FINANCIAL ANALYSIS (OF HDFC LIFE) A Major Project ReportSubmitted In Partial Fulfillment Of The Requirements For MBA Semester II Programme Of G.G.S Indraprastha University, Delhi. Submitted By (AMIT ) (Course – M.B.A – Semester –II) Enrl.No: DELHI INSTITUTE OF ADVANCE STUDIES ROHINI SECTOR 25, DELHI
DECLARATIONI hereby declare that the major project report , entitled “FINANCIALANALYSIS”, is based on my original study and has not been submittedearlier for award of any degree or diploma to any institute or university.The work of other authors(s), wherever used, has not been acknowledged atappropriate place(s).Place: New Delhi Candidate signatureDate: Name: Amit Enrl.no: 01112303911CountersignedName: MRS RUCHI GUPTA Name: S.N MAHESHWARI DirectorDelhi institute of advanced studies Delhi Institute Of advance studies
PREFACEManagement of financial analysis plays a significant role in the organizationas the blood plays its role in the human body .It not only provides energy tothe business but simultaneously it is essential for the success of any businessorganization management of working capital has close implication with thetwo important factor‟s that judge the overall success of the businessprofitability and solvency. Now–a-days, the major problem faced by everybusiness organization is of finance because of drastic changes in the size andscale of business and increased competition, which results in the increase incredit business and shortage of financial brackets. In such an environment, theworking capital management has occupied one of the key position in thebusiness management.In our study, our main objective is to reflect our attention on the position ofFINANCE MANAGEMENT in HDFC LIFE LTD. And discuss variousaspects of Finance analysis in the company.The HDFC LIFE LTD Is leading company in the field of INSURANCESECTOR. Our study is grouped under chapters where we Discusses variousaspects of the FINANCE MANAGEMENT and effects there of on ultimateperformance of the company.It gives me great pleasure to acknowledge my in deftness to all those whohave helped me completing this project and bringing it out in it‟s presentform. I am very grateful to my supervisor under whose kind supervision andable guidance, this work has completed.It gives me immense pleasure to present this project report on FINANCEMANAGEMENT carried out at HDFC LIFE LTD In partial fulfillment ofPost graduation course IN M.B.A.
No work can be carried out without the help and guidance of various persons.I am happy to take this opportunity to express my gratitude to those who havebeen helpful to me in completing this project report.I would be failing in my duty if I do not express my deep sense of gratitude toMRS. RUCHI GUPTA without her guidance it wouldn‟t have been possiblefor me to complete this project work.Lastly I would like to thank my parents, friends and well wishers whoencouraged me to do this research work and all those who contributed directlyor indirectly in completing this project to whom I am obligated to. AMIT M.B.A (G)
CONTENTS 01. INTRODUCTION PURPOSE OF THE STUDY AIM OF THE STUDY OBJECTIVE OF THE STUDY 02. Organization Information A .About HDFCSLIC B .company profile C. what is insurance? D .scope of insurance E .objective F .Award and accolade G .product of HDFCSL H .About ULIP 03. Descriptive work A. Factsheet B. Profiling of prospects C. Mode of contacting prospects D. Total number of people contacted . 04. FINANCE DEPARTMENT OF HDFC LIFE 05. A .Conclusion B. RECOMMENDATION AND SUGGESTION 06. ANNEXURE 07. BIBLOGRAPHY 2
Purpose of study During my summer training in the Housing Development financecorporation standard life insurance company limited (HDFCSL). I havegotten the work of Analyzing financial need and manage the funds of thepolicies. The main focus area of the company is to manage and focus ofcustomer profit which gets through managing the funds of the policy. Indeedthe work of financial analyst is very significant and gives more and morecustomer assistance to the customer so company can earn customer base andthrough strong customer base gets more and more policies distribution andcompany can sell the policies. The main motive of this project is analysis offinancials of HDFC LIFE. HDFCSL is one of India‟s leading private insurance companies.It offers both individual and group insurance solution. It is a joint venturebetween HDFC and a group of company of Standard Life. I have choseninsurance sector as the place for summer training because in these days thissector is in boom and it will never go down. All people invest their money ininsurance and get more benefited. In the sector the work of Finance is morechallenging then the other sector because there is 17 insurance companies inthe market who are giving competition to each other and the work ofconvince people for investment in respective company is a challenging workand success in the sector proves that the respective person is a good finan ceadv isor . Today insurance sector India is on boom because all people want toinvest. Those who don‟t know about investment in share market and don‟twant to invest in mutual funds they invest in insurance sector. Insurancesector gives them investment plus risk cover. Those who don‟t want to takerisk in the investment go to insurance sector. It also gives income tax benefitsto the peoples. Insurance company are now launching ULIP plan and giveschance to the investor to choose their investment pattern according to theirfund investment table. This fund investment tells us that how much theinvestor want to take risk. Generally in the ULIP plan, the thesis is that “Themore you risk the more you have profit.” 4
AIM OF STUDY During the summer training I have done my work through telephone calling, natural market, and contact person having gone to their home. In the entire work I have contacted person who is policy holder of the company or willing customer and prospect customers of the company I found that most of person can earn as well as get insured t h r o u g h insurance company and save taxes, life assurance with little effort, which will give him back support as a HEAD of the family in the diverse situation. This project will help to understand the current market scenario and marketing in stiff competition. Being a student of management I can draw the relevant conclusion from the financial analyze and give the appropriate suggestion to the organization. The company can take decision according to the suggestions and it will provide better experience to the students for their bright carrier. My project will provide help in these matters which are thus:- Analyze the people perception about HDFCStudy financial markets and analyze the financials of the companyTo find out the competitive edge of the company over the competitors.
OBJECTIVE OF THE STUDYThe project was an attempt to explore the “Analyzing financial need andmanage the funds of the policies” in HDFC LIFE. The project was started on10th June, after knowing all the relevant information about the companyinsurance product and policies and its competitor‟s insurance products inaccordance with the prescribed schedule mentioned by management of HDFCLIFE.The project started in Janakpuri branch where covering all the investors whomfunds are down and bearing loss. In this process I meet 90 policy holders who facingloss .I have tried to convince them to continue with company and remain withthe company. During my work I found the perception of the people aboutinsurance, what they desire from it, and if they su ff er loss than wh at th e ythink . What the organization should do for the policyholder who sufferingfrom loss. Many of the customer is not aware about the share market and ifthey suffer loss than they blame either company or agent/sales manager. So Ihave to manage the customers to remain with us and provide them the bestfinancial solution to themAs I can say this project gives the abstract of my work at HDFC LIFE asfinancial analyst
INTRODUCTION OF HDFCLIFEINRODUCTION OF HDFC LIFE Risk is found everywhere. It cannot be eliminated together, only it can beminimized. Human life is full of risk. There is a risk when a man walks on theroad, travels in a bus, train or an aero plane and when he is engaged in trade,profession or business. Also there is a risk when property is destroyed by fire,flood, earthquakes, etc. Thus, the involvement of risk is inescapable. Risk Percentage Drought 4% Earthquakes 20% Floods 35% Storms 41% Risk 4% 20% 41% Drought Earthquakes 35% Floods Storms
Insurance is a method by which we can spread over the risk. It is a way ofreducing uncertainty of occurrence of an event. Insurance is entirely a methodof co-operative endeavor where in the loss caused by a particular risk is spreadover among a large section of persons. Insurance is a process in which a largenumber of persons collect their small contributions, called the premium, in apool and out of this losses are paid to the suffering persons. The Business of insurance is related to the protection of the economicvalues of assets. Every asset has a value. The asset would have been createdthrough the efforts of the owner. The asset is valuable to the owner, because heexpects to get some benefits from it. It is a benefit because it meets some of afactory or a cow, the product generated by it is sold and income is generated. Inthe case of a motor car, it provides comfort and convenience in transportation.There is no direct income. Both are assets and provide benefits.INTRODUCTION OF THE COMPANY HDFC Life Insurance Company Limited. is one of Indias leading privateinsurance companies, which offers a range of individual and group insurancesolutions. It is a joint venture between Housing Development FinanceCorporation Limited (HDFC Limited), Indias leading housing financeinstitution and a Group Company of the Standard Life Plc, UK. As on February28, 2009 HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding)2006, Ltd. holds 26.00% of equity in the joint venture, while the rest is held byothers.
HDFC Life believes that establishing a strong and ethical foundation is an essential prerequisite for long-term sustainable growth. To ensure this, we have concentrated our focus on expansion of branch network, organizing an efficient and well trained sales force, and setting up appropriate systems and processes with optimum use of technology. As all these areas form the basic infrastructure for establishing the highest possible customer service standards. Our core values are drilled down to all levels of employees, as these are inviolable. We continue to promote high integrity in business practices and shun short cuts and unethical practices, as we wish to be perceived as an institution with high moral standing. Since our inception in 2000, when the Indian insurance space was opened for private participation, we have consistently focused on setting benchmarks in all aspect on insurance business. Beingthe first private player to be registered with the IRDA and the first to issue a policy on December 12, 2000, The HDFC was established in 1977, for the purpose of providing the home loan for long term HDFC is rated as (AAA) by the CRISIL and ICRA. In the year 2004, it was awarded DREAM HOME AWARD. It has got 3rd rank in the investment management, in year 2006. One of the largest financial institution of India with more then 2 million satisfied customer base.
HDFC HAS FOLLOWING GROUP COMPANIES HDFC Ltd. HDFC Standard life HDFC Mutual fund HDFC Securities HDFC Bank HDFC realty.com HDFC CIBIL HDFC Chubb General Insurance Co. Ltd. HDFC Centre For Housing Finance HDFC Distribution HDFC Intel net HDFC Securitization HDFC Deposits HDFC Home Loans
OUT STANDARD LIFE (U.K) Founded in 1825, and is now one of the largest life Insurance companies in the world. Strong reputation build over 182 years Currently over 5 mn. policyholders benefiting from the services offered Europe‟s largest mutual life insurer
1.Integrity Honest and Truthful in every action Transparency Stick to principles irrespective of outcome Be just and fair to everyone.2.Innovation Building a store house of treasures through experiences. Looking at every product and process through fresh eyes everyday.3.Customer Centric Understand customer expectations by keeping him as the centre – point. Listen actively Understand customer needs and deliver solutions. Customer interest always supreme.4.People Care Genuinely understanding the people we work with. Guiding their development through training and support. Helping them develop requisite skills to reach their true potential. Know them on a personal front. Create an environment of trust and Respect for the time of others.5.Team Work Whole team takes the ownership of the deliverables. Consult all involved, understand and arrive at a company Co-operate and support across departmental boundaries. Identify strengths and weaknesses according allocate responsibility to achieve common objectives.
6.Joy and Simplicity Environment that fosters fun in the form of celebration of individual and team success. To encourage work as fun that contributed to personal and organizational development. Joy is also derived through simple processes and forms.VISION STATEMENTS “ The most successful and admired life insurance Company, which means that we are the most trusted Company, the easiest to deal with, offer the best value for money, and set the standards in the industry. In short, “The most obvious choice for all”
DIFFERENT PLANS OF HDFC SLIC Plans Traditional ULIPTraditional Traditional plan is a life insurance solution that provides the client only guaranteed return.ULIP (Unit Linked Insurance Plan) Unit Linked insurance plan is a life insurance solution that provides the client with the benefits of protection & flexibility in investment .It is solution which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time.
LIFE INSURANCE SECTOR:India is emerging a some of the two of the largest markets in the world for lifeinsurance products, the other being China. In the case of India, the three keydrivers of growth are a large insurable population, a high savings rate, roughlyat about 25 percent and a low penetration, at a mere 2.3 percent. In the 11months of fiscal year 2004-05, life insurance companies collected premiumworth Rs172 billion and the market grew by a whopping 32.4 per cent duringthe year. Of this, the public sector Life Insurance Corporation (LIC) had thelions share of the market with premium totaling Rs134 billion. Private sectorplayers recorded a spectacular growth of 129 percent over the last year,compared to LICs growth of 18 percent. Indias GDP growth rate of 6 percentper annum holds great potential for the sector. According to one estimate reallife premium are expected to grow at a compounded annual rate of 15 per centover the next ten years.How does Indias life insurance market compare with Chinas? While Indiasmarket is currently the fifth largest, Chinas is the third largest in Asia afterJapan and Korea. Low penetration rate of insurance products is common toIndiaandChina-atjustabout2.3 percent. In China, the savings rate is at 35percent while for India it is a little lower at 25 percent. A large part of thegrowth of the life insurance market in China was driven by the conversion ofbank deposits into endowment products. Demographically Chinas population isageing faster than Indias FDI in Insurance Sector. The government of India isplanning to increase the equity limit for foreign direct investment from thecurrent 26 percent to 49 percent in the insurance sector. Liberalizations of theFDI policy, including the Budget proposals for raising the sector al caps ininsurance is one of the main factors for the higher FDI inflows during thecurrent year. In 2003-04 the total FDI inflows in the country touched $3.4billion. Indian insurance companies have been pushing for the FDI limit to beraised. The current paid-up requirement of Rs1 billion for general insuranceand Rs2 billion for life insurance have become difficult targets to achieve forthe companies. The companies feel that injection of additional foreign equitywould reduce the costs. The sector was liberalized for private players towardsthe end of 1999. Currently, there are 14 insurance companies, including the keypublic sector company Life Insurance Corporation, in the life insurance sectorand 13 general insurance companies.
Changing DemographicsIn1999, according to KSA-Techno park, savings and investments comprised14 percent of an Indian consumer‟s expenditure. The other items includedgrocery (44 percent), personal care items (6 percent), consumer durables (6.6per cent), clothing and books and music (5 percent each), eating out (8 percent), movies (1 percent). By 2003, expenditure on savings and investmentshad declined to just 4.1 percent. The other items included grocery (41percent), personal care items (7.6 percent), consumer durables (6.6percent), clothing(6.9 percent), eating out (10.8 percent), movies and theatres (4.6percent),books and music (7.6 percent), vacations (3.9 per cent). Clearly, the increasedspending on other items have had a huge impact on the amount people arespending on savings and investment products. (Source: Business World‟sMarketing White book 2005). Composition of Household Financial Savings 1991 1996-97 2002-0
Currency 10.6% 8.6% 8.5%Deposits 33.3% 48.2% 41.5%Of which Deposits with non banking companies 2.2% 16.4% 1.6%Share sand debentures 14.3% 6.6% 2.7%Small savings (central govt. schemes) 13.2% 7% 14.3%Life insurance 9.5% 10.1% 15.5%Provident and pension funds 16.9% 19.1% 14.3%Source: RBI Annual Reports.Key Players in the Indian MarketWhile the public sector LIC dominates the Indian life insurance market withnearly 80 percent of the market share. It has 248 branches, 115,000 employeesand over 1 million agents. It has also been improving internal processes andsystems, upgrading skills of its agency force and managers And developinginnovative products. LIC sold 1.69 corers policies during the year comparedto 18 lakh policies sold by all the private players.ICICI Prudential is the leader among the private players with a market share of6.69 percent after its premium collection totaled Rs11.54 billion. Bajaj Allianzwith sales of Rs 4.9 billion had a market share of 2.86 percent. Birla Sun Lifewith sales of Rs 4.8 billion had a market share of 2.81 percent and SBI Lifewith premium collection of Rs 3.9 billion, a market share of 2.29 percent. Withits combination of aggressive marketing through an agency force and the useof the banking channel, ICICI has emerged as a key player. Initially, thecompany drove new business by opening branches in new locations. The focushas now shifted to penetrating the locations for increasing market share. Thecompany is also trying to get higher penetration in the High Net Worthsegment. The company has seven bank assurance partners and this is thelargest contributor to non-agency business. It also has 15 key non-bankpartners and 800 financial sales consultants. As of September 2004, it had 90branches in 60+ locations. It took the initiative in launching non- traditionalproducts such as life-stage products, retirement solutions and child plans. Italso focused on Unit Linked Plans (ULIPs) to target new consumer segments.It has a presence in 15 states through partnership arrangements and as of 2003-04, it sold64, 764 policies in rural areas.HDFC Standard Life has established its branches in 110 locations and istargeting non-metro towns. It is hoping to leverage its “pedigree/parentage” togain more customer acceptance. As a result, it is focusing on quality – not 39
Just volume growth. It has developed some innovative products like the LoanCover Term Assurance Plan which provides a lump sum in case of death ofthe assured life during the term plan. Aimed at the growing segment of homeloan takers, the plan helps the family to repay the outstanding loan. Giventhat HDFC has a huge database of home-loan customers; it can easily tap intothis resource to acquire new business. The company is leveragingIts large customer database of home loan and banking clients to cross-sellinsurance products.Birla Sun LifeBirla Sun Life was the first to offer ULIPs in the Indian insurance market.And this has been the primary driver of its growth over the last one year. Thecompany has been investing in customer education and feels that as a resultcustomers dont view ULIPs as mutual funds but long term insurance. As of2004, the company had 33 branches, 10,274 agents, 79 corporaterelationships and 10 bank assurance partners.Bajaj Allianz has been focusing on second tier towns and cities which are yetto witness the entry of other life insurance players apart from LIC. It is usingfirst mover advantage by opening an office in the most prominent location ina non-metro town. It hires local people who are trained. Its mantra is todevelop only the indispensable infrastructure so that it can match the pricingof LIC. Apart from that it claims that it is the only private player to providepolicy servicing at the branch level .Standard Chartered is currently itsbiggest partner followed by Syndicate Bank and Centurion Bank. Thebiggest challenge that the company faces is the weak infrastructure –particularly transport and communications – in the smaller cities. It is alsofacing a challenge in terms of banking channels, particularly for customerswho bank with cooperative banks, where delays in clearingCheques are in evitable. Tied agencies comprise the biggest channel (68%) ofnew business acquisitions for Bajaj Allianz. Bank insurance (27%) is theother significant channel of growth for the company.Product Preferences among ConsumersPension policies are becoming popular as people prefer to opt forsolutions that can offer them a regular income after retirement rather thana lump sum on retirement. Measurable policies for a bulk sum are beingbought only for limited single use such as purchase of a house, children‟shigher education, marriage, etc. This consumer trend is likely to helpcompanies that offer pension schemes. Term policies are finding favor with 40
Youngsters. Term insurance policies are also finding more and more takersamong the younger generation of consumers. Because the offer protection atextremely low costs.It is assumed that life insurance is purchased only to avail of tax-breaks. Butthe fact remains that while the tax paying population in the country is justabout 20 million, there is a huge population that has not been tapped. Onlythe urban salaried class who fall in the tax net has been targeted for lifeinsurance policies for tax-saving purposes. The other income-earning classessuch as businessmen, professionals, farmers, provide a great opportunity forlife insurance marketers. There is a need to tap these customer segmentseffectively. Currently all their disposable income is going into purchase ofconsumer durables such as washing machines, TV, refrigerators and mobilephones(as is evident from the fact that spending on savings/investmentproducts has declined from 14 percent to 4 percent in the past decade).Mutual Funds (MF) have benefited the most during the last two years. Takethe example of the Systematic Investment Plans (SIP) of mutual funds. In justone quarter ICICI PRU MF sold 20,000 SIPs and it has the potential ofselling about 100,000 new SIPs in a year. There are 33 Mutual Fundcompanies in the country and based on this trend one could say that theestimated fund in flow in MFs through this route alone could touch the Rs20billion per month. Due to the good performance of MF during the past 2years, life insurance companies have lost out to mutual funds.PROFILING PROSPECTFor the Providing assistance of financial management there are certaincriteria for the selection of policy holder. These criteria differ from differentinsurance company. We can divide the profiling prospect of HDFCSLIC intwo ways.Which are thus:-1.H.N.I (HIGHLY NET WORTH INDIVIDUALS)Highly net worth individuals are those persons who having yearly incomemore than 20 lacs and they are specially treated as H.N.I clients and they haveprovided relationship manager who watching and manage their funds andprovided financial advices and updating all information of policies
2.LOYAL CUSTOMERS FUND VALUE AND HAVING DOWNEvery Company Want more and more business and market share and we allknow that the work in insurance sector is totally based upon the customerbase. The more you have customer the more you earn business. SoHDFCSL provide the facility to customers that they can contactwith financial assistant in the company and manage their fundswhich is in loss or customer is not aware about thei r policies andmanaging funds also .TOTAL NO. OF PEOPLECONTACTEDDuring the work of financial Assistance I have contacted 100 peopleincluding phone calling, meetings, and the other efforts. In these 100 peopleI have gotten appointment of 65people. In the 65 person I have assisted 39people. The percentage of converting the profits at 9%. During the meeting time with the customer these questions are generallyasked by them which are thus:-Which type of this policy in which I m getting loss!Our premium will charge by your company orpremium is invested or not?How your policy is working?How can I believe on you and your company?Mostly person have still faith in LIC so I have to convince them against theLIC.
ABSTRACT OF MARKET RESEARCHMarketing Research provides information that assists and organization todefine opportunities for product development and market strategy. It works byassessing whether marketing strategies are accurately targeted, and byidentifying market opportunities or changes that are required by customers.Market research tends to confirm issues that are well-known in a marketinitially, but if planned well and effectively it will also identify newopportunities, market niches, or ways by which to improve sales, marketingand communications activities.WHY MARKET RESEARCH STUDYThe role of market research, therefore, is to reduce uncertainty in decisionmaking, to monitor the effects of decisions taken, and identify theperformance of a company or a product in the market. During internship mymarket survey was related with the distribution enhancement of the insurancepolicies of HDFCSL. To be more specific, we can list five key uses formarket research, namely to:a. Identify the size, shape, and nature of a market, so as to understand themarket and marketing opportunities.b. Test out strategic and product ideas which help to define the most effectivecustomer-led strategies.c. Monitor the effectiveness of strategiesd. It will define when marketing expenditure, promotions and targeting needto be adjusted or improved.The variety of purposes listed above makes it clear that market research is notsimply a “first check.”It is useful ahead of any action, but it also provide sameanswer of checking and refining views as operations proceed. Companies,especially those for which budget seem tight, who have selected one of theseuses for market research are always concerned to make the research aworthwhile investment. Best results come when their marketing and salesplanning is influenced by the results of research. In other words, whenresearch pays for itself by providing a basis for change and improvement inoperational matters.
RESEARCH METHODOLOGYResearch methodology is a way to systematically solve the research problem.It may be understood as a science of studying now research is donesystematically. In that various steps, those are generally adopted by aresearcher in studying his problem along with the logic behind them.It is important for research to know not only the research method but alsoknowmethodology. ”The procedures by which researcher go about their work ofdescribing, explaining and predicting phenomenon are called methodology.”Methods comprise the procedures used for generating, collecting andevaluatingdata. All this means that it is necessary for the researcher to design hismethodology for his problem as the same may differ from problem toproblem. Data collection is important step in any project and success of anyproject will be largely depend upon now much accurate you will be able tocollect and how much time, money and effort will be required to collect thatnecessary data, this is also important step.Data collection plays an important role in research work. Without proper dataavailable for analysis you cannot do the research work accurately.
OBJECTIVE OFPROJECTMy project is being undertaken in HDFCSL in which finance managementprogram and distribution enhancement of insurance policies of HDFCSL hasbeen implemented as a marketing strategy. HDFCSL tied up with world classinsurance product.Primary ObjectiveThe primary objective of my project is to p r o v i d e Financial assistance andto increase market share of HDFCSL. In the insurance sector the main work isdone by the financial planning manager who brings selling for theorganization as well providing the best solution for policies which is not inprofit. It improves the services of the organization.Secondary ObjectiveIn this point we can conclude the company objective which is to increase themarket share in the insurance sector and this will happens it becomes morebeneficiary and reliable to the customer. Customer should have faith on it. Itis trying to do it. Today it comes under top 5 insurance companies. It wants toreach on the top.Working ProcedureIn my summer training I have targeted Delhi. I have collected my data someparts of Delhi. Here I have to approach various detail of insurance product ofHDFCSL and the other competitor of it, suggestions, its marketing strategyand its advertisement. As a part of marketing research I also have collect thedata in order to find out market share of HDFCSL from our sample space.During the period I was in continuous touch with my senior and salesmanager and I have to submit daily report of my work and full informationabout phone calls and questioners. Questionnaire consisting of open endedquestions was used for collecting the information.Sample AreaMy working area was Delhi. As we know that those person will invest ininsurance sector who are salaried or professional. I have targeted those personwho‟s age is equal or more than 25.
31Instrument UsedI have collected my data form LIFE ASIA and through phone calling. Lifeasia is the software which used by every insurance company and thissoftware help me to know the customer details and customer policyinformation which help me providing best solution through discussion withmy seniors.Types of data collectionThere are two types of data collection methods available.1. Primary data collection2. Secondary data collection1) Primary dataThe primary data is that data which is collected fresh or first hand, and for firsttime which is original in nature. Primary data can collect through personalinterview, questionnaire etc. to support the secondary data.2) Secondary data collection methodThe secondary data are those which have already collected and stored.Secondary data easily get those secondary data from records, journals, annualreports of the company etc. It will save the time, money and efforts to collectthe data. Secondary data also made available through trade magazines, balancesheets, books etc. This project is based on primary data collected throughpersonal interview of head of account department, head of SQC department andother concerned staff member of finance department. But primary datacollection had limitations such as matter confidential information thus project isbased on secondary information collected through five years annual report ofthe company, supported by various books and internet sides. The data collectionwas aimed at study of working capital management of the company
32We used both methodology i.e. primary and secondaryWe take the sample size of 100 POLICY HOLDERSSample location is DelhiThis is stratified sampling
33LIMITATIONS OF THE STUDYLimitations of the studyFollowing limitations were encountered while preparing this project:1) Limited data:-This project has completed with annual reports; it just constitutes one part ofdata collection i.e. secondary. There were limitations for primary data collectionbecause of confidentiality.2) Limited period:-This project is based on five year annual reports. Conclusions andrecommendations are based on such limited data. The trend of last five yearmay or may not reflect the real working capital position of the company3) Limited area:-Also it was difficult to collect the data regarding the competitors and theirfinancial information. Industry figures were also difficult to get.
35CRM is also referred to as Customer Service Management. Generally organizations are morefocused on the path they travel through to reach the success or determined goal. The stagesthey traverse includes design, development, marketing, service support, analyzing managerialtrack, channeling the development phase, research and development and many more. Thesestages of one‟s business life are as a whole supported with the Customer RelationshipManagement features.In the field of business development, and short term goal tracking with standard terms andstrategies, one must keep up certain flexible terms of communicational relationship andmanagerial provisions among the company employees, customers, and clients and withvarious departmental staff and members. This enhances a co-operative and comfortable zoneto make the right move of the company development on time.Focusing on the marketing department, it is important to realize the important of promotingone‟s products sales via advertisements, and efficient marketing strands with better quality.Advertising has to be powerful means to reach the targeted customers in a short time spanwith less investment for a perfect outcome of the resulting sale. Sale includes product quality,competitiveness, advertisement, managing the service to meet the requirements of the clientsand many more.Marketing one‟s product means to take the product to the customers who are into the track orinto the field of trade. Sales department is specific in making the product move to the clientswith respect to the deal of sale. This department is more concerned about the sales of theproduct that make use of customer service and management terms to keep up good terms onserving the customers with help-line service to solve problems related to purchase and utilityof products from the company.Benefits of CRM techniques are more focused towards customer management and services.Customer relationship management attracts and retains the customers winning the growingloyalty of the customer and company relationship. CRM processes helps in guiding the wayan organization runs that are targeted generating quality leads, sales and services that aremore focused on the goals and objectives. They help in forming a tie between customer andorganizational relationship that improves the customer satisfaction with the high qualityservice and makes the customers feel comfortable to take up business in futurity.In many industries customers‟ experience with a company‟s customer service cansignificantly affect their overall opinion of the product. Companies producing superiorproducts may negatively impact their products if they back these up with shoddy service. On
36the other hand, many companies compete not because their products are superior to theircompetitors‟ but because they offer a higher level of customer service. In fact, many believethat customer service will eventually become the most significant benefit offered by acompany because global competition (i.e., increase in similar products) makes it moredifficult for a company‟s product to offer unique advantages.Customer service manifests itself in several ways, with the most common being a dedicateddepartment to handle customer issues. Whether a company establishes a separate departmentor spreads the function among many departments, being responsive and offering reliableservice is critical and in the future will be demanded by customers.Our Vision & ValuesOur VisionThe most successful and admired life insurance company, which means that we are the mosttrusted company, the easiest to deal with, offer the best value for money, and set thestandards in the industry.The most obvious choice for all.Our ValuesValues that we observe while we work:IntegrityInnovationCustomer centricPeople Care "One for all and all for one"Team workJoy and Simplicity ORGANIZATIONAL STRUCTURE- BRANCH DEVELOPMENT MANAGER
37 EXECUTIVE SALES MANAGERSR. SALES MANAGER SR. SALES MANAGER 8 TO ASST. SALES MANAGER IN EAH SR. SALES MANAGER 25 TO 35 ADVISORES IN EACH ASST. SALES MANAGER Figure 1.2 Organization Structure
38 INDUSTRY OVERVIEWWith an annual growth rate of 15-20% and the largest number of life insurance policies inforce, the potential of the Indian insurance industry is huge. Total value of the Indianinsurance market (2010-11) is estimated at Rs. 550 billion (US$10 billion). According togovernment sources, the insurance and banking services contribution to the countrys grossdomestic product (GDP) is 7% out of which the gross premium collection forms a significantpart. The funds available with the state-owned Life Insurance Corporation (LIC) forinvestments are 8% of GDP. Till date, only 20% of the total insurable population of India iscovered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate theof immense growth potential of the insurance sector. The year 1999 saw a revolution in theIndian insurance sector, as major structural changes took place with the ending ofgovernment monopoly and the passage of the Insurance Regulatory and DevelopmentAuthority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreignplayers to enter the market with some limits on direct foreign ownership. Though, theexisting rule says that a foreign partner can hold 26% equity in an insurance company, aproposal to increase this limit to 49% is pending with the government. Since opening up ofthe insurance sector in 1999, foreign investments of Rs.8.7 billion have poured into theIndian market and 21 private companies have been granted licenses. Innovative products,smart marketing, and aggressive distribution have enabled fledgling private insurancecompanies to sign up Indian customers faster than anyone expected. Indians, who had alwaysseen life insurance as a tax saving device, are now suddenly turning to the private sector andsnapping up the new innovative products on offer. The life insurance industry in India grewby an impressive 36%, with premium income from new business at Rs. 253.43 billion duringthe fiscal year 2004-2005, braving stiff competition from private insurers. This report "IndianInsurance Industry: New Avenues for Growth 2012", finds that the market share of the statebehemoth, LIC, has clocked21.87% growth in business at Rs.197.86 billion by selling 2.4billion new policies in2004-05. But this was still not enough to arrest the fall in its marketshare, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs.24.29 billion in2003-04 Though the total volume of LICs business increased in the last fiscalyear (2004-2005) compared to the previous one, its market share came down from 87.04 to
3978.07%. The 14 private insurers increased their market share from about 13% to about 22%in a years time. The figures for the first two months of the fiscal year 2005-06 also speakof the growing share of the private insurers. The share of LIC for this period has further comedown to 75 percent, while the private players have grabbed over 24 percent. There arepresently 12 general insurance companies with four public sector companies and eight privateinsurers. According to estimates, private insurance companies collectively have a 10% shareof the non-life insurance market.INTRODUCTION Financial management means procurement of funds at minimum costs andeffective utilization in order to maximize the wealth of shareholders. The term of financial management refers to its relationship with the closely-related fields of economics and accounting, its functions, scope and objectives.Financial management, as an academic discipline, has undergone fundamentalchanges in its scope and coverage. In the early years of its evolution it was treatedsynonymously with the raising of funds. In the current literaturepertaining to financial management, a broader scope so as to include, in addition toprocurement of funds, efficient use of resources is universally recognized. Financial management, as an integral part of overall management, is not a totally,independent area. It draws heavily on related disciplines and fields of study, such aseconomics, accounting, marketing, production and quantitative methods. A part fromeconomics and accounting, finance also draws for its key day to day decisions onsupportive disciplines such as marketing, production and quantitative methods, forinstance, financial managers should consider the impact of new productdevelopment and promotion plans made in the marketing area since their plans willrequire capital outlays and have an impact on the projected cash flows. Finally, the tools of analysis developed in the quantitative methods area arehelpful in analyzing complex financial management problem. Organization makes
40 their planning for the financial sources which are very helpful in the future course of action. Taking a commercial business as the most common organizational structure, the key objectives of financial management would be to: Create wealth for the business Generate cash, and Provide and adequate return on investment bearing in mind the risks that the business is taking and the resources invested. CONCEPT OF FINACING 1. Financial Planning Management needs to ensure that enough funding is available at the right time to meet the needs of the business. In the short term, funding may be needed to invest in equipment, pay employees and fund sales made on credit. In the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions. 2. Financial Control Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. 3. Financial Decision-Making A key financing decision is whether profits earned by the business should be retained
41rather than distributed to shareholders via dividends. If dividends are too high, thebusiness may be starved of funding to reinvest in growing revenues and profitsfurther.FINANCIAL DECISIONSFinancial management consists of four major decisions or functions which are asdiscussed as below. 1. Investment decisionInvestment decision is the long term, strategic policies of an organization. Investmentdecisions have a long term effect on the working of an organization.Thus an enterprise should invest in proposals which maximize share value. 2. Financing decisionThere are various sources of capital like equity, preference shares, borrowed funds, andretained profits. The finance manager has to select a proper mix of owned at theminimum cost. A financing decision adds to the value to the value of shareholders. 3. Dividend decisionProfits can either be distributed or reinvested into the business. Theproportion of profits that needs to be distributed and that needs to be retained is a crucial
42decision. It is the job of finance manager to satisfy the shareholders as well as clawback into the business. This division of profit when done in an optimum mannermaximizes shareholder value. 4. Liquidity decisionAn enterprise needs finance for the day today activities for the smoothfunctioning. The brand of FM that deals with investments in current assets &liabilities, in other words investment is the net working capital comprises of theliquidity decisions.DEPRECIATION POLICY IN HDFC LIFEDepreciation is charged as per the below mentioned ratesAsset Rate as per Companies Act Rate as per Income Tax (Written Down Value method) Act (Written Down Value – WDV method) – WDVBuildings Residential Units 1.63 % Residential units 5 % Office Premises 1.63 % Office Premises 10 % (Straight Line Method – SLM)Computers 25 % (SLM) 60 %Air Conditioners & 13.91 % 15 %RefrigeratorFurniture & Fixtures 18.10 % 10 %Office Equipment 13.91 % 15 %Electrical Installations 13.91 % 15 %Vehicles (Motor Cars) 25.89 % 15 %
44 Companies Act1. The rate 13.91 % is applicable to Plant and Machinery (applicable to A/C, Office Equipment and Electrical Installations).2. The Depreciation under Companies Act for Computers is 16.21 % (SLM). However, the rate adopted by us is 25 % SLM.3. Except Computers, all the rates are as per Companies Act.4. No depreciation is charged in the year of sale.5. Depreciation is charged for the full year in the year of purchase. Income Tax Act1. Machinery and Plant other than the specified – 15 % (applicable to A/C, Office Equipment and Electrical Installations).2. Rates of premises, computers, vehicles and furniture specified.3. If the asset is put to use for 180 days or more in a year, 100 % depreciation is provided during the financial year. If the period is less than 180 days ---50 % depreciation is provided for tax purposes.
45 FINACIAL STATEMENT FOR THE YEAR 2009-101.Cash flowParticular 2010 2009Operating activitiesAmount received form policy holder 70,817,804 54,747,190Amount received to reinsurance -312,168 -384,636 Amount paid to policy holder -12,053,422 -5,414,218 Amount paid as commission -5,417,619 -4,136,736Payment of employee and suppliers -13,207,483 -15,583,363Deposited with RBI 0 100,00Income tax paid -309,142 -230,833Net cash flow from operating activities 39,821,183 29,453,152Investing activities 155,217,800 68,782,936Purchases of fix assets -217,752 -581,822Sales of fix assets 5,444 3,159Investment -48,767,468 -39,057,231Interest income 48,17,558 3,805,029Dividend income 1,338,737 745,975Net cash flow from investing activities -42,823,481 -35,081,730Financing activitiesIssue of share 1,720,000 5,250,000Net cash flow from financing activities 1,720,000 5,250,000Net increase in cash and cash equivalents -1,282,298 -384,578Cash and cash equivalent as at beginning of the 4,108,660 4,493,238yearCash and cash equivalent as at end of the year 2,826,362 0
46Particular 2010 2009LiabilityShare capital 19,680,000 17,958,180Reserve fund 552,892 552,892 Credit change a/c 184,435 -77,610 Credit change a/c 205,087 -296,885policy liabilities 37,666,908 29,092,419insurance reserve 0- 0Provision for link liabilities 127,701,636 84,085,083Add: Fair value change 27,516,164 -15,302,147total provision 155,217,800 68,782,936Funds 1,490,013 586,395funds for provision 1,064,831 531,970Surplus 0 0Profit and loss 6,95,56,324 5,51,83,763Total 216,061,966 117,130,297AssetsShare holder 6,304,757 4,291,597policy holder 43,415,382 30,152,727Assets held to cover link liabilities 155,217,800 68,782,936Loans 40,366 30,248Fix assets 1,143,777 1,451,346Cash and bank 2,826,362 4,108,660Advance 4,917,758 5,428,699Current asset 12,28,585 8,820,225Provision 187,617 208,813Net working capital 4,725,082 508,321Miscellaneous expense 14,664,966 11,913,122Other Asset 0 0
47 2. BALANCE SHEET Total 216,610,966 117,130,2973. RATIO ANALYSIS(A) CURRENT RATIOCURRENT ASSETS:Cash and bank balances: 2,826,362Advances and Other Assets: 4,917,758CURRENT LIABILITIES: 12,281,585CURRENT RATIO=2009-10 = =0.63:12008-09= =1.08:1
48 1.2 1 0.8 0.6 Column1 0.4 0.2 0 2009-2010 2008-2009Comment Current ratio of HDFC LIFE insurance, has 0.63:1, it means it is less than 1that indicates firm‟s ability to meet current obligations & greater the safety of funds ofshort-term creditors. It also indicates the sound solvency of the company is lover.
49(B) LIQUID RATIOLIQUID RATIO: =2009-10== 0.60:12008-09== 0.57:1 0.605 0.6 0.595 0.59 0.585 0.58 LiQuid Ratio 0.575 0.57 0.565 0.56 0.555 2009-2010 2008-2009CommentThe liquid ratio of HDFC life in 2009 was 0.57 and in 2010 is .60 so increasing theliquid ratio and company have a good liquid position over the year.
50(C)Gross profit ratioGROSS PROFIT RATIO =2009-10 == 30.25 %2008-09= = 21.76% 35 30 25 20 Column1 15 10 5 0 2009-2010 2009-2010Comment:-The gross profit ratio of HDFC LIFE in 2009 was 21.76% and in 2010 is 30.25% soincreasing the gross profit of HDFE LIFE over the year and company become a strongin his financial performance.
51(D) NET PROFIT RATIONET PROFIT RATIO= 2009-10= = 22.09%2008-09 == 21.58% 22.1 22 21.9 21.8 21.7 Series 3 21.6 21.5 21.4 21.3 2009-2010 2008-2009Comment:- The net profit ratio of HDFC LIFE in 2009 was 21.58% and in 2010 is 22.09%therefore the net profit is increasing. The company have good profit margin. Thecompany should more and more profit for the future.
52(E)Net retention ratioNET RETENTION RATIO=2009-10 == 99.29 %2008-09==99.17% 99.3 99.28 99.26 99.24 99.22 99.2 Series 3 99.18 99.16 99.14 99.12 99.1 2009-2010 2008-2009Comment:- The net retention ratio of HDFC LIFE in 2009 was 99.17% and in 2010 is99.29% therefore increasing the net retention ratio of the HDFE LIFE. So companybecome successful for maintain the premium level over the year.
53(F)RATIO OF EXPENSES OF MANAGEMENTRATIO OF EXPENSES OF MANAGEMENT = 2009-10 = = 29.04 % 2008-09 ==39.38% 40 35 30 25 20 Series 3 15 10 5 0 2009-2010 2008-2009Comment:- The ratio of expense of management of HDFC LIFE in 2009 was 39.38% and in2010 is 29.07% so decreasing the management expenses over the year
55(H)RATIO OF POLICY HOLDERS’ LIABILITIES TOSHAREHOLDERS’ FUNDS:RATIO OF POLICY HOLDERS‟ LIABILITIES TO SHAREHOLDERS‟ FUNDS :=2009-10 = = 597.44 %2008-09= = 677.89% 680 660 640 620 Series 3 600 580 560 540 2009-2010 2008-2009
56(I)RETURN ON INVESTMENTRETURN ONINVESTMENT =2009-10 = = 24.86% 2008-09 = =13.60% 25 20 15 Series 3 10 5 0 2009-2010 2008-2009Comment:- The return on investment ratio of HDFC LIFE in 2009 was 13.60% andin 2010 is 24.86% there increasing the return on investment over the year so companybecome a profitable over the year.
57(J) DEBT-EQUITY RATIODEBT-EQUITY RATIO = * 100 2009-10 ==1.58%2008-09=1.25% 1.6 1.4 1.2 1 0.8 Series 3 0.6 0.4 0.2 0 2009-2010 2008-2009Comment:The debt-equity ratio of HDFC LIFE in 2009 was 1.25% and in 2010 is 1.58% thereincreasing the level of equity against long term debt.
59 LiabilityLiability 2009-2010 2010-2011 2009- 2010- 2010(%) 2011(%)Share capital 19,680,000 17,958,180 100% 91%Reserve fund 552,892 552,892 100% 100% Credit change a/c 184,435 -77,610 100% 142% Credit change a/c 205,087 -296,885 100% 42%policy liabilities 37,666,908 29,092,419 100% 77%insurance reserve 0- 0 100% 100%Provision for link 127,701,636 84,085,083 100% 0liabilitiesAdd: Fair value change 27,516,164 -15,302,147 100%total provision 155,217,800 68,782,936 100% 44%Funds 1,490,013 586,395 100% 39%funds for provision 1,064,831 531,970 100% 49%Surplus 0 0 100% 100%Profit and loss 6,95,56,324 5,51,83,763 100% 79% Conclusion:- According to trend analysis the hdfc life doing improvement in 2010-2011 compare to 2009-2010 so company is growing in following way 1). The liquid position of the company improving around 145 % 2).The increase in fixed asset is financed by issue of debenture 3).Higher improvement in current asset the compare the two year 717% are improvement in 2010-2011
60COMMON SIZE STATEMENTSAsset 2010 2010 (%)Share holder 4,291,597 3.66policy holder 30,152,727 25.74Assets held to cover 68,782,936 58.72link liabilitiesLoans 30,248 0.025Fix assets 1,451,346 1.24Cash and bank 4,108,660 3.5Advance 5,428,699 4.63Current Asset 8,820,225 7.53Provision 208,813 0.18Net working capital 508,321 4.34Miscellaneous expense 11,913,122 10.17Total 117130297 100
61TREND ANALYSESShare Capitalshare capitalPARTICULAR 2009-10 2008-09 incre/decre %Authorised Capital 30,000,000 30,000,000 0 0Issued Capital 19,680,000 17,960,000 17,20,000 9.57Subscribed Capital 19,680,000 17,960,000 17,20,000 9.57Called-up Capital 19,680,000 17,960,000 17,20,000 9.57 share capital % 10 0 0 17,20,000 17,20,000 17,20,000 share capital % 30,000,000 17,960,000 17,960,000 17,960,000 30,000,000 19,680,000 19,680,000 19,680,000 Authorised Capital Capital Issued Subscribed Capital Called-up CapitalCONCLUSION:in the year 2008-09 the Authorized share capital was 30,000,000 and at current yearthe Authorized share capital are same there are no changes arise in Authorized sharecapital between two year and Called-up Capital, Subscribed Capital , Issued Capitalwere 17,960,000 and in current year increase by 17,20,000 so as compare to theprevious year increase by 9.57 %
62RESERVES AND SURPLUSPARTICULAR 2009-10 2008-09 incre/decre %Revaluation Reserve 552,892 552,892 0 0 Revaluation Reserve 100% 90% 80% 70% 60% 50% 40% 30% Revaluation Reserve 20% 10% 0%CONCLUSION: in the year 2008-09 the Revaluation Reserve are 5,52,892 and at current yearare same there are no changes arise in the current year,
63Investments – Shareholders PARTICULAR 2009-10 2008-09 incre/decre %Government Securities 2,471,702 2,180,149 291,553 13.373077Equity 457,377 233,783 223,594 95.641685Debentures / Bonds 208,675 100,531 108,144 107.57279Investment Properties 757,540 757,540 0 0Infrastructure 1,108,284 386,899 721,385 186.45305Other Investments 145,085 64,797 80,288 123.90697 5,000,000 4,000,000 3,000,000 2,000,000 % 1,000,000 0 incre/decre 2008-09 2009-10CONCLUSION in the year 2008-09 the investment in Government Securities was 2180149and at current year are having 2471702 so increase by 291,553 and so 13.37 % areincrease as compare to previous. And Equity, Debentures / Bonds, InvestmentProperties, Infrastructure, Other Investments, are increase by respectively 95.64%,107%,0%, 186% 123%.
64Working Capitalcurrent assets 2009-10 2008-09 incre/decre %Cash 279,148 668,726 -389,578 -58.25674Deposit Accounts 1,340,581 1,751,354 -410,773 -23.4546Current Accounts 1,206,633 1,653,161 -446,528 -27.01056current liabilities 2009-10 2008-09 incre/decre %Agents’ Balances 422,567 525,903 -103,336 -19.64925Premiums received in 296,400 278,748 17,652 6.3326015advanceSecurity Deposits 21,441 21,441 0 0Sundry creditors 5,078,198 3,894,536 1,183,662 30.392889Claims Outstanding 433,935 198,361 235,574 118.76024Unallocated Premium 232,117 274,095 -41,978 -15.31513 100% 80% % -58.25674491 -23.4545957 60% -27.01055735 % 40% incre/decre -389,578 - 20% 410,773 -446,528 incre/decre 0% -20% 2008-09 668,726 1,751,354 1,653,161 2008-09 2009-10 279,148 1,340,581 1,206,633 2009-10CONCLUSION: As compared to previous year, Current Accounts are decrease by as compare tothe previous year respectively,-58%, -19%, 6.33%,0%, 30.39%, in the year 2008-09the current asset of cash, Deposit Accounts -23%, -27%,. And current liabilities ofAgents‟ Balances, Premiums received in advance, Security Deposits, Sundry creditorsare decrease or increase
65Comparison of funds for year 2010: Fund 2009 2010 Growth fund 38 73 Balance manage fund 32 48 Equity manage fund 34 62 Liquid manage fund 28 31 80 70 60 50 40 30 20 10 2009 0 2010 Growth fund Balance Equity Liquid manage manage fund manage fund fundIn above diagram comparison of fund’s performance for year 2010. The above diagram represents the comparison of various funds. The growthfund in 2009 was 38% and at present in 2010 are 73% so increased by 35%. Andsecond fund is balance manage fund there was 32%in 2009 and at present jn 2010 is48% so increase by 16%. And third fund is equity manage fund there was in 2009 was34% and at present in 2010 are 62% so increase by 28%. And forth fund are liquidfund there was in 2009 was 28% and present in 2010 are 31% so increase by 4%.
676.ProcessesThe process should be customer friendly in insurance industry. The speed and accuracy ofpayment is of great importance. The processing method should be easy and convenient to thecustomers. Installment schemes should be streamlined to cater to the ever growing demandsof the customers. IT & Data Warehousing will smoothen the process flow. IT will help inservicing large no. of customers efficiently and bring down overheads. Technology can eithercomplement or supplement the channels of distribution cost effectively. It can also help toimprove customer service levels. The use of data warehousing management and mining willhelp to find out the profitability and potential of various customers product segments. What is Welcome Calling to the customer?Welcome Calling is a call made to all our new customers to ensure that the policy chosen bythem is as per requirement. What is the objective of Welcome Calling? Welcome Calling serves mainly 2 objectives:First, to contact the customer as per the given contact details thereby ensuring contact ability.Second, to verify if the customer has fully understood the important features the insuranceplan chosen and whether it suits the customers requirement, thereby avoiding mis-saleoccurrences.
68 The process of customer Welcome Calling of customer A welcome call is made to the customer after the application for insurance policy has been accepted by the company. Before disclosing any policy related information, our Customer Service Associate (CSA) will do a mandatory verification by asking few questions. If the policy holder is not available, information can be shared with a third party who takes care of the policy holders finances, post confirmation from the third party that all the discussed details will be shared with the Policy Holder. Once the verification is done, the CSA will inform the customer on all the Key features of the insurance plan. Once all the key features have been communicated, the CSA can also make a note of any query, request or complaint by the customer. If the customer is not contactable despite multiple attempts, we will send a Welcome Calling Letter to the communication address of the customer. Physical Distributions Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. Technology will not replace a distribution network though it will offer advantages like better customer service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India. In Netherlands, financial services firms provide an entire range of products including bank accounts, motor, home and life insurance and pensions. In France, half of the life insurance sales are made through banks. In India also, banks hope to maximize expensive existing networks by selling a range of products. The physical evidences include signage, reports, punch lines, other tangibles, employee„s dress code etc.
69A. Tangibles: banks give pens, writing pads to the internal customers. Even thepassbooks,chequebooks, etc reduce the inherent intangibility of services.B. Punch lines: punch lines or the corporate statement depict the philosophy and attitudeofthe bank. Banks have influential punch lines to attract the customers.SOME CHANNEL OF DISTRIBUTIONS IN HDFC LIFE • Direct Sales Manager 1. Direct Sales • Individual Sales • ( Door to Door Marketing ) • Business through Financial Consultants 2. Sales Development Manager’s Induction • Bank Relation 3. Alternative • ( HDFC,SBI,BOB,Andra Bank,AXIS Induction Bank etc...) 4. Corporate • Group Selling • Collabration with other Companies Induction
71 CONCLUSION Introduction1. It has got 3rd rank in the investment management, in year 2006One of the largest financial institution of2. India with more then 2 million satisfied customer base.3. The most successful and admired life insurance Company, which means that we are the most trusted Company, the easiest to deal with, offer the best value for money, and set the standards in the industry. In short, “The most obvious choice for all Financial analysis is important aspect of financial management. The study of financial managementat HDFC LIFE LTD. has revealed that the current ratio was as per the standard industrial practice but the liquidity position of the company showed an increasing trend.
72 Finance department1. The proprietary ratios shows efficient capital structure. Considering the turnover ratios, the management having effective collection system and low investment in stocks.2. The Depreciation under Companies Act for Computers is 16.21 % (SLM). However, the rate adopted by us is 25 % SLM.3. Machinery and Plant other than the specified – 15 % (applicable to A/C, Office Equipment and Electrical Installations).4. Current ratio of HDFC LIFE insurance, has 0.63:1 It also indicates the sound solvency of the company is higher.5. The net profit ratio in 2009 was 21.58% and in 2010 is 22.09% therefore the net profit is increasing. The company have good profit margin. The company should more and more profit for the future.6. Issued Capital were 17,960,000 and in current year increase by 17,20,000 so as compare to the previous year increase by 9.57 %
74 RECOMMENDATIONS The HDFC company should now try to identify the gap between current level of customer service and customer expectations. Some of the strategies being recommended are as follows: Brand Building: HDFC is a very huge Brand in US in Insurance but in India it is not known as a Insurance brand. So HDFC need to focus on Brand building Activities which can be done through Advertising, Road shows, Knops, Sponsoring Events in rural & Urban Areas. Educating the Consumers: HDFC should take initiative to educate the consumers regarding all these aspects & take competitive Advantage on this front as its Allocation charges are minimum in the whole Indian Insurance Industry. Need to Increase Market Presence: It should make more channel partners & do business tie ups with more broking houses & should hire marketing agencies for aggressive marketing purpose. It can also increase its Business Units. Concentration More On Rural Areas : HDFC need to concentrate more towards the rural areas as 60-70% of India population is living in rural areas and most of the people in rural areas are not insured so there is a huge potential in the rural sector. Product Differentiation: Offering a product that is distinctly different from other products available in the market by other insurance players. More Guaranteed Plans to be Introduced:
75 As we know today the stock market is giving very less return even in last year the return comes Negative so the company need to introduce some more granted plans so that customer can invest in them and have assured return on them which ultimately is an edge in competition in insurance sector. Need to commence Medical claim Products and General Insurance : There are very less which are having Medical claim products and also very less companies providing General Insurance with Life Insurance for example ICICI , Reliance and Bajaj Allianz so HDFC also need to come in General Insurance business so that they can compete with these players. Flexibility: The companies should make their products flexible for the convenience of their customer. Hassle Free Service: All bureaucracy in customer interactions should be eliminated. Proper Policy Documentation: Wrong interpretations/ non-awareness of policy document by the customer may have serious implications in the long term and the possibility of the same should be alleviated by the company which leads to.
76Recommendation can be use by the firm for the betterment increased of the firmafter study and analysis of project report on study and analysis of workingcapital. I would like to recommend.1. Company should raise funds through short term sources for short termrequirement of funds, which comparatively economical as compare to long termfunds.2. Company should take control on debtor‟s collection period which is majorpart of current assets.3. Company has to take control on cash balance because cash is non earningassets and increasing cost of funds.4. Company should reduce the inventory holding period with use of zeroinventory concepts.Over all company has good liquidity position and sufficient funds to repaymentof liabilities. Company has accepted conservative financial policy and thusmaintaining more current assets balance. Company is increasing sales volumeper year which supported to company for sustain 2nd position in the world andnumber one position in Asia.
77SUGGESTIONS:The company should try to increase his financial performance in the future.The company should try to increased his product cycle.Stable Managed fund & Secure Managed Fund provide low return. but less risk in StableManaged fund & Secure Managed Fund.Most of the people are not aware about HDFC STANDARD LIFE INSURANCE CO.LTD so they have toadvertise their company and their product.HDFC LIFE INSURANCE CO.LTD focuses on the urban area so now they have to focus on rural areaalso.HDFC LIFE INSURANCE CO.LTD should try to increase awareness of their UNIT LINK PLANThe company should increase their distribution network.
79QUESTIONNAIREPERSONAL DETAILS:Name:Mobile Number:Adress:_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Occupation: _____________________Age: ____________________________1. Of the following what at present are your investment needs?a. To build a corpus for retirement
80b. To save for children education/ marriagec. To provide for medical emergenciesd. To provide for family financial securitye. To create wealthf. All of the above2. Which of the following you think as investment for tax- saving?a. Mutual fundsb. Fixed depositc. Insuranced. Ppfe. All of the above3. Have you ever been invested in mutual funds?a. Yes b. No4. Have you ever been invested in ulip insurance plans?a. Yes b. No
815. If you had Rs 1000/- where you prefer to investa. Mutual fundb. Fixed depositc. Direct equityd. Life insurancee. Postal office deposit6. Out of the following in which Mutual Fund you have invested? a) HDFC b) Tata Mutual Fund . c) Franklin Templeton . d) Reliance . e) ICICI Prudential . f) SBI . g) Other If any ,Please Specify 7. Out of the following company which company ulip plans you have invested? a) HDFC LIFE. b) Tata AIG . c) BAJAJ ALLIANZE . d) Reliance . e) ICICI Prudential . f) SBI LIFE. g) Other If any ,Please Specify
828. To how much extent are you satisfied with the services offered by HDFCLIFE regardingULIP INVESTMENT PLANS? a) Exteremly satisfied. b) Satisfied to the lesser extent d) Dissatisfied to lesser extent e) Extremely dissatisfied.9. Do you prefer GROWTH FUND OR DIVERSIFY YOUR MONEY in various fund? a) growth fund b) diversify funds c) Depends upon the risk bearing condition
83 BIBLOGRAPHY Books Referred1. Maheshwari, S.N.; Financial Managemen, Principles and Practice, Sultan Chand & sons, 9th Edition 2004.2. Maheshwari, S.N.; Elements of Financial Management, Sultan Chand & Sons, 2003 7th Edition.3. Pandey, I.M.; Financial Management, Vikas Publishing House, 8th Edition, 2001.4. .Author:Evertt.E.AdamProduction and opration management prentice hall 5th edition Websites References www.hdfclife.com/ www.bimadeals.com › Life Insurance › Life Insurance Companies www.myinsuranceclub.com › Life Insurance › Companies www.indiancustomers.in/company/hdfc-standard-life www.hdfclife.com/ChildrensPlans/child-insurance-plans. www.hdfclife.com/savingsplans/WholeLife