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ASUMMER TRAINING PROJECT REPORT
ON
Marketing Analysis ofICICI Prudential Life Insurance.
Submitted in the partial fulfillment for the award ofBachelor of Business Administration (BBA)
(2007-2010)
SUBMITTED BY:
Jyoti
BBA 3rd B
Regd. No. :2007. GIM/A.90
Preface
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An Industrial, Business or service organization by taking up a project study is mostimportant part of our BBA course & is must as per the syllabus prescribed by Guru
Nanak Dev university BBA course is of administrative and managerial activity of
industrial, Business or service organization. The main objective of this project study isto help the student to develop ability to practical technique to solve real life problemrelated industrial. Business or Service organization.
According to the rules, I have taken my summer training in ICICIPrudential Life Insurance. Our gardeners, professors and banks summanagers gives the knowledge and guidance of this bank to us.
The summer training programmed for student of BBA training is for twomonths in the time of summer vacation theoretically knowledge and class room
discussion is not sufficient for the student but training given them practical andday to day working of bank.
In this project report I had tried to analyze the needs of the customersand suggest them the most suitable insurance solution. As well as I alsoanalyzed the brand awareness among the people.
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ACKNOWLEDGEMENT
To take training is a part of our BBA Programming and is an important part. Training quit valuable and important aspect to provide practicalknowledge student of management studies.
It was very useful and experience which I got during my training inICICI Prudential Life Insurance.
I was able to prepare this training report with the co-operation of variouspeople.
First of all I am very much thankful to in charge Director and professorof our institute
our professor Mrs Riti Passi who has given me an opportunity and she hashelped me very much in preparing the report by her guidance
Thanking you
JYOTI
GUIDE CERTIFICATE
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This is to certify that the project titled MARKETING ANALYSIS OF ICIC LIFEPRUDENTIAL is an original work of Mrs. Jyoti Enrollment student of Guru NanakInstitute of Management & IT , New Delhi submitted in partial fulfillment of the
requirements for the award of Bachelor of Business Administration(BBA)(2007-2010) under the guidance of the committee.
.
Signature of committee members Signature of HOD
Mrs.Riti Passi Mrs. Maninder Kaur
Objective of the Study
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Management as a profession cant be taught merely in the four walls of
classrooms. Only theoretical knowledge is not sufficient to build competitive
managers. Practical knowledge of the business environment is equallyimportant.
In today business world, insurance sector is running towards its
booming stage. This industry still has many things to come up to, so many
changes and opportunities will be given by insurance industry. So I choose
insurance industry for my training session in M.B.A.
I choose ICICI Prudential Life Insurance is one of those private
insurance players who entered the market before few years and made its own
place among all its competitors.
This report is shows insurance sector & how insurance is most
important part of life. And understand insurance definitions, different providers
of life insurance and comparisons. It also shows ICICI Prudential Life
Insurances Products.
As a Trainee ICICI Prudential Life Insurance give me very practical
knowledge about life insurance and how to working in organization, How
manage work, how to maintain relations with top level management as well as
colleges and bottom level management. So, this experience will helpful in
future. I am pleased by taken training at Indias one of the best insurance
company.
TABLEOF CONTENT
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No. Particulars PageNo.1 Introduction 72 Reserch Methodology 20
3 Life insurance at a glance 324 Retail Market Share: Private
Players37
5 Introduction of ICICI
Prudential
Prudential Plc
ICICI Life Insurance
Management
41
6 ICICI Prus Products 49
7 Finance Department 55
8 Marketing Department 649 SWOT Analysis 68
10 Conclusion 70
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INTRODUCTIUON
Insurance is defined as a co-operative device to spread the
loss caused by a particular r isk over a number of persons who areexposed to it and who agree to ensure themselves against that risk.
Risk is uncertainty of a f inancial loss. I t should not be confused
with the chance of loss, which is the probable number of losses out
of confused with per i l , which is def ined as the cause of loss or
with hazard, which is a condition, may increase the chance of loss.
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Every r i sk involves the loss of one or o ther k ind . The
function of insurance is to spread the loss over a large number of
persons who are agreed to co-operate each other at the time of loss.
The r isk cannot be over rated but loss occurring due to a certain
r isk can be distr ibuted amongst the agreed persons. They are
agreed to share the loss because the chance of loss is there.
Everybodys greatest asset during his/her working years is
his/her abi l ity to earn an income. I t is important to adequate ly
safeguard this asset to ensure his/her cash flow will continue in the
event of an unexpected disaster . His/her insurance policies will
help to protect him/her (if any) against any unforeseen odds.
There are two kinds of insurance available viz. Life Insurance and
General Insurance.
Life Insurance
Provides for dependents in case of death.
Replaces earning power, if disabled.
Protects his/her abili ty to meet accumulation / education /
marriage goals.
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General Insurance Addresses health care concerns.
Provides for auto, home and personal liability protection. Provides for potential long-term care costs.
Plans for business continuation.
GENERAL DEFINITION
The general definitions are given by the social scientists & they
consider insurance as a device to protect ion against r isks, or a
provision against inevitable contingencies or a co-operative device
of spreading risks. Some of such definitions are given below:
In the words of John Magee , Insurance is a plan by which
large number of people associate themselves & transfer to
the shoulder of all, risks that attach to individuals.
In the words o f S ir Wil li am B evridges , The collective
bearing of risks is insurance.
In the words of Boone & Kurtz , Insurance is a substitution
for a small known loss (the insurance premium) for a largeunknown loss, which may or may not occur.
In the words of Thomas , Insurance is a provision, which a
p rudent man makes agains t f or t he l os s or i nevi tabl e
contingencies, loss or misfortune.
In the words of Allen Z. Mayerson , Insurance is a device
for the transfer to an insurer of certain risks of economic
loss that would otherwise come by the insured.
In the words o f Ghosh & Aga rwal , Insurance is a co-
operative form of distributing a certain risk over a group of
persons who are exposed to it.
FUNDAMENTAL STATEMENT
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These are based on economic or business or iented s ince i t is a
device providing financial compensation against risk or
misfortune.
In the words of D. S. Harsell , Insurance may be defined as
a social device providing f inancial compensat ion for the
ef fects o f mis fortune, the payments being made from the
accumulated contribution of all parties participating in the
scheme.
I n t he w or ds o f R obert I. M eh r & E mer so n C amm ark ,
Insurance is purchased to of fset the risk resulting from
hazards, which exposes a person to loss. In the words of Riege l & Mil le r , Insurance is a social
device whereby the uncertain risks of individuals may be
combined i n a g roup & thus made more cer ta in smal l
periodic contributions, by the individuals providing a fund,
out of which, those who suffer losses may be reimbursed.
Insurance follows important characteristics.
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CHARACTERISTICS OF
INSURANCE
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Sharing of Risks
Insurance is a co-operative device to share the burden of r isk,
which may fall on happening of some unforeseen events, such as
the death of head of the family, or on happening of marine perils or
loss of by fire.
Co-operative Device
Insurance is a co-operative form of distributing a certain risk over
a group of persons who are exposed to it (Ghosh & Agarwal). Alarge number of persons share the losses arising from a particular
risk.
Evaluation of Risk
For the purpose of ascertaining the insurance premium, the volume
of risk is evaluated, which forms the basis of insurance contract.
Payment of happening of specified event
On happening of specified event, the insurance company is boundto make payment to the insured. Happening of the specified event
i s cer ta in in l ife insurance , but in the case of f ire, mar ine or
accidental insurance, it is not necessary. In such cases, the insurer
is not liable for payment of indemnity.
Amount of payment
The amount of payment in indemnity insurance depends on the
nature o f los se s occur red, sub ject to a max imum of the sum
insured. In life insurance, however, a fixed amount is paid on the
happening of some uncertain event or on the maturity of the policy.
Large number of insured persons
The success of insurance business depends on the large number of
persons insured against similar r isk. This will enable the insurer
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to spread the losses of r isk among large number of persons, thus
keeping the premium rate at the minimum.
Insurance is not a gambling
Insurance is not a gambling. Gambling is illegal, which gives gain
to one party & loss to the other. Insurance is a valid contract to
indemnity against losses. Moreover, insurable interest is present
in insurance contracts & it has the element of investment also.
Insurance is not charity
Charity pays without consideration but in the case of insurance,
premium is paid by the insured to the insurer in consideration of
future payment.
Protection against risks
Insurance provides pro tect ion aga inst r isks involved in l ife,
materials & property. It is a device to avoid or reduce risks.
Spreading of risk
Insurance is a plan, which spread the risks & losses of few people
among a large number of people. John Magee writes, Insuranceis a plan by which large number of people associates themselves &
transfer to the shoulders of all, risks attached to individuals.
Transfer of risk
Insurance is a plan in which the insured transfers his r isk on the
insurer . This may be the reason that Mayerson observes, that
insurance i s a device to t ransfe r some economic losses to the
insurer, and otherwise such losses would have been borne by the
insured themselves.
Ascertaining of losses
By taking a l i fe insurance policy, one can ascer ta in his future
l os ses i n t e rms o f m on ey. T his is d on e b y t he i ns ure r t o
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INTRODUCTION INSURANCE
COMPANY
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In order to go through the journey of LIC Path of private
sector insurance companies to nationalize company to again private
sector insurance companies is given as below:
Path
Private Life Insurance Companies
Nationalization
Privatization of Life Insurance Sector
1870 1956
Life Insurance concept was
accepted with almost 250 Private
Life Insurance Companies
1956
Merging of almost 250 Private
Sector Life Insurance Companies
in one nationalized
Life Insurance Corporation of
India
1995 Proposal to privatize life insurancebusiness
June 2000 Registration process was notified
August 2000 Applicat ion was filed
October 20001 s t l icense was issued with
introduction of IRDA
2002
During the month of January, 11
Life and Non-Life Private
Insurance license were issued
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In order to elaborate the above path lets go through the history of
Life Insurance Sector.
On 3 rd December 1670, seven earnest men of Bombay with just
seven rupees for initial expenses gave shape to a plan of offering
insurance to the public without the r isk of ruin and the Bombay
Mutual Life Insurance Society came into existence.
Right up to the end of the 19 t h century , fore ign insurance
companies had an upper hand in the matter of insurance business
and they enjoyed mere monopoly and the partiality were observed
in the form that Indian lives were insured with 10% extra premium
as a common pract ice, a t tha t t ime Lala Har ik ishan Lal f rom
Lahore was cal led The Napoleon of Indian Finance as he was
then called to launch the Bharat Insurance Company a t Lahore
(1896) in Punjab.
Prior to 1912, India had no legislation for regulating insurance.
The Life Insurance Companies Act 1912 and the Provident Fund
Act 1912 were passed.
The Insurance Act 1938 was the f irst comprehensive legislation
governing not only life but also non-life branches of insurance to
provide strict state control over insurance business.
But after the introduction of Insurance Act 1938, the demand for
nationalization of Life Insurance Industry was raised, there were so
many reasons in order to nationalize the insurance sector.
They are:
Policyholders will be provided cent percent security.
Expenses will be reduced due to Absence of duplica t ion,
wasteful competition
Better service due to absence of profit motive.
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The funds will be available for nation building activities.
Insurance is servicing sector and so that i t should be in the
hands of government only.
Above are few but strong reasons, which have contributed towards
nationalization of insurance sector, and then after in the year 1956,
all insurance companies were merged in to one and Life Insurance
Corporation of India came into existence.
Till the year 1999, LIC of India was the only insurance sector in
economic market with ever- increasing growth ra te and market
sha re with the capac ity to earn h igh r at e o f p ro fi t and thusprofitability. In spite of all these merits of LIC, the overall status
of insurance sector was not so satisfactory.
Business figure before the introduction of IRDA
Population 1.00 Billion
Insurable Population 0.36 Billion
No. Of insured individuals 0.08 Billion
Potential uninsured
individuals
0.28 Billion
New Business premium 0.66 Billion
Above stated figures clearly shows that from 1 Billion population
of India, almost 0.28 Billion population was uninsured. Again the
exist ing government uni t d id not properly mee t the emerging
segments l ike retirement, disabili ty. Moreover, the government
wan ted 25% p .a . g rowth r at e in new bus iness p remium f rom
insurance sector. All these factors combine forced the government
to take the decision about the privatization of insurance sector.
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In order to increase the business ac t ivi t ies , the introduct ion of
IRDA was made by Gove rnment . Thus, IRDA ( Insurance
Regulatory and Development Authority) witnessed the existence
power to co-ordinate regular and control the insurance business.
Private Insurers in Indian Insurance Market
Registration
No.
Date of
Registration
Name of the Company
101 23.10.2000 HDFC Standard Life
104 15.11.2000 Max New York Life
105 24.11.2000 ICICI Prudential Life
107 10.01.2001 Om Kotak Mahindra Life
109 31.01.2001 Birla Sun Life Insurance
110 12.02.2001 TATA AIG Life Insurance
111 30.03.2001 SBI Life Insurance
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RESERCH &
METHODOLOGY
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Objectives
To Study the Brand awareness of the new product i.e. Unit Linked
Insurance Plans in Ahmedabad City.
To know what are the priorities of people of city for making investment in
Insurance.
To know what are the perception of the consumer about ICICI Prudential
Life Insurance Co.
To know the standing of the ICICI Prudential Life Insurance Co. in
Ahmedabad City.
Data Source:
The data would be collected from both primary as well as secondary source.
Consumers would be asked to fill questionnaires to arrive at the information.
Various secondary sources of data as magazines, journal, Internet etc. would
also be explored.
Sampling Area:
The sampling areas of this research are Ahmedabad.
Sampling method:
The convenient sampling method was used for this research and the
respondents were those who have already taken life insurance policy.
Sample Size:
The size of this research is 50 respondents.
Research Instrument:
The research instruments, which was used, for collecting the data is
questionnaire.
Method of contact:
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The method of contact would be personal and direct as this would help
to qualify the customers issues while filling up the questionnaire and also helps
them if they do not have the knowledge about any insurance plan of the
company.
Method of making an approach for Sales:
After analyzing the data form the questionnaires the needs of prospects
were identified and the best suitable insurance solution was suggested to them
accordingly.
Data Collection and Analysis
Q.1. Do you have a Life Insurance Policy?
Criteria No. Of Respondents
Yes 50
No 0
As our sample is those people who have insurance so all the respondents are
falling under the Yes criteria.
Q.2. Which Companys Insurance Policies do you have?
Company No. of Respondents
LIC 50
Birla Sunlife 2
SBI 3
ICICI Pru. Life 10
Kotak Mahindra 3
Post Office 15
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HDFC 3
No. of Respondents
0102030405060
LIC
SBI
Kotak
Mahindra
HDFC
No. of
Respondents
Fig:- 3
As from the above chart it is very clear the all of the respondents have an
insurance of the LIC while some of them have an insurance of the other
companies like post Office, ICICI Prudential Life insurance Co., HDFC Co.
Etc.
The reason behind this is that the LIC competitor since more than four
decades and the Indian Govt. allowed the Introduction of private player inInsurance in the year 2000.
Q.3 What is amount of insurance premium you pay annually?
Criteria No. of Respondents
Below Rs. 10,000 11
10,000 to 20,000 18
20,000 to 30,000 6
30,000 to 40,000 5Above 40,000 10
The analysis of the above available data is merely to find out the percentage of
income that one is willing to invest in insurance
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Q.4 What priorities would you consider most important, while
purchasing a policy?
Priorities of Respondents
010
2030
4050
60
1 2 3 4 5To
tal
Rank
No.ofResponde
Death Benefit
Childrens Future
Retirement
Planning
Tax Planning
Financial
Planning
Fig:- 4
From the table and chart it can be say that most of the people rank death benefit
first for the decision to make investment in Insurance. Their second priority is
tax planning because the premium, which is paid by the people towards
Insurance, is deductible up to certain limit from the income and also the
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Criteria/Rank 1 2 3 4 5 Total
Death Benefit 29 10 6 2 3 50
Childrens
Future
7 13 21 3 0 44
Retirement
Planning
5 5 6 20 7 43
Tax Planning 8 18 8 8 6 48
Financial
Planning
2 5 3 11 25 46
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maturity amount is also tax free. The third and fourth priorities are childrens
future and retirement planning.
Q.5 Do you have any knowledge of the stock market?
Criteria No. of Respondents
Yes 32
No 18
Q.6 If Yes do you have any knowledge about unit linked insurance
plans?
Criteria No. of Respondents
Yes 25
No 7
The question number 5 and 6 are designed to know the awareness of people
who have knowledge of share market or deals in shares also have the
knowledge of the new modern insurance product i.e. Unit Linked Insurance
Plan. From the available data it can be say that those who deal in shares are also
aware of the ULIP.
Q.7 Is your current Insurance policy Unit Linked or Traditional?
Criteria No. of Respondents
Only Unit Linked 0
Only Traditional 39
Both 11
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Respondents Having ULIP and
Traditional Insurance Products
0%
78%
22%Only Unit Linked
Only Traditional
Both
Chart:- 2From the Q. No. 7 we can say that even though the modern products available
in the market since more than two years and which are having the more
flexibility and also giving the higher return than traditional one most of the
people do not have or may be not aware of it which shows the lack of brand
awareness and it requires an aggressive promotional efforts on the part of
company.
There is a lot of scope available for the company to attract more customers by
giving or introducing most suitable ULIP products and at the same time increase
the customer base.
Q.8 If given a choice, where would you like to invest your money?
(Please Rank Your Choice)
Choice/Rank 1 2 3 4 5 6 7 8 Total
Mutual Fund 0 1 5 1 25 12 5 1 50
Insurance 4 12 14 4 8 3 0 0 45
Gold 4 8 1 2 2 5 13 13 48
Equities 17 3 0 5 2 6 1 0 34
Post Office 22 12 12 2 2 0 0 0 50
Debenture 0 2 4 10 1 14 2 0 33
Bank Deposit 0 6 12 19 1 0 3 1 42
Other 10 5 0 2 1 0 0 2 20
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Investment Priorities
0102030405060
1 2 3 4 5 6 7 8
Total
Rank
No.ofRespond
ent
Mutual FundInsurance
Gold
Equities
Post Office
Debenture
Bank Deposit
Other
Fig:- 5
This question is mainly designed to know the investment priorities of the people
of Ahmedabad town. The objective behind this Q. is that after the Charotar
Nagrik Co-oprerative Bank and other Credit Societies, which are giving higher
interest on deposits, the whole scenario of city is changed. Most of the people
prefer to invest in post office saving schemes and where their money is safe
even though the return is very less. So there is a great need to divert the efforts
of the company towards the safety and security as ICICI Prulife is a private
insurance Company.
Q.9 According to you what are the factors that would affect you decision
while purchasing an insurance policy?
Criteria/Rank 1 2 3 4 5 50
Premium 12 15 15 6 2 50
Return 21 17 8 2 2 50
Safety 20 14 15 1 0 50
Liquidity 1 1 9 18 21 50
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Market
Condition
1 2 0 16 21 40
Factors Affecting the Insuran
Decision
0
20
40
60
1 2 3 4 5 6
Rank
No.of
Respondents
Criteria/Rank
Premium
Return
Safety
Liquidity
Market Conditio
Fig:- 6
The question No. 9 is designed to know which the factors are affecting
the most to the prospect while making decision to invest in insurance. As far as
investment in insurance is concerned most of the people want that it should be
safe and at the same time giving the compatible returns because insurance is not
only for death benefit it is also a saving tool for future. So the mix response of
respondents is welcomed. Available data is such that there is a bit ambiguity.
But we can say that the most affecting factors to the prospect are return and
safety. As per the finance theory risk and return goes in hand in hand but as far
as insurance is concerned it is all about the compatible and safe returns over
others.
Q. 10 Are you or ay of your family members are planning to buy an
insurance policy in near future?
Criteria No. of Respondents
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Yes 13
No 37
This question is taken to collect the information of those respondents who aregoing to plan to purchase insurance within near future that is used by the
company for making personal contact for sale.
Q. 11 Are your needs satisfied with your current investment in insurance?
Criteria No. of Respondents
Yes 10
No 30
Q. 11(a) If No, then give reasons?
Criteria No. of Respondents
High Premium 0
Low Return 1
Poor Services 7
Others 2
No. of Respondents
0% 10%
70%
20% High Premim
Low Return
Poor Services
Others
The question No.11 and 12 are designed to know the percentage of people who
are not satisfied with the current investment in insurance and also to know the
reasons behind it. So that the company can focus on those areas where the
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competitors fail. Because now a days the competition is very stiff in the
insurance industry. All companies are trying to attract more customers by
anyhow. So it will be useful for designing the promotional schemes of the
company.
From the above table and chart it can be seen that the respondents who
are dissatisfied give the main reason behind it are poor services. There are many
others reasons like more time taken by the company for claim settlement, non-
dispatchment of cheques and other important vouchers, etc. So the company can
improve upon these and increase its market share by offering quality service to
the customers.
Q. 12 Do you know anything ICICI Prudential Life Insurance?
Criteria No. of Respondents
Yes 30
No 20
Q. 13 If Yes, from where did you come to know about the company?
30
Criteria No. of Respondents
Television 4
News Paper 3Sales Representative 14
Others source 9
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Toal No. of Advertisement
13%
10%
47%
30%
Television
News Paper
Sales
Representative
Others source
Chart:- 4Q. 14 What do you feel about ICICI Prudential Life Insurance?
(Open Ended)
The question No.13, 14 and 15 are designed to know the company
awareness the respondents of the city and also the source of awareness. But I
felt very much difficulty while filling up these questions because most of the
people know about the company but they know it as an ICICI Bank not as a
different identity. So there is a great need to design the advertisement campaign
in such a way that it will create the different image of the company. The main
reason behind this is that the image of ICICI Bank in city is such that most of
the people ask for charges first than the service that it provides.
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LIFE INSURANCE AT A GLANCE
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LIFE INSURANCE CORPORATION OF INDIA
On January 19, 1956 the President of the Indian Union issued an
ordinance, providing for the taking over, in public interest, of the
management of l i fe insurance pending national iza tion of such
business, & the then Finance Minister explained the objectives of
nationalization of life insurance business.
In June 1956, the parliament passed a bill for nationalization of
life insurance business in India and for setting up a corporation as
the sole agency fo r c ar ry ing on thi s bus iness in Ind ia . The
corporat ion, se t up under this Act , is known as Life Insurance
Corporation of India, which started functioning on September 1,
1956 .
For the purpose of servicing of policies issued before September 1,
1956, some integrated head offices & integrated branch office units
were created. These offices have nothing to do with the policies
issued by the corporation. Corporation also took over foreign life
business of the Indian insurers.
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Objectives of LIC
M aximize mob il iz at ion o f people s sav ings by making
insurance linked savings adequately attractive. Conduct
business with utmost economy & with the full realization that
the moneys belong to the policyholders.
To publicize & extent the insurance business specifically in
rural & remote areas.
To provide suitable financial security at reasonable cost.
To make the investments more dynamic by popularizing thesavings plans attached with insurance.
To invest the insurance fund keeping with maximum benefit
& interest of insureds.
To run the insurance business a t minimum administra t ive
costs.
To function as trusts of the insureds.
To fulfil l the needs of the society in a changing social and
economic environment.
To make the employees collectively responsible for providing
efficient services to the insureds.
To develop work satisfaction among agents & employees.
HDFC STANDARD LIFE INSURANCE COMPANY
HDFC Standard Life Insurance Co. Ltd. Is a joint venture
between HDFC, Indias largest housing f inance inst i tut ion and
Standard Life Assurance Company, Europes largest mutual l ife
company. HDFC manages R s. 21, 450 C ro re s in as se ts and
Standard Life manages over US $100 bill ion in assets. Both thepromoters are well known for their ethical dealings, their financial
strength and their commitment to be a long-term player in the life
insurance industry.
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MAX NEW YORK LIFE INSURANCE COMPANY
Max New York Life Insurance Company is a joint venture
between New York Life International Inc. and Max India Limited.
New York Life , a For tune 100 Company, is one of the worlds
experts in l ife insurance with over 156 years of experience in the
business and over US$ 165 bill ion (Rs. 775,000 Crores) in assets
under managemen t. M ax Ind ia L imited i s a mul ti -bus iness
corporate, focused on the knowledge, people, and service-oriented
business of life insurance, healthcare and information technology.
ICICI PRUDENTIAL LIFE INSURANCE
COMPANY
ICICI Prudential Life Insurance Company is a joint venture
b et wee n IC IC I Ba nk , a p rem ie r fi na nc ial po we rh ous e a ndPrudential plc, a leading internat ional f inancia l services group
headquartered in the Uni ted Kingdom. ICICI Prudent ia l was
amongst the f i rs t pr ivate sector insurance companies to begin
ope ra tions in December 2000 a ft er r eceiving approva l f rom
Insurance Regulatory Development Authority (IRDA).
OM KOTAK MAHINDRA LIFE INSURANCE
Om Kotak Mahindra Life Insurance, a company under Kotak
Mahindra Group is a 74:26 l i fe insurance joint venture between
Kotak Mahindra Finance Limited with Old Mutual, U.K.
The philosophy of Om Kotak Mahindra is helping their customers
take f inancia l decis ions a t every s tage in l i fe . Their a im is to
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consi st en tly o ff er a w ide r ange o f innovat ive l if e insurance
products, to help their customers remain financially independent,
which is why they believe that freedom to take life on Jeene Ki
Aazadi
The alliance of Om Kotak Mahindra with Old Mutual has given it
unmatched expert ise in l i fe insurance area. With 156 years of
exper ience in l ife insurance bus iness, Old Mutua l i s today an
International Financial Service Group based in London.
BIRLA SUN LIFE INSURANCE COMPANY
I t is a joint venture of Aditya Birla Group and Sun Life Financial
Services with the objective that Insurance is not about something
going wrong . I t s o ft en about things going r ight . One o f the
wonders of human nature is that we never bel ieve anything can
actually go wrong. Surely, l ife has i ts share of ifs. At Birla Sun
Life however, we believe it has i ts equally pleasant share of buts
as wel l. We a t B ir la Sun Life s tand committed to helping you
realize those happy moments, which make a l ife. Be it l iving thesame lifestyle in your post retirement days or providing a secure
future for your loved ones, in case something happens to you.
TATA AIG LIFE INSURANCE COMPANY
Tata AIG is a joint venture that is backed by the Tata Group
Indias most respected industrial conglomerate, with revenues of
more than US $8.4 billion, and American International Group, Inc.
(AIG) the leading US-based international insurance and financial
services organization, with a presence in over 130 countries and
jurisdictions throughout the world. Tata AIG offers a gamut of
innovative products in the Life Insurance sector.
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RETAIL MARKET SHARE
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As per the figure available with IRDA reports for the period ended in
August 2005, the 13 private players have grabbed nearly 26% market share
from LIC in terms of premium underwritten as against 17.70% in August
2004 The list of insurer with premium underwritten, investment and their
market share have been presented in table.
Table shows that the life insurance market has collected Rs. 16,604cr as
a fresh premium. It grew about 2.8 times bigger than he 3 players put together
in terms of premium collection. It is still growing at the rate 26% per annum. It
is relevant to that the market share by them. Out of 13 pvt. Players, ICICI
prudential has leading pvt. Player in the Life insurance, invested rs. 625 cr
which is the highest investments among the private players and captured first
position with 7.11% of the market share. Secondly, Max New York life has
invested Rs. 305 cr and had failed to capture the second position in terms of
market share and was satisfied with only 1.32% Followed by HDFC standard
Life had invested Rs. 255 cr and 2.96% of the market share was captured and
stood third position interims of investments and capturing market share.
Allianz Bajaj has invested Rs. 250 cr and stands fourth in terms of investmentbut captured second position with 6.12% of the market share. This indicates
that there is no relation between investment and acquiring market share and
mere capital is not alone playing any significant role in terms of capturing
market share. There may be some other variables like: (a) innovative schemes,
(b) brand loyalty, (c) professional outlook, (d) transference in their
transactions, etc. It can be noticed that the capital is not playing any attaching,
kindly significant role in terms of premium collection and capturing market
share. It seems to be Bajaj Allianz would occupy the first position in near
future in terms of market share as well as annual growth rate.
Chart 1 shows that. Among private players, the ICICI prudential has
captured the 28% of the market share up to December 2005, followed by
Allianz Bajaj with 23% and HDFC Standard Life with 11% TATA Aig life and
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Birla Sunlife with 7% each and remaining other players have captured less than
5% of market share.
28%
5%
11%
23%
7%
7%
3%
4%2%
6%2%2% LIC
ICICI Pru. Life
New York MaxLife
HDFC Standard Life
Alliance Bajaj
TATA AIG
OM Kotak Mahindra
AVIVA Life
ING Vysya
SBI Life Insu.
AMP Sanmar
Metlife
Chart:- 1
Chart 2 shows that the annual growth rate of the private life insurance
players from November 2004-05. it is interesting to note that Allianz Bajaj has
achived 264.09% annual growth rate in terms of premium collection and the
fastest growing insurance players, followed by HDFC Standard with 143.1%
and Metlife with 136.45%, and remaining other players have doubled their
premium in a span of one year, whereas Birla Sunlife and SBI life have failedto collect the premium consistently and registered negative growth rates 7.93%
and 2.48% respectively. Surprisingly, ICICI Prudential Co. has not been
retrained in their leading position in 2005.
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The market share of the LIC has been declining since 2000, after
opening up of the sector to private companies, LICs higher market share in the
number of policies sold compared with premium income, so it is to be inferred
that the private players are cornering a larger share of high premium policies.
Further all policymakers are expected that, insurance business will take wings
under bancassurance but despite the belief SBI Life was registered negative
2.48% annual growth rate in corresponding period. It is need to be viewed
serious by the RBI and IRDA authorities.
Annual Growth rate of Private Insu.
Players from Nove. 2004-05
73.0290.41164.31
264.09
66.2348.2493.9100.43
-2.48
98.69136.48
78.06-7.93
-100
0
100
200300
ICICIPru.
Life
HDFC
Standard
TATA
AIG
AVIVA
Life
SBILife
Insu.
Metlife
Birlasunli
fe
Insurers
Annualgrowth
rate
Fig:- 2
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INTRODUCTION OF ICICI
GROUP
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Fig:- 3
ICICI Bank is Indias second-largest bank with total assets of about
Rs.112.024 crore and a network of about 450 branches and offices and about
1750 ATMs. ICICI Bank offers a wide range of banking products and financialservices to corporate and retail customer through a variety of delivery channels
and through its specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital, asset management and
information technology. ICICI Banks equity shares are listed in India on stock
exchanges at
Chennai. Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai
and the National Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
ICICI Bank was originally promoted in 1994 by ICICI Limited, an
Indian financial institution, and was its wholly owned subsidiary. ICICIs
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed on
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the NYSE in fiscal 2000, ICICI Banks acquisition of Bank of Mathura Limited
in an all-stock amalgamation in fiscal 2001, and secondary market sales by
ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed
in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a
development financial institution for providing medium term and long term
project financing to Indian businesses. In the 1990s, ICICI transformed its
business from a development financial institution offering only project finance
to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank, In 1999, ICICI become the first Indian company and the first bank
or financial institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the management of ICICI and ICICI
Bank formed the view that the merger of ICICI with ICICI Bank would be the
optimal strategic alternative for both entities, and would create the optimal legal
structure for the ICICI groups universal banking strategy. The merger would
enhance value for ICICI shareholders through the merged entitys access to
low-cost deposits, greater opportunities for earning fee-based income and theability to participate in the payment system and provide transaction-banking
services. The merger would enhance value for ICICI Bank shareholders through
a large capital base and scale of operations, seamless access to ICICIs strong
corporate relationships built up over five decades, entry into new business
segments, higher market share in various business segments, Particularly fee-
based services, and access to the vast talent pool of ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, With
ICICI Bank.
Shareholders of ICICI and ICICI BANK approved the merger in January
2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the
High Court of
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Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI groups financing and banking operations,
both wholesale and retail, have been integrated in a single entity. ICICI Bank is
the only Indian company to be rated above the country rating by the
international rating agency moody s and the only Indian company to be
awarded an investment grade international credit rating. The Bank enjoys the
highest AAA (or equivalent) rating from all Leading Indian rating agencies.
Prudential P.L.C.
Established in 1848, today prudential plc is a leading international
financial services company with some 16 million customers, policyholders and
unit holders and some 20,000 employees worldwide. In the UK Prudential is a
leading life and pensions provider with around seven million customers. M&G
was acquired by Prudential in 1999 and is the Groups UK and European fund
manager, responsible for managing over of 111 billion of funds (as at
December 2003). Launched by Prudential in 1998, Egg is an innovative
financial services company, with over three million customers, with nearly six
per cent of UK credit card balances. In Asia, Prudential is the leading Europeanlife insurer with 23 life and fund management operations in 12 countries
serving some five million customers. In the US, Prudential owns Jackson
National Life, a leading life insurance company, and has more than 1.5 millions
policies and contracts in force.
Prudential has brought to market an integrated range of financial services
products that now includes life assurance, pensions, mutual funds, banking,
investment management and general insurance. In Asia, Prudential is UKs
Largest life insurance company with a vast network of 22 life and mutual
fund operations in twelve countries China, Hong Kong, India, Indonesia,
Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and
Vietnam. Since 1923, Prudential has championed customer-centric products and
services, supported by over 60,000 staff and agents across the region.
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Prudential plcs strong mix of business around the world positions us
well to benefit form the growth in customer demand for asset accumulation and
income in retirement. Our international reach and diversity of earnings by
geographic region and product will continue to give us significant advantage.
Our commitment to the shareholders who own Prudential is to maximize
the value over time of their investment. We do this by investing for the long
term to develop and bring out the best in our people and our businesses to
produce superior products and services, our international peer group in terms of
total shareholder returns.
At Prudential our aim is lasting relationships with our customers and
policyholders, through products and services that offer value for money and
security. We also seek to enhance our Companys reputation, built over 150
years, for integrity and for acting responsibly within society.
ICICI Prudential Life Insurance:
ICICI Prudential Life Insurance Company is a joint venture between
ICICI Bank, a premier financial powerhouse and Prudential Plc, a leading
international financial services group headquartered in the United Kingdom.
ICICI Prudential was amongst the first private sector insurance companies to
begin operations in December 2000 after receiving approval from insurance
Regulatory Development Authority (IRDA).
ICICI Prudential s equity base stands at Rs.6.75 billion with ICICI Bank
and Prudential plc holding 74% and 26% stake respectively. In the year ended
March 31,2004 the company had issued over 430,000 policies, for a total sum
assured of over Rs 8,000 crore and premium income in excess of Rs.980 crore.
The company has a network of about 30,000 advisors; as well as 12 bancassurance tie-ups. Today the company is the number one private life insurer in
the country
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Management
K. V. Kamath
Managing Director and Chief Executive Officer
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Lalita Gupte
Joint Managing DirectorKalpana Morparia
Joint Managing Director
Chanda Kochhar
Deputy Managing DirectorNachiket Mor
Deputy Managing Director
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http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/nachiketmoresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/ckochcharresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/kalpanaresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/lalitagupteresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/kvkresume.htm -
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Board Committees
Audit CommitteeBoard Governance &
Remuneration Committee
Mr. Sridar Iyengar
Mr. Narendra
Murkumbi
Mr. M. K. Sharma
Mr. N. Vaghul
Mr. Anupam Puri
Mr. M. K. Sharma
Mr. P. M. Sinha
Prof. Marti G. Subrahmanyam
Customer Service
Committee Credit Committee
N. Vaghul
Narendra Murkumbi
M.K. Sharma
Mr. N. Vaghul
Mr. Narendra Murkumbi
Mr. M .K. Sharma
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P.M. Sinha
K. V. Kamath
Mr. P. M. Sinha
Mr. K. V. Kamath
Fraud MonitoringCommittee
Risk Committee
Mr. M. K. Sharma
Mr. Narendra
Murkumbi
Mr. K. V. Kamath
Ms. Kalpana
Morparia
Ms. Chanda D.
Kochhar
Mr. N. Vaghul
Mr. Sridar Iyengar
Prof. Marti G. Subrahmanyam
Mr. V. Prem Watsa
Mr. K. V. Kamath
Share Transfer &
Shareholders'/
Investors'
Grievance
Committee
Asset-Liability Management
Committee
Mr. M. K. Sharma
Mr. Narendra
Murkumbi
Ms. Kalpana
Morparia
Ms. Chanda D.
Kochhar
Ms. Lalita D. Gupte
Ms. Kalpana Morparia
Ms. Chanda D. Kochhar
Dr. Nachiket Mor
Committee of
Directors
Mr. K. V. Kamath
Ms. Lalita D. GupteMs. Kalpana
Morparia
Ms. Chanda D.
Kochhar
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Dr. Nachiket Mor
ICICI PRUS PRODUCT
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Insurance solution for individuals..
ICICI Prudential Life Insurance offers a range of innovative, customer-
centric products that meet the needs of customers at every life stage. Its 17
products cab is enhanced with up to 6 riders, to create a customized solution for
each policyholder.
Savings Solutions..
Secure Plus is a transparent and feature-packed savings plan that offers 3levels of protection. Cash Plus is a transparent, feature-packed savings plan that
offers 3 levels of protection as well as liquidity options. Save n Protect is a
traditional endowment savings plan that offers life protection along with
adequate returns. Cash Back is an anticipated endowment policy ideal for
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meeting milestone expenses like a childs marriage, expenses for a childs
higher education or purchase of an asset.
Protection Solutions.
LifeGuard is a protection plan, which offers life cover at very low cost.
It is available in 3 coupons level term assurance, level term assurance with
return or premium and single premium.
Child Solutions.
Smart kid child plans provide guaranteed educational benefits to a child
along with life insurance cover for the parent who purchases the policy. Thepolicy is designed to provide money at important milestones in the childs life.
SmartKid child planed are also available with in unit-linked form both single
premium and regular premium.
Market-linked Solutions
LifeLink is a single premium Market Linked Insurance Plan, which
combines life insurance cover with the opportunity to stay, invested in the stock
market. Life Time offers customers the flexibility and control to customize thepolicy to meet the changing needs at different life stages. It offers 3 investment
options Growth Plan, Income plan and Balance plan.
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Retirement Solutions
Forever Life is a retirement products targeted at individual in there
thirties. Secure Plus Pension is a flexible pension plan that allows one to select
between 3 levels of cover.
Market-linked retirement products
Life Time Pension is a regular premium market-linked pension plan.
Life Link Pension is a single premium market linked pension plan. ICICI
Prudential also launched Salaam Zindagi, a social sector group insurance
policy targeted at the economically underprivileged sections of the society.
Group Insurance Solutions
ICICI Prudential also offers Group Insurance Solutions for companies
seeking to enhance benefits to their employees.
Group Gratuity Plan
ICICI Prus group gratuity plan helps employers fund their statutory
gratuity obligation in a scientific manner. The plan can also customize to
structure schemes that can provide benefits beyond the statutory obligations.
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Group Superannuation Plan
ICICI Bank offers flexible defined contribution superannuation scheme
to provide a retirement kitty for each member of the group. Employees have the
option of choosing from various annuity options or opting for partial
commutation of the annuity at the time of retirement.
Group Term Plan
Group Term Plan
ICICI Prus flexible group term solution helps provides affordable cover
to members of group. The cover could be uniform or based on designation/rank
or a multiple of salary. The benefit under the policy is paid to the beneficiary
nominated by the member on his/her death.
Flexible Rider Options
ICICI Pru Life offers flexible riders, which can be added to the basic
policy at marginal cost, depending on the specific of the customer.
Accident & disability benefit: If death occurs as the result of an accident
during the term of the policy, the beneficiary receives an additional amount
equal to the sum assured under the policy. If the death occurs while traveling in
an authorized mass transport vehicle, the beneficiary will be entitled to twice
the sum assured as additional benefit.
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Accident benefit: This rider option pays the sum assured the rider on death due
to accidents.
Critical Illness Benefit: protects the insured against financial loss in the event
of 9 specified critical illnesses. Benefits are payable to the insured for medical
prior to death.
Major Surgical Assistance Benefits: provides financial support in the event of
medical emergencies, ensuring that benefits are payable to the life assured for
medical expenses Incurred for surgical procedures. Cove is offered against 43
different surgical procedures.
Income Benefit: This rider pays the 10% of the sum assured to the nominee
every year, till maturity, in the event of the death of the life assured. It is
available on SmartKid, SecurePlus and Cashplus.
Waiver of Premium: In Case of total and permanent due to an accident, the
premiums are waived till maturity. This rider is available with SecurePlus and
CashPlus.
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FINANCE DEPARTMENT
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INTRODUCTION TO FINANCE MANAGEMENT
Financial management, as an academic discipline, has undergone
fundamental changes in its scope and coverage. In the early years of its
evolution it was treated synonymously with the raising of funds. In the current
literature pertaining to financial
Management, a broader scope so as to include, in addition to
procurement of funds, efficient use of resources is universally recognized.
Similarly, the academic thinking as regards the objective of financial
management is also characterized by a change over the years.
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 as economics, accounting, marketing, production and quantitative
methods. Although these disciplines are interrelated, there are key differences
among them. The relationship between finance and accounting, conceptuallyspeaking, has two dimensions:
(1) They are closely related to the extent that accounting is an important
input in financial decision-making and
(2) There are key differences in viewpoints between them.
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The viewpoint of accounting relating to the funds of the firm is different from
that of finance. The measurement of funds (income and expenses) in accounting
is based on the accrual principle/system.
Capitalization and Capital Structure:
Capital structure can affect the value of a company by affecting either its
expected earnings or the cost of capital, or both. While it is true that financing-
mix cannot affect the total operating earnings of a firm, as they are determined
by the investment decisions, it can affect the share of earnings belonging to the
ordinary shareholders. The capital structure decision can influence the value of
the firm through the earnings available to the shareholders. But the leverage
can largely influence the value of the firm through the cost of capital. Inexploring the relationship between leverage and value of a firm the relationship
between leverage and cost of capital from the standpoint of valuation.
The importance of an appropriate capital structure is, thus, obvious.
There is a viewpoint that strongly supports the close relationship between
leverage and value of a firm. There is an equally strong body of opinion, which
believes that financing-mix or the combination of debt and equity has no impact
on the shareholders wealth and the decision on financial structure is irrelevant.
In other words, there is nothing such as optimum capital structure.
Capital structure theories are based on certain assumptions, they are:
[1] There are only two sources of funds used by a firm: perpetual risk less
debt and ordinary shares.
[2] There are no corporate taxes. This assumption is removed later.
[3] The dividend-payout ratio is 100. That is, the total earnings are paid out
as dividend to the shareholders and there are no retained earnings.
[4] The total assets are given and do not change. The investment decisions
are, in other words, assumed to be constant.
[5] The total financing remains constant. The firm can change its degree of
leverage (capital structure) either by selling shares and use the proceeds
to retire debentures or by raising more debt and reduce the equity capital.
[6] The operating profits (EBIT) are not expected to grow.
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[7] All investors are assumed to have the same subjective probability
distribution of the future expected EBIT for a given firm.
[8] Business risk is constant over time and is assumed to be independent of
its capital structure and financial risk.
[9] Perpetual life of the firm.
Leverage Analysis:
A firm can make use of different sources of financing whose costs are different.
These sources may be, for purposes of exposition, classified into those that
carry a fixed rate of return and those on which the returns vary. The fixed
returns on some sources of finance have implications for those who are entitledto a variable return. Thus, since debt involves the payment of a stated rte of
interest, the return to the ordinary shareholders is affected by the magnitude of
debt in the capital structure of a firm.
The employment of an asset or source of funds for which the firm has to pay a
fixed cost or fixed return may be termed as leverage. Consequently, the
earnings available to the shareholders as also the risk are affected. If earnings
les the variable costs exceed the fixed cost, or earnings before interest and taxes
exceed the fixed return requirement, the leverage is called favorable. When theydo not, the result is unfavorable leverage.
There are 2 types of leverage- operating and financial. The leverage
associated with investment (asset acquisition) activities is referred to as
operating leverage, while leverage associated with financing activities is called
financial leverage. While we are basically concerned with financial leverage for
purposes of the financing decision of a firm, the discussion of operating
leverage is to serve as a background to the understanding of financial leverage
because the two types of leverage are closely related. Operating leverage is
determined by the relationship between the firms sales revenues and its
earnings before interest and taxes (EBIT). The earnings before interest and
taxes are also generally called as operating profits. Financial leverage
represents the relationship between the firms earnings before interest and taxes
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(operating profits) and the earnings available for ordinary shareholders. The
operating profits (EBIT) are thus, used as the pivotal point in defining operating
and financial leverage. In a way, operating and financial leverage represent two
stages in the stages in the process of determining the earnings available to the
equity shareholders and, hence, their discussion in this chapter. Apart from the
elaboration of the return-risk implications, their combined effect has also been
discussed.
Operating leverage results from the existence of fixed operating expenses
in the firms income stream. The operating leverage may be defined as the
firms ability to use fixed operating costs to magnify the effects of changes in
sales on its earnings before interest and taxes. Operating leverage occurs any
time a firm has fixed costs that must be met regardless of volume. We employ
assets with fixed cost in the hope that volume will produce revenues more than
sufficient to cover all fixed and variable costs. In other words, with fixed costs,
the percentage change in profits accompanying a change in volume is greater
than the percentage change in volume. This occurrence is known as operating
leverage.
Financial leverage relates to the financing activities of a firm. The
sources from which funds can be raised by a firm, from the point of view of the
cost/charges, can be categorized into [1] those which carry a fixed financialcharge, and [2] those which do not involve any fixed charge. The sources of
funds in the first category consist of various types of long-term debt, including
bonds, debentures, and preference shares. Long-term debts carry a fixed rate of
interest which is a contractual obligation for the firm. Although the dividend on
preference shares is not a contractual obligation, it is fixed charge and must be
paid before anything is paid to the ordinary shareholders. The equity
shareholders are entitled to the remainder of the operating profits of the firm
after all the prior obligations are met. Financial leverage results from the
presence of fixed financial charges in the firms income stream. These fixed
charges do not vary with the earnings before interest and taxes (EBIT) or
operating profits.
Capital Budgeting:
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Capital budgeting decision pertains to fixed/long-term assets which by
definition refer to assets which are in operation, and yield a return, over a
period of time, usually, exceeding one year. They therefore, involve a current
outlay or series of outlays of cash resources in return for an anticipated flow of
future benefits. In other words, the system of capital budgeting is employed to
evaluate expenditure decisions which involve current outlays but are likely to
produce benefits over a period of time longer than one year. These benefits may
be either in the form of increased revenues or reduced costs. Capital
expenditure management, therefore, includes addition, disposition, modification
and replacement of fixed assets.
Capital budgeting decisions are of paramount importance in financial decision-making. In the first place, such decisions affect the profitability of a firm. They also
have a bearing on the competitive position of the enterprise mainly because of the fact
that they relate to fixed assets. The fixed assets represent, in a sense, the true earning
assets of the firm. They enable the firm to generate finished goods that can ultimately
be sold for profit. The current assets are not generally earning assets. Rather, they
provide a buffer that allows the firms to make sales and extend credit. True, current
assets are important to operations, but without fixed assets to generate finished
products that can be converted into current assets, the firm would not be able to
operate. Further, they are strategic investment decisions as against tactical- which
involve a relatively small amount of funds. Therefore, such capital investment
decisions may result in a major departure from what the company has been doing in
the past. Acceptance of a strategic investment will involve a significant change in the
companys expected profits and in the risks to which these profits will be subject.
Working Capital Management:
Working capital management is concerned with the problems that arise
in attempting to manage the current assets, the current liabilities and the
interrelationship that exists between them. The term current assets refer to those
assets which in the ordinary course of business can be, or will be, convertedinto cash within one year without undergoing a diminution in value and without
disrupting the operations of the firm. The major current assets are cash,
marketable securities, accounts receivable and inventory.
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Current liabilities are those liabilities which are intended, at their
inception, to be paid in the ordinary course of business, within a year, out of the
current assets or earnings of the concern. The basic current liabilities are
accounts payable, bills payable, bank overdraft, and outstanding expenses. The
goal of working capital management is to manage the firms current assets and
liabilities in such a way that a satisfactory level of working capital, it is likely to
become insolvent and may even be forced into bankruptcy. The current assets
should be large enough to cover its current liabilities in order to ensure a
reasonable margin of safety. Each of the current assets must be managed
efficiently in order to maintain the liquidity of the firm while not keeping too
high a level of any one of them. Each of the short-term sources of financing
must be continuously managed to ensure that they are obtained ad used in the
best possible way. The interaction between current assets and current liabilities
is, therefore, the main theme of the working capital management.
Receivables Management:
The receivables represent an important component of the current assets
of a firm. The receivables are defined as debt owned to the firm by customers
arising from sale of goods or services and in the ordinary course of businesses.
When a firm makes an ordinary sale of goods or services and does not receive
payment, the firm grants trade credit and creates accounts receivable, whichcould be collected in the future. Receivables management is also called trade
credit management. Thus, accounts receivables represent an extension of credit
to customers, allowing them a reasonable period of time in which to pay for the
goods received.
The sale of goods on credit is an essential part of the modern competitive
economic systems. In fact, credit sales and, therefore, receivables are treated as
a marketing tool to aid the sale of goods. The credit sales are generally made on
open account in the sense that there are no formal acknowledgements of debtobligations through a financial instrument. As a marketing tool, they are
intended to promote sales and thereby profits. However, extension of credit
involves risk and cost. Management should weigh the benefits as well as cost to
determine the goal of receivables management. The objective of receivables
management is to promote sales and profits until point is reached where the
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return on investment in further funding receivables is less than the cost of funds
raised to finance that additional credit (i.e. cost of capital). The specific costs
and benefits, which are relevant to the determination of the objectives of
receivables management, are:
o Cost
o Collection cost
o Capital cost
o Delinquency cost
o Default cost
Dividend policy:
Dividend refers to that portion of a firms net earnings which are paid
out to the shareholders. Since dividends are distributed out of profits, the
alternative to the payment of dividends is the retention of earnings/profits. The
retained earnings constitute an easily accessible important source of financing
the investment requirements of firms. There is, thus, a type of inverse
relationship between retained earnings and cash dividends. Larger the retention,
lesser dividends; and smaller retentions, larger dividends. Thus, the alternativeuses of the net earnings-dividends and retained earnings-are competitive and
conflicting.
A major decision of financial management is the dividend decision in the
sense that the firm has to choose between distributing the profits to the
shareholders and plugging them back into the business. The choice would
obviously hinge on the effect of the decision on the maximizing present values;
the firm should be guided by the consideration as to which alternative use is
consistent with the goal of wealth maximization. That is, the firm would be well
advised to use the net profits for paying dividends to the shareholders if thepayment will lead to the maximization of wealth of the owners. If not, the firm
should rather retain them to finance investment programes. The relationship
between dividends and value of the firm should, therefore, be the decision
criterion.
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There are however, conflicting opinions regarding the impact of
dividends on the valuation of a firm. According to one school of thought,
dividends are irrelevant so that the amount of dividends paid has no effect on
the valuation of a firm. On the other hand certain theories consider the dividend
decision as relevant to the value of the value of the firm measured in terms of
the market price of the shares. The crux of the argument supporting the
irrelevance of dividends to valuation is that the dividend policy of a firm is a
part of its financing decision.
As a part of the financing decision, the dividend policy of the firm is a
residual decision and dividends are a passive residual. If the dividend policy is
strictly a financing decision, whether dividends are paid out of profits, or
earnings are retained, will depend upon the available investment opportunities.
It implies that when a firm has sufficient investment opportunities, it will retain
the earnings to finance them. Conversely, if acceptable investment
opportunities are inadequate, the implication is that the earnings would be
distributed to the shareholders.
The test of adequate acceptable investment opportunities is the
relationship between the return on investments and the cost of capital. As long
as investments exceed cost of capital, a firm has acceptable investment
opportunities. In other words, ifs firm can earn a return higher tan its cost ofcapital; it will retain the earnings to finance investment projects. If the retained
earnings fall short of the total funds required, it will raise external funds-both
equity and debt-to make up the shortfall
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MARKETING DEPARTMENT
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Marketing Yesterday and Today
Today the definition of marketing has been changed. The marketing activity of anorganization before the product is produced and continues even after the product is
sold. In the buyer market of recent times the sharpest weapon that a company can
develop is globalize marketing place in the value creation and delivery. The proud and
demanding customer of today brings before corporate a critical fact, when the
customer is jury. It is the value generation for the customer that will separate the victor
from vanquished. The value of customer service cascades all over the company. The
aim of customer focus is not just satisfaction but delight satisfaction.
Till the year 1999 the life insurance business was exclusively conducted by the LifeInsurance Corporation (LIC) while the general insurance business in India, was
exclusive by General Insurance Corporation and its four subsidiaries. The insurance
sector is opened for private participation since November, 2000.
Before 1999 there was no marketing done by LIC due to its monopoly but now after 5
years the picture has changed. Now there are private players in market. With the
effective marketing techniques the private players has changed the whole scenario of
the insurance sector. They are slowly and gradually driving the business out of the
hands of the LIC. Before 1999 customer had no option other then LIC, but now they
have got many options.
This is the significant change in insurance industry. Now the customer is back in the
center state. All the companies are trying to please the customer with the innovative
schemes and better service.
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Relationship Marketing in Insurance
Introduction
It is five times more expensive to acquire a new customer than to retain an old one.
Relationship marketing is the practice of building long term satisfying relationship
with key parties customers and suppliers. They accomplish this by promoting and
delivering high quality, goods, services, and fair prices to other parties overview.
Relationship marketing results in strong economic, technical and social ties among the
parties.
Definition of Relation Marketing:
Relationship marketing can be defined as the process to identify, establish, maintain
and other stakeholders at a profit so that the objective of all parties involved are net
and this is done by mutual exchange and fulfillment of promises.
The important objectives of relationship marketing to acquire new customers maintain
and enhance relationship with existing customers, re-activities of ex-customers and
handling of customer terminations. The key objective of relationship marketing is toestablish one to one relationship with all the customers. This may have sound like a
day dream few dream few years ago but thanks to the technological breakthrough and
technological solution providers, it is very much of a reality.
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How to add value through relationship Marketing
Identify loyal customers
Recognize their special needs
Provide special reward for loyalty
Establish continuing relationship
Ensure increase in customer value
Relationship marketing is one of the hottest tread in the present marketing scenario.
Satisfied customers not only stay with a company but they are also walking talking
advertisement for the companys product.
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SWOT ANALYSIS
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Strengthso Flexible Products
o Partners having experience in different markets of
the world.
o Synergy with exiting operations
o Expertise in the field of insurance
o Professional management
o Good Customer service
o Create a brand name
Weakness
Low capital base
Yet to build strong distribution network
Cannot tap rural market
Opportunities
o Untapped market
o Banks ready to tie up for as a readymadedistribution network for a small fee.
Threats
Large distribution network of LIC
Decades of experience and brand name of LIC
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5% service tax on investments.
CONCLUSION
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At ICICI prudential Life Insurance Company Ltd. Aurangabad. I observed very systematic and
professional approach toward marketing. People are engaged in compulsory task, relates themselves
to reach other systematic establishment & accomplishment of the Marketing Process. After studying
various theoretical approach of company. I have come to a conclusion that ICICI Prudential is a profit
making company and gradually the demand of the product is also increasing.
The main areas of company are:-
1. Well defined objective.
2. Well organized and co-ordinate group of people.
3. Clear & well defined policies & responsibility.
4. An effective system of the company.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
BOOKS
Wheelen, Thomas L. & Hunger, J. David; Strategic Management &
Business Policy.
Mishra, M.N.; Modern Marketing Research
Shani, N.K. and Kumar, Yogesh; Modern Marketing.
Kotler, Phillip; Marketing Management
INTERNET SITES
www.spiceindia.com
www.airtelworld.com
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www.google.com
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QUESTIONNAIRE
Q.1. Do you have a Life Insurance Policy?
Yes No
Q.2. Which Companys Insurance Policies do you have?
(Please specify the numbers)
LIC SBI Life Insurance
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HDFC Standard Life New York MaxLife
Birla Sunlife Alliance Bajaj
Cholamandalam ICICI Pru. Life Insurance
TATA AIG Insurance MetLife Insurance
ING Vysya OM Kotak Mahindra
AVIVA Life AMP Sanmar
Q.3 What is amount of insurance premium you pay annually?
Amount
Q.4 What priorities would you consider most important, while
purchasing a policy? (Please Rank Your Choice)
Death Benefit
Childrens Education
Retirements Benefit
Tax Planning
Financial Plannin
Q.5 you have any knowledge of the stock market?
Yes No
Q.6 If Yes do you have any knowledge about unit linked insurance
plans?
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Yes No
Q.7 Is your current Insurance policy Unit Linked or Traditional?
Yes No
Q.8 If given a choice, where would you like to invest your money?
(Please Rank Your Choice)
Mutual Funds Post Office Schemes
Insurance Policies Debentures
Gold Banks (FDs etc.)
Equities If other (specify)___________
Q.9 According to you what are the factors that would affect you decision
while purchasing an insurance policy?
(Please Rank Your Choice)
Premium
Return
Safety
Liquidity
Market Condition
Q. 10 Are you or any of your family members are planning to buy an
insurance policy in near future?
Yes No
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Q. 11 Are your needs satisfied with your current investment in insurance?
Yes No
Q. 11 (a) If No, then give reasons?
High Premium Poor Services
Low Return Other Reasons__________
______________________
Q. 12 Do you know anything ICICI Prudential Life Insurance?
Yes No
Q. 13 If Yes, from where did you come to know about the company?
T.V. Newspaper Magazine
Radio Internet Hoarding
Others (Please Specify)_____________________________
Q. 14 What do you feel about ICICI Prudential Life Insurance?
__________________________________________________________
__________________________________________________________
_______________________________
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