analysis of profitibility and financial position of aviva life insurance
TRANSCRIPT
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SIP REPORT
ON
ANALYSIS OF PROFITIBILITY AND FINANCIAL
POSITION OF AVIVA LIFEINSURANCE
Submitted in partial fulfillment of requirement of Bachelor of
Business Administration (B.B.A) General
BBA V Semester (MORNING)
Batch 2011-2014
Submitted to: Submitted by:
Ms.Ahuti Bhargav Ishaan Dhasmana
Assistant. Professor 07014101711
JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL
KALKAJI, NEW DELHI
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ACKNOWLEDGEMENT
I am deeply indebted to Mr.Ishan Tanejafor his constant support, guidance and
inspiration in completion of the internship program and preparation of thisdocument.
My sincere thanks to him for finding time out of his busy schedule and giving us
invaluable suggestions. I am also grateful to other employee of Aviva Life
Insurance for their encouragement and help.
I would like to send my sincere thanks to Ms. Ahuti Bhargav for her helpful
hand in the completion of my project.
Last but not the least; I would like to thank my parents and friends for their moral
support throughout the project.
ISHAAN DHASMANA
(07014101711)
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DECLARATION
I, Ishan Dhasmana student of Bachelor of Business Administration fromJagannath International Management School, GGSIP University hereby
declare that I have completed Summer Internship project on ANALYSIS OF
PROFITIBILITY AND FINANCIAL POSITION OF AVIVA LIFE INSURANCE
as part of the course requirement.
I further declare that the information presented in this project is true and original
to the best of my knowledge.
Ms. AHUTI BHARGAV ISHAAN DHASMANA
(Assistant Professor) (07014101711)
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TABLE OF CONTENTS
EXECUTIVE SUMMARY 4
INTRODUCTION 5
OBJECTIVE OF STUDY 9
COMPANY PROFILE
HISTORY JOINT VENTURE COMPETITORS VISION&VALUES PARTNERS AVIVA GUIDING PRINCIPLES
11121415171621
LITERATUREREVIEW SWOT ANALYSIS DIRECTORS REPORT AUDITORS REPORT ACCOUNTING POLICIES
2327284146
RESEARCH METHODOLOGY
FINANCIAL STATEMENTS CREDIT RATING
CASH FLOW
50
535162
DATA ANAYLSIS 53
CONCLUSION 71
FINDINGS 72
LIMITATIONS 73
BIBLOGRAPHY
74
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EXECUTIVE SUMMARY
The project titled ANALYSIS OF PROFITIBILITY AND FINANCIAL POSITION
OF AVIVA LIFE INSURANCE Undertaken in AVIVA life insurance.
AVIVA is a UK based insurance group. It has a long history dating back to 1834
and has a joint venture with DABUR groups. Aviva holds a 26 per cent stake in
the joint venture and the Dabur group holds the balance 74 per cent share.
It is one of the leading providers of life and pensions products to Europe and
has substantial businesses elsewhere around the world.
The project report is about financial position process thats an important part of
any organization. Which is considered as a necessary asset of a company? In
fact, the financial position gives a home ground to the organization acumen that
is needed for proper functioning of the organization. It gives an organizational
structure of the company.
This report tries to outline idea of professional world and helps in understanding
the pragmatic aspect of management function. Own observations are significant
towards the contribution in learning the subject. The report is therefore designed
as a reference of organization functioning rather than copy down instrument.
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INTRODUCTION
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INTRODUCTION
AN INTRODUCTION TO INSURANCE SECTOR IN INDIA
Insurance in India started without any regulation in the Nineteenth Century. It
was a typical story of a colonial era: a few British insurance companies
dominating the market serving mostly large urban centres. After the
independence, it took a dramatic turn. Insurance was nationalized. First, the life
insurance companies were nationalized in 1956, and then the general insurance
business was nationalized in 1972. Only in 1999 private insurance companies
have been allowed back into the business of insurance with a maximum of 26%
of foreign holding. In what follows, we describe how and why of regulation and
deregulation. The entry of the State Bank of India with its proposal of bank
assurance brings a new dynamics in the game. We study the collective
experience of the other countries in Asia already deregulated their markets and
have allowed foreign companies to participate. If the experience of the other
countries is any guide, the dominance of the Life Insurance Corporation and the
General Insurance Corporation is not going to disappear any time soon.
Insurance under the British Raj
Life insurance in the modern form was first set up in India through a British
company called the Oriental Life Insurance Company in 1818 followed by the
Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance
Society in 1829. All of these companies operated in India but did not insure the
lives of Indians. They were there insuring the lives of Europeans living in India.
Some of the companies that started later did provide insurance for Indians. But,
they were treated as "substandard" and therefore had to pay an extra premium
of 20% or more. The first company that had policies that could be bought by
Indians with "fair value" was the Bombay Mutual Life Assurance Society starting
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in 1871.
The first general insurance company, Triton Insurance Company Ltd., was
established in 1850. It was owned and operated by the British. The first
indigenous general insurance company was the Indian Mercantile Insurance
Company Limited set up in Bombay in 1907. By 1938, the insurance market in
India was buzzing with 176 companies (both life and non-life). However, the
industry was plagued by fraud. Hence, a comprehensive set of regulations was
put in place to stem this problem. By 1956, there were 154 Indian insurance
companies, 16 non-Indian insurance companies and 75 provident societies that
were issuing life insurance policies. Most of these policies were cantered in the
cities (especially around big cities like Bombay, Calcutta, Delhi and Madras). In
1956, the then finance minister S. D. Deshmukh announced nationalization of the
life insurance business.
Monopoly Raj
The nationalization of life insurance was justified mainly on three counts.
It was perceived that private companies would not promote insurance in ruralareas.
The Government would be in a better position to channel resources for
saving and investment by taking over the business of life insurance.
Bankruptcies of life insurance companies had become a big problem (at
the time of takeover, 25 insurance companies were already bankrupt and
another 25 were on the verge of bankruptcy). The experience of the next
four decades would temper these views.
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AN OVERVIEW OF INSURANCE INDUSTRY
Insurance has a long history in India. Life Insurance in its current form was
introduced in 1818 when Oriental Life Insurance Company began its operations
in India. General Insurance was however a comparatively late entrant in 1850
when Triton Insurance company set up its base in Kolkata. History of Insurance
in India can be broadly bifurcated into three eras: a) Pre Nationalization b)
Nationalization and c) Post Nationalization. Life Insurance was the first to
nationalize in 1956. Life Insurance Corporation of India was formed by
consolidating the operations of various insurance companies. General Insurance
followed suit and was nationalized in 1973. General Insurance Corporation of
India was set up as the controlling body with New India, United India, National
and Oriental as its subsidiaries. The process of opening up the insurance sector
was initiated against the background of Economic Reform process which
commenced from 1991. For this purpose Malhotra Committee was formed
during this year who submitted their report in 1994 and Insurance Regulatory
Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was
opened for private companies and Private Insurance Company effectively
started operations from 2001.
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OBJECTIVES
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OBJECTIVES
The main objective of this project is to understand the financial position of
AVIVA LIFE INSURENCE and to know the impact of profitability on its market
value. These are the primary and secondary objective if my project.
With the help of this project I can understand that how I can analyses the
financial statement of any company and what are the ratios any key indicators
by which anyone can understand the financial status of company.
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COMPANY PROFILE
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HISTORY
Aviva is UKs largest and the worlds fifth largest insurance Group. It is one of
the Leading providers of life and pensions products to Europe andhas substantial businesses elsewhere around the world. With a history dating
back to 1696, Aviva has a 40 million customer base worldwide. It has more
than 377 billion of assets under management.
In India, Aviva has a joint venture with Dabur, one of India's oldest, and largest
Group of companies. A professionally managed company, Dabur is the country's
leading producer of traditional health care products.
In accordance with the government regulations Aviva holds a 26 per cent stake
in the joint venture and the Dabur group holds the balance 74 per cent share.
With a strong sales force of over 28,000 Financial Planning Advisers (FPAs),
Aviva has initiated an innovative and differentiated sales approach to the
business. Through the Financial Health Check (FHC) Avivas sales force has
been able to establish its credibility in the market. The FHC is a free service
administered by the FPAs for a need based analysis of the customers long term
savings and insurance needs. Depending on the life stage and earnings of the
customer, the FHC assesses and recommends the right insurance product for
them.
When Aviva entered the market, most companies were offering traditional life
products.
Aviva started by offering the more modern Unit Linked and Unitized with Profit
products to the customers, creating a unique differentiation. Avivas products
have been designed in a manner to provide customers flexibility, transparency
and value for money. It has been among the first companies to introduce the
more modern Unit Linked products in the market. Its products include: whole life
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(Lifelong), endowment (Lifesaver, Easy Life Plus, Lifesaver Plus), child policy
(Young Achiever, Save Guard Junior, Aviva Little Master) single premium (Life
Bond and Life Bond Plus), Pension (Pension Plus), Term (Life Shield), fixed
term protection plan (Freedom Life Plan) and a Tax efficient investment plan
with limited premium payment term (LifeBond5). Aviva Products are modern and
contemporary unitized products that offer unique customer Benefits like flexibility
to choose cover levels, indexation and partial withdrawals.
Aviva has 176 Branches in India (including rural branches) supporting its
distribution network. Through its Banc assurance partner locations, Aviva
products are available in close to 500 towns and cities across India.
Aviva is also keen to reach out to the underprivileged that have not had access
to Insurance so far. Through its association with Basix (a micro financial
institution) and otherNGOs, it has been able to reach the weaker sections of the
society and provide life insurance to them.
Aviva has been felicitated with the "Bronze Award for Excellence in People
Management" by Grow Talent Company Limited and Business world. This honor
is given to Aviva based on the ranks received in top 25 lists of the Great Place
to Work India studies conducted in the last four years.
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JOIN VENTURE
Dabur
Founded in 1884, Dabur is one of India's oldest and largest groups ofcompanies with consolidated annual turnover in excess of Rs 1,899 crores.
A professionally managed company, it is the country's leading producer of
traditional healthcare products.
Aviva
Aviva is UKs largest and the worlds fifth largest insurance Group. 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 has a 40 million customer base worldwide. It has more than
377 billion of assets under management.
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Competitors of Aviva life insurance
1. Life Insurance Corporation of India (LIC)
LIC is the largest and is popular with over 2048 branches all over India. LIC still remains the topwith new players entering with customized insurance products. It has gained credibility and
consumers trust that it is able to sustain the insurance business having estimated assets
worthRs.8 trillion
2. AIG Tata LIC Ltd
AIG Tata offers various insurance plans for everyone, children to senior citizens. This LIC is
a joint venture with the American International Group and Tata Group.
3. HDFC life Insurance Co. Ltd (Standard)
HDFC Life specializes in providing an array of solutions for individuals and groups. This is
a joint-venture between UK based Standard Life and HDFC Ltd, the leading
finance institution.
4. Birla Life Insurance Co. Ltd (Sun)
Birla is the only and first insurance company initiating insurance business in association with
Business Continuity Plan and helping small companies grow bigger. This is life insurance that is
collaboration between Sun Life Financial Inc and Aditya Birla Group.
5. SBI Life Insurance Co. Ltd
SBI Life Insurance makes highest profit and is the life insurance offering plans matching
different segments from urban to rural divisions.
6. ICICI Life Insurance Co. Ltd (Prudential)
ICICI Prudential Life Insurance is India's trusted private sector insurance company having
collaboration with UK based Prudential Group.
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7. Bajaj Allianz Life-Insurance Co. Ltd
Bajaj Allianz offers life and general insurances and is the largest insurers in the world.
8. Kotak Mahindra Old Mutual Life Insurance Limited
Kotak Mahindra is committed to offer investment-based policies identical to mutual funds and
ULIPs, to name a few.
9. Max New York Life Insurance Co. Ltd
Max New York Life Insurance offers outstanding combination covers. It has ISO:
9001:2000certifications.
10. Future Generali Life Insurance
Future Generali is offering comprehensive plans for groups and individuals and is becoming
more competitive.
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VISION
Aviva - where exceeding expectations through innovative solutions is "our" way of life.
This is the compelling vision that Aviva India has created through the active contribution of its
employees. These lines not only define the way they live and work but also serve as a reminder
to deliver the best to their customers, shareholders, colleagues, partners & employees at all
times.
Embedded in this vision are the core values of Integrity, Customer centricity, Passion for
winning, Innovation and Empowered team that they have collectively defined and committed to
working towards.
VALUES
Our values are integral to the way we conduct our business and shape the Experiences of our
clients and employees.
We value integrity, teamwork, innovation and performance. Integrity is the Cornerstone of our
business. Through global and local teams we innovate, And through our performance we
deliver results
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PARTNERS
Aviva has committed to help its customers get 'Kal par Control'and make the most out of
their lives. It is their constant endeavor to ensure that their customers have easy access toAVIVA products and services at all times.
Aviva has pioneered bancassurance in the country through its tie-ups with 22 leading private
and nationalized Banks in the country. It has 40 major partnerships with leading banks across
the globe.
ABN AMRO is a prominent international bank with European roots and a clear focus on
consumer and commercial banking gaining a competitive edge on the chosen markets and
client segments. Aviva's relationship with ABN India commenced in June 2002 under which the
bank introduces its customers to Aviva for insurance and provides access to its affluent
customer base across the country through its operations in 21 branches at 14 locations.
Aviva Life Insurance entered into a strategic alliance with American Expressfor distribution of
Life Insurance in June 2002 to offer top-of the line saving-cum-protection plans to Amex bank
and card customers.
Aviva offers tailor-made investment solutions to the high net worth clients of the Wealth
Management channel. The retail card segment is being tapped through outbound calling to the
Amex card holders. The American Express Inbound call centre also pitches Aviva products to
its callers.
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The Lakshmi Vilas Bank Ltd, based out of Karur, is among the top private banks in India. It
has 221 branches with a customer base of 1.2 million, across 10 states. Currently Aviva
products are sold across 204 branches of LVB.
Canara Bankis one of the largest retail banks in India with 2,513 branches spread across 25
States and 4 Union Territories. The customer base of Canara Bank exceeds 27 million. With a
net profit of INR 1110 Crores, deposits of over INR 96,908 Crores, 47389 employees for the
year ending Mar 2005, Canara Bank is truly a Bank to be reckoned with for the sheer
magnitude of coverage it offers its clients. Canara Bank has tied up with Aviva as a Corporate
Agent for its Life Insurance Products. Aviva products are currently offered in 1030 Canara Bank
branches in 103 Cities.
Punjab & Sind Bankwas established in the year 1908. Based on the principles of social
commitment to the people, help the farmers, and the weaker sections of the society to raise
their standard of living and play a significant role in the development of the country. Even after
96 years of its inception, Punjab & Sind Bank stands committed to honor the high ideals of its
founding fathers.
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Centurion Bank of Punjabis a new generation private sector bank offering a wide spectrum
of retail and corporate banking products and services. It has been among the earliest banks to
offer a technology-enabled customer interface that provides easy access and superior
customer service.
RBI has approved the merger between Centurion Bank and Bank of Punjab effective from
October 1st, 2005. The merged entity, named Centurion Bank of Punjab, has a strong
nationwide franchise of 241 branches and extension counters and 389 ATMs.
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AVIVA GUIDING PRINCIPLES
Recruit the best Accept personal
Build an empowered team
Building a shared vision and purpose
Leadership Development
Reward and Recognition
Recruit the best
Aviva India has a well-articulated equal opportunity policy, which lays strong emphasis on hiring
of individuals irrespective of age, race, caste or gender. As a best practice in recruitment, they
deploy identified psychometric tools such as SHL and Belbin and designate ability tests to
eliminate any biases in the resourcing process and facilitate hiring of diverse profiles (vis--vis
gender, background, experience levels and competencies). The focus is on competence-
based credentials rather than past experience or length of service.
Accept Personal Responsibility
Apart from professional development, AVIVA also looks after the personal development of
employees
They believe that dealing with diversity is an ongoing phenomenon that facilitates the process
for a Company to adapt to and capitalize on today's increasingly complex marketplace. Specific
action plans have been formulated to ensure the mandated gender ratio is achieved at the
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recruitment stage for a new position or through job enhancement/ job rotation opportunities for
existing roles.
Theorganization has tremendous respect for the individual - which it demonstrates by doing
what itsays
Build an Empowered Team
To institutionalize an open and honest environment with shared goals and participative
decision-making, they have various open forums, one such initiative being the Town Hall(s).
These are conducted on a monthly basis by the Managing Director and designate leadership
team members.
Build Shared Vision and Purpose
Youfeel as if you are part of the system when you are included in all the decisions being made
for your function.
As a Company, they encourage self-starters. Given their dynamic environment, one is
expected to deliver from day one. Somewhere between adjusting to the new environment,
About the facilities, infrastructure, processes, key people and dynamics of the Organization etc.
Information, which if provided on time can be very useful. This is how the Buddy
Programme was envisaged. Launched in July 2003, it addresses the need of a new
employee in terms of extending a friendly hand apart from the support provided by the Line and
HR managers. The objective is simple: To facilitate a seamless transition of the new hire into the
Aviva family.
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LITERATURE REVIEW
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LITRATURE REVIEW
Insurance Market- Present:
The insurance sector was opened up for private participation four years ago. For
years now, the private players are active in the liberalized environment. The
insurance market have witnessed dynamic changes which includes presence of
a fairly large number of insurers both life and non-life segment. Most of the
private insurance companies have formed joint venture partnering well
recognized foreign players across the globe.
There are now 29 insurance companies operating in the Indian market 14
private life insurers, nine private non-life insurers and six public sector
companies. With many more joint ventures in the offing, the insurance industry
in India today stands at a crossroads as competition intensifies and companies
prepare survival strategies in scenario.
There is pressure from both within the country and outside on the Government
to increase the Foreign Direct Investment (FDI) limit from the current 26% to
49%, which would help JV partners to bring in funds for expansion.
There are opportunities in the pensions sector where regulations are being
framed. Less than 10 % of Indians above the age of 60 receive pensions. The
IRDA has issued the first license for a standalone health company in the country
as many more players wait to enter. The health insurance sector has
tremendous growth potential, and as it matures and new players enter, product
innovation and enhancement will increase. The deepening of the health
database over time will also allow players to develop and price products for
larger segments of society.
State Insurers Continue To Dominate There may be room for many more
players in a large underinsured market like India with a population of over one
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billion. But the reality is that the intense competition in the last five years has
made it difficult for new entrants to keep pace with the leaders and thereby
failing to make any impact in the market.
Also as the private sector controls over 26.18% of the life insurance market and
over 26.53% of the non-life market, the public sector companies still call the
shots.
The countrys largest life insurer, Life Insurance Corporation of India (LIC), had
a share of 74.82% in new business premium income in November 2005.
Similarly, the four public-sector non-life insurers New India Assurance,
National Insurance, Oriental Insurance and United India Insurance had a
combined market share of 73.47% as of October 2005. ICICI Prudential Life
Insurance Company continues to lead the private sector with a 7.26% market
share in terms of fresh premium, whereas ICICI Lombard General Insurance
Company is the leader among the private non-life players with a 8.11% market
share. ICICI Lombard has focused on growing the market for general insurance
products and increasing penetration within existing customers through product
innovation and distribution.
Reaching Out To Customers No doubt, the customer profile in the insurance
industry is changing with the introduction of large number of divergent
intermediaries such as brokers, corporate agents, and bancassurance.
The industry now deals with customers who know what they want and when,
and are more demanding in terms of better service and speedier responses.
With the industry all set to move to a detariffed regime by 2007, there will be
considerable improvement in customer service levels, product innovation and
newer standards of underwriting.
Intense Competition In a de-tariffed environment, competition will manifest
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itself in prices, products, underwriting criteria, innovative sales methods and
creditworthiness. Insurance companies will vie with each other to capture market
share through better pricing and client segmentation.
The battle has so far been fought in the big urban cities, but in the next few
years, increased competition will drive insurers to rural and semi-urban markets.
Global Standards While the world is eyeing India for growth and expansion,
Indiancompanies are becoming increasingly world class. Take the case of LIC,
which has set its sight on becoming a major global player following a Rs280-
crore investment from the Indian government. The company now operates in
Mauritius, Fiji, the UK, Sri Lanka, and Nepal and will soon start operations in
Saudi Arabia. It also plans to venture into the African and Asia-Pacific regions in2006.
The year 2005 was a testing phase for the general insurance industry with a
series of catastrophes hitting the Indian sub-continent.
However, with robust reinsurance programs in place, insurers have successfully
managed to tide over the crisis without any adverse impact on their balance
sheets.
With life insurance premiums being just 2.5% of GDP and general insurance
premiums being 0.65% of GDP, the opportunities in the Indian market place is
immense. The next five years will be challenging but those that can build scale
and market share will survive and prosper.
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SWOT ANALYSIS
The SWOT analysis of Insurance sector is as follows:-
Strength-Very good policies of life coverage.
Weaknesses:-unable to convince the people about the products. There
are notmuch advisors for the insurance companies
Opportunities:-Untapped rural sector and small towns
Threats:-growing competition from larger MNC's.
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Directors Report
REVIEW OF OPERATIONS:
The turnover of the company during the year is Rs.50.28.Lacs compared to
1423.33 Lacs. Showing decrease by Rs.1373.05 Lacs from the corresponding
year ended 31st March, 2007 due to fall in marketing conditions.
FIXED DEPOSIT:
The company has not accepted any fixed deposits during the year.
AUDITORS:
Auditors of the company M/s. J. P. Saboo & Co. Chartered Accountants of
Surat, will retire at the conclusion of the ensuing 24th Annual General Meeting
from the office of the Auditors and being eligible offer themselves for re-
appointment from the end of the ensuing Annual General Meeting till the.
Conclusion of the next Annual General Meeting at a remuneration payable as
may be decided. As required under the provisions of Section 224(lB),the
Company has received certificate that the. appointment, if made shall be within
the limits as set down in said section.
DIRECTORS:
In accordance with Article 116 of the Articles of Association of the company,
Shri Jatin Gupta & Sbri Pawan Gupta retire by rotation and being eligible, offers
himself for-their re-appointment. The Board recommends their re-appointment
Shri Mohan Gupta, Shri Shyam sunder Gupta and Shri Sunil kumar Gupta had
resigned as Directors of the Company w.cf. 15-12-2007, 15- 12-2007 and 05-01-
2008 respectively.
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CONSERVATION OF ENRGY, TECHNOLOGY ABSORPTION,
FOREIGN EARNING & OUTGO:
The particulars prescribed by the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988 as to conservation of energy;
technology absorption is Not Applicable since project is yet to start. There is
no Foreign Exchange earnings and Outgo.
INSURANCE:
The company has made necessary arrangements for adequately insuring
interests in various properties.
DIRECTORS RESPONSIBILITY STATEMENT:
As required under section 217(2AA) of the Companies Act, 1956 yourDirectors state:
That in the preparation of the annual accounts, the applicable
accounting standards have been followed.
That the accounting policies selected and applied are consistent and the
judgments and estimates made are reasonable and prudent so as to give
a true and fair view of the state of affairs of the company at the end of the
financial year ended 31st March, 2008 and of the profit or loss of the
company for that period.
That proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities.
That the annual accounts have been prepared on a going
concern basis.
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CORPORATE GOVERNANCE REPORT:
Your company is committed to maintain the highest standards of corporate
governance. Your Directors adhere to the requirements set out by the
Securities and Exchange Board of India in respect of Corporate Governance
Practices and have implemented all
stipulations prescribed, Report on Corporate Governance as stipulated under
clause 49 of the listing agreement with stock exchange is annexed which
forms part of the annual report. Certificate from Statutory Auditors, confirming
compliance of conditions of corporate governance as stipulated underaforesaid clause 49 is annexed to this report.
COMPLIANCE CERTIFICATE :
The Company has availed Secretarial Compliance Certificate for the under
review form the Practicing Company Secretary pursuant to the proviso of
section 383 A of the Companies Act, 1956 and a copy of the same is
attached with this report.
LISTING:
The shares of your company are listed on Bombay Stock Exchange. The
listing fees for the year 2008-09 have been paid to The Bombay Stock
Exchange Limited.
DEPOSITORY SYSTEM:
Your company has established electronic connectivity with the both the
depositories, NSDL & CDSL. In view of numerous advantages offered by the
depository system, members of the company are requested to avail the
facility of dematerialization of the companys shares on NSDL SCDSL.
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ACKOWLEDGEMENT:
The Directors place on record the appreciation and gratitude for the co-
operations and assistance extended by the Banks, Government etc. The
company will make all effort to meet the aspiration of its shareholders and
wish to sincerely thank them for their whole hearted co- operation and
support at all times.
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how the budget impacted your pocket.
Going Concern
As a consequence of the Companys considerable financial resources,
the directors believe that the Company is well placed to manage its
business risks successfully despite the current uncertain economic
outlook.
After making enquiries, the directors have a reasonable expectation that
the Company has adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the financial statements.
The Company is expected to continue to generate positive cash flows on its
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own account for the foreseeable future. The Company participates in the
Aviva Groups centralized treasury arrangements and so shares banking
arrangements with fellow subsidiaries.
The directors, having assessed the responses of the directors of a fellow
group company, Aviva International Insurance Limited, which maintains the
centralized arrangement, have no reason to believe that a material
uncertainty exists that may cast doubt about the ability to continue with the
current banking arrangements.
Financial Position and Performance
The financial position of the Company at 31 December 2009 is
shown in the statement of financial position shown below
Financial instruments
The business of the Company includes use of financial instruments. Details
of the Company's risk management objectives and policies and exposures to
risk relating to financial instruments are set out in note 8 to the financial
statements.
Dividends
Interim ordinary dividends of 340 million were declared and paid during
2009 (2008: 475 million). The directors do not recommend a final ordinarydividend for the year (2008: nil). The total cost of dividends paid during the
year, including preference dividends, amounted to 361million (2008: 567
million, including the2007 final dividend).
Directors interests
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None of the directors who held office at 31 December 2009 held any
interest in the Companys shares.
Authority to purchase own shares
At the Annual General Meeting held on 25 April 2006, shareholders renewed
the Companys authority to make market purchases of up to 140 million 8 7/8
% preference shares and up to 110 million 77/8 % preference shares. This
authority remains in place until 24 April 2011 but was not used in the year.
Creditor payment policy and practice
The Company has no trade creditors.
Directors Liabilities
Aviva plc, the Companys parent, has granted an indemnity to the directors
against liability in respect of proceedings brought by third parties, subject to
the conditions set out in the Companies Act 1985. This indemnity was
granted in 2004 and the provisions in the Company's Articles of Association
constitute "qualifying third party indemnities" for the purposes of sections
309A to 309C of the Companies Act 1985. These qualifying third party
indemnity provisions remain in force as at the date of approving the Directors
report by virtue of the transitional provisions to the Companies Act 2006.
Disclosure of Information to the Auditor
Each person who was a director of the Company on the date that this report
was approved, confirms that so far as the director is aware, there is no
relevant audit information, being information needed by the auditor in
connection with preparing his report, of which the auditor is unaware. Each
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director has taken all the steps that he ought to have taken as a director in
order to make himself aware of any relevant audit information and to
establish that the auditor is aware of that information.
Auditor
A resolution is to be proposed at the Annual General Meeting for the
reappointment of Ernst & Young LLP as auditor of the Company. A resolution
will also be proposed authorizing the directors to determine the auditors
remuneration.
The Combined Code on Corporate Governance
The Company is a wholly-owned subsidiary of Aviva plc, a company listed
on the London Stock Exchange. The Combined Code on Corporate
Governance sets out standards of good practice in the form of principles and
provisions on how companies should be directed and controlled to follow
good governance practice. The Financial Services Authority requires
companies listed in the UK to disclose, in relation to Section 1 of the
Combined Code, how they have applied its principles and whether they have
complied wit its provisions throughout the accounting year. Where the
provisions have not been complied with companies must provide an
explanation for this.
It is the Boards view that Aviva plc has been fully compliant throughout the
accounting period with the provisions set down in Section 1 of the Combined
Code, apart from a period during the year when the majority of the members
of the Nomination Committee was not independent non-executive directors.
This was due to the resignation of Nikesh Arora, a non-executive director,
who resigned following his relocation to the United States. The Aviva plc
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Directors Report sets
out details of how the Aviva group has applied the principles and complied
with the provisions of the Combined Code during 2009.
The Company has listed preference shares and the payment of dividends to
the preference shareholders is reviewed by the Aviva plc Audit Committee
and approvedby the directors of the Company. There are no other significant
risks associated with the Companys assets and liabilities, and the Company
seeks to maintain sufficient funds to meet dividends payable on the
preference shares as they fall due.
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Statement of Directors Responsibilities
The directors are required to prepare financial statements for each
accounting period that comply with the relevant provisions of the Companies
Act 1985, the Companies Act 2006 and International Financial ReportingStandards (IFRS) as adopted by the European Union (EU), and which
present fairly the financial position, financial performance and cash flows of
the Company at the end of the accounting period. A fair presentation of the
financial statements in accordance with IFRS requires the directors to:
select suitable accounting policies and verify they are applied
consistently in preparing the financial statements on a going concern
basis unless it is inappropriate to presume that the Company will
continue in business;
Present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable
information;
provide additional disclosures when compliance with the specific
requirements in IFRS is insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the
Companys financial position and financial performance
The directors are responsiblefor maintaining proper accounting records which
are intended to disclose with reasonable accuracy, at any time, the financial
position of the Company. They are also ultimately responsible for the
systems of internal control maintained for safeguarding the assets of the
Company and for the prevention and detection of fraud and other
irregularities.
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Directors responsibility statement pursuant to theDisclosure and Transparency Rule 4
The directors confirm that, to the best of each persons knowledge:
The Company financial statements in this report, which have been
prepared in accordance with IFRS as adopted by the EU, International
Financial Reporting Interpretations Committees interpretations and those
parts of the Companies Act 2006 applicable to companies reporting under
IFRS, give a true and fair view of theassets, liabilities, financial position
and results of the Company; and
The directorsreport contained in this report includes a fair review
of the development and performance of the business and the position of the
Company together with a description of the principal risks and uncertainties
that they face.
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Independent auditors report to the members of GeneralAccident plc
We have audited the financial statements of General Accident plc for the year
ended 31 December 2009 which comprise the Accounting Policies, the Income
Statement, the Statement of Comprehensive Income, and the Statement of
Changes in Equity, the Statement of Financial Position, the Statement of Cash
Flows, and the related notes 1 to 10. The financial reporting framework that has
been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the companys members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the companys members those matters we
are required to state to them in an auditors report and for no other purpose . To
the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the companys members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors Responsibilities Statement (set out
on page 6), the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Boards
Ethical Standards for Auditors.
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Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in
the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the companys circumstances and have been
consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall
presentation of the financial statements.
Opinion on financial statements
In our opinion the financial statements:
Give a true and fair view of the state of the companys affairs as at 31
December 2009 and of its profit for the year then ended; have been properly
prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies
Act 2006.
Opinion on other mat ters prescr ibed by the Comp anies Ac t
2006
In our opinion, the information given in the Directors Report for the financial
year for which the financial statements are prepared is consistent with the
financial statements.
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Auditor's Report
1. We have audited the attached balance sheet of AVIVA INDUSTRIES
LIMITED, MUMBAI as at 31st March 2008, the profit and loss accountand also the (cash flow statement) for the year ended on that date
annexed thereto. These financial statements are the responsibility of the
companys management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with.the auditing standards
generally accepted in India. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosure in the financial statement. An audit also includes assessing the
accounting principal used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation: We believe that our audit provides a reasonable basis forour opinion.
3. As required by the Companies (Auditors Report) Order, 2003 issued by
the Central Government of India in term of sub - section (4A) of section
227 of the Companies Act, 1956, we enclose in the Annexure a statement
on the matters specified in paragraphs 4 . and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report
that.
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i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of
our audit.
ii) In our opinion, proper books of account, as required by law have been
kept by the company so far as appears from our examination of those
books.
iii)The balance sheet, profit and loss account and cash flow statement
dealt with by this report are in agreement with the books of account.
iv) In pur opinion, the balance sheet, profit and loss account and cash
flow statement dealt with by this report comply with the accounting
standards referred to in sub ^section (3C) of section 211 of the
Companies Act, 1956.
v) On the basis of written representation received from the directors, as
on 31st March 2008 and taken on record by the Board of Directors,
we report that none of the directors Is disqualified as on 31st March
2008, from being appointed as a . director in teiius of clause (g) of sub
- section (1) of section 274 of the Companies Act, 1956
vi)In our opinion and to the best of our information and according to the
explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India.
in the case of the balance sheet, of the state of affairs of the company as
at 31st March 2008 . in the case 67 the profit and loss account, of the Loss for the year ended
on that date ; and
in the case of the cash flow statement, of the cash flows for the year
ended on that date.
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The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets;
All the assets have not been physically verified by the management
during the year but there is a regular programme of verification which,
in our opinion, is reasonable having regard to the size of the company
and the nature of its assets. No material discrepancies were noticed to
such verification
Some part of old fixed assets has been disposed off during the period.
According to the information and explanations given to us, we are of
the opinion that the sale of the said part of fixed assets has not affected
the going concern status of the company.
The inventory has been physically verified during the year by the
management. In our opinion the frequency of verification is reasonable.
The procedures of physical verification of inventories followed by the
management are reasonable and adequate in relation to the size of the
company and the nature of its business.
The company Is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the books records were not material.
The company has not granted/taken loans to/from companies, firms or
other parties listed in the register maintained under section 301 of the
Companies Act, 1956.
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In our opinion and according to the information and explanations given to
us, there are adequate internal control procedures commensurate with
the size of the company and the nature of its business with regard to
purchases of inventory, fixed assets and with regard to the sale of goods.
During the course of our audit, we have not observed any continuing
failure to correct major weaknesses in internal controls.
According to the information and explanations given to us, we are of the
opinion that the transactions that need to be entered into the register
maintained under section 301 of the Companies Act, 1956 have been So
entered.
In our opinion and according to the information and explanations given to
us, the transactions made in pursuance of the contracts or arrangements
entered in the register maintained under section 301 of the Companies
Act, 1956 and exceeding the value of rupees five lacs In respect of any
party during the year have been. Made at. Prices which are reasonable
having regard to prevailing. market prices at the relevant time.
In our opinion and according to the information and explanations given to
us, the company has complied with the provisions of sections 58A arid
58AA of the Companies Act;1956 and the Companies (acceptance of
Deposits) Rules, 1975.
In our opinion, the company has an internal control system
commensurate with the size and nature of its business.
Since this is being Trading unit, hence sec 209 (1) (d) of the Companies
Act, 1956 is not applicable.
The company is regular in depositing with appropriate authorities
undisputed statutory dues including income tax, sales tax, custom duty,
cuss and other material statutory dues applicable to it.
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According to the information and explanations given to us, no undisputed
amounts payable in respect income tax, wealth tax, sales tax, custom
duty, excise duty and cess were in arrears, as at 31st March, 2008 for a
period of more than six months from the date they became payable, other
than income tax for the immediate previous year.
According to the information and explanation given to us, there are no
dues of sale tax, customs duty, wealth tax, excise duty and cess, which
have not been deposited on account of any dispute.
The company has incurred cash losses during the financial year covered
by our audit and immediately preceding financial year and also company
has no accumulated losses.
In our opinion and according to the information and explanations given to
us, the company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
The company has not granted loans and advances on the basis of
security by way of a pledge of share, debentures and other securities.
The company is not a chit fund or a nidhi mutual benefit fund/society.
Therefore; the provisions of clause 4 of the Companies (Authors Report)
Order, 2003 are not applicable to the company.
The company is not dealing in or trading in shares, securities, debentures
and other investments except as an investment. Accordingly, the
provisions of clause 4 (xiv) of the Companies (Auditors Report) Order,
2003 are not applicable to the company.
In our opinion and informed by the management, the company has not
given guarantees for loans taken by others from banks or financial
institutions.
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In our opinion, the term loans have been applied for the purpose for
which they were raised.
According to the information and explanations given to us and on an
overall examination of the balance sheet of the company, we report that
the no funds raised on short
Term basis have been used for long
Term investment. No long - term funds have been used to finance short
Term assets except permanent working capital.
According to the information and explanations given to us, the company
has not made any allotment of preferential shares during the financial
year
.
The company has no issued and / or outstanding debentures at the end
of the year.
The company has not issued and raised money by public issues during
the year.
According to the information and explanations given to us, no fraud on or
by the Company has been noticed or reported during the course of our
audit. Find your favorite sections instantly with one swift search Stock
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ACCOUNTING POLICIES
General Accident plc (the Company) is a public limited company incorporated
and domiciled in the United Kingdom (UK). The following accounting policies
have been applied consistently in dealing with items which are considered
material in relation to the Companys financial statements.
GENERAL
The Financial Statements have generally been prepared on the historical
cost convention.Accounting policies not specifically referred to otherwise are in consonance
with generally accepted
BASIS OF ACCOUNTING
The company follows the mercantile system of accounting generally except
otherwise stated herein below.
FIXED ASSETS
Fixed Assets are stated at cost less accumulated depreciation.
DEPRECIATION
Depreciation on fixed assets has been provided at the rates and in
accordance with the provisions of Schedule XIV of the Companies Act,1956
on SLM Method on days pro rata on basis of date put to use of the assets.
However, no depreciation has been charged on fixed assets during the year
and profit of the company has been affected adversely to that extent.
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INVENTORIES
The inventory has been valued at lower of cost or net relisable price, however
there is no closing stock at the
REVENUE AND EXPENDITURE RECOGNITION
Revenue Is recognized and expenditures is accounted for on their accrual
except claims in respect of goods purchased and sold & Insurance, which are
accounted for on cash basis.
INVESTMENT
Investments are valued at Cost. No provision has been made for depreciation
of the market value of the Investment.
Investment income
Investment income consists of interest receivable for the year. Interest
receivable is recognized as it accrues, taking into account the effective yield on
the investment.
Financial instruments
Loans to, or from other Aviva Group companies are recognized when cash is
advanced to, or received from these companies. These loans are subsequently
carried at amortized cost. The Company reviews the carrying value of loans on aregular basis. If the carrying value of the loan is greater than the recoverable
amount, the carrying value is reduced through a charge to the income statement
in the period of impairment.
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Cash and cash equivalents
Cash and cash equivalents consist of cash at banks and in hand.
Income taxes
The current tax expense is based on the taxable result for the year, after any
adjustments in respect of prior years. Tax, including tax relief for losses if
applicable, is allocated over profits before taxation and amounts charged or
credited to reserves as appropriate.
Provision is made for deferred tax liabilities, or credit taken for deferred tax
assets, using the liability method, on all material temporary differences between
the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets are recognized to the extent that it is probable
that future taxable profit will be available against which the temporary
differences can be utilized.
Share capital
Equity instruments
An equity instrument is a contract that evidences aresidual interest in the
assets of an entity after deducting all its liabilities. Accordingly, a financialinstrument is treated as equity if:
There is no contractual obligation to deliver cash or other financial
Assets or to exchange financial assets or liabilities on terms that may
be unfavorable; and
The instrument is a non-derivative that contains no contractual obligationto
deliver a variable number of shares, or is a derivative that will be settled only
by the Company exchanging a fixed amount of cash or other assets for a
fixed number of the Companys own equity instruments.
Dividends
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Dividends on ordinary shares are recognized in equity in the period in which
they are paid and, for the final dividend, approved byshareholders. Dividends
on preferenceshares are recognized in the period in which they are declared
and appropriately approved.
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RESEARCHMETHODOLOGY
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Research Methodology
Market research is the process of systematic gathering, recording and
analyzing of data about customers, competitors and the market. Marketing
research (also called consumer research) is a form of business research. It
is a form of applied sociology which concentrates on understanding the
behaviors, whims and preferences, of consumers in a market-based
economy. Market research can help create a business plan, launch a new
product or service, fine tune existing products and services, expand into new
markets etc. It can be used to determine which portion of the population will
purchase the product/service, based on variables like age, gender, location and
income level. It can be found out what market characteristics your target market
has. With market research companies can learn more about current and
potential customers.
The purpose of market research is to help companies make better business
decisions about the development and marketing of new products and in the
case of financial market research, it shows the company worthiness and position
in front of people.
Market Research Process
Defining the Research Problem
Selecting and Establishing Research Design
Select the Research Design
Identify Information types and Sources
Determining and Design Research Instrument
Collecting and Analyzing Data
Formulate Findings
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Method Adopting of Data Collection
There are two types of data collection technique. i.e.
Primary Data and
Secondary Data.
In my research project there is no need to collect primary data. I want only
secondary data that I have been collected by different sources.
Internet- From the internet we have take the histories of companies for the
introductionpart. We search some data from the website of company and
search engine like Google.
Books- Books are also helpful us for the data research. We have taken help ofbooks tocalculate the ratios and analyzing the financial statements like Profit &
Loss account and Balance sheet etc.
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FINANCIAL STATEMENT
Profit & loss Account, Balance Sheet and Key Ratio
of Aviva life insurance
Prof i t & Los s account of
Aviv a l i fe insu rance
------------------- in Rs. Cr. --------------- ----
Mar '05 Mar '06 Mar '07 Mar '08 Mar '0
12 mths 12 mths 12 mths 12 mths 12 mth
Income
Sales Turnover 0.00 10.15 0.00 14.23 0.47
Excise Duty 0.00 0.00 0.00 0.00 0.00
Net Sales 0.00 10.15 0.00 14.23 0.47
Other Income 0.06 0.05 0.05 0.01 0.03
Stock Adjustments 0.00 0.00 0.00 0.00 0.00
Total Income 0.06 10.20 0.05 14.24 0.50
Expenditure
Raw Materials 0.00 7.77 0.00 13.91 0.45
Power & Fuel Cost 0.00 0.30 0.00 0.00 0.00
Employee Cost 0.00 0.36 0.00 0.09 0.01
Other Manufacturing Expenses 0.00 1.59 0.00 0.00 0.00
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Selling and Admin Expenses 0.00 0.00 0.00 0.00 0.00
Miscellaneous Expenses 0.01 0.11 0.01 0.11 0.06
Preoperative Exp Capitalized 0.00 0.00 0.00 0.00 0.00
Total Expenses 0.01 10.13 0.01 14.110.52
Mar '0 Mar '06 Mar '07 Mar '08 Mar '0
12 mths 12 mths 12 mths 12 mths 12 mt
Operating Profit -0.01 0.02 -0.01 0.12 -0.05
PBDIT 0.05 0.07 0.04 0.13 -0.02
Interest 0.00 0.00 0.00 0.00 0.00
PBDT 0.05 0.07 0.04 0.13 -0.02
Depreciation 0.01 0.01 0.01 0.00 0.00
Other Written Off 0.00 0.00 0.00 0.00 0.00
Profit Before Tax 0.04 0.06 0.03 0.13 -0.02
Extra-ordinary items 0.00 0.00 -0.01 0.00 0.00
PBT (Post Extra-ord Items) 0.04 0.06 0.02 0.13 -0.02
Tax 0.00 0.00 0.00 0.05 0.01
Reported Net Profit 0.04 0.06 0.03 0.07 -0.02
Total Value Addition 0.01 2.36 0.01 0.19 0.07
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 0.00 0.00 0.00 0.00 0.00
Corporate Dividend Tax 0.00 0.00 0.00 0.00 0.00
Per share data (annualized)
Shares in issue (lakhs) 15.00 14.99 14.99 14.99 14.99
Earning Per Share (Rs) 0.27 0.42 0.18 0.50 -0.12
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Equity Dividend (%) 0.00 0.00 0.00 0.00 0.00
Book Value (Rs) 11.73 12.16 12.34 30.99 30.87
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Balance Sheet of Av iva
l i fe insu rance
------------------- in Rs. Cr. -------------------
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 1.50 1.50 1.50 1.50 1.50
Equity Share Capital 1.50 1.50 1.50 1.50 1.50
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 0.26 0.32 0.35 3.15 3.13
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net worth 1.76 1.82 1.85 4.65 4.63
Secured Loans 0.01 0.00 0.00 0.02 0.01
Unsecured Loans 0.00 0.00 0.09 1.00 0.75
Total Debt 0.01 0.00 0.09 1.02 0.76
Total Liabilities 1.77 1.82 1.94 5.67 5.39
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
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Gross Block 0.13 0.13 0.13 0.80 0.69
Less: Accum. Depreciation 0.09 0.10 0.11 0.08 0.07
Net Block 0.04 0.03 0.02 0.72 0.62
Capital Work in Progress 0.00 0.00 0.00 0.00 0.00
Investments 0.69 0.69 0.69 1.24 1.24
Inventories 0.00 0.00 0.00 0.00 0.00
Sundry Debtors 0.00 0.31 0.00 1.07 1.38
Cash and Bank Balance 0.03 0.08 0.03 0.10 0.08
Total Current Assets 0.03 0.39 0.03 1.17 1.46
Loans and Advances 1.02 1.76 1.22 3.46 3.69
Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Total CA, Loans & Advances 1.05 2.15 1.25 4.63 5.15
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 0.01 1.04 0.03 2.21 2.92
Provisions 0.00 0.00 0.00 0.04 0.04
Total CL & Provisions 0.01 1.04 0.03 2.25 2.96
Net Current Assets 1.04 1.11 1.22 2.38 2.19
Miscellaneous Expenses 0.00 0.00 0.00 1.31 1.35
Total Assets 1.77 1.83 1.93 5.65 5.40
Contingent Liabilities 0.00 0.00 0.00 0.00 0.00
Book Value (Rs) 11.73 12.16 12.34 30.99 30.87
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Key Financial Ratios o f
Aviva. ------------------- in Rs. Cr. -------------------
Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share -- -- -- -- --
Operating Profit Per Share (Rs) -0.07 0.12 -0.05 0.84 -0.27
Net Operating Profit Per Share (Rs) -- 67.70 -- 94.91 3.16
Free Reserves Per Share (Rs) -- -- -- -8.77 -9.00
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Operating Profit Margin (%) -- -- -- -- --
Profit Before Interest And Tax Margin (%) -- -- -- -- --
Gross Profit Margin (%) -- -- -- -- --
Cash Profit Margin (%) -- -- -- -- --
Adjusted Cash Margin (%) 83.33 0.70 92.30 0.55 -3.67
Net Profit Margin (%) 66.66 0.61 52.42 0.52 -3.67
Adjusted Net Profit Margin (%) -- -- -- -- --
Return On Capital Employed (%) -- -- -- -- --
Return On Net Worth (%) 2.27 3.42 1.46 -- --
Adjusted Return on Net Worth (%) 2.27 3.42 2.18 2.28 -0.56
Return on Assets Excluding Revaluations 2.25 2.17 1.37 0.94 -0.22
Return on Assets Including Revaluations 2.25 2.17 1.37 0.94 -0.22
Return on Long Term Funds (%) 2.25 3.39 1.89 2.28 -0.21
Liquidity And Solvency Ratios
Current Ratio 105.00 2.05 37.47 2.06 1.73
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Quick Ratio 105.00 2.04 37.20 2.06 1.73
Debt Equity Ratio 0.01 -- 0.05 0.22 0.16
Long Term Debt Equity Ratio 0.01 -- 0.05 0.22 0.16
Debt Coverage Ratios
Interest Cover -- -- -- -- --
Total Debt to Owners Fund 0.01 -- 0.05 0.22 0.16
Financial Charges Coverage Ratio -- -- -- -- --
Financial Charges Coverage Ratio Post Tax -- -- -- -- --
Management Efficiency Ratios
Inventory Turnover Ratio -- -- -- -- --
Debtors Turnover Ratio -- 32.81 -- -- 0.39
Investments Turnover Ratio -- -- -- -- --
Fixed Assets Turnover Ratio -- 278.39 -- -- --
Total Assets Turnover Ratio -- -- -- -- --
Asset Turnover Ratio -- 75.58 -- 17.74 0.69
Average Raw Material Holding -- -- -- -- --
Average Finished Goods Held -- -- -- --
Number of Days In Working Capital -- 39.05 -- 60.42 1,654.04
Profit & Loss Account Ratios
Material Cost Composition -- 76.54 -- 97.76 94.37
Imported Composition of Raw Material Consumed -- -- -- -- --
Selling Distribution Cost Composition -- -- -- -- --
Expenses as Composition of Total Sales -- -- -- -- --
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit -- -- -- -- --
Dividend Payout Ratio Cash Profit -- -- -- -- --
Earning Retention Ratio 100.00 100.00 100.00 100.00 --
Cash Earning Retention Ratio 100.00 100.00 100.00 100.00 --
Adjusted Cash Flow Times 0.20 -- 1.84 12.95 --
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Mar '05 Mar '06 Mar '07 Mar '08 Mar '09
Earnings Per Share 0.27 0.42 0.18 0.50 -0.12
Book Value 11.73 12.16 12.34 30.99 30.87
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CREDIT RATING
At Aviva we consider it important to keep customers and investors up to date
with developments affecting the Group. In this section we show the Insurer
Financial Strength ratings of our core operating subsidiaries and the ratings of
our long and short term debt.
Insurer financial strength
S&P Moodys AM Best
Rating AA- Aa3 A
Description Very strong Excellent Excellent
Outlook Negative Negative Stable
Debt ratings
S&P Moody's AM Best
Senior (guaranteed) A A1 a-
Subordinated A-/BBB+ A3 bbb+
Direct capital instrument BBB+ Baa1 bbb
Commercial paper (guaranteed) A-1+ P-1 not rated
*Ratings as at 5 August 2009
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CASH FLOW
Cash Flow of Aviva Industries
Net Profit Before Tax
Net Cash From Operating Activities
Net Cash (used in)/from
Investing Activities
Net Cash (used in)/from Financing
ActivitiesNet (decrease)/increase In Cash and Cash
Equivalents
Opening Cash & Cash Equivalents
Closing Cash & Cash Equivalents
-------------------in Rs. Cr. -----------------
Mar '03 Mar '04 Mar '08
12 mths 12 mths 12 mths
0.06 0.04 -0.01
0.00 -0.18 0.18
0.06 0.04 0.06
-0.01 0.09 -0.26
0.05 -0.04 -0.02
0.03 0.08 0.10
0.08 0.03 0.08
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DATA ANALYSIS
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DATA REPRESENTATION
Earnings per share
Their IFRS earnings per share for 2009 were 37.8 pence (2008: 36.8 pence
loss). This mainly reflects the improvement in financial markets in 2009.
Economic and investment return assumptions during the year were in line with
our long-term expectations with a positive variance of 77 million (2008: 2,544
million adverse).
As condition of insurance market was very bad in 2006 to 2008 mid after that it
improved a lot and from that graph we can understand that because of market
slowdown it happened.
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Debt Equity Ratio
Debt equity ratio is also saying that it improved a lot from the year 2007 mid
till 2008 but after that because of return the have faced the slowdown.
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Quick Ratio
Quick ratio shows also decline position it means that the ability to change
current assets into money or liquidate power is declining because of market
trends. The liquid assets are very few and they are not utilizing properly. As
market down in year 2005 so its speedily declined after year 2006 its slowlyrecovered but in the year 2008 and 2009 it was stagnant.
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Current Ratio
The difference of current assets and current liabilities shows that ratio. As it
shows that if working capital is high so liquidity of business is respectively high.
By this graph I can understand the financial position of the company like in the
year 2005 the ratio shows the good position but because of market slowdown
its fluctuating and after 2008 it become stable. That shows that company is
recovering its financial position.
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Net Profit Margin (in %)
In every graph we can see that position was very fluctuating of the company, it
is because market slowdown. In this graph I can say that company is trying to
recover the losses by reducing the indirect expenses. As in the year 2008 and
2009 the position was little bit stable then other year.
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Operating Profit per Share
Operating profit per share is decline very speedily, it is because after
slowdown it become tough to survive in that position and to overcome from
this situation they need fund and the company can adjust fund only by
reducing expense and taking help by bank or its shareholders. So here
because of expense operating profit reduce per share till the year 2009.
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Return on equity shareholders' funds - %
The improvement in 2009 to 16.2% (2008: 11.0%) reflects the increase in the
post-tax MCEV operating result and the impact of lower opening equity
shareholder's funds following falls in asset values in 2008.
Return on equity shareholders' funds is calculated as after-tax operating return,
before adjusting items, on opening equity shareholders' funds, including life
profits on a market consistent embedded value (MCEV) basis.
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Conclusion
As the project is to Analysis of Financial Position & Profitability of Aviva
Life Insurance and the main objective to understand the financial positionor condition of company. After completing the project I know that how
ability of management can perform work in difficult situation. Because
during the recession they faced very bad condition but as India condition
will improve they will also improve. As company is trying to reduce its
expenses for earning good profit.
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Finding
By this project I found that company position is not that much good
right now because of slowdown in year 2005-06 and that impacted a lot
on companys ratio.
The ratio like Current Ratio, Quick Ratio, Earning par share,
Return on Capital Employed or Shareholder Funds, Operating Profit, Net
Profit Margin and Debt-Equity Ratio are in decline position.
These ratios show that company is not utilizing its fund properly
and the working capital requirement is highly.
By this project I found that the operating expenses are very high
due to recovery period from global slowdown.
I found that if company will focus on its liabilities so they can
overcome from the negative growth.
The cash flow statement shows its working.
The credit rating that the company got in year 2205 was very good.
But after that recession it changed, here credit rating play very important
role because almost 60% investors invest their money on the basis of
goodwill or credit rating that a company hold in the market.
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Limitation
The data collection was little bit tough because latest data is not
available on the internet.
Finding the data of Insurance sector is very difficult.
Problem occurred due to lack of time and facility of internet.
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BIBLOGRAPHY
Articles
http://articles.economictimes.indiatimes.com/2013-08-
03/news/41034416_1_integrated-insurance -pharande-spaces-anil-
pharande
http://articles.timesofindia.indiatimes.com/2013-07-
08/internet/40442721_1_insurance companies market-sudhir-pai
http://articles.economictimes.indiatimes.com/2013-06-
24/news/40166820_1_slowdown-insurance-sector-dtz-india
Books
Malhotra, Naresh, FINANCIAL MANAGEMENT, 5thedition, Pearson
education, 2008
C.B. GUPTA, FINANCIAL MANAGEMENT, 3rd
edition, sultan and
sons, 2009.
P. SUBBA RAO, PERSONNEL AND HUMAN RESOURCE
MANAGEMENT, 2ndedition, Himalaya Publishing House
Websites
http://www.avivaindia.org/download/brouchre-March-220313.pdf