Business Analysis Sundaram Finance Limited Essay - 611 Words

CHAPTER 1 INTRODUCTION 1.1 OBJECTIVE OF THE PROJECT The project was done in Sundaram Finance Limited. It is a Non Banking Financial Company which accepts deposits from customers, and gives out loans, and also performs leasing and hire purchasing functions. Vehicle financing takes up a huge chunk of the company’s operations. Among the three types of vehicle financing (Hypothecation, leasing, and hire purchasing), leasing is done majorly to huge and well performing corporate. So the need for credit appraisal is rendered moot in that case. While in the case of hypothecation and hire purchasing, the customers range from individuals with sporadic income streams to companies. Therefore, in order to safeguard the profitability of the company,†¦show more content†¦For people belonging to the salaried class, pay slips and Form 16 are studied; for businesses, the Profit and Loss statements, Income and Expenditure statements, Balance Sheets are studied. 1.3 IMPORTANCE OF CREDIT APPRAISAL As mentioned earlier, credit appraisal forms the backbone of the hire purchasing department without which the company would be at a loss for choosing customers. Credit appraisal ensures that the company is choosing the right customers without adding to its Non Performing Assets and compromising its profitability. It is extremely important that a company should mitigate its credit risk. Credit risk is the risk associated with non repayment of loans. This can be done by using credit appraisal 1.4 Scope of the project The scope of the project is confined to the analysis of three years of data of customer companies for the credit appraisal process, a sample of 175 contracts to study the recovery pattern, and five years of data to analyse the profitability of Sundaram Finance Limited. The study was conducted only for cars and commercial vehicles customers and not other types of financing like tire and fleet card. 1.5 Limitations of the project The following are the limitations of the project The credit appraisal procedure varies from one NBFC to another. Therefore it cannot be used to generalize or to study about the industry. 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