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INDUSTRY PROFILE
The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act,1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Insurance sector reforms

In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend its future direction.

The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector.

The reforms were aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms

In 1994, the committee submitted the report and some of the key recommendations included:

i) Structure Government stake in the insurance Companies to be brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to operate

ii) Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry. No Company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies. Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operate in each state

iii) Regulatory Body

The Insurance Act should be changed An Insurance Regulatory body should be set up Controller of Insurance (Currently a part from the Finance Ministry) should be made independent

iv) Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time)

v) Customer Service

LIC should pay interest on delays in payments beyond 30 days Insurance companies must be encouraged to set up unit linked pension plans Computerization of operations and updating of technology to be carried out in the Insurance industry

The committee emphasized that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry.

Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 crore. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body.

The Insurance Regulatory and Development Authority (IRDA)

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies.

The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDAs online service for issue and renewal of licenses to agents.

The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year.

Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.

COMPANY PROFILE OF HDFC - STANDARD LIFE A) Background and inception of the company

HDFC Standard Life Insurance Company Limited is one of India's leading private insurance companies, which offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India's leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 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 by others.

HDFC Limited HDFC Limited, Indias premier housing finance institution has assisted more than 3.3 million families own a home, since its inception in 1977 across 2400 cities and towns through its network of over 250 offices. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist NRIs and PIOs to own a home back in India. As of December 2008, the total asset size has crossed more than Rs. 95,000 crores including the mortgage loan assets of more than Rs. 82,800 crore. The corporation has a deposit base of Rs. 17,551 crore, earning the trust of more than 9, 00,000 depositors. Customer Service and satisfaction has been the mainstay of the organization. HDFC has set benchmarks for the Indian housing finance industry. Recognition for the service to the sector has come from several national and international entities including the
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World Bank that has lauded HDFC as a model housing finance company for the developing countries. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, and Bangladesh in the setting up of housing finance companies.

Standard Life Group (Standard Life plc and its subsidiaries)

The Standard Life Group has been looking after the financial needs of customers for over 180 years. It currently has a customer base of around 7 million people who rely on the company for their insurance, pension, investment, banking and health-care needs. Its investment manager currently administers 125 billion in assets. It is a leading pensions provider in the UK, and is rated by Standard & Poor's as 'strong' with a rating of A+ and as 'good' with a rating of A1 by Moody's. Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at the Money Marketing Awards, and it was voted a 5 star life and pensions provider at the Financial Adviser Service Awards for the last 10 years running. The '5 Star' accolade has also been awarded to Standard Life Investments for the last 10 years, and to Standard Life Bank since its inception in 1998. Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the Mortgage Magazine Awards in 2006.

B) Nature of the business carried

HDFE standard life is on the business of life insurance. But HDFC is in diversified business like banking, housing finance, securities etc.

C) Vision, Mission and quality policy

Vision

The most successful and admired life insurance company, which mean 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.

Mission

We aim to be the top new life insurance company in the market. This does not just mean being the largest or the most productive company in the market, rather it is a combination of several things like-

Customer service of the highest order Value for money for customers Professionalism in carrying out business Innovative products to cater to different needs of different customers Use of technology to improve service standards Increasing market share

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Values

Integrity Innovation Customer centric People Care One for all and all for one Team work Joy and Simplicity

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Quality policy
Quality road map time lines

Phase-1 to phase-3 should run simultaneously

Phases

Objectives

Visible proof

when

Phase-5

Business excellence

BE award (external)/service 12-24 months and guarantee Improve levels

Phase-4

Phase-3

Value stream map 6 sigma processes, SLA, 6-8 months and projects financial benefit. improve Process maturity Process complaint functions 8-12 months and sustenance Organized places work Zone/region/branch/location 6-10 months and certification sustenance and

Phase-2

Phase-1

Current business Completion of projects and 4-6 months improvement benefits derived and sustenance programs sustenance

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How (1)

how (2)

how (3)

how (4)

VALUE STREAM MAP PROJECTS Workplace organization Align and integrate long term loans Process manage ment

BUSINESS EXCELLENCE

O B J E C T I V E S Organized workplace Current business improvement Process maturity Optimize value streams

IMPROVEMENT PROJECTS (KNOWN OPPORTUNITY)

Business Prioritized functions/CFT All locations Processes Primary value Organization and Stake Streams holders

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BREADTH OF QUALITY INTERVENTION

How (1): How to achieve Quality awareness Identify known opportunities Implement prioritized projects Develop capability- BB/GB Deliver and quantify value Share and recognize Basic workplace hygiene

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How (2): How to achieve Standard processes Process rollout Process adherence Dash board

How (3): How to achieve Value stream projects. SLA Service guarantee

How (4): How to achieve Stake holders delight Business excellence

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PRODUCT/SERVICE PROFILE
1. Protection Plans

HDFC Term Assurance Plan: This plan is designed to help secure familys financial needs in case of uncertainties. The plan does this by providing a lump sum to the family of the life assured in case of death or critical illness (if option is chosen) of the life assured during the term of the contract. One can choose the lump sum that would replace the income lost to ones family in the unfortunate event of ones death.

HDFC Loan Cover Term Assurance Plan: This plan aims to protect family from loan liabilities in case of unfortunate demise within the policy term. It provides the beneficiary with a lump sum amount, which is a decreasing percentage of the initial Sum Assured. This means that as the outstanding loan decreases as per the loan schedule, the cover under the policy also decreases as per the policy schedule.

HDFC Home Loan Protection Plan: This plan aims to protect family from loan liabilities in case of unfortunate demise within the policy term. It ensures that family does not lose the dream house that person have purchased for them, in case person is not around to repay the outstanding monthly installments on their housing loan.

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2. Children's Plans

HDFC Children's Plan: As a parent, everyone priority is their childs future and being able to meet their childs dreams and aspirations. With HDFC Childrens Plan, they can start building their savings today and ensure a bright future for their child.

HDFC Young Star Super: This Plan provides valuable protection to insured person child in case his/her is not around and gives them an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at Maturity.

HDFC Young Star Super Suvidha: It is a convenient plan, which saves insured person from the need of going for Medicals. This Unit Linked Plan provides valuable protection to his/her child in case he is not around and gives him with an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at Maturity.

HDFC Young Star Supreme Suvidha: This Plan provides valuable protection to insured person child in case he is not around and gives him an outstanding investment opportunity to maximize his savings by providing him a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at Maturity.

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 HDFC SL Young Star Champion Suvidha: This is a convenient plan, which saves him from the need of going for Medicals. This Unit Linked Plan gives him with an outstanding investment opportunity to maximize his savings by providing you a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at Maturity.

3. Retirement Plans

HDFC Personal Pension Plan: The HDFC Personal Pension Plan is a With Profits insurance policy that is designed to provide a post-retirement income for life with the freedom to choose your retirement date.

HDFC Pension Super: The HDFC Personal Pension Plan is a With Profits insurance policy that is designed to provide a post-retirement income for life with the freedom to choose your retirement date.

HDFC Pension Supreme: The HDFC Pension Supreme is Unit Linked plan, designed to provide a post-retirement income for life with the freedom to choose their retirement date. This plan gives them with an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at vesting.

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 HDFC SL Pension Champion: The HDFC SL Pension Champion is Unit Linked plan, designed to provide a post-retirement income for life with the freedom to choose their retirement date. This plan gives them with an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at vesting.

HDFC SL Unit Linked Pension Maximiser II: HDFC SL Unit Linked Pension Maximiser II is a unique Single Premium unit linked plan, designed to provide a postretirement income for life with the freedom to maximize their investment returns. This plan also gives Bumper Addition* of 5% of initial single premium at vesting and on death.

HDFC Immediate Annuity: The HDFC Immediate Annuity is a contract that uses investor capital to provide them with a guaranteed gross income throughout their lifetime or over a period of their choice. The income is guaranteed and is unaffected by the rise and fall of interest rates. This means the investor can plan their life the way they want it to be, safe in the knowledge that their gross income will not fall during the period they have selected. The HDFC Immediate Annuity offers a number of options to meet all their income needs.

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4. Savings & Investment Plans

HDFC Endowment Super: With HDFC Endowment Super, investors can start building their savings and it ensures that their family remains financially independent, even when they are not around. This Unit Linked Plan also gives them with an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments.

HDFC Endowment Supreme: With HDFC Endowment Supreme, investors can start building their savings today and it ensures that their family remains financially independent, even when they are not around. It is a convenient plan, which saves them from the need of going for Medicals. This Unit Linked Plan gives them with an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at Maturity.

HDFC SimpliLife: It is a convenient plan, which saves investors from the need of going for Medicals. This Unit Linked Plan gives them with an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments.

HDFC Endowment Super Suvidha: It is a convenient plan, which saves investors from the need of going for Medicals. This Unit Linked Plan gives them with an outstanding
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investment opportunity to maximize their savings by providing you a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at Maturity.

HDFC Endowment Supreme Suvidha: It is a convenient plan, which saves insured person from the need of going for Medicals. This Unit Linked Plan gives them with an outstanding investment opportunity to maximize their savings by providing them a choice of thoroughly researched and selected investments. This plan also gives Bumper Addition to the fund value at Maturity.

HDFC Wealth Builder: HDFC Wealth Builder is an exclusive plan crafted for elite achievers. An investment cum insurance plan that will actively help in building investor wealth and give them twin advantage of exclusive funds (actively managed ) along with choice of limited premium payment term. This plan provides the financial protection to their loved ones and builds up their wealth effortlessly. This plan also gives Bumper Addition to the fund value at Maturity.

HDFC Endowment Assurance Plan: With HDFC Endowment Assurance Plan, investors can start building their savings today and ensure that their family remains financially independent, even when they are not around. This With Profits plan is designed to secure their familys future by giving their family a guaranteed lump sum on maturity or in case of their unfortunate demise, early into the policy term.

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 HDFC Money Back Plan: With HDFC Money Back Plan, investors can plan now to ensure that they have the necessary funds to have the necessary funds to secure their longterm as well as short-term financial goals. This With Profits plan gives them a proportion of the basis Sum Assured as Cash lump sums at regular 5-year intervals within the policy term. HDFC Single Premium Whole of Life Insurance Plan: HDFC Single Premium Whole of Life Plan is a tailor made plan well suited to meet investors long-term investment needs and help them to maintain their familys financial independence. This single premium investment plan is a Whole of Life plan aimed at providing long-term real growth of their money. HDFC Assurance Plan: HDFC Assurance Plan helps investors conveniently build their long-term savings while keeping their familys future protected. This With Profits savings plan helps them to build their long-term savings while securing their familys future. HDFC Savings Assurance Plan: HDFC Savings Assurance Plan is a With Profits savings plan which helps investors conveniently build their long-term savings and ensure that their family is protected even if they are not around.

5. Health Plans

HDFC Critical Care Plan: HDFC Critical care plan provides for a lump sum payment on survival post diagnosis of a critical illness, so that in the event a critical illness strikes, investors dont have to dig into those precious savings of them.
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 HDFC SurgiCare Plan: HDFC SurgiCare Plan provides investors with timely support in case they have to undergo a major surgery and hospitalization, as the case maybe, ensuring their financial independence at all times.

6. Rural Products

HDFC Gramin Bima Kalyan Yojana HDFC Gramin Bima Mitra Yojana HDFC Bima Bachat Yojana

7. Social Products

HDFC Development Insurance Plan

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D) Area of operation

HDFC STANDARD LIFE is operating internationally, that means all over INDIA and outside India; it is rendering its insurance services including rural places.

E) Ownership pattern

It is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited), India's leading housing finance institution and a Group Company of the Standard Life Plc, UK. As on February 28, 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 by others.

Associate Companies:

HDFC Limited HDFC Bank HDFC Mutual Fund HDFC Sales HDFC ERGO General Insurance
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G. Competitors information

Aegon Religare Life

AEGON, an international life insurance, pension and investment company, Religare, one of Indias leading integrated financial services groups and Bennett, Coleman & company, Indias largest media house, have come together to launch AEGON Religare Life Insurance Company Limited. This venture is dedicated to build a firm future, both for customers and employees and will continue to balance a local approach with the power of an expanding global operation.

We launched our pan-India multi-channel operations in July, 2008 with over 30 branches spread across India. Our business philosophy is to help people plan their life better. We provide high quality advice to our customers and offer superior customer service.

Aviva India
Aviva India is a joint venture between one of the countrys oldest and largest groups, Dabur, and Aviva plc, the UK's largest insurance group, whose association with India dates back to 1834.

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Dabur Group
Founded in 1884, Dabur Group is one of India's oldest and largest groups of companies with a consolidated annual turnover in excess of Rs 2,396 crores. A professionally managed company, it is the country's leading producer of traditional healthcare products.

Aviva Group

Aviva Group is the UKs largest and one of the biggest Insurance groups worldwide. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. With a history dating back to 1696, Aviva Group has a 50 million customer base worldwide.

Bajaj Allianz Life Insurance Co Ltd

Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest Insurance Company and Bajaj Finserv.

Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world, managing assets worth over a Trillion (Over INR. 55, 00,000 Crores). Allianz SE has over 115 years of financial experience and is present in over 70 countries around the world.

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Canara HSBC OBC Life

The shareholding pattern of the Joint Venture is as follows - Canara Bank holds 51% equity, HSBC Insurance (Asia Pacific) Holdings Ltd 26% and Oriental Bank of Commerce 23%. The Venture has an initial paid up capital of INR 325 crores which will further increase in line with our expansion plans.

The Company commenced business 16th of June, 2008 after receiving requisite approvals from the Insurance Regulatory Development Authority (IRDA). Canara HSBC Life has access to 4100 bank branches all over India.

Future Generali Life

Future Generali is a joint venture between the India-based Future Group and the Italy-based Generali Group.

Future Generali is present in India in both the Life and Non-Life businesses as Future Generali India Life Insurance Co. Ltd. and Future Generali India Insurance Co. Ltd.

ICICI Prudential Life Insurance

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank - one of India's foremost financial services companies-and prudential plc - a leading international

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financial services group headquartered in the United Kingdom. Total capital infusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%.

We began our operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of 2074 branches (inclusive of 1,116 micro-offices), over 225,000 advisors; and 7 bancassurance partners.

ICICI Prudential is the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver worldclass financial solutions to customers all over India.

F) Infrastructural facilities

HDFC SL is providing good infrastructural facilities which are required for employees to perform their work in a better way. During the year, the Company has invested in additional infrastructure capacity and human capital, in terms of offices, technology, staff, financial consultants, in order to be well positioned to increase the growth momentum in the year ahead. The company stepped up the recruitment programme in the latter part of the year in preparation for the next year.
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G) Awards/achievements
Received CIO 'the Ingenious 100 2009' Award HDFC Standard Life has received the CIO The Ingenious 100 - 2009 Award, for ATLAS (Agency Training Licensing and Servicing System). Additionally, the company has received the CIO 100 Security Award 2009 for pioneering LANDesk Management and Security Suite security implementation and taking its security to a higher level of technological excellence.

HDFC Standard has received the CIO 100 Award for the third consecutive year. It had received the 2008 CIO Bold Award for Consultant Corner and CIO Security Award for our initiatives for a secure computing environment, including Sesame - Identity and Access Management. In 2007, the company received CIO 100 award for Wonders and a Special Award in Storage category.

CIO magazine has a long tradition of honoring leading companies for business and technology leadership and innovations through its flagship award program CIO 100. Its a celebration of 100 organizations (and the people within them) that are using IT in innovative ways to deliver business value, whether by creating competitive advantage, optimizing business processes, enabling growth or improving relationships with customers.

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Received Diamond EDGE Award 2009

HDFC Standard Life has received the Diamond EDGE Award 2009 for its mobile workforce portal - Consultant Corner. EDGE - Enterprises Driving Growth and Excellence (using IT) is an initiative by the ,Network Computing magazine to identify, recognize, and honors end-user companies in India that have demonstrated the best use of technology to solve a business problem, improve business competitiveness, and deliver quantifiable ROI to stakeholders.

Network Computing magazine is part of CMP Technology, which brings more than 100 IT media brands to more than 18 million technology and business decision makers worldwide.

Received 2008 CIO Bold 100 and CIO Security Awards

HDFC Standard Life has received the 2008 CIO Bold 100 Award. This annual award recognizes organizations that exemplify the highest level of operational and strategic excellence in information technology. This year's award theme, The Bold 100, recognized those executives and organizations that embraced great risk for the sake of great reward.

HDFC Standard Life has also been one of the five recipients of the Special 2008 CIO Security Award aimed at CIOs, whose pioneering implementations have taken their enterprise security to the next level. This award category identifies innovative and groundbreaking deployment of technologies aimed at creating a secure business infrastructure.

The company received the 2008 CIO Bold Award for its mobile workforce portal and the CIO Security Award for its initiatives for a secure computing environment, including identity management.
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Received PCQuest Best IT Implementation Award 2008

HDFC Standard Life received the PCQuest Best IT Implementation Award 2008 for Consultant Corner, the applications for its financial consultants, providing centralized control over a vast geographical spread for key business units such as inventory, training, licensing, etc.

HDFC Standard Life has won the PCQuest Best IT Implementation Award for two years consequently. Last year, the company received the award for Wonders, its path-breaking implementation of an enterprise-wide workflow system.

Silver Abby at Goafest 2008

HDFC Standard Life's radio spot for Pension Plans won a Silver Abby in the radio writing craft category at the Goafest 2008 organized by the Advertising Agencies Association of India (AAAI). The radio commercial Pata nahin chala touched several changes in life in the blink of an eye through an old mans perspective. The objective was drive awareness and ask people to invest in a pension plan to live life to the fullest even after retirement, without compromising on ones self-respect

Unit Linked Savings Plan Tops Mint Best TV Ads Survey

The Unit Linked Savings Plan advertisement of HDFC Standard Life, one of the leading private insurance companies in India, has topped Mints Top Television Advertisement survey conducted, for February 2008. HDFC Standard Lifes Unit Linked Savings Plan

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advertisement was ranked 4th in terms of a combined score of ad awareness and brand recall and 3rd in terms of ad diagnostic scores (likeability, enjoyment, believability, and claim).

Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007

Mr. Deepak M Satwalekar, Managing Director and CEO, HDFC Standard Life, received the QIMPRO Gold Standard Award 2007 in the business category at the 18th annual Qimpro Awards function. The award celebrates excellence in individual performance and highlights the quality achievements of extraordinary individuals in an era of global competition and expectations. Sar Utha Ke Jiyo among Indias 60 Glorious Advertising Moments HDFC Standard Lifes advertising slogan honored as one of 60 Glorious Advertising & Marketing Moments' over the last 60 years in India, by 4Ps Business and Marketing magazine. The magazine said that HDFC Standard Life is one of the first private insurers to break the ice using the idea of self respect (Sar Utha Ke Jiyo) instead of 'death' to convey its brand proposition. This was then, followed by others including ICCI Prudential, thus giving HDFC Standard Life the credit of bringing up one such glorious advertising and marketing moment in the last 60 years.

H) Work flow model

The work will starts from the innovating of new product or policy and giving training regarding exiting products or new products to sales development officers. They will start their
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work of selling policies to the customers. Then from the premium amount company management people take the decision to invest in different portfolios, after that when the customers going to withdraw the money in that time after a fixed term that is minimum 3 years what will be the market return in that percentage, company will reimburse their amount that may happen after the death of a person also.

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I) Future growth and prospects

New Business Market Share HDFC Standard Life growing steadily

BAJAJ ALLIANZ: 8%

BIRLA SUNLIFE: 5%

REALIANCE LIFE: 6% MAX NEW YORK: 3% SBI LIFE: 9% OTHERS: 59% LIC: 40% ICICI PRUDENTIAL: 12%

HDFC SL: 5%

OTHERS: 12%

Market Share for HDFC SL has gone up from 4.10% Mar 08 to 4.5% Mar 09

Thus from the above diagram we can say that HDFC SL is growing steadily as it is acquiring market share from 4.10% to 4.5% in march 2009. Through many strategies like: advertising, good service to customers than competitors etc, it can acquire a good market share in future

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Thus from the above diagram we can say that HDFC SL is growing steadily as it is acquiring market share from 4.10% to 4.5% in march 2009. Through many strategies like: advertising, good service to customers than competitors etc, it can acquire a good market share in future also.

Five S Model
5- S Model is followed by HDFC STANDARD LIFE instead of 7- s Model

Introduction:
FIVE S is a basic and the simplest methodology used to establish and maintain quality environment in organization. It is a part of a Japanese philosophy known as Kaizen; Kai in Japanese means, to change and Zen means for better. It involves setting standards and then continuously improving on those standards to achieve their goals. The ultimate goal of 5s is to make the workplace more effective and efficient by its own people in a short span of time so that efficiency of that workplace is enhanced in an innovative and sustainable manner. Thus it requires active involvement of everyone in the organization across the hierarchy and to come up with suggestions on regular basis.

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The name stands for five Japanese words

Japanese S1 S2 S3 S4 S5 SEIRI SEITON SEISO SEIKETSU SHITSUKE English SORTING SYSTEMATIC ARRANGEMENT SPIC N SPAN/SANITIZE STANDARDISE SELF DISCIPLINE/SUSTENANCE

BENEFITS OF 5S: Can be started immediately. Reduces wastages and fatigue. Improves the efficiency of workplace and wastages are made visible. Improves self organization and overall self appearance of company. Everyone can participate and does not require any quality background. Brings in the feelings of ownership of workplace.

Thus the 5s are the pillars of visually managed workplace. This process starts with identifying the area where 5s is to be deployed. It can be a single workstation or area as big as entire

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office. Teams are nominated for carrying out the 5s and to ensure that everyone on a regular basis practices it.

In detail:
S1 sorting: The meaning of s1 that is sorting is to straighten and contain that is to divide the objects into 2 groups one that is needed and other that is wanted and then remaining the unneeded ones from the workplace. Needed items: needed items are items that are critical in terms of existence at the

workplace and are required from process point of view. Wanted items: wanted items are those, which we want, but are not required from process point of view. We can also determine the criteria to distinguish between the need and want items. Red Tag Square (R.T.S) The use of a red tag square is generally during the time of a blitz, that is during the blitz the material identified as obvious scrap and other abnormal material shall be parked in a common place which will be known as Red Tag Square, however the items which are in excess quantities can also be put in the R.T.S and be noted in the Red Tag Matrix. S 2 systematic arrangements: Place for everything and everything in place.

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After the needed and wanted items are identified properly and the R.T items have been parked at the R.T.S. The next step is to identify the right place for all the needed /wanted items kept at workplace. Workstation illustration: The layout of the workplace should be prepared in such a manner so that the owners know the exact location. Layout helps the owner to locate the workplace and assign responsibilities to his team. Again the needed and wanted items (from need want matrix) needs to taken into consideration. So that place to keep them can be decided according to the frequency or usage. Storeroom illustration: After sorting out the needed and unneeded items and putting the unneeded items in the red tag square, one must make the layout of the store and start specifying the areas where the things are supposed to be placed. It is very important to allocate right areas so that no rework needs to be done. S 3 : Spin N Span Cleaning with meaning and cleaning is inspection Sanitize means keeping things clean and in order. It is a maintenance made, which looks for damages, defects and potential problems. Once s1 and s2 have been done it is the responsibilities of the staff to ensure that s3 is done on regular basis so that the items stored are properly identified.

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S4 Standardize: This step is about making standards for all the procedures and practices followed in five s. Abnormality identification register R.T. Matrix Cabinet index Master index Store master index

S5 discipline: The main objective of five s is to follow and spread the learning to others. All employees need to keep five s as an ongoing improvement plan and for that there is a fifth s that emphasizes on sustenance. It is the culmination of s1, s2, s3, and s4, which is likely to happen over a period of time.

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MCKINSEY 7-S MODEL

The 7-s model with reference to Hdfc standard life:

The 7s model is better known as Mc-Kinsey 7s. This is because the persons who developed this model Robert H Waterman, Jr., Thomas J. peters and Julian R Philips have been consultants at MC-Kinsey and co. they published their 7s model in their article STRUCTURE IS NOT ORGANISTATION(1980) and in their books THE ART OF JAPANESE MANAGEMENT (1981) and IN SEARCH OF EXCELLENCE(1982). Productive organization change is not simply a matter of structure, although strategy is critical too. Our claim is that effective organizational change is really the relationship between structure, strategy, systems, styles, skills, staff and something we call super-ordinate goals. Our central idea is that organization effectives, systems from the interaction of several factorsome especially obvious and some under analyzed. Our framework for organization change graphically depicted the figure.

40

STRUCTURE
In the hdfc standard life each and every department is empowered with the officer, clerk and sub staff. The authority is delegated to officer/manager to extract work from the staff. The each department consists of members based on its requirements. Thus it is having an effective work on the various activities efficiently and effectively.

SKILLS
It is a more reputed insurance company, as it is providing financial solution of where to invest, how to invest and number of products with having more benefits to investors. It has reputed customers who are loyal to the organization. The service given to the customers are accomplished as per their requirements. Financial services generally do mass supporting services are rendered to all types (classes) of customers. More over the people feel their task is in safe hands of the industry. The organization is having various capabilities over the competitors. These skills are unique from the competitors of hdfc standard life. The skills are broadly categorized as follows:Market knowledge, analytical skills, Services, Research, Personal/administration, Soft skills, Supporting, Medical, Finance, Information relations, others

41

STYLE
Hdfc standard life follows tip down/bottom up style in its management, where in each major decision regarding the company is taken in tip down fashion and other decision like targets and growth aspects hdfc standard life follows bottom up style. We think it is important to distinguish between the basic personality of a top management team and the way the team comes across to the organization. Organization may listen to what managers say but they believe what managers do. Not words, but pattern of action is decisive. The power of style then is essentially manageable. One aspect of style is symbolic behavior. Typically have more people on board who understand exploration are have headed exploration department. Typically they fund exploration more consistently.

STRATEGY
By strategy we mean those actions that a company plans in response to or anticipation of changes in its customers, its competitors. Strategy is the way A Company aims to improve its position vis--vis competition perhaps through low cost production or delivery, perhaps by providing better value to the customer, perhaps by achieving sales and service dominance. it is, or ought to be, an organization way of saying: here is how we will create unique value. The hdfc standard has set of objectives, strategies to achieve the objective, the course of action to be taken to achieve the objective and guidelines for the course of action.

42

Hdfc standard adopts low pricing strategy to generate huge returns and good market share in the industry, since it has well expanded its business all over INDIA. Hdfc standard life charges minimal to its clients for the services. It provides more benefits to customers compared to its competitor. Hence it is known for the good pricing strategy in the industry.

SYSTEM
The hdfc standard life has various techniques to control this procedure as system like to improve the back office targets by giving addition support. Information system: the implementation of computers has made information flow fast and reliable. The information is versatile. Since hdfc standard life has good backup system. Recruitment, training and development system Recruitment process starts with the identification of the vacancies by the department head of the respective department. A form requesting for the human resource is sent from the department to HRD.

STAFF
Staff (in the sense of people, not line/staff) is often treated in one of two ways. At the hard end of the spectrum, we talk of appraisal systems, pay scales, formal training program and the like. At the soft end, we talk about morale, attitudes, motivation and behavior.

43

The hdfc standard life is in the course of cutting down the cost of service. If it starts recruiting, the selection is done based on the education qualification first class degree. The various training program to the employees are taken like refresher course, job rotation and job training. The promotion in the organization is taken place based upon the service, seniority and educational qualification. The performance appraisal is also taken as a basis for promotion so officers staff makes it.

SHARED VALUES
Unlike the other six Ss, super ordinate goals dont seem to be present in all, or even most, organizations. They are, however, evident in most of the superior performers. The value shared by the members of an enterprise is known as the shared values. The organization of HDFC STANDARD LIFE is having a strategy of sharing values.

44

SWOT ANALYSIS

STRENGTHS

1. HDFC Standard life insurance offers a range of individual and group insurance solutions.

2. HDFC Standard Life has the financial expertise required to manage your long-term investments safely and efficiently.

3. Rated AAA by CRISIL and ICRA for the 10th consecutive year for High service standards

4. Life insurance industry is a rapid growing and a nobler service industry.

WEAKNESSES

1. LIC is prevalent and sustains even today a major source of population.

2. Low number of offices and network and number of life insurance agents.

3. Lack of knowledge and expertise.

45

OPPORTUNTIIES

1. Life insurance has captured its mere15 20% growth therefore a wide open untapped market is open to the company to develop, grow and measure its success.

2. Still the numbers of companies are few and company has every capability to grow and forward its performance areas to the widest. THREATS

1. People are hesitant to invest and put their hard earned money to the private life insurance company with the fear of getting lost.

2. Belief towards LIC as it is a government corporation phobia is continue to surmount the people of India despite lots of flaws and development and liberalization of life insurance.

3. Alternative financial services such as mutual fund, banking services, share and securities also pose problems and threats to the working of the life insurance sector.

4. Illiteracy and unemployment also pose threat.

5. Rising real estate industry also pose threat as people are investing a bulk of their money over to that industry.

46

ANALYSIS OF FINANCIAL STATEMENT

Financial statement analysis is a comprehensive analysis of all three financial statements: balance sheet, income statement, and cash flow statement. Financial statements provide useful information. However, one has to meticulously look for the right information from the right data. One can undertake the financial statement analysis from different stakeholders perspective: creditors, bankers, credit rating agencies, existing shareholders, potential shareholders, internal management, and employees too. Financial statement helps in understanding the performance of the organization. The performance of an organization can be explained on the basis of the four important aspects of the business: a) Liquidity: Liquidity shows the ability of the business to service the short term obligation. b) Solvency: Solvency shows the ability of the business to meet the long term obligation. c) Efficiency: Efficiency shows the ability of the business to use the resources of the business. d) Profitability: Profitability shows the ability to the business to generate and distribute profit.

Intra firm comparison of hdfc:

1. Analysis of Short Term Liquidity: a. Current ratio = Total Current Assets / Total Current Liabilities
47

b. Quick ratio = quick current assets / quick current liabilities

Table showing: current ratio and quick ratio of hdfc standard life insurance company ltd. for the year 2008 and 2009. Year Current assets Current liabilities Current ratio and quick ratio 2009 (RS.000) 9,643,629 9,029,038 1.07% 2008 (RS.000) 8,575,727 6,251,168 1.37%

Inference: The above table is showing the details regarding the current ratio and quick ratio of hdfc standard life insurance company ltd. The standard current ratio is 2:1, and quick ratio is 1:1, but the company has got only 1.37 and 1.07 both the year the ratio is not satisfactory. But compare to year-2009 ratio year-2008 ratio was good. 2. Capital Structure and Long -Term Solvency Ratios: Debt equity ratio =long Term Debt / shareholders fund

48

Table Years Outsiders Funds Share Holders Fund Debt Equity Ratio 2009 (RS.000) 97,578,470 18,433,462 5.29% 2008 (RS.000) 84,012,076 13,263,132 6.33% showing : debt equity ratios of hdfc standard life in the year 2008 and 2009. Inference: There is continues increase in Share holders Funds and also in an outsider funds from the year 2008 to 2009. Outsiders funds are increased more than the shareholders fund. Hence the outsiders funds has been increased year by year, it shows the larger outsiders funds are available to the company. Since this is quite satisfactory and in the same way it is not good to the shareholders point of view and also to the company. 3. Profitability Ratios: a. Gross profit ratio = gross profit / sales*100

49

Table showing: the gross profit ratio of hdfc standard life insurance company ltd.

Year Gross profit Sales Gross profit ratio Analysis:

2009 (Rs.000) (5,029,631) 55,183,763 -0.09%

2008 (Rs.000) (2,435,094) 48,176,166 -0.05%

The high ratio of gross profit is considered satisfactory; hdfc standard life insurance company ltd. is suffering gross loss in the year 2008 and 2009. Inference: There is an increase in gross loss and also the percentage of loss in the year 2008 to 2009 is 0.05, and 0.09 respectively. In the year 2008 it was facing less gross loss, but later it went on increasing. In the year 2009, loss percentage is 0.09 compare to last year the loss has increased. b. Net profit ratio: Net profit ratio= net profit/sales*100 Table showing net profit ratio of hdfc standard life for the year 2008 and 2009

50

Year Net profit Sales Net profit ratio

2009 (RS.000) (11,913,122) 55,183,763 -0.22

2008 (RS.000) (6,883,491) 48,176,166 -0.14

Inference: The high ratio of net profit is considered satisfactory; hdfc standard life insurance company ltd. is suffering net loss in the year 2008 and 2009 respectively. There is an increase in net loss in 2009 compare to year-2008. The percentage of loss in the year 2008 and 2009 is 0.14, and 0.22 respectively. This is not good from the company point of view.

LEARNING EXPERIENCE

In the class just we can assume how the corporate world is but it is completely different when I started to go to the company. In the class just we will read, learn and same thing we will write in the exam and we will get pass but when we go for searching job really we will feel the heat of outside world, regarding pressure for target achievement, competition for jobs etc

51

That was a wonderful experience to me in that company. I learnt so many things there, what is the real corporate culture, How much we have to be smart, How much talented we should, How we should achieve our target, what is our responsibity.

Actually I got the work of recruitment consultant; there I need to call to the people who want to work as financial consultant for part or full time as per their requirement, I had to take interview to them and need to motivate them to take up that job, for that they need to write the exam and get through with the exam. And then they need to get the licence from IRDA to do that work.

52

Ratio analysis is an important tool for financial statement analysis. Here we studied various ratios relating to measurement of the financial performance such as current ratio, quick ratio, debt equity ratio, proprietary ratio, gross profit ratio etc. In the previous chapter we made a detailed analysis of the hdfc standard life insurance company ltd. from 2005 to 2009. The major findings are given below

The study shows there is a continuous changes in the current ratio and also it is not satisfactory when compare to actual standard of 2:1.

Current ratio in the year 2005, it is showing 1.05% and later on it went on increasing way i.e. in 2006 1.44%, 2007 1.36, 2008-1.37%.

Current ratio in past three years it was getting to meet the standard, but in the year of 2009 again it went down to 1.07%.

The quick ratio for this company is same as mentioned in the above table. Because as there is no inventory and prepaid expenses to deduct in this company as it is insurance company we cannot find inventory.

53

 The study shows that the net working capital in the company is Rs.52,669,000 in 2005, Rs.1,182,432,000 in 2006, in 2007 Rs.1,420,039,000, in 2008 Rs.2,324,559,000 and in 2009 again it decreased to Rs.614,591,000.

The study shows that the debt equity ratio is satisfactory from the creditors point of view that is in the year 2005 the percentage of ratio is 2.65%, in 2006 3.73%, in the year 2007 5.50%, in 2008- 6.33% and in 2009 it is 5.29%.

The study shows that the proprietary ratio to fixed assets is 2005- 4.37%, 2006- 10.53%, 2007- 11.36%, 2008- 9.96%, 2009- 12.73%.

The study shows that the proprietary ratio to current ratio is in 2005-2.79%, 2006- 1.64%, 2007- 1.55%, 2008- 1.55%, 2009- 1.91%.

The study shows that gross profit ratio of the company was went on decreasing but it is recovering from more loss to less loss and the percentage of ratio is, in the year 2005 is 0.13%, in 2006 it is -0.08%, in 2007 it is -0.04%, in 2008 it is -0.05%, in 2009 it is -0.09%

The study shows that the net loss was went on decreasing from the year 2005 to 2008. But in the year 2009 it has incurred more loss than 2006, 2007, and 2008 but less than 2005 (i.e. 2005 = -0.27, 2006= -.20, 2007= -.16, 2008= -0.14, 2009= -0.22)

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 The study shows that the return on capital employed is not good because every year it is earning negative returns and also the percentage of negative returns went on increasing way (i.e. 2005= -58.80%, 2006= -49.99%, 2007= -52.88%, 2008= -51.90%, 2009= 64.62%.

The return on capital employed is more negative in the year 2009 as compared to all other four years. (I.e. 64.62%)

55

Profit & Loss Account for year ended March 31, from 2005 to 2009
Shareholders Account (Non-technical Account)
2009 Particulars Amounts transferred schedule (RS.000) 794,984 2008 (RS.000) 516,341 2007 (RS.000) 2006 (RS.000) 2005 (RS.000) -

from the Policyholders Account Account) Income Investments (a) Interest, Dividends Rent - Gross (b) Profit on sale / redemption investments (c) (Loss on sale / redemption investments) (d) Transfer / gain on revaluation / change in fair value of (2,965) 561 (2,375) (8,926) (5,156) 51,887 (21,384) (23,909) (6,594) of (35,870) (11,142) (12,470) (6,933) (4,043) & 13,924 98,694 114,192 7,989 10,117 from 302,367 242,109 126,836 138,496 65,321 (Technical

56

(e) Amortization of (premium)/disco unt investments Sub Total Other Income TOTAL (A) Expenses other than 3A 329,343 300 1,124,627 5,307 308,838 531 825,710 12,596 202,274 764 203,038 8,252 124,032 3,650 127,682 18,251 66,239 1587 67,826 10,490 on

those directly related to the insurance business Bad debts written off -

Provisions (other than taxation)

(a) For diminution

in the value of Investments (net) 6,148,951 3,248,208 1,450,397 1,397,003 954,744

(b) Provision

for

doubtful debts

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(c) Others

Contribution

to

the

Policyholders Fund TOTAL (B) 6,154,258 3,260,804 1,458,649 1,415,254 965,234

Profit / (Loss) before tax Provision for Taxation Profit / (Loss) after tax APPROPRIATIONS (a) Balance at the beginning of the Year (b) Interim dividends paid

(5,029,63 1) (5,029,63 1)

(2,435,094 ) (2,435,094 )

(1,255,611 ) (1,255,611 )

(1,287,572 ) (1,287,572 )

(897,348) (897,348)

(980,833)

(6,883,49 1)

(4,421,364 )

(3,165,753 )

(1,878,181 )

during the Year (c) Proposed dividend (d) Dividend distribution tax (e) Transfer liabilities account Employee to on of final

(27,033)

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benefits Profit / (Loss) carried forward to the Balance Sheet Earnings per share Basic Earnings per share Diluted (3.28) (2.42) (1.81) (2.92) (3.38) (11,913,1 22) (3.28) (6,883,491 ) (2.42) (4,421,364 ) (1.83) (3,165,753 ) (2.92) (1,878,181 ) (3.38)

59

60

INTRODUCTION TO THE TOPIC

Financial Statement Analysis
The purpose of the financial statement analysis is to help users to understand the organization and the business decisions. These users are both internal and external. The internal users include the management, employees, and the external users include the shareholders, researchers, bankers, customers, suppliers government representatives. Boards of directors analyze the financial statements to understand the impact of the decisions and use the same for future decision making. Employees use the financial statements to negotiate the union demands. Potential investors use the financial statements to decide about the investment to be made. The common goal of these users is to understand the past and use the data to predict the future. For answering the above mentioned questions one has to undertake a detailed analysis of the financial statements. Financial statement analysis is a comprehensive analysis of all three financial statements: balance sheet, income statement, and cash flow statement. Financial statements provide useful information. However, one has to meticulously look for the right information from the right data. One can undertake the financial statement analysis from different stakeholders perspective: creditors, bankers, credit rating agencies, existing shareholders, potential shareholders, internal management, and employees too. There are different tools of financial statement analysis: common-size statement, comparative statements, and ratio analysis. Before we get into the financial statement analysis, in the first section we will recapitulate the financial statements.
61

Tools for Financial Statement Analysis

Following the important tools which are used for undertaking FSA: a) Comparative Statements b) Common Size Statements c) Ratio Analysis d) Trend Analysis e) Du-Pont analysis f) Fund flow analysis g) Cash flow statement h) Cost-volume profit analysis

Statement of the problem

Finance is the life blood of all business activities. Financial soundness is the basic requirement on which the progress and success of any business firm rests in the long run. Firms should be able to mobilize adequate funds to carry on their regular and normal activities without any difficulty.

The year 08-09 has been a difficult year for the financial sector and the impacts have been felt in the Indian life insurance industry. Growth rate in the private sector have declined over the year on the back of a much more cautious attitude adopted by individual customers. There
62

have been changes in asset allocation and preferences during the year. Main purpose of this topic is to analyze the financial statement to know regarding the performance of the company and to know whether it has performed well in this financial year (2009) compare to past five years.

63

RESEARCH METHODOLOGY

This project is on descriptive research and some extent it regards to causal research, and to use the available facts as information and analyze these to make a critical evaluation of the materials this is also a causal research with an aim to find a solution for an immediate problem facing by industry or business organization. The control aim of descriptive research is to discover a solution for some pressing problem. 1. Type of research descriptive research 2. Tool Ratio analysis 3. Company annual reports and e-mail at www.hdfcinsurance.com

Source of data
Secondary data: Secondary was collected through available records/annual reports of 5 year period from 2005-2009 and web sites of hdfc standard life insurance company. Data Collection: The required data was collected from the annual report of the company and direct Personal interview with the officer of the company and also through company website.

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OBJECTIVES
I. To study the overall financial performance of the company.

II.

To know the debt and equity position in the company

III.

To analyze whether company is in good financial position or not.

IV.

And to gain the professional knowledge while working in corporate environment.

a. Hdfc standard life financial statements analysis with comparison of financial statements of past five years.

b. To study regarding insurance industry

c. To know about hdfc standard life insurance company

d. To know the status of hdfc standard life in the market

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DATA ANALYSIS & INTERPRETATION

Ratio analysis of financial statements

It is a systematic use of ratios to interpret/ assess the performance and status of the firm.

A ratio expresses a mathematical relation between two quantities.

Ratios are tools providing us which clues and symptoms of underlying conditions. Ratios can help us to identify areas requiring further investigation.

The usefulness of ratio depends on the quality of the numbers in their calculation.

That is our ability to draw useful insights and make valid intercompany comparisons is enhanced by our skill in adjusting reported numbers prior to inclusion in these analyses.

66

Ratios are interpretable only in comparison with

1) Prior ratios 2) Predetermined standards. 3) Ratios of competitors. Ratio analysis of a firms financial statements is of interest to shareholders, creditors, and the firms management. Stockholders are interested in the firms current and future level of risk and return, which directly affect the stock price. The firms creditors are primarily interested in the short-term liquidity of the company and in its ability to make interest and principal payments.

Internal management is concerned with all aspects of the firms financial performance. Therefore, they attempt to produce financial ratios that will be considered favorable to both owners and creditors. Additionally, management uses ratios to monitor the firms

performance from period to period. Unexpected changes or variances are identified to isolate developing problem areas.

67

IMPORTANCE OF RATIO ANALYSIS

Ratio analysis does two things, immediately. The first thing is it allows the company to compare itself with other like companies. If management feels things aren't going well, they can help pinpoint the problem through comparing their ratios with other companies.

They may have several ratios that are comparable, but a couple which are way off. That might be where the problem is.

Also, ratio analysis may help by comparing your company with prior periods. If a particular ratio is declining when it would be better if it were staying the same or increasing, then again looking at the ratios are important to find out where the problem lies. Ratios are important to spot trends easily.

Types of ratios: Ratios can be classified into six broad groups: 1. Liquidity ratios 2. Capital structure/ leverage ratios 3. Profitability ratios 4. Activity/ efficiency ratios 5. Integrated analysis of ratios 6. Growth ratios. 1. Liquidity Ratios:
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It is the ability of a firm to satisfy its short- term obligations as they become due. The importance of adequate liquidity in the sense of the ability of a firm to meet current / short term obligations when they become due for payment can hardly be overstressed.

a) Current Ratio:

Current Ratio is the ratio between Current Assets and Current Liabilities. It calculated by dividing Current Assets by Current Liabilities. Current assets include all assets, which can convert easily into near money within a year. Current assets include cash in hand, cash at bank, debtors, stock, and money at short or call notice etc. Current liabilities are the sum of all short-term payables within a year, which include Sundry Creditors, Bills payable, Bank overdraft, Expenses outstanding etc. the current ratio of a firm measures its short term solvency that is, its ability to meet short-term obligations. As a measure of short-term current financial liquidity, it indicates the amount of current assets available for each amount of current liability. Formula for finding current ratio is given below.

Current Ratio = Current Assets/Current Liabilities

Significance of the ratio Current ratio provides a margin of safety to the creditors. In a sound business, a current ratio of 2:1 is considered an ideal one. Current ratio indicates firms ability to pay its current liabilities, i.e. day-to-day financial obligation. Current ratio is an index of the firms financial
69

stability i.e., an index of technical solvency and an index of the strength of working capital, which means excess of current assets over current liabilities. Higher ratio more than 2:1 indicates sound solvency position. Lower ratio less then 2:1 indicates inadequate working capital.

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Table: 1 Table showing: the Current Ratios of hdfc standard life from the year 2005-09.

Year

2009 (RS.000) 9,643,629

2008 (RS.000) 8,575,727

2007 (RS.000) 5,325,536

2006 (RS.000) 3,869,728

2005 (RS.000) 1,143,024

Current assets

Current liabilities Current ratio

9,029,038

6,251,168

3,905,497

2,687,296

1,090,355

1.07%

1.37%

1.36%

1.44%

1.05%

Analysis: Hdfc standard life insurance company ltd. is having a low current ratio in the year 2005 (1.05) in the year 2006 the ratio has been increased to 1.44. It has been reduced to 1.36 in the year of 2007, and in 2008 current ratios increased further (1.37). But again the current ratio has decreased in the year 2009 (1.07).

71

Graph-1 Graph showing: the Current ratios of hdfc standard life insurance company ltd. from the year2005 to 2009.
P
1.6

Current Ratio

E
1.4

R C E N T A G E

1.2 1 0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 2009

YEARS Quick ratio: Quick ratio is also known as liquid ratio or Acid test ratio. Quick ratio shows the liquidity of the business. Quick ratio is the ratio between quick assets and quick liabilities. The term quick asset refers to current assets, which can be converted into, cash immediately or at a short notice without diminution of value. Quick assets comprise of all current assets minus stock and pre paid expenses.

72

Table-2 Table showing the quick or Acid Test ratios of hdfc standard life from the year 2005-09

Years

2009 (Rs.000)

2008 (Rs.000)

2007 (Rs.000)

2006 (Rs.000)

2005 (Rs.000)

Liquid assets

9,643,629

8,575,727

5,325,536

3,869,728

1,143,024

Liquid liabilities

9,029,038

6,251,168

3,905,497

2,687,296

1,090,355

Acid test ratio

1.07%

1.37%

1.36%

1.44%

1.05%

Analysis: Hdfc standard life insurance company ltd. is having a low acid test ratio in the year 2005 and 2009 i.e. (1.05 and 1.07). When compare to next years, in the year 2006, 2007 and 2008, it has 1.44, 1.36 and 1.37 respectively.

73

Graph 2 Graph showing the quick ratios or Acid test ratio of hdfc standard life insurance.ltd from the year 2005 to 2009

1.6

P E R C E N T A G E

1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005 2006 2007 2008 2009 Series 1

Years
b) Net working capital:

Working capital is the lifeblood of the business. Working capital refers to that part of the firms capital, which is used for financing short term or current assets, such as, cash, marketable securities, debtors, inventories, bills receivables etc. in a narrow sense, the term working capital refers to the net working capital. Net working capital is the excess of current assets over current liabilities.

74

Table: 3 Table showing: Working Capital of HDFC Standard life insurance company ltd. from the year 2005-09.

Years

2009 (RS.000) Current 9,643,629

2008 (RS.000) 8,575,727

2007 (RS.000) 5,325,536

2006 (RS.000) 3,869,728

2005 (RS.000) 1,143,024

Total Asset

Total Current 9,029,038 Liability Net working 614,591 Capital

6,251,168

3,905,497

2,687,296

1,090,355

2,324,559

1,420,039

1,182,432

52,669

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Table: 4

The debt equity ratios of hdfc standard life insurance company ltd. from the year 2005 to 2009.

Years

2009 (RS.000)

2008 (RS.000)

2007 (RS.000)

2006 (RS.000)

2005 (RS.000)

Outsiders Funds Share Holders Fund

97,578,470

84,012,076

45,999,541

23,633,655

8,470,669

18,433,462

13,263,132

8,360,441

6,331,725

3,194,450

Debt Equity 5.29% Ratio Analysis:

6.33%

5.50%

3.73%

2.65%

The ratio of 2:1 is considered satisfactory, the debt equity ratios of hdfc standard life insurance company ltd is 2.65, 3.73, 5.50, 6.33, and 5.29 from the year 2005 2009 respectively. Inference: There is continues increase in Share holders Funds and also in an outsider funds from the year 2005 to 2009. Outsiders funds are increased more than the shareholders fund. Hence the outsiders funds has been increased year by year, it shows the larger outsiders funds are available to the company. It has crossed more than maximum level also. Since this is quite satisfactory and in the same way it is not good to the shareholders point of view and also to the company.

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Graph- 4 Chart showing: the debt equity ratios of HDFC STANDARD LIFE from the year 200509. Debt equity ratios

7 6 5 4 3 2 1 0 2005 2006 2007 2008 2009 Series 1

P e r c e n t a g e

Years Analysis: Another approach to calculating the debt to capital ratio is to relate the total debt to the total assets of the firm. The total debt of the firm comprises long- term debt plus current liabilities. The total assets consist of permanent capital plus current liabilities. Thus,

Debt to total assets/capital ratio= total debt/ total assets

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Table: 5 Debt - assets ratio table

Particulars

2009 (Rs.000)

2008 (Rs.000)

2007 (Rs.000)

2006 (Rs.000)

2005 (Rs.000)

Total debt

116,011,932

97,275,208

54,359,982

29,965,380

11,665,119

Total assets

11,091,335

9,907,527

6,061,590

4,471,073

1,874,848

Debt-assets Ratio

10.45%

9.82%

8.97%

6.70%

6.22%

Analysis: The ratio of 2:1 is considered satisfactory, the debt equity ratios of hdfc standard life insurance company ltd is 6.22, 6.70, 8.97, 9.82, and 10.45% from the year 2005 2009 respectively. Inference: There is continues increase in total debt and also in total assets from the year 2005 to 2009. Debt ratio is increasing more than the assets ratio. Hence the debt ratio has been increased year by year; it shows the larger total debt is more than the total assets available to the company. Since this is quite satisfactory and in the same way it is not good to the share holders point of view and also to the company.

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Graph: 5 Debt assets ratio of HDFC STANDARD LIFE, from the year 2005 to 2009

P E 12 R C E N T A
4 8 10

Series 1

G 2 E
0 2005 2006 2007 2008 2009

Years c) Equity assets ratio: Still another variant of the debt/equity ratio is to relate the owners/proprietors funds with total assets. This is called the proprietary ratio. The ratio indicates the proportion of total assets financed by owners. Symbolically, it is equal to:

Proprietary ratio = Proprietors funds / total assets x 100

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Table: 6 Table showing: the Proprietary Ratio of hdfc standard life from the year 2005-09. 2009 (RS.000) 1,447,706 18,433,462 2008 (RS.000) 1,331,800 13,263,132 2007 (RS.000) 736,054 8,360,441 2006 (RS.000) 601,345 6,331,725 2005 (RS.000) 731,824 3,194,450

Years Fixed Asset Shareholders Fund Proprietary ratio

12.73%

9.96%

11.36%

10.53%

4.37%

Analysis: The ratio of 1:3 is considered satisfactory; the Proprietary Ratio of Hdfc standard life insurance company is having a proprietary ratio of 4.37, 10.53, 11.36, 9.96, and 12.73 in the year 2005, 2006, 2007, 2008, and in 2009 respectively. Inference: The Proprietary Ratio of hdfc standard life insurance company is increasing over the years. It shows Good investment over by the company in Fixed Asset.

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Graph 6 Graph showing the Proprietary Ratio of hdfc standard life insurance company ltd. from the year 2005-09 Proprietary Ratio

P
14

E R C E N T
4 12 10 8 6

A G E
2 0 2005 2006 2007 2008 2009

Years

Analysis: Ratio of current assets to proprietors funds: It shows the relationship between current assets and Shareholders funds. The purpose of this ratio is to calculate the percentage of shareholders funds invested in current assets. It found by dividing current assets by proprietors funds.

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Table: 7

Table showing the Proprietary Ratio of hdfc standard life insurance company ltd. from the year 2005-09

Years

2009 (RS.000) 9,643,629 18,433,462 1.91%

2008 (RS.000) 8,575,727 13,263,132 1.55%

2007 (RS.000) 5,325,536 8,360,441 1.55%

2006 (RS.000) 3,869,728 6,331,725 1.64%

2005 (RS.000) 1,143,024 3,194,450 2.79%

Current Asset Proprietors Fund Proprietary Ratio

Analysis: Hdfc standard life is having a current asset to proprietary ratio of 2.79, 1.64, 1.55, 1.55, and 1.91 percent in the year 2005, 2006, 2007, 2008, and in 2009 respectively. Inference: The Proprietary ratio of hdfc standard life insurance company ltd. is varying from the year 2005 to 2009. It indicates that the Proprietary ratio is not up to the level.

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Graph -7 Graph showing the Proprietary Ratio of hdfc standard life insurance company ltd. from the year 2005-2009.

P E R C
2 3

2.5

E N T A G E
0.5 1.5

0 2005 2006 2007 2008 2009

Analysis: c) Coverage ratios:

YEARS

It measures the firms ability to pay certain fixed charges. These ratios are computed from information available in the profit and loss account. For a normal firm, in the ordinary course of business, the claims of creditors are not met out of the sale proceeds of the permanent assets of the firm. The obligations of a firm are normally met out of the earning or operating profits.

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1. Interest coverage ratio: It measures the firms ability to make contractual interest payments.

Interest coverage = EBIT / interest

It is also known as time-interest- earned ratio. This ratio measures the debt servicing capacity of a firm insofar as fixed interest on long term loan is concerned. It is determined by dividing the operating profits or earnings before interest and taxes by the fixed interest charges on loans.

2. Dividend coverage ratio:

It measures the ability of a firm to pay dividend on preference shares which carry a stated rate of return. This ratio is the ratio of net profits after taxes and the amount of preference dividend. Thus,

Dividend coverage ratio = EAT/ PREFERENCE DIVIDEND

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3. Total fixed charges coverage ratio: It measures the firms ability to meet all fixed payment obligations. The total coverage ratio has a wider scope and takes into account all the committed fixed obligations of a firm, that is, 1) Interest on loan 2) Preference dividend 3) Lease payments 4) Repayment of principal

Symbolically,

Total fixed charges coverage ratio = EBIT + Lease payment/ interest + lease payment + (preference dividend + installment of principal) / (1-t)

4. Cash flow coverage ratio:

Total cash flow coverage = EBIT+ lease payments + depreciation + non-cash expenses / lease payment + interest + (principal repayment)/(1-t) + (preference dividend)/ (1-t)

The overall ability of a firm to service outside liabilities is truly reflected in the total cash flow coverage ratio: the higher the coverage, the better is the ability

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5. Debt services coverage ratio:

Debt service capability is the ability of a firm to make the contractual payments required on a scheduled basis over the life of the debt. It is considered a more comprehensive and apt measure to compute debt service capacity of a business firm. It provides the value in terms of the number of times the total debt service obligations consisting of interest and repayment of principal in installments are covered by the total operating funds available after the payment of taxes: Earnings after taxes, EAT + interest + depreciation + other non cash expenditure like amortization.

2. Profitability ratios:

The profitability of a firm can be measured by its profitability ratio. Apart from the creditors, both short-term and long terms, also interested in the financial soundness of a firm are the owners and the management or the company itself. The management of the firm is naturally eager to measure its operating efficiency. Similarly the owners invest their funds in the expectation of reasonable returns. The operating efficiency of a firm and its ability to ensure adequate returns to its shareholders/ owners depends ultimately on the profits earned by it.

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a) Gross profit ratio: Gross profit is the result of the relationship between prices, sales volume and costs. It measures the percentage of each sales rupee remaining after the firm has paid for its goods. A change in the gross margin can be brought about by changes in any of these factors. The gross margin represents the limit beyond which fall in sales prices are outside the tolerance limit. Further, the gross profit ratio/ margin can also be used in determining the extent of loss caused by theft, spoilage, damage, and so on in the case of these firms which follow the policy of fixed gross profit margin in pricing their products. A high ratio of gross profit to sales is a sign of good management as it implies that the cost of production of the firm is relatively low. It may also be indicative of a higher sales price without a corresponding increase in the cost of goods sold. It is also likely that cost of sales might have declined without a corresponding decline in sales price. A relatively low gross margin is definitely a danger signal, warranting and careful and detailed analysis of the factors responsible for it.

Gross profit ratio=

gross profit Sales

x 100

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Table: 8 Table showing: the gross profit ratio of hdfc standard life insurance company ltd.

Year

2009 (Rs.000) (5,029,631)

2008 (Rs.000) (2,435,094)

2007 (Rs.000) (1,255,611)

2006 (Rs.000) (1,287,572)

2005 (Rs.000) (897,348)

Gross profit

Sales Gross ratio

55,183,763 profit -0.09%

48,176,166 -0.05%

28,226,248 -0.04%

15,469,501 -0.08%

6,866,346 - 0.13%

Analysis: The high ratio of gross profit is considered satisfactory; hdfc standard life insurance company ltd. is suffering gross loss from the year 2005 2009 respectively. Even though having a very good sales and growth in the market company is not in the position to make profit. Inference: There is continues decrease in gross loss suffered by this company and also the percentage of loss from the year 2005 to 2009 is 0.13, 0.08, 0.04, 0.05, and 0.09 respectively. In the year 2005 it was facing more gross loss, but later it went on decreasing the loss. In the year 2009, again it faced more loss percentage compare to last three years.

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Graph- 8 The gross profit ratios of hdfc standard life insurance company.ltd from the year 200509. Gross profit ratio in percentage YEARS

0 2005 2006 2007 2008 2009

P E R C E N T A G E

-0.02 -0.04 -0.06 -0.08 -0.1 -0.12 -0.14

B.Net profit ratio:

It measures the percentage of each sales rupee remaining after all costs and expenses including interest and taxes have been deducted.

The net profit margin is indicative of managements ability to operate the business with sufficient success not only to recover from revenues of the period, the cost of merchandise or services, the expenses of operating the business (including depreciation) and the cost of the
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borrowed funds, but also to leave a margin of reasonable compensation to the owners for providing their capital at risk. The ratios of net profit (after interest and taxes) to sales essentially express the cost price effectiveness of the operation.

A high net profit margin would ensures adequate return to the owners as well as enable a firm to withstand adverse economic conditions when selling price is declining, cost of production is rising and demand for the product is falling.

A low net profit margin has the opposite implications.

Net profit ratio = Net profit Sales

x 100

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Table: 9

Table showing net profit ratio of hdfc standard life from the year 2005 to 2009

Year

2009 (RS.000) (11,913,122)

2008 (RS.000) (6,883,491) 48,176,166 -0.14%

2007 (RS.000) (4,421,364) 28,226,248 -0.16%

2006 (RS.000) (3,165,753) 15,469,501 -0.20%

2005 (RS.000) (1,878,181) 6,866,346 -0.27%

Net profit

Sales 55,183,763 Net profit -0.22% ratio Analysis:

The high ratio of net profit is considered satisfactory; hdfc standard life insurance company ltd. is suffering net loss from the year 2005 2009 respectively. It is having very good sales and growth in the market then also its profit is not increasing, but net loss is reducing compare to past years. Inference: There is continues decrease in net loss, which is suffered by this company and also the percentage of loss from the year 2005 to 2009 is 0.27, 0.20, 0.16, 0.14, and 0.22 respectively. In the year 2005 it was facing more net loss, but later it went on decreasing the loss. In the year 2009, again it faced more loss percentage compare to last three years.

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Graph- 9 Chart showing the Net profit ratios of hdfc standard life insurance company.ltd from the year 2005-09. YEARS

p 0 e r c-0.05 e n -0.1 t a g-0.15 e

-0.2

2005

2006

2007

2008

2009

-0.25

-0.3

c. Return on capital employed:

The ROCE is the second type of ROI. Here the profits are related to the total capital employed. The term capital employed refers to long- term funds supplied by the lenders and owners of the firm. It can be computed in two ways. First, it is equal to non current liabilities (long term liabilities) plus owners equity.

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Return on capital employed=

Net profit Capital employed

x100

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Table-10 Return on capital employed ratio table

Particulars

2009 (Rs.000)

2008 (Rs.000)

2007 (Rs.000) (4,421,364)

2006 (Rs.000) (3,165,753)

2005 (Rs.000) (1,878,181)

Net profit

(11,913,122) (6,883,491)

Capital employed

18,433,462

13,263,132

8,360,441

6,331,725

3,194,450

Return on -64.62% capital employed ratio Analysis:

-51.90%

-52.88%

-49.99%

-58.80%

The high ratio of rate of return on capital employed is considered satisfactory; hdfc standard life insurance company ltd. is not in the position to earn a better rate of return on total capital employed from the year 2005 2009 respectively. Inference: There is continues decrease in rate of return on capital employed, and also the percentage of capital employed is increasing continuously from the year 2005 to 2009 i.e. is 3,194,450,000, 6,331,725,000, 8,360,441,000, 13,263,132,000, and 18,433,462,000 respectively. In the year 2005 and 2009 it was earning very low return on capital employed compare to other financial years.

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Graph- 10 Chart showing the return on capital employed ratio of hdfc standard life insurance company.ltd from the year 2005-09. YEARS
0 2005 -10 2006 2007 2008 2009

P e r c e n t a g e

-20 -30 -40 -50 -60 -70

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CONCLUSION
HDFC STANDARD LIFE has been one of the best life insurance service providers in India. It has the excellent quality service provider to their customer. The overall performance of HDFC STANDARD LIFE is very good compared to other service providers. It got fifth position in the insurance industry. They share a very good rapport with the customers.

The financial condition is not good from year to year. It is in loss condition from past five years. Its debt- equity ratio is good. Because of that the company is in a good condition to get survival in the market.

It is selling more policies from year to year that means the sales percentage is increasing from many years it is the signal to the growth of the company. Presently it is incurring more expenses and market share is very less compare to other competitors like LIC, ICICI Prudential etc.

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LIMITATIONS
It was difficult to collect some information because of some company rules. Interaction with the employees was limited because of the work schedule. It was difficult to cover all the types of ratios because of lack of information i.e. regarding inventories, debtors turnover etc..

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RECOMMENDATION
a. It can try to create awareness about this company through some programmes. b. There may be proper and immediate response in case of any queries from customers. c. It can concentrate to increase its sales revenue as finance is life blood of any business. d. It is able try to increase its profits through using better portfolios. e. There can be an outstanding after sales service which is one of the important factors. f. There may be more effective response in case of any incidents/events. g. Feedback information can be inculcated. h. It is able to concentrate on decreasing other expenses and it has to spend the expenses which are really required to the development of the company. i. Proper management is to be there and also it should supervise the activities of the company very well. j. It needs to be aware of its competitors to overcome from the competition and to get more market share.

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Balance sheet of HDFC STANDARD LIFE as at March 31 for five years

Particulars

Schedule

2009 (Rs.000)

2008 (Rs.000)

2007 (Rs.000)

2006 (Rs.000)

2005 (Rs.000)

SOURCES OF FUNDS SHAREHOLDERS FUNDS: 5 Share Capital Share application money received pending allotment of 6 shares Reserve and Surplus Credit / [Debit] Fair Value Change Account Sub-Total BORROWINGS 7 POLICYHOLDERS FUNDS: Credit / [Debit] Fair Value Change Account Policy Liabilities Insurance Reserves Provision for Linked liabilities Add: Fair value change Total Provision for Linked Liabilities Sub-Total Funds for Future Appropriations Funds for future appropriation Provision for lapsed policies unlikely to be revived Surplus Allocated to Shareholders

17,958,180 552,892 (77,610)

12,706,359 552,892 3,881

8,007,148 287,391 65,902 -

6,192,718 65,902 73,105

3,190,898 3,552

18,433,462 -

13,263,132 -

8,360,441 -

6,331,725 -

3,194,450 -

(296,885) 29,092,419 84,085,083 (15,302,147 ) 68,782,936 97,578,470 586,395 531,970

193,745 24,366,747 56,317,976 3,133,608

91,247 17,391,531 25,934,264 2,582,499

209,569 11,487,996 9,732,781 2,203,309

174,980 6,377,397 1,918,292 -

59,451,584 84,012,076 246,951

28,516,763 45,999,541 59,485

11,936,090 23,633,655 25,516

8,470,669 -

TOTAL

117,130,297

97,522,159

54,419,467

29,990,896

11,665,119 99

APPLICATION OF FUNDS: INVESTMENTS Shareholders Policyholders Assets held to cover Linked Liabilities LOANS FIXED ASSETS CURRENT ASSETS Cash and bank balances Advances and Other Assets Sub-total (A) CURRENT LIABILITIES PROVISIONS

8 8A 8B 9 10 11 12

4,291,597 30,050,097 68,782,936 30,248 1,447,706 4,108,660 5,534,969

4,213,064 23,299,043 59,451,584 18,618 1,331,800 4,493,238 4,082,489

1,529,743 17,782,866 28,516,763 12,638 736,054 3,363,556 1,961,980

1,380,910 11,695,010 11,936,090 29,356 601,345 2,879,622 990,106

984,253 6,087,916 1,918,292 11,984 731,824 733,529 409,495

9,643,629 13 14 8,820,225 208,813 9,029,038 614,591 -

8,575,727 6,129,149 122,019 6,251,168 2,324,559 -

5,325,536 3,874,652 30,845 3,905,497 1,420,039 -

3,869,728 2,658,567 28,729 2,687,296 1,182,432 -

1,143,024 1,069,635 20,720 1,090,355 52,669 -

Sub-Total (B) NET CURRENT ASSETS (C) = (A - B) MISCELLANEOUS 15 EXPENDITURE (to the extent not written off or adjusted) DEBIT BALANCE IN PROFIT AND LOSS ACCOUNT (Shareholders account) TOTAL CONTINGENT LIABILITIES 1. Partly paid-up investments 2. Claims, other than against policies, not acknowledged as debts by the company 3. Underwriting commitments outstanding (in respect of share and

11,913,122

6,883,491

4,421,364

3,165,753

1,878,181

117,130,297

97,522,159

54,419,467

29,990,896

11,665,119

262,091

309,494

119,829

100

securities) 4. Guarantees given by or on behalf of the Company 5. Statutory demands / liabilities in dispute, not provided for 6.Reinsurance obligations to the extent not provided for in the accounts 7.Others Total

1,465,718 -

1,465,718

262,091

309,494

119,829

101

BIBILOGRAPHY
WEBSITES:

WWW.HDFCINSURANCE.COM WWW.GOOGLE.COM WWW.YAHOOSEARCH.COM REFERENCE BOOKS:

PRASANNA CHANDRA: FINANCIAL MANAGEMENT, (TMH), 6/e, 2004

M.Y. KHAN & P.K. JAIN: FINANCIAL MANAGEMENT, (TMH), 4/e, 2004

OTHER REFERENCES: NEWS PAPERS: o TIMES OF INDIA o ECONOMIC TIMES MAGAZINES: o BUSINESS WORLD

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