Social Management Project

Report On-
“To understand the Corporate Social Responsibility (CSR) activity
followed by Capital First Limited”

Submitted in partial fulfillment for the award of degree

of
Master of Management Studies (MMS)
(Under University of Mumbai)

Submitted by
Rajnishkumar B Gupta
(Roll No. 111 – Finance)

Under the Guidance of

Dr. Yogesh Ingle
2016-2018

Sheila Raheja Business School of Management

(Bombay Suburban Art & Craft Education Society)

Raheja Education Complex, Kher Nagar, Opp. ChatrapatiShivaji Ground, Bandra (East) Mumbai - 400051
 TABLE OF CONTENTS

Sr. No. Chapter Topics Page No.

Prefatory Items
0.1 0.1 Certificate i
0.2 0.2 Declaration ii
0.3 0.3 Acknowledgement iii
1 Chapter 1 Introduction
1.1 Section 1 Problem Statement 1
1.2 Section 2 Research Objectives 2
1.3 Section 3 Research Hypothesis 3
1.4 Section 4 Limitations 4
2 Chapter 2 Literature Review 5
2.1 Section 1 Organization Structure 10
2.2 Section 2 Importance of Organization 11
Structure
2.3 Section 3 Types of Organization Structure 14
2.4 Section 4 Capital First Limited 19
2.5 Section 5 Company Vision 20
2.6 Section 6 Company Values 21
2.7 Section 7 Director and Management 22
2.8 Section 8 SWOT Analysis of Capital First 25
2.9 Section 9 A transformative journey of Capital 26
First limited
2.10 Section 10 CORPORATE SOCIAL RESPONSIBILITY 28
3 Chapter 3 Methodology
3.1 Section 1 Sampling Strategy 31
3.1 Section 2 Research Design 32
4 Chapter 4 Results (Data Analysis) 33
5 Chapter 5 Discussion 45
6 Chapter 6 Hypothesis Testing 47
7 Chapter 7 Conclusions 48
8 Chapter 8 Findings 49
9 Chapter 9 Suggestions 50
10 Chapter 9 Appendices
10.1 Section 1 Bibliography 51
 INDEX OF TABLE

SR. NO. TABLE NAME PAGE NO.

CHART
1 LINE ORGANISATION 14
2 LINE AND STAFF ORGANIZATION 15
3 FUNCTIONAL ORGANISATION 16
4 PROJECT ORGANISATION 17

5 MATRIX ORGANISATION 18

6 SWOT ANALYSIS OF CAPITAL FIRST 25

7 A TRANSFORMATIVE JOURNEY 26

8 A TRANSFORMATIVE JOURNEY 27

9 DATA OF LAP, UNSECURED MSME, 33

CONSUMER LOAN, 2W AND OTHERS
10 NET SALES 34

11 OPERATING PROFIT AND OPERATING 35

PROFIT MARGIN
12 EBITDA, PBT AND PAT 36

12 COMPANY’S DIVIDEND PAYOUT RATIO 37

TABLE

1 STOCK VALUATIONS OF CAPITAL FIEST 38

LIMITED
2 BALANCE SHEET OF CAPITAL FIRST 39
LTD
3 PROFIT AND LOSS ACCOUNT OF 41
CAPITAL FIRST LTD
4 SHAREHOLDING PATTERN 42
 CERTIFICATE

This is to certify that project titled “To understand the Corporate Social
Responsibility (CSR) activity followed by Capital First Limited” is successfully
completed by Mr. Rajnishkumar B. Gupta during the IV semester, in partial
fulfillment of the Master’s Degree in Management Studies by the University of
Mumbai for the academic year 2016-2018 through Sheila Raheja Business School
of Management.
This project work is original & not submitted earlier for the award of any
degree or associateship of any other University/Institution.

Name:- Dr. Yogesh Ingle ( )

Date:-26/02/2018
Signature of the Guide

i
 DECLARATION

I hereby declare that this project Report submitted by me to the Sheila

Raheja Business School of Management and Research is a bonafied work
undertaken by me & it is not submitted to any other University or Institution for the
award of any degree certificate or published any time before.

Name: - Rajnishkumar Gupta

Roll No.:-111 Signature of the Student

ii
 ACKNOWLEDGEMENT

I believe that behind the ascent of each and every student lie not only the relentless
urge to work hard but also the guidance and inspiration of his guide, co-guide and
other helpful people. I was no exception and would like to express my deep
gratitude towards all those who helped me in the completion of this project.

With due respect and deep gratitude I take this opportunity to convey my sincere
thanks to Prof. Dr. Yogesh Ingle (Faculty Guide) for allowing me to do the project.

I would also like to convey my sincere to him for spending his valuable time for
giving me important information and support without which I would not be able to
complete my Project Report.

Name: - Rajnishkumar Gupta

Roll No.:-111 Signature of the Student

iii
 PROBLEM STATEMENT

“To understand the Corporate Social Responsibility (CSR) activity followed by

Capital First Limited”

1
 RESEARCH OBJECTIVE

1 To study the importance of CSR activity in corporate.

2 To study, the CSR activity done by Capital first limited.

2
 HYPOTHESIS STATEMENT

Set 1.
H0:- CSR activity helps corporate to gain market share and goodwill with
society’s benefit.
H1:- CSR activity does not helps corporate to gain market share and
goodwill with society’s benefit.

Set 2.
H0:- CSR activity did by Capital First Limited helps society as well as to
company for achieving its organizational goals.
H1:- CSR activity did by Capital First Limited didn’t helps society as well as
to company for achieving its organizational goals.

3
 LIMITATIONS

Every coin has two sides in the same way during my project analysis; I also came across
such things that created problem for me.
These are listed below:-
 Research was only limited to single company, cannot show the scenario of every
company, hence the findings cannot be generalize for the entire companies.
 Due to time constraint the period of study is for Capital First only.
 All variables could not be used for analyzing the performance based on business policy.
 The study was based on published annual reports.

4
 LITERATURE REVIEW

To understand Corporate Social Responsibility and its impact on society & performance of
company researcher have studied more than 5 doctoral theses with respect to know coporate
social responsibility and its impact on business as well as on society. Researcher has also taken
extensive data from websites of Capital First Limited & Money Control, etc. In this chapter,
literature review is explained in detail in tabular form to structure the concept and analytical
framework for the study. In table form author name, title, objective, research model, finding,
suggestions and research gap are explained.

5
 RESEARCH GAP

Researcher gap means the uncovered area of the particular field where further research is
possible. It may be defined as further possibility of research work in particular area. Research gap
is identified from the review of literature of the particular field and related field (area) in which
the researcher worked. From the above literature review it clearly revealed that so many
researchers have done research work from Big Corporations to small, medium to micro
enterprises. Some researcher has worked on connecting corporate social responsibility to ethics
and financial performance. No detailed research was previously conducted on the corporate social
responsibility and social acitivity of any company.

10
INTRODUCTION TO CORPORATE SOCIAL RESPONSIBILITY

Over the past few years CSR, as a concept, has been the focus of many deliberations and
research. It has grown in importance both academically as well as in the business sense. It
captures a spectrum of values and criteria for measuring a company’s contribution to social
development. As the term “CSR” is used continually, many complementary and overlapping
concepts, such as corporate citizenship, business ethics, stakeholder management and
sustainability, have emerged.

A widely cited definition of CSR in the business and social context has been given by the
European Union (EU). It describes CSR as “the concept that an enterprise is accountable for its
impact on all relevant stakeholders. It is the continuing commitment by business to behave fairly
and responsibly, and contribute to economic development while improving the quality of life of
the work force and their families as well as of the local community and society at large…1”

In other words, CSR refers to ensuring the success of the business by inclusion of social and
environmental considerations into a company’s operations. It means satisfying your shareholders’
and customers’ demands while also managing the expectation of other stakeholders such as
employees, suppliers and the community at large.

It also means contributing positively to society and managing your organization’s environmental
impact.2 Hence, CSR is a contribution to sustainable development, implying the way a company
balances its economic, environmental and social objectives while addressing stakeholder
expectations and enhancing shareholder value.

1
.“A renewed EU strategy 2011-14 for Corporate Social Responsibility,” European Commission press release,
http://ec.europa.eu/enterprise/ newsroom/cf/_getdocument.cfm?doc_id=7010, 25 October 2011.

2
European Commission, Directorate-General for Enterprise
11
SOME EXISTING CSR POLICY INITIATIVES ACROSS COUNTRIES

As the importance of being socially responsible is being recognized throughout the world,
governments are aware of the national competitive advantages won from a responsible business
sector. Large corporations have progressively realized the benefit of implementing CSR
initiatives where their business operations are located.

The Organization for Economic Co-operation and Development (OECD) established a set of
guidelines for multinational enterprises in 1976, and was thus a pioneer in developing the concept
of CSR. The purpose of these guidelines was to improve the investment climate and encourage
the positive contribution multinational enterprises can make to economic and social progress. In
addition to the OECD’s 30 member countries, 11 observer countries have endorsed the
guidelines.

It is observed that, transparency in reporting enhances the focus on economic, social and
environmental factors. It motivates companies to intensify their efforts in becoming socially
responsible. Several efforts have been taken by various governments, to encourage CSR
reporting, such as incentivizing companies who voluntarily report their CSR activities or by
taking measures such as mandating CSR reporting. In 2007, the Malaysian government passed a
regulation to mandate all publicly listed companies to publish their CSR initiatives in their annual
reports on a “comply or explain” basis. Accordingly, all public listed companies (PLCs) in
Malaysia have to either publish CSR information or they need to explain why they should be
exempted.3 In another example, in 2009 Denmark mandated CSR reporting, asking all state-
owned companies and companies with total assets of more than €19 million, revenues more than
€38 million and more than 250 employees, to report their social initiatives in their annual
financial reports.

3
“Current Corporate Social Responsibility Disclosure Efforts by National Governments and Stock Exchanges,” The Hauser
Center website, http:// hausercenter.org/iri/wp-content/uploads/2011/08/CSR-Disclosures- Update-6-27-13.pdf

12
To enable transparency from businesses on the environment, social and governance front, France
passed a law called Grenelle II, which mandates integrated sustainability and financial reporting
for all companies listed on the French stock exchanges, including subsidiaries of foreign
companies located in France and unlisted companies with sales revenue of more than €400
million and more than 2,000 employees.

Although some CSR standards are mandatory, there are others, which comprise of both,
mandatory and voluntary standards. For instance, in 2006 the British Companies Act mandated
all companies listed in the UK to include information about their CSR activities in their annual
reports; however, a full length CSR reporting was made voluntary.4

4
Matthew Maguire, “The future of Corporate Social Responsibility Reporting,” Boston University website, The Frederick S. Pardee Center for the Study
of Longer – Range Future http://www.bu.edu/pardee/files/2011/01/PaedellB-019-Jan-2011.pdf, dated 19 January 2011.
13
CORPORATE SOCIAL RESPONSIBILITY EVOLUTION IN INDIA

India has a long tradition of paternalistic philanthropy. The process, though acclaimed recently,
has been followed since ancient times albeit informally. Philosophers such as Kautilya from India
and pre-Christian era philosophers in the West preached and promoted ethical principles while
doing business. The concept of helping the poor and disadvantaged was cited in several ancient
literatures. In the pre-industrialized period philanthropy, religion and charity were the key drivers
of CSR. The industrial families of the 19th century had a strong inclination toward charity and
other social considerations. However, the donations, either monetary or otherwise, were sporadic
activities of charity or philanthropy that were taken out of personal savings, which neither
belonged to the shareholders nor did it constitute an integral part of business. During this period,
the industrial families also established temples, schools, higher education institutions and other
infrastructure of public use.

The term CSR itself came into common use in the early 1970s. The last decade of the twentieth
century witnessed a shift in focus from charity and traditional philanthropy toward more direct
engagement of business in mainstream development and concern for disadvantaged groups in the
society. In India, there is a growing realization that business cannot succeed in isolation and
social progress is necessary for sustainable growth. An ideal CSR practice has both ethical and
philosophical dimensions, particularly in India where there exists a wide gap between sections of
people in terms of income and standards as well socio-economic status (Bajpai, 2001).5

Currently, there is an increased focus and a changing policy environment to enable sustainable
practices and increased participation in the socially inclusive practices. Some of these enabling
measures have been illustrated in the next section of this report.

5
Bajpai, G.N. , Corporate Social Responsibility in India and Europe: Cross Cultural Perspective, 2001
14
Policy framework for CSR in India

In the developing world, governments and businesses understand that their respective competitive
positions and access to capital increasingly depend on being able to respect the highest global
standards. At one end of the spectrum, CSR can be viewed simply as a collection of good
citizenship activities being engaged by various organizations. At the other end, it is a way of
doing business resulting in a significant impact on community and long-term sustainability.

The essence of CSR comprises philanthropic, corporate, ethical, environmental and legal as well
as economic responsibility. An alternative, synonymous to CSR, is People, Planet, and Profit,
also known as triple bottom line. In India, the evolution of CSR refers to changes over time in
cultural norms of corporations’ engagement and the way businesses managed to develop positive
impacts on communities, cultures, societies, and environment in which those corporations
operated. CSR motives changed during the independence movement in India toward social
reforms to encourage empowerment of women and rural development.

In the last decade, CSR has rapidly evolved in India with some companies focusing on strategic
CSR initiatives to contribute toward nation building. Gradually, the companies in India started
focusing on need-based initiatives aligned with the national priorities such as public health,
education, livelihoods, water conservation and natural resource management. Intensive national
level deliberations on the potential role and responsibility of the corporate sector in contributing
toward addressing social issues were witnessed in the last decade. In the last five years, the
Government of India has also enhanced its focus on persuading companies to participate in
addressing social and developmental issues, not only as a part of their social responsibility but
also their business practices. Setting an example for the private sector, guidelines regarding
expenditure on CSR activities for Central Public Sector Enterprises were issued by Department of
Public Enterprises. According to these “Guidelines on Corporate Social Responsibility and
Sustainability for Central Public Sector Enterprises” revised by the Department of Public
Enterprises (DPE), Ministry of Heavy Industries and Public Enterprises every year, each CPSE
shall with the approval of its Board of Directors make a budgetary allocation for CSR and
Sustainability activities/projects for the year.

15
The budgetary allocation is determined by the Profit after Tax (PAT) of the company in the
previous year:

PAT of CPSE in the previous year Range of Budgetary allocation for CSR and
sustainability activities (as % of PAT in
previous year)
Less than INR 100 crore 3%–5%
INR 100 crore to INR500 crore 2%–3%
INR 500 crore and above 1%–2%
Source: The revised guidelines by DPE, with effect from 1 April 2013

These guidelines came into effect from 1 April 2013 and are a revised version of the previous
comprehensive “Guidelines on Corporate Social Responsibility for Central Public Sector
Enterprises” issued by The Department of Public Enterprises (DPE), in April 2010. While the
earlier guidelines focused mainly on CSR activities for external stakeholders, the revised
guidelines by the DPE also take internal stakeholders, particularly employees, into account. 6
The new CSR Guidelines also include a dedicated section on sustainability reporting and
disclosure.

6
New CSR Guidelines for Indian Public Sector Enterprises Focus on Sustainability Reporting. 24 April, 2013

16
The National Voluntary Guidelines on Social, Environmental and Economic
Responsibilities of Business

Voluntary CSR guidelines create a common standard for how companies can improve their CSR
efforts, especially with regard to sustainability. The adoption of a common set of standards
creates an expectation that companies will strive to meet the guidelines, and can create peer and
public pressure for companies failing to comply. In this regard, the National Voluntary
Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business, have
been laid down by the Ministry of Corporate Affairs in order to provide companies with guidance
in dealing with the expectations of inclusive growth and imperatives of climate change, while
working closely within the framework of national aspirations and policies. These are applicable
to all businesses irrespective of size, sector or location. The NVGs were designed with the intent
of assisting enterprises to become responsible entities whereby they formulate their
financial/business objectives while considering the impact on various diverse stakeholders
including society and environment at large.

The nine principles of National Voluntary Guidelines are:

Principle 1: Businesses should conduct and govern themselves with ethics, transparency and
accountability.
Principle 2: Businesses should provide goods and services that are safe and contribute to
sustainability throughout their life cycle.
Principle 3: Businesses should promote the wellbeing of all employees.
Principle 4: Businesses should respect the interests of, and be responsive toward all stakeholders,
especially those who are disadvantaged, vulnerable and marginalized.
Principle 5: Businesses should respect and promote human rights.
Principle 6: Business should respect, protect, and make efforts to restore the environment.
Principle 7: Businesses, when engaged in influencing public regulatory policy, should do so in a
responsible manner.
Principle 8: Businesses should support inclusive growth and equitable development.
Principle 9: Businesses should engage with and provide value to their customers and consumers
in a responsible manner.

17
In the last decade, CSR has been a focus of all stakeholders including the government, corporate
sector, media, customers, suppliers, employees and communities. The Government of India’s
initiative to provide a mandate to public sector enterprises to spend certain percentage of PAT for
CSR has set the wheels in motion for increased contribution and more socially responsible
behavior to lead to inclusive growth. Moreover, the National Voluntary Guidelines on Social,
Environmental and Economic responsibilities of business by the Ministry of Corporate Affairs
indicates that governments emphasize on CSR and engaging public and private companies and
enhancing their contribution toward lessening the gap between economic and social progress.

Companies Bill, 2012 and CSR

With a view to provide a framework for companies (private and public) to implement need-based
CSR activities, the Government of India has included CSR-related provisions in the Companies
Bill, 2012. The Clause 135 of the Companies Bill 2012 aims at Motivating companies to spend
2% of the profit after tax on CSR. Though spending 2% of the PAT is not mandatory but Clause
135 of the proposed Companies Bill casts a duty on the Board to specify reasons for not spending
the specified amount on CSR.

The Clause 135 will be applicable to all companies that have either of the following:
Net worth of INR 500 crores or more
Turnover of INR 1000 crores or more
Net Profit of INR 5 Crores or more

An average of last three financial years PAT will be considered for calculating the 2% for CSR.

18
The Bill mandates companies to form a board-level CSR Committee comprising three or more
directors with at least one independent director. The composition of the CSR Committee has to
be disclosed in the annual board of director’s report. The CSR Committee will be responsible for
formulating and recommending a CSR policy and implementation plan. The Committee will also
be responsible for regular monitoring of CSR activities. Company’s board will be responsible for
approving and disclosing CSR Policy in the annual Director’s Report and on company’s website.
The Board will also be responsible for ensuring implementation of CSR activities according to
the Policy. The annual Director’s Report has to specify reasons. In case the specific amount (2%
of PAT) has not been utilized adequately.

The diagram below encapsulates the requirements of the CSR clause in the Companies Bill
2012 (clause 135):

In addition, there are other Government initiatives such as the following:

Guidelines on Corporate Social Responsibility and Sustainability for Central Public
Sector Enterprises as well as the National Voluntary Guidelines on Social, Environmental and
Economical Responsibilities of Business by the Ministry of Corporate Affairs, SEBI’s mandates
an annual 'business responsibility report for Companies.

19
The relevance of CSR within an organization

CSR is not only relevant because of a changing policy environment but also because of its ability
to meet business objectives. Undertaking CSR initiatives and being socially responsible can have
a host of benefits for companies such as the following:
Strengthening relationships with stakeholders
Enabling continuous improvement and encouraging innovation
Attracting the best industry talent as a socially responsible company
Additional motivation to employees
Risk mitigation because of an effective corporate governance framework
Enhanced ability to manage stakeholder expectations

These benefits are important and most companies that are engaged in CSR are revisiting their
strategies and expanding their operations to reap enhanced benefits and contribute to inclusivity
in growth. Some of the existing trends have been highlighted in the next chapter of this report.

20
The current scenario: what companies are doing as part of CSR in India

The Companies Bill 2012, once enacted, is envisioned to result in an increase in investments and
strategic efforts for CSR in India. Companies will need to revisit their CSR policies, strategies
and activities in order to align with the Clause 135. In this chapter, we have made an effort to
provide an analysis of the current trends in CSR in India, particularly how companies are
managing CSR, their focus areas and how they are disclosing their CSR activities to the public.
Our findings are based on Research conducted using secondary literature review on information
available in the public domain.
The CSR activities of 50 companies from the S&P BSE Top 100 Index7 were analyzed in order to
identify the trends of CSR activities in India as represented by those companies that are a part of
the index. The reader is advised that research was based on publicly available information. The
accuracy of which cannot be determined.
The parameters chosen to undertake the research have been categorized broadly into — Design,
Deliver and Disclose. The Design category focuses on understanding the partnership preference
and the implementation mechanism for CSR activities. The Deliver category aims to identify the
thematic areas that best describe the company’s activities and their geographic focus. The
Disclose category provides an insight on how companies are disclosing their CSR activities and
sharing their learning with the public.

7
S&P Bombay Stock Exchange Sensitive Index
21
 CAPITAL FIRST LIMITED

CAFL is a non-deposit-taking NBFC focusing largely on retail lending. It offers loans to small
and medium business enterprises, 2W/CD loans, and also home loans via its subsidiary Capital
First Home Finance. n In August 2010, Mr Vaidyanathan, with more than two decades
experience in retail banking acquired a stake in an existing wholesale focused NBFC with a
strategy to transform the Company to a retail financing focused franchise with the help of
financial backup from a private equity investor to provide exit to the erstwhile promoters. n In
FY11, CAFL divested its entire stake in a 50:50 JV with Centrum Capital. In FY12, it merged an
existing subsidiary NBFC (engaged in retail finance) with the parent company. n In FY13, Clover
dell Investment Ltd. (Warburg Pincus) – through a combination of (1) purchase of equity shares
from existing shareholders and (2) the issue of fresh equity shares and fresh compulsorily
convertible preference shares – acquired a controlling stake in the company by infusing fresh
equity capital of INR1b. n In May 2013, the company’s 100% owned subsidiary, Capital First
Home Finance Private Limited, obtained a certificate of registration from the National Housing
Bank to commence housing finance business. n In 2015, the company raised equity capital of
INR3b via a QIP from marquee investors such as Goldman Sachs Asset Management. n CAFL
recently raised INR3.4b via preferential share allotment to GIC.

22
COMPANY VISION:-

 TO BE A LEADING FINANCIAL SERVICES PROVIDER – ADMIREDAND

RESPECTED FOR HIGH CORPORATE GOVERNANCE, ETHICSAND VALUES

 TO SUPPORT THE GROWTH OF SELF-EMPLOYED ENTERPRISESAND MSMES

IN INDIA WITH DEBT CAPITAL THROUGHTECHNOLOGY-ENABLED
PLATFORMS AND PROCESSES

 TO FINANCE THE ASPIRATIONS OF THE INDIAN CONSUMERS USING NEW-

AGE ANALYTICS AND TECHNOLOGY SOLUTIONS

23
 COPMANY’S VALUES

RESPONSIBILITY

We respect the fact that our investors have entrusted us with their capital, our partners with their
faith, our customers with their confidence and our employees with their aspirations. We will
measure our success by the success of our stakeholders and will work diligently to ensure that we
fulfill our fiduciary responsibility.

INTEGRITY

We firmly believe that the difference between a good business and a great organisation is the
integrity of its people. We will conduct ourselves ethically and transparently in all our dealings,
both internal and external.

LEADERSHIP

We will maintain an environment which fosters creativity and encourages innovation and run an
ethical organisation. We believe that this will enable us to attract, retain and nurture the best
talent and contribute to their growth.

MUTUAL RESPECT

We will build an organisation which has a positive mindset. By conducting every interaction with
respect and consideration, we will create a self-reinforcing culture of success.

COMMUNITY

We believe that it is our responsibility to contribute to the environment in which we operate. By

investing in our community, we will not only improve our surroundings today, but also provide
better opportunities for future generations.

24
 DIRECTORS AND SENIOR MANAGEMENT
N.C. Singhal
Independent Director
He is the founding Vice
Chairman & Managing Director
of SCICI Ltd. (since merged
with ICICI Ltd.).
He holds Post Graduate
qualifications in Economics,
Statistics and Administration
and was awarded the United
Nations Development
Programme Fellowship for
Advanced Studies in the field
of Project Formulation and
Evaluation, in Moscow and St.
Petersburg.
He has 57 years of experience
in corporate sector across
development finance, project
financing, and wholesale
lending and has a wide
experience in this field. He has
presided over a large number of
prestigious corporate boards
during his distinguished career.
Hemang Raja
Independent Director
He is the former Managing
Director and Head – India
of Credit Suisse Private
Equity Asia and was earlier
the MD & CEO of IL&FS
Investsmart Ltd.
He has served on the
executive committee of the
Board of the NSE and also
served as a member of the
Corporate Governance
Committee of the BSE
Limited.
He is an MBA from
Abilene Christian
University, Texas, with a
major emphasis on finance
and an Alumni of Oxford
University, UK.
He has a vast experience of
over 36 years in financial
services.
Dr. (Mrs.) Brinda
Jagirdar
Independent Director
She is the former Chief
Economist of State Bank of
India.
She is an independent
consulting Economist with
specialization in areas relating
to the Indian economy, both at a
macro level as well at a micro
level, keeps a close watch on
policy announcements, and is a
recognized voice in economic
circles in India.
She is a Ph.D. in Economics,
University of Mumbai, M.S. in
Economics from the University
of California, M.A. in
Economics from Gokhale
Institute, Pune and
B.A. in Economics from
Fergusson College, Pune.
She has over 36 years of
experience in banking industry.
25
V. Vaidyanathan
Chairman and Managing Director
He was earlier the MD and CEO
of ICICI Prudential Life
Insurance
(2009-10) and an Executive
Director on the Board of ICICI
Bank Limited (2006-09).
Between 2010-2012, he acquired
a stake in an existing finance
company, changed the business
model, and then secured an
equity backing of USD 159
million from Warburg Pincus
and founded Capital First as a
new entity and brand.
He is an alumnus of Birla
Institute of Technology and
Harvard Business School. He has
26 years of experience in
financial sector.
Vishal Mahadevia
Non-Executive Director
He is the Managing Director &
Co-Head, Warburg Pincus India
Private Ltd since 2006.
Previously, he was the Principal
at Greenbriar Equity Group, a
fund focussed on investment in
the transportation sector. Prior
to that, he worked at Three
Cities Research, a New York
based Private Equity Fund and
as a consultant with
McKinsey & Company.
He is a B.S. in Economics with
a concentration in finance and
B.S. in Electrical Engineering
from the University of
Pennsylvania.
He has a wide range of
experience of over 23 years
across private equity investing
in India and overseas.
Dinesh Kanabar
Independent Director
He is the CEO of Dhruva
Advisors LLP. Prior to
founding Dhruva, he held a
series of leadership positions
across several large
professional service
organizations in India. Most
recently, he was the Deputy
CEO of KPMG India where
he played a key role in
developing and implementing
the firm’s overall strategy.
He has handled some of the
biggest tax controversies in
India and has advised on
complex structures for both
inbound and outbound
investments.
He is a Fellow Member of the
Institute of Chartered
Accountants of India.
He has over three decades of
experience advising some of
the largest multinationals in
India.
26
Narendra Ostawal M. S. Sundara Rajan
Non-Executive Director Independent Director
He is a Managing Director He is the former Chairman &
of Warburg Pincus India Managing Director of Indian
Private Limited. Bank.
He has earlier worked He is a Post Graduate in
with Economics from University of
3i India Private Limited Madras with specialisation in
(part of 3i Group Plc, UK) Mathematical Economics,
during 2006- 2007 and National Income and Social
McKinsey & Company Accounting.
during 2002-2004.
He is also a Certified Associate
He holds a Chartered of Indian Institute of Bankers
Accountancy degree from and
Institute of Chartered Associate Member of Institute of
Accountants of India and Company Secretaries of India.
articled with PwC.
He has a total experience of over
He is an MBA from Indian 38 years in the Banking
Institute of Management, Industry.
Bangalore.
He has a wide range of
experience covering
consulting and private
equity investing for over
15 years. At Warburg
Pincus, he focuses his
effort in Financial
Services and
Healthcare.
Apul Nayyar
Executive Director
Apul is an Executive Director on the
Board of Capital First Limited (CFL).
He joined the Company in October
2010 and has successfully built a number
of retail businesses in the Company.
Previously, he has worked in leadership
positions across companies like India
Infoline (IIFL), Merrill Lynch and
Citigroup.
He holds a Chartered Accountancy
degree from Institute of Chartered
Accountants of India.
He has successfully concluded
Global Program for Management
Development (GPMD) from Ross
School of Business, Michigan, USA.
He has more than 19 years of experience
in the Financial Services Industry.
Nihal Desai
Executive Director
Nihal is an Executive Directoron the Board
of Capital First Limited (CFL).
He joined the Company in November 2012
and has successfully built a number of
support, control, technology and enabling
functions in the Company.
He has also worked with Serco India as
Managing Director and developed new
markets for its core and new BPO business.
He holds a degree in BE Computer Science
and PGDM. He has been part of numerous
management trainings from institutes
including Wharton and IIM-Ahmedabad.
He has more than 23 years of work
experience in the Financial Services
domain.
27
Pankaj Sanklecha
Chief Financial Officer &
Head - Corporate Centre
He is the Chief Financial Officer and
Head - Corporate Centre at
Capital First Limited. He joined the
Company in December 2010 as Chief
Risk Officer and was later appointed
as the Chief Financial Officer and
Head – Corporate Centre of our
Company in November 2012.
He has earlier managed retail
businesses in ICICI Bank and
Standard Chartered Bank.
He has obtained a Bachelor’s degree
in Commerce from the University of
Mumbai and is a qualified Chartered
Accountant.
He has more than 22 years of work
experience in the Financial Services
Industry.
 SWOT ANALYSIS OF CAPITAL FIRST

Chart No. 6

Source:- Motilal Oswal eport on Capital First 2017

28
A TRANSFORMATIVE JOURNEY OF CAPITAL FIRST LIMITED FROM
REAL ESTATE AND CORPORATE LOANS TO RETAIL LOANS

Chart No. 6

Reference:- CAPF annual report 2016-2017 Page No. 6

29
Chart No. 7

Reference:- CAPF annual report 2016-2017 Page No. 7

30
 GAINING MOMENTUM - GROWING RESPONSIBLY

CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITY OF CAPF

CAPITAL FIRST SCHOLARSHIP PROGRAM

Our flagship CSR program is called Capital First Scholarship Program (CFSP). We feel for
students who are capable and get admissions to MBA schools and their equivalents on their own
merit, yet cannot get their well deserved education because they can’t afford it as they belong to
the economically weaker sections of the society. We provide a scholarship of INR 1 lakh p.a. to
each qualifying student. In FY2016-17, we have granted scholarships to 56 deserving and bright
students. We share with you two sample stories of the 56 students who won the scholarships.

Since ours is a unique scholarship, which is primarily for students whose family income is less
than ` 6 lakh p.a., we do necessary verification in order to make sure that we give away
scholarships only to deserving students. Towards this end, Capital First has tied up with Times
Pro- An Education Venture of Times of India Group, which aims to provide a platform for
aspirants in the BFSI sector. The organization seeks to identify and nurture aspirants to deliver
industry ready talent, by focusing on providing academic inputs and practical nuances on the
BFSI sector.

31
 Capital First – BALM Fellowship Program

The Banyan Academy of Leadership in Mental Health (BALM) is a sister organization of ‘The
Banyan’, which was founded in FY07. The focus of this initiative is to advocate for positive
mental health, increased access to care and recovery, engage in research and capacity-building
towards making relevant policy changes in the mental health and development sectors and to
implement strategies to achieve visible outcomes, particularly in the context of persons affected
by homelessness and poverty.

Towards creating ‘change-makers’ who are capable of driving social innovations, BALM offers
masters’ programs, such as Social Work in Mental Health, Applied Psychology (Counselling),
Applied Psychology (Clinical) and Management, Entrepreneurship and Policy Analysis in Health
and Mental Health, in collaboration with the Tata Institute of Social Sciences (TISS).

All students with a family income of less than ` 1,50,000 per annum are eligible for Capital First
– BALM Fellowship Program. Further, after the program, all students engage in a key initiative
focussed on promoting mental health and wellbeing, either through the Capital First - BALM
Fellowship Program or through regular placement opportunities. The program offers students a
tuition waiver, rental and living stipend, support for local travel and travel for fieldwork
placements. It offers all students, access to the Language and Writing Centre at BALM that will
offer remedial English language classes and basic research skills.

EMPLOYEE SOCIAL RESPONSIBILITY

We took major efforts for employees to involve themselves in CSR directly. We are proud that
1,053 employees personally worked with 88 NGOs and contributed ` 52,64,950 on behalf of
Capital First, with their personal attention, as part of the CSR.

32
CAPITAL FIRST WOMAN OF SUBSTANCE

Towards empowering women from low income backgrounds, using our primary platform of
education, we have teamed up with the NGO - Etasha Society – to provide vocational training to
our focus group. The objective of this initiative is to offer training to women, between the ages of
18 and 30 years, who are keen to earn a living. We chose to work with Etasha as its community
mobilization team works tirelessly to engage with the local community through various
programmes and initiatives. The team works with local community leaders, NGOs and cultural
organizations to reach the youth segment.

CAPITAL FIRST EDUBRIDGE TRAINING PROGRAM

In collaboration with EduBridge, a Mumbai-based training organisation, we have set up a co-

branded career academy in Pune. Sponsored by Capital First Ltd., this academy provides job-
oriented retail, BFSI, IT/ ITeS and hospitality sector training and placements in reputed
organisations in these sectors.
Actively participating in this program, through sponsorship, monitoring and mentoring, we have
been able to mobilise 300 students till date at our Pune Academy. Out of these, 250+ students
have successfully completed the training and are now either preparing themselves for placements
or are successfully placed.

OM CREATIONS TRUST – SUPPORTING CHILDREN WITH DOWN SYNDROME

Capital First endeavours to help children / young adults with Down Syndrome to develop and
realise their potential, by giving them opportunities to study, acquire skills and integrate into the
mainstream. Our mission is also to empower them to lead.
The project Om Creations Trust has students from the SPJ Sadhana School with Specialised
Education in the Arts and Crafts, Hospitality and Catering skills. This enables them to earn a
living and also lead a more meaningful life. Through this initiative, we give stipends to 20
students who are from weaker sections of the society.

33
BALA JANAAGRAHA

Capital First in partnership with Bala Janaagraha runs an education programme for children in 12
schools in Bengaluru City. The programme focuses on teaching children the principles of good
citizenship and, in the process, delivering multiple other benefits to them. It therefore equips
them to become active citizens, change agents and leaders.

PROJECT SAMBHAVNA

Capital First decided to carry out training activities that cater to the aspirational development of
children at orphanages run by various NGOs that are supported by CSA (Catalysts for Social
Action). This project took off on February 20, 2017 and since then, we have trained 127 students
at four locations – Wagholi - Pune, ROH - Kharghar, GCH - Ulhasnagar and BLC - Goa. These
students gained immense exposure by visiting retail outlets, manufacturing units, sports and
fitness academies, hospitals, banks, etc. They were made aware of different professions and this
has enabled them to make better and wiser career choices. The students had to organise a
carnival, cultural event, exhibition, art show, etc. They also put up stalls and sold items which
they created and performed for the guests. The event ended with an award ceremony.

34
PROJECT SAKSHAM

In October 2016, Capital First partnered with NGO Animedh Charitable Trust (ACT) to sponsor
the launch of Project Saksham, an initiative in the broad arena of skill development and
livelihoods for women under the “learn and earn” format.
The syllabus has been designed along with garment manufacturing companies. The women will
be able to increase their individual earning capacity to ` 1 lakh per annum. CFL’s team,
comprising the (CFO, HR head, CSR team) visited the Saksham Centre at Jogeshwari West, in a
low income community, for a formal opening of the Centre and were pleased to see the women
beneficiaries engaged in the intensive training and eager to make the most of this opportunity for
skill development and livelihood.
Within the first quarter of a year-long association with Capital First Limited, 27 beneficiaries
started to learn and earn livelihoods in a factory-like environment, tailoring readymade garments
and becoming specialized.

SAMPARC

Capital First assisted SAMPARC in the completion of the ITI Building, enabling the Institute to
provide technical training, thereby generating employment opportunities for young adults from
nearby villages and accommodate needy students.

35
MASK DISTRIBUTION DRIVE

Pollution levels in the capital city was acute during November 2016 and affected children from
families who could not afford the masks or were not aware of its benefits. Hence, Capital First
distributed pollution masks to school children. We have distributed 13,500 masks to school
children.

We also distributed 5,000 masks to the Delhi Traffic Police. A small ceremony was arranged at
the Traffic police headquarters on December 30, 2016, which was attended by our ED, Mr. Apul
Nayyar, Mr. Ajay Kashyap (Special Commissioner Delhi Traffic Police) and Mr. B.K. Singh
(Additional Commissioner Delhi Traffic Police).

A large delegation of 140 employees of Capital First Delhi planned and participated in the event
tribes into the formal education system. Special books that were not part of the regular
curriculum were distributed to 4,419 students from the 16 schools identified.

36
MARWARI VIDYALAYA HIGH SCHOOL - TEACHER EDUCATION PROJECT

They say that “Teachers who love teaching teach children to love learning.” Accordingly, there is
a need to employ dedicated and quality teachers who believe in the power of an education and
have good subject knowledge. In this regard, Capital First is supporting Marwari Vidyalaya High
School (MVHS) with a special focus on teachers because we understand the criticality of teacher
training and education. MVHS will impart training to teachers and holds workshops on matters
such as evaluation methods, conducting experiments and activities, teaching styles, dealing with
students with learning disorders, computer training, soft skills and curriculum development.

37
 METHODOLOGY

SAMPLING STRATEGY

METHODS OF DATA COLLECTION -

This study was based on the annual report and other official data of respective company. Hence
the information related to organization structure, financial highlights and Marketing Operations
and Product & Quality assurance and turnover are genuine and true as published by Company.

Secondary Data-
Annual Report
Company Website
Official Data
Newspaper
Company Journals & Magazines

Tools Applied -

To have a meaningful analysis and interpretation of various data collected the

following tools were made, for of this study.

 Corporate Social Responsibility

1. Corporate Culture
2. Vision & Mission
3. CSR activity done by Capital First Limited
4. Programs under CSR activity

38
 RESEARCH DESIGN

The research design is a combination of descriptive research and exploratory research.

Exploratory Research

Exploratory research is a type of research conducted for a problem that has not been
clearly defined. Exploratory research helps determine the best research design, data collection
method and selection of subjects. It should draw definitive conclusions only with extreme
caution. Given its fundamental nature, exploratory research often concludes that a perceived
problem does not actually exist.

Descriptive Research

Descriptive research is known as statistical research, describes data and characteristics

about the population or phenomenon being studied. Descriptive research answers the questions.
Although the data description is factual, accurate and systematic, the research cannot describe
what caused a situation. Thus, Descriptive research cannot be used to create a causal relationship,
where one variable affects another. In other words, descriptive research can be said to have a low
requirement for internal validity.

39
 RESULTS (DATA ANALYSIS)

Capital First has very strong organizational structure and well qualified management team. Over
past four years, the company has introduced and scaled- up new products such as unsecured
MSME financing and CD/2W loans.

CSR
+

Importance of CSR

Role of SCR in organizations

CSR on Global Plateform

SOCIAL RESPONSIBILITIES HIGHLIGHTS by CapF

Mother teressa’s word on CSR

Activites done by Capital First

SOCIAL RESPONSIBILITIES HIGHLIGHTS

40
OPERATING PROFIT AND OPERATING PROFIT MARGIN (RS. IN CR.)

Chart No. 10

Source:- moneycontrol.com/capital first/financial graphs.

Interpretation:- Operating Profit and Operating Profit Margin both increasing year on year,
which shows company has good control on its cost management system. It utilizes optimum of its
resources.

41
EBITDA, PBT AND PAT (Rs. In Cr.)

Chart No. 11

Source:- moneycontrol.com/capital first/financial graphs.

Interpretation:- EBITDA, PBT and PAT all three are increasing, hence it proves company
handling proper its operation of business and capturing market with higher market share. It also
indicates that company has very strong financial as compare to its peers.

42
COMPANY’S DIVIDEND PAYOUT RATIO:- (IN %)

Chart No. 12

Source:- Capital First Annual Report 2017

Interpretation:- Capital First Ltd is increasing its dividend payout ratio every year from 2013 to
2017 and also growing its business. So further we can estimate growth in dividend payout ratio if
economy will be stable in future also.

43
 DISCUSSION

Capital First Limited is a niche play in the retail NBFC space with a diversified
portfolio. Its business model offers high growth potential with strong profitability and
low competition.
While the company has grown its AUM at 26% CAGR over FY12-17, it has not
compromised on asset quality. Its asset quality remains pristine, with the GNPL ratio
at ~1% over past five years.
I expect asset quality to remain stable, as the company is focusing on segments where
it has good underwriting knowledge.
I believe the return ratios have been suppressed as CAFL has made significant
investments in manpower and technology in all its retail and SME business segments.
In addition, its margins were low due to a large share of LAP and heavy reliance on
bank funding. I expect significant margin improvement and stable asset quality to
drive RoA/RoE improvement from 1.6%/12% in FY17 to 1.9%/17% in FY20. I

44
 HYPOTHESIS TESTING

Set 1.
H0:- Efficient management process leads to smooth working of Capital First Limited.
H1:- Efficient management process leads to dull working of Capital First Limited.

Efficient management process helps in providing framework, guidance to all employee,

smooth work activity and high efficient business without any misguidance. A formal outlined of
company’s structure makes it easier to add new policy and business development ideas easily.

HENCE HYPOTHESIS H0 IS ACCEPETED AND H1 IS REJECTED.

Set 2.
H0:- Efficient business strategy helps to generate profit of Capital First limited.
H1:- Efficient business strategy does not helps to generate profit of Capital first limited.

45
A course in business strategy helps individual to improve their decision making capabilities in
significant way. Every employee will encouraged to gather information from diverse sources
investigate facts thoroughly examine the opinions of affected parties initially and resolve issues
through joint, interactive sessions. Strategic decision making is not a one man show. Both the
manager and the subordinates must be willing to dissolve their differences examine facts
objectively and arrive at decisions to mutual satisfaction. One can develop skills of this nature of
course only through experience and observation. A Course in Business policy helps participants
to understand the linkages between various functional specialties decide things objectively and
rationally.

HENCE HYPOTHESIS H0 IS ACCEPETED AND H1 IS REJECTED.

CONCLUSIONS

CAFL is a niche play in the retail NBFC space with a diversified loan portfolio. Its business
model offers high growth potential with strong profitability and low competition.

The segments it operates in largely underpenetrated and have huge growth potential.

With the change in ownership and management of the company in FY11, the top priority was to
improve asset quality and clean the balance sheet. CAFL also took a provision hit on its
investments in subsidiaries as it planned to exit non-core businesses.

Over past four years, the company has introduced and scaled-up new products such as unsecured
MSME financing and CD/2W loans. The share of unsecured MSME financing has increased
from 1% in 1QFY14 to 18% currently, while that of CD (3% to 13%) and 2W (3% to 10%)
financing has also inched up.

CAFL also offers affordable home loans, primarily to the self-employed segment, through its
wholly owned subsidiary, Capital First Home Finance Ltd.

46
Since the entry of Mr Vaidyanathan, the company has focused on diversifying and de-risking its
balance sheet. It launched SME Loans, consumer durable loans, two wheeler loans and gold loans
(gold loans business was eventually closed in FY15, though). It also laid more emphasis on
unsecured SME loans and cross-selling of personal loans while it de-emphasized wholesale
lending.

FINDINGS

Capital First ltd is one of the leading NBFC with fast growing business. It primarily focus
on self-employed segments, through its wholly owned Capital First Home finance ltd.
It has very strong financial data with good growth rate.
All the Board of Members and Management Committee of Capital First is highly
qualified and global experienced in the field of finance. They have strong analytical skills
and strategy making experience, results of this we can see in reports that it has grown its
retail loan with very fast growth rate.
From the financial report, company growing its reserves and surplus, EPS, Asset and
business revenue.
Its vision shows that company has full effort on the growth purely financial product.
“Capital First” is a lesser known brand in India since it is newly conceptualized. But it is
gaining recognition in the marketplace of late. Reviews are also very positive.
Number of customer financed grew from a few thousand to over four million within five
years.
Its Retail Loans grows from 10% in 2010 to 93% in 2017. Which indicates big
opportunity in retails loans in Indian economy.
47
 SUGGESTIONS

Capital first in one of the best company in the field of NBFC as compare
to its peers with its highly experienced board members and strong
management approach. Its financial data is also shows uptrend in its
number year on year. It has very strong business growth and market
opportunity. It is one of the public listed company with undervalued
share price. So it is an opportunity for long term investor also to invest
in it for long period.

48
 BIBLIOGRAPHY

1 Mr. Bose Tapas Kumar- Issue –4,Oct. 2013 - , The environment of public enterprises in
India a study of its structure nature and implications for effective management-
International Refereed Research Journal.
2 Shreekala Padma Nabhan- 18 - January, 2015 - , A study of organizational structure
selected aspects of management work culture and problems of Ashtavinayak temples in
Maharashtra -Journal of Finance and Accountancy.
3 Reddy, D. N. MadhuSudana -Dec - 2015 - “Organizational culture and its impact on
organizational effectiveness, a comparative study of public and private sector enterprises”
- R Econ General Publications.
4 SamantaraySudhir K -1st June 2014 - The impact of organizational culture structure and
strategy on organizational health and effectiveness.- INTERDISCIPLINARY JOURNAL
OF CONTEMPORARY RESEARCH IN BUSINESS.
5 SouvikBanerajee - June 2016 - ”Determinants of Dividend Policy for Cement Sector in
India: an Empirical Analysis” - SCMS Journal of Indian Management.
6 Mr. Bhowmick, Debasish –May 2011- “Studies on organisational efficiency in relation to
organisational structure and form with special reference to Durgapur steel plant”.– July –
2015 - European Journal of Accounting Auditing and Finance Research.
7 Mr. ParmarSanjeev– Feb -2009 – “A comparative study of management and operations of
state financial corporations of Himachal Pradesh and Haryana” –Journal of International
Research Finance.
8 https://www.moneycontrol.com/capitalfirst/
9 Report based on capital first stock research from Motilal Oswal.

49