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Comparative Financial Statements of HDFC Standard Life Insurance.
Introduction
Introduction to finance:
Finance studies and addresses the ways in which individuals,
businesses, and organizations raise, allocate, and use monetary resources
over time, taking into account the risks entailed in their projects. The
term "finance" may thus incorporate any of the following:
➢ The study of money and other assets.
➢ The management and control of those assets,
➢ Profiling and managing project risks,
➢ The science of managing money,
➢ As a verb, "to finance" is to provide funds for business or for an
individual's large purchases (car, home, etc.).
The field of finance deals with the concepts of time, money and
risk and how they are interrelated. It also deals with how money is spent
and budgeted. Finance works most basically through individuals and
business organizations depositing money in a bank. The bank then lends
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the money out to other individuals or corporations for consumption or

investment, and charges interest on the loans.
The activity of finance is the application of a set of techniques that
individuals and organizations (entities) use to manage their money,
particularly the differences between income and expenditure and the
risks of their investments.
An entity whose income exceeds its expenditure can lend or invest
the excess income. On the other hand, an entity whose income is less
than its expenditure can raise capital by borrowing or selling equity
claims, decreasing its expenses, or increasing its income.
Finance is used by individuals (personal finance), by governments

(public finance), by businesses (corporate finance), as well as by a wide
variety of organizations including schools and non-profit organizations.
In general, the goals of each of the above activities are achieved through
the use of appropriate financial instruments, with consideration to their
institutional setting.

Finance is one of the most important aspects of business

management. Without proper financial planning a new enterprise is
unlikely to be successful. Managing money (a liquid asset) is essential to
ensure a secure future, both for the individual and an organization.
Financial Management:
Management of funds is an important aspect of financial
management. Management of funds acts as the primary concern
whether it may be in a business undertaking or in an educational
institution. Financial management, which is simply meant dealing with
management of money matters.

Meanings of Financial Management:

Financial Management mean efficient use of economic resources
namely capital funds. According to Phillippatus, "Financial management
is concerned with the managerial decisions that result in the acquisition
and financing of short term and long term credits for the firm". Here it
deals with the situations that require selection of specific assets, the
selection of specific problem of size and growth of an enterprise. Here
the analysis deals with the expected inflows and outflows of funds and
their effect on managerial objectives. So the analysis simply states two
main aspects of financial management like procurement of funds and
an effective use of funds to achieve business objectives.
Objective of Financial Management:

Financial management of any business firm has to set goals for
and interpret them in relation to the objectives of the firm. Broadly there
are only two alternative goals/ objective of financial management.

1. Specific objectives:
a) Profit Maximization:
It is consider as an important goal in financial decision making in
an organization. Maximization is the condition achieving the maximum
target profit with available resources in an economic and efficient
manner.
b) Wealth maximization:
It refers to the maximization of wealth by maximization in the
market value of shares of a company. The efficient of an organization
maximizes present not only for shareholders but for including
employees, customers, suppliers and community at large. It is the
ultimate objective of every organization.
1. General objective:
a) Balance asset structure:

A proper balance between the fixed assets and current assets is an

important factor for efficient managements of funds. This is one of the
objectives of financial management that size of current asset must permit
the company to exploit the investment on fixed assets.
b) Liquidity:
Liquidity refers to available cash and it is an indication of positive
growth of a company. It is an important factor for meeting the short and
long term obligation of a firm.
c) Proper planning of funds:

Proper planning of funds include acquisition and allocation of
funds in the best possible manner that is minimum cost of acquisition of
funds but maximum returns through wise decision.
d) Efficiency:

Efficiency and effectiveness are very much necessary in

controlling flow of funds. The efficiency level should continuously
increase for betterment of statements etc.
e) Financial discipline:
There shouldn’t be any mishandling of funds, misuse etc. Proper
discipline should be practiced in matters relating to finance, its flow and
control. This can be done through various techniques like budgeting
funds flow statement etc.
Scope of financial management:

The scope of financial management is determined from the stages
of development of the study. Financial management developed as a
separate subject from economics in the year 1920. Its scope has enlarged

to make it an integrated and complete subject for every organization.

Since 1950 it has assumed an important status.
Traditional scope of financial management:

Traditionally financial management was used by corporate
organizations mainly for the purpose of finding the sources of funds and
the methodologies of raising them from such sources and utilizing them
for the organizations requirements. It also incorporated the legal and
accounting requirements relating to sources and uses of funds.
Traditionally Financial Management was known as Corporation Finance
and was called the outsider looking approach.
Its emphasis was centred on the following three issues:
• To organize funds from different sources like banks, investment
companies and financial institutions.
• To use financial instruments in the form of shares, debentures,
bonds, fixed deposits for company’s requirements.
• To settle the organization of funds through proper
administration, legal advice and proper accounting records.

Modern Financial Management:

Modern Financial Management is a concept of overall
management of a company. Its scope is broadly divided into three
important decisions which may also be called the functions of financial
management. These are investment decisions, financing decisions and
dividend decisions. It covers the areas of sourcing of funds, financial
analysis, attaining an optimum capital structure, profit planning and
control, project planning and evaluation and corporate taxation. It takes
care of internal and external management of funds and covers the
requirements of different groups of people such as shareholders,
management, investors, government, customers and suppliers.
1. Investment Decision Making:

A firm is required to take decisions relating to acquisition of long term
assets and current assets. Capital investment proposals require heavy
investment.

2. Financing Decisions:
A financial manager has to procure funds from different sources. He has
to decide the quantum of funds and the type of source that he should use
for the firm. There is a cost attached to every source of fund and hence
balance has to be maintained between debt and equity.
3. Dividend Decisions Making:
Dividend decision making pertains to an analysis of the right amount of
dividend to be distributed to shareholders. It has to take care of the legal
restrictions and accounting processes before giving a dividend. The
correct decisions have to be taken regarding the percentage of reserves
before distribution of dividends.
4. Balancing Profitability And Liquidity:

Conflicts in goals have to be solved as they are within the ambit of the
scope of financial management. A firm has to balance its conflicts
between being profitable and liquid. When profitability increases a

financial manager may have the problem of low liquidity as all the funds
may be used to make the profitable. Similarly, if there is too much
availability of funds but the firm does not make use of them then a cost
will be attached to it. Hence the scope of financial management is to
balance conflicts in profitability and liquidity.
5. Risk and Return:

High return brings about high risk but an organization has to consider
several factors before undertaking high risk because it can make loss if
decisions are not taken properly. Therefore, the scope of financial
management is to invest cautiously through proper calculations by
applying techniques through matching of risk with return.
The organizations structure of financial management:
BOARD OF DIRECTORS
PRESIDENT

Vice-President Vice-President Vice-President

Marketing Finance Production
Chief Chief
Finance Finance
Manager Manager
(Controlle (Treasurer)
Tax Financial Capital Cash

Manager Accounting Expenditur
Manager e Manager Manager
Cost Data Credit Portfolio

Accounting Processing Collection Manager
Manager Manager Manager
Appraisal Appraisal
or or
Reporting Reporting

Financial performance:
Financial performance is about knowing how the firm is doing
and what its financial condition. The stakeholders of a firm are
interested broadly knowing about the firm’s financial conditions. Of
course, their specific concern may differ. Trade creditor and short term
lenders are interested primarily in the short term liquidity of the firm its
ability to pay its due in the next 12 months or so. Terms lending
institutions and debenture holders have a relatively longer time horizon
are concerned about the ability to service its debt over the next five to
ten years. Long term shareholders and managers who want to make a
career with the firm are interested in the profitability and growth of the
firm over an extended period of time. To understand the financial
performance and conditions of a firm, its stakeholders look at their
financial statements .viz.
1. The Balance Sheet
2. The Profit and Loss Account

Note: The companies Act requires that the annual report of the
company, a public document that is sent to shareholders, contain the
balance sheet, the profit and loss and account, the Director’s report and
the auditor’s report. Though not presently required by law, most of the
companies present fund flow and cash flow statement as well in the
annual report.
Analyzing financial performance:
Financial analysis depends primarily on financial; statements to
diagnose financial performance. If properly analyzed and interpreted,
financial statement can provide valuable insights into a firm’s
performance.
Financial statements, their uses and significance:

Financial statements are formal records of the financial activities
of a business, person, or other entity. Financial statements provide an
overview of a business or person's financial condition in both short and
long term. All the relevant financial information of a business enterprise

presented in a structured manner and in a form easy to understand, is

called the financial statements. There are four basic financial statements:
1. Balance sheet:
It is also referred to as statement of financial position or condition,
reports on a company's assets, liabilities, and Ownership equity at a
given point in time.
2. Income statement:
It is also referred to as Profit and Loss statement (or a "P&L"), reports
on a company's income, expenses, and profits over a period of time.
Profit & Loss account provide information on the operation of the
enterprise.
3. Statement of retained earnings:
It explains the changes in a company's retained earnings over the
reporting period.
4. Statement of fund flows:

It indicates various means of how the funds have been obtained and the
way of using the funds in a certain period.
5. Statement of cash flows:

It reports on a company's cash flow activities; particularly its operating,
investing and financing activities.
Financial statement analysis:

Financial statement analysis refers to an assessment of the
viability, stability and profitability of a business, sub-business or project.
It is performed by professionals who prepare reports which are usually
presented to top management as one of their bases in making business
decisions.
Steps involved in the analysis of financial statement:

From a study of the meaning of analysis of the financial

statement, it is clear that the work of analysis of financial statements
involved three steps or processes they are:
1. Analysis:
The data shown in the financial statements are either the balance of
individual account or groups of balance of many accounts. As a result,
they lack homogenizing and uniformity. They are not of much help to an
analyst, who requires homogenize and comparable data for judging the
profitability and the financial position of concern. So, to obtain the
desired homogeneous and comparable data (i.e the inter connected data)
the figures founding the financial statement have to be analyzed.
2. Comparison:
Mere splitting up or regrouping of the figures found in the
financial statements into the desired component part is not sufficient for
judging the profitability and the financial status of an enterprise. After
the figures contained in the financial statements are dissected or split
into the required comparable compound parts and must be compared

with each other and their relative magnitudes (i.e., their relationship
must be measured)
3. Interpretation
After the financial statement are analyzed or dissected into
comparable components parts and it is measured through comparison the
results must be interpreted.
Types of Financial Statement Analysis:

a. Internal and External Analysis.
When analysis in done on behalf of the management who have access to
the internal accounting records of the firm, it is called internal analysis.
External analysis is done by outsiders like shareholders, creditors,
investors and potential investors, government agencies, etc. who don't
have access to the detailed internal records of the firm.
b. Horizontal and Vertical Analysis.

Horizontal analysis is that which covers financial data of more than one
year. The figures for various years are presented horizontally over a
number of columns. This type of analysis is also called dynamic
analysis. Vertical analysis, also known as static analysis, covers a period
of one year only and analysis is made on the basis of one set of financial
statements.
c. Long term and short term analysis.

This analysis is made in order to study the Long term stability, solvency
and liquidity as well as profitability and earning capacity of a business
concern.
Short term analysis is made to determine the short term solvency,

stability and liquidity as well as earning capacity of a business concern.
User of Financial Statement Analysis:
Information contained in financial statements is useful to different
categories of users of financial data:

1. Management:
Management of a company is interested in its financial condition,
profitability and progress. It uses a number of methods, tools and
techniques available to it to analyze the financial data.
2. Shareholders:
Shareholders are the suppliers of basic capital to run the business.
Such capital is exposed to all the risks of ownership. Shareholders are
interested in the profitability, dividends declared and market value of
their holdings.
3. Creditors:
Creditors include short-term creditors like bankers, trade creditors
and also long term credit grantors like debenture-holders and financial
institutions etc. All creditors are mainly interested in the short term and
long-term solvency of the company. They are also interested in

profitability because profit is viewed as the primary source for payment

of interest on loans and debentures.
4. Purchaser of Business:
Any person interested in the purchase of a going concern analyses
the financial statements to determine its real value. It makes an
assessment of the financial and operating strengths and weaknesses of
the business.
5. Government:
Financial statements are used by various government departments
like Income Tax, Sales Tax, Excise Duty etc. to determine the tax
liability of the company.
Tools of Financial Statements:

In the analysis of financial statements, the analyst has available a
number of tools from which he has to choose best suited for his specific

purpose. The following are the principal tools of analysis of financial

statements.
a) Comparative Financial Statements.
b) Common-size Financial Statements.
c) Trend percentage analysis.
d) Funds flow statement.
e) Cash flow statement
f) Net working capital analysis
g) Cost-volume profit analysis
h) Ratio analysis
1. Comparative financial analysis:
These statement are prepared in away so as to provide time perspective
to the consideration of various element of finance position embodied in
such statements. This is done to make the financial data more
meaningful. The statement of two or more years are prepared to show
absolute data of two or more years is increased or decreased in absolute
data in value and in terms of percentages

Comparative statements can be prepared for both

a) Income statement, as well as
b) Position statement or balance sheet.
Comparative financial statement analysis:

Comparative financial statement analysis is an important tool of
horizontal analysis it is very effective in analyzing and interpreting
financial statements.
Meaning of comparative financial statement analysis:

Comparative financial statement analysis is the study of the trend
of the same items, group of items and computed items in two or more
financial statement of the same business on different dates. In other
words, it is an analytical study of the different item in the financial
statement of a business under taking over a period of time.
Definition of comparative financial statement analysis:

In other words, Fouke, comparative financial statements of the

financial position of a business so planned as to provide time perspective
to the consideration of various element of financial position embodied in
such circumstances.
Contents of comparative financial statements:

Comparative financial statements generally contain the following
data for the purpose of analysis.
➢ Absolute data in money values, as found in the financial

statements of the current period and preceding period.
➢ Change in absolute data in money values in the current period.
➢ Changes in absolute data in terms of percentages.
➢ Comparisons of absolute data expressed in ratios.
Objective of comparative financial statements:

The main Objective of comparative financial statements is...

➢ To indicate the magnitude and direction of changes in various

accounting figures.
➢ To ascertain the strength and weakness of business
undertaking in terms of liquid, solvency and profitability.
Advantages of comparative financial statements analysis:

Financial data become more meaningful when compared with
similar data of a previous period.
a. An analyst will be able to draw useful conclusion easily where

figure of more periods are given side by side in a comparative
statements. For instance, when sales figure of previous period are
given a long with the sales figure of the current period, an analyst
will be able to interpret the result easily.
b. Comparative financial statements facilitate comparisons between

two or more years side by side. The trends in a number of

accounting figure relating to the performance, efficiency and

financial position of a business can be understood through the use
of comparative financial statements. For instance, comparative
income statement indicates the trend in sales, cost of production,
gross profits, operating expenses and efficiency of the undertaking.
Similarly, comparative position statement indicates the

trends in working capital, fixed capital and retained profits, helping
the analyst to evaluate the liquidity, solvency and profitability of
the undertaking.
c. Comparative financial statements are useful for meaningful

forecasting and planning of business activities. On the basis of the
nature of changes, quality of changes and direction of changes
disclose of comparative financial statements, future trends of the
concern can be forecast with greater precision.
1. Common-size statements:

The percentage balance sheet is often known as the common size

balance sheet. Such balance sheet are, in a broad sense ratio analysis
general items in the profit and loss accounts and in the balance sheet are
expressed in analytical percentages when expressed in the form, the
balance sheet and profit and loss account are referred to as a common
size statement. Such statements are useful in comparative analysis of the
financial position in operating results of the business.
2. Trend percentage:
This analysis is an important tool of horizontal financial analysis.
This method is immensely helpful in making a comparative study of the
financial statements of several years. Under this method trend
percentages are calculated for each item of the financial statements
taking the figures of base year as in the starting year is usually taken as
the base year. The trend percentages show the relationship of each item
with preceding year’s percentages. These percentages can also be
presented in the form index. Numbers showing relative changes in

financial fact of certain period. This will exhibit the directions (i.e.,
upward or downward trend) to which the concern is proceeding. The
trend nations may be compared with the industry in order to know the
strong or weak point of the concern. These calculations are only for
major items instead of calculating for all items in the financial
statements.
3. Fund flow analysis:

Fund may be interpreted in various ways as Cash, Total current
assets, Net working capital, and Net Current Assets. For this purpose
Fund flow statement is prepared. The term fund means net working
capital. The flow of fund will occur in a business, when a transaction
results in a change in increase or decrease in the amount of funds.
Definition:
Foulke, define this statement as:

“a statement of source and application of fund is a technical

device designed to analyze the changes in the financial condition of a
business enterprise between two dates.”
4. Cash flow statement:

A cash flow statement is the financial analysis of the net income
or profit after including book expense items which currently do not use
cash; for example, depreciation, depletion and amortization. Revenue
items, which do not currently provide funds, are to be deducted. A gross
cash flow is net profit after tax plus provision for depreciation. A net
cash flow is arrived after deducting dividends from the gross cash flow.
The cash flow is very significant because it represents the actual amount
of cash available to the business.
5. Statements changes in working capital:

This statement is prepared to know the net changes in working

capital of the business between two specified dates. It is prepared from
current assets and current liabilities of the said dates to show the net
increased or decrease in working capital.
6. Cost–Volume–Profit Analysis:
Cost – Volume – Profit Analysis is a technique for studying the
relationship between cost, volume and profit. Profit of an understanding
depends upon a large number of factors. But the most important of these
factors are the cost of manufacture, volume of sales and the selling
prices of the product.
7. Ratio Analysis:
Financial ratio analysis is the calculation and comparison of ratios
which are derived from the information in a company's financial
statements. The level and historical trends of these ratios can be used to

make inferences about a company’s financial condition, its operations

and attractiveness as an investment.
Financial ratios are calculated from one or more pieces of

information from company’s financial statements. For example, the
"gross margin" is the gross profit from operations divided by the total
sales or revenues of a company, expressed in percentage terms. In
isolation, a financial ratio is a useless piece of information. In context,
however, a financial ratio can give a financial analyst an excellent
picture of a company's situation band the trends that are developing.

Introduction to insurance:
Life Assurance was born in England when the first policy
providing temporary cover for a period of 12 months was issued as easy
as 1583 A.D. The Amicable Society started granting fluctuating sum on
death since 1705 and a fix sum since 1757, with the development of
mortality tables, the life Assurance acquired a scientific character. The
Equitable Society founded in 1762 was the first Society established on
scientific basis.
Origin of life insurance in India:

In India, after failure of to British companies, the European and
the Albert in 1870, which attempted writing business on Indian lives,
first Indian Life Assurance Society was formed in the same year called
Bombay Mutual Assurance Society Limited. The Oriental Life
Assurance Company Limited in 1874, Bharat in 1896 and Empire of
India in 1897 followed it. The idea of insurance was born out of a desire

of the people to share loss of an individual by many. Originally it

restricted to forms other than life assurance. It started with Marine
Insurance, where the losses on account of perils of sea forms of
insurance, is found in the codes of Hammurabi, Manu (Manav Dharma
Shastra). The word ‘Yogakshema’ is used in the Rig Veda suggesting
that some form of community insurance was practiced by the Aryans in
India over 3000 years ago.
In India during Buddhist period burial societies existed which
were mutual in their character and used to help a family by building a
house, protecting the widow, marrying the girls.
The Swadeshi Movement of 1905 provided impetus to the

formation of several companies such as the “Hindustan Cooperative’,
the ‘United India’, the ‘Bombay Life’, the ‘National’. Further in the
wake of freedom movement number of companies such as the ‘New
India’, the Jupiter the ‘Lakshmi’ emerged.

The government began to exercise a certain measure of control on

Insurance business by passing the ‘Insurance Act’ in 1912. For
controlling investment of funds, expenditure and management, a
comprehensive Act was passed know as the insurance Act 1938’. For
controlling the affairs, the office of Controller of Insurance was
established. The act was extensively amended in 1950. In the year 1955,
approximately 170 Insurance offices and 80 Provident Fond Societies
had been registered for transacting Life Assurance business in India. The
concept of trusteeship was lacking. Many insurance companies went into
liquidation. There were malpractices in insurance business. For
achieving the following purposes it was felt necessary to nationalize the
insurance business in India.
The first in this direction was taken by the Government of India

by issuing the life Insurance (the Emergency provisions) Ordinance,
1956 on 19th January. The then Finance Minister, Shri C.D. Deshmukh
mentioned the purpose of nationalization as reaching the goal of

socialistic pattern of society, rendering genuine service to the people in

the rural areas.
Insurance activity in India is going on for more than 150 years. In

India, life insurance in its modern form was brought for the first time by
the Britishers. The Oriental Life Insurance Company started in 1818 in
Calcutta was the first to be founded in India by Europeans to help the
widows of their community. The general insurance business in India, on
the other hand, can trace its roots to him Triton Insurance Company Ltd,
the first general insurance company established in the year 1850 in
Kolkata by the British. The year 1870, saw the birth of first Indian
Insurance Company namely, Bombay Mutual Life Assurance Society.
The basic aim of this company was to insure Indian lives at normal rates
since in the earlier period. Indian lives were treated as subnormal and
loaded with an extra premium of fifteen to twenty per cent. However,
right up to the end of 19th century, the foreign insurance companies in
India had an upper hand in matters of Insurance business. Insuring
Indian lives with 10 percent of extra premium was a common practice

prevalent in those times. The Indian Life Assurance Companies were the
first to regulate the life insurance business in 1912. In 1928, the Indian
Insurance companies act enabled the government to collect statistical
information about both life and non life insurance business. Later, the
insurance Act of 1938 was passed and department of insurance under
authority of superintendent of insurance was established for the
administration of the Act. Up to 1939, 199 companies were working in
India. However, the period 1939-55 was marked by:
➢ Series of amendments to the insurance Act, 1938.
➢ Appointment of a committee under the Chairmanship of Sir
Cowasji Jahangir to enquire into and to recommend measures to
check certain trends and undesirable features in the management of
insurance companies.
➢ The findings of the subcommittee on insurance under the National
Planning Commission headed by Pt. Jawaharlal Nehru.
➢ Partition of India.
➢ De-valuation of rupee on September 18, 1949.
➢ The insurance Amendment Act.

➢ The rate war and cut throat competition between insurance

companies.
➢ The founding of the Jiwanlal Chimanlal Setawad Memorial--The
Federation of Insurance Institutes.
Need for life insurance:

➢ Risks and uncertainties are part of life's great adventure -- accident,
illness, theft, natural disaster - they're all built into the workings of
the Universe, waiting to happen.
➢ Insurance then is man's answer to the vagaries of life. If you cannot
beat man-made and natural calamities, well, at least be prepared for
them and their aftermath.
➢ Insurance is a contract between two parties - the insurer (the
insurance company) and the insured (the person or entity seeking
the cover) - wherein the insurer agrees to pay the insured for

financial losses arising out of any unforeseen events in return for a

regular payment of "premium".
➢ These unforeseen events are defined as "risk" and that is why
insurance is called a risk cover. Hence, insurance is essentially the
means to financially compensate for losses that life throws at
people - corporate and otherwise.
➢ The principle of insurance works on the concept of a large number
of people exposed to a similar risk making a contribution to a
common fund. Those who suffer losses due to the occurrence of
these events are compensated for them from this fund.
Life insurance as an investment:

Insurance is an attractive option for investment. While most
people recognize the risk hedging and taxes saving potential of
insurance, many are not aware of its advantages as an investment option

as well. Insurance products yield more compared to regular investment

options, and this is besides the added incentives offered by insurers.
You cannot compare an insurance product with other investment

schemes for the simple reason that it offers financial protection from
risks, something that is missing in non-insurance products. In fact, the
premium you pay for an insurance policy is an investment against risk.
Thus, before comparing with other schemes, you must accept that a part
of the total amount invested in life insurance goes towards providing for
the risk cover, while the rest is used for savings.
In life insurance, unlike non-life products, you get maturity

benefits on survival at the end of the term. In other words, if you take a
life insurance policy for 20 years and survive the term, the amount
invested as premium in the policy will come back to you with added
returns. In the unfortunate event of death within the tenure of the policy,
the family of the deceased will receive the sum assured.

Insurance sector reforms:

The government in a bid to complement the reforms initiated in
the financial sector established a committee headed by former finance
secretary and Reserve Bank of India (RBI) governor, Mr R.N. Malhotra
to evaluate the insurance industry and to recommend its future direction.
This committee suggested the following changes:
➢ Government stake in insurance companies be brought down to 50
percent.
➢ Allowing private enterprise in the sector with companies with a paid
up capital of a minimum of Rs 100 crore.
➢ Foreign companies to be allowed only in combination with an Indian
partner.
➢ Changed to be made to the insurance Act.
➢ Reduction in the mandatory investments of LIC Life Fund in
government securities to be brought down from 75 percent to 50
percent.

➢ GIC and its subsidiaries are not to hold more than 5 percent in any
company.
➢ Use of revised mortality tables by LIC and revision of premiums
after every 10 years.
➢ Transfer of LALGI and IRDP schemes to concerned government
authorities.
The insurance sector began its reform process with the passage of
the IRDA (the Insurance Regulatory and development authority) bill in
Parliament in December 1999. However with the setting up of IRDA,
the government has once again de-regulated the sector opening it for the
private players. The entry of private players has enabled the industry to
look at alternative distribution channels. To get the maximum pie of the
premium, every insurance company is adopting new distribution and
marketing strategies. In the last two years alone, the economy has
witnessed some fundamental changes in the Indian insurance industry.
Present status of insurance industry:

Insurance is a Rs.400 billion business in India, and together with

banking services adds about 7% to India’s GDP. Gross premium
collection is about 2% of GDP and has been growing by 15-20% per
annum. India also has the highest number of life insurance policies in
force in the world, and total investible funds with the LIC are almost 8%
of GDP. Yet more than three-fourths of India’s insurable population has
no life insurance or pension cover. Health insurance of any kind is
negligible and other forms of non-life insurance are much below
international standards.
Some few years ago the entry of private players was banned in
India but its only after first stage of economic reforms the situation has
become better with the entry of private sector. As of now the govt
insurance companies like Life Insurance Corporation of India, GIC
etc. It holds the majority of market share whereas the private players are
slowly catching up the race. As of now the private players have
concentrated on urban markets more and less on the rural markets and

their lies a huge untapped potential at rural markets. Even in urban

markets the penetration levels in India in terms of life insurance is very
less and thus there is a huge market potential for the companies to grow.
The problem is how the companies can untapped the unawake Ned
demand among the target market. Also the awareness levels among the
consumers about insurance product is very low and the advertisement
campaigns launched by the private players like ICICI, HDFC, KOTAK
MAHINDRA has increased the level of awareness among the consumers
and have arisen the need for insurance.
Private players in the market:

The new insurance companies used all channels of advertising
from newspapers and the television to insurance agents and direct
mailers. The new companies focused their campaigns primarily on
building an image of trustworthiness and reliability for themselves.
Their advertisement focused on insurance as an investment option and
not a mere tax saving tool. Most of these advertisements carried

messages like the family’s happiness. It has been more than 5 years
since private insurance companies’ lunched operations in India, which is
depicted in the Table given below.
Table: Private players in the Indian insurance market

Company Indian partner Foreign insurer Area
Birla Sunlife Aditya Birla Group Sunlife, Canada Life
Om Kotak Kotak Mahindra Old Mutual, Life
HDFC-Standard Life HDFC Standard Life UK Life
Royal Sundaram Sundaram Finance Roya Sun, UK Life & Non life
ICICI-Prudential ICICI Prudential, UK Life

New York Life
Max New York Life Max India Life
USA
Tata-AIG Tata group AIG USA Life & non Life
ING Vysya Vysya Bank ING Insurance, Life
Aviva Dabur Cardiff, France Life
Metlife India SBI Metlife, USA Life
Bajaj Allianz Bajaj Auto Allianz Life & non Life

SBI Life Insurance Sanmar Group AMP, Australia Life
SOURCE: www.knowledgedigest.com.
Industry profile
Introduction:
The Insurance sector in India governed by Insurance Act, 1938,
The Life Insurance Corporation Act, 1956 and General Insurance
Business (Nationalization) Act, 1972 Insurance Regulatory and
Development Authority (IRDA) Act, 1999 and other related acts. With
such a large population and the untapped market area of this population
insurance happens to be a very big opportunity in India. Today it stands
as a business growing at the rate of 15 - 20% annually. Together with
banking services, it adds about 7% to the country’s GDP. In spite of all
this growth the statistics of the penetration of the insurance in the

country is very poor. Nearly 80% of Indian populations are without Life
Insurance cover and the Health Insurance. This is an indicator that
growth potential for the insurance sector is immense in India. It was due
to this immense growth that the regulations were introduced in the
insurance sector and in continuation “Malhotra Committee” was
constituted by the Government in 1993 to examine the various aspects of
the industry. The key element of the reform process was participation of
overseas insurance companies with 26% capital. Creating a more
efficient and competitive financial system suitable for the requirements
of the economy was the main idea behind this reform.
Since then the insurance industry has gone through many sea
changes. The competition LIC started facing from these companies were
threatening to the existence of LIC. Since the liberalization of the
industry the insurance industry has never looked back and today stand as
the one of the most competitive and exploring industry in India.
What Is Insurance?

Insurance is a contract between two parties, the insurer or the

insurance company, and the insured, the person seeking the cover.
Within this contract, the insurer agrees to pay the insurer for financial
losses arising out of any unforeseen events or risk in return for a regular
payment of premium. Thus, these insurance plans are also called as a
Risk Cover Plans, which means to financially compensate for losses that
occur uncertainly through accident, illness, theft, natural disaster.
Types of Insurance:
Insurance policies cover the risk of life as well as other assets and
valuables, such as, home, automobiles, jewellery at all. On the basis of
the risk they cover, insurance policies can be classified into two
categories: Life Insurance and General Insurance. As the term suggests,
Life Insurance covers the risk involved in a person's life, while General
Insurance provides financial protection against unforeseen events, like
accident, flood, earthquake, disease, etc.
Insurance - Kind of Investment:

Insurance is an attractive option for investment but most people

are not aware of its advantages as an investment option. Remember that
first and foremost, insurance is about risk cover and protection. By
buying life insurance, you buy peace of mind. Insurance also serves as
an excellent tax saving mechanism. The Government of India has
offered tax incentives to life insurance products in order to facilitate the
flow of funds into productive assets.
Insurance Regulatory & Development Authority:

Insurance Regulatory & Development Authority is regulatory and
development authority under Government of India in order to protect the
interests of the policyholders and to regulate, promote and ensure
orderly growth of the insurance industry. It is basically a ten members'
team comprising of a Chairman, five full time members and four part-
time members, all appointed by Government of India. This organization
came into being in 1999 after the bill of IRDA was passed in the Indian
parliament.

Impact of IRDA on Indian Insurance Sector:

The creation of IRDA has brought revolutionary changes in the
Insurance sector. In last 10 years of its establishment the insurance
sector has seen tremendous growth. When IRDA came into being; only
players in the insurance industry were Life Insurance Corporation of
India (LIC) and General Insurance Corporation of India (GIC), however
in last decade 23 new players have emerged in the field of insurance.
The IRDA also successfully deals with any discrepancy in the insurance
sector.
Power and function of IRDA:

➢ It issues the applicants in insurance arena, a certificate of
registration as well as renewal, modification, withdrawal,
suspension or cancellation of such registrations.
➢ It also specifies obligatory credentials, code of conduct and
practical instructions for mediator as well as the insurance
company. Apart from this, it also defines the code of conduct for

the surveyors and loss assessors involved with the insurance

business.
➢ IRDA specifies the terms and pattern in which books of accounts
are to be maintained and statement of accounts shall be provided by
insurers and other insurance mediators.
➢ It also regulates investment of funds by insurance companies as
well as the maintenance of margin of solvency.
➢ It is also entitled to supervise the functioning of the Tariff Advisory
Committee.
➢ One of the major functions of IRDA includes endorsing
competence in the insurance business. Apart from this, upholding
and regulating professional organizations in insurance and re-
insurance business is also a major duty of IRDA.
➢ IRDA is also entitled to for asking information, undertaking
inspection and investigating the audit of the insurers, mediators,
insurance intermediaries and other organizations related to the
insurance sector.

➢ It is also concerned with the regulation of the rates, profits,

provisions and conditions that may be offered by insurers in respect
of general insurance business if it is not controlled or regulated by
the Tariff Advisory Committee.
➢ It is also empowered to be involved in the arbitration of
disagreements between insurers and intermediaries or insurance
intermediaries.
➢ IRDA also specifies the share of life insurance business and general
insurance business to be accepted by the insurer in the rural or
social sector.
➢ It protects the interests of the policy holders in any insurance
company in the matters related to the assignment of policy,
nomination by policy holders, insurable interest, and resolution of
insurance claim, submission value of policy and other terms and
proposals in the contract.
HISTORY OF INSURANCE SECTOR:
The insurance sector in India has come a full circle from being an
open competitive market to nationalization and back to a liberalized

market again. Tracing the developments in the Indian insurance sector

reveals the 360- degree turn witnessed over a period of almost 190
years. The business of life insurance in India its existing form started in
India in the year 1818 with the establishment of the oriental Life
Insurance Company in Calcutta. Some of the important milestones in the
Life Insurance Business in India are given in the table.
Table: Milestone’s in the Life Insurance Business in India:
Year Milestone’s in Life Insurance Business in India

The Indian Life Insurance Companies Act enacted as the first statue
1912
to regulate the Life Insurance Business
The Indian Life Insurance Companies Act enacted to enable the

1928 government to collect statistical information about both Life and
Non-life insurance business.
Earlier legislation consolidated and amended by the Insurance Act

1938
with the objective of protecting the interest of the insuring public.

245 Indian and foreign insures and provident societies taken over by
the central government and Nationalized. LIC formed by an act of
1956
parliament, viz. LIC Act, 1956 with a capital contribution of Rs. 5
crore from the government of India.
The General Insurance Business in India, on the other hand, can

trace its roots to the Triton Insurance Company Ltd. The first general
insurance company established in the year 1850 in Calcutta by the
British.
Some of the important Milestone’s in the general insurance

business in India are given in the table.
Table: Milestone’s in the general insurance business in India

Year Milestone’s in the general insurance business in India

The Indian Mercantile Insurance Ltd. set up the first company to
1907
transact all classes of general insurance business.
General Insurance Council, a wing of the Insurance Association of

1957 India, frames a code of conduct for ensuring fair conduct and sound
business practices.
The Insurance Act amended to regulate investments and set

1968 minimum solvency margins and the Tariff Advisory Committee set
up.
The General Insurance Business (Nationalization) Act, 1972

nationalized the general insurance business in India which effect from
1st January 1973. 107 insures amalgamated and grouped into four
1972 companies viz. the National Insurance Company Ltd. The New India
Assurance Company Ltd. The oriental Insurance Company Ltd. And
the United India Insurance Company Ltd. GIC incorporated as a
company.
History of insurance in India:

Insurance has a long history in India. Life Insurance in its current

form was introduced in 1818 when Oriental Life Insurance Company
began its operation in India. Triton insurance company limited was the
first General Insurance company to have established in India in 1850,
whose share were mainly held by the British. The first General insurance
company to be set up by an Indian was Indian Mercantile insurance
company limited which was established in 1907. There emerged many a
player on the Indian scene thereafter.
The General Insurance 3 Business was nationalized after the

promulgation of General Insurance Business (Nationalization) Act,
1972. The General Insurance Corporation of India and its 4 subsidiaries
undertook the post-nationalization general insurance business:
a) Oriental Insurance Company Limited.
b) New India Assurance Company limited.
c) National Insurance Company Limited.
d) United India Insurance Company Limited.

Towards the end of 2000, the relation ceased to exist and the four
companies are at present, operating as independent companies.
The Indian insurance industry saw a new sun when the Insurance
Regulatory and Development Authority (IRDA) invited the applications
for registration as insures in August 2000. With the liberalization and
opening up the sector to private players, the industry has presented
promising prospects for the coming future. The transition has also
resulted into introduction of ample opportunities for the professional
including chartered Accountants.
Insurance Market-Present:
The insurance sector was opened up for private participations four
years ago. For years now, the private players are active in the liberalized
environment. The insurance market have witnessed dynamic charges
which includes presence of a fairly large number of insures both life and

non-life segment. Most of the private insurance companies have formed

joint venture partnering well recognized foreign players across the
globe.
There are now 29 insurance companies operating in the Indian

market 14 private insurers, nine private non life insurers and six public
sector companies. With many more joint venture in the offing, the
insurance industry in India today stands at a crossroads as competition
intensifies and companies prepare survival strategies in a detariffed
scenario.
There is pressure from both within the country and outside on the
Government to increase the Foreign Direct Investment (FDI) limit from
the current 26% to 49%, which would help JV partners to bring in funds
for expansion.
There are opportunities in the pensions sector where regulations

are being framed. Less than 10% of Indians above the age of receive

pensions. The IRDA has issued the first license for a standalone health
company in the country as many more players wait to enter. The health
insurance sector has tremendous growth potential, and as it matures and
new it matures and new players enter, product innovation and
enhancement will increase. The depending of the health database over
time will also allow players to develop and price products for larger
segment of society.
State insurers continue to dominate:

There may be room for many more players in a charge under
insured market like India with a population of over one billion. But the
reality is that the intense competition in the last five years has made it
difficult for new entrants to keep pace with the leaders and there by
failing to make any impact in the market.
Also as the private sector control over 30% of the life insurance
market and non - life market, the public sector companies still call the
shots. The country’s largest life insurer, Life Insurance Corporation of

India (LIC), had a share of 70% in the new business premium income in
2009.
Similarly, the four public- sector non-life insures – New India

Assurance, National Insurance, oriental Insurance and United India
Insurance – had a combined market share of 73.47% as of October 2005.
ICICI Prudential Life Insurance Company continues to lead the private
sector with a 7.26% market share in terms of fresh premium, whereas
ICICI Lombard General Insurance Company is the leader among the
private non-life players with an 8.11% market share.
Reaching out to customers:

No doubt, the customer profile in the insurance industry is
changing with the introduction of large number of divergent
intermediaries such as broker, corporate agent and bank assurance. The
industry now deals with customers who knows what they want and
when, and are more demanding in terms of better service and speedier

responses With the industry all set to move to a detariffed regime by

2007, there will be considerable improvement in customer service level,
product innovation and newer standards of under writing.
Intense competition:
In a de-terrified environment, competition will manifest itself in
prices, products, underwriting criteria, innovative sales and credit
worthiness. Insurance company will vie with each other to capture
market share through batter pricing and client segmentation. The battle
has so far been fought in the big urban cities, but in the next few years,
increase competition will drive insurers to rural and semi-urban markets.
Global standards:
While the world is eyeing India for growth and expansion, Indian
company are becoming increasingly world class. Take the case of LIC,
which has set its site on becoming a major global player following a
280–crore investment from the Indian government. The company now
operates in Mauritius, Fiji, the UK, Sri Lanka, and Nepal and will soon

start operation in Saudi Arabia. It also plans to venture into the African
and Asia-Pacific regions in 2006.
The year 2005 was a testing phase for the general insurance
industry with a series of catastrophes hitting the Indian sub-continent.
However, with robust reinsurance programme in place, insurers have
successfully managed to tide over the crisis without any adverse impact
on their balance sheets.
With life insurance premiums are being just 2.5% of GDP and
general insurance premiums being 0.65% of GDP. The opportunity in
the Indian market place is immense. The next 5 year will be challenging
but those that can build scale and market share will.

Company profile
Introduction:

Established on 14th August 2000, HDFC Standard Life Insurance

Co. Ltd. is a joint venture between Housing Development Finance
Corporation Limited (HDFC Limited) - India's leading housing finance
institution, and a Group Company of the Standard Life Plc, UK. The
Company is one of leading private insurance companies, offering a
range of individual and group insurance solutions, in India. Being a joint
venture of top financial services groups, HDFC Standard Life has
adequate financial expertise to manage long-term investments safely and
resourcefully.
HDFC Standard Life Insurance offers a range of individual and

group solutions, which can be easily personalized to specific needs. Its
group solutions have been planned to offer complete flexibility, together
with a low charging structure. As of 31 December, 2008, the Company's
new business premium income stood at Rs. 1,839.70 Crores; it has
covered over 812,811 lives so far.

The partnership:
HDFC Standard Life first came together for a possible joint
venture; enter the Life Insurance market, in January 1995. It was clear
from the outset that both companies shared similar value and beliefs and
a strong relationship quickly formed. In October 1995 the companies
signed a 3 years joint venture agreement. Around this time Standard Life
purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank,
further strengthening the relationship.
The next three years were filled with uncertainty, due to changes
in government and ongoing delays in getting the IRDA (Insurance
Regulatory and Development authority) Act passed in parliament.
Despite this companies remained firmly committed to the venture.
In October 1998, the joint venture agreement was renewed and

additional resource made available. Around this time Standard Life

purchased 2% of Infrastructure Development Finance Company Ltd.

(IDFC). Standard Life also started to use the service of the HDFC
Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very
promising and both companies agreed the time was right to move the
operation to the next level. Therefore, in January 2000 an expert team
from the UK joined a handpicked team from HDFC to form the core
project team, based in Mumbai.
Vision, mission & values:
Vision:
'The most successful and admired life insurance company, which
means that we are the most trusted company, the easiest to deal with,
offer the best value for money, and set the standards in the industry'.
'The most obvious choice for all'.
Mission:

To be the top new life insurance company in the market. This

does not just mean being the largest or the most productive company in
the market, rather it is a combination of several things like – Customer
service of the highest order Value for money for customer
professionalism in carrying out business. Innovative products to cater to
different need of different customers, Use of technology to improve
service standards Increasing market share.
Their mission is to be the best new life insurance company in

India and these are the values that will guide the country.
Values:
SECURITY:

Providing long term financial security to our policy holders will be

our constant Endeavour. We will be do this by offering life
insurance and pension products.
TRUST:
We appreciate the trust placed by our policy holders in us. Hence,
we will aim to manage their investments very carefully and live up
to this trust.
INNOVATION:
Recognizing the different needs of our customer, we will be
offering a range of innovative products to meet these needs.
Values that we observe while we work:

Integrity
Innovation
Customer centric
People Care “One for all and all for one”

Team work
Joy and Simplicity
Goals of the Company:

Emerge as transactional Life Insurer of global scale and standard.
Achieve impeccable reputation and credentials through best
business practices.
Guiding Principles:
Customer Care and Satisfaction.
Corporate Governance.
Creativity and Innovation.
Competitiveness.
COMPETITORS:
Life Insurance Companies
Aviva Life Insurance
Bajaj Allianz Life Insurance

Birla Sun-Life Insurance

HDFC Standard Life Insurance
ING Vysya Life Insurance
Life Insurance Corporation
Max New York Life Insurance
MetLife Insurance
Om Kotak Mahindra Life Insurance
Reliance Life Insurance
Sahara India Life Insurance
SBI Life Insurance
TATA AIG Life Insurance
ORGANISATION STRUCTURE

Zonal
Chief
Sales Administration
Insurance
Chief
Finance
Branch
Finance
Zonal
Administrative
Business
National
Zonal
Senior
Asst.
Finance
Team
Administration
C.E.O
B.O.D
Manager
Branch
Executive
Finance
Manager
consultants
Branch
Officer
Manager
Sales
Dept.
Officer
Officer
Supervisor
Executive
Manager
Officer

Policies and products:

Given below is a comprehensive list of policies and products offer
by HDFC Standard Life Insurance:
Health Plans:
HDFC Critical Care Plan
HDFC SurgiCare Plan
Protection Plans:
HDFC Term Assurance Plan
HDFC Loan Cover Term Assurance Plan
HDFC Home Loan Protection Plan
Children's Plans:
HDFC Children's Plan
HDFC Unit Linked Young Star II
HDFC Unit Linked Young Star Plus II
HDFC Unit Linked Young Star Champion

Retirement Plans:
HDFC Personal Pension Plan
HDFC Unit Linked Pension II
HDFC Unit Linked Pension Maximiser II
HDFC Immediate Annuity
Savings & Investment Plans:
HDFC Unit Linked Endowment Plus II
HDFC SimpliLife
HDFC Unit Linked Endowment II
HDFC Unit Linked Enhanced Life Protection II
HDFC Unit Linked Wealth Maximiser Plus
HDFC Unit Linked Endowment Winner
HDFC Endowment Assurance Plan
HDFC Money Back Plan
HDFC Single Premium Whole of Life Insurance Plan
HDFC Assurance Plan

HDFC Savings Assurance Plan
Group Plans:
Group Term Insurance Plan
Group Variable Term Insurance Plan
Group Unit Linked Plan - Gratuity
Group Unit Linked Plan - Superannuation
Group Unit Linked Plan - Leave Encashment
HDFC Standard Life believes that establishing a strong and

ethical foundation is an essential prerequisite for long-term sustainable
growth. We have concentrated our focus on expansion of branch
network, organizing an efficient and well trained sales force, and setting
up appropriate systems and processes with optimum use of technology.

As all these areas form the basic infrastructure for establishing the
highest possible customer service standards.
Our core values are drilled down to all levels of employees, as

these are inviolable. We continue to promote high integrity in business
practices and shun short cuts and unethical practices, as we wish to be
perceived as an institution with high moral standing. Since our inception
in 2000, when the Indian insurance space was opened for private
participation, we have consistently focused on setting benchmarks in all
aspect on insurance business. Being the first private player to be
registered with the IRDA and the first to issue a policy on December 12,
2000, our differentiators are:

Strong Promoter:
HDFC Standard Life is a strong, financially secure business
supported by two strong and secure promoters – HDFC Ltd and
Standard Life. HDFC Ltd’s excellent brand strength emerges from its
unrelenting focus on corporate governance, high standards of ethics and
clarity of vision. Standard Life is a strong, financially secure business
and a market leader in the UK Life & Pensions sector.
Preferred and Trusted Brand:

Our brand has managed to set a new standard in the Indian life
insurance communication space. We were the first private life insurer to
break the ice using the idea of self-respect instead of ‘death’ to convey
our brand proposition (Sar Utha Ke Jiyo). Today, we are one of the few
brands that customers recognize, like and prefer to do business.
Moreover, our brand thought, Sar Utha Ke Jiyo, is the most recalled
campaign in its category.

Investment Philosophy:
We follow a conservative investment management philosophy to
ensure that our customer’s money is looked after well. The investment
policies and actions are regularly monitored by a formal Investment
Committee comprising non-executive directors and the Principal Officer
& Executive Director.
We understand that customers have invested their savings with us
for the long term, with specific objectives in mind. Thus, our investment
focus is based on the primary objective of protecting and generating
good, consistent, and stable investment returns to match the investor’s
long-term objective and return expectations, irrespective of the market
condition.
Need Based Selling Approach?

Despite the criticality of life insurance, sales in the industry have
been characterized by over reliance on tax benefits and limited advice-
based selling. Our eight-step structured sales process ‘Disha’ however,

helps customers understand their latent needs at the first instance itself
without focusing on product features or tax benefits. Need-based selling
process, 'Disha', the first of its kinds in the industry, looks at the whole
financial picture. Customers see a plan not piecemeal product selling.
Risk Control Framework:

HDFC Standard Life has fully implemented a risk control
framework to ensure that all types of risks (not just financial) are
identified and measured. These are regularly reported to the board and
this ensures that the company management and board members are fully
aware of any risks and the actions taken to ensure they are mitigated
Focus on Training:
Training is an integral part of our business strategy. Almost all
employees have undergone training to enhance their technical skills or
the softer behavioural skills to be able to deliver the service standards
that our company has set for itself. Besides the mandatory training that
Financial Consultants have to undergo prior to being licensed, we have

developed and implemented various training modules covering various

aspects including product knowledge, selling skills, objection handling
skills and so on.
Focus on Long term Value:

HDFC Standard Life does not focus in the business of ramping up
the top line only, but to create maximisation of stakeholder's value.
Today, we are extremely satisfied with the base that we have created for
the long-term success of this company.
We are one of the few companies whose product details, pricing,

clauses are clearly communicated to help customers take the right
decision.
Diversified Product Portfolio:

HDFC Standard Life’s wide and diversified product portfolio help
individual meet their various needs, be it:

Protection:
Need for a sound income protection in case of your unfortunate demise
Investment:
Need to ensure long-term real growth of your money
Savings:
Save for the milestones and protect your savings too
Pension:
Need to save for a comfortable life post retirement
Health:
Cover for health related exigencies
Nature of investment / Risk and return category:
Equity funds:
Primary invested in company stock with a general aim of capital
appreciation.
Risk and Return: Medium

Income, Fixed Interest and Bond Funds:

Invested in corporate bonds, Government securities and other
fixed income instruments.
Cash Funds:
Some time known as money market funds invested in cash, Bank
deposits and money market instruments.
Risk and Return: Low
Balanced Funds:
Combining equity investment with fixed interest in the
instruments.
Charges of HDFC standard life insurance company:

HDFC Standard Life Insurance follows the method of cancelling

the units in order to recover the charges. Some of the charges are:
Premium allocation charge:

This is a premium based charge, after deducting this charge from
your premium, the reminders is invested to buy units. The table given
below will help show how percentage of premium will help to buy units.
This % is called the allocation rate. The allocation rates are guaranteed
for the entire duration of the policy term.
Table showing premium allocation charge:
Premium paid during years Allocation rate

Regular 1st & 2nd Year 3 rd Year

Onwards onwards
Up to 1,99,999 70% 99%

From 2,00,000 to
80% 99%
4,99,999
premiums From 500,000 to

85% 99%
9,99,999
From 10,00,000
90% 99%
to 19,99,999
From 20,00,000
95% 99%
to above
Single premium top ups 97.5% 99%
Fund management charge (FMC):

In the long term the key to build great maturity values is a low
FMC. The daily unit price already increases our low fund management
charge of only o.8% per annum of the funds value.

Surrender charge:
This is the charge we will apply when the policy is surrendered. It
is equal to 30% of the difference between the regular premiums
expected and received in the first two years of the contract.
Other charges:
The following is the set of other charges that we will take from
your policy.
Charges Explanation
Policy A charge of Rs. 20 per month is charged to cover

administration regular administration costs. We take the charge by
cancelling units proportionately from each of the funds you
charge have chosen.
Every month we make a charge for providing you

Mortality and with the death or critical illness cover in your policy. The
other risk benefit amount of the charge taken each month depends on your age.
charges We take the charge by cancelling units proportionately from
each of the funds you have chosen.
24 switches will be given free in a policy year and

Switching charge
any additional switch will be charged at Rs. 100 per switch.

6 partial withdrawal requests will be free in a policy

Partial withdrawal
year and any additional partial withdrawal requests will be
Charge
charged at Rs. 250 per request.
A charge of Rs. 250 is for revival to cover for

Revival charge
administration expenses.
This is a charge levied for any alterations within

contract like premium redirection or adhoc policy servicing,
12 premium redirection requests will be free in a policy year
Miscellaneous
any premium redirection requests will be charge at 250 per
charge
request, 6 policy servicing requests will be free in a policy
year and any additional policy. Servicing requests will be
charged at Rs.250 per request.
Service tax and education is payable at the applicable rates on the

mortality and other risk benefit charges.
Alteration charges:
Current charges cannot be charged without prior approval from
IRDA. The fund management charge cannot exceed 2% per annum. The
surrender charge can be increased subject to a maximum of 10% of the
fund applicable for the first 3 years. The policy administration charge

can increase in line with inflation subject to a maximum of 5% per

annum over the period since inception. The mortality charge rates and
accidental death benefit charge rate are guaranteed for full duration of
your policy term and critical illness charge rates can be reviewed at the
end of every 3 years from date of launch of this product. And can be
increased subject to a maximum increase 200% of every rate.
The maximum switching charge allowed is Rs. 100 per switch

increased in line with inflation subject to a maximum of 5% per annum
over period since inception.
We can charge up to Rs. 250 per request for premium redirection,

partial withdrawal and other adhoc policy servicing requests. We can
increase this amount in line with inflation subject to a maximum of 5%
per annum over the period since inception.

Parentage:
HDFC Limited:
HDFC Limited, India's premier housing finance institution has
assisted more than 3.4 million families own a home, since its inception
in 1977 across 2400 cities and towns through its network of over 271
offices. It has international offices in Dubai, London and Singapore with
service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist
NRI's and PIO's to own a home back in India. As of December 2009, the
total asset size has crossed more than Rs. 104,560 crores including the
mortgage loan assets of more than Rs.90,400 crores. The corporation has
a deposit base of over Rs. 23,000 crores, earning the trust of nearly one
million depositors. Customer Service and satisfaction has been the
mainstay of the organization. HDFC has set benchmarks for the Indian
housing finance industry. Recognition for the service to the sector has
come from several national and international entities including the
World Bank that has lauded HDFC as a model housing finance company
for the developing countries. HDFC has undertaken a lot of

consultancies abroad assisting different countries including Egypt,

Maldives, and Bangladesh in the setting up of housing finance
companies .
Standard Life Group (Standard Life plc and its

subsidiaries):
The Standard Life Group has been looking after the financial
needs of customers for over 180 years. It currently has a customer base
of around 7 million people who rely on the company for their insurance,
pension, investment, banking and health-care needs. Its investment
manager currently administers £190 billion in assets. It is a leading
pensions provider in the UK, and is rated by Standard & Poor's as
'strong' with a rating of A+ and as 'good' with a rating of A1 by
Moody's. Standard Life was awarded the “Best Companies to Work for
in India in 2010, YoungStar Super voted Product of the Year 2010,

Received CIO 'The Ingenius 100 2009' Award, Received Diamond

EDGE Award 2009, Best Pension Provider in 2004, 2005 and 2006 at
the Money Marketing Awards, and it was voted a 5 star life and
pension’s provider at the Financial Adviser Service Awards for the last
10 years running. The '5 Star' accolade has also been awarded to
Standard Life Investments for the last 10 years, and to Standard Life
Bank since its inception in 1998. Standard Life Bank was awarded the
'Best Flexible Mortgage Lender' at the Mortgage Magazine Awards in
2006.
HDFCSL Milestone
Received the PCQuest Best IT Implementation Award 2008 for
Consultant Corner, the applications for its financial consultants,

providing centralized control over a vast geographical spread for key

business units such as inventory, training, licensing, etc.
Received the 2008 CIO Bold 100 Award for its mobile workforce
portal and the Special 2008 CIO Security Award for a secure computing
environment, including identity management respectively.
Mr. Deepak M Satwalekar Awarded QIMPRO Gold Standard

Award.
HDFCSL expanded its reach in the Bancassurance channel by

arrangements with co-operative banks in the rural areas.
Continued to increase its focus on quality service, by putting in

place a robust mechanism to capture 'Voice of the Customer' through
service audits across its offices. This was complemented by use of
technology that enabled capture of all interactions with customers across
all touch points

Sar Utha Ke Jiyo was honoured as 'Among India's 60 Glorious

Advertising Moments. The advertisements of the company were ranked
6th amongst 'The 10 most effective Advertisements' in September 2007.
Received the PCQuest Best IT Implementation Award 2007 for

Wonders, its path-breaking implementation of an enterprise-wide
workflow system. In addition the company also bagged the EMC storage
award for being the most innovative users of storage and storage
management.
Pension Plan Tops Mint's Survey of Best TV Ads.
HDFC Standard Life's advertising created high awareness for the

brand and bagged 2 silver and 1 bronze awards at the ADFEST 2007
National Awards organised by the Advertising Agencies Association of
India (AAAI). The 3 awards are the highest won by any single brand in

the financial services business (including banking, mutual fund,

insurance and other financial services).
Ranked 29th most trusted Indian Brands amongst the Top 50

Service Brands of 2006 according to a study conducted by the Brand
Equity – Economic Times, the leading business publication of India
Research Methodology
Title of the study:
‘Financial statement analysis’
A Study has been conducted in the area of “Financial statement
analysis.” And title of the study is:
“A report on Analysis of Financial Statement using a technique of

comparative balance sheet, conducted at HDFC Standard Life
Insurance Company Limited”

Objectives of the study:

This widely used by the financial analysis’s and credit granting
institutions and financial managers in performance of their jobs. It has
become a useful tool in their analytical kit. This is because the financial
statements, i.e., “Income Statement” and the “Balance Sheet” have a
limited role to perform. Income Statement measures flow restricted to
transitions that pertain to rendering of goods and services to customers.
The Balance Sheet is merely a static statement. It is a statement of assets
and liabilities as on a particular date.
The main objectives of the study are:

➢ To analyse the financial statement.
➢ To forecast and prepare the plans for the future.
➢ To establish ideal standards of the different items of the business.

➢ To provide useful information to the management.

➢ To simplifies and summarizes a long array of accounting data and
make them understandable.
➢ To will reveal the trend of costs, sales, profits and other important
facts.
Scope of the study:

➢ It is useful for the management.
➢ It gives information to the investors about the earning capacity of
the business.
➢ Current year's ratios are compared with those of previous years and
if some weak spots are thus located remedial measures are taken to
correct them.
➢ It gives information to the financial institution for providing the
finance to the company
➢ It gives information to the taxation authorities.

➢ It gives information to the researchers for conducting research in

respect of profitability, efficiency, financial soundness and growth
of that company.
Research methodology:
Research methodology is a way to systematically solve the
research problem. In it, step-by-step Research Methodology is a way to
systematically solve the research problem. In it, step-by-step methods
are followed to solve a particular problem. It refers to a search for
knowledge. It can also be defined as a scientific and systematic search
for pertinent information on a specific topic. In fact, research is an art of
scientific investigation.
DATA COLLECTION:
The data can be of two types:
➢ Primary Data:
Primary Sources are original sources from which the researcher
directly collects data that have not been previously collected. Primary

data are first-hand information collected through various methods such

as observation, interviewing, etc.
Here, the primary data is collected as follows:
 Interview with the Sales Manager.
 Discussions with other personnel such as advisors and
trainers.
➢ Secondary Data:
Secondary Data are those data which are already collected and
stored and which has been passed through statistical research.
In this project, secondary data has been collected from following
sources:
 Annual Report
 Other material and report published by company
Research designs:
Research Design is the way in which the research is carried out. It
works as a blue print. Research Design is the arrangement of conditions

for the collection and analysis of data in a manner that aims to combine
relevance to the research purpose with economy in procedure.
The present project is descriptive in nature. In Descriptive

Research Design, those studies are taken which are concerned with
describing the characteristics of a particular group. The major purpose of
descriptive research is the description of state of affairs, as it exists at
present.
Exploratory Research:
An exploratory research focuses on the delivery of ideas and is
generally based on secondary data. It is a preliminary investigation a
preliminary investigation which does not have a rigid deigns. This is
because a researcher engaged in exploratory study may have to change
his focus as a result of new ideas and relation among the variables.
The study conducted through exploratory research with the help
of data obtain from the secondary data, there is no specific sample
design made or questionnaire used to obtain information

Data Type:
The data used for the study is secondary data:
Source of data:
➢ Insurance company broacher
➢ IRDA web site
➢ Companies web sites
➢ Annual report of company
Limitations of the study:

The survey conducted may not be considered as comprehensive as
only limited respondents could be contacted because of the time
constraint.
Lacks of information of company.
It depends on past information.
Only the last 4 years data is considered for the study.

Only limited sample size had been considered for the study and
therefore, the conclusions drawn based on this may not be a reflection of
the entire industry.
Financial statement:
➢ Profit and loss account is prepared to ascertain the results of
business operations called net profit or net loss of the business for
an accounting year.
➢ The balance sheet is prepared to indicate the financial position.
Object of balance sheet is prepared to know the soundness of the
business indicated by its assets and liabilities.
➢ In balance sheet there are 2 major things to learn before is
 Current Assets:
The term ‘Current Assets’ includes assets which are acquired with
the intention of converting them into cash during the normal business
operations of the company.

 Current Liabilities:
The term ‘Current Liabilities’ is used principally to designate such
obligations whose liquidation is reasonably expected to require the use
of assets classified as current assets in the same balance sheet or the
creation of other current liabilities or those expected to be satisfied
within a relatively short period of time usually one year. The term
current liabilities also includes amounts set apart or provided for any
known liability of which the amount cannot be determined with
substantial accuracy e.g., provision for taxation, pension etc.
CHAPTER SCHEME
Introduction:
• This chapter deals with giving complete information about the title
selected.
Industrial profile:
• This chapter contains details on which industry belongs to.

Company profile:
• This chapter describe the nature of the company when, who and
where the company was established. The profit, growth, losses, its
competitors, objective, mission, vision of the organization etc.
Research design:
• This chapter deals with the framework of the entire project.
Analysis and interpretation:

• This chapter deals with the conversion of collected data into
meaningful observation by utilizing statistical technique and
converting data into charts, diagrams and graphs.
Findings:
• This chapter analyses the important finding done during the start
and completion of the project.

Suggestion:
• This chapter explains in providing probable suggestion to the
various issues related to the project title.
Conclusion:
• This chapter deals with providing an overall conclusion of how the
project was selected, its important findings, corresponding
suggestion and the experience of the researcher in taking up such a
project.

Analysis and interpretation

In this chapter the method comparative statement is uses
to find, analyzed and interprets the data of the firm to know the
financial position of the firm.
Comparative Statements:
The elements of financial position are shown in a comparative
form so as to given an idea of financial position at two or more periods.
Any statement prepared in a comparative form will be covered in
comparative statements. From practical point of view , generally two
financial statements (balance sheet and income statement) are prepared
in comparative form for financial analysis purpose. Not only the
comparison of the figures of two financial position and operative results.

The comparative statement show:

➢ Absolute figures ( rupee amounts )
➢ Changes in absolute figures i.e., increase or decrease in absolute
figures.
➢ Absolute data in terms of percentages.
➢ Increase or decrease in terms of percentages.
The financial data will be comparative only when same

accounting principles are used in preparing these statements. In case of
any deviation in the use of accounting principles this fact must be
mentioned at the foot of financial statements and the analyst should be
careful in using these statements. The two comparative statements are
balance sheet and income statement.
Comparative Balance Sheet:

The comparative balance sheet analysis is the study of the trend of
the same items, group of items and computed items in two or more

balance sheet of the same business enterprise on different dates. The

changes in periodic balance sheet items reflect the conduct of a business.
The changes can be observed by comparison of the balance sheet at the
beginning at the end of period and these changes can help in forming an
opinion about the progress of an enterprise
Procedure of Comparative Balance Sheet

➢ The Comparative balance sheet has two columns for the data of
original balance sheet.
➢ Third column is used to show increases in figures.
➢ The Fourth column is use to give percentages of increase or
decrease.
Comparative balance sheet for the year 2010 & 2009

2010 2009 Increase / decrease in

Particular
Rs. (000) Rs. (000) Rs. (000) %
Sources of funds:
Shareholders’ funds:
Share capital 19,680,000 17,958,180 +1,721820 9.6
Reserves and surplus 552,892 552,892 0 0
Credit/[debit] fair
184,435 (77,610) +262045 337.6
value change account
Sub-Total 20,417,327 18,433,462 +1,983,865 10.8
Policyholder funds:
Credit/[debit] fair
205,087 (296,885) +501972 169.1
Policy liabilities 37,666,908 29,092,419 +8,574,489 29.5
Provision for linked liabilities 127,701,636 84,085,083 +43,616,553 51.9
Add: fair value change 27,516,164 (15,302,147) +42,818,311 279.8
Total provision for linked

155,217,800 68,782,936 +86,434,864 125.7
Liabilities
Sub-Total 193,089,795 97,578,470 +95,511,325 97.9
Funds for future appropriations 1,490,013 586,395 +903,618 154.1

Interpretation (comparative balance sheet of 2009 & 2010):

The comparative balance sheet of the company reveals that during
2009-2010, there has been a decrease in fixed assets of -21% at 2010 as
compared to 2009. This fact depicts the policy of the company is not to
purchase fixed assets from the long-term sources of finance there by not
affect the working capital.
Current assets have decreased by -19.7% from previous year and

cash and bank balances also decreased 31.2%, an investment is
increased by 44.78%. The current liabilities have increased by Rs.
38.1%. This further confirms that the company working capital is
decreased due to increased in huge current liabilities and there is a
decreased of -19.7% in current assets as compared to previous year
2009.

From profit and loss account we find that the company has
increased by 23.1% of profit from previous year.
The overall financial position of the company is satisfactory.


Particular
Rs. (000) Rs. (000) Rs. (000) %
Sources of funds:
Share capital 17,958,180 12,706,359 +5,251,821 41.3
Credit/[debit] fair
(77,610) 3881 -81,491 -
Sub-Total 18,433,462 13,263,132 +5,170,330 38.98
Policyholder funds:
Credit/[debit] fair
(296,885) 193,745 -490,630 -253.2
Add: fair value change (15,302,147) 3,133,608 -18,435,755 - 588
Total provision for

68,782,936 59,451,584 +9,331,352 15.7
linked liabilities
Sub-Total 97,578,470 84,012,076 +13,566,394 16.15
Funds for future appropriation- 586,395 - +586,395 100


2008 & 2009, there has been an increased on issuing share capital of
41.3% and fixed assets also increase by 8.7%. This fact depicts that the
company has purchase more fixed assets from previous year from the
long-term sources of finance.
Current assets have increased by 12.5% from previous year, but

cash and bank balances is decreased 8.6% but advances and other assets
is increased by 35.6%, an investment is increased by 25%. The current
liabilities have increased by 44%. This further confirms that the
company working capital is decreased by 73.6% due to increased in
huge current liabilities.
From profit and loss account we find that the company has
increased by 73.1% of profit from previous year.



Particular
Rs. (000) Rs. (000) Rs. (000) %
Sources of funds:
Share capital 12,706,35

8,007,148 +4,699,211 58.7
9
Share application money

- 287,391 - 287,391 - 100
Receiv. pending allotment
Reserves and surplus 738.9

552,892 65,902 +486,990
6
Credit/[debit] fair
3881 - +3881 100
Sub-Total 13,263,13
8,360,441 +4,902,691 58.6
2
Policyholder funds:
Credit/[debit] fair
193,745 91,247 +102,498 112.3
Policy liabilities 24,366,74

17,391,531 +6,975,213 40.1
7
Provision for linked liabilities 56,317,97

25,934,264 +30,383,712 117.2
6
Add: fair value change
2,582,499 +551,109 21.3
3,133,608



2007 & 2008, there has been on increase in fixed assets of 81%. This
fact depicts the company has purchase fixed assets from the long-term
sources of finance.
Current assets have increased by 61% and cash and bank balances
also increased 33.6%, investments also have huge increased on the other
hand there has been an increase in loan by 47.3%. The current liabilities
have increased by 60%. This further confirms that the company has
revised long term finances. It doesn’t affect the working capital.



Particular
Rs. (000) Rs. (000) Rs. (000) %
Sources of funds:
Share capital 8,007,148 6,192,718 +1,814,430 29.3
Share application money received

287,391 - +287,391 100
pending allotment
Credit/[debit] fair
- 73,105 -73,105 -100
Sub-Total 8,360,441 6,331,725 +2,028,716 32.04
Policyholder funds:
Credit/[debit] fair
91,247 209,569 -118,322 -56.5
Add: fair value change 2,582,499 2,203,309 +379,190 17.2
Total provision for linked

28,516,763 11,936,090 +16,580,673 139
Liabilities
Sub-Total 45,999,541 23,633,655 +22,365,886 94.6
Funds for future appropriation- 59,485 25,516 +33,969 133.1


2006 & 2007, there has been an increase in fixed assets of 22%. This
fact depicts the company has purchase fixed assets from the long-term
sources of finance.
Current assets have increased by 37.6% and cash and bank

balances also increased 16.8%, investments also have huge increased on
the other hand there has been an increase in loan by 56.9%. The current
liabilities have increased by 45%. This further confirms that the
company working capital is affect.

1. Table showing percentage change in share capital:

(In Rs.000)
Aggregate
Amount
Years change % change
omitted
amount
2006-2007 8,007,148 1,814,430 29.3
2007-2008 12,706,359 4,699,211 58.7

2008-2009 17,958,180 5,251,821 41.3
2009-2010 19,680,000 1,721,820 9.6
INTERPRETATION:
The above table shows that the share capital has huge increased in
the second year. While comparing all the year there is a big jump in
second year, but in the year 2010 there is a small increased in share
capital of 9.6% only. To make more strength of financial position of the
firm, the firm needs to increase the shareholder funds.
a. Diagram showing percentage change in shareholder

capital (funds):

X – Axis indicates the number of years.

Y – Axis indicates the changes amount in Percentages.
1. Table showing percentage change in reserves and

surplus:
(In Rs.000)

Amount Aggregate
omitted amount
2006-2007 65,902 0 0
2007-2008 552,892 486,990 738.96
2008-2009 552,892 0 0
2009-2010 552,892 0 0

INTERPRETATION:
The table shows that the reserves and surplus are increasing only
in the year 2007-2008. It shows that there is no change of reserve and
surplus in the year 2008-2009, & 2009-2010. The company needs to
focus on ploughing back of profit to retain more reserves and surplus in
future.
To retain more reserves and surplus they need to provide good

measures which can help to obtain more profit..
a. Diagram showing percentage change in reserve and

surplus:


1. Table showing percentage change in policy liabilities:

(In Rs.000)

Aggregate
Amount
omitted
amount
2006-2007 17,391,531 5,903,535 51.4
2007-2008 24,366,747 6,975,216 40.1
2008-2009 29,092,419 4,725,672 19.4
2009-2010 37,666,908 8,574,489 29.5

INTERPRETATION:
The table shows that the policy liabilities are decreasing in all the
years. It means the policyholder funds are decreasing day by day. In the
year 2010 the policy liabilities is 29.5. While comparing to 2009, the
policy liabilities are increasing by 10.1%
a. Diagram showing percentage change in policy liabilities:


1. Table showing percentage change in provision for

linked liabilities:
(In Rs.000)
Aggregate
Amount
omitted
amount
2006-2007 28,516,763 16,580,673 138.9
2007-2008 59,451,584 30,934,821 108.5
2008-2009 68,782,936 9,331,352 15.7
2009-2010 155,217,800 86,434,864 125.7

INTERPRETATION:
The above table shows that the provision for linked liabilities is
fluctuating. And in this current year there is a huge increased in
provision for linked liabilities while comparing to previous year which is
not good for company.
a. Diagram showing percentage change in provision for

linked liabilities:


1. Table showing percentage change in funds for future

appropriation:
(In Rs.000)
Aggregate
Amount
omitted
amount
2006-2007 - - -
2007-2008 - - -
2008-2009 586,395 586,395 100
2009-2010 1,490,013 903,618 154.1
INTERPRETATION:

It shows that the funds for future appropriation is increasing after

second year, it means that the firm is saving the funds for future. It is a
good management decision of the firm.
a. Diagram showing percentage change in funds for future

appropriation:


1. Table showing percentage change in shareholder

investment:
(In Rs.000)
Aggregate
Amount
omitted
amount
2006-2007 1,529,743 148,833 10.8
2007-2008 4,213,064 2,683,321 175.4
2008-2009 4,291,597 78,533 1.9
2009-2010 6,304,757 2,013,160 46.9
INTERPRETATION:
We can see that shareholder investment of the firm is increasing
very fast as compared to 2008. The investment in the year 2008 is very

high as compared to other years. In 2008-2009 there is a small increased

in investment of the firm and in the year 2009-2010 the investment
change to 46.9%, it means there is high change in investment.
a. Diagram showing percentage change in shareholder

investment:


1. Table showing percentage change in policyholder

investment:
(In Rs.000)
Aggregate
Amount
omitted
amount
2006-2007 17,782,886 6,087,876 52.1
2007-2008 23,299,043 5,516,157 31.01
2008-2009 30,050,097 6,751,054 28.97
2009-2010 43,415,382 13,365,285 44.47
INTERPRETATION:
We can see that policyholder investment of the firm is decreasing
year by year as compared to 2007. In 2008 & 2009 the investment of the

firm are decreased and in the year 2009-2010 the investment is increased
to 44.7% as compared to 2008 & 2009. This is the indication of good
financial position of the firm.
a. Diagram showing percentage change in policyholder

investment:

1. Table showing percentage change in loans:

(In Rs.000)

Aggregate
Amount
omitted
amount
2006-2007 12,638 -16,718 -56.9
2007-2008 18,618 5,980 47.3
2008-2009 30,248 11,630 62.5
2009-2010 40,366 10,118 33.5
INTERPRETATION:
The above table shows that the loans have increased during the
year 2008, 2009 & 2010 as compared to 2007. The liquidity position of
the company shows wide fluctuation. From the below graph it is clear
that the short term loans made by the company have gradually fluctuated

up and down direction. The company needs to take measures for

collection of loans and advances made by it to retain its liquidity.
a. Diagram showing percentage change in loans:

1. Table showing percentage change in fixed assets
(In Rs.000)

Aggregate
Amount
years change % change
omitted
amount
2006-2007 736,054 131,540 21.75
2007-2008 1,331,800 595,746 80.93
2008-2009 1,447,706 115,906 8.70
2009-2010 1,143,777 -303,929 -21
INTERPRETATION:
The above table shows that fixed assets of the firm are
fluctuating. In the year 2010 the company fixed assets value shows
negative results it means the fixed assets is not purchasing from the
sources of long term finance. The firm needs to invest fairly good

amount to increases its assets to improve its profitability. The company

needs to focus on increasing its fixed assets.
a. Diagram showing percentage change in fixed assets:

1. Table showing percentage change in cash and bank

balances:
(In Rs.000)

Aggregate
Amount
omitted
amount
2006-2007 3,363,556 483,934 16.8
2007-2008 4,493,238 1,129,682 33.6
2008-2009 4,108,660 -384,578 -8.55
2009-2010 2,826,362 -1,282,298 -31.2
INTERPRETATION:
The cash balance is showing an increased trend during the year
2007-2008. We can infer that liquidity position of the firm is good in the
year 2007-2008. Liquidity position of the firm is fluctuated and it is
showing negative sign in the year 2008-2009 and 2009-2010. In the
above graph we can see that the liquidity position of the firm sounds bad
during the year 2008-2009 and2009- 2010 and it shows negative trends.

The company has to take measures to improve the cash and bank
balance position.
a. Diagram showing percentage change in cash and bank
balances:

1. Table showing percentage change in advances and

others assets:
(In Rs.000)
Aggregate
Amount
omitted
amount

2006-2007 1,961,980 975,043 98.8
2007-2008 4,082,489 2,120,509 108.1
2008-2009 5,534,969 1,452,480 35.6
2009-2010 4,917,758 -617,211 -11.15
INTERPRETATION:
The above table shows that advances and others assets of the firm
are fluctuating. In the year 2010 the company advances and others assets
value is showing negative results it means the advances and others assets
is losing from the company. The firm needs to take good measures to
increases its advances and others assets. The company needs to focus on
increasing its advances and others assets to increased in working capital.

a. Diagram showing percentage change in advances and

others assets:

1. Table showing percentage change in current liabilities:

(In Rs.000)
Aggregate
Amount
omitted
amount
2006-2007 3,874,652 1,216,085 45.74

2007-2008 6,129,149 2,254,497 58.2
2008-2009 8,820,225 2,691,076 44
2009-2010 12,281,585 3,461,360 39.2
INTERPRETATION:
We can see that current liabilities have increased during the year
2007-2008. The current liabilities are fluctuating and it shows
decreasing in the year 2009 and 2010. It does affect working capital
there by decreased liquidity and management will find it difficult to
manage day to day expenses of the firm. More the current liabilities then
current assets decreased at net current assets or working capital.
a. Diagram showing percentage change in current liabilities:


1. Table showing percentage change in provision:
(In Rs.000)
Aggregate
Amount
omitted
amount
2006-2007 30,845 2,116 7.4
2007-2008 122,019 91,174 295.6
2008-2009 208,813 86,794 71.1

2009-2010 187,617 -21,196 -10.2
INTERPRETATION:
We can see the provision have increased during the year 2007-
2008. The provision is fluctuating and it shows negative trend in the
year 2009-2010. There is increased in provision during the year 2007-
2008. It does affect working capital there by decreased liquidity and
management will find it difficult to manage day to day expenses.
a. Diagram showing percentage change in provision:


1. Table showing percentage change in net current assets:
(In Rs.000)
Aggregate
Amount
omitted
amount
2006-2007 1,420,039 240776 20.4
2007-2008 2,324,559 904520 63.7
2008-2009 614,591 -1709968 -73.6
2009-2010 -4,725,082 -5339673 -868.8

INTERPRETATION:
From the above table we can see that the company needs to
improve its current assets to avoid its adverse effect on working capital.
The above table makes it clear that company needs to increase its current
assets to maintain working capital. From the graph we find that the
financial position of the company sounds bad.
a. Diagram showing percentage change in net current assets:

Finding

 The aggregate change amount of share capital for 2007, 2008, 2009 &
2010 are 1,814,430 i.e. 29.3% 4,699,211 i.e. 58.7% 5,251,821 i.e. 41.3%
and 1,721,820 i.e. 9.6%. There is a small increased of share capital i.e.
9.6% only in 2010. Share capital is increasing in all the year, while
comparing all the year there is a big jump of 58.7% in 2008. To make
more strength of financial position of the firm, they need to increase the
shareholder funds.
 In 2007-2008 there was a sudden increase of 738.96% of reserve and

surplus. After 2008 there was no change in reserve and surplus. If the
company needs more reserve then they need to focus on ploughing back
of profit to retain maximum reserve and surplus.
 The aggregate change amount of policy liabilities for 2007, 2008, 2009
& 2010 are 5,903,535 i.e. 51.4%, 6,975,216 i.e. 40.1%, 4,725,672 i.e.
19.4% and 8,574,489 i.e. 29.5%

Policy liabilities are decreasing in percentage for every year. And

linked liabilities are fluctuating. At the end of 2010 we find that the
linked liabilities are increasing 29.5%.
 The aggregate change amount of shareholder investment for 2007, 2008,

2009 & 2010 are 148,833 i.e. 10.8%, 2,683,321 i.e. 175.4%, 78,533 i.e.
1.9% and 2,013,160 i.e. 46.9%. In 2009-2010 the shareholder
investment are increasing in percentage as compare to 2009 and 2007,
but comparing to 2008 the investment is decreasing.
 In 2009-2010 the policyholder investment is increasing in percentage

while compared to 2008 and 2009. It indicates good financial position.
 The aggregate change amount of fixed assets for 2007, 2008, 2009 &
2010 are 131,540 i.e. 21.75%, 595,746 i.e. 80.93%, 115,906 i.e. 8.7%
and -303,929 i.e. -21%. In 2007-2008 there was an increase in
percentage of fixed asset. At the end of 2010 there is a huge decrease in
the value of fixed assets as compared to all the years.

 In 2007-2008 there was an increase of 33.6% of cash and bank balances.

There is a wide fluctuation in the cash and bank balances of the
company. In the year 2009 & 2010 the company cash and bank balance
is showing negative value i.e. 8.55% and 31.2%. A steady percentage of
liquidity is advisable.
 In 2007-2008 there was an increase of 108% in advances and other

assets. After 2009 there is a huge decrease in advances and other assets
i.e. -11.15%, which is not good for company.
 In 2007-2008 there was an increase of 58.2% in current liabilities. As

compared to current assets the current liabilities is increasing in the year
2009 and 2010 which is not good for company working capital.
 In 2009-2010 there is a decrease in percentage of provision which

indicate increased in working capital.

 There is a decrease in percentages of working capital of the company

which indicates the bad sounds of financial position of company.
Suggestion
 Company has to develop zeal to increase its profit. The company should
utilize the available resources in proper manner.

 As a company is facing a stiff competition from competitors it has to

work hard to meets its targets. It needs to give more importance for
research and development.
 It needs to update with latest technology to match with its competitors.

And the company can invest fairly good amount in investments of fixed
assets.
 The company assets in the form of loans and advances are to be verified
and appropriate measures have to be taken for the collection of same
time.
 The liquidity position of the company in the base year is weak; still the
company should take steps to improve the liquidity position.
 The overall analysis reveals that the company’s performance all the year
is good. But they are suffering from inadequate working capital, so the
steps have to be taken to improve it for all the years.

Conclusion
We can say that there should be an efficient financial
management system in the organization. It should overcome the adverse
condition and minimize its losses and protect firm from facing the
negative condition of liquidity. In tomorrow’s economy the world will
belong to those who are open to creative, imaginative and flexible to
changes, having open mindless, strength of taking risk and an innovative
spirit. These entire characteristics can lead the company on a successful
path.
Based on this study the major findings are that from the overall
finance point of view, company is not performing to a very high degree
level of achievement. This study indicates that in order to improve the
overall performance of company (‘HDFC Standard Life Insurances

Company Ltd’) the management must take all possible steps to review
and modify various policies, cash budgets, inventory status by using
sound information management system. This will enable the
management to have a close control over the various operations.
Though this study may be of academic in nature it may serve a

starting point for the managerial action plan towards enhancing not only
the operational efficiently but also will prove a great help in
understanding and determining appropriate strategic plans to bring
various important comparative analysis of financial statements results to
the level of industry standards.

Bibliography
Referred Books:
COST & FINANCIAL ACCOUNTING
 S.K. GUPTA
 NEETI GUPTA

MANAGEMENT ACCOUNTING
 SHASHI K. GUPTA
 R. K. SHARMA
FINANCIAL MANAGEMENT
 SHASHI K. GUPTA

FINANCIAL ACCOUNTING
 REDDY
 REDDY
Referred web sites:

 www.hdfcslic.co.in
 www.googlesearch.com
 www.mapsofindia.com
 www.wikipedia.com


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Comparative Financial Statements of HDFC Standard Life Insurance.

Indian Academy Degree college, Hennur cross, Page 1

the money out to other individuals or corporations for consumption or

Finance is used by individuals (personal finance), by governments

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Finance is one of the most important aspects of business

Indian Academy Degree college, Hennur cross, Page 3

Meanings of Financial Management:

Objective of Financial Management:

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Indian Academy Degree college, Hennur cross, Page 5

A proper balance between the fixed assets and current assets is an

c) Proper planning of funds:

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Efficiency and effectiveness are very much necessary in

Scope of financial management:

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to make it an integrated and complete subject for every organization.

Traditional scope of financial management:

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Modern Financial Management:

1. Investment Decision Making:

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4. Balancing Profitability And Liquidity:

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5. Risk and Return:

The organizations structure of financial management:

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Vice-President Vice-President Vice-President

Tax Financial Capital Cash

Cost Data Credit Portfolio

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Financial statements, their uses and significance:

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presented in a structured manner and in a form easy to understand, is

4. Statement of fund flows:

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5. Statement of cash flows:

Financial statement analysis:

Steps involved in the analysis of financial statement:

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From a study of the meaning of analysis of the financial

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Types of Financial Statement Analysis:

b. Horizontal and Vertical Analysis.

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c. Long term and short term analysis.

Short term analysis is made to determine the short term solvency,

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profitability because profit is viewed as the primary source for payment

Tools of Financial Statements:

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purpose. The following are the principal tools of analysis of financial

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Comparative statements can be prepared for both

Comparative financial statement analysis:

Meaning of comparative financial statement analysis:

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In other words, Fouke, comparative financial statements of the

Contents of comparative financial statements: