
over an aggressive business Model adopted by private NBFC`s.
RESCERCH METHODOLOGY:
Secondary Data: Business models of IDFC and Religare Ltd, Annual reports
and expected future earnings.
Primary Data: Growth rate indicators and factors affecting growth.
Tools Used: Interviews with key personnel’s in IDFC and Religare,

Questionnaires.
Sampling Method: Focus group Interviews, Systematic and stratified sampling.
Sample Size: 6-8
Target Audience: Investors, Private Equity players, industry players and

industrial and commercial infrastructure financing companies.
SCOPE OF WORK:
The scope of work lays in the study of the business models of IDFC and Religare
and their core areas of competency.
Analysis of annual reports of IDFC and Religare, Capital Adequacy ratios and
key data inputs regarding future earnings past performances in recession and
boom economic scenarios.
JUSTIFICATION OF CHOOSING THE TOPIC:
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Capital inflows into developing economies like India have many good effects
especially when it comes to investing in infrastructure, financing projects and
supporting a good economic growth.
But this capital infusion should be supported by a capital base from the
institutions which are financing projects.
Destabilized cash inflows could lead to inflation, exchange rate problems and
affect the domestic financial sector.
Private NBFC`s follow a business model which has a Capital Adequacy ratio of
1:8 which is too risky and aggressive as compared to a ratio of 1:5 by PSU
NBFC`s like IDFC.
So it is an analysis of how a conservative business model is more appropriate for

Indian Financial Sector.
DETAILS OF EXTERNAL GUIDE:
Mr.Ashish Sharma.
Consultant (IDFC)
Currently performing Advisory services for IDFC (Infrastructure Wing), previously

has worked as a Senior Analyst for Mckinsey and Company for two and a half
years.
Academic Qualification:
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B.com (H) Graduate form Delhi University, (Hans Raj College)
Chartered Accountant (ICAI)
SUMMER TRAINING DETAILS:
An analysis of the free float methodology and its importance in calculation of the
index.
Importance of correlation in calculating future stock values and hedging

portfolios.
An analysis of the business model and advisory function of Religare Securities

Ltd.
ABSTRACT
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History of NBFC`s in India
NBFC`s in India are registered companies conducting business activities similar

to regular banks. Their banking operations include making loans and advances
available to customers, acquisition of marketable securities, leasing of hard
assets like automobiles, hire purchase and insurance business.
Though they are similar to banks, they differ in a couple of ways.
They cannot accept demand deposits, they cannot issue checks to customers
and deposits with them are not insured by DGIC. Both RBI and SEBI regulate
NBFC`s in India.
NBFC`s have been around in india for a long time, but have recently gained
popularity amongst institutional investors, since they facilitate the finance and
loans for rural and semi rural areas where the traditional banks are still to reach.
NBFC`s have also played a huge part in developing small businesses and
infrastructure in India, through local presence and strong customer relationships.
Basically,
There are three categories of NBFC’s:
 Asset Financing Companies (“AFC”)

 Loan Companies (“LC”)
 Investment Companies (“IC”)
Micro Finance Sector and Religare:
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There is a huge need of credit in rural India. Roughly 245 million people need
US$ 52 billion of microfinance credit.
The customer base covered by the microfinance is expected to reach 49 million

people by 2012 growing at a CAGR of 43% with an expected loan portfolio of
US$ 6 billion.
The key growth drivers in the microfinance sector are:
1. Need for a broader suite of products: products such as investment

products, insurance products, retirement planning which can be offered to
large consumer base.
2. Regional Diversification: An NBFC should focus on to the vast regional

boundaries of India to make them effective.
3. Market consolidation and entry of FII`s: The smaller NBFC will get
acquired and large FII`s will come in and build franchising models to
accelerate the quality and penetration of mutual funds in rural areas.
Infrastructure Sector and why IDFC:
During the boom of 1990`s the Indian Government implemented many policies
for Infrastructure development with focus on roads, telecommunications, ports
and power. Special purpose vehicles were formed. Most of these were set up as
NBFC`s. The government also implemented (PPP) Public private Partnership.
During the period of 1996-2006, 233 PPP projects were completed with a total
investment of US$69 Billion. The PPP investments grew from US$.6 billion in
1991 to US$17.1 Billion n 2006 representing a CAGR of 25%.
(Source:www.IDFC.com/wwwrbi.org.in)
During the period of 2007-2017, the investment is accepted to accelerate further

fueled by the economic growth and the need to catch up this growth by adding
the right amount of infrastructure. The amount in of investment would be around
US$ 500 Billion. (Source: www.E&Y.com).
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The government of India is setting up new policies to attract at least 50% of the
investment from the private sector. So here the role of NBFC`s like IDFC plays a
very important role.
IDFC
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Product Structure:
Senior Debt Management: forms the largest component of the
company’s portfolio and accounted for 85.6 % of the outstanding disbursements.
Senior debt financing is provided through loans or in the forms of subscriptions to
debentures. Senior debt ranks ahead of other debt obligations of the borrower
with respect of security and payment.
The financing typically bears fixed rate interest with reprising mechanisms
usually effective after 5 years. Additionally senior loans may also be reprised for
changes in the credit quality of the borrower.
The product is generally much secured and has access to the assets of the
projects in case of any default. As on 31 .3 2006 79.3% of our financing were
borrowers to special purpose entities. 35.1% of our senior debt financing there is
a limited recourse to the sponsors where they undertake to meet construction
cost overruns or funding short falls. For 17.8 % of senior debt financing there is
no recourse to the sponsors.
For 26.7 % of our financing we have negotiated personal and corporate

guarantees from one of the sponsors of the projects for the interest and principal
payment obligations.
Mezzanine products :
It comprises of preference capital and subordinated debt.mezzainaine products

are layered in a company’s capital structure between the equity and senior debt
and act as an additional tier in the capital structure. ‘
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These subordinated financing structures have a little more risk than the senior
debt but have the potential of earning higher returns. 4.5% of the total
outstanding financing.
Proprietary equity :
The portfolio was valued at 653 crores. The overall portfolio IRR for all
investments was valued at 37%. Have made equity proprietary investments In
infrastructure related companies:
Gate way Distripark, Indraprastha gas limited.
Power Trading corporation.
Public offering companies such as :
Bharti- tele ventures
Jet- airways
National thermal power corporation.
ONGC
TCS
Tata Teleservices (Maharashtra)
Short and medium term .2.2% of the outstanding DIS.
PRIVATE EQUITY:
Mobilizing and managing third party funds through a wholly owned subsidiary,
IDFC private equity ltd. The company focuses on long Term private equity
investment opportunities and also invests in listed equities in certain
circumstances. The objective is to achieve attractive returns by providing equity
risk capital to early stage and rapidly growing infrastructure focused companies.
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IDFC private equity has a panel of highly regarded advisors and an experienced
team that leverages the client relationships and domain expertise of IDFC.
OTHER PRODUCTS: Guarantees
The company issues guarantees on behalf of projects to grantee their

performance and payment obligations. Our guarantees enhance the ratings of
the underlying financial instruments and enable projects to secure financing from
a wider spectrum of resources, including borrowings from commercial banks,
forgein lenders and debt capital market. They are usually extended by us to
secure the performance obligations of borrowers, such as meeting the license
requirements in the telecommunication and transportation industry.
TAKE OUT FINANCING:
Take-out financing is a method of providing finance for longer duration projects

(say of 15 years) by banks by sanctioning medium term loans (say 5-7 years). It
understands that the loan will be taken out of books of the financing bank within
pre-fixed period, by another institution thus preventing any possible asset-liability
mismatch. After taking out the loans from the banks, the institution could off-load
them to another bank or keep it.
Treasury:
The funding generally includes funding company`s assets comprising of

infrastructure loans , with market borrowings of various maturities and
subordinated debt. The borrowings include bonds, debentures, term loans from
banks and financial institutions, commercial paper, term money borrowings and
certificates of deposits.
Subordinated debt for the company is provided by the government which has a
term of 50 years maturing in 2047, which has an intrest rate of 25 basis points
over the 5 year government bond, and reprises every five years. The bonds of
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the company are rated LAAA by ICRA and AA+ by CRISIL which are the top in
its category.
The primary objective of the investment policy of the company is to prudently

manage the surplus finds so that optimal returns can be achieved. Under the
guidance of the ministry of finance the company aims to use its treasury
operations to manage their liquidity, provide a steady source of income with
minimum risks and increase the overall return on the assets.
Through the operations the company maintains its ability to repay its borrowings
as and when they mature and make new loans and investments as new
opportunities arise.
We invest predominantly in fixed income securities and instruments such as

mutual funds (Consisting of both debt and equity investments), corporate bonds
and bank deposits.
Advisory:
IDFC provides a wide range of fee earning advisory services to infrastructure

development projects and their sponsors. They are mainly of three types:
 Government advisory services.
 Corporate advisory services.
 Project development and consulting services.
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Project Equity:
This product mobilizes and manages third party funds with an objective to deliver
and stabilize long term returns by investing in assets, equity, quasi equity and
convertibles.
The focus here is to create a diversified and a high quality portfolio of operating
and green field infrastructure assets and also use financial engineering to strike
and appropriate balance between yield and capital appreciation.
Debt Capital:
We are the lead arranger of appraisal and structure of products, syndicate the
debt commitments among other financial institutions and also participate in it.
The equity placement business is an extension of our service of assisting
companies in structuring their capital by equity financing. This product gives the
company income in terms of the fee the company charges for the expertise
comments and analysis it does for the company who wants to raise equity.
Here is the list of major deals IDFC has undertaken:
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(Data source: idfc.com)
Project Development:
Project development and consulting services are provided to our clients though
our joint ventures with the states of Karnataka and Uttaranchal to promote
investments in infrastructure through public private partnerships.
The main joint venture in Karnataka was set up as Infrastructure development

corporation (Karnataka) Ltd in 2001 to promote and increase infrastructure
projects in these states, using both private capital and professional management
with strong public sector support. The same was done with the state of
Uttaranchal.
PPP Initiatives:
PPP refers to Public – Private Partnership. It thus provides an opportunity for

private sector participation in financing, designing, construction and operation
and maintaince of public sector programs and projects.
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Results:
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(Source: Annual Report (IDFC) 08-09)
Valuation
EPS (Rs)* P/E Ratio (x) Market Cap (Rs P/BV (x)
7.34 20.13 m) 3.10
191,562.10
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(Source: India bulls Research)
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(Source: India bulls Research)
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Key Findings:
Net interest income rose 88.9% to Rs. 1.87 billion led by 46% increase in the
loan book to Rs. 204.9 billion.
The main contributor was the infrastructure income accounting for about 89% of
the income of 1.66 billion.
The remaining part of the 210 million was counted by income from treasury
operations.
The company`s overall spread increased by 30 basis points to 2.2% over the
year
Noninterest income witnessed a more than two fold rise over the year to Rs.1.3
billion. Income from IDFC-SSKI the investment banking subsidiary of IDFC,
accounted for the majority – 48% of the other total income.
Followed by advisory and other fees that contributed to 27%. However the latter
fell to 10% on year on year basis to Rs.360 million.
Income from principal investments multiplied 3.2 times to Rs.160 million
Operating expenses jumped 184% on year on year basis to 1.3 billion.

Increase in expenses was comprehensive with all components recording high
increases.
Staff and other expenses witnesses a more than 3 fold rise on year on year
basis, while provisions and contingencies increased by around 2.5 times.
(Source: Annual Report IDFC)
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Future Outlook
EQUITY RESEARCH May 21, 2008
Newer ventures and is also witnessing higher expenses on account of
Consolidation with SSKI.
Further, strong growth in income – both net interest income (89% year on year
basis) and other income (more than a two-fold rise) more than compensated for
the expenses and resulted in a net profit growth of c.61% year on year basis.
The balance sheet showed a healthy growth of c.55% year on year basis as the
loan book increased c.46% year on year basis to Rs. 204.9 billion. Gross
approvals increased 54% year on year basis to Rs. 203.1 billion.
In an important development over the year, IDFC has diversified its loan portfolio
across sectors and is moving towards reducing its dependence on any particular
sector.
Outstanding disbursements to Energy and Transportation have fallen,

From 42.4% and 27.3% to 34.3% and 24.2%, respectively.
Outstanding disbursements to Telecom & IT and Industrial & Commercial sector

have increased from 12.1% and 9.7% to 19.1% and 14.6%, respectively. IDFC’s
equity book increased 2.3 times to Rs. 13.5 billion.
(Source: www.Indiabulls.com)
(www.e&y.com)
(www.idfc.com)
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Report Card:
Attribute Value Date
PE ratio 25.57 11/02/10
EPS (Rs) 5.68 Mar, 09
Sales (Rs crore) 880.76 Dec, 09
Face Value (Rs) 10
Net profit margin (%) 22.16 Mar, 09
Last dividend (%) 12 28/04/09
Return on average equity 12.2 Mar, 09
(Source: www.moneycontrol.com)
APPROVALS AND DISBURSEMENTS:
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(Source: Annual Report (IDFC) 08-09)
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Future Outlook and Growth Prospects:
The change of government’s stance from being a financier to a facilitator

suggests that greater number of infrastructure projects would be routed through
public-private partnership (PPP) mode in the long run. This would enable players
like IDFC who fund infrastructure projects in consortiums. In fact, IDFC finances
on an average 25 per cent of the total private sector infrastructure projects in the
country. IDFC’s project financing is its core business and energy, transportation,
telecom and IT (ETT).
(Source: Business week)
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Importance of the business model to Indian Growth:
IDFC was set up in 1997 by the united front government to act as a catalyst for
and help bankroll infrastructure projects in the private sector. IDFC is expected to
do what institutions like IFCI and IDBI have been doing in the past years and that
too without having any bad loans. It had to work its way out of criticisms though
most of it was unfair.
IDFC estimates that it’s spending on infrastructure projects would go to about

$46.5 billion or around 4.7% of India’s GDP.
A recent study by Morgan Stanley estimates that china spent nearly $201 billion
as compared to India. The gap between India and china in terms of infrastructure
specifically roads and power is huge. The major role which IDFC has to play here
is to mobilize resources and use them in a very efficient way to get the maximum
growth.
IDFC Strategy:
The IDFC management team had a two-pronged defense system in place:
First, the concept of project finance for infrastructure was then in its infancy in
India, and IDFC was the first Indian financial institution to focus on the
assessment and funding of projects in areas like roads or ports.
Second, regulations were in a mess and lending to projects in areas where the
basic rules were unclear was bound to be risky.
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Recession Strategy:
In 2009 in the recession, the company reported a year-on-year growth of 75% in

its income from investment banking and broking activities in the September 2009
quarter.
Any finance company derives revenue from fund-based activities and non-fund
based activities — with the latter source known as other income.
At a time when there is hardly any growth in the loan books of lenders, it is the
other income that has bolstered the books of finance companies.
IDFC’s loan book grew by only 3% in the September 2009 quarter, more or less
flat.
(Source: Economic Times and Annual Report 2009)
What also helped the infrastructure projects financier was improvement in

spreads. On a rolling 12-month basis, the IDFC`s spreads touched 2.6%, a near
all-time high, IDFC’s net interest income rose 44%.
(Source: Economic Times and Annual Report 2009)
Interestingly, a good deal of its credit growth has come from the telecom sector.
(IDFC’s outstanding disbursements to the telecom sector increased by 32% in
the September 2009 quarter)..
With interest rates down sharply since last year, the company will find it easy to
maintain the current growth momentum in the next two quarters. Further, it will
also come on the back of depressed spreads in the corresponding period of last
year, when the Indian central bank embarked on a monetary tightening course.
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Investors seem to have cottoned on to this as reflected in the hike in foreign
holding in IDFC, which is now 46.7% compared to less than 40% in March 2009.
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Information gathered on RELIGARE :
1) Methods used: 1) Analysis of secondary data (RELIGARE Website,
Articles in newspapers,
2) Consultation with Mr.Sachin Thakur (Head NCR, Advisory (Religare)) on
the product structure and strategies followed by RELIGARE in usage of those
products.
2) Products Religare:
Retail Spectrum Institutional Spectrum Wealth Spectrum

 Equity and Commodity  Institutional  Wealth Advisory
Trading Broking Services
 Portfolio
 Online Investment  Investment Management
Portal Banking Service.
 personal Financial  Merchant  Priority equity client
Services Banking Services
 Transaction
 Mutual Funds Advisory  Arts Initiative
 International
 Corporate Advisory Fund
 Insurance Finance Management Service.
 Insurance
 Savings Solutions
 Personal Credit
 Personal Loans
 Loans against Shares
Equity and Commodity Trading: The Company ensures you have a

superlative trading experience through -
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 A highly process driven, diligent approach
 Powerful Research & Analytics and
 One of the "best-in-class" dealing rooms
Further, Religare also has one of the largest retail networks, with its presence in
1837* locations across 498* cities & towns. This means, you can walk into any of
these branches and connect to our highly skilled and dedicated relationship
managers to get the best services.
The Competitive Edge (Strategy)
 Pan India footprint

 Powerful research and analytics supported by a pool of highly skilled
research analysts
 Ethical business practices
 Offline/Online delivery models
 Single window for all investments needs through you unique Customer
Relationship Number.
Online Investment Portal: The Company provides a unique service of

availability of all kinds of financial products, services and advisory through the
Internet.
This is something which makes the company easily accessible and with a big
coverage area, both nationally and internationally. The Company also boats of
features such as Zero percent brokerage, Interest on cash margin, exposure up
to 20 times on your cash margin, etc. on our select product schemes available
through our highly sophisticated and customized platform
R-ACE (Religare Advanced Client Engine).
Personal Finance Services:
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Today, more and more people look up to ways and means which can fulfill their
financial aspirations such as Savings, Retirement planning, Tax planning &
Wealth planning, etc. All this coupled with multiple and cut throat competitive
offerings makes it very difficult for an individual to come to a decision and this
leads to the search of a partner who can help an individual understand the
complex investment instruments and make the best use of them to meet his/her
short-term and long-term financial objectives.
1. Product Offerings
 Mutual Funds
 Insurance - Life & General
 Bonds
 Deposits
 IPOs
 Small Savings Instruments
2. The Religare Edge
 Pan India foot print

 Dedicated team of trained and skilled advisors
 Strong pedigree driven by diligent processes and ethical business
practices
 Wide & varied platter of products & services to choose from
 Backed by strong & credible research
Loans:
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Structurally all business are operated through various subsidiaries held through
the holding company Religare Enterprises Limited. One such wholly owned
subsidiary of REL is Religare Finvest Limited registered with the Reserve Bank of
India as a Non-Banking Finance Company (NBFC) and is a Member of CDSL.
Religare Finvest Limited offers loans for all your needs.
SME loans -
As businesses grow, so do their needs. Whether it is for new equipment or

inventory acquisition, new marketing efforts or pure working capital needs, SME
Loans from Religare Consumer Finance can provide the money your company
needs to thrive.
Commercial Vehicle Loans -
Transportation is an essential part of any business and its growth, hence now
with Religare Consumer Finance you can avail Commercial Vehicle loans for
both new and used three-wheeler, multi utility vehicle, light and heavy
commercial vehicles and high end cranes which includes LCV's, Tractor Trailers,
Buses etc.
Construction Equipment finance -
India is growing at a fast pace, to develop its infrastructure with the same pace
Religare Consumer Finance offers loans for purchase of new and used
Construction Equipments and all earth moving machinery which includes JCB,
Excavators, Backhoe/wheel Loaders etc.
Loan against Property -
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Religare Consumer Finance offers the best and hassle free way to en-cash the
value of your Residential or Commercial property to finance your personal or
business requirements. These loans are available for all types of individuals and
companies.
The Religare Edge
 Tailor made solutions to meet your requirement

 Quick & hassle free services
 Easy documentation
 Competitive rates of Interest
Insurance Solutions:
Religare with one of the largest retail networks in the country offers a complete
range of insurance solutions though its 100% subsidiary company, Religare
Insurance Broking Limited (RIBL). The company holds a composite broker's
license operating in the Life, General and Reinsurance domains.
An insurance portfolio is designed from a choice of more than 3000 life and
general insurance products & plans from more than 30 companies. This one
easy window for any brand of insurance, any kind of cover, offers tailor made
insurance solutions with not just the right kind of cover but also the right mix of
cover.
Offerings include:
Life Insurance
 Pure Insurance Solutions
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 Investment Linked Plans
 Guaranteed Saving Plans
General Insurance
 Motor Insurance
 Health Insurance Program
 Travel Protection Schemes
 Package Policies for SMEs
Institutional Spectrum:
Institutional broking:
The Religare Edge:
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 Highly skilled, dedicated dealing, research and sales teams
 Dealing capabilities on the NSE, BSE and in the cash and derivatives segment
 In-depth, detailed and insightful coverage across 16 diverse sectors and 153
companies that extends to
 Economic Research
 Result Expectations
 Derivative Strategies
 IPO Research
 Mutual Fund Research
 Special reports like impact of credit policy, budget, etc.
 The sectors covered are FMCG, Hotels, Media, Pharmacy, Auto, Cement,
Steel pipes, Logistics, Telecom, Construction and much more
 Access to international expertise and global practices established in
mature financial markets
 An international distribution network servicing the needs of institutions &
corporate houses through a large global network and with the ability to
execute globally
Investment Banking:
Our Investment Banking business offered through Religare Capital Markets

Limited (RCML), a wholly owned subsidiary of the holding company, Religare
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Enterprises Limited, deals in merchant banking, transaction advisory and
corporate finance servicing the Corporate, Entrepreneurs and Investors.
Supported by a dynamic team of professionals with proven track record, our

Investment Banking division is backed by in-depth understanding of the
regulatory systems. With our expertise, we create customized capital structures
that are aligned to the customers, business plan and stakeholder objectives.
Through its diligent processes in Investment Banking, Religare wishes to partner

with the midcaps, be it for Transaction Advisory services, Private Equity
placements, Debt Syndication or even entering the Primary Market, ECB, FCCB,
GDR/ADR, etc. Religare's Investment Banking is a one-stop shop for all these
services.
At Religare, our constant endeavor is to forge strong relationships and our

innovation and uncompromising ethical standards that have enabled us to
develop global distribution & execution capabilities.
The Religare Edge
 Excellent track record in deal closing and capital raising
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 End-to-End solution delivery capability and in-depth understanding of the
regulatory systems.
 Global presence with offices operating in nine countries besides India.
 Pan India presence in 1550 locations across more than 460 cities & towns.
 Powerful research and analytics supported by a pool of highly skilled Research
Analysts
 Part of a large diversified Indian trans-national promoter group
Insurance Advisory:
Religare Insurance Broking Limited (RIBL), a Religare Enterprises Limited

venture is one of India's leading insurance broking firms, with one of the largest
retail networks in the country. The company holds a composite broker's license
operating in the Life, General and Reinsurance domains.
RIBL not only provides customized solutions to individual clients but also to some
of the leading corporate houses and institutions across the country.
Our team across the country is driven by the core philosophy of creating and
delivering value to its customers. Our strengths are a team of passionate
professionals, a robust IT infrastructure and strong risk analysis teams adept at
identifying & analyzing your risks and providing you with tailor made solutions.
Value Proposition
Presence Pan India foot print

Strong Domain Expertise Rich domain knowledge and Industry experts
Comprehensive Risk Portfolio Expertise to meet all your Insurance needs
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Management
Flexibility Market understanding, proactive and
customer centric
Stability Part of a large diversified Indian trans-
national group with presence in over 1550
locations across more than 460 cities &
towns in India and globally across 10
countries.
Infrastructure Human, technical, physical presence, CRM
Quality Best business practices and highest quality
service
Strategic Partnerships Alliance with global and national players to
get you the best deals
Our Service Offerings
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Wealth Spectrum:
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Wealth Advisory Services:
Religare operates its wealth management business in partnership with

Macquarie through the joint venture - Religare Macquarie Wealth Management
Limited (A 50:50 joint venture). The JV is a combination of strengths -
Macquarie's strong global expertise with Religare's strong local insights.
Portfolio Management Services
Religare offers PMS to address varying investment preferences. As a focused

service, PMS pays attention to details, and portfolios are customized to suit the
unique requirements of investors.
Religare PMS currently extends six portfolio management schemes, viz Monique,
Panther, Tortoise, Elephant, Caterpillar and Leo. Each scheme is designed
keeping in mind the varying tastes, objectives and risk tolerance of our investors.
The Edge:
We serve you with a diligent, transparent & process driven approach and ensure
that your money gets the care it deserves.
 No experts, only expertise.

 No hidden profits.
 Daily disclosures.
 No charge till you profit.
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Arts Initiative:
With this vision in mind, Religare Enterprises Limited last year launched Religare
Arts Initiative Limited (RAI), a wholly owned subsidiary. So, while most galleries,
auction houses and art funds operate art businesses, Religare Art Initiative will
conversely leverage business for art.
Religare Arts Initiative is committed to the business of arts, the arts as an

alternate investment option and is a corporate champion for the cause of Art. The
gallery is the first physical manifestation of this initiative.
The Film Fund:
Religare and Vistaar bring to you an opportunity to invest and partner with the
ever evolving and recession-proof medium of films, through VISTAAR
RELIGARE FILM FUND - India's first SEBI-approved venture capital fund in this
sector. The Fund would be focusing on identifying right opportunities in the film
industry and in turn - produce challenging, entertaining, culturally-relevant
cinema as well as growth and returns for all its investors.
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Results and Future Outlook:
Mar ' Mar ' Mar ' Mar ' Mar '
09 08 07 06 05
PER SHARE RATIOS

Adjusted E P S (Rs.) -2.09 3.08 1.83 0.89 -1.76
Adjusted Cash EPS (Rs.) -2.04 3.09 1.86 0.89 -1.76
Reported EPS (Rs.) -2.09 3.08 1.83 0.89 -1.76
Reported Cash EPS (Rs.) -2.05 3.09 1.86 0.89 -1.76
Dividend Per Share 0.00 2.50 1.00 0.00 0.00
Operating Profit Per Share (Rs.) -0.46 3.59 2.25 0.90 0.70
Book Value (Excl Rev Res) Per
-0.63 2.15 1.97 1.30 0.00
Share (Rs.)
Book Value (Incl Rev Res) Per
-0.63 2.15 1.97 1.30 0.00
Share (Rs.)
Net Operating Income Per Share
1.64 4.19 2.39 0.91 1.11
(Rs.)
Free Reserves Per Share (Rs.) 80.84 53.24 34.76 0.00 0.00
PROFITABILITY RATIOS

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Operating Margin (%) -28.09 85.83 94.04 98.43 63.82
Gross Profit Margin (%) -30.58 85.69 94.03 98.43 63.82
Net Profit Margin (%) -58.15 73.49 76.71 97.38 -159.57
Adjusted Cash Margin (%) -56.84 73.62 77.93 97.38 -159.57
Adjusted Return On Net Worth (%) -2.29 4.87 4.09 8.33 -24.11
Reported Return On Net Worth (%) -2.30 4.87 4.09 8.33 -24.11
Return On long Term Funds (%) 1.53 5.67 4.95 6.23 9.64
LEVERAGE RATIOS

Long Term Debt / Equity 0.03 0.00 0.00 0.35 0.00
Total Debt/Equity 0.03 0.15 0.01 0.35 0.00
Owners fund as % of total Source 96.52 86.45 98.80 74.00 100.00
Fixed Assets Turnover Ratio 7.42 56.93 1,860.97 6.81 0.00
LIQUIDITY RATIOS

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Current Ratio 97.46 2.03 1.35 0.73 0.37
Current Ratio (Inc. ST Loans) 97.46 0.25 0.83 0.73 0.37
Quick Ratio 97.38 2.01 1.35 0.73 0.37
Inventory Turnover Ratio 155.54 882.68 0.00 0.00 0.00
(Source: Religare Annual Report)
Corporate social responsibility:
Sponsorship of family home at SOS Children’s Village
Approximately 5000 children die every day in India, due to lack of amenities or
nutrition. And to rectify this dismal situation, Religare Enterprises Limited has
partnered with SOS Children’s Villages of India. At a time when India’s child
mortality rate is one of the highest in the world, Religare’s commitment to this
initiative is strong and unwavering.
SOS Children’s Villages of India creates the right environment for orphaned
children, where they are looked after at “homes.” Each village has “homes” with
8-10 children, who stay together like brothers and sisters, and they have a
“mother” who looks after them as her own. The children stay there till they
complete their education, giving them and the mother a loving family in return.
Employee Payroll Giving programme in association with Give India
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The employees’ initiative has already begun with Give India Foundation, where
Employees donate a part of their salaries to their pet cause, and contribute
towards a better world.
Primary Research: (Interview):
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The primary research was done on the basis of focus interviews with personnel’s
from IDFC and Religare Ltd respectively, and their views on their business
models were as follows:
IDFC:
IDFC is now at a stage where it sees a lot of projects coming its way, being a
company which has pioneered the PPP investments in India, with the growth of
the economy and the need for infrastructure investments, we have our work cut
out to deliver as promised.
In terms of urban development with the expected increase in India’s population in

urban areas from 26% in 2001 to 36% in 2011, there is intense demand for
development infrastructure spending in the short tern to the medium term will be
likely in the public sector, we believe that there are select opportunities for private
initiatives in urban transportation, solid waste management and industrial water
supply. We also expect that the ‘viability gap funding “mechanism announced by
the government would provide funding up to 20% for certain projects meeting its
criteria, that will increases the private level funding in this area. To assist the
development of this sector we are advising a no of government agencies and
urban bodies for the PPP initiatives.
Power sector is something which we are looking at and we are looking at

financing captive power plant projects majorly small and medium hydroelectric
projects, select coal and gas based independent power projects.
In this we have limited our exposure to large scale independent power projects
(300MW).
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The company`s strategy, in the last three-four years, has been to find a balanced
business model that gives us a combination of different businesses so that we
get greater stability of earnings through cycles, and also we get, over a period of
time, a better return on our capital.
There are also the regulatory constraints and other market-imposed constraints
that got attached to our business balance sheet. We were, thus, disproportional
in a business that was very capital-intensive, and the return on investments was
modest. Given our structure as a non-banking finance company, which imposes
limitations on our sources of funding, we have been at a structural competitive
disadvantage vis-à-vis the banking competitors whose cost of funds is inevitably
lower.
This is why in the last three-four years we evolved a strategy to diversify our
earning streams away from capital-intensive businesses to capital-light
businesses of different characteristics.
We are still focused on the infrastructure space, but we are building our domain
knowledge to get into the businesses that are less capital intensive.
Competing with banks for funding projects is a challenge for us since cost of
funds for the banks is relatively low. We may try to convert IDFC into a full-
fledged infrastructure-focused commercial bank in the future. IDFC Bank could
be a possibility in the years to come. It is a strategic option that makes increasing
sense as we become larger.
IDFC is still relatively small compared to the overall opportunities available in the
country. So, even though the market has moderated and investments in India’s
infrastructure sector may have slowed down, that does not necessarily mean that
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IDFC will see a disproportionate slowdown. Although we will witness a slowdown
inevitably, our market share will surely rise.
Also, India’s infrastructure sector is likely to witness a lesser slowdown than the
rest of the economy. We remain very focused on lending to infrastructure
projects, investing in infrastructure sector, facilitating investments in India’s
infrastructure projects, raising capital for infrastructure sector players, providing
broad-based financial services for people who are in the infrastructure sector and
would, hopefully, be introduce new products for interested investors in the
infrastructure sector in the future.
This fiscal our business has been larger than that of the last fiscal year in terms
of the balance-sheet size. However, the pace of growth of our balance sheet has
slowed down considerably due to the current economic scenario. Due to risk
aversion, we have not participated in certain projects.
Also, infrastructure funding demand has also slowed down in the country. Many
investment plans have been delayed. Our NPAs in this fiscal are higher than the
last fiscal’s figures, as expected.
The next fiscal is expected to be slower than the current fiscal although our
market share will witness a modest growth. We are planning to raise money
through external commercial borrowing. It will not be a large amount.
Although our cost of funding has fallen in recent weeks, it has not fallen by as
much as the government securities rates have fallen because the spread of AAA-
rated paper over government securities has not fallen.
There is no shortage of liquidity and the immediate challenge we face is the

volatility of our cost of funds.
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Alternatively, in the next couple of years, we also see a more significant
development in the corporate debt market that will give us more room to manage
our business in the way we are today, without becoming a bank.
Also, If the process of globalization accelerates and the Indian rupee becomes
fully convertible, then we can immediately connect to the world capital markets to
meet our future funding needs.
Religare:
Financial services group Religare Enterprises Ltd intends to enter the banking
business, taking advantage of the Rs10,000 crore that its owners will receive
when they complete the sale of their stake in Ranbaxy Laboratories Ltd, India’s
biggest drug maker, to a Japanese acquirer.
The family is also “open to evaluating private equity” as a new line of business as
well, Malvinder Mohan Singh, chief executive and managing director the sale of
their stake to Japan’s third largest drug firm, Daiichi Sankyo Co. Ltd in a deal that
valued Ranbaxy at $8.5 billion (more than Rs36,450 crore) after equity dilution.
“At some point of time, I think it is an integral part of a strategy for any financial
services business to have a bank,” he said, declining to specify a time frame”.
Religare Capital Markets Ltd, a brokerage and investment banking arm of

Religare Enterprises, recently bought London investment banking firm Hichens,
Harrison and Co. Plc for about Rs400 crore.
Religare Enterprises already has a venture capital unit under Religare Venture
Capital Ltd.
The banking ambitions of Singh, who runs the group’s business along with
younger brother Shivinder Mohan Singh and Religare chief executive Sunil
Godhwani, will, however, face several regulatory hurdles.
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Banking rules in India don’t allow a company to hold more than a 10% stake in a
bank and any change in this is unlikely in the near future.
India financial services group Religare Enterprises has acquired a majority stake
in US and UK-based fund of funds investor Northgate Capital. Reportedly valued
at $36m, the deal is the opening salvo in a $1bn spending programme Religare is
planning that will see the group invest in asset management firms across the
globe.
In terms of new horizons Religare is looking forward to new businesses like air
travel and concierge services.
Corporate Travel, Customized Leisure Travel & Air Charter Services The air
charter business is one of the largest non scheduled operators in the country and
can boast of one of the best-in-class “owned fleets”, with its hubs in Delhi,
Mumbai and Chennai. The fleet is a versatile and young combination of
Jets, turbo props and helicopters with a flying range within the Asian continent
and the Middle East. The fleet has been carefully chosen keeping in
Mind safety, comfort and convenience parameters and is commanded by pilots
drawn from the very best in the industry. The travel business is duly accredited
for complete management of both in-bound and outbound domestic and
international travel. Our 360 degree service bouquet encompasses.
The entire gamut of activities with single minded client centricity.
– Systematic and Process Driven Itinerary Planning

– Ticketing
– Domestic & International
– Hotel Reservations
– Chartered Flights
– Ground Arrangements
– Visa Facilitations
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As regarding the capital structure and CAR, The Associated Chambers of

Commerce and Industry of India (ASSOCHAM) has opposed the proposed move
of Reserve Bank of India (RBI) to make it mandatory for Non-Banking Financial
Companies and Non-Deposit Taking Companies to maintain 10% capital
adequacy ratio with them.
To us it’s a lot of money and in the competition we are in we need to make sure
that every penny we have generates a good amount of return. That’s why we
focus more on asset creation than keeping the cash with us.
Off course we have to abide what the regulators say, but as a profit making
organization we need to look at what best we can give to our shareholders.
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Recommendation:
Aggressive strategy or the American way of Banking, it’s the new trend in
India. Following this and taking a good look at how private banks and NBFC`s
in India were functioning RBI cautioned the banks on the pitfalls of "doorstep
banking", where banks make their staff and agents visit the client`s homes to
get new business.
Also the Liquidity ratios and Capital Adequacy ratios with some of the NBFC`s
are a concern as they try to squeeze everything out to get an aggressive
approach to profit making, without looking at the interests of the investor and
the consumer.
The federal banks of many countries see this as a hampering factor to

something we call as “know your customer” thing, with increase in competition
the banks and NBFC`s are ignoring this fact of the business.
I personally after analyzing the data and factors of marketing and promotion
by various companies see that aggressiveness for selling and increasing
revenues is hampering the fundamentals of capital structure and creating a
trust for tha banking industry in the market
The RBI guidelines on "know your customer" primarily deal with money
laundering. Aggressive marketing for business development should, by all
accounts, have no apparent conflict with normal banking practices. A brief
look at the probable relationship between aggressive marketing, and the high
level of non-performing assets (NPA) in the banking sector may help us
understand the reasons behind the unstated and unspoken concerns of the
RBI. Banks in India, especially the nationalized entities, never considered
`marketing' an essential tool for business. It mostly remained the domain of
the foreign banks.
The American banks especially thrived on marketing, and made it an art form.
It was since 1994, only when the new generation, technology-driven private
sector banks came into operation that marketing received a boost. A
performance driven approach to the business of banking, the desire to grow
at a fast pace, the pressure to grab a market share from the existing players
and the urgency to shore up the balance-sheet before a public issue took the
battle for business right to the doorstep of the foreign banks.
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The war for market share was spearheaded by the new generation bankers
recruited from non-banking finance companies (NBFC), foreign banks,
broking houses and business schools. The staid, traditional, conservative
banker became passé. The demand for front- and back-office staff, apart from
those required for marketing or managing `relationships', forced the
headhunters and the HR managers to look at unconventional (read non-
banking) sources. Inevitably, there had to be some compromises. The
recruitment of these `bankers', therefore, came at a price. The personnel
recruited were mostly non-bankers. Few realized there was more to banking
than what was written in the textbooks, or taught in the classrooms.
The resultant impact was subtle, essentially on the attitude and the approach
to handling transactions, but more on business generation. Those in a hurry
hardly spared time to know their customers, or build relationships. Coupled
with their drive to generate the maximum business in the shortest possible
time, these hard-sell bankers also had a different mindset, which was `deal'
based, in contrast to that of a conservative, traditional banker.
The `deal' based approach, and aggressive marketing to generate business

extended, unfortunately, to loans and advances. Generating fee business
(that is, non-fund based business) without offering little or no fund-based
facilities is extremely difficult at the best of times.
Fee business, therefore, normally follows fund-based facilities. In order to lure

away the top customers (often from foreign banks), increase non-interest
income, improve spreads, lower the overall cost of funds and improve
profitability, these banks went after selected customers with bouquets of
offers, which included fund-based facilities. It goes without saying that in such
situations, a banker could hardly impose total and strict financial discipline on
his clients — either at the time of the initial assessment or during the life of an
advance.
In trying to beat the foreign banks at their own game, the new generation
banks burnt their fingers badly. In their zeal they failed to appreciate the fact
that the foreign banks had a highly developed system of risk management in
place, and that they were quite adept at exiting accounts at the first hint of
trouble.
The consequence of the approach should hardly come as a surprise. Some

new-generation banks are now going through painful restructuring, primarily
provoked by unusually high levels of NPAs accumulated over an unusually
short period of time.
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This was the advice of RBI on the strategy of private NBFC` working in India
"Distribute your loans rather than concentrate them in a few hands. Large
loans to a single borrower or firm, although sometimes proper and necessary,
are generally injudicious, and frequently unsafe. Large borrowers are apt to
control the bank, and when this is the relation between a bank and its
customers, it is not difficult to decide which in the end will suffer..."
Source: www.cnbc.com
The basic principles of sound banking practice have remained unchanged

and valid for well over a century. As the custodian of other people's money, a
banker must understand and appreciate the significance of these words.
The diversification of businesses and concentration of fundamentals in terms

of marketing and usage of funds in comparison with the base of revenues in
order to sustain the growth and provide security to investors should be the
main concern for the management of private NBFC`s.
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Conclusion:
Through the analysis of various data and the models for both the companies,
IDFC and Religare we come to a conclusion that the businesses targeted by both
the companies are different in aspects and that both have a business model
suiting to that.
By analyzing the secondary data and performance charts of both the companies
we can say that both companies have done fairly well in terms of profits, growth
and increasing their business size in the previous year.
IDFC focusing on their core business of financing and consulting has been a
major factor for development of Indian infrastructure industry, whereas Religare
has been a company which has revitalized the microfinance industry by taking
reach and convenience to another level.
When we take a close look at the models, we see that the models are perfect
according to the business they engage themselves perfectly in the business they
look forward to as Religare having its core business of microfinance products
needs to have marketing and selling expenses and moreover it needs to be
aggressive to churn in more profits to take care of its expenses and along with
that grow at a healthier rate.
Growth and risk are two components of strategies companies select for
themselves.
Comparably the risk factor for Religare s more in their capital structure due to its
strategy and business structure, whereas IDFC supports a more robust capital
structure which involves less risk and since IDFC is supported by the
Government of India in terms of its stake and structure, the risk factor for IDFC
would always be lower when compared to a private company like Religare.
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In terms of growth both IDFC and Religare have grown in a very positive manner
since they came into existence.
This clearly proves the theory by Modigliani and Miller that capital structure of a
firm does not affect the valuation of a firm.
The following shows you the capital structure of Religare:
By this we can say that it’s a structure which mainly consists of equity and no
debt component and the company has done really well in terms of its value which
has increased in spite of the recession in the previous year.
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And now we look at the capital Structure of IDFC:
http://www.moneycontrol.com/stocks/company_info/print_main.php
The IDFC capital structure also comprises mainly of equity capital and has been
a great performer on the stock exchange and also in terms of profits.
The capital structure has not affected the company`s returns or valuations but the
only difference is that IFDC being a PSU has a greater Capital Adequacy Ratio
as compared to a private NBFC meaning that the company will be safe in case
their assets turn bad or their investments lose its value which is not the case with
Religare.
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A private NBFC like Religare has to be very vigilant and resourceful when it
invests in assets and creates an reinvestment strategy for its surplus. As the
company does not maintain a very high capital Adequacy ratio, it has a rick of
devaluation or bankruptcy in scenarios like recession where the returns go on the
negative side and assets tend to lose their value.
So by studying all the research and data and with the talks with people in this
industry we come to a conclusion to our hypothesis, of “Is Capital Adequacy ratio
important for growth and sustainability” that the Capital Adequacy ratio is not
important for growth or sustainability of a company and also that the capital
structure of a company does not have any impact on the value of a firm.
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Response Sheet 1:
 Companies taken into consideration: a) PSU NBFC: IDFC LTD,

b) PRIVATE NBFC: RELIGARE SECURITIES LTD.
Information gathered on IDFC:
3) Methods used: 1) Analysis of secondary data (IDFC Website, Articles

in newspapers) 2) Consultation with the external guide Mr.Ashish
Sharma on the product structure and strategies followed by IDFC in
usage of those products.
4) Products IDFC:
Senior Debt Management:
It forms the largest component of the company’s portfolio and accounted for 85.6
% of the outstanding disbursements. Senior debt financing is provided through
loans or in the forms of subscriptions to debentures. Senior debt ranks ahead of
other debt obligations of the borrower with respect of security and payment.
The financing typically bears fixed rate interest with reprising mechanisms
usually effective after 5 years. Additionally senior loans may also be reprised for
changes in the credit quality of the borrower.
The product is generally much secured and has access to the assets of the
projects in case of any default. As on 31.3.2006, 79.3% of the Company`s
disbursements were borrowers to special purpose entities. 35.1% of our senior
debt financing there is a limited recourse to the sponsors where they undertake
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to meet construction cost overruns or funding short falls. For 17.8 % of senior
debt financing there is no recourse to the sponsors.
For 26.7 % of the Company`s disbursements have negotiated personal and

corporate guarantees from one of the sponsors of the projects for the interest
and principal payment obligations.
Mezzanine products:
It comprises of preference capital and subordinated debt.mezzainaine products

are layered in a company’s capital structure between the equity and senior debt
and act as an additional tier in the capital structure. ‘
These subordinated financing structures have a little more risk than the senior
debt but have the potential of earning higher returns. 4.5% of the total
outstanding disbursements.
Proprietary equity:
The portfolio was valued at 653 crores. The overall portfolio IRR for all
investments was valued at 37%. Have made equity proprietary investments in
infrastructure related companies:
Gate way Distripark, Indraprastha gas limited.
Power Trading Corporation.
Public offering companies such as:
 Bharti- tele ventures

 Jet- airways
 National thermal power corporation.
 ONGC
 TCS
 Tata Teleservices (Maharashtra)
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Private Equity:
Mobilizing and managing third party funds through a wholly owned subsidiary,
IDFC private equity ltd. The company focuses on long Term private equity
investment opportunities and also invests in listed equities in certain
circumstances. The objective is to achieve attractive returns by providing equity
risk capital to early stage and rapidly growing infrastructure focused companies.
IDFC private equity has a panel of highly regarded advisors and an experienced
team that leverages the client relationships and domain expertise of IDFC.
OTHER PRODUCTS: Guarantees
The company issues guarantees on behalf of projects to guarantee their

performance and payment obligations. Our guarantees enhance the ratings of
the underlying financial instruments and enable projects to secure financing from
a wider spectrum of resources, including borrowings from commercial banks,
foreign lenders and debt capital market. They are usually extended by us to
secure the performance obligations of borrowers, such as meeting the license
requirements in the telecommunication and transportation industry.
Take Out Financing:
Take-out financing is a method of providing finance for longer duration projects

(say of 15 years) by banks by sanctioning medium term loans (5-7 years). It
understands that the loan will be taken out of books of the financing bank within
pre-fixed period, by another institution thus preventing any possible asset-liability
mismatch. After taking out the loans from the banks, the institution could off-load
them to another bank or keep it.
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RESPONSE SHEET 2
Information gathered on RELIGARE SECURITIES:

Methods used: 1) Analysis of secondary data (RELIGARE Website, Articles in
newspapers), Consultation with Mr.Sachin Thakur (Head NCR, Advisory
(Religare)) on the product structure and strategies followed by RELIGARE in
usage of those products.
5) Products Religare :
Institutional
Retail Spectrum Spectrum Wealth Spectrum
 Equity and Commodity
Trading  Institutional Broking  Wealth Advisory Services
 Portfolio Management
 Online Investment Portal  Investment Banking Service.
 Priority equity client

 Personal Financial Services  Merchant Banking Services
 Mutual Funds  Transaction Advisory  Arts Initiative
 International Advisory
Fund
 Insurance  Corporate Finance Management Service.
 Savings  Insurance Solutions
 Personal Credit
 Personal Loans
 Loans against Shares
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Equity and Commodity Trading: The Company ensures you have a

superlative trading experience through -
 A highly process driven, diligent approach

 Powerful Research & Analytics
 One of the "best-in-class" dealing rooms
Further, Religare also has one of the largest retail networks, with its presence in
1837 locations across 498* cities & towns. This means, you can walk into any of
these branches and connect to our highly skilled and dedicated relationship
managers to get the best services.
The Competitive Edge (Strategy)
 Pan India footprint

 Powerful research and analytics supported by a pool of highly skilled
research analysts
 Offline/Online delivery models
 Single window for all investments needs through you unique Customer
Relationship Number.
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Online Investment Portal: The Company provides a unique service of
availability of all kinds of financial products, services and advisory through the
Internet.
This is something which makes the company easily accessible and with a big
coverage area, both nationally and internationally. The Company also boats of
features such as Zero percent brokerage, Interest on cash margin, exposure up
to 20 times on your cash margin, etc. on our select product schemes available
through our highly sophisticated and customized platform
R-ACE (Religare Advanced Client Engine).
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Response Sheet 3:
8th February 2010
 Companies taken into consideration: a) PSU NBFC: IDFC LTD,

b) PRIVATE NBFC: RELIGARE SECURITIES LTD.
 Analysis of data and future growth patterns for IDFC and Religare done,
through focus interviews with key personnel’s.
 The role of IDFC and Religare analyzed with the key inputs of these
companies representing public and private ownerships.
 Future investing patterns and revenue sources along with change in

patterns for marketing strategies and mobilizing India through financial
engineering.
 Annual results of both companies analyzed and the growth patterns of

both the companies put into emphasis to as to determine which was more
aggressive in their specific spheres and products representing different
modules of non banking Sector.
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SS (08-10) Alumni ID: DS/08/10-M-227
Bibliography
 www.idfc.com
 www.religare.in
 www.investopedia.com
 www.indiastat.com
 www.businessweek.com
 www.financialexpress.com
 www.moneycontrol.com
 www.cnbc.com
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Appendix:
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SS (08-10) Alumni ID: DS/08/10-M-227

Indian Institute of Planning and Management, New

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BUSINESS MODELS OF NBFC`S IN INDIA

INTERNAL GUIDE: EXTERNAL GUIDE:

Letter of Approval ………………………………………………………………………7

Letter of Originality …………………………………………………………………….8

Thesis Synopsis ………………………………………………………………………..9

Micro Finance Sector and Religare…………………………………………………15

Infrastructure Sector and why IDFC………………………………………………..15

Literature Review ………………………………………………………………..…...17

Mezzanine products ……………………………………………………………… 17

Future Outlook and Growth Prospects……………………………………….

Importance of the business model to Indian

Information gathered on Religare…………………………………………….. .35

Equity and Commodity

Commercial Vehicle Loans

Construction Equipment finance

Results and Future

Primary Research (IDFC) ………………………………………………………52

Response Sheet 1…………………………………………………………..……65

Response Sheet 2………………………………………………………………..68

Response Sheet 3………………………………………………………………..71

This is to inform that your thesis proposal on “Business Model of NBFCs in

Make it a comprehensive thesis by ensuring that all the objectives as stated by

DETAILS OF THE STUDENT

Name Chetan Sharma (2825)

Email Address Chetanpoda2000@gmail.com

Thesis Topic Analysis of Business Models of Indian

A comparative analysis between the conservative approach of PSU NBFC`s and

Effectiveness of these models in diverse economic situations like boom and

1. Through analysis of the business models followed by PSU NBFC`s in

Primary Data: Growth rate indicators and factors affecting growth.

Tools Used: Interviews with key personnel’s in IDFC and Religare,

Sampling Method: Focus group Interviews, Systematic and stratified sampling.

Sample Size: 6-8

Target Audience: Investors, Private Equity players, industry players and

JUSTIFICATION OF CHOOSING THE TOPIC:

So it is an analysis of how a conservative business model is more appropriate for

DETAILS OF EXTERNAL GUIDE:

Currently performing Advisory services for IDFC (Infrastructure Wing), previously

Chartered Accountant (ICAI)

SUMMER TRAINING DETAILS:

Importance of correlation in calculating future stock values and hedging

An analysis of the business model and advisory function of Religare Securities

NBFC`s in India are registered companies conducting business activities similar

Though they are similar to banks, they differ in a couple of ways.

There are three categories of NBFC’s:

 Asset Financing Companies (“AFC”)

Micro Finance Sector and Religare:

The customer base covered by the microfinance is expected to reach 49 million

The key growth drivers in the microfinance sector are:

1. Need for a broader suite of products: products such as investment

2. Regional Diversification: An NBFC should focus on to the vast regional

Infrastructure Sector and why IDFC:

During the period of 2007-2017, the investment is accepted to accelerate further

For 26.7 % of our financing we have negotiated personal and corporate

It comprises of preference capital and subordinated debt.mezzainaine products

Gate way Distripark, Indraprastha gas limited.

Power Trading corporation.

Public offering companies such as :

Bharti- tele ventures

National thermal power corporation.

Tata Teleservices (Maharashtra)

Short and medium term .2.2% of the outstanding DIS.

OTHER PRODUCTS: Guarantees