A Study on Financial Performance of Muthoot Finance and Cholamandalam Finance

Abstract

This study is based on the financial performance of Cholamandalam Finance and Muthoot Finance. The aim of the study is to compare the financial performance of both the company for the period of ten years using CAMEL approach, this study helps in understanding the importance of financial management and analyzing the overall performance using the camel rating system for NBFC sector.

The crucial part of analysis is collection of data and analyzing the data from the company point of view because different company considers different aspect of the calculations of the financials.

The financial performance is analyzed with the help of five important factors Capital adequacy, asset quality, management efficiency, earnings quality, liquidity. Through the help of these factors the company performance can easily be analyzed and interpreted. To analysis the soundness of the company performance tools like ratio is used and statistical tools such as descriptive, independent sample t-test were used. The data used for the analysis is secondary source of data collected from the annual report of the company websites and other trusted source. Table and graphs were used to find out difference in better between the companies performance and interpretation of the data became easier and successful in conveying the reports to the reader.

Cholamandalam Finance and Muthoot Finance are pioneers of the NBFC sector who have the role of being the early starters of NBFC sector in India. Both have a long journey of more than 100 years in successful operations in the business in NBFC sector. But when comparison is made between them on the application of CAMEL model, Muthoot Finance is performing better than Cholamandalam Finance in terms of most of the components.