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ASUMMER TRAINING PROJECT REPORT

ON

Marketing Analysis ofICICI Prudential Life Insurance.

Submitted in the partial fulfillment for the award ofBachelor of Business Administration (BBA)

(2007-2010)

SUBMITTED BY:

Jyoti

BBA 3rd B

Regd. No. :2007. GIM/A.90

Preface

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An Industrial, Business or service organization by taking up a project study is mostimportant part of our BBA course & is must as per the syllabus prescribed by Guru

Nanak Dev university BBA course is of administrative and managerial activity of

industrial, Business or service organization. The main objective of this project study isto help the student to develop ability to practical technique to solve real life problemrelated industrial. Business or Service organization.

According to the rules, I have taken my summer training in ICICIPrudential Life Insurance. Our gardeners, professors and banks summanagers gives the knowledge and guidance of this bank to us.

The summer training programmed for student of BBA training is for twomonths in the time of summer vacation theoretically knowledge and class room

discussion is not sufficient for the student but training given them practical andday to day working of bank.

In this project report I had tried to analyze the needs of the customersand suggest them the most suitable insurance solution. As well as I alsoanalyzed the brand awareness among the people.

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ACKNOWLEDGEMENT

To take training is a part of our BBA Programming and is an important part. Training quit valuable and important aspect to provide practicalknowledge student of management studies.

It was very useful and experience which I got during my training inICICI Prudential Life Insurance.

I was able to prepare this training report with the co-operation of variouspeople.

First of all I am very much thankful to in charge Director and professorof our institute

our professor Mrs Riti Passi who has given me an opportunity and she hashelped me very much in preparing the report by her guidance

Thanking you

JYOTI

GUIDE CERTIFICATE

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This is to certify that the project titled MARKETING ANALYSIS OF ICIC LIFEPRUDENTIAL is an original work of Mrs. Jyoti Enrollment student of Guru NanakInstitute of Management & IT , New Delhi submitted in partial fulfillment of the

requirements for the award of Bachelor of Business Administration(BBA)(2007-2010) under the guidance of the committee.

.

Signature of committee members Signature of HOD

Mrs.Riti Passi Mrs. Maninder Kaur

Objective of the Study

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Management as a profession cant be taught merely in the four walls of

classrooms. Only theoretical knowledge is not sufficient to build competitive

managers. Practical knowledge of the business environment is equallyimportant.

In today business world, insurance sector is running towards its

booming stage. This industry still has many things to come up to, so many

changes and opportunities will be given by insurance industry. So I choose

insurance industry for my training session in M.B.A.

I choose ICICI Prudential Life Insurance is one of those private

insurance players who entered the market before few years and made its own

place among all its competitors.

This report is shows insurance sector & how insurance is most

important part of life. And understand insurance definitions, different providers

of life insurance and comparisons. It also shows ICICI Prudential Life

Insurances Products.

As a Trainee ICICI Prudential Life Insurance give me very practical

knowledge about life insurance and how to working in organization, How

manage work, how to maintain relations with top level management as well as

colleges and bottom level management. So, this experience will helpful in

future. I am pleased by taken training at Indias one of the best insurance

company.

TABLEOF CONTENT

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No. Particulars PageNo.1 Introduction 72 Reserch Methodology 20

3 Life insurance at a glance 324 Retail Market Share: Private

Players37

5 Introduction of ICICI

Prudential

Prudential Plc

ICICI Life Insurance

Management

41

6 ICICI Prus Products 49

7 Finance Department 55

8 Marketing Department 649 SWOT Analysis 68

10 Conclusion 70

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INTRODUCTIUON

Insurance is defined as a co-operative device to spread the

loss caused by a particular r isk over a number of persons who areexposed to it and who agree to ensure themselves against that risk.

Risk is uncertainty of a f inancial loss. I t should not be confused

with the chance of loss, which is the probable number of losses out

of confused with per i l , which is def ined as the cause of loss or

with hazard, which is a condition, may increase the chance of loss.

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Every r i sk involves the loss of one or o ther k ind . The

function of insurance is to spread the loss over a large number of

persons who are agreed to co-operate each other at the time of loss.

The r isk cannot be over rated but loss occurring due to a certain

r isk can be distr ibuted amongst the agreed persons. They are

agreed to share the loss because the chance of loss is there.

Everybodys greatest asset during his/her working years is

his/her abi l ity to earn an income. I t is important to adequate ly

safeguard this asset to ensure his/her cash flow will continue in the

event of an unexpected disaster . His/her insurance policies will

help to protect him/her (if any) against any unforeseen odds.

There are two kinds of insurance available viz. Life Insurance and

General Insurance.

Life Insurance

Provides for dependents in case of death.

Replaces earning power, if disabled.

Protects his/her abili ty to meet accumulation / education /

marriage goals.

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General Insurance Addresses health care concerns.

Provides for auto, home and personal liability protection. Provides for potential long-term care costs.

Plans for business continuation.

GENERAL DEFINITION

The general definitions are given by the social scientists & they

consider insurance as a device to protect ion against r isks, or a

provision against inevitable contingencies or a co-operative device

of spreading risks. Some of such definitions are given below:

In the words of John Magee , Insurance is a plan by which

large number of people associate themselves & transfer to

the shoulder of all, risks that attach to individuals.

In the words o f S ir Wil li am B evridges , The collective

bearing of risks is insurance.

In the words of Boone & Kurtz , Insurance is a substitution

for a small known loss (the insurance premium) for a largeunknown loss, which may or may not occur.

In the words of Thomas , Insurance is a provision, which a

p rudent man makes agains t f or t he l os s or i nevi tabl e

contingencies, loss or misfortune.

In the words of Allen Z. Mayerson , Insurance is a device

for the transfer to an insurer of certain risks of economic

loss that would otherwise come by the insured.

In the words o f Ghosh & Aga rwal , Insurance is a co-

operative form of distributing a certain risk over a group of

persons who are exposed to it.

FUNDAMENTAL STATEMENT

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These are based on economic or business or iented s ince i t is a

device providing financial compensation against risk or

misfortune.

In the words of D. S. Harsell , Insurance may be defined as

a social device providing f inancial compensat ion for the

ef fects o f mis fortune, the payments being made from the

accumulated contribution of all parties participating in the

scheme.

I n t he w or ds o f R obert I. M eh r & E mer so n C amm ark ,

Insurance is purchased to of fset the risk resulting from

hazards, which exposes a person to loss. In the words of Riege l & Mil le r , Insurance is a social

device whereby the uncertain risks of individuals may be

combined i n a g roup & thus made more cer ta in smal l

periodic contributions, by the individuals providing a fund,

out of which, those who suffer losses may be reimbursed.

Insurance follows important characteristics.

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CHARACTERISTICS OF

INSURANCE

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Sharing of Risks

Insurance is a co-operative device to share the burden of r isk,

which may fall on happening of some unforeseen events, such as

the death of head of the family, or on happening of marine perils or

loss of by fire.

Co-operative Device

Insurance is a co-operative form of distributing a certain risk over

a group of persons who are exposed to it (Ghosh & Agarwal). Alarge number of persons share the losses arising from a particular

risk.

Evaluation of Risk

For the purpose of ascertaining the insurance premium, the volume

of risk is evaluated, which forms the basis of insurance contract.

Payment of happening of specified event

On happening of specified event, the insurance company is boundto make payment to the insured. Happening of the specified event

i s cer ta in in l ife insurance , but in the case of f ire, mar ine or

accidental insurance, it is not necessary. In such cases, the insurer

is not liable for payment of indemnity.

Amount of payment

The amount of payment in indemnity insurance depends on the

nature o f los se s occur red, sub ject to a max imum of the sum

insured. In life insurance, however, a fixed amount is paid on the

happening of some uncertain event or on the maturity of the policy.

Large number of insured persons

The success of insurance business depends on the large number of

persons insured against similar r isk. This will enable the insurer

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to spread the losses of r isk among large number of persons, thus

keeping the premium rate at the minimum.

Insurance is not a gambling

Insurance is not a gambling. Gambling is illegal, which gives gain

to one party & loss to the other. Insurance is a valid contract to

indemnity against losses. Moreover, insurable interest is present

in insurance contracts & it has the element of investment also.

Insurance is not charity

Charity pays without consideration but in the case of insurance,

premium is paid by the insured to the insurer in consideration of

future payment.

Protection against risks

Insurance provides pro tect ion aga inst r isks involved in l ife,

materials & property. It is a device to avoid or reduce risks.

Spreading of risk

Insurance is a plan, which spread the risks & losses of few people

among a large number of people. John Magee writes, Insuranceis a plan by which large number of people associates themselves &

transfer to the shoulders of all, risks attached to individuals.

Transfer of risk

Insurance is a plan in which the insured transfers his r isk on the

insurer . This may be the reason that Mayerson observes, that

insurance i s a device to t ransfe r some economic losses to the

insurer, and otherwise such losses would have been borne by the

insured themselves.

Ascertaining of losses

By taking a l i fe insurance policy, one can ascer ta in his future

l os ses i n t e rms o f m on ey. T his is d on e b y t he i ns ure r t o

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INTRODUCTION INSURANCE

COMPANY

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In order to go through the journey of LIC Path of private

sector insurance companies to nationalize company to again private

sector insurance companies is given as below:

Path

Private Life Insurance Companies

Nationalization

Privatization of Life Insurance Sector

1870 1956

Life Insurance concept was

accepted with almost 250 Private

Life Insurance Companies

1956

Merging of almost 250 Private

Sector Life Insurance Companies

in one nationalized

Life Insurance Corporation of

India

1995 Proposal to privatize life insurancebusiness

June 2000 Registration process was notified

August 2000 Applicat ion was filed

October 20001 s t l icense was issued with

introduction of IRDA

2002

During the month of January, 11

Life and Non-Life Private

Insurance license were issued

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In order to elaborate the above path lets go through the history of

Life Insurance Sector.

On 3 rd December 1670, seven earnest men of Bombay with just

seven rupees for initial expenses gave shape to a plan of offering

insurance to the public without the r isk of ruin and the Bombay

Mutual Life Insurance Society came into existence.

Right up to the end of the 19 t h century , fore ign insurance

companies had an upper hand in the matter of insurance business

and they enjoyed mere monopoly and the partiality were observed

in the form that Indian lives were insured with 10% extra premium

as a common pract ice, a t tha t t ime Lala Har ik ishan Lal f rom

Lahore was cal led The Napoleon of Indian Finance as he was

then called to launch the Bharat Insurance Company a t Lahore

(1896) in Punjab.

Prior to 1912, India had no legislation for regulating insurance.

The Life Insurance Companies Act 1912 and the Provident Fund

Act 1912 were passed.

The Insurance Act 1938 was the f irst comprehensive legislation

governing not only life but also non-life branches of insurance to

provide strict state control over insurance business.

But after the introduction of Insurance Act 1938, the demand for

nationalization of Life Insurance Industry was raised, there were so

many reasons in order to nationalize the insurance sector.

They are:

Policyholders will be provided cent percent security.

Expenses will be reduced due to Absence of duplica t ion,

wasteful competition

Better service due to absence of profit motive.

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The funds will be available for nation building activities.

Insurance is servicing sector and so that i t should be in the

hands of government only.

Above are few but strong reasons, which have contributed towards

nationalization of insurance sector, and then after in the year 1956,

all insurance companies were merged in to one and Life Insurance

Corporation of India came into existence.

Till the year 1999, LIC of India was the only insurance sector in

economic market with ever- increasing growth ra te and market

sha re with the capac ity to earn h igh r at e o f p ro fi t and thusprofitability. In spite of all these merits of LIC, the overall status

of insurance sector was not so satisfactory.

Business figure before the introduction of IRDA

Population 1.00 Billion

Insurable Population 0.36 Billion

No. Of insured individuals 0.08 Billion

Potential uninsured

individuals

0.28 Billion

New Business premium 0.66 Billion

Above stated figures clearly shows that from 1 Billion population

of India, almost 0.28 Billion population was uninsured. Again the

exist ing government uni t d id not properly mee t the emerging

segments l ike retirement, disabili ty. Moreover, the government

wan ted 25% p .a . g rowth r at e in new bus iness p remium f rom

insurance sector. All these factors combine forced the government

to take the decision about the privatization of insurance sector.

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In order to increase the business ac t ivi t ies , the introduct ion of

IRDA was made by Gove rnment . Thus, IRDA ( Insurance

Regulatory and Development Authority) witnessed the existence

power to co-ordinate regular and control the insurance business.

Private Insurers in Indian Insurance Market

Registration

No.

Date of

Registration

Name of the Company

101 23.10.2000 HDFC Standard Life

104 15.11.2000 Max New York Life

105 24.11.2000 ICICI Prudential Life

107 10.01.2001 Om Kotak Mahindra Life

109 31.01.2001 Birla Sun Life Insurance

110 12.02.2001 TATA AIG Life Insurance

111 30.03.2001 SBI Life Insurance

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RESERCH &

METHODOLOGY

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Objectives

To Study the Brand awareness of the new product i.e. Unit Linked

Insurance Plans in Ahmedabad City.

To know what are the priorities of people of city for making investment in

Insurance.

To know what are the perception of the consumer about ICICI Prudential

Life Insurance Co.

To know the standing of the ICICI Prudential Life Insurance Co. in

Ahmedabad City.

Data Source:

The data would be collected from both primary as well as secondary source.

Consumers would be asked to fill questionnaires to arrive at the information.

Various secondary sources of data as magazines, journal, Internet etc. would

also be explored.

Sampling Area:

The sampling areas of this research are Ahmedabad.

Sampling method:

The convenient sampling method was used for this research and the

respondents were those who have already taken life insurance policy.

Sample Size:

The size of this research is 50 respondents.

Research Instrument:

The research instruments, which was used, for collecting the data is

questionnaire.

Method of contact:

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The method of contact would be personal and direct as this would help

to qualify the customers issues while filling up the questionnaire and also helps

them if they do not have the knowledge about any insurance plan of the

company.

Method of making an approach for Sales:

After analyzing the data form the questionnaires the needs of prospects

were identified and the best suitable insurance solution was suggested to them

accordingly.

Data Collection and Analysis

Q.1. Do you have a Life Insurance Policy?

Criteria No. Of Respondents

Yes 50

No 0

As our sample is those people who have insurance so all the respondents are

falling under the Yes criteria.

Q.2. Which Companys Insurance Policies do you have?

Company No. of Respondents

LIC 50

Birla Sunlife 2

SBI 3

ICICI Pru. Life 10

Kotak Mahindra 3

Post Office 15

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HDFC 3

No. of Respondents

0102030405060

LIC

SBI

Kotak

Mahindra

HDFC

No. of

Respondents

Fig:- 3

As from the above chart it is very clear the all of the respondents have an

insurance of the LIC while some of them have an insurance of the other

companies like post Office, ICICI Prudential Life insurance Co., HDFC Co.

Etc.

The reason behind this is that the LIC competitor since more than four

decades and the Indian Govt. allowed the Introduction of private player inInsurance in the year 2000.

Q.3 What is amount of insurance premium you pay annually?

Criteria No. of Respondents

Below Rs. 10,000 11

10,000 to 20,000 18

20,000 to 30,000 6

30,000 to 40,000 5Above 40,000 10

The analysis of the above available data is merely to find out the percentage of

income that one is willing to invest in insurance

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Q.4 What priorities would you consider most important, while

purchasing a policy?

Priorities of Respondents

010

2030

4050

60

1 2 3 4 5To

tal

Rank

No.ofResponde

Death Benefit

Childrens Future

Retirement

Planning

Tax Planning

Financial

Planning

Fig:- 4

From the table and chart it can be say that most of the people rank death benefit

first for the decision to make investment in Insurance. Their second priority is

tax planning because the premium, which is paid by the people towards

Insurance, is deductible up to certain limit from the income and also the

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Criteria/Rank 1 2 3 4 5 Total

Death Benefit 29 10 6 2 3 50

Childrens

Future

7 13 21 3 0 44

Retirement

Planning

5 5 6 20 7 43

Tax Planning 8 18 8 8 6 48

Financial

Planning

2 5 3 11 25 46

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maturity amount is also tax free. The third and fourth priorities are childrens

future and retirement planning.

Q.5 Do you have any knowledge of the stock market?


Yes 32

No 18

Q.6 If Yes do you have any knowledge about unit linked insurance

plans?


Yes 25

No 7

The question number 5 and 6 are designed to know the awareness of people

who have knowledge of share market or deals in shares also have the

knowledge of the new modern insurance product i.e. Unit Linked Insurance

Plan. From the available data it can be say that those who deal in shares are also

aware of the ULIP.

Q.7 Is your current Insurance policy Unit Linked or Traditional?


Only Unit Linked 0

Only Traditional 39

Both 11

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Respondents Having ULIP and

Traditional Insurance Products

0%

78%

22%Only Unit Linked

Only Traditional

Both

Chart:- 2From the Q. No. 7 we can say that even though the modern products available

in the market since more than two years and which are having the more

flexibility and also giving the higher return than traditional one most of the

people do not have or may be not aware of it which shows the lack of brand

awareness and it requires an aggressive promotional efforts on the part of

company.

There is a lot of scope available for the company to attract more customers by

giving or introducing most suitable ULIP products and at the same time increase

the customer base.

Q.8 If given a choice, where would you like to invest your money?

(Please Rank Your Choice)

Choice/Rank 1 2 3 4 5 6 7 8 Total

Mutual Fund 0 1 5 1 25 12 5 1 50

Insurance 4 12 14 4 8 3 0 0 45

Gold 4 8 1 2 2 5 13 13 48

Equities 17 3 0 5 2 6 1 0 34

Post Office 22 12 12 2 2 0 0 0 50

Debenture 0 2 4 10 1 14 2 0 33

Bank Deposit 0 6 12 19 1 0 3 1 42

Other 10 5 0 2 1 0 0 2 20

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Investment Priorities

0102030405060

1 2 3 4 5 6 7 8

Total

Rank

No.ofRespond

ent

Mutual FundInsurance

Gold

Equities

Post Office

Debenture

Bank Deposit

Other

Fig:- 5

This question is mainly designed to know the investment priorities of the people

of Ahmedabad town. The objective behind this Q. is that after the Charotar

Nagrik Co-oprerative Bank and other Credit Societies, which are giving higher

interest on deposits, the whole scenario of city is changed. Most of the people

prefer to invest in post office saving schemes and where their money is safe

even though the return is very less. So there is a great need to divert the efforts

of the company towards the safety and security as ICICI Prulife is a private

insurance Company.

Q.9 According to you what are the factors that would affect you decision

while purchasing an insurance policy?

Criteria/Rank 1 2 3 4 5 50

Premium 12 15 15 6 2 50

Return 21 17 8 2 2 50

Safety 20 14 15 1 0 50

Liquidity 1 1 9 18 21 50

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Market

Condition

1 2 0 16 21 40

Factors Affecting the Insuran

Decision

0

20

40

60

1 2 3 4 5 6

Rank

No.of

Respondents

Criteria/Rank

Premium

Return

Safety

Liquidity

Market Conditio

Fig:- 6

The question No. 9 is designed to know which the factors are affecting

the most to the prospect while making decision to invest in insurance. As far as

investment in insurance is concerned most of the people want that it should be

safe and at the same time giving the compatible returns because insurance is not

only for death benefit it is also a saving tool for future. So the mix response of

respondents is welcomed. Available data is such that there is a bit ambiguity.

But we can say that the most affecting factors to the prospect are return and

safety. As per the finance theory risk and return goes in hand in hand but as far

as insurance is concerned it is all about the compatible and safe returns over

others.

Q. 10 Are you or ay of your family members are planning to buy an

insurance policy in near future?


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Yes 13

No 37

This question is taken to collect the information of those respondents who aregoing to plan to purchase insurance within near future that is used by the

company for making personal contact for sale.

Q. 11 Are your needs satisfied with your current investment in insurance?


Yes 10

No 30

Q. 11(a) If No, then give reasons?


High Premium 0

Low Return 1

Poor Services 7

Others 2

No. of Respondents

0% 10%

70%

20% High Premim

Low Return

Poor Services

Others

The question No.11 and 12 are designed to know the percentage of people who

are not satisfied with the current investment in insurance and also to know the

reasons behind it. So that the company can focus on those areas where the

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competitors fail. Because now a days the competition is very stiff in the

insurance industry. All companies are trying to attract more customers by

anyhow. So it will be useful for designing the promotional schemes of the

company.

From the above table and chart it can be seen that the respondents who

are dissatisfied give the main reason behind it are poor services. There are many

others reasons like more time taken by the company for claim settlement, non-

dispatchment of cheques and other important vouchers, etc. So the company can

improve upon these and increase its market share by offering quality service to

the customers.

Q. 12 Do you know anything ICICI Prudential Life Insurance?


Yes 30

No 20

Q. 13 If Yes, from where did you come to know about the company?

30


Television 4

News Paper 3Sales Representative 14

Others source 9

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Toal No. of Advertisement

13%

10%

47%

30%

Television

News Paper

Sales

Representative

Others source

Chart:- 4Q. 14 What do you feel about ICICI Prudential Life Insurance?

(Open Ended)

The question No.13, 14 and 15 are designed to know the company

awareness the respondents of the city and also the source of awareness. But I

felt very much difficulty while filling up these questions because most of the

people know about the company but they know it as an ICICI Bank not as a

different identity. So there is a great need to design the advertisement campaign

in such a way that it will create the different image of the company. The main

reason behind this is that the image of ICICI Bank in city is such that most of

the people ask for charges first than the service that it provides.

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LIFE INSURANCE AT A GLANCE

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LIFE INSURANCE CORPORATION OF INDIA

On January 19, 1956 the President of the Indian Union issued an

ordinance, providing for the taking over, in public interest, of the

management of l i fe insurance pending national iza tion of such

business, & the then Finance Minister explained the objectives of

nationalization of life insurance business.

In June 1956, the parliament passed a bill for nationalization of

life insurance business in India and for setting up a corporation as

the sole agency fo r c ar ry ing on thi s bus iness in Ind ia . The

corporat ion, se t up under this Act , is known as Life Insurance

Corporation of India, which started functioning on September 1,

1956 .

For the purpose of servicing of policies issued before September 1,

1956, some integrated head offices & integrated branch office units

were created. These offices have nothing to do with the policies

issued by the corporation. Corporation also took over foreign life

business of the Indian insurers.

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Objectives of LIC

M aximize mob il iz at ion o f people s sav ings by making

insurance linked savings adequately attractive. Conduct

business with utmost economy & with the full realization that

the moneys belong to the policyholders.

To publicize & extent the insurance business specifically in

rural & remote areas.

To provide suitable financial security at reasonable cost.

To make the investments more dynamic by popularizing thesavings plans attached with insurance.

To invest the insurance fund keeping with maximum benefit

& interest of insureds.

To run the insurance business a t minimum administra t ive

costs.

To function as trusts of the insureds.

To fulfil l the needs of the society in a changing social and

economic environment.

To make the employees collectively responsible for providing

efficient services to the insureds.

To develop work satisfaction among agents & employees.

HDFC STANDARD LIFE INSURANCE COMPANY

HDFC Standard Life Insurance Co. Ltd. Is a joint venture

between HDFC, Indias largest housing f inance inst i tut ion and

Standard Life Assurance Company, Europes largest mutual l ife

company. HDFC manages R s. 21, 450 C ro re s in as se ts and

Standard Life manages over US $100 bill ion in assets. Both thepromoters are well known for their ethical dealings, their financial

strength and their commitment to be a long-term player in the life

insurance industry.

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MAX NEW YORK LIFE INSURANCE COMPANY

Max New York Life Insurance Company is a joint venture

between New York Life International Inc. and Max India Limited.

New York Life , a For tune 100 Company, is one of the worlds

experts in l ife insurance with over 156 years of experience in the

business and over US$ 165 bill ion (Rs. 775,000 Crores) in assets

under managemen t. M ax Ind ia L imited i s a mul ti -bus iness

corporate, focused on the knowledge, people, and service-oriented

business of life insurance, healthcare and information technology.

ICICI PRUDENTIAL LIFE INSURANCE

COMPANY

ICICI Prudential Life Insurance Company is a joint venture

b et wee n IC IC I Ba nk , a p rem ie r fi na nc ial po we rh ous e a ndPrudential plc, a leading internat ional f inancia l services group

headquartered in the Uni ted Kingdom. ICICI Prudent ia l was

amongst the f i rs t pr ivate sector insurance companies to begin

ope ra tions in December 2000 a ft er r eceiving approva l f rom

Insurance Regulatory Development Authority (IRDA).

OM KOTAK MAHINDRA LIFE INSURANCE

Om Kotak Mahindra Life Insurance, a company under Kotak

Mahindra Group is a 74:26 l i fe insurance joint venture between

Kotak Mahindra Finance Limited with Old Mutual, U.K.

The philosophy of Om Kotak Mahindra is helping their customers

take f inancia l decis ions a t every s tage in l i fe . Their a im is to

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consi st en tly o ff er a w ide r ange o f innovat ive l if e insurance

products, to help their customers remain financially independent,

which is why they believe that freedom to take life on Jeene Ki

Aazadi

The alliance of Om Kotak Mahindra with Old Mutual has given it

unmatched expert ise in l i fe insurance area. With 156 years of

exper ience in l ife insurance bus iness, Old Mutua l i s today an

International Financial Service Group based in London.

BIRLA SUN LIFE INSURANCE COMPANY

I t is a joint venture of Aditya Birla Group and Sun Life Financial

Services with the objective that Insurance is not about something

going wrong . I t s o ft en about things going r ight . One o f the

wonders of human nature is that we never bel ieve anything can

actually go wrong. Surely, l ife has i ts share of ifs. At Birla Sun

Life however, we believe it has i ts equally pleasant share of buts

as wel l. We a t B ir la Sun Life s tand committed to helping you

realize those happy moments, which make a l ife. Be it l iving thesame lifestyle in your post retirement days or providing a secure

future for your loved ones, in case something happens to you.

TATA AIG LIFE INSURANCE COMPANY

Tata AIG is a joint venture that is backed by the Tata Group

Indias most respected industrial conglomerate, with revenues of

more than US $8.4 billion, and American International Group, Inc.

(AIG) the leading US-based international insurance and financial

services organization, with a presence in over 130 countries and

jurisdictions throughout the world. Tata AIG offers a gamut of

innovative products in the Life Insurance sector.

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RETAIL MARKET SHARE

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As per the figure available with IRDA reports for the period ended in

August 2005, the 13 private players have grabbed nearly 26% market share

from LIC in terms of premium underwritten as against 17.70% in August

2004 The list of insurer with premium underwritten, investment and their

market share have been presented in table.

Table shows that the life insurance market has collected Rs. 16,604cr as

a fresh premium. It grew about 2.8 times bigger than he 3 players put together

in terms of premium collection. It is still growing at the rate 26% per annum. It

is relevant to that the market share by them. Out of 13 pvt. Players, ICICI

prudential has leading pvt. Player in the Life insurance, invested rs. 625 cr

which is the highest investments among the private players and captured first

position with 7.11% of the market share. Secondly, Max New York life has

invested Rs. 305 cr and had failed to capture the second position in terms of

market share and was satisfied with only 1.32% Followed by HDFC standard

Life had invested Rs. 255 cr and 2.96% of the market share was captured and

stood third position interims of investments and capturing market share.

Allianz Bajaj has invested Rs. 250 cr and stands fourth in terms of investmentbut captured second position with 6.12% of the market share. This indicates

that there is no relation between investment and acquiring market share and

mere capital is not alone playing any significant role in terms of capturing

market share. There may be some other variables like: (a) innovative schemes,

(b) brand loyalty, (c) professional outlook, (d) transference in their

transactions, etc. It can be noticed that the capital is not playing any attaching,

kindly significant role in terms of premium collection and capturing market

share. It seems to be Bajaj Allianz would occupy the first position in near

future in terms of market share as well as annual growth rate.

Chart 1 shows that. Among private players, the ICICI prudential has

captured the 28% of the market share up to December 2005, followed by

Allianz Bajaj with 23% and HDFC Standard Life with 11% TATA Aig life and

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Birla Sunlife with 7% each and remaining other players have captured less than

5% of market share.

28%

5%

11%

23%

7%

7%

3%

4%2%

6%2%2% LIC

ICICI Pru. Life

New York MaxLife

HDFC Standard Life

Alliance Bajaj

TATA AIG

OM Kotak Mahindra

AVIVA Life

ING Vysya

SBI Life Insu.

AMP Sanmar

Metlife

Chart:- 1

Chart 2 shows that the annual growth rate of the private life insurance

players from November 2004-05. it is interesting to note that Allianz Bajaj has

achived 264.09% annual growth rate in terms of premium collection and the

fastest growing insurance players, followed by HDFC Standard with 143.1%

and Metlife with 136.45%, and remaining other players have doubled their

premium in a span of one year, whereas Birla Sunlife and SBI life have failedto collect the premium consistently and registered negative growth rates 7.93%

and 2.48% respectively. Surprisingly, ICICI Prudential Co. has not been

retrained in their leading position in 2005.

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The market share of the LIC has been declining since 2000, after

opening up of the sector to private companies, LICs higher market share in the

number of policies sold compared with premium income, so it is to be inferred

that the private players are cornering a larger share of high premium policies.

Further all policymakers are expected that, insurance business will take wings

under bancassurance but despite the belief SBI Life was registered negative

2.48% annual growth rate in corresponding period. It is need to be viewed

serious by the RBI and IRDA authorities.

Annual Growth rate of Private Insu.

Players from Nove. 2004-05

73.0290.41164.31

264.09

66.2348.2493.9100.43

-2.48

98.69136.48

78.06-7.93

-100

0

100

200300

ICICIPru.

Life

HDFC

Standard

TATA

AIG

AVIVA

Life

SBILife

Insu.

Metlife

Birlasunli

fe

Insurers

Annualgrowth

rate

Fig:- 2

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INTRODUCTION OF ICICI

GROUP

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Fig:- 3

ICICI Bank is Indias second-largest bank with total assets of about

Rs.112.024 crore and a network of about 450 branches and offices and about

1750 ATMs. ICICI Bank offers a wide range of banking products and financialservices to corporate and retail customer through a variety of delivery channels

and through its specialized subsidiaries and affiliates in the areas of investment

banking, life and non-life insurance, venture capital, asset management and

information technology. ICICI Banks equity shares are listed in India on stock

exchanges at

Chennai. Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai

and the National Stock Exchange of India Limited and its American Depositary

Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an

Indian financial institution, and was its wholly owned subsidiary. ICICIs

shareholding in ICICI Bank was reduced to 46% through a public offering of

shares in India in fiscal 1998, an equity offering in the form of ADRs listed on

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the NYSE in fiscal 2000, ICICI Banks acquisition of Bank of Mathura Limited

in an all-stock amalgamation in fiscal 2001, and secondary market sales by

ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed

in 1955 at the initiative of the World Bank, the Government of India and

representatives of Indian industry. The principal objective was to create a

development financial institution for providing medium term and long term

project financing to Indian businesses. In the 1990s, ICICI transformed its

business from a development financial institution offering only project finance

to a diversified financial services group offering a wide variety of products and

services, both directly and through a number of subsidiaries and affiliates like

ICICI Bank, In 1999, ICICI become the first Indian company and the first bank

or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the

context of the emerging competitive scenario in the Indian banking industry,

and the move towards universal banking, the management of ICICI and ICICI

Bank formed the view that the merger of ICICI with ICICI Bank would be the

optimal strategic alternative for both entities, and would create the optimal legal

structure for the ICICI groups universal banking strategy. The merger would

enhance value for ICICI shareholders through the merged entitys access to

low-cost deposits, greater opportunities for earning fee-based income and theability to participate in the payment system and provide transaction-banking

services. The merger would enhance value for ICICI Bank shareholders through

a large capital base and scale of operations, seamless access to ICICIs strong

corporate relationships built up over five decades, entry into new business

segments, higher market share in various business segments, Particularly fee-

based services, and access to the vast talent pool of ICICI Bank approved the

merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI

Personal Financial Services Limited and ICICI Capital Services Limited, With

ICICI Bank.

Shareholders of ICICI and ICICI BANK approved the merger in January

2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the

High Court of

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Judicature at Mumbai and the Reserve Bank of India in April 2002.

Consequent to the merger, the ICICI groups financing and banking operations,

both wholesale and retail, have been integrated in a single entity. ICICI Bank is

the only Indian company to be rated above the country rating by the

international rating agency moody s and the only Indian company to be

awarded an investment grade international credit rating. The Bank enjoys the

highest AAA (or equivalent) rating from all Leading Indian rating agencies.

Prudential P.L.C.

Established in 1848, today prudential plc is a leading international

financial services company with some 16 million customers, policyholders and

unit holders and some 20,000 employees worldwide. In the UK Prudential is a

leading life and pensions provider with around seven million customers. M&G

was acquired by Prudential in 1999 and is the Groups UK and European fund

manager, responsible for managing over of 111 billion of funds (as at

December 2003). Launched by Prudential in 1998, Egg is an innovative

financial services company, with over three million customers, with nearly six

per cent of UK credit card balances. In Asia, Prudential is the leading Europeanlife insurer with 23 life and fund management operations in 12 countries

serving some five million customers. In the US, Prudential owns Jackson

National Life, a leading life insurance company, and has more than 1.5 millions

policies and contracts in force.

Prudential has brought to market an integrated range of financial services

products that now includes life assurance, pensions, mutual funds, banking,

investment management and general insurance. In Asia, Prudential is UKs

Largest life insurance company with a vast network of 22 life and mutual

fund operations in twelve countries China, Hong Kong, India, Indonesia,

Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and

Vietnam. Since 1923, Prudential has championed customer-centric products and

services, supported by over 60,000 staff and agents across the region.

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Prudential plcs strong mix of business around the world positions us

well to benefit form the growth in customer demand for asset accumulation and

income in retirement. Our international reach and diversity of earnings by

geographic region and product will continue to give us significant advantage.

Our commitment to the shareholders who own Prudential is to maximize

the value over time of their investment. We do this by investing for the long

term to develop and bring out the best in our people and our businesses to

produce superior products and services, our international peer group in terms of

total shareholder returns.

At Prudential our aim is lasting relationships with our customers and

policyholders, through products and services that offer value for money and

security. We also seek to enhance our Companys reputation, built over 150

years, for integrity and for acting responsibly within society.

ICICI Prudential Life Insurance:

ICICI Prudential Life Insurance Company is a joint venture between

ICICI Bank, a premier financial powerhouse and Prudential Plc, a leading

international financial services group headquartered in the United Kingdom.

ICICI Prudential was amongst the first private sector insurance companies to

begin operations in December 2000 after receiving approval from insurance

Regulatory Development Authority (IRDA).

ICICI Prudential s equity base stands at Rs.6.75 billion with ICICI Bank

and Prudential plc holding 74% and 26% stake respectively. In the year ended

March 31,2004 the company had issued over 430,000 policies, for a total sum

assured of over Rs 8,000 crore and premium income in excess of Rs.980 crore.

The company has a network of about 30,000 advisors; as well as 12 bancassurance tie-ups. Today the company is the number one private life insurer in

the country

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Management

K. V. Kamath

Managing Director and Chief Executive Officer

46

Lalita Gupte

Joint Managing DirectorKalpana Morparia

Joint Managing Director

Chanda Kochhar

Deputy Managing DirectorNachiket Mor

Deputy Managing Director

46
http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/nachiketmoresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/ckochcharresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/kalpanaresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/lalitagupteresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/kvkresume.htm


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Board Committees

Audit CommitteeBoard Governance &

Remuneration Committee

Mr. Sridar Iyengar

Mr. Narendra

Murkumbi

Mr. M. K. Sharma

Mr. N. Vaghul

Mr. Anupam Puri

Mr. M. K. Sharma

Mr. P. M. Sinha

Prof. Marti G. Subrahmanyam

Customer Service

Committee Credit Committee

N. Vaghul

Narendra Murkumbi

M.K. Sharma

Mr. N. Vaghul

Mr. Narendra Murkumbi

Mr. M .K. Sharma

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P.M. Sinha

K. V. Kamath

Mr. P. M. Sinha

Mr. K. V. Kamath

Fraud MonitoringCommittee

Risk Committee

Mr. M. K. Sharma

Mr. Narendra

Murkumbi

Mr. K. V. Kamath

Ms. Kalpana

Morparia

Ms. Chanda D.

Kochhar

Mr. N. Vaghul

Mr. Sridar Iyengar

Prof. Marti G. Subrahmanyam

Mr. V. Prem Watsa

Mr. K. V. Kamath

Share Transfer &

Shareholders'/

Investors'

Grievance

Committee

Asset-Liability Management

Committee

Mr. M. K. Sharma

Mr. Narendra

Murkumbi

Ms. Kalpana

Morparia

Ms. Chanda D.

Kochhar

Ms. Lalita D. Gupte

Ms. Kalpana Morparia

Ms. Chanda D. Kochhar

Dr. Nachiket Mor

Committee of

Directors

Mr. K. V. Kamath

Ms. Lalita D. GupteMs. Kalpana

Morparia

Ms. Chanda D.

Kochhar

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Dr. Nachiket Mor

ICICI PRUS PRODUCT

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Insurance solution for individuals..

ICICI Prudential Life Insurance offers a range of innovative, customer-

centric products that meet the needs of customers at every life stage. Its 17

products cab is enhanced with up to 6 riders, to create a customized solution for

each policyholder.

Savings Solutions..

Secure Plus is a transparent and feature-packed savings plan that offers 3levels of protection. Cash Plus is a transparent, feature-packed savings plan that

offers 3 levels of protection as well as liquidity options. Save n Protect is a

traditional endowment savings plan that offers life protection along with

adequate returns. Cash Back is an anticipated endowment policy ideal for

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meeting milestone expenses like a childs marriage, expenses for a childs

higher education or purchase of an asset.

Protection Solutions.

LifeGuard is a protection plan, which offers life cover at very low cost.

It is available in 3 coupons level term assurance, level term assurance with

return or premium and single premium.

Child Solutions.

Smart kid child plans provide guaranteed educational benefits to a child

along with life insurance cover for the parent who purchases the policy. Thepolicy is designed to provide money at important milestones in the childs life.

SmartKid child planed are also available with in unit-linked form both single

premium and regular premium.

Market-linked Solutions

LifeLink is a single premium Market Linked Insurance Plan, which

combines life insurance cover with the opportunity to stay, invested in the stock

market. Life Time offers customers the flexibility and control to customize thepolicy to meet the changing needs at different life stages. It offers 3 investment

options Growth Plan, Income plan and Balance plan.

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Retirement Solutions

Forever Life is a retirement products targeted at individual in there

thirties. Secure Plus Pension is a flexible pension plan that allows one to select

between 3 levels of cover.

Market-linked retirement products

Life Time Pension is a regular premium market-linked pension plan.

Life Link Pension is a single premium market linked pension plan. ICICI

Prudential also launched Salaam Zindagi, a social sector group insurance

policy targeted at the economically underprivileged sections of the society.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies

seeking to enhance benefits to their employees.

Group Gratuity Plan

ICICI Prus group gratuity plan helps employers fund their statutory

gratuity obligation in a scientific manner. The plan can also customize to

structure schemes that can provide benefits beyond the statutory obligations.

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Group Superannuation Plan

ICICI Bank offers flexible defined contribution superannuation scheme

to provide a retirement kitty for each member of the group. Employees have the

option of choosing from various annuity options or opting for partial

commutation of the annuity at the time of retirement.

Group Term Plan

Group Term Plan

ICICI Prus flexible group term solution helps provides affordable cover

to members of group. The cover could be uniform or based on designation/rank

or a multiple of salary. The benefit under the policy is paid to the beneficiary

nominated by the member on his/her death.

Flexible Rider Options

ICICI Pru Life offers flexible riders, which can be added to the basic

policy at marginal cost, depending on the specific of the customer.

Accident & disability benefit: If death occurs as the result of an accident

during the term of the policy, the beneficiary receives an additional amount

equal to the sum assured under the policy. If the death occurs while traveling in

an authorized mass transport vehicle, the beneficiary will be entitled to twice

the sum assured as additional benefit.

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Accident benefit: This rider option pays the sum assured the rider on death due

to accidents.

Critical Illness Benefit: protects the insured against financial loss in the event

of 9 specified critical illnesses. Benefits are payable to the insured for medical

prior to death.

Major Surgical Assistance Benefits: provides financial support in the event of

medical emergencies, ensuring that benefits are payable to the life assured for

medical expenses Incurred for surgical procedures. Cove is offered against 43

different surgical procedures.

Income Benefit: This rider pays the 10% of the sum assured to the nominee

every year, till maturity, in the event of the death of the life assured. It is

available on SmartKid, SecurePlus and Cashplus.

Waiver of Premium: In Case of total and permanent due to an accident, the

premiums are waived till maturity. This rider is available with SecurePlus and

CashPlus.

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FINANCE DEPARTMENT

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INTRODUCTION TO FINANCE MANAGEMENT

Financial management, as an academic discipline, has undergone

fundamental changes in its scope and coverage. In the early years of its

evolution it was treated synonymously with the raising of funds. In the current

literature pertaining to financial

Management, a broader scope so as to include, in addition to

procurement of funds, efficient use of resources is universally recognized.

Similarly, the academic thinking as regards the objective of financial

management is also characterized by a change over the years.

Financial management, as an integral part of overall management, is not

a totally independent area. It draws heavily on related disciplines and fields of

study, such as economics, accounting, marketing, production and quantitative

methods. Although these disciplines are interrelated, there are key differences

among them. The relationship between finance and accounting, conceptuallyspeaking, has two dimensions:

(1) They are closely related to the extent that accounting is an important

input in financial decision-making and

(2) There are key differences in viewpoints between them.

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The viewpoint of accounting relating to the funds of the firm is different from

that of finance. The measurement of funds (income and expenses) in accounting

is based on the accrual principle/system.

Capitalization and Capital Structure:

Capital structure can affect the value of a company by affecting either its

expected earnings or the cost of capital, or both. While it is true that financing-

mix cannot affect the total operating earnings of a firm, as they are determined

by the investment decisions, it can affect the share of earnings belonging to the

ordinary shareholders. The capital structure decision can influence the value of

the firm through the earnings available to the shareholders. But the leverage

can largely influence the value of the firm through the cost of capital. Inexploring the relationship between leverage and value of a firm the relationship

between leverage and cost of capital from the standpoint of valuation.

The importance of an appropriate capital structure is, thus, obvious.

There is a viewpoint that strongly supports the close relationship between

leverage and value of a firm. There is an equally strong body of opinion, which

believes that financing-mix or the combination of debt and equity has no impact

on the shareholders wealth and the decision on financial structure is irrelevant.

In other words, there is nothing such as optimum capital structure.

Capital structure theories are based on certain assumptions, they are:

[1] There are only two sources of funds used by a firm: perpetual risk less

debt and ordinary shares.

[2] There are no corporate taxes. This assumption is removed later.

[3] The dividend-payout ratio is 100. That is, the total earnings are paid out

as dividend to the shareholders and there are no retained earnings.

[4] The total assets are given and do not change. The investment decisions

are, in other words, assumed to be constant.

[5] The total financing remains constant. The firm can change its degree of

leverage (capital structure) either by selling shares and use the proceeds

to retire debentures or by raising more debt and reduce the equity capital.

[6] The operating profits (EBIT) are not expected to grow.

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[7] All investors are assumed to have the same subjective probability

distribution of the future expected EBIT for a given firm.

[8] Business risk is constant over time and is assumed to be independent of

its capital structure and financial risk.

[9] Perpetual life of the firm.

Leverage Analysis:

A firm can make use of different sources of financing whose costs are different.

These sources may be, for purposes of exposition, classified into those that

carry a fixed rate of return and those on which the returns vary. The fixed

returns on some sources of finance have implications for those who are entitledto a variable return. Thus, since debt involves the payment of a stated rte of

interest, the return to the ordinary shareholders is affected by the magnitude of

debt in the capital structure of a firm.

The employment of an asset or source of funds for which the firm has to pay a

fixed cost or fixed return may be termed as leverage. Consequently, the

earnings available to the shareholders as also the risk are affected. If earnings

les the variable costs exceed the fixed cost, or earnings before interest and taxes

exceed the fixed return requirement, the leverage is called favorable. When theydo not, the result is unfavorable leverage.

There are 2 types of leverage- operating and financial. The leverage

associated with investment (asset acquisition) activities is referred to as

operating leverage, while leverage associated with financing activities is called

financial leverage. While we are basically concerned with financial leverage for

purposes of the financing decision of a firm, the discussion of operating

leverage is to serve as a background to the understanding of financial leverage

because the two types of leverage are closely related. Operating leverage is

determined by the relationship between the firms sales revenues and its

earnings before interest and taxes (EBIT). The earnings before interest and

taxes are also generally called as operating profits. Financial leverage

represents the relationship between the firms earnings before interest and taxes

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(operating profits) and the earnings available for ordinary shareholders. The

operating profits (EBIT) are thus, used as the pivotal point in defining operating

and financial leverage. In a way, operating and financial leverage represent two

stages in the stages in the process of determining the earnings available to the

equity shareholders and, hence, their discussion in this chapter. Apart from the

elaboration of the return-risk implications, their combined effect has also been

discussed.

Operating leverage results from the existence of fixed operating expenses

in the firms income stream. The operating leverage may be defined as the

firms ability to use fixed operating costs to magnify the effects of changes in

sales on its earnings before interest and taxes. Operating leverage occurs any

time a firm has fixed costs that must be met regardless of volume. We employ

assets with fixed cost in the hope that volume will produce revenues more than

sufficient to cover all fixed and variable costs. In other words, with fixed costs,

the percentage change in profits accompanying a change in volume is greater

than the percentage change in volume. This occurrence is known as operating

leverage.

Financial leverage relates to the financing activities of a firm. The

sources from which funds can be raised by a firm, from the point of view of the

cost/charges, can be categorized into [1] those which carry a fixed financialcharge, and [2] those which do not involve any fixed charge. The sources of

funds in the first category consist of various types of long-term debt, including

bonds, debentures, and preference shares. Long-term debts carry a fixed rate of

interest which is a contractual obligation for the firm. Although the dividend on

preference shares is not a contractual obligation, it is fixed charge and must be

paid before anything is paid to the ordinary shareholders. The equity

shareholders are entitled to the remainder of the operating profits of the firm

after all the prior obligations are met. Financial leverage results from the

presence of fixed financial charges in the firms income stream. These fixed

charges do not vary with the earnings before interest and taxes (EBIT) or

operating profits.

Capital Budgeting:

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Capital budgeting decision pertains to fixed/long-term assets which by

definition refer to assets which are in operation, and yield a return, over a

period of time, usually, exceeding one year. They therefore, involve a current

outlay or series of outlays of cash resources in return for an anticipated flow of

future benefits. In other words, the system of capital budgeting is employed to

evaluate expenditure decisions which involve current outlays but are likely to

produce benefits over a period of time longer than one year. These benefits may

be either in the form of increased revenues or reduced costs. Capital

expenditure management, therefore, includes addition, disposition, modification

and replacement of fixed assets.

Capital budgeting decisions are of paramount importance in financial decision-making. In the first place, such decisions affect the profitability of a firm. They also

have a bearing on the competitive position of the enterprise mainly because of the fact

that they relate to fixed assets. The fixed assets represent, in a sense, the true earning

assets of the firm. They enable the firm to generate finished goods that can ultimately

be sold for profit. The current assets are not generally earning assets. Rather, they

provide a buffer that allows the firms to make sales and extend credit. True, current

assets are important to operations, but without fixed assets to generate finished

products that can be converted into current assets, the firm would not be able to

operate. Further, they are strategic investment decisions as against tactical- which

involve a relatively small amount of funds. Therefore, such capital investment

decisions may result in a major departure from what the company has been doing in

the past. Acceptance of a strategic investment will involve a significant change in the

companys expected profits and in the risks to which these profits will be subject.

Working Capital Management:

Working capital management is concerned with the problems that arise

in attempting to manage the current assets, the current liabilities and the

interrelationship that exists between them. The term current assets refer to those

assets which in the ordinary course of business can be, or will be, convertedinto cash within one year without undergoing a diminution in value and without

disrupting the operations of the firm. The major current assets are cash,

marketable securities, accounts receivable and inventory.

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Current liabilities are those liabilities which are intended, at their

inception, to be paid in the ordinary course of business, within a year, out of the

current assets or earnings of the concern. The basic current liabilities are

accounts payable, bills payable, bank overdraft, and outstanding expenses. The

goal of working capital management is to manage the firms current assets and

liabilities in such a way that a satisfactory level of working capital, it is likely to

become insolvent and may even be forced into bankruptcy. The current assets

should be large enough to cover its current liabilities in order to ensure a

reasonable margin of safety. Each of the current assets must be managed

efficiently in order to maintain the liquidity of the firm while not keeping too

high a level of any one of them. Each of the short-term sources of financing

must be continuously managed to ensure that they are obtained ad used in the

best possible way. The interaction between current assets and current liabilities

is, therefore, the main theme of the working capital management.

Receivables Management:

The receivables represent an important component of the current assets

of a firm. The receivables are defined as debt owned to the firm by customers

arising from sale of goods or services and in the ordinary course of businesses.

When a firm makes an ordinary sale of goods or services and does not receive

payment, the firm grants trade credit and creates accounts receivable, whichcould be collected in the future. Receivables management is also called trade

credit management. Thus, accounts receivables represent an extension of credit

to customers, allowing them a reasonable period of time in which to pay for the

goods received.

The sale of goods on credit is an essential part of the modern competitive

economic systems. In fact, credit sales and, therefore, receivables are treated as

a marketing tool to aid the sale of goods. The credit sales are generally made on

open account in the sense that there are no formal acknowledgements of debtobligations through a financial instrument. As a marketing tool, they are

intended to promote sales and thereby profits. However, extension of credit

involves risk and cost. Management should weigh the benefits as well as cost to

determine the goal of receivables management. The objective of receivables

management is to promote sales and profits until point is reached where the

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return on investment in further funding receivables is less than the cost of funds

raised to finance that additional credit (i.e. cost of capital). The specific costs

and benefits, which are relevant to the determination of the objectives of

receivables management, are:

o Cost

o Collection cost

o Capital cost

o Delinquency cost

o Default cost

Dividend policy:

Dividend refers to that portion of a firms net earnings which are paid

out to the shareholders. Since dividends are distributed out of profits, the

alternative to the payment of dividends is the retention of earnings/profits. The

retained earnings constitute an easily accessible important source of financing

the investment requirements of firms. There is, thus, a type of inverse

relationship between retained earnings and cash dividends. Larger the retention,

lesser dividends; and smaller retentions, larger dividends. Thus, the alternativeuses of the net earnings-dividends and retained earnings-are competitive and

conflicting.

A major decision of financial management is the dividend decision in the

sense that the firm has to choose between distributing the profits to the

shareholders and plugging them back into the business. The choice would

obviously hinge on the effect of the decision on the maximizing present values;

the firm should be guided by the consideration as to which alternative use is

consistent with the goal of wealth maximization. That is, the firm would be well

advised to use the net profits for paying dividends to the shareholders if thepayment will lead to the maximization of wealth of the owners. If not, the firm

should rather retain them to finance investment programes. The relationship

between dividends and value of the firm should, therefore, be the decision

criterion.

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There are however, conflicting opinions regarding the impact of

dividends on the valuation of a firm. According to one school of thought,

dividends are irrelevant so that the amount of dividends paid has no effect on

the valuation of a firm. On the other hand certain theories consider the dividend

decision as relevant to the value of the value of the firm measured in terms of

the market price of the shares. The crux of the argument supporting the

irrelevance of dividends to valuation is that the dividend policy of a firm is a

part of its financing decision.

As a part of the financing decision, the dividend policy of the firm is a

residual decision and dividends are a passive residual. If the dividend policy is

strictly a financing decision, whether dividends are paid out of profits, or

earnings are retained, will depend upon the available investment opportunities.

It implies that when a firm has sufficient investment opportunities, it will retain

the earnings to finance them. Conversely, if acceptable investment

opportunities are inadequate, the implication is that the earnings would be

distributed to the shareholders.

The test of adequate acceptable investment opportunities is the

relationship between the return on investments and the cost of capital. As long

as investments exceed cost of capital, a firm has acceptable investment

opportunities. In other words, ifs firm can earn a return higher tan its cost ofcapital; it will retain the earnings to finance investment projects. If the retained

earnings fall short of the total funds required, it will raise external funds-both

equity and debt-to make up the shortfall

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MARKETING DEPARTMENT

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Marketing Yesterday and Today

Today the definition of marketing has been changed. The marketing activity of anorganization before the product is produced and continues even after the product is

sold. In the buyer market of recent times the sharpest weapon that a company can

develop is globalize marketing place in the value creation and delivery. The proud and

demanding customer of today brings before corporate a critical fact, when the

customer is jury. It is the value generation for the customer that will separate the victor

from vanquished. The value of customer service cascades all over the company. The

aim of customer focus is not just satisfaction but delight satisfaction.

Till the year 1999 the life insurance business was exclusively conducted by the LifeInsurance Corporation (LIC) while the general insurance business in India, was

exclusive by General Insurance Corporation and its four subsidiaries. The insurance

sector is opened for private participation since November, 2000.

Before 1999 there was no marketing done by LIC due to its monopoly but now after 5

years the picture has changed. Now there are private players in market. With the

effective marketing techniques the private players has changed the whole scenario of

the insurance sector. They are slowly and gradually driving the business out of the

hands of the LIC. Before 1999 customer had no option other then LIC, but now they

have got many options.

This is the significant change in insurance industry. Now the customer is back in the

center state. All the companies are trying to please the customer with the innovative

schemes and better service.

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Relationship Marketing in Insurance

Introduction

It is five times more expensive to acquire a new customer than to retain an old one.

Relationship marketing is the practice of building long term satisfying relationship

with key parties customers and suppliers. They accomplish this by promoting and

delivering high quality, goods, services, and fair prices to other parties overview.

Relationship marketing results in strong economic, technical and social ties among the

parties.

Definition of Relation Marketing:

Relationship marketing can be defined as the process to identify, establish, maintain

and other stakeholders at a profit so that the objective of all parties involved are net

and this is done by mutual exchange and fulfillment of promises.

The important objectives of relationship marketing to acquire new customers maintain

and enhance relationship with existing customers, re-activities of ex-customers and

handling of customer terminations. The key objective of relationship marketing is toestablish one to one relationship with all the customers. This may have sound like a

day dream few dream few years ago but thanks to the technological breakthrough and

technological solution providers, it is very much of a reality.

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How to add value through relationship Marketing

Identify loyal customers

Recognize their special needs

Provide special reward for loyalty

Establish continuing relationship

Ensure increase in customer value

Relationship marketing is one of the hottest tread in the present marketing scenario.

Satisfied customers not only stay with a company but they are also walking talking

advertisement for the companys product.

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SWOT ANALYSIS

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Strengthso Flexible Products

o Partners having experience in different markets of

the world.

o Synergy with exiting operations

o Expertise in the field of insurance

o Professional management

o Good Customer service

o Create a brand name

Weakness

Low capital base

Yet to build strong distribution network

Cannot tap rural market

Opportunities

o Untapped market

o Banks ready to tie up for as a readymadedistribution network for a small fee.

Threats

Large distribution network of LIC

Decades of experience and brand name of LIC

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5% service tax on investments.

CONCLUSION

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At ICICI prudential Life Insurance Company Ltd. Aurangabad. I observed very systematic and

professional approach toward marketing. People are engaged in compulsory task, relates themselves

to reach other systematic establishment & accomplishment of the Marketing Process. After studying

various theoretical approach of company. I have come to a conclusion that ICICI Prudential is a profit

making company and gradually the demand of the product is also increasing.

The main areas of company are:-

1. Well defined objective.

2. Well organized and co-ordinate group of people.

3. Clear & well defined policies & responsibility.

4. An effective system of the company.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

BOOKS

Wheelen, Thomas L. & Hunger, J. David; Strategic Management &

Business Policy.

Mishra, M.N.; Modern Marketing Research

Shani, N.K. and Kumar, Yogesh; Modern Marketing.

Kotler, Phillip; Marketing Management

INTERNET SITES

www.spiceindia.com

www.airtelworld.com

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www.google.com

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QUESTIONNAIRE

Q.1. Do you have a Life Insurance Policy?

Yes No

Q.2. Which Companys Insurance Policies do you have?

(Please specify the numbers)

LIC SBI Life Insurance

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HDFC Standard Life New York MaxLife

Birla Sunlife Alliance Bajaj

Cholamandalam ICICI Pru. Life Insurance

TATA AIG Insurance MetLife Insurance

ING Vysya OM Kotak Mahindra

AVIVA Life AMP Sanmar

Q.3 What is amount of insurance premium you pay annually?

Amount

Q.4 What priorities would you consider most important, while

purchasing a policy? (Please Rank Your Choice)

Death Benefit

Childrens Education

Retirements Benefit

Tax Planning

Financial Plannin

Q.5 you have any knowledge of the stock market?

Yes No

Q.6 If Yes do you have any knowledge about unit linked insurance

plans?

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Yes No

Q.7 Is your current Insurance policy Unit Linked or Traditional?

Yes No

Q.8 If given a choice, where would you like to invest your money?


Mutual Funds Post Office Schemes

Insurance Policies Debentures

Gold Banks (FDs etc.)

Equities If other (specify)___________

Q.9 According to you what are the factors that would affect you decision

while purchasing an insurance policy?


Premium

Return

Safety

Liquidity

Market Condition

Q. 10 Are you or any of your family members are planning to buy an

insurance policy in near future?

Yes No

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Q. 11 Are your needs satisfied with your current investment in insurance?

Yes No

Q. 11 (a) If No, then give reasons?

High Premium Poor Services

Low Return Other Reasons__________

______________________

Q. 12 Do you know anything ICICI Prudential Life Insurance?

Yes No

Q. 13 If Yes, from where did you come to know about the company?

T.V. Newspaper Magazine

Radio Internet Hoarding

Others (Please Specify)_____________________________

Q. 14 What do you feel about ICICI Prudential Life Insurance?

__________________________________________________________

__________________________________________________________

_______________________________

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icici proect

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