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Finance is regarded as provision of money at time it is needed. We need finance for production of goods and services as well as their distribution. It is the life blood of business activities. Management of finance determines the success or failure of any business activity. Management in general deals with effective procurement and utilization of basic imports like men, machines, methods, materials, markets and money. Finance is common thread that passes through all business activities. Financial Management deals with how the corporation (company) obtained the funds and how it uses them. Financial Management is that part of management which is concerned mainly with raising funds in the most economic and suitable manner, using these funds as profitably as possible, planning, future operations; and controlling current performances and future developments through financial accounting, cost accounting, budgeting, statistics and other means. Financial Management implies the designing and implementation of certain plan. Plans aims at an effective utilization of funds. Financial management is important because it has an impact on all the activities of firm. It touches on all the other business functions. Financial management applies to an organization, irrespective of its size, nature of ownership and control whether it is manufacturing or service organization. It applies to any activities of an organization which has financial implication. Financial management should not be taken to be a profit-extracting device. It is concerned with the use of funds as well and therefore, with the investment decision that determine the nature of a firm‟s business. How to acquire finance for short term and long term assets in an important decision area of financial management. Both assets and liabilities should be properly chosen for both have their own merits and limitations which financial manager will
have to reconcile. Moreover, such selection would also involve a judicious planning of inflows and out flows of funds.
DEFINITION: According to Guthmann and Dougall “Business finance can be broadly defined as the activity concerned with the planning, raising, controlling and Administering the funds used in the business.”
According to Prather and Wert, “Business finance is deals primarily
with raising, administrating and disbursing funds by privately owned business units, operating in non-financial fields of industry.
SCOPE OF FINANCIAL MANAGEMENT
The scopes of financial management fall in to three groups. One view is that the finance is concerned with cash. At the other extreme is raising and administering funds for an enterprise. The third approach is that it is integral part of overall management. The scope of financial management may be broadly be classified as below
Anticipation of the financial management Acquisition of the necessary capital and determining the sources of finance
Allocation of funds which deals with the deployment of total funds between the different components of fixed and current assets
Appropriation on which basically considers the division of total earning between the dividend distribution and retention of profits in the business
Assessment which deals with the control over financial activities.
OBJECTS OF FINANCIAL MANAGEMENT There are two widely discussed approaches or criterion or goals of maximizing owner‟s welfare:1) Profits maximization 2) Wealth maximization 1) Objects of profit maximization:Maximization of profit is generally regarded as the main objective of a business enterprise. the goal of maximization of profits is said to be the best criterion of the decision making. 2) Objects of wealth maximization:The wealth maximization (also known as value maximization or net present worth maximization ) is also universally accepted criterion for financial decision making. sales and management. economic welfare i. the goal of financial management to ensure its shareholders that the value of their share will be maximize in the long run in fact.e. production. the performance of the company can well be evaluated by the value of its share.e. Wealth maximization means maximizing the net present value( or wealth) or course of action. Therefore. Each company collects its finances by way of issue of shares to the public. The wealth maximization objectives is consistent with the objective of maximizing the owners. The wealth maximization criterion is based on the concept of cash flows (inflows and outflows ) generated by decisions. 4 . It is therefore. On the other hand. But this is possible only when the company earns higher profit or sufficient profits to discharge its obligations to them. The all such interested parties must get the maximum return for their contributions. their wealth. higher profits are the barometer of its efficiency on all fronts i.
5 .IMPORTANCE OF FINANCIAL MANAGEMENT The importance of financial management can be discussed under following heads: 1) Successful promotion depends on financial administration:One of the most important reasons of business promotion is a defective financial plan. development. Riskiness and profitability are two major factors which jointly determine the value of the concern. 3) Financial administration co-ordinates various functional activities:Financial administration provides complete co-ordination between various functional area such as marketing. 2) Smooth running of an enterprise:Sound financial planning is necessary for the smooth running of an enterprise for the smooth running of an enterprise. expansion and administration of working etc.. in-corporation . what oil is to an engine. promotion.e.e. 5) Measure of performance:. Money is to an enterprise. by its size of earning. As finance is required at each stage of an enterprise i. 4) Determination of business success:It has been recognized. even in India that the financial managers play a very important role in the success of the business organization by advising the top management the solutions of the various financial problems as experts. risks and control of various alternatives plans. to achieve the organizational goals. Hence sound financial plan is very necessary for the success of business enterprise. production etc. proper administration of finance is very necessary. As the selection of sound financial plan requires a serious consideration over factors like profitability.The performance of the firm can be day-to-day measured by its financial results i.
CHAPTER:2 COMPANY PROFILE 6 .
1963 governs marine insurance in our country. the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. fire.INSURANCE IN INDIA Indian Insurance Industry: . 1972 govern Fire and Marine Insurance. the peril of sea. death. insurance for employer‟s liability. The aim of all insurance is to compensate the owner against loss arising from a variety of risks. marine. These laws contain provisions relating to the constitution. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.The business of insurance is related to the protection of the economic value of assets. 1972 and the General Insurance Business (Nationalization) Act. a large number of people associate themselves by sharing risk. Insurance is actually al contract between 2 parties where by one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of al certain event. Insurance is a contact whereby in return for the payment of premium by insured. while the Indian Marine Insurance At. and insurance of motor vehicles. General Insurance means Fire. incident and burglary. fidelity guarantee. Insurance may be described as a social device to reduce or eliminate risk of life and property. and Miscellaneous insurance which includes insurance against burglary or theft. to his life. Insurance is mainly of two types: Life Insurance and General Insurance. The Insurance Act. which can be insured against include. Under the plan of insurance. attached to individual. management and winding up of 7 . The risk. which he anticipates. livestock and crops. property and business.
did not have the exclusive privilege of doing life insurance business of India. the National in Calcutta. In India. on the happening of a specified event. in 1874. there were 170 companies and 75 Provident Fund societies transacting life insurance business in India. in consideration of a sum of money. Law recognizes insurance as a system of sharing risk too great to be borne by one individual. the Hindustan Cooperative was formed in Calcutta. The business of insurance started with marine business. agreed to share the losses to their goods while being carried by ships. By 8 .I. Later. Fire accident or death. The first Indian insurance. After the amendments to the relevant laws in 1999. insurance began in 1870 with Life insurance being transacted by an English company. when the life insurance business was nationalized and Life Insurance Corporation of India (LIC) was formed on 1st Sep. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ship. the Bharat in 1896 and the of India in 1897. This was followed by the Oriental Life Assurance Co. These were all Indian Companies. 1956. Traders. the Bombay life in Bombay. By the year 1956.C. A contract of insurance is a contract by one party undertakes to make good the loss of another. formed in 1870. who used to gather in the Lloyd‟s coffee house in London. The first insurance policy was issued in 1583 in England. the Jupiter in Bombay and Lakshmi in New Delhi. Company was the Bombay Mutual Assurance Society Ltd. the United India in Madras. started as a result of the swadeshi movement in the early 1900s. the European and the Albert. All insurance business in India has been nationalized. the New India in Bombay.g. the L. e.insurance companies and the conduct of insurance business of all types.
can trace its roots to the Triton Insurance Company Ltd. with a capital contribution of Rs. the first company to transact all classes of general insurance business. Up. on the other hand.. 1912 – The Indian Life Assurance Companies Act enacted as the statute regulate the life insurance business. 9 . 1956 – 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. 11 new insurers had been registered and had begun to transact life insurance business in India.31st March 2002. Some of the important milestones in the general insurance business in India are: 1907 – The Indian (M) Insurance Ltd. the first general insurance company established in the year 1850 in Calcutta by the British. Set. 1956. Some of the important milestones in the insurance business in India. LIC formed by an Act of parliament. Tracing the developments in the Indian insurance sector reveals the degree turn witnessed over a period of almost 190 years. HISTORY OF INSURANCE SECTOR The Insurance sector in India has come a full circle from being an open competitive market to nationalization and black to a Liberia zed again. 1928 – The Indian Insurance Companies act enacted to enable the government to collect statically information about both life and non – life insurance businesses. The General insurance business in India. LIC Act. The business of Life insurance in India in its existing from started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. viz. 5 crore from the Government of India. 1938 – Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.
1968 – The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972 – The General Insurance Business (Nationalization) Act. The uncertainty of loss can be reduced by better planning and administration. The insurer charges premium for providing the said certainty. the person will suffer loss in absence of insurance. if the subject matter is not. But. 10 . 1. The time and amount of loss are uncertain and at the happening of risk. The insurance guarantees the payment of loss and thus protects the assured from suffering the insurance cannot check the happening of risk but can provide for losses at the happening of the risk. Insurance provides protection : The main function of the insurance is to provide protection against the probable chances of loss. 1972 nationalized the general insurance in India with effect from 1st Jan.1957 – General Insurance council. 1973 FUCTION OF INSURANCE: The functions of insurance can be studies into two parts. Insurance provides certainty Insurance provides certainty of payment at the uncertainty of loss. a wing of the insurance Association of India. Primary Functions 2. Secondary Functions PRIMARYL FUNCTIONS: 1. 2. the self – provision may prove costlier. Moreover. adequate. the insurance relieves the person from such difficult task. Insurance remove all these uncertainty and the assured is given certainty of payment of loss. frames a code of conduct for giving fair conduct and sound business practices.
When risk takes place. on the basis of probability of risk. The dearth of capital of the society is minimized to a greeted extend with the help of investment of insurance. and therefore the loss arising from the risk is also uncertain. Prevention of loss: The insurance joins hands with those institutions which are engaged I preventing the losses of the society because the reduction in loss causes lesser payment to the assured and so more saving is possible which will assist in reducing the premium. 2. the loss is shared by all the persons who are exposed to the risk. the shares is obtained from each and every insured in the shape premium without which protection is not guaranteed by the insurer. Lesser premium invites more business and business causes lesser share to the assured. but today. SECONDARY FUNCTION : 1.3. The risk sharing in ancient time was done only at time of damage of death. 3. The industry. The accumulated funds are invested in productive channel. It Improves Efficiency: The insurance eliminates worries and miseries of losses at death and destruction of property. the business and the individual are benefited by the investment and loans of the insurers. but the efficiencies of the masses are also advanced. Risk Sharing: The risk is uncertain. It Provides Capital: The insurance provides capital to the society. The carefree person can devotes his body and soul together for better achievement. 11 . It improves not only his efficiency.
provides an initiative to work hard for the betterment of the masses. It helps Economic progress:The insurance by protecting the society from huge losses of damage. Max Life Insurance Co. Met Life Insurance Sahara India Life Insurance ANZ Insurance Amsure Insurance Cholamandalam MS General Insurance Employeee State Insruance Corporation. the capital. Export Credit Grarantee Corporation of India Ltd. is also immensely provided by the masses. Ltd. The next factor of economic progress. Ltd. ICICI Lombard Agriculture Insurance Co.4. General Insurance Companies in India Birla Sun life Financial Service Birla Sun life Birla Sun Life insurance Companies in India Bajaj Allianz Insurance Companies in India Om Kotak Mahindra Life Insurance Companies in India Royal Sundaram Alliance Insurance Companies in India Ing Vysya Life Insurance Co. India Ltd. INSURANCE INDUSTRIES IN INDIA H D F C Standard life insurance ICICI Prudential Life Insurance Co. destruction and death. Ltd. Peerless Smart Financial Solution IFFCO TOKIO Tata AIG Insurance Reliance Life Insurance SBI Life Insurance 12 .
Insurance companies collect premiums to provide for this protection. For Example if a person buys a Life Insurance Policy by paying a premium to the Insurance company. There are different kinds of Insurance Products available such as Life Insurance. to pay the other party called insured a fixed amount of money on the happening of a certain event.” In simple terms it is a contract between the person who buys Insurance and an Insurance company who sold the policy. By entering into contract the Insurance Company agrees to pay the Policy holder or his family members a predetermined sum of money in case of any unfortunate event for a predetermined fixed sum payable which is in normal term called Insurance Premiums. By paying a very small sum of money a person can safeguard himself and his family financially from an unfortunate event. 13 . Home Insurance. Health or Med claim Insurance etc.BASIC LIFE INSURANCE WHAT IS INSURANCE? Insurance in its basic form is defined as “A contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums. Insurance is basically a protection against a financial loss which can arise on the happening of an unexpected event. Travel Insurance. Vehicle Insurance. the family members of insured person receive a fixed compensation in case of any unfortunate event like death.
liablility insurance and other of insurance. whereby the insurer compensates the loss to the insured when he is under the liability of payment to the third party. 14 . This insurance provides protection to the family at the premature death or gives adequate amount at the old age when earning capacities are reduced. KINDS OF INSURACNE : The Insurance can be divided from two angles : first. Motor.e. Fire and marine insurances are strictly called property insurance. There are the two kinds of the Insurance. from the business point of view and the second. 2) Non – Life Insurance :Non – life Insurance is a general insurance. beyond human control. It requires a large number insured to make the principle of insurance work. The insurer will pay the fixed amount of insurance at the time of death or at the expiry of certain period. 2) The insured should not make any profit out of it. based on law of probability. from the risk point of view. fidelity and machine insurance include the extent of liability insurance to a certain extent. 1) The contingency or the insured event should be fortuitous in nature. theft. here the subject matter of insurance is life of human being. 1) 2) 1) Life Insurance Non – Life Insurance Life Insurance : Life Insurance is different from other insurance in the sense that. The strictest form of liability insurance is fidelity insurance. i. The business of life insurance is wholly done by the Life Insurance Corporation of India. The general insurance includes property insurance.They following are his principles for the insurance as they under.
Life insurance. like fixed deposit. 3) It is superior to traditional saving instrument. 8) It is also used as a tool of social security by progressive government.P.BENEFITES FROM LIFE INSURANCE : 1) It provides protection to the family of the assured ( by way of replacement of income) in the event of premature death. 88. involving long – term investment of funds. making him financially independent of the family. P. etc. 80 CCC and 80D. particularly when they are unit – linked can act as an 4) effective investment tool to provide market related to the policyholder. 2) It becomes an old age provision for the assured when the survives the term of the policy. thus accelerating its economic development.F. Sec. 15 . Sec. 5) A life insurance policy can facilitate raising a loan. because a premature is such as saving plan. 10 (10D). Insurance plans. 6) As per the prevailing tax laws life insurance policies enjoy tax benefits under Sec. making it financially independent of the assured. has potential 7) of contributing to the economic and social infrastructure of the country.
The premium in the case will be higher than in the case of the term plan. insurance companies have come out with non – traditional products mainly in the form of unit linked products. Where survival benefits become payable at definite intervals. which have borrowed several beneficial features of mutual funds. called deferment period.) 2) Non – Traditional Products : Due to the inflexibilities of traditional life insurance products. d) Annuities : They are a series of periodic payment to the annuitant for life or for a specified period. 16 . An annuity can be immediate ( Where the payment of annuity starts immediately) or deferred ( where the payment of annuity commences after a specified period. etc. c) Endowment Plan: It provides for the payment of the sum assured at the end of a specified term or an earlier death. lack of transparency. which result into high causation. is all a variant of endowment plan. A money back plan. A detailed discussion on these products is available in a later chapter on the subject. inconvenience in sticking to premium payment regimen. b) Whole Life Insurance : Here the sum assured is paid on death whenever it occurs. which includes: a) Term Plan : Provides death risk cover for a specified term only every policy does not result into a claim.LIFE INSURANCE PRODUCTS: Life insurance products are broadly placed under two categories: 1) Traditional Products.
Insurers usually three choices – an equity ( growth) fund. the insurer calculates how much has to be paid to settle death and maturity claims. In a ULIP too. ULIPs also serve the same function of providing insurance protection against death and provision of long-term savings. The surplus in the life fund left after meeting these liabilities is credited to policyholders‟ accounts in the form of a bonus. In „with profits‟ policies. Every year. the insurance company credits the premium to a common pool called the „life fund. but they are structured differently. The policyholder‟s share in the fund is represented by the number of units. In ULIRs.UNIT LINKED INSURANCE PLAN (ULIP) : Unit – linked insurance plans. Most important of all. the policyholder bears most of the investment risk. „ With profits‟ policies are called so because investment gains (profits) are distributed to policyholders in the form of a bonus announced every year. In traditional „with profits‟ policies. If the insurance company offers a range of funds. 17 . Why do insurers prefer ULIPs? Insurers love ULIPs for several reasons. the insurer deducts charges towards life insurance (mortality charges). are distinct from the more familiar „with profits‟ policies sold for decades by the Life Insurance Corporation.‟ after setting aside funds for the risk premium on life insurance and management expenses. The rest of the premium is used to invest in a fund that invests money in stocks or bonds. administration charges and fund management charges. balanced fund and a fund which invests in bonds. The value of the unit is determined by the total value of all the investments made by the fund divided by the number of units. insurers can sell these policies with less capital of their own than what would be required if they sold traditional policies. the insurance company bears the investment risk to the extent of the amount. the insured can direct the company to invest in the fund of his choice. ULIPs.
FEATURES:Unit Linked Insurance Plans have gained high acceptance due to the attractive features they offer. Alternatively. and Fund Options. Transparency. Liquidity. a ULIP will also allow for partial/ systematic withdrawal should the need arise. 5) Traditional Plans: . 3) Liquidity: . 1) Flexibility: . or a combination of the three. Steady Investment a) Major chunk of ingestible funds are in debt instruments. ULIPs give the customer the option of changing the level of premium/Sum Assured even after the plan has started. 18 . where all charges in the plan as well as the entire net amount invested is made known to the customer.ULIPS offer a high degree of transparency.These are the oldest types of insurance plans available. 4) Fund Options: . ranging through equity. cash. Some of the common features of traditional plans are : 1. so you can decide instantly where you want your assets allocated. and the flexibility to change asset allocation by switching between funds with ease. Benefits include flexibility.A ULIP offers you the option of withdrawing money a few years into the plan. and to choose the desired premium amount. 2) Transparency: . The Customer is also afforded the option of choosing your fund mix based on your desired asset allocation. allowing for the exigencies of life. debt. These plans cater to customers with a low appetite. ULIPs also offer the convenience of tracking your investment performance on a day to day basis.A ULIP offers the customer an acute degree of flexibility: the flexibility to choose the Sum Assured.A ULIP will offer you a wide choice of funds. b) steady and almost assured returns over the long term.
Features c) d) e) Death benefit is Sum Assured + guaranteed & vested bonus Helps in asset creation as they are for a long tenure. 19 . Premium to Sum Assured ratios are fixed for each plan and age. f) Generally withdrawals are not allowed before maturity.2.
(Housing Development Finance Corporation Limited) one of India‟s leading housing finance institution and standard Life Group-a leading housing finance institution and Standard Life Group. The MD and CEO of HDFC Standard Life Mr. Intellect. they can be easily customized as per specific needs. HDFC Standard Life brings to you a whole range of insurance solutions be it group or individual or NAV services for corporations.a leading financial service company in the united Kingdom. COMPANY PROFILE OF HDFC INTRODUCTION:A Joint Venture between HDFC Ltd. HDFC Standard Life Insurance Co. both the joint venture partners being one of the leaders in their respective areas came together in this joint venture to form HDFC Standard Life insurance Company Limited. Deepak Satwalekar.HDFC bank. HDFC Mutual Fund.1. It is a joint venture between Housing development Finance Corporation Limited (HDFC Ltd. Some of the companies belonging to the HDFC group are . HDFC securities. 20 . [ Tagline : „Sar Utake Jiyo‟] is reputed private life insurance company in India. Ltd was incorporated on 14th august 2000. Ltd.) India and UK based Standard Life Company. HDFC Standard Life Insurance Co. & other. has given the company new directions and has helped the company achieve the status it currently enjoys.
HDFC Standard Life Insurance India boasts of covering around 8. Indian Bank. 856 crores. BABHGUYTHVBBABBASSEKL 21 . HDFC Standard Life Insurance Corporation is sure to become one of the leaders and the first preference for any life insurance customer. HDFC Bank India Limited. Union Bank of India. Bank of Baroda. Saraswat Bank and Bajaj Capital. The Bank assurance partners of HDFC Standard Life Insurance Co Ltd are HDFC.7 lakh lives by March‟2007 The gross incomes standing at a hooping Rs. 2.
HDFC GROUPS 22 .
PRODUCTS:At HDFC Standard Life . This section gives you details of all our products. we offer a bouquet of insurance solutions to meet every need. we have a range of protection. These affordable plans apart from providing loan term value to the employees help in enhancing goodwill of the company. 1) Individual Products:- a) Protections Plans:-Terms Assurance Plan -Loan Cover Term Assurance plan -Home Loan protection plan b) Investment Plans:-Single Premium Whole of Life plan -Unit Linked Wealth Maximiser plus 23 . Gratuity. We cater to both. indivisuals as well as to companies looking to provide benefits to their employees. investment. We have incorporated various downloadable forms and product details so that you can make an informed choice about buying a policy. Leave Encashment and Superannuation Products. You can choose from a range of products to suit your life-stage and needs. For organization we have a host of customized solutions that range from Group Term Insurance. pension and savings plans that assist and nurture dreams apart from providing protection. For individual.
Unit Linked Young star plus II .Money Back .Unit Linked Endowment plus II .Unit Linked Young star .Unit Linked Young star Suvidha .Unit Linked Endowment Suvidha plus .Unit Linked Endowment plan plus .c) Pension Plans:.Unit linked Pension Maxi miser d) Saving Plans:.Unit Linked Endowment plan .Unit linked Pension plus .Saving Assurance plan .Unit Linked Endowment Suvidha .Children‟s plan .Unit linked Pension plan .Simply Life 24 .Personal Pension plan .Unit Linked Young star Suvidha plus .Assurance plan .Endowment Assurance plan .Unit Linked Young star .Unit Linked Enhanced Life Protection II .
Critical care plan 2) Group Products:.Group Term Insurance .e) Health plan:.Garmin Bima Mitra Yojana 4) Social Product:.Group Unit Linked plan 3) Rural Product:.Development Insurance plan 25 .Group Variable term Insurance .
2. COMPANY PROFILE OF ICICI PRUDENTIAL
INTRODUCTION:A joint Venture between ICICI Prudential Life Insurance Company is between ICICI Bank, a major financial organization in India, and prudential plc, an international financial service company based in the United Kingdom. ICICI prudential [`we cover you. At every step in life`] had started its operation in December 2000 following the approval from Insurance Regulatory
Development Authority (IRDA). A premier private life insurances provider in india, ICICI Prudential has a network of abo0ut 56,000 advisors. ICICI Prudential Life Insurance Company Limited was incorporated on July 20, 2000. The authorized capital of the company is Rs.2300 Million and the paid up capital is Rs.1500 Million. The Company is a joint venture of ICICI (74%)and prudential plc UK (26%). The company was granted certificate of registration for carrying out life incurrence business, by the insurance regulatory and development authority on November 24, 2000. It commenced commercial operations December 19, 2000, becoming one of the first few private sector players to enter the liberalized arena. The company‟s now operational in Mumbai, New Delhi, Pune, Chennai, Kolkata, Bangalore, Chandigade, Ahemadabad, Heydrabad, Lucknow, Nasik, Jaipur, Cochin, Meerut. Till March 31, 2002 the company has issued 100,000 policies translating into a premium income of around Rs. 1,200 Million and a sum assured of cover Rs.15000 Million. The company recognizes that the driving force for gaining sustainable competitive advantages in this business is superior customer experience and investment behind the brand. The company aims to achieve this by striving to provide world class service levels through constant innovation in product.
1) Educational Insurance Plans:- Smart Kid New Unit linked Regular - Smart Kid New Unit linked Single - Smart Kid Regular Premium 2) Wealth creation Plans:- Life stage Assure - Life time Gold - Life Link Super - Premier Life Gold - Life Stage RP 3) Premium Guarantee Plans:- Invest Shield Life New - Invest Shield Cash back
4) Protection Plans:- Pure Protect -Life Guard - Cash back - Home Assured
5) Retirement Solutions:- Life Stage Pension - Premier Life Pension - Life Time Super Pension - Forever life - immediate Annuity
Group Gratuity Plan .Group Super Annotation .Group Term Insurance In lieu of EDLI 8) Rural Products:.Cancer Products .Diabetes Products 7) Group Products:.Suraksha Kavach 9) Micro Insurance Products:.Group Term Insurance Plans .Sarv Jana Suraksha 29 .Critical Illness Plans .6) Health Insurance Products:.Hospitalization Plans .Suraksha .Annuity Solution .
CHAPTER:3 OBJECTIVES OF PROJECT & HYPOTESIS 30 .
To provide suqqestion & improvement in the policy of HDFC Standard Life & ICICI Prudentional that is currently available in the market share of the company.OBJECTIVES OF PROJECT The main objectives of the study are. 31 . its scope &importance. The understand the concept of floater policy. To compare the product of HDFC Standard Life & ICICI Prudential with specific reference to floater plan. HDFC is unit link pension plan is able to give returns that other companies and because of the lower fund management charges. HDFC and ICICI investment is very convenient to consumers. HYPOTHESIS The HDFC plan is more preferable to old age group people.
CHAPTER:4 Research methodology 32 .
The purpose of survey research method is to collect primary data for the research Interviews of the people using the products were taken for the sake of data collection. The two major companies we are considering for the comparison are HDFC Standard Life & ICICI Prudential Pension plan Primary as well as Secondary data collection is used for the analysis. The primary method for data collection includes the survey method. One group consisted of those people who used HDFC & the second group consisted of those who used ICICI prudential each group was provided with the same questionnaire a darting according. Sample size:The sample size of the purpose of the research was 30. The respondendent were divided in to two groups.RESEARCH METHODOLOGY Research Methodology Here the research is being carried out to do a financial analysis between two major companies in this sector. The sample size for the research is 30. The copy of questionnaire is attached in appendix. On the basis of the answer to the questions rating was given to the two selected players for the comparison. A questionnaire for the interview was prep aired & the people using the product were asked to questions. 33 .
rearranging & tabulating the data. A descriptive analysis of the tabulated data was done & appropriate interpretation of the data led to the recommendations. collecting organizing & invalidating data and making reduction & conclusion.Data analysis :The data analysis part consisted of summarizing. a research include defining & redefining problem. To help reliance to improve its market share as compared to that of the other competitors considered for the research. The raw data was transformed in to the form that will make to easy to understand & interpret. These recommendations are believed. formulating hypotheses or suggested solution. RESEARCH METHODOLOGY Meaning:Research is a common term refers to a search for knowledge it is a scientific & systematic search for specific information topic infect research is an art & scientific investigation research is also & academic activity and as such the term should be use in a technical sense. Definition of research:“According to mory Research is a systematic effort to gain new knowledge” 34 . at last carefully testing the conclusion to determine whether they fit the formulating hypotheses.
Applied research:Applied research or fundamental research aims and financing a solution for an immediate problem facing a society or an industrial or business organization. on the other hand is concern with qualitative phenomena (involving quality or king). Qualitative v/s Quantitative :Quantitative research is based on the measurement of quantity or amt. The main feature of this method is that the researcher has no control over the variables he can only report what has happen and what is happened. 2.research concerning with natural phenomena or relating to pure mathematics are example of fundamental Research. Qualitative research. To test accurately the features of a particular individual (descriptive research) 3.Objectives of research:1. To determine the frequency with which something accurse or with which is it associated with something else. (diagnostic research) 4. To test hypotheses of a cactus relationship between variable (hypotheses testing research) Types of research 1. To gain familiarity with a phenomenon or to achieve new insights into each. 3. 35 . (formulative research) 2. it is applicable to phenomena that can be expressed in term of quantity. Descriptive research :Descriptive researches include surveys &fact finding inquires of deferent kind. For et:. The major purpose of descriptive research is description of the state of affairs as it eit at present.
d. books magazines etc. the best way of understanding it with once own college or with those having some expertise in the matter. Empriricl research relies on in experience or observation alone. can be referred depending on the nature of the problem. Conclusion oriented research. conceptual v/s emperiel:- Conceptual research is that related to some attract idea or theory it is generally use by philosophers & thinkers to develop new concept. often without due regard is appropriable when prodf is sough that certain variables affect other variables in some way. Clinic research. In an academic institution the researcher can seek from a guide who is usually an experience man & has several research problems in mind. Formulation the research problems:There are two types of research problems example. Decision oriented research Research process or steps involved in research process 1. b. Those which relate to set up nature &those which relate to relationship between variables. Extensive larcener survey:Once the problem is formulated a brief summary of it should be written. report. govt. f. c. 5. Historical research. Field setting research or laborite research. e. One time research. 36 . 2. Some other types of research:a. Down it is compulsory for research workers writing a these for a PHD degree to write a synopses of the topic & submit it to the research board for approval academic journal conference proceeding.4.
Simple random sampling c. 5.3. Sequential sampling 37 . the function of research design in to provide for the collection of relevant evidence. Quota-stage sampling e. a sample design is a definite plan determined before any data are actually corrected for obtaining a sample from a given populating. Determining Sample Design:The researcher must decide the way of selection the sample design. In other words. Multi-stage sampling f. research should state in clear terms the working hypotheses. Important sample design or as follows:a. Design in other words. There are several research designs such as experimental and nonexperimental hypothesis & testing. Working hypothesis in tentative assumption made in order to draw out & test its logical consequence hypothesis should be very specific & limited the peace of research in hand because it has to be tested the role of the research by delimiting the area of research & to keep him on the right track. Systematic sampling d. Preparing the research design:The research problem having been formulated in clear cut terms the research will be required to prepare a research. 4. Development of working hypothesis:After expensive litercehers survey. With minimum expenditure of refer time and money. Deliberate sampling b.
6. Following are the difference way of collecting the data. of closely related operation such as establishment pf categories.Execution of the project:Execution of the project is a very important step in the research process the researcher should be see that the project is executed in a systematic manner & in time. 8) Analysis of Data:After the data have been collected. F-test. Primary data can be collected either through experiment or through survey. Hypothesis testing:After analyzing the data the researcher is a position to test the hypothesis. Tion. the researcher turns to the task of analyzing them the analysis of data requires a no. There are various steps of hypothesis such as T-test. 9. Collecting the data:There are several ways of collecting the data. With loading the stage is ready for tabulation is the part of the technical where in the classified data are put in the form of tables. chi-squre test which have been developed by statistician hypothesis or in rejecting it. tabulation and them drawing statistical conclusion editing is the procedure that includes the quality of the data for the quality of the data for ioading. 1) By observation 2) Through personal interview 3) Through telephone interview 4) By mailing of questionnaires 5) Through schedules 7). 38 .
Conclusion should be confined to those justified by the data of research. 2. Generalization & interpretation:If a hypothesis is tested. It the research had no hypothesis to start with he might seek to explain is finding on the basis of some theory. if may be possible for the researches to arrive at generalization ( to build a theory). The procedural design of the research should be carefully plant to give results that‟s are as objectives as possible. And estimate their effects upon the findings. 3. 11. Preparation of the report or or theris:The layout of the report should be as follows a) Preliminary pages b) The man text c) The end matter QUALITIES OF GOODS RESEARCH 1. 39 . The research should rep-ort way complete frankness flows in procedural designs. 4. The research procedure is used should be described in sufficient detail to Permian other research to repeated the research for further advancement. 5. The analysis of the data should be sufficiently adequate. It is known as interpretation.10. The purpose of the researcher should be critically defined and common concept be used. 6.
40 . Greater confidence of it research is warranted if the researcher is experience has a good reputation in research and is the person of integrity. Good research is imperial Good research is replicable. A) B) C) D) Good research a systematic. In the other words we can stay qualities of the researcher as under. Good research is logical.7.
4) Hypothesis should be limited in scope and must be specific. 6) Hypothesis should be consistent with must known facts. Features:1) Hypothesis should be clear and precise if it is not clear the drown on its basis cannot be taken as reliable. 3) Hypothesis should stay relationship between variable.HYPOTHESIS Hypothesis is usually considers as the principle instrument in research. It‟s make function is to suggest new experiments are carried out with the object of testing hypothesis. Hypothesis means as assumption or some supposition to be proved or disprove a research hypothesis is a predictive statement capable of being tested by scientific methods. 2) Hypothesis should be capable of being tested. 7) Hypothesis must explain the facts that gave rise to need for explanation inferences 41 . That related and independent variables to some dependently variables. 5) It should be stated as for as possible is must simple terms.
2) Secondary data. Thus. In this study facts and figures are raw material with which researcher works. Projective technique 6.COLLECTION OF DATA Different method of Collection of data There are two way of collecting data 1) Primary data. Warranty cost 2. Dept interview 7. in primary data collection researcher come across many methods as follows: a) Observation methods b) Interview methods c) Questioner methods d) Through schedule Other method include the following :1. salesmen. etc. Contain analysis 42 . Use of mechanical devices 5. Distributor 3. Consumer panels 4. One can obtain information from dealers. 1) Primary data:Primary data is originally gathered specifically on project hand. it offers much greater accuracy and reliability.
In this there are several types such as:1) General library 2) Trade -books 3) Internet etc. The information is relevant and can be used for our purpose. This data is not especially collected to solve present or specific problem.2. the researcher did the collection through the secondary data. After doing the data collection in primary method. 43 . Secondary data:Secondary data is the data already collected by someone else.
CHAPTER:5 COMPARISON OF ULPP OF HDFCSL AND ICICI PRUEDENTIAL 44 .
UNIT LINKED PENSION PLAN:The HDFC Unit linked pension gives you: An outstanding investment opportunity by providing a choice of thoroughly researched and selected investment A post retirement income for life Flexibility to plan your retirement date Freedom in invest premium as per your performance
The HDFC Unit Linked Pension is an insurance policy that is designated to provide retirement income for life with the freedom to maximize your investment returns. Stride into your golden years of retirement with dignity and pride. You can choose your premium and the investment fund. In the event of your unfortunate demise during the policy term, your spouse will received a cash lump sum to hold him or her manage the retirement years. Use HDFC Standard Life‟s excellent investment option to maximizes your saving and secure our Golden years. Go ahead, hold your head high and enjoy life with HDFC sum to hold him or her manage the retirement years. All Unit Linked life Insurance plans are different traditional insurance plans and are subject to different risk factors. HDFC Standard life is the name of our Insurance Company and HDFC Unit Linked plan is the name of this plan.
PENSION AT GLANCE:-
Premium Payment Term Regular Premium
Minimum Premium Minimum Entry Age Maximum Entry Age Minimum Policy Term Maximum Policy Term
Rs. 10000 18 years 75 years 10 years 30 years
Rs. 25000 18 years 70 years 10 years 30 years 50/75 years
Maximum / Maximum 50/75 years Age at maturity Maximum Sum Assured
Zero Sum Assured Policy
Under Section 80 CCC, as per prevailing Income Tax Laws on premium paid
1) Death Benefits:In the of unfortunate demise before the end of policy term, your nominee will receive the unit value. Your policy will terminate thereafter. 2) Premium Changes:Policyholder invests more than his usual premiums at any time, subject to following condition; a) Policyholder paid all his regular premiums to date for regular Premium contract. b) Each single premium Top – Up amount is at least Rs. 5000
3) Premium Changes :The minimum increase in regular premium amount is only Rs. 5000/- per year and any changes to premiums will take place from the next premium due date. All applicable charges to premiums will continue to believe. Policyholder may only restart his regular premiums within the specified revival period.
4) Changing investment Decision:Policyholder changes his investment fund choice in two ways. a) Switching: Policyholder can move his accumulated funds from one fund to another anything. b) Premium Redirection: Policyholder can pay his future premiums into a different selection of funds, as per his need.
5) Premium payment:Policyholders pay the regular premium up to 15 day after the due date to fit in with here cash flows.
1) Fund Management (FMC):In the long term.a. The daily unit price already includes our low fund management charge of only 0. He can take up to 1/3rd of his fund value as a tax free cash lump. of the funds value.6) On Vesting :Policyholders his policy matures at the end of the policy term they have chosen and on his chosen retirement ( vesting) date. Our charges. As per prevailing Government Regulations. are structured to give you better returns and value for a over the long term. a) Regular premium policy: It is equal to 25% of the difference between the regular premiums expected and those paid in the first two years of the contract. 48 . He can buy the annuity from us or any other insurance.sum and the rest must be converted to an annuity. b) Single premium Policy: Nil. the key to build greater maturity values is a low FMC. when take together. he will get the value of the units in his policy. except that the policy cannot be surrender before completion of three years. CHARGES :- The charges under this policy are deducted to provide for the cost of benefits and the administration provided by us.80% p. 2) Surrender charge:This is the charge we will apply when the policy is surrendered.
999 REGULAR PREMIUMS From 2.000 to 4. This percentage is called the Allocation Rate. The allocation rates are guaranteed for the entire duration of the policy term.50% 87.) ALLOCATION RATE 1st year 2nd year onward SINGLE Up to 4.999 From 10. The tables given below will help show how percentage of your premium is used to buy unit.999 From 20.000 to 9.50% 92.000 and 97.99.999 94% PREMIUMS From 5. Regular Premium Policy: - PREMIUMPAID DURING YEAR (RS.000 to 19.99.50% 99% 49 .99.50% 95% 97.00.99.00.000 and above Single premium Top – Up (s) ALLOCATION RATE 1st & year 2nd 3rd year onwards 99% 99% 99% 99% 99% 99% 75% 82.) Up to 1.99.50% Single Premium Policy: PREMIUMPAID DURING YEAR (RS.00.00. After deducting this charge from your premium.50% above Single premium Top – Up (s) 97.999 From 5.00.3) Premium Allocation Charge:This is a premium – based charge. the reminder is invested to buy units.
20 per month is charge to cover regular administration cost. 250 per request. 12 premium redirection requests will be free in a policy year and any additional premium redirection request will be charged at Rs. 250 is charged for revival to cover for administrative expenses. c) Revival Charge: A charge of Rs. After having reached this enviable and secure position. then you need a retirement solution that not only suits your need but also lets you retire RICH 50 . The surrender charge can be increased subject to maximum of 100% of the fund.4) Other Charges:a) Policy Administration Charge: . The Policy administration charges can increase in line with inflection subject to a maximum of 5% per annum over the period since inception PREMIER LIFE PENSION : ICICI PRUDENTAL Life Insurance presents premier life Pension – a limited premium paying. b) Switching Charge: 24 switches will be given free in a policy year and any additional switch will be charged as Rs. 100 per switch. wouldn‟t you like to continue living life on your own term even after retirement? If you think so. We take charge by canceling unites proportionately from each of the funds you have chosen. applicable for the first three years. unit linked pension policy designed for preferred customers You have strived hard to achieve your dreams and have attained the best comforts life could offer.A charge of Rs. d) Miscellaneous Charge: This is charge levied for any alteration within the contract like premium redirection or ado policy servicing. 5) Alteration to Charge : The fund management charged will not be exceeding 2% per annum.
This unique policy helps you customize your investments by allowing you to decrease your premium contributions as well as allowing you to boost your investment kitty by making top –ups at any time. Unit – Linked pension policy designed for preferred customers like you. Once you arrive at your retirement age the accumulated value of your policy provides you with a regular income (Pension) for life.a limited premium paying. FEATURES : Flexibility of limited premium payment term of 3 to 5 years Flexibility to decrease customer premium contribution from 2nd year onward Flexibility to increase customer investment by investing surplus money over and premium as top – ups Flexibility to choose from 5 pension option through can be received a pension Get regular income (Pension) post retirement Customer are choose the retirement date from started the receiving the pension 51 . ICICI Prudential Life Insurance presents Premier Life Pension Plan .To help you achieve this.
as per prevailing Income Tax Laws on Premium paid 52 .PENSION AT A GLANCE :- Premium payment Term 3 Years 5 Years Minimum Premium Rs 100000 Rs 60000 Minimum Entry Age 18 Years 18 Years Maximum Entry Age 18 Years 70 Years Minimum Policy Term 10 Years 10 Years Maximum Policy Term 62 Years 62 Years Maximum/Maximum Age at Maturity 50-80 Years 50-80 Years Maximum Sum Assured Zero Sum Assured Policy Tax Benefit Under Section 80 CCC.
Alternately. where the spouse is not the nominee. the benefits will be paid in lump sum to the nominee. However. II) Resources Investment Consumption and Human capital Pension Flexi Growth II Pension Multiplier II Pension Flexi Balanced II Pension Balancer II Pension Protector II Pension Preserver 4) Switching Option :With this option can switch between the various funds at time depending on financial priority and investment decision. Pension (R. This may be taken as lump sum or may be used to purchase an annuity from the company.C. 2) Flexible Retirement Date:The start receiving pension any time after you reach 50 years of age however. 4 free switches are allowed every policy Year.H. the option of deferring this date till age of 80 years 3) Choice of Investment Funds:The option to choose how want the investment to grow based on the objectives of each of the fund.I.BENEFITS:1) Death Benefit:In the unfortunate event of death before vesting the spouse receives Fund value. a portion of it (up to one-third) can be taken as a lump sum of the policy proceed and apply the balance to provide an annuity under the immediate annuity plan of the company then available this purpose. The minimum switch amount is Rs 2000/- 53 .
The minimum amount of topup is Rs. can option to reduce the premium after the first policy year to the Minimum specified limits under the chosen the premium payment term. These option available charges will be automatically reduced From a unites available in the funds.5) Top-Up:Can decide to increase the investment by investing surplus money over and above the premium. and the convenience.2000/6) Premium reduction:Under the product. it unsure that are the policy continues in Case the unable to pay premiums. 8) Other Benefits: Flexibility of limited premium payment term of 3 to 5 years Flexibility to decrease customer premium contribution from 2nd year Onward Flexibility to choose from 5 pension option through can be receive a Pension Get regular income (pension) post retirement Customer are choose the retirement date from started the receiving the Pension 54 . 7) Cover Continuance Option:If the avail of the cover continuance option.
Pension Preserver Pension Multiplier II Charge 1.00 % p.II. Pension Flexi Growth II.I. PREMIUM PAYMENT TERM Year 1 3 YEARS 5 YEARS 14% 14% % OF PREMIUM Year 2 Year 3 Year 4 Year 5 4% 4% 4% 4% 2% 2% 2) Top-Up Charge:The premium allocation charge for a single premium top-up is 1% of the amount of top-up premium.a 0. Pension Balancer II II.H.a 55 .C. as follows.a 1. 3) Funds Management Charge (FMC):The annual fund management charge which will be ad jested from the Net Asset Value (NAV) of various fund are as follow. FUND Pension R.50 % p.CHARGES:1) Premium Allocation Charge :This will be deducted from the premium amount at the time of premium payment and the balance amount would be used for allocation of units in fund (s).75 % p. Pension Flexi Balance Pension Protector II.
Pension Protector II (Income).per month for all premium paying modes. COMPARISON:Pension Unit Linked Insurance plance: How they fare HDFC STANDRD LIFE UNIT LINKED PENSION PLAN PRODUCT TYPE Market Linked Plan ICICI PRUDENTIAL PREMIR LIFE PENSION Market Linked Plan ULIP Fund option Growth fund.per switch by cancellation of unit*. additional swithces will be charged in Rs. up to 40% in Pension balancer-II. Any unutilized free switch cannot be carried forward to subsequent years. managed fund. Preserver Allocation to equities 100% in growth fund. There after. Secure fund. 100/.4) Policy Administration Charges :The fixed policy administration charge is Rs. 60100% in equity managed fund. Equity Defensive fund. Liquid fund pension Maxi miser II (Growth). Pension Balancer II (Balanced). nil in . Balanced fund. 60/. This will be recovered by cancellation of unit* 5) Switching Charge :Free swithces are allowed in each policy year. 30-60% in 56 Up to 100% in Pension Maxi miser-II.
60.000 Life cover option available How is Sum assured calculated No Yes sum assured = Rs 1. nil in secure managed & liquid fund Minimum Premium (Rs) Regular Premium: Rs. assured. 15-30% in defensive managed fund.000 Protector II & Preserver 3 years: Rs.000 5 years: Rs. Option 1 : Zero sum calculated plus the fund value.50%-22% for years 1 57 18 / 70 years Min-Max vesting age (Yrs) Initial years’ expenses 50 / 80 years 17%-22% in first yr. Option 2: Sum assuerd = annunal contribution X tenure. Min / Max Age at entry ( Yrs) Regular premium 18 / 65 years Single premium: 18 / 70 years 50 / 75 years 8. 1.000 Single Premium: Rs.00. 25. Pure accumulation. 10.000 plus the fund value.balanced fund. .
1% of top-up value for first 10 yrs. additional switches be charged Rs. 100 /per switch by cancellation of unit.0%.80% 12%15% for second yr.5%.1% thereafter. (Exact percentage depends upon premium amt). (Exact percentage 15% for second yr. 20 Expenses after initinal 1% third yr onwards. There after. Nil thereafter. Free switches are allowed in each policy year.and 2. balancer-1. 15 2. 100 per switch. Fund management charges 0. Maximiser II.1. Nil years (%) thereafter.5% for initial two yrs. depends upon the annual premium amt). protector II & preserver-0. Fixed monthly expenses (Rs) Charges on top-ups (%) .75% 1% for years 3 to 10. Switch charges 24 switches will be given free in a policy year and any additional switch will as Rs.* 58 .
This is quite evident from the fact that mutual fund had been recently collection huge croups in their New Fund Offers.HDFC Standard Life and ICICI Prudential Unit Linked Pension Plan compare to the two company’s product plan of the age at Vesting and term/ defermentb Vears as under. 59 . UNIT LINKED PENSION PLAN Build-in Flexibility Vesting(yrs) Available Plan HDFC Standard Life (Unit Linked Pension) ICICI Prudential (Premier Life Pension) 50 80 10 57 Min 50 Max 75 Deferment (yrs) Min 10 Max 40 Age at Vesting Term/ NET ASSECT VALUE:Introduction:The NAV (net asset value) of a nature fund has been correctly understood by a large section of the investing community. This switch makes no sense. investors sold their existing investment and invested in NFOs. In fact. or NFOs whereas the collection in the existing schemes were negligible. unless the new fund has something different and better to offer.
divided by the total number of units outstanding. Of Units Misconception about NAV:This situation arises from the perception that a fund at Rs 10 is cheaper than say Rs 15 or Rs 100.Definition of NAV:Net As sect Value. this perception is totally wrong and investors would be much better off they appreciate this fact. you have Rs 10. Why people carry this perception is because they assume that the NAV of a MF is similar to the market price of an equity share.50for Fund Y. This. or NAV. say by 25%. However. less the liabilities. After one year. Two fund with same portfolio are same.50 for Fund X and Rs 62. Than NAV after one year would be Rs 12. both fund would have grown equally as their portfolio is same.000 to invest. You have two option. You will get 1000 units of Fund X or 200 units of Fund Y.50 = Rs 60 . Say. wherein the fund are same as far as the portfolio is concerned. But sau one Fund X has an NAV of Rs 10 and another Fund Y has NAV of Rs 50. Formula: - NAV = Total Fund Value NO. however. NAV is immaterial. is the sum total of the market value of all the shares held on the portfolio including cash. This again is due to the wrong perception about NAV. is not true. The value of your investment would be 1000*12. NAV of a mutual fund unit is nothing but the „book value‟. NAV and its impact on the returns We feel that a MF with lower NAV will give better returns. Thue. An example will make it clear that returns are in depended of the NAV. no matter what their NAV is.
‟ which apart from the fundamentals. say.500 for Fund X and 200*62. There is no such thing as a higher or lower price. An IT company share at. Therefore. There is no concept as market value for the MF unit. To evaluate to their Two Companies Fund Performances in the market by year: 61 . And since we are buying at book value. the price of this share is „as quoted on the stock exchange. is also dependent on the perception of the company‟s future performance and the demand-supply scenario.500 for Fund Y. when we buy MF units at NAV. And hence the market price is generally different from its book value. we are paying the right priced of the asset whether it is Rs 10 or Rs 100. Price of an equity share In case of companies. which would make a difference to your returns. It is quality of fund.5 = Rs 12.000 may give a better return than say a jute company share at Rs 50. we are buying at book value. Thus your returns would be same irrespective of the NAV. which will not be the case with MF NAV). since IT sector would show a much higher growth rate than jute industries (of course Rs 1000 may „fundamentally‟ be over or under priced. In fact for equity shares also broadly this logic would apply. Rs 1.12. NAV vs.
So.76.76.GROWTH FUND:Comparison different pension plan:Here.g.14. 7.492 Rs. 26. 24.14. who is interested to invest Rs. we can see clearly that the best plan for those people who are interested to take a pension plan is of HDFC Standard life Insurance-Unit Link Pension 62 10 Year 15 Year 20Year Rs.84.51.606 Rs. 50.Premier Life Pension For e. As per IRDA‟s guidelines an Agent or a company can show the return of 10% (Higher)& 6% (Lower).66. Following are the returns that the person will get if the market gives a return of 10%.775 Rs.000 annually as premium. 1) 2) HDFC Standard life Insurance Co-Unit Linked Pension ICICI prudential. I am comparing 2 Pension plans of 2 different companies.178 .775 Rs.:. FUND PERFORMANCE Companies pension Plan HDFC Unit Linked Pension Plan Growth Fund ICICI Premier Life Pension Maxi miser II Fund So.292 Rs. 26.Let‟s take an example of a person of 40 year of Age. 15.
a. 45.016 Rs. RETURNS:The power of compounding ensures that you substantially higher returns if invest for a longer term.472 Rs. 20 15 Rs. which play a major role in the long term.000 Rs.08% of your fund value.988 Rs. 20. 74.16.65.The reason why HDFC‟s Unit Linked Pension Plan is able of give more returns that other combines are because of the Lower Fund Management Charge (FMC).(as shown in the illustration below) DETAIL HDFC STANDARD LIFE (UNIT LINKED PENSION PLAN) Age at Entry (yrs) 35 ICICI PRUDENTIAL (PREMIER LIFE PENSION PLAN) 35 Premium Paying Terms (yrs) Annual Premium Returns @ 10% p. 32.10%. 60.962 63 . FMC is the charge. This additional benefit of Loyalty Units.00. Beside this HDFC is also giving addition units of 0. which is called Loyalty Benefit. which is minimum in the industry.15.000 Rs. In Case of HDFC the Fmc charge is just 0. which is being.a Returns @ 6% p. increases the total Fund Value. 5.31.
38lakh 100 45.Equity 1) Over 2) Return 1st Yrs(%) (%) HDFC Standard Life Unit Linked Pension ICICI Prudential Premier Life Pension 38. except for Aviva.2 3) Corpus (Rs) 4) Exposure (%) 51. this is till 16 January 2009 Since inception Approximate corpus on annul investment of Rs 36.06 40. 1) 2) 3) As on 19 January 2009. No life cover option.Plans of companies launched till April 2009 with top market share considered.08 36.000 at 10 per cent for 30 year by individual aged 30.46 39.38 lakh 100 64 . equity fund option. Returns Annualized projected Max.
Industrial and Equity Share:.80%. 8.T OIL GAS 65 .40%.91 3.1 10.38%. 3.07 8.PORTFOLIO DISCLOSURE:How the fund performs depends on where we have invested your premium. 12.91%.27%. 12.48%.Top Ten Sector 10.19%.4 10.8 2.64%. 6.38 4.19 6. 17. 10. 10. 4.48 17. This section takes you through our latest portfolio composition of our unit-linked funds.07%.27 10.10%.64 FINANCE AGRICULTURE TRANSPORT MEDIA AND PUBLICATION FMCG CONSUMER DURABLE HEALTH CARE CAPITAL GOOD I. 2.
00 51.00 44.36 ICICI Premier 1.Performance of schemes form various categories for the financial year ended 31 March 2008 Ranking methodology: Returns = Latest NAV-previous period NAV*100 Previous period NAV Insurer HDFC Standard Life plan FMC 1st Year 2nd Year 1 Year Unit Linked Pension plan 8.77 Prudential Life Pension EARING PER SHARE :Earring is the yardstick by which companies are finally judge. earning ratio is popular tool for determining the fair market price of a share and to discover valuable investments.50 14. namely what investors earn on their investment. 66 .08 25.00 25.00 9. Accordingly.
If the earning per share is Rs. 50. 5 and a yield of 10 per cent is considered reasonable the share is priced at Rs.000 share of Rs.40 and depreciation of Rs. tax and cost of finance various from one company to another.Earning Per Share:The earning per share (EPS) ratio indicates the earning of a common share in a year. including India. and to determine where it is reasonably priced. investors check a company‟s fully diluted earnings per share.3. 20. This is the earning per share of a company after all share options. 10 each. Earnings per share = * Administration expenses include interest costs of Rs. The ratio is arrived at by dividing the income attributable to common shareholders by the weighted average of the number of common shares. The case earning of a share in XYZ Company Ltd. The company had issued 5. warrants and convertible securities outstanding at the end of the accounting period are exchange for shares. In countries. would therefore be: Cash Earnings Per share = 500 = Rs.12/1500+40+20 67 .00. 1) Cash Earning Per Share:It is often argued that the earning per share is not a proper measure of the earning of a company since depreciation. Many investor also value a share as a multiple of the earning of the company. This ratio enables investors to actually quantify the income earned by a share. where employees are given stock option.
In such a scenario if XYZ Company has paid a divided of 15 per cent. How does one value a share? If one assumes that the gains made by an investor would include an increase in the price of the share.e. 30/100* 68 . a low divided yield would be acceptable. and dividend income per share. its market value on the basis of divided per share would be (assuming 15 per cent divided on the face value= 5 per cant on the market value) as follow: Rs.2) Dividend per Share:Investor often use the divided per share as a measure to determine the real value of a share. 1. Illustration :The share of XYZ Company Ltd. It is therefore submitted that the value of a share should be multiple of the dividend paid on that share.50 (divided) = 5(return required) = Rs. capital appreciation. 40. The income of an investor is the divided that he receive. If an investor were aiming at a yield of 30 per cent. a divided of 5 per cent would be adequate. i. If the share has regularly appreciated by 30 per cent every year. has appreciated during the last three year by an average percentage of 25. the price would depend on the capital appreciation one expects. which has a market value of Rs.. Proponents of this school of thought argue that the earning per share is of no real value to anyone but those who can determine the policies of a company.
if a share dose not appreciated by more than 5 per cent and a 30 per cent return is required. This is an imported ratio when assessing a company‟s prospects because if all it income were distributed there would be no internal generation of capital available to finance expansion and to nullify the ravages of inflation and to achieve these company would have to borrow. This ratio enables an investor to determine how of the annul earnings are paid out as divided to shareholders and how much is ploughed back into the company for its long-term growth.13/- It must be noted that this method of valuation is on ridden with assumptions (appreciation every year and expect return) that it is rarely used.On this basis the share of XYZ Company is overpriced. 3) Dividend payout Ratio:The divided payout ratio measure the quantum or amount of divided paid out of earning. a high divided yield would be expect. 3 per share the value of the share would be(30 per cent divided will be construed as a yield of 23 per cent). 69 . If the share of PDP have been appreciating at 7 per cent per annum and the company declares a divided of 30 per cent or Rs. Conversely. 3(divided per share) 100* 23 (return required) = Rs.
Investors must also ensure that the dividend is being paid out of current income and not out of retained earning because that tantamount to eating funding set said for growth. pension and replace of asset. aggressive growth companies have low divided payout ratios as they plough back their profit for growth. 70 . This is of concern as they may not be retaining capital to renew assets or grow.28 lakh. Dividend payout Ratio = Dividend Net income after taxs Illustration The XYZ Company Led‟s earning after tax in the last financial year was Rs. Dividend payout = Ratio = 28 (Dividend) 68 (Net income after tax) 0.412 Normally. 68 lakh. it paid a dividend of Rs. Of this.This ratio is calculated by divided net income after tax. on the other hand. Its dividend payout ratio would be. Mature companies. have high payouts. young.
A ratio can be computed from any pair of numbers. activity or turnover ratios provide information about management’s ability to control expenses and to earn a return on the resources committed to the business. Efficiency. The following ration presentation includes ratios that are most often used when evaluating the credit worthiness of a customer. One of the primary objectives is identification of major changes. financial ratios are calculated for the purpose of evaluating aspects of a company‟s operations and fall into the following categories: Liquidity ratios measure a firm’ ability to meet its current obligations. Generally.Ratios and Formant in Customer Financial Analysis Financial statement analysis is a judgment process. Given the large quantity of variables included in financial statements a very long list of meaningful ratios can be lived. Ratio analysis becomes a very personal or company driven procedure. Profitability ratios measure management’s ability to control expenses and to earn a return on the resources committed to the business. Financial ratios are usually expressed in percentage or times. A standard list of ratios or statement computation of them does not exist. 71 . Leverage ratio measures the degree of protection of suppliers of long-term funds and can also aid in judging a firm’s ability to raise additional debt and its capacity to pay its liability ties on time. The judgment process can be improved by experience and the use of analytical tools. Probably the most widely used financial analysis technique is ratio analysis. Analyses are drawn to and use the ones they are comfortable with and understand. the analysis of relationship between two or more line items on the financial statement.
Formula: Current Assets . The quick ration compares the cash plus cash equivalents and accounts receivable to the current liabilities. accounts receivable and inventories current liabilities include accounts payable. Consequently a business quick ratio. current maturities of long term debt. In general.Liquidity Ratios 1) Working Capital:Working capital compares current assets to current liabilities. The ratio indicates the short-term solvency of a business and in determine if a firm can pay its current liabilities when due. A business‟s current assests generally consist of cash marketable securities. and serves as the liquid reserve available to satisfy contingencies and uncertainties. will be lower than its current ratio. A high working capital balance is mandated if the entity is unable to borrow on short notice. business prefer to have at lest one dollar of current 72 . The include inventory and prepaid expenses in the calculation. Formula Cash + Marketable securities + Accounts Receivable Current Liabilities 3) Current Ratio :Provides an indication of the liquidity of the business by comparing the amount of current assests to current liabilities.Current Liabilities 2) Acid Test or Quick Ratio:A measurement of the liquidity position of the business. It is a stringent test of liquidity. accrued income taxes and other accrued expenses that are due within one year.
Conversely. Formula:Net Income* Net Sales 73 . or the analyst suspect‟s severe liquidity problems with inventory and receivables. the normal current ratio fluctuates from industry. However.assets for every dollar of current liabilities. Formula :Current Assets Current Liabilities 4) Cash Ratio :Indicates a conservative view of liquidity such as when a company has pledged its receivables and its inventory. current ratios significantly lower than the industry average could indicate a lack of liquidity. A current ratio significantly higher than the industry average could indicate the existence of redundant assets. Formula : Cash Equivalents + Marketable Securities Current Liabilities Profitability Ratios 1) New Profit Margin (return on Sales) :A measure of net income dollars generated by each dollar of sales.
2) Return on Assests :Measures the cojmpany‟s ability to utilize its assests to create profits Formula :Net Incoome* (Beginning + Ending Total Assets)/2 3) Operating income margin :A measure of the operating income generated by each dollar of sales Formula : Operating Income Net Sales 4) Return on Investment :Measure the income earned on the invested capital Formula :Net Income* Long term liabilities + Equity 74 . They could include removal of equity earnings from investments.* Refinements to the net income figure can make it more accurate than this ratio computation. “other income” and “other expense” items as well as minority share of earnings and nonrecurring items.
Formula :Net Income Equity 6) Du pont return on Assets :A combination of financial ratios in a series to evaluate investment return. The benefit of the method is that is provides an understanding of how the company generates its return. Formula :Gross profit Net Sales 75 . This ratio should be compared with industry data as it may indicate insufficient volume and excessive purchasing or labor costs.5) Return on Equity :Measure the income earned on the shareholder‟s investment in the business. Formula :Net Income * Sales Assets Sales Assets Equity 7) Gross profit Margin:Indicates the relationship between net sales revenue and the cost of goods sold.
Formula :Total Debt Total Equity 4) Interest Coverage Ratio ( Times Interest Earned) :Indicates a company‟s capacity to meet interest payments.Financial Leverage Ratio 1) Total Debts to Asset :Provides information about the company‟s ability to absorb asset reductions arising from losses without jeopardizing the interest of creditors. Formula :Total Liabilities Total Assests 2) Capitalization Ratio :Indicates long term debt usage. Uses EBIT (Earnings before interest and Taxes) 76 . Formula :Long-term debt Long Term Debt + Owner’s Equity 3) Debt to Equity :Indicates how well creditors are protected in case of the company‟s insolvency.
Current Liabilities Efficiency Ratios 1) Cash Turnover :Measure how effective a company is utilizing its cash. Formula :Net Sales Average Working Capital 77 . while a high level implies that the company‟s working capital is working too hard.Term Debt to Net Working Capita:-1 Provide insight into the ability to pay long term debt from current assests after paying current liabilities.Formula: EBIT Interest Expense 5) Long . Formula :Long-term Debt Current Assets . A low ratio indicates inefficiency. Formula:Net Sales Cash 2) Sales to working capital (Net Working Capital Turnover) Indicates the turnover in working capital per year.
that receivables are outstanding (DSO). Formula :Gross Receivables Annual Net Sales / 365 6) Accounts Receivable Turnover :Indicates the liquidity of the company‟s receivables Formula :Net Sales Average Gross Receivables 78 .3) Total Asset Turnover :Measure the activity of the assests and the ability of the business to generate sales through the use of the assets. Formula :Net Sales Average Total Assets 4) Fixed Asset Turnover :Measure the capacity utlization and the quality of fixed assets. Formula :Net Sales Net Fixed Assets 5) Day’s Sales in Receivables :Indicates the average time in days. An analyst might compare the day‟s sales in receivables with the company‟s credit terms as an indication of how efficiently the company manages its receivables. or to another factor such as a change in selling terms. It helps determine if a change in receivables is due to a change is sales.
Formula :Total Stockholders’ Equity .Liquidation Value of Preferred StocksPreferred Dividends in Arrears) Common Shares Outstanding 79 . Book value per share tells what each share is worth per the books based on historical cost.7) Account Receivable Turnover in Days :Indicates the liquidity of the company receivables in days Formula :Average Gross Receivables Annual Net Sales / 365 8) Inventory Trunover :Indicates the liquidity of the inventory. Formula :Cost of Goods Sold Average Inventory 9) Book Value per Common Share :Book value per common share is the net assets available to common stockholders divided by the shares outstanding. where net assets represent stockholders equity less preferred stock.
the entire amount is due in 30 days. total assests equal 100% and each asset is stated as a percentage of total assets. total liabilities and stockholder‟s equity are assigned 100% with a given liability or equity account stated as a percentage of total liabilities and stockholder‟s equity. The cost of not taking the cash discount ban be substantial.Common Size Analysis:In vertical analysis of financial statements. Credit terms usually express the amount of the cash discount. If payment is made within 10 days. and the due date. 80 . Similarly. 2 percent cash discount is allowed: otherwise. On the income statement . with all revenue and expenses accounts then related to it. A typical credit term is 2/10 net/30. an item is used as a base value and all other accounts in the financial statement are compared to this base value. the date of its expiration. Cost of Credit :The cost of credit is the cost of not taking credit terms extended for a business transaction. On the balance sheet. 100% is assigned to net sales.
CHAPTER:6 INVEST OF POLICY FUND 81 .
Our quarterly investment reports have been graphically giving each fund‟s performance vies-avis its benchmark index.Invest of policy fund:HDFC Standard Life and ICICI Prudential follow an investment philosophy which is given below : To build a sound investment portfolio within the external and internal guideline to ensure the company‟s requirement of solvency and liquidity while maximizing return on investment at an optimal level of risk. viz.” HOW TO JUDGE A FUND PERFORMANCE:This is done by deciding up front the benchmark. on a consistent long term basis. but a composite index our composite indices are defined all over investment report. it couldn‟t be either of them. it is an equity index and for dept funds. an adequately matched scenario. 82 . This becomes the guide post for the fund manger. In case of diversified equity mutual fund. Since our funds are basically balanced fund with investments made in debts and equity in varying proportions as explained above. it is a suitable dept index. NSE GSec index (over 8 year maturity) and Nifty in the same proportion as committed to the policy holder in the respective fund option . for both policyholders and shareholders in .
Chapter:7 CONCLUSION 83 .
-22%. HDFC‟s Unit Linked Pension Plan is able of give more returns that other companies are because of the Lower Fund Management Charges (FMC).CONCLUSION: The HDFC Standard Life Unit Linked Pension Plan are allocated by initial years expenses for 1styear8. In April 2007 the market share considered by annualized return are HDFC & ICICI are 39.2% and 40. The Highest Portfolio Investing in Industrial & Equity Shares of top ten sectors Unit Linked Funds performance in Finance Sector (10. The ICICI Prudential Unit linked Premier life Pension are allocated by initial years expenses for 1st year 17%-2nd year 12%-15% (percentage depend upon the annual premium amount).50%.50% maxi miser II.77 84 . The Fund Management Charged by HDFC & ICICI are 0.80% and 1.2nd year (percentage depend upon the annual premium amount).35% and 51.08%.91%). The Current year are of HDFC returns are 44.
Chapter:8 RECOMMENDATION 85 .
86 . Allow the changes in premium contribution Administrative charges decrease Rs. 60 per month in ICICI Premier LIFE Pension Plan.20 per month in HDFC (ULPP) Administrative charges increase Rs.RECOMMENDATION:- Following are the recommendation for the insurance company : HDFC Standard Life (ULPP) :. Print the detail of product in broaches with term and condition Flexibility in top use.Increased by 24 switches free of ICICI Pension plan will be given in the policy ICICI Prudential Premier Life Pension Plan: .Free switches are allowed in each policy.
Chapter : 9 QUESTIONNAIRE 87 .
FOR HOW MANY YEARS DO YOU HAVE INSURANCE POLICY? (Please Tick) a) <5Yrs b) 5-10 Yrs c) 10-15 Yrs d) Any Other______ (Specify) 88 . only then proceed 2.QUESTIONNAIRE 1. NO WHICH INSURANCE POLICY DO YOU HAVE? LIFE NON-LIFE BOTH 4. DO YOU HAVE ANY INSURANCE POLICY? YES 3. WHICH CO’S INSURANCE POLICY YOU PREFER THE MOST? (RANK THEM) a) b) c) d) e) f) g) LIC ICICIPRUDENTIAL SBI LIFE INSURANCE ING VYSYA LIFE RELIANCE LIFE INSURANCE TATA AIG LIFE ANY OTHER ________ (Specify) 5. ARE YOU EMPLOYED? YES NO If YES.
DO YOU REALLY THINK INSURANCE POLICY COVER IN TODAY’S SCENARIO IS NOT ESSENTIAL? _____________________________________________________ 89 . YOUR MONTHLY INCOME? a) <4k b) 4k-8k c) 8k-12k d)12k-16k e)Other_____(Specify) 9. WHICH FEATURE OF YOUR POLICY ATTRACTED YOU TO BUY IT? (RANK THEM) a) b) c) d) e) f) LOW PREMIUM LARGER RISK COVERANCE MONEY BACK GUARNTEE REPUTATION OF COMPANY EASY ACCESS TO AGENTS ANY OTHER _________ (Specify) 8. WHAT DO YOU THINK ARE THE BENEFITS OF INSURANCE COVER? (RANK THEM) a) b) c) d) COVER FUTURE UNCERTAINITY TAX DEDUCTIONS FUTURE INVESTMENT ANY OTHER _________ (Specify) 7.6.
ARE YOU SATISFIED WITH THE POLICY? a) b) c) SATISFIED SAVING TOOL NOT SATISFIED NOT RESPONDING 13. WHAT’S YOUR PERCEPTION ABOUT INSURANCE? (RANK THEM) a) b) c) A SAVING TOOL A TAX SAVING DEVICE A TOOL TO PROTECT FUTURE 11. HOW HAS/WOULD YOU BOUGHT/BUY AN INSURANCE? a) b) CUSTOMER APPROCHED INSURANCE COs INSURANCE COs APPROCHED CUSTOMER 12. ARE YOU SATISFIED WITH THE SERVICE AGENT? a) b) c) SATISFIED SAVING TOOL NOT SATISFIED NOT RESPONDING 14 DO YOU PAY TAXES? YES NO 90 .10.
WHICH IS THE BEST FORM OF INVESTMENTS? (RANK THEM) a) FIXED ASSETS b) BANK DEPOSITS c) JEWELLERY d) SECURITIES.15. WHAT DO YOU INTENT TO GAIN FROM INVESTMENTS? a) SAVING & RETURNS b) SECURITY c) TAX BENIFITS 91 . Bonds. i.e. WHERE HAVE YOU INVESTED FOR TAX SAVING? (RANK THEM) a) b) c) d) e) f) LIC NSC BONDS PPF PF EPF 16. MFs e) SHARES f) INSURANCE 17.
WHAT WOULD YOU LOOK FOR IN AN INSURANCE COs? (RANK THEM) a) A TRUSTED NAME b) FRIENDLY SERVICE & RESPONSIVENESS c) GOOD PLANS d) ACCESSIBILITY 92 . HOW WOULD YOU RATE INDIAN INSURANCE COs? a) RIGID PLANS b) NON-USER FRIENDLY c) UNSATISFATORY SREVICES d) NON-AGGRESSIVE e) SATISFACTORY f) GOOD g) VERY GOOD 20. WHAT’S THE RIGHT AGE TO BUY INSURANCE? a) AFTER 25 Yrs b) AFTER 35 Yrs c) AFTER 45 Yrs d) ANYTIME 19.18.
WOULD YOU GO FOR INSURANCE IF A SERVICE PROVIDER AWAY FROM THE CITY OFFERS BETTER SERVICE & PRODUCTS? a) c) c) YES NO UNCERTAIN THANK YOU NAME :_____________________________________________________________ ADDRESS :_____________________________________________________________ _____________________________________________________________ OCCUPATION :_____________________________________________________________ 93 .21. ARE YOU PLANNING FOR NEW INVESTMENTS? PLANNING NOT PLANING 22.
Chapter : 10 BIBLIOGRAPY 94 .
BIBLIOGRAPY BOOK : Insurance principles and practice Author :.iciciprulife.M.hdfcinsurance.com OTHERS : Company Broachers Magazines 95 . Mishra WEBSITE : www.N.com www.