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Transcript of Project Report On
Birla Sun Life Insurance
PROJECT REPORT ON
FINANCIAL STATEMENT ANALYSIS
OF
SUBMITTED BY:
A report submitted in partial fulfillment of MBA programme at
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Birla Sun Life Insurance
ACKNOWLEDGEMENT
We would like to express our sincere gratitude and thanks to Mr.
TARUN GOEL, Agency Manager, Birla sun life insurance ltd,
AMBALA CANTT. for giving us the guidance. We owe everything
we have gained from the project in terms of knowledge and
experience to them, as without their timely support and
encouragement the project would not have been as fruitful as it has
been.
We also thank Mr. PARVEEN BAJAJ for his constant
encouragement and guidance at every stage of this project, acting as
my faculty guide. He has been kind enough to spare his valuable
time and share his corporate experiences, which helped me to
approach the project in the right way.
We are grateful also to the entire staff of “Birla sun life insurance
ltd.” who helped us to collect the relevant data and get the real gist
of current scenario.
We would also like to extend sincere thanks to few people who were
not part of our project but without their help things would not have
been as easy as they were.
THANK YOU ALL
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Birla Sun Life Insurance
POONAM KUMARI (MBA 3rd SEMESTER)
FINANCIAL STATEMENT ANALYSIS
SUBMITTED BY:- POONAM KUMARI
ROLL NO. MBA 3rd SEM
KALPI INSTITUTE OF TECHNOLOGY KALPI
SESSION (2011-13)
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Birla Sun Life Insurance
KURUKSHETRA UNIVERSITY
KURUKSHETRA
STUDENT DECLARATION
I hereby declare that the project report titled “FINANCIAL STATEMENTS OF BIRLA SUN LIFE INSURANCE CO. LTD”, submitted in the partial fulfillment of the requirement of Master of Business Administration to KALPI INSTITUTE OF TECHNOLOGY KALPI is my original work. POONAM KUMARI
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Birla Sun Life Insurance
CERTIFICATE BY THE GUIDE
This is to certify that the work entitled “FINANCIAL STATEMENT ANALYSIS” is a piece of research done by Poonam Kumari, a student of MBA 3rd semester bearing enrolment no. under my guidance and supervision for partial fulfillment of summer training project of Kurukshetra university Kurukshetra . To the best of my knowledge and belief the project report:
1. Embodies the work of the candidate herself
2. Has been duly completed 3. Is up to the standard in respect to
contents and language for being referred to the examiner.
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Birla Sun Life Insurance
GUIDE
PREFACE
During my six week training at “BIRLA SUN LIFE INSURANCE CO. LTD.” .I worked on a project “FINANCIAL STATEMENT ANALYSIS OF BIRLA SUN LIFE INSURANCE CO. LTD.”
Financial statement analysis is a powerful mechanism that helps in ascertaining the strength and weakness in operation and financial position of any business unit. It has been rightly said; “God is architect of money” it is adequate flow of finance with which business is started and run
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Birla Sun Life Insurance
smoothly in a successful way. Financial statement analysis is a best mean for drawing meaningful conclusion regarding financial operation, thus benefiting those who are in the working of business concern.
This project was undertaken to make the complete analysis of financial statement and also to get an experience of working with concern itself.Birla Sun Life Insurance co. ltd. To be a world class provider of financial security to individuals and corporates and to be amongst the top three private sectors life insurance companies in India.
CONTENTS
1. Introduction to insurance 5
2. Fundamental principles of insurance 6-8
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Birla Sun Life Insurance
3. Reasons for taking a life insurance policy 9-10
4. Vision, Mission, Values 11
5. Company Profile 12-16
6. Sales Procedure 17-19
7. Company’s Products 19-34 7.1 Flexi Plans 7.2Classic Life Premier 7.3 Gold plus II Plan 7.4 Supreme Life Plan 7.5 Platinum plus Plan
9. Funds by BSLI 34-39
11. Conclusion 40
12. Recommendation 41
13. Bibliography 41
14. Annexure 42-44
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Birla Sun Life Insurance
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Birla Sun Life Insurance
INTRODUCTION
“Insurance, in law and economics, is a form of risk
management primarily used to hedge against the risk of a
contingent loss. Insurance is defined as the equitable transfer
of the risk of a loss, from one entity to another, in exchange
for a premium. An insurer is a company selling the
insurance. The insurance rate is a factor used to determine
the amount, called the premium, to be charged for a certain
amount of insurance coverage. Risk management, the practice
of appraising and controlling risk, has evolved as a discrete
field of study and practice.”
The evolution of human beings from the primordial ‘wild’
stage to the ‘cave dwelling’ stage is nothing but their saga of
search for security. Their quest for security is eternal. Life
insurance is a device invented by them to seek security
against the most important hazards against which they found
themselves quite helpless. It will not be an exaggeration to
say that progress of civilization is due to human beings’
unending pursuit for security.
Life insurance in its modern form is a western concept.
Although it started taking shape since last 300 years, it came
to India with the arrival of the Europeans .the first life
insurance company was established in India in 1818 as
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Birla Sun Life Insurance
oriental life insurance company mainly by Europeans to
provide for widows of Europeans. The companies that
followed mainly catered to Europeans and charge extra
premium on Indians lives. The first Indian company, insuring
Indian lives at standard rates, was Bombay mutual life
insurance company, which was formed in 1870.this was the
year also when the first Insurance Act was passed by the
British parliament. The years subsequent to the Swedishi
Movement saw the emerging of several insurance companies.
The end of the year 1955, there were 245 insurance
companies and provident societies out of which 16 were non-
Indian companies. These companies were nationalized in
1956 and brought under one umbrella – the life insurance
corporation of India, which enjoyed monopoly of life
insurance business, till almost up to the end of year 2000.By
enacting the IRDA Act 2000,the government of India
effectively ended LIC’s monopoly and opened the doors for
private insurance companies
FUNDAMENTAL PRINCIPLES OF INSURANCE
Some useful terms in Insurance:
A) INDEMNITY
A contract of insurance contained in a fire, marine, burglary
or any other policy excepting life assurance and personal
accident and sickness insurance) is a contract of indemnity.
This means that the insured, in case of loss against which the
policy has been issued, shall be paid the actual amount of loss
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Birla Sun Life Insurance
not exceeding the amount of the policy, i.e. he shall be fully
indemnified. The object of every contract of insurance is to
place the insured in the same financial position, as nearly as
possible, after the loss, as if his loss had not taken place at all.
It would be against public policy to allow an insured to make
a profit out of his loss or damage.
B) UTMOST GOOD FAITH
Since insurance shifts risk from one party to another, it is
essential that there must be utmost good faith and mutual
confidence between the insured and the insurer. In a contract
of insurance the insured knows more about the subject matter
of the contract than the insurer. Consequently, he is duty
bound to disclose accurately all material facts and nothing
should be withheld or concealed. Any fact is material, which
goes to the root of the contract of insurance and has a bearing
on the risk involved. It is only when the insurer knows the
whole truth that he is in a position to judge
(a) Whether he should accept the risk and
(b) What premium he should charge.
If that were so, the insured might be tempted to bring about
the event insured against in order to get money.
C) Insurable Interest - A contract of insurance affected
without insurable interest is void. It means that the insured
must have an actual pecuniary interest and not a mere
anxiety or sentimental interest in the subject matter of the
insurance. The insured must be so situated with regard to the
thing insured that he would have benefit by its existence and
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Birla Sun Life Insurance
loss from its destruction. The owner of a ship run a risk of
losing his ship, the charterer of the ship runs a risk of losing
his freight and the owner of the cargo incurs the risk of losing
his goods and profit. So, all these persons have something at
stake and all of them have insurable interest. It is the
existence of insurable interest in a contract of insurance,
which distinguishes it from a mere watering agreement.
D) Causa Proxima - The rule of causa proxima means that
the cause of the loss must be proximate or immediate and not
remote. If the proximate cause of the loss is a peril insured
against, the insured can recover. When a loss has been
brought about by two or
more causes, the question arises as to which is the causa
proxima, although the result could not have happened without
the remote cause. But if the loss is brought about by any cause
attributable to the misconduct of the insured, the insurer is not
liable.
E) Risk - In a contract of insurance the insurer undertakes to
protect the insured from a specified loss and the insurer
receive a premium for running the risk of such loss. Thus, risk
must attach to a policy.
F) Mitigation of Loss - In the event of some mishap to the
insured property, the insured must take all necessary steps to
mitigate or minimize the loss, just as any prudent person
would do in those circumstances. If he does not do so, the
insurer can avoid the payment of loss attributable to his
negligence. But it must be remembered that though the
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Birla Sun Life Insurance
insured is bound to do his best for his insurer, he is, not bound
to do so at the risk of his life.
G) Subrogation - The doctrine of subrogation is a corollary
to the principle of indemnity and applies only to fire and
marine insurance. According to it, when an insured has
received full indemnity in respect of his loss, all rights and
remedies which he has against
Third person will pass on to the insurer and will be exercised
for his benefit until he (the insurer) recoups the amount he has
paid under the policy. It must be clarified here that the
Insurer’s right of subrogation arises only when he has paid for
the loss for which he is liable under the policy and this right
extends only to the rights and remedies available to the
insured in respect of the thing to which the contract of
insurance relates.
H) Contribution - Where there are two or more insurance on
one risk, the principle of contribution comes into play. The
aim of contribution is to distribute the actual amount of loss
among the different insurers who are liable for the same risk
under different policies in respect of the same subject matter.
Any one insurer may pay to the insured the full amount of the
loss covered by the policy and then become entitled to
contribution from his co-insurers in proportion to the amount
which each has undertaken to pay in case of loss of the same
subject-matter.
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Birla Sun Life Insurance
In other words, the right of contribution arises when
1) There are different policies, which relate to the same
subject matter
2) The policies cover the same peril which caused the
loss, and
3) All the policies are in force at the time of the loss, and
4) One of the insurers has paid to the insured more than
his share of the loss.
Life Insurance Policy is a form of security for the person who
insures his life and his family. Life insurance policies have
helped trade and other economic activities to flourish in a
great manner. It has generated lots of job opportunities. It is
looked upon as a lucrative career option. Life insurance
companies have also entered the international business
scenario.
The following reasons substantiate why a life
insurance policy should be taken :
A) Early Deaths
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Birla Sun Life Insurance
The mortality rate is experiencing a declining trend in many
parts of the world. However it is also important to note that
the age at which People die is also ever decreasing. Some
reasons for this include unhealthy living style, stress,
pollution, and some natural calamities. This necessitates
people to make adequate measures to yield income for their
family and dependents. This could be a serious concern if the
insured happens to be the sole breadwinner. Some individuals
see this as an option to plan their retirement.
B) Advancements in Health Care
The mortality rate has declined rapidly even though the fact
remains that the number of people who die at an early age is
on the increase. This is mainly due to the advancement in
healthcare and the awareness on medical facilities. This
results in an increased spending at an old age. This increased
spending is also due to increase in the costs of living apart
from paying expensive medical bills. Unless they invest in
Life insurance or other forms of insurance like health
insurance it becomes next only too impossible to meet the
financial demands especially during the old days.
C) Increase in the Cost of Living and Spending
Power
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Birla Sun Life Insurance
The purchasing power of the consumers and the standard of
living has experienced a steep rise over the years. The
increase in National Income and gross domestic product are
Partly responsible for this. Individuals incur many unexpected
expenses due to the growing needs. Insurance comes in handy
to meet such an unexpected expense. It also
Makes sure that an individual is able to meticulously plan his
finances.
Insurance option is more or less an interest free loan. An
individual can cancel his insurance policy and obtain a huge
amount if it is imperative in meeting an urgent expenses and
he does not have alternative sources for finance. Life
insurance companies therefore do the needful to consumers.
D) Tax Concessions
Income tax concessions are available to individuals and
corporate houses that adopt insurance policies. Many have
been making investments in Insurance with the sole aim of
enjoying tax benefits. This naturally increases spending
power. Since the investments increases the economic
activities in the country automatically increases.
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Birla Sun Life Insurance
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Birla Sun Life Insurance
Birla Sun Life – A Coming
Together Of Values
Birla Sun Life Insurance Company (BSLI) is a joint venture between the Aditya Birla Group and Sun Life Financial Inc of Canada and was established in India in the year 2000. Aditya Birla Group has established a strong financial presence in India through Aditya Birla Financial Services Group with expertise in a wide array of products which include wealth management, consumer finance, broking, lending and private equity. The Aditya Birla Group is common and trusted name in India with decades of presence in sectors ranging from cement, metals, textile, telecom and retail business to name a few. Sun Life Financial is a Canadian based financial services conglomerate with a major chunk of its business in the insurance domain with a history of over 140 years and hence provides the much needed expertise to this joint venture in India. Birla Sun Life Insurance Company has a vast distribution network of almost 600 branches across India reaching out t more than 1500 towns. The already established companies of the Aditya Birla Financial Services Group give it the expertise and reach to service and add more consumers to the life insurance business. The company has a wide array of life insurance products catering to all aspects of a person’s life from traditional plans to unit linked market plans. They have had Virendra Sehwag and Yuvraj Singh as their branch ambassadors endorsing life insurance products of Birla Sun Life.
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Birla Sun Life Insurance
Birla Sun Life is a joint venture between The Aditya Birla
Group, one of the largest business house in India and Sun
Life Financial Inc., a leading International Financial Services
Organization. The local knowledge of the Aditya Birla Group
combined with the expertise of Sun Life Financial Inc. offers
a formidable protection for our future.
The Aditya Birla Group is led by its chairman- Mr. Kumar
Manglam Birla. The Group has over 88000 employees across
all its units worldwide. Some of the key organizations with
the group are Hindalco, Grasim, Aditya Birla Nuvo, etc.
The group is India's leading business house with a number of
key organizations. These are as follows:
1. Grasim
2. UltraTech Cement Ltd
3. Hindalco
4. Indian Aluminium Company Ltd
5. Aditya Birla Nuvo
6. Idea Cellular Ltd.
7. Birla Sun Life Insurance Co.Ltd
8. Birla Sun Life Asset Mgmt. Co.Ltd
9. Birla Sun Life Distribution Co. Ltd
10. PSI Data Systems
11. Indo Gulf Fertilizers Ltd.
12. Birla Global Finance Ltd
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Birla Sun Life Insurance
Sun Life Financial Inc. and its partners today have operations
in key markets worldwide, including Canada, the United
States, the United Kingdom, Hong Kong, the Philippines,
Japan, Indonesia, India, China and Bermuda. Sun Life
Financial Inc. is a leading player in the life insurance market
in Canada.
Share Holding Pattern:
In Birla-Sun Life, the two companies are having shareholding
pattern as follows:
74 %--> Aditya Birla Group
26 %--> Sun Life Financial Inc.
The group has 3 businesses:
1. Mutual Funds
2. Wealth Management
3. Life Insurance
Birla Sun Life Insurance co ltd. is the Life-Insurance arm
of Birla-Sun Life
Birla Sun Life Insurance in its 7 successful years of
operations has contributed significantly to the growth and
development of life insurance industry in India. It pioneered
the launch of Unit Linked Life Insurance plans amongst the
private players in India. It was the first player in the industry
to sell its policies through the Bancassurance route and
through the Internet. It was the first private sector player to
introduce a Pure Term plan in the Indian market. This was
supported by sales practices, which brought a degree of
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Birla Sun Life Insurance
transparency that was entirely new to the market. The process
of getting sales illustrations signed by customers, offering a
free look period on all policies, which are now industry
standards were introduced by BSLI. Being a customer centric
company, BSLI has covered more than a million lives since
inception and its customer base is spread across more than
1000 towns and cities in India. All this has assisted the
company
in cementing its place amongst the leaders in the industry in
terms of new business premium income. The company has a
capital base of more than Rs.672 crores.
Many ONEs with Birla Sun Life Insurance:
BSLI is a company that has a very unique contribution in the
history of Insurance sector. The company not only has
varying plans and funds, rather also is a pioneer in many
aspects. These pioneering features of BSLI are as follows:
1. Free Look Period: BSLI offers its policyholders
with a free look period of 15 days. Client gets
freedom to have an in-depth look over all the terms
and conditions regarding his/her life-insurance
policy. If he finds policy not worth opting for, he
can also return the policy, but at BSLI, co. people
ensures this not to happen.
2. Bancassurance: BSLI pioneered Bancassurance in
India. Bancassurance means to include Banks as one
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Birla Sun Life Insurance
of the distribution channels with the company. BSLI
is the first company, which realized that banks, with
their huge customer base and strong customer
loyalty, are a readymade platform to acquire new
business on a more cost effective and sustainable
basis.
3. Unit Linked Life Insurance Plans: BSLI was the
first in India to introduce Unit Linked Plans. A ULIP
is an auspicious coming together of security from
life
4. insurance and earnings from investment. Which
means, apart from securing the future they offer
efficient returns. These plans provide the customer
with a certain number of units, in the same way as a
mutual-fund holder gets units. ULIPs offer market-
linked returns to policyholders.
5. Sales Illustrations: BSLI is the first company to
introduce Sales Illustrations in the Insurance
Industry. Sales people of BSLI give demonstrations
of fund
6. Performance on two points of projections i.e. on 6%
and 10%. Now IRDA has also made it mandatory to
have sales illustrations.
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Birla Sun Life Insurance
BSLI’s has launched Century SIP, a unique systematic
investment plan offering an opportunity to create wealth with
as little as Rs 1000 per month plus a life insurance cover of up
to 100 times the monthly installment.
This plan comes along with free term insurance for an
individual up to 55 years of age.
The life insurance cover comes at no extra cost to the
investor. The cover is hassle free. The investor need not go
thru any medial test to avail of the life cover. All an investor
needs to do is enroll for CSIP & sign a “Declaration of Good
Health”. In case of unfortunate demise of investor the
insurance claim will be directly paid to the nominee by the
insurance company (Birla Sun Life Insurance Company).
Announcing the launch of Century SIP, Anil Kumar, CEO,
and Birla Sun Life MF said,
“This offering touches all aspects of an investor’s financial
planning needs. We wish to encourage the investment habit
among investors by providing them life insurance cover.”
Insurance cover to the investor would continue even after the
SIP’s minimum maturity tenor of 3 years. Any individual
between 18 to 46 years of age may invest in this plan.
Investment in this plan may be made through Electronic
clearing system (ECS), direct debits or post dated cheques.
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Birla Sun Life Insurance
7. Others: Some other ONEs with BSLI are:
1st to issue daily NAVs of funds for better
transparency.
1st to have a distinct CRISIL benchmark.
1st to disclose portfolio on a monthly basis.
Policyholders can view their policy details
online; they can be accessed from BSLI
website using your unique password.
Out of every 100 claims intimated to BSLI
98.28 stands cleared.
Also the average Turn Around Time (TAT) :
(i) From the receipt of the last
requirement till dispatch of
cheque is 5 days and
(ii) From intimation of claim till its
decision & dispatch of cheque is
36 days.
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Birla Sun Life Insurance
Sales Procedure of Insurance in BSLI:
BSLI ensures that its policyholders get the best out of the
policy offered to them by their Advisors. For this, BSLI
follows a set procedure of selling Insurance to the clients. The
sales procedure can be diagrammatically presented as follows:
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Birla Sun Life Insurance
This procedure can be stepped down as follows:
1. Pitching the customer: The first and foremost thing is
that, client should be ready to purchase the Insurance plan.
Insurance is not a very preferable product yet in India. And,
thus, co. has to be very vigilant. Advisors, at BSLI, maintain
relationships and make the most of their Goodwill. Insurance
27
SUSPECTING
PROSPECTING
APPOINTMENT
FIRST SALES CALL
FOLLOW UPS
SALES CLOSED
OFFICE WORK
Birla Sun Life Insurance
is a Relationship oriented business. Keeping this in mind
BSLI also initiated Bancassurance, where Banks’ image of
being loyal to the customers, plays a major role in pitching the
customer to buy Insurance. BSLI uses following routes for
distributing their Product to general public:
a. Direct Personal Contacts (through Advisors)
b. Bancassurance (through Banks)
c. Personal Relations (through co. employees)
d. Existing Policyholders.
2. Sales Illustration: BSLI is the first company to give
demonstration of the fund performance i.e. how a certain
policy will perform or will give returns. BSLI Advisors give
sales illustration. Fund performance is shown on 6% and 10%
projections. If client find these projected returns suitable to
his/her risk profile, he go for purchasing the policy.
3. Proposal Form : Now as client is ready to get insured,
advisor gives him the proposal form and asks for all
the documents required. Proposal form is a 4 page
document that contains all the necessary information
related to the Insured and the Owner of the policy.
Documents required along with the proposal form are:
Date-Of-Birth Proof
Address & ID Proof
Income Certificate
Medical Certificates (only if Insurer is a senior
citizen)
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Birla Sun Life Insurance
4. After Sales Service : Now after the Insurance is sold,
follow-ups are required. Advisor needs to maintain
good relations with the policyholder. Insurance co. can
Generate further business, only if, existing policyholders
are satisfied with the services being provided by the
advisor of the co. Thus, BSLI keeps this in mind and
Business Development Executives continuously track the
needs of the policyholders. BSLI provides the
policyholders with monthly updates of the fund
performance and
also discloses the asset portfolio of the fund. This assists
the policyholders to manage their policy according to their
risk profile. They can, thus, change their fund allocation
as well as the asset allocation in any fund, chosen by
them.
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Birla Sun Life Insurance
COMPANY PRODUCTS /
PLANS
All the plans associated with BSLI are Unit Linked Plans.
Flexi Plans
Flexi Plans have three variants. These variants are:
1. Flexi Save Plus (Endowment Plan)
2. Flexi Cash Flow (Money Back Plan)
3. Flexi Lifeline (Whole of Life Plan)
Features:
This is a Unit Linked Plan with guaranteed returns.
Provides flexibility with Top-Up Facility.
For Quarterly modal premium less than Rs.5000,
payment can be made through ECS.
Policyholder can attach riders to the plan according to
his/her needs.
Liquidity in the form of Partial withdrawals.
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Birla Sun Life Insurance
Three Investment Fund options are available with the
policy and policyholder is free to switch between
funds anytime during the tenure of the policy.
The Sum Assured may be increased once in every 5
policy years, starting from the 6th policy year.
Premium can be paid annually, semi-annually,
quarterly and monthly
Premium Invested: Collected Premium is invested in three
Investment Fund Options. These funds are:
1. Protector
2. Builder
3. Enhancer
Benefits:
1. Maturity Benefits : At maturity, Policyholder gets the
higher of the guaranteed fund value (min. 3% on
premium) or the Total Fund value.
2. Survival Benefits :
(i) At the end of every 5th Coverage Benefit Period
and the remainder on maturity, an amount equals
to the minimum of (a) or (b) mentioned below will
be reduced from the guaranteed fund value and
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Birla Sun Life Insurance
transferred to the holding account for the purpose
of partial withdrawals, where-
(a) Guaranteed Fund Value
(b) Sum Assured % as stated below:
30% if the Coverage Benefit Period is
10 years.
25% if the Coverage Benefit Period is
15 years.
20% if the Coverage Benefit Period is
20 years.
15% if the Coverage Benefit Period is
25 years.
If survival benefits are not withdrawn, they will
continue to be a part of the Fund Value.
(ii) If the life insured is a minor, policyholder
can withdraw the survival benefit payout
within one month from the scheduled
payout date from the fund value.
3. Death Benefits :
Age at time of
DeathDeath Benefits
30 days to 1 year Fund Value Only
Age 1 Year to 60
Year
Higher of Sum Assured less all partial withdrawals made in 24
months preceeding the death of life insured or the fund value or
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Birla Sun Life Insurance
the guaranteed fund value.
On or After
attainment of 60
Years
Higher of Sum Assured less all partial withdrawals made since
the life insured attained the age 58 or the fund value or the
guaranteed fund value.
Charges:
1. Mortality Charges : These charges are deducted by
canceling units on a monthly basis at the prevailing
NAV. The annual mortality charges per 1000 sum
assured for sample ages are as follows:
Age 20 30 40 50 60
Male 1.016 1.171 2.150 5.532 13.732
Female 0.896 1.163 1.657 4.030 10.660
2. Partial Withdrawal Charges : 2 withdrawals in a policy
year are free of charge. Rs100 for every additional
partial withdrawal are charged.
Classic Life Premier
This is the plan that not only helps to save for the future but
also helps to get rich benefits from the investments, especially
at a time when the need for family protection reduces
significantly.
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Birla Sun Life Insurance
Features:
The plan is a unit linked, non-participating plan.
This plan has the option of seven-investment fund
with the flexibility to allocate the premiums in varying
proportions into the different Fund Option.
Top up facility is there. The minimum amount of top
ups is 10000.
The plan offers further benefits in the form of
additional units, which will be added to the Fund value
at the end of the 10th policy year.
There is high liquidity in the form of Partial
Withdrawals and Surrender Benefits.
Death Benefits, which will be higher of the Fund value
or Sum Assured, reduced by the applicable partial
withdrawals.
Eligibility:
Entry Age:
Minimum: 30 days for 20 & 30 term
8 years for 10 terms
30 years for whole life
Maximum: For 10 years term- 60 years
For 20 years term- 50 years
For 30 years term- 40 years
For Whole Life- 60 years
Duration:
Minimum: 10 years
Maximum: 70 years (assuming whole life to be
100 years)
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Birla Sun Life Insurance
Maturity Age: 70 years for the term- 10,20,30 years
100 years for whole life
Premium Payment Term: For 10 years term- 3, 5yrs or
regular coverage paying
period.
For 20 yrs, 30yrs term and
Whole Life- 5yrs, 10 yrs or
regular coverage paying
period.
Premium Investment: Premium collected is invested in
Seven Investment Fund Options:
1. Assure
2. Protector
3. Builder
4. Enhancer
5. Creator
6. Magnifier
7. Maximiser
Benefits:
1. Guaranteed Addition : It is in the form of additional
units, which is added to the fund value on the 10 th
policy anniversary and on every 5th policy anniversary
thereafter, while policy is in effect.
2. Partial Withdrawal Options : Partial Withdrawals can
be made after 3 policy years or when the life insured
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Birla Sun Life Insurance
attains maturity, whichever is later. The minimum
partial withdrawal amount is Rs.10000
3. Surrender Benefits : Policy offers the flexibility of
surrendering the policy, if the need arises. There is no
surrender charge after 6 completed policy years.
However, if the policy is surrendered within 3 years from
inception, the surrender value is paid after the completion
of the third policy anniversary.
4. Death Benefits :
Below 5 years: If the death of the life insured
take place before 5 years, only the fund value
shall be payable to the policy owner.
Between 5 to 60 years: Higher of the fund
value or the sum assured less all applicable
partial withdrawals made in the last 24 months
preceding the death of the life insured.
60 years and Above: Higher of the fund value
or the sum assured less all applicable partial
withdrawals made since the life insured
attained the age of 58.
5. Maturity Benefits : On maturity of the policy, the fund
value is payable. Under the whole life option, on
maturity of the policy, when the life insured attains the
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Birla Sun Life Insurance
age of 100, then fund value is payable and the policy
will be terminated.
6. Tax Benefits : Tax benefits on premium payment are
governed by section 80C of the Income Tax Act 1961.
Tax Exemptions on the amount received on maturity
in the unfortunate event of death and the withdrawals
are governed by section 10(10D).
7. Addition of Riders : Policy holder can customize the
plan by adding any of the following 6 riders:
1. Accidental Death & Dismemberment Rider
2. Term Rider
3. Critical Illness Rider
4. Critical Illness Plus Rider
5. Critical Illness Women Rider
6. Waiver of Premium Rider
Charges:
1. Premium Allocation Charges : These charges during
the premium paying term are as under:
Policy Year 1 2 or 3 Thereafter
Charge 13% 4% 2%
This charge on Top-up and underwriting extra is 2%.
2. Mortality Charge : This charge will be deducted by
cancellation of units on a monthly basis at the
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Birla Sun Life Insurance
prevailing NAV. The Annual Mortality charge per
1000 of the Sum at risk for sample ages are as follows:
Age 25 35 45 55 65
Female 1.023 1.162 2.385 6.441 15.92
Male 1.083 1.363 3.110 8.571 21.06
3. Fund Management Charge : This is charged by
adjustment of the daily NAVs. The charge is:
1% p.a. for Assure, Protector, Builder and
Enhancer Fund.
1.25% p.a. for Creator, Magnifier and
Maximiser Fund.
4. Policy administration Charge : The charge is deducted
by canceling units on a monthly basis at the prevailing
NAV. The annual charge differs according to the
5. Life Insurance Coverage Sum Assured and Life
Insurance Coverage Paying Period. The maximum
charge is 6.10 and the minimum charge is 0.00
6. Surrender Charge : These charges are levied as the
percentage of the annual life insurance coverage
Premium payable. Charges are as follows:
Policy Year 1 2 3 4 5 6 7+
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Birla Sun Life Insurance
Surrender
Charge30% 20% 15% 10% 8% 6% NIL
7. Rider Premium Charge : If the riders are attached, this
charge will be realized by cancellation of units on a
monthly basis based on the equivalent monthly rider
coverage premium payable, when rider coverage
payment period equals the rider coverage benefit
period.
Gold Plus II Plan
The plan gives much more than a good insurance cover, an
opportunity to grow investment for the medium term. It is
worth more than Gold.
Features:
It is a Unit Linked, Non-Participating, Insurance plan.
Duration of plan is 8 years.
Premium paying term of 3 years with the flexibility to
reduce premium up to Rs. 10000 from the second
policy year.
Plan also has Top-up facility.
Liquidity in the form of Partial Withdrawals and
Surrender Benefits.
Plan has 7 fund options.
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Birla Sun Life Insurance
Free unlimited fund switching and premium
redirection
Eligibility:
Entry Age: 18 to 70 years.
Minimum Premium: Rs.50000
Minimum sum Assured: 5 x Annual Premium
Premium Investment: Premium collected is allocated in
varying proportions in seven investment fund options.
Policyholder can switch between the fund options anytime
during the tenure of the policy. The seven Investment Funds
available are:
1. Assure
2. Protector
3. Builder
4. Enhancer
5. Creator
6. Magnifier
7. Maximiser
Benefits:
1. Maturity Benefits :
On maturity fund value will be paid to the
policyholder.
2. Death Benefits :
In the Unfortunate event of the Death of the Life
Insured prior to the maturity date of the policy, the
nominee gets the greater of
(a) Fund Value
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Birla Sun Life Insurance
(b) Sum Assured reduced for partial withdrawal as
follows:
Before the life insured attains the age
of 60, the sum assured payable on
death is reduced by partial
withdrawals made in the preceeding
years.
Once the Life Insured attains the age
of 60, the Sum Assured payable on
death is reduced by all partial
withdrawals made from age 58
onwards.
3. Tax Benefits :
Policyholder is eligible for tax benefits U/S 80C and
U/S 10(10D) of the Income Tax Act 1961.
U/S 80C- Premium up to Rs.100000 is allowed
as deduction from taxable income each year.
U/S 10(10D) - The Benefits received under
plan are exempted from tax.
Charges:
1. Premium Allocation Charges:
It is deducted from premium when received and before
allocation of units.
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Birla Sun Life Insurance
Policy
Charges
Policy Years
1 2 3 4+
On Policy
Premium 8% 4% 4%
On top-up
Premium 2% 2% 2% 2%
2. Fund Management Charges :
Fund Management charge not exceeding 1.5% per
annum of the fund value will be charged by
adjustments of the daily unit price. The charge is
1% p.a.- Assure, Protector, Builder and
Enhancer
1.25% p.a. – Creator, Magnifier and
Maximiser
3. Policy Administration Charges :
These charges are recovered by canceling units on a
monthly basis proportionately from each investment
fund. The annual Rate per 1000 of Sum Assured is:
Policy
Charges
Policy Years
1 2 3 4+
Policy
Administration
Charge *
19.4 19.4 19.4 14.4
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Birla Sun Life Insurance
* An additional 5 per 1000 will be charged in the first
3 policy years only on any excess Sum Assured over
Rs. 50000
4. Mortality Charges : These charges are deducted on a
monthly basis. These charges are taken by canceling
units proportionately from each of the investment
funds at that time. The annual rate per 1000 of Sum
Assured less fund value for sample ages are:
43
Birla Sun Life Insurance
Age 25 35 45 55 65
Female 1.023 1.162 2.385 6.441 15.92
Male 1.083 1.363 3.110 8.571 21.06
5. Surrender Charges :
These charges are applied when the policyholder
surrender their policy in the first 3 policy years. The
surrender charge as a percentage of the annual policy
premium chosen at issue is
Policy
Charges
Policy Years
1 2 3 4+
Surrender
Charges15% 12.5% 10% nil
Supreme Life Plan
Features:
The plan is a Unit Linked Insurance Plan.
It provides the nominee with an increased sum assured
and builds savings faster.
The plan offers more protection of money at
supremely low cost.
Provides with Supreme Accidental TPD (Total
Permanent Disability).
Policyholder gets freedom to choose premium amount
as low as Rs.25000
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Birla Sun Life Insurance
The plan provides with 6 Investment Fund Options.
The plan is flexible as it provides the policyholder
with Top-Up Premium facility to ensure faster growth
in the Fund Value.
Partial Withdrawals, are allowed, after 3 years to meet
liquidity needs of the policyholder
Duration:
Policy Term : 10, 15, 20, 25, 30, 35, 40 Years.
Premium Payment Term : Policyholder can choose to
pay premium at short or regular intervals.
Premium Investment: Premium Collected is investment in
six investment fund options. These funds are:
1. Assure
2. Protector
3. Builder
4. Enhancer
5. Creator
6. Magnifier
Benefits:
1. Death Benefits :
Double Death Benefits i.e. Death Benefits= Sum
Assured + Savings
Increasing Death benefits i.e. Death Benefit= Sum
Assured + 25% every 5th year
2. Accidental TPD Benefit :
45
Birla Sun Life Insurance
Policyholder immediately gets the original sum
assured up to Rs.50 lac
Co. pays the future premiums up to age 60.
3. Switches & Redirection :
Policyholder gets flexibility to switch between the
fund options. Two switches are free per annum.
Charges:
1. Mortality Charges : Charges are deducted monthly by
canceling units from the associated fund option. The
charge is 95%
2. Policy Administration Charges : These charges are
deducted monthly by canceling units from the
investment fund. The annual charge is Rs. 720 on the
first 1000 Sum Assured in all years i.e. Rs.3.60 per
1000 Sum Assured p.a. The additional charges for
years 1-5 are as follows:
Term Band 1 Band 2 Band 3
10/15 4.75 4.25 4.00
20+ 3.75 3.25 3.00
3. Premium Allocation Charges : These charges are 5%
for the 1st policy year and 2% for subsequent policy
years.
4. Fund Management Charges : These charges are 1 –
1.25% p.a. for all associated funds.
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Birla Sun Life Insurance
Platinum Plus Plan
Features:
This plan is a Unit Linked, Non-Participating,
Insurance plan.
A policy term of 10 years.
A premium paying term of 3 years.
One Innovative Investment fund, namely Platinum
Plus Fund I.
Full Liquidity after three policy years to meet any cash
needs.
Unique Guaranteed Maturity Unit Price representing
the highest unit plus price of Platinum Plus Fund I
recorded on 88 reset dates starting on March 17, 2008
and ending on June 15, 2015.
Eligibility:
Entry Age of Life Insured: 18 to 70 Years.
Minimum Annual Premium: Rs. 1,00,000
Minimum Sum Assured: 5xAnnual Premium.
Premium Collected is invested in the Equity & Debt
Market according to the preset Asset Allocation of the
Platinum Plus Fund I.
Benefits:
1. Guaranteed Maturity Unit Price
Minimum of Rs. 10 on the first Reset Date
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Birla Sun Life Insurance
At maturity, is the highest Unit Price recorded on 88
Reset Dates
2. Maturity Benefits
Number of units multiplied by higher of Guaranteed
Maturity Unit Price or prevailing Unit Price at
maturity
3. Surrender Benefits
Full liquidity after 3 policy years –100% Fund Value*
4. Death Benefits
Higher of Fund Value (as per the then
prevailing unit price) or Sum Assured (less
applicable partial withdrawals)
5. Tax Benefits
U/S 80C- Premium up to Rs.100000 is
allowed as deduction from taxable income
each year.
U/S 10(10D) - Benefits from the plan are
exempted from tax.
Charges:
1. Premium Allocation Charges : 10% of
premium in the first year and 4% of premium
in subsequent years.
2. Fund Management Charges : 1.00%-1.50% p.a.
for Assure & 1.50%-2.00% p.a. for Platinum
Plus Fund I.
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Birla Sun Life Insurance
3. Policy Administration Charges : These charges
are deducted monthly by canceling units from
the investment fund Assure first and then,
from Platinum Plus I, if required. The annual
charge is Rs. 720 on the first 1000 Sum
Assured in all years plus Rs.6 per 1000 Sum
Assured in years 1 to 3 only.
4. Mortality Charges : Charges are deducted
monthly by canceling units from the
associated investment funds. The Annual
Charges for sample ages are as follows:
Attained
Age25 35 45 55 65
Female 1.023 1.162 2.385 6.441 15.920
Male 1.083 1.363 3.110 8.571 21.060
5. Surrender Charges : This charge, as a
percentage of the annual premium at issue, is
16%, 13% and 10% for policy year 1, 2 and 3
respectively.
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Birla Sun Life Insurance
6. Revival Charge : The charge for policy revival
is Rs. 100-1000 per revival
FUNDS BY BSLI
Birla Sun Life Insurance, a leading Life Insurance company,
offers its clients with a long range of Funds. These funds are
designed to cater to a variety of needs of people who are from
different life stages. BSLI offers a broad range of 12 funds,
each having differing asset allocations.
12 funds offered are:
1. Individual Protector
2. Individual Assure
3. Individual Balancer
4. Individual Builder
5. Individual Creator
6. Individual Enhancer
7. Individual Life Maximiser
8. Individual Magnifier
9. Individual Multiplier
10. Pension Nourish
11. Pension Enrich
12. Pension Growth
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Birla Sun Life Insurance
A new fund named Platinum Plus Fund I is also added in
this list of funds.
Asset Allocation is decided by the Fund Managers of the
company. These fund managers continuously tracks the
movements of volatile market and combine this volatility with
the fund requirements of the policyholders. Accordingly he
decides allocation of assets in 5 major investment options:
Government Securities
Corporate Debt
Securitized Debt
Equity
Money Market Instruments
Proportion of allocating the fund in these options, vary
according to the needs and fund requirements of
policyholders. The most important thing to be noticed here is
that this portfolio is decided, based on the regulations of
IRDA. Performances of these funds are rated by the rating
agency-CRISIL.
All the 12 funds by BSLI are described below along with their
respective Asset Allocations.
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Birla Sun Life Insurance
Individual Assure
Objective: The primary objective of this fund is to provide
Capital Protection, at a high level of safety and liquidity
through judicious investments in high quality short-term debt.
Strategy: Generate better return with low level of risk
through investment into fixed interest securities having short-
term maturity profile.
Asset Allocation:
SECURITIES HOLDING
Corporate Debt 59.57%
Money Market Instruments 17.97%
TOTAL 100.00%
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Birla Sun Life Insurance
Individual Balancer
Objective: The objective of this fund is to achieve value
creation of the policyholder at an average risk level over
medium to long-term period.
Strategy: The strategy is to invest predominantly in debt
securities with an additional exposure to equity, maintaining
medium term duration profile of the portfolio.
Asset Allocation:
SECURITIES HOLDINGS
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Birla Sun Life Insurance
Government Securities 10.67%
Corporate Debt 39.04%
Equity 23.44%
Money Market Instruments 26.85%
TOTAL 100.00%
HOLDINGS
10.67%
39.04%
23.44%
26.85%Government Securities
Corporate Debt
Equity
Money Market Instruments
Pension Growth
Objective: This fund option is designed to build the capital
and to generate better returns at moderate level of risk, over a
medium or long-term period through a balance of investment
in equity and debt.
Strategy: Generate better return with moderate level of risk
through active management of fixed income portfolio and
focus on creating long term equity portfolio which will
enhance yield of composite portfolio with low level of risk
appetite.
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Birla Sun Life Insurance
Asset Allocation:
SECURITIES HOLDINGS
Government Securities 13.90%
Corporate Debt 45.41%
Equity 18.63%
Money Market Instruments 22.06%
TOTAL 100.00%
HOLDINGS
13.90%
45.41%18.63%
22.06%
Government Securities
Corporate Debt
Equity
Money Market Instruments
Pension Enrich
Objective: Helps to grow the capital through enhanced
returns over a medium to long-term period through
investments in equity and debt instruments, thereby providing
a good balance between risk and return.
Strategy: To earn capital appreciation by maintaining
diversified equity portfolio and seek to earn regular return on
55
Birla Sun Life Insurance
fixed income portfolio by active management resulting in
wealth creation for policyholders.
Asset Allocation:
SECURITIES HOLDINGS
Government Securities 14.35%
Corporate Debt 39.40%
Equity 32.69%
Money Market Instruments 13.57%
TOTAL 100.00%
56
HOLDINGS
14.35%
39.40%32.69%
13.57%
Government Securities
Corporate Debt
Equity
Money Market Instruments
VISION
To be a world class provider of financial security to individuals and corporates and to be amongst
the top three private sectors life insurance companies in India.
MISSION
To be the first preference of our customers by providing innovative, need based life insurance and retirement solutions to individuals as well as corporates. These solutions will be made
available by well-trained professionals through a multi channel distribution network and
Superior technology.
Our endeavor will be to provide constant value addition to customers throughout their
relationship with us, within the regulatory framework.
We will provide career development opportunities to our employees and The highest possible returns to our
shareholders.
VALUES
Integrity: Honesty in every action. Commitment: Deliver on the
promise Passion: Energized action Seamlessness: Boundary less in
letter & spirit Speed: One step ahead always
RESEARCH METHODOLOGY
For analysis the financial position of Birla Sun Life Insurance co. ltd. Both primary and secondary data have been collected. Primary data has been obtained by conducting direct interviews and indirect oral interviews with the staff of the company. Secondary data has been using Annual report, in the form of Balance Sheet and Profit & loss Account, and website of the company.
For calculating the financial ratio, Balance Sheet and Profit & Loss Account of the company has been taken as major tool.Balance sheet of the company has been taken as a tool for calculating Liquidity ratio, Efficiency/ Activity ratios and Solvency ratios. Profit & Loss Account has been taken as a tool for calculating Profitability ratios.All the ratios have been calculated from the figures as shown in the Balance Sheet and Profit & Loss account of the year for which the figures as shown in the Balance Sheet and Profit & Loss Account of the year for which the financial analysis of the company is being done.
PERIOD OF THE STUDY
The time period of the study of the topic “Financial Statement Analysis” was to be conducted and competed in the summer vacation from 15-06-2012 to 16-08-2012, which was very short duration.
RESEARCH PLAN
The research study is exploratory in nature. The established objectives were kept in mind during the study, however no hypothesis was formed as the study was more in the form of descriptive design attempting to analysis the attitude of respondents towards the project.
DATA COLLECTION
The information collected for the concerned topic is extracted through primary as well as secondary sources. This study is mainly based upon secondary data that is collected from balance sheets, trading & profit &loss a/c, reports, documents and other financial records. The major source of information has been published annual reports of the company.
METHODS OF DATA COLLECTION
Primary data- it is collected with help of questionnaire as it has been filled by selected sample. Respondents fill the questionnaire as per they perceive.
Secondary data- it is collected from internet, journals, electronic media, magazines, newspapers, books etc.
Instruments used – Questionnaires- A judicious mix of open ended and close ended question is used.
TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS
Various tools and techniques are used to complete the project work:-1. Comparative Statement2. Common Size Statement3. Trend Analysis4. Ratio Analysis
PRESENTATION OF DATA
The data has been resented in the form of one or more statements and tables. Each of such statement/table is accompanied by appropriate analysis and explanation and moreover significance of specific data has been highlighted there in.
LIMITATION OF THE STUDY
1. It was not an easy task. The respondent was not always open and forthcoming with their view.
2. This study is based on the assumption that respondents are true and factual although at times that my not be the case.
3. Another limiting factor could be existence of biasness in the respondents mind.
4. Though every care has been taken to eliminate such biasness, but considering the human factor the possibility of small bias having come up cannot be ruled out altogether.
5. As a financial statement is reared on basis of a going concern concept, it does not give exact position. The accounting concepts and conventions cause serious limitation to financial analysis.
6. Change in financial procedure by firm may often make financial analysis misleading.
7. Analysis is only a mean not end itself. The analyst has to make interpretation and draw conclusion. Different people may interpret the same analysis in different way.
FINACIAL STATEMENTS ANALYSIS - AN
INTRODUCTION
FINANCIAL STATEMENTS ANALYSIS (MEANING,PURPOSE AND PARTIES INTERESTED)
Meaning:
We know business is mainly concerned with the financial activities. In orderto ascertain the financial status of the business every enterprise preparescertain statements, known as financial statements. Financial statements aremainly prepared for decision making purposes. But the information as isprovided in the financial statements is not adequately helpful in drawinga meaningful conclusion. Thus, an effective analysis and interpretation offinancial statements is required.
Analysis means establishing a meaningful relationship between variousitems of the two financial statements with each other in such a way thata conclusion is drawn. By financial statements we mean two statements :
(i) Profit and loss Account or Income Statement(ii) Balance Sheet or Position Statement
These are prepared at the end of a given period of time. They are theindicators of profitability and financial soundness of the business concern.The term financial analysis is also known as analysis and interpretation offinancial statements. It refers to the establishing meaningful relationship
between various items of the two financial statements i.e. Income statementand position statement. It determines financial strength and weaknesses ofthe firm.Analysis of financial statements is an attempt to assess the efficiency andperformance of an enterprise. Thus, the analysis and interpretation offinancial statements is very essential to measure the efficiency, profitability,financial soundness and future prospects of the business units.
Financial analysis serves the following purposes :
_ Measuring the profitabilityThe main objective of a business is to earn a satisfactory return on thefunds invested in it. Financial analysis helps in ascertaining whetheradequate profits are being earned on the capital invested in the businessor not. It also helps in knowing the capacity to pay the interest anddividend.
_ Indicating the trend of AchievementsFinancial statements of the previous years can be compared and thetrend regarding various expenses, purchases, sales, gross profits and netprofit etc. can be ascertained. Value of assets and liabilities can becompared and the future prospects of the business can be envisaged.
_ Assessing the growth potential of the businessThe trend and other analysis of the business provides sufficientinformation indicating the growth potential of the business.
_ Comparative position in relation to other firms
The purpose of financial statements analysis is to help the managementto make a comparative study of the profitability of various firmsengaged in similar businesses. Such comparison also helps themanagement to study the position of their firm in respect of sales,expenses, profitability and utilising capital, etc.
_ Assess overall financial strengthThe purpose of financial analysis is to assess the financial strength ofthe business. Analysis also helps in taking decisions, whether fundsrequired for the purchase of new machines and equipments are providedfrom internal sources of the business or not if yes, how much? And alsoto assess how much funds have been received from external sources.
_ Assess solvency of the firmThe different tools of an analysis tell us whether the firm has sufficientfunds to meet its short term and long term liabilities or not.
PARTIES INTERESTED
Analysis of financial statements has become very significant due towidespread interest of various parties in the financial results of a businessunit. The various parties interested in the analysis of financial statementsare :(i) Investors : Shareholders or proprietors of the business are interestedin the well being of the business. They like to know the earningcapacity of the business and its prospects of future growth.(ii) Management : The management is interested in the financial positionand performance of the enterprise as a whole and of its variousdivisions. It helps them in preparing budgets and assessing theperformance of various departmental heads.(iii) Trade unions : They are interested in financial statements for
negotiating the wages or salaries or bonus agreement with themanagement.(iv) Lenders : Lenders to the business like debenture holders, suppliersof loans and lease are interested to know short term as well as longterm solvency position of the entity.(v) Suppliers and trade creditors : The suppliers and other creditors areinterested to know about the solvency of the business i.e. the abilityof the company to meet the debts as and when they fall due.vi) Tax authorities : Tax authorities are interested in financial statementsfor determining the tax liability.(vii) Researchers : They are interested in financial statements in undertakingresearch work in business affairs and practices.(viii) Employees : They are interested to know the growth of profit. As aresult of which they can demand better remuneration and congenialworking environment.(ix) Government and their agencies : Government and their agenciesneed financial information to regulate the activities of the enterprises/industries and determine taxation policy. They suggest measures toformulate policies and and regulations.(x) Stock exchange : The stock exchange members take interest infinancial statements for the purpose of analysis because they provideuseful financial information about companies.
Thus, we find that different parties have interest in financial statements fordifferent reasons.
27.2 TECHNIQUES AND TOOLS OF FINANCIAL STATEMENTANALYSIS
Financial statements give complete information about assets, liabilities,
equity, reserves, expenses and profit and loss of an enterprise. They are notreadily understandable to interested parties like creditors, shareholders,investors etc. Thus, various techniques are employed for analysing andinterpreting the financial statements. Techniques of analysis of financialstatements are mainly classified into three categories :
(i) Cross-sectional analysisIt is also known as inter firm comparison. This analysis helps inanalysing financial characteristics of an enterprise with financialcharacteristics of another similar enterprise in that accounting period.For example, if company A has earned 15% profit on capital invested.This does not say whether it is adequate or not. If we analyse furtherand find that a similar company has earned 16% during the sameperiod, then only we can make a conclusion that company B is better.Thus, it turns into a meaningful analysis.
(ii) Time series analysisIt is also called as intra-firm comparison. According to this method,the relationship between different items of financial statement isestablished, comparisons are made and results obtained. The basis ofcomparison may be :– Comparison of the financial statements of different years of thesame business unit.– Comparison of financial statement of a particular year of differentbusiness units.
(iii) Cross-sectional cum time series analysisThis analysis is intended to compare the financial characteristics of twoor more enterprises for a defined accounting period. It is possible toextend such a comparison over the year. This approach is most effectivein analysing of financial statements.The analysis and interpretation of financial statements is used to determine
the financial positon. A number of tools or methods or devices are usedto study the relationship between financial statements. However, thefollowing are the important tools which are commonly used for analysingand interpreting financial statements :
METHODS OR DEVICES OF FINANCIAL ANALYSIS
The analysis &interpretation of financial statement is used to determine the financial position & results of operations as well. A number of methods or devices are used to study the relationship between different statements. As effort is made to use those devices that clearly analysis the position of the enterprise.
The following methods of analysis are generally used:
_ Comparative financial statements _ Common size statements_ Trend analysis _ Ratio analysis_ Funds flow analysis _ Cash flow analysis
1. Comparative financial statements
In brief, comparative study of financial statements is the comparison of thefinancial statements of the business with the previous year’s financialstatements. It enables identification of weakpoints and applying correctivemeasures. Practically, two financial statements (balance sheet and incomestatement) are prepared in comparative form for analysis purposes.
Comparative Balance SheetThe comparative balance sheet shows the different assets and liabilities of
the firm on different dates to make comparison of balances from onedate to another. The comparative balance sheet has two columns for thedata of original balance sheets. A third column is used to show change(increase/decrease) in figures. The fourth column may be added for givingpercentages of increase or decrease. While interpreting comparative Balancesheet the interpreter is expected to study the following aspects :(i) Current financial position andLiquidity position(ii) Long-term financial position(iii) Profitability of the concern(i) For studying current financial position or liquidity position of aconcern one should examine the working capital in both the years.
Working capital is the excess of current assets over current liabilities.(ii) For studying the long-term financial position of the concern, oneshould examine the changes in fixed assets, long-term liabilities andcapital.(iii) The next aspect to be studied in a comparative balance sheet is theprofitability of the concern. The study of increase or decrease in profitwill help the interpreter to observe whether the profitability hasimproved or not.After studying various assets and liabilities, an opinion should beformed about the financial position of the concern.
Comparative Income statementThe income statement provides the results of the operations of a business.This statement traditionally is known as trading and profit and loss A/c.Important components of income statement are net sales, cost of goods sold,selling expenses, office expenses etc. The figures of the above components
are matched with their corresponding figures of previous years individuallyand changes are noted. The comparative income statement gives an ideaof the progress of a business over a period of time. The changes in moneyvalue and percentage can be determined to analyse the profitability of thebusiness. Like comparative balance sheet, income statement also has fourcolumns. The first two columns are shown figures of various items for twoyears. Third and fourth columns are used to show increase or decrease infigures in absolute amount and percentages respectively.The analysis and interpretation of income statement will involve thefollowing :– The increase or decrease in sales should be compared with the increaseor decrease in cost of goods sold.– To study the operating profits– The increase or decrease in net profit is calculated that will give an ideaabout the overall profitability of the concern.
2. COMMON SIZE STATEMENTS AND TREND ANALYSIS
The common size statements (Balance Sheet and Income Statement) areshown in analytical percentages. The figures of these statements are shownas percentages of total assets, total liabilities and total sales respectively.Take the example of Balance Sheet. The total assets are taken as 100 anddifferent assets are expressed as a percentage of the total. Similarly, variousliabilities are taken as a part of total liabilities.
Common size balance sheetA statement where balance sheet items are expressed in the ratio of eachasset to total assets and the ratio of each liability is expressed in the ratioof total liabilities is called common size balance sheet
Trend percentage analysis (TPA)The trend analysis is a technique of studying several financial statementsover a series of years. In this analysis the trend percentages are calculatedfor each item by taking the figure of that item for the base year taken as100. Generally the first year is taken as a base year. The analyst is able tosee the trend of figures, whether moving upward or downward. In brief, the procedure for calculating trends is as :– One year is taken as a base year which is generally is the first year orlast year.– Trend percentages are calculated in relation to base year
3. Ratio Analysis : Ratio analysis is a technique of analysis and interpretation of analysis and interpretation.
4. Fund Flow Statement: fund flow statement is a method by which we study changes in financial position of a business enterprise between beginning and ending financial statement date. It is a statement showing and uses of funds for a period of time. Fund flow statement is called by various names such as previous name such as services and application of funds, statement of changes in financial position, sources and uses of funds, summary of financial position, where gone statement, movement of fund statement, sources of increase and application of decrease, funds statements etc.
5. Cash Flow Statement : Cash flow statement is a statement which describes the inflows(source) and outflow(uses) of cash and cash equivalents an enterprise during a specified period of time such a statement enumerates net effects of the various business transaction on cash and its equivalents and takes in to account receipts and disbursement of cash.
SIGNIFICANCE OF COMPARITIVE FINANCIAL STATEMENT
1. Comparative study of financial statements is the comparison of the
financial statements of the business with the previous years financialstatements.
2. Comparative Balance Sheet shows the different assets and liabilites of
the firm on different dates to make comparison of balances from thedate to another.
3. Common size balance sheet items are expressed in the ratio of each asset
to total assets and the ratio of each liability is expressed in the ratio oftotal liablities.
4. The trends are brought with in understanding which help in making important decisions.
STATEMENT OF COMPREHENSIVE SIZE INCOME for the second quarter ended 29 Feb. 2012
STATEMENT OF FINANCIAL POSITION AS OF 29 FEB 2012
CONCLUSION
Our training was a very enriching experience for us, we have learnt
so many things, and we got insight into the insurance world.
Insurance sector today playing a major role in everyone’s life lot
more than ever before life currently there is a comprehensive range
of products covering each type of policy available in the market. We
have studied various insurance plans covered under BSLI, and their
features. BSLI also gives various Riders, which provides extra
benefits to the customers. And we came to know about the
pioneering features of BSLI, like sales procedure, SIP, etc.
While most insurance plans block money for certain period of time, a
BSLI plan gives the double benefit of life insurance along with easy
liquidity through lump sum cash.
Birla Sun Life Insurance (BSLI), one of the largest private life
insurers, is gearing itself to take advantage of the vast rural
opportunity that has opened up as a result of the revised definition of
rural areas by the IRDA. Over the last four years, BSLI has
painstakingly built its rural infrastructure to create a cost-effective
distribution network across the country.
Our training gave us corporate exposure, and helped in improving
our communication skills. We learnt to deal with customers, we
made them aware about various plans, and their respective features,
even helped them to select the best plan as per their requirements.
RECOMMENDATIONS
1. Competition from public sector and foreign banks remains a key challenge
for private sector banks. They need to reorient their staff and effectively
utilize technology platforms to retain customers.
2. They have to update their portfolio timely.
3. Birla Sun Life Insurance Ltd should have proper division of departments
under heads.
4. Birla Sun Life Insurance Ltd should have more pension plans.
5. Birla Sun Life Insurance Ltd should have more children plans, and more
help line plans
6. They should provide more information to the customer so that they
become more aware about insurance
BIBLIOGRAPHY
1. www.birlasunlife.com Dated 13/6/08 Time 3:30
2. www.Paisawaisa.com/LifeInsurance Dated 13/6/08 Time 4:00
3. Company brochure
4. Company brochure/ GOLD- PLUSII PLAN/ Ver 01/12/07
5. Company brochure/ Classic Life Premier/ Ver 8/9/07
ANNEXURE
1. Do you make investments?
A.Yes
B.No
2. How much you earn annually?
A. Below 50,000
B. 50,000-100,000
C.100, 000-1, 50,000
D. Above 150000
3. Do you know about insurance?
A. Yes
B. No
4. Do you know about BSLI?
A. Yes
B.No
5. How did you came to know about it?
A Newspapers
B. Online
C. Personal Reference
D. Other
6. What assets do you own?
A. Personal house
B.Car
C.Credit card
7. Where would you like to invest?
A. Mutual Fund
B.Stocks
C.Real estate
D.Insurance
8. What would u like to insure?
A. Vehicle
B.Life insurance
9. Which insurance plan of BSLI are you
interested in?
A.Saral Jeevan
B.Gold Plus II
C.Platinum Plus
D.Classic Life Premier
10. How do you rate our plans?
A. Average
B. Good
C. Excellent