Comparative Study

1. About Company

SBI Life Insurance is a joint venture life insurance company between State Bank of India
(SBI), the largest state-owned banking and financial services company in India, and BNP
Paribas Cardif. BNP Paribas is a French multinational bank and financial services company
with global headquarters in Paris. SBI owns 62.1% of the total capital and BNP Paribas
Cardif 22% of the capital. Other investors are Value Line Pte. Ltd. and MacRitchie
Investments Pte. Ltd., holding 1.95% of the total capital each and remaining 12% with
Public. SBI Life Insurance has an authorized capital of ₹20 billion (US$280 million) and a
paid up capital of ₹10 billion (US$140 million).
1.1. Company profile
SBI Life Insurance is a joint venture life insurance company between State Bank of
India, the largest state-owned banking and financial services company in India, and BNP
Paribas Cardif. BNP Paribas is a French multinational bank and financial services
company with global headquarters in Paris.

BASIC DETAILS

Type Public company

Founded March 2001
Industry Insurance
Headquarters  Mumbai, India
Area served Worldwide
Key people  Mahesh Kumar Sharma
Products Life Insurance
Pensions
Website https://www.sbilife.co.in/

1.2. History of company

 SBI life insurance is Public Limited Listed Company. SBI Life Insurance Listed
on BSE And NSE (Stock Exchange of India). SBI Life started as a joint venture with
BNP Paribas in 2001. While in its initial stage its business was mainly
from Bancassurance channel, now it is developing its own agency team for selling its life
insurance products.
1.3. Vision & Mission, Corporate Goals & Objectives
VISION STATEMENT
Creating Value for All through Responsible, Reliable and Resourceful Partnership
MISSION STATEMENT
 To make the Company the Financial Partner of Choice. We seek to delight customers
through our innovative product offerings and world-class servicing standards, enabling them
to make informed choices using State-of- the-Art execution capabilities that provide
trusted market access. We rejoice in our workforce and strive to provide an enriching
workplace where value is generated for all.

Corporate Goals & Objectives

 To offer clients insurance policies and long term care that is very affordable. The
company ensures that they are able to give life insurance that suits the financial status
of every individual.
 To give services that can easily be accessed.
 To ensure that they are able to give assistance to their clients anytime needed.
1.4. Board of Directors

Sr. NO Designation Name

1 Managing Director & Chief Executive Mr. Mahesh Kumar
Officer Sharma
2 Deputy Managing Director Mr. Sanjeev Nautiyal
3 Executive Vice President & Chief of Ms. Seema Trikannad
Human Resources
4 Non-Executive - Nominee Director- Mr. Rajnish Kumar
Chairperson related to Promoter

1.5. Awards and achievement

Sr Year Awards and Achievement

.
No
1 2020
Life Insurance Provider of the Year

India's Leading Life Insurance Company - Private

 2 2019
Gold Shield from ICAI for FY 2018-19

SMART Award-Life Insurance in Large Category

ICC Emerging Asia Insurance Conclave & Awards 2019

Foxglove Awards 2019

Indian Television BrandVid Awards 2019

3 2018
Golden Peacock Award for Risk Management 2018

Risk & Insurance Management Society (RIMS), USA 2018

30th Qualtech Prize 2018

TISS Leapvault CLO Awards 2018

4 2017
Brand of the Year 2016-17

Most Trusted CEO by WCRC Leaders Asia

Fintelekt Insurance Awards 2017

Digital Innovation Award 2017

CTO Leadership Award 2017

5 2016
Life Insurance Company of the Year

CLO Chief Learning Officer Summit India – 2016

Outlook Money Awards 2016

1.6. Organization Structure

 SBI Life
Insurance

Agency
Bancassurance Brokers Brokers
channel

Corporate Insurance
agents agents

1.7. SWOT Analysis

SWOT Analysis is a proven management framework which enables a brand like SBI life
Insurance to benchmark its business & performance as compared to the competitors and
industry. As of 2020, SBI life Insurance is one of the leading brands in the banking &
financial services sector.

Strengths

 Leverages SBI’s largest customer base for cross selling its product
Multi-layer Distribution channel
 SBI life has over 7,000 on-roll employees and 75,000 agents
 Strong Presence across India.
 SBI Life Insurance has an authorized capital of Rs2,000 crore (US$405.6 million)and a
paid up capital of Rs1,000 crore (US$202.8 million
 State Bank Group has the unrivalled strength of over 18,000 branches across the country
Weaknesses
 Managing a huge number of people is a concern
 Cases of fraud have tarnished image

Opportunities

 Growing rural market potential

 Group Insurance through large employers
 People willing to invest more to secure their future
 Threats

 Economic crisis
 Entry of new NBFCs in the sector
2. Finance Department

2.1. Introduction & Objective of finance department

Finance is the life blood of a business organization. The study of financial management
relates to the process of procuring financial resources and its rationale allocation with a
view of increasing shareholders value.
Finance department perform the activists like financing new project, acquiring funds for
financing capital requirement, making new investment, purchase of new assets depends on
the finance. Without finance we cannot run our business.
Financial management concern with three activities:
1. Anticipating financial needs.
2. Acquiring financial resources.
3. Allocating fund in business.

Objective

Finance departments are an integral part of an organization, providing the fuel to keep it
moving forward. By communicating, managing money wisely and staying informed about
available opportunities, finance departments can ensure a steady flow of funds into the
organization.

2.2. Analysis of Financial Statements with the help of ratios

1. Gross Profit Ratio
Gross profit is the profit a company makes after deducting the costs associated with making
and selling its products, or the costs associated with providing its services.
Gross Profit Ratio = Gross Profit/ Net Sales * 100
 =90.37%
2. Current Ratio

The current ratio measures a company’s short-term obligations or those due within one year.
It shows that how company can maximize the current assets on its balance-sheet to satisfy its
current debt and other payables.
Current Ratio = Current Assets / Current Liabilities
=0.05
3. Liquidity Ratio

Liquidity refers to the ability of a firm to meet its current obligations as and when these
become due. The short-term obligations are met by realizing amounts from current, floating
or circulating assets.
Liquidity Ratio = Cash & Bank Balance/ Current Liabilities
=0.05
4. Debtors Ratio

Debtor’s turnover ratio indicates the speed of debt collection of the firm. This ratio computes
the number of times debtors (receivables) has been turned over during the particular period.
Debtors Ratio = Net Sales/ Average Debtors

5. Net Profit
The actual profit after working expenses not included in the calculation of gross profit have
been paid.
Net Profit = Net Profit/ Net Sales
=88.20%
2.3.Sources & application of funds
Sources of Funds Application of Funds
Shareholders’ Fund Investment
Borrowings Current assets
Policyholders’ Fund Contingent liability
Revenue of previous year Provision
 2.4. Management of payables & receivable
The term receivable is defined as “Debt owed to the firm by customer arising from sales
of goods or service in the ordinary course of business.”
When a firm makes an ordinary sale of goods on services and does not receive payment,
the firm grants various trade credit and creates account receivable, which could be
collected in the future. Receivable management is also trade credit management.

Credit Policy:
The credit policy related to sales and purchase also affect working capital. The credit policy
influences the requirement of working capital in two ways.
1. Through credit terms granted by the firm to its customers buyers of good.

2. Credit terms available to the company its creditors.

The credit policy is a framework to determine whether to extend credit to a customer and how
much credit to be extended to the customer. The broad dimensions of credit policy of a firm are
credit standards and credit analysis.
The Company provides around 45 to 60 days credit limit to the customer. The Company is
granting credit to its customers for the following reasons:

 To achieve growth in sales

 To increase profit
 To meet competition

2.5. Budgeting & Budgetary control

Budgeting control and standard costing systems are two essential tools frequently used by
business executives for the purpose of planning and control. In the case of budgetary control,
the entire exercises start with the setting up of budgets or targets and ends with the taking of
an action. In the case the actual figures differed with the budgetary ones.
According to the sales taken out by the marketing department budget is formed and upon this
the comparison of actual budget with the anticipated budget is carried out.
Through which further decision of the company can be taken and then the final decision is
carried out by the board member and managing director of the company.

2.6. Working Capital Management of Company

 2.7. Dividend Decision of Company

For the year ending March 2019 SBI Life Insurance Company has declared an equity dividend of
20.00% amounting to Rs 2 per share. At the current share price of Rs 768.65 this result in
a dividend yield of 0.26%. The company has a good dividend track report and has consistently
declared dividends for the last 5 years.

2.8. Impact of Budget on Company

The recent proposals came like a bolt from the blue for the life insurance companies when the
Budget introduced an optional regime for personal income tax (I-T), which while lowering rates,
took away most exemptions and deductions that individual taxpayers could avail. This, in turn,
could impact sales of insurance products.
 HDFC Life Insurance SBI Life Insurance
Company Company
BSE 540777 540719
ISIN INE795G01014 INE123W01016
Industry Miscellaneous Diversified
NSE HDFCLIFE SBILIFE

Balance Sheet ------------------- in Rs. Cr. -------------------

HDFC Life SBI Life Insura
Mar '19 Mar '19
Sources Of Funds
Total Share Capital 2,017.38 1,000.00

Equity Share Capital 2,017.38 1,000.00

Share Application Money 0.39 0.00

Preference Share Capital 0.00 0.00
Reserves 3,637.87 6,576.36

Revaluation Reserves 0.00 0.00

Networth 5,655.64 7,576.36

Secured Loans 0.00 0.00

Unsecured Loans 0.00 0.00
Total Debt 0.00 0.00
Total Liabilities 5,655.64 7,576.36

Application Of Funds
Gross Block 732.03 595.22
Less: Accum. Depreciation 408.92 0.00
Net Block 323.11 595.22
Capital Work in Progress 10.19 0.00
Investments 124,479.35 139,324.71
Inventories 0.00 0.00
Sundry Debtors 0.00 0.00
Cash and Bank Balance 1,239.82 2,420.63
Total Current Assets 1,239.82 2,420.63
Loans and Advances 3,948.33 4,393.28
Fixed Deposits 0.00 0.00
Total CA, Loans & Advances 5,188.15 6,813.91
Differed Credit 0.00 0.00
Current Liabilities 63,765.41 78,206.47
Provisions 60,579.74 60,951.02
Total CL & Provisions 124,345.15 139,157.49

Net Current Assets -119,157.00 -132,343.58

Miscellaneous Expenses 0.00 0.00
Total Assets 5,655.65 7,576.35
Contingent Liabilities 1,762.96 1,504.83
Book Value (Rs) 28.03 75.76

Interpretation

SBI Life insurance has more total liability than HDFC Life. This shows that SBI Life purchased
more goods on credit, conserving its cash. And SBI Life has more value of a company’s stock.

Profit & Loss account ------------------- in Rs. Cr. -------------------

HDFC Life SBI Life Insura
Mar '19 Mar '19
Income
Sales Turnover 1,615.29 1,504.16
Excise Duty 0.00 0.00
Net Sales 1,615.29 1,504.16
Other Income 21.08 13.54
Stock Adjustments 0.00 0.00
Total Income 1,636.37 1,517.70
Expenditure
Raw Materials 0.00 0.00
Power & Fuel Cost 0.00 0.00
Employee Cost 4.82 0.00
Other Manufacturing Expenses 0.00 0.00
Selling and Admin Expenses 0.00 0.00
Miscellaneous Expenses 341.22 144.21
Preoperative Exp Capitalised 0.00 0.00
Total Expenses 346.04 144.21
Operating Profit 1,269.25 1,359.95
PBDIT 1,290.33 1,373.49
Interest 0.45 0.00
PBDT 1,289.88 1,373.49
Depreciation 0.00 0.62
Other Written Off 0.00 0.00
Profit Before Tax 1,289.88 1,372.87
Extra-ordinary items 0.00 0.00
PBT (Post Extra-ord Items) 1,289.88 1,372.87
Tax 13.09 46.07
Reported Net Profit 1,276.79 1,326.80
Total Value Addition 346.04 144.21
Preference Dividend 0.00 0.00
Equity Dividend 328.83 200.00
Corporate Dividend Tax 67.59 41.11
Per share data (annualized)
Shares in issue (lakhs) 20,173.81 10,000.00
Earnings Per Share (Rs) 6.33 13.27
Equity Dividend (%) 16.30 20.00
Book Value (Rs) 28.03 75.76

Name HDFC Life SBI Life Insura

Last Price 516.25 796.70
Market Capital 104,239.81 79,672.37
Sales Turnover 1,629.20 1,939.35
Net Profit 1,295.27 1,422.17
Total Assests 5,655.65 7,576.35

Interpretation

SBI Life is perceived as one of HDFC Life's biggest rivals. SBI Life is headquartered in
Mumbai, Maharashtra, and was founded in 2001. Like HDFC Life, SBI Life also operates in the
Life & Health Insurance industry. SBI Life generates 109% the revenue of HDFC Life.
References
https://www.insurancepandit.com/ [ CITATION Com20 \l 16393 ]
https://www.sbilife.co.in/ [ CITATION Lif17 \l 16393 ]
https://www.business-standard.com/
[ CITATION Bus20 \l 16393 ]