Kotak Mahindra

Chapter – 1

Profile of the firm/company

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1.1 Name of the firm/company – Kotak Mahindra Life Insurance

1.2 Type of organization – Multinational

1.3 Registered Office – 1. Kotak Mahindra Old Mutual Life Insurance Ltd.

9th Floor, Godrej Coliseum, Everard Nagar,

Sion (E), Mumbai – 400022

Tel : (022) 66215999

Fax : (022) 66215757, 66215858

2. 5th Floor, H.B.Twin Towers,

A-2,3 & 4 Netaji Subhash Place,

Wazirpur District Centre, Ring Road,

New Delhi – 110034

Tel : (011) 65195000-4

Fax : (011) 2735632

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1.4 Nature of the organization -

Insurance sector in India was opened for private players in 2001, because of a huge

proportion of India’s population was untapped by Life Insurance corporation of India, well

known by its name LIC. Today we have more than 15 insurance layers in India, which are

competing for more and more business with approximately equal benefits to policy holders,

but with same benefits in different ways. When we have so many options available, then it

is very difficult for us to select best plan, which can provide us best benefits. Today India’s

Insurance sector with banking sector is adding more than 7.5% to country’s GDP. Out of

all players LIC is enjoying more than 60% business alone, but over the time LIC’s business

has reduced in percentage terms.

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Kotak Mahindra Group

Today, Kotak Mahindra group is one of the well known brands in India. Started in 1985,

kotak mahindra group is enjoying a net worth of more than Rs.30000 crore and a leading

financial institution of India.

Kotak mahindra old mutual life insurance is a joint venture between kotak Mahindra Bank

ltd. it’s affiliates and Old mutual plc.

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1.5 Company’s Vision and Mission-

1.5.1 Vision

Kotak Life Insurance hasa deep rooted commitment to improve the quality of life of its

customers, employees and stakeholders. They aim at improving the long term value in

relationships by continuous innovation and improvements.

Increase Customer Value – Building a relationship of mutual trust and benefit to

serve the customers”needs perfectly.

Cohesive Work Environment – Offers its employees space to grow, innovate and

build a long term career.

Work With Honour – Honour in every thought, act and deed in order to positively

contribute toindividual, society and national growth.

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1.5.2 Mission

They focus on the needs of their customers and create confidence, trust and loyalty by

offering a wide and varied range of innovative and useful insurance solutions.

Strengthened by their commitment to professional management, they ensure the continued

growth and advancement of their employees.

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1.6 Product Range of the Company-

1.6.1 Automobile insurance, known in the UK as motor insurance, is probably the most

common form of insurance and may cover both legal liability claims against the driver and

loss of or damage to the insured's vehicle itself.

1.6.2 Aviation insurance- insures against hull, spares, deductible, hull war and liability

risks.

1.6.3 Boiler insurance- (also known as boiler and machinery insurance or equipment

breakdown insurance) insures against accidental physical damage to equipment or

machinery.

1.6.4 Builder's risk insurance- insures against the risk of physical loss or damage to

property during construction. Builder's risk insurance is typically written on an "all risk"

basis covering damage due to any cause (including the negligence of the insured) not

otherwise expressly excluded.

1.6.5 Business insurance- can be any kind of insurance that protects businesses against

risks. Some principal subtypes of business insurance are (a) the various kinds of professional

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liability insurance, also called professional indemnity insurance, which are discussed below

under that name; and (b) the business owners policy (BOP), which bundles into one policy

many of the kinds of coverage that a business owner needs, in a way analogous to how

homeowners insurance bundles the coverage’s that a homeowner needs.

1.6.6 Casualty insurance- insures against accidents, not necessarily tied to any specific

property.

1.6.7 Credit insurance- repays some or all of a loan back when certain things happen to the

borrower such as unemployment, disability, or death. Mortgage insurance (which see below)

is a form of credit insurance, although the name credit insurance more often is used to refer

to policies that cover other kinds of debt.

1.6.8 Crime insurance insures the policyholder against losses arising from the criminal acts

of third parties. For example, a company can obtain crime insurance to cover losses arising

from theft or embezzlement.

1.6.9 Crop insurance "Farmers use crop insurance to reduce or manage various risks

associated with growing crops. Such risks include crop loss or damage caused by weather,

hail, drought, frost damage, insects, or disease.

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1.6.10 Life insurance provides a monetary benefit to a decedent's family or other designated

beneficiary, and may specifically provide for burial, funeral and other final expenses. Life

insurance policies often allow the option of having the proceeds paid to the beneficiary either

in a lump sum cash payment or an annuity.

a. Annuities provide a stream of payments and are generally classified as

insurance because they are issued by insurance companies and regulated as

insurance and require the same kinds of actuarial and investment management

expertise that life insurance requires. Annuities and pensions that pay a benefit

for life are sometimes regarded as insurance against the possibility that a retiree

will outlive his or her financial resources. In that sense, they are the complement

of life insurance and, from an underwriting perspective, are the mirror image of

life insurance.

1.6.11 Locked funds insurance is a little-known hybrid insurance policy jointly issued by

governments and banks. It is used to protect public funds from tamper by unauthorized

parties. In special cases, a government may authorize its use in protecting semi-private funds

which are liable to tamper. The terms of this type of insurance are usually very strict.

Therefore it is used only in extreme cases where maximum security of funds is required.

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1.6.12 Marine insurance and marine cargo insurance cover the loss or damage of ships at

sea or on inland waterways, and of the cargo that may be on them. When the owner of the

cargo and the carrier are separate corporations, marine cargo insurance typically compensates

the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can

be recovered from the carrier or the carrier's insurance. Many marine insurance underwriters

will include "time element" coverage in such policies, which extends the indemnity to cover

loss of profit and other business expenses attributable to the delay caused by a covered loss.

1.6.13 Mortgage insurance insures the lender against default by the borrower.

1.6.14 Property insurance provides protection against risks to property, such as fire, theft or

weather damage. This includes specialized forms of insurance such as fire insurance, flood

insurance, earthquake insurance, home insurance, inland marine insurance or boiler

insurance.

1.6.15 Travel insurance is an insurance cover taken by those who travel abroad, which

covers certain losses such as medical expenses, lost of personal belongings, travel delay,

personal liabilities, etc.

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1.6.16 Workers' compensation insurance replaces all or part of a worker's wages lost and

accompanying medical expense incurred because of a job-related injury.

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1.7 Size in Terms of Manpower and Turnover-

MANPOWER - The Company believes that its employees define the organization. The

Company has recruited high quality manpower and carries out an extensive

induction training for its operations and sales staff. The Company believes that its growth lies in

the growth of its employees. The Company had

723 employees on its rolls as on March 31, 2003.

TURNOVER - Kotak Mahindra Old Mutual Life Insurance today said it has posted a 114 per

cent growth in first year premium income for the half-year ended September 30.

The adjusted premium equivalent has grown 119 per cent to Rs 566 crore for the reporting half

from Rs 259 crore for the same period a year ago, Kotak said in a release.

The company's loss for the reporting half stood at Rs 35 crore against Rs 53 crore a year ago for

the same period.

"Increase in productivity was a sheer focus for this half-year and we have successfully managed

to raise the bar.

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"Higher toplines, reduced costs and better customer service were the focus parameters and we

aim to continue with the same objectives," Kotak Life Insurance Managing Director, Gaurang

Shah, said.

1.8 Organization Structure of the Company-

Figure No. – 1

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1.9 Market share and Position of the Company-

Table No. - 1

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Figure No. – 2

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1.10 Present Leadership-

Kotak Life Insurance works as a team and have a flat management structure. Their top

management has many years of experience which has helped guide the company into a position

of leadership

Mr. Gaurang Shah - Managing Director

Mr. G Muralidhar - Chief Operating Officer

Mr. Pankaj Desai - Executive Director

Mr. Subhasish Ghosh - Financial Institutions Group

Mr. Sugata Dutta - Head Human Resources

Ms. Elizabeth Venkataraman - Sr. Vice President Marketing

Mr. Andrew Cartwright - Appointed Actuary

Mr. Suresh Agarwal - Head of Alternate channel

Mr. Shekhar Bhandari - Head of Tied channel

Mr. Anand Dewan - Head Management Development Training

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1.11 Source of Data Collection-

Primary Data – The primary data was collected through internship experience in the

organization itself and some paper conversation.

Secondary Data – The secondary data was collected through magazines and online

research material including websites.

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Chapter – 2

SWOT Analysis of the company

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2.1 SWOT Analysis

SWOT analysis is done for a company, to find out its overall Strengths, Weaknesses, Threats and

Opportunities leading to gauging the competitive potential.

The SWOT Analysis enables a company to recognize its market standing and adopt strategies

accordingly.

2.1.1 Strengths

Financial Acumen - Holds a stable and diversified portfolio and has received some of

the highest ratings in financial strength from industry’s independent rating agencies.

Disciplined fund management - Years of experience in asset management, and a strong

track record in managing funds - backed by the acclaimed expertise of Old Mutual plc

Innovativeness - Known for being an innovator in providing world-class pragmatic

financial solutions, with a constant focus on customization and flexibility

Unrelenting Customer Focus - A highly committed sales force, with customer

satisfaction as the key driving force - a major differentiator

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Transparency in Services - Daily declaration of fund performances, regular

performance benchmarking, well regulated asset management, and monthly newsletter on

market updates

2.1.2 Weaknesses

Industry in nascent stage.

Rural areas still not covered.

Not very known among Indian population.

Lack of credibility among the people because Kotak being a private player.

Premiums are high as compared to its competitors.

Very few branches in the country.

Products:

» The policy doesn’t have the surrender option before third year.

» Plan does not offer any guarantee or assured return.

» Product profile is not very comprehensive.

» Mortality, management and administrative charges are sky scrapping as compared

to its competitors.

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2.1.3 Opportunities

Liberalization of Indian economy.

As the industry is growing the whole market is virgin.

The whole private sector is opened to be trapped even though the competition is fierce

from government owned insurance companies.

It’s a volume business that is even if the company has few good corporate the turnover

cease to increase by manifold.

Products:

» Preserver funds look good due to comfortable liquidity in the economy and there

is little chance hike in short-term rate by RBI.

» Finance minister unveiled a budget favoring consumer spending, boosting

demand and therefore higher economic growth.

2.1.4 Threats

The government players will become aggressive thus growth is going to be tough.

Entry of other players is not ruled out.

Apprehension towards Kotak being a private life insurance company.

We expect the industry to rationalize in future that is mergers and acquisitions will

happen, which will impact the industry and Kotak life fortunes.

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Products:

» Past performance of these plans is not indicative of the future performance of the

plan.

» The sum invested in the funds is subject to market risks and there can be no

assurance that the objective of plan will be achieved.

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2.2 Best Practices of the company

2.2.1 Marketing :

Marketing practice tends to be seen as a creative industry, which includes advertising,

distribution and selling. It is also concerned with anticipating the customers' future needs and

wants, which are often discovered through market research. Seen from a systems point of view,

sales process engineering views marketing as a set of processes that are interconnected and

interdependent with other functions, whose methods can be improved using a variety of

relatively new approaches.

2.2.2 Human Resource :

In pursuance of strengthening the human resources of the Kotak Mahindra Life Insurance, a

comprehensive induction plan for recruiting professionals with specialized qualifications and

back ground was embarked upon.

2.2.3 Finance :

The field of finance refers to the concepts of time, money and risk and how they are interrelated.

Banks are the main facilitators of funding through the provision of credit, although private

equity, mutual funds, hedge funds, and other organizations have become important. Financial

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instruments allow many forms of securitized assets to be traded on securities exchanges such as

stock exchanges, including debt such as bonds as well as equity in publicly-traded corporations.

2.2.4 Services :

Customer satisfaction refers to how satisfied customers are with the products or services they

receive from a particular agency. The level of satisfaction is determined not only by the quality

and type of customer experience but also by the customer’s expectations. Kotak Mahindra with a

strong customer service culture places the customer at the centre of service design, planning and

service delivery. Customer centric organizations will:

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2.2 USPs of the company

Kotak Mahindra Life Insurance is the only company to reach Break-Even Point with a profit of

about 1400 Crores even at the time of recession with a number of competitors both private and

public including Bajaj Allianz, LIC, Metlife and other huge players in the insurance sector.

The reason behind this success was the SALES STRATEGY of the company which further

includes the following two types of strategies :

1. COMPANY STRATEGY:

Now company applies the project “Turning Point” and in this project to decide the selection

criteria for LIFE ADVISOR and life advisor is the basic requirement for sale the policy.

2. EXTERNAL STRATEGY:

Kotak life insurance external strategy is “To make limited branches but, to perform

productive” so as to reduce the cost.

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Chapter – 3

Analysis of Financial Reports of the company

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Analysis of Financial Statements(Accounting Ratios)

(All amounts in Rs. Crores)

Proprietary Ratio - It highlights the general financial position of the enterprise and

shows the extent to which the shareholders own the business.

Proprietary Ratio = Shareholder’s Funds Total Assets

For the year 2009 = 3593.71 28312.36

= 0.12:1

For the year 2010 = 3905.53 28711.88

= 0.13:1

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Figure No. - 3

This ratio has increased in comparison to the previous year which means that there is adequate

safety for creditors and hence results in higher Return on Investment.

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Debt – Equity Ratio – It is computed to ascertain the long-term financial position of the

firm.

Debt – Equity Ratio = Debt Equity

For the year 2009 = 21542.90 3593.71

= 5.9:1

For the year 2010 = 21549.00 3905.53

= 5.5:1

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Figure No. - 4

A minor decrease in the ratio indicates a safe financial position. It implies the use of more

equity than debt leaving a larger safety margin for the creditors.

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Return on Capital Employed – It judges the overall performance of the enterprise i.e., it

measures how efficiently the sources entrusted to the business are used.

Return on Capital Employed = Net Profit before Tax X 100 Capital Employed

For the year 2009 = 293.93 X 100 3593.71

= 8.71 %

For the year 2010 = 276.10 X 100 3905.53

= 7.06 %

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Figure No. - 5

The ratio has decreased in comparison to the previous year but on a small margin thereby

indicating satisfactory performance of the company..

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Return on Equity – It is used to find out how efficiently the funds supplied by

shareholders have been used.

Return on Equity = Net Profit after Interest and Tax X 100 Shareholders Funds

For the year 2009 = 648.11 X 1003593.71

= 18.03 %

For the year 2010 = 804.27 X 100 3905.53

= 20.59 %

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Figure No. - 6

An increase in the ratio indicates efficient management and utilization of shareholder’s funds i.e.,

the firm has the ability of generating profit per rupee of shareholder’s funds.

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Total Asset to Debt Ratio - It measures the safety margin available to the providers of

long-term debts. It measures the extent to which debt is covered by assets.

Total Assets to Debt Ratio = Total Assets Debt

For the year 2009 – 28312.36 21542.90

= 1.31:1

For the year 2010 – 28711.88 21549

= 1.33:1

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Figure No. -7

An increase in the ratio represents higher security to the lenders for extending long-term loans to

the business.

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Return on Total Assets - It is used to ascertain whether the investment in assets have

generated adequate net profit.

Return on total Assets = Net Profit after Tax X 100 Total Assets

For the year 2009 = 648.11 X 100 28312.36

= 2.28 %

For the year 2010 = 804.27 X 100 28711.88

= 2.80 %

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Figure No. -8

A higher ratio reflects efficiency of the management in generating adequate net profit by

investment in assets.

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Analysis of Cash Flow Statement

Cash Flow Statement (Rs. in Crores)

March’09 March’10

Net cash from operating activities (655.71) (833.15)

Net cash used in investing activities (180.66) (95.40)

Net cash used in financing activities 1689 (35.78)

Net increase/decrease in cashand equivalent 853.19 (964.33)

Cash and equivalent begin of year 1278.61 2105

Cash and equivalent end of year 2131.80 1140.67

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Comments

Cash generated from operating activities is negative which isn’t a good sign. In the near

future, the company may have to face liquidity problems as it may be having slow

moving stock.

It is observed that the 2 years show negative flow of cash from investing activities. It

means Kotak Mahindra has consistently invested in fixed assets. It also indicates that the

investment in fixed assets facilitates the business to earn more profit in future. It is also a

healthy sign for any business.

An increase in cash from financing activities depicts efficient assessment of claims on

future cash flows by providers of funds to the enterprise

In the year 2009, there is a marginal increase in the closing balance of cash and cash

equivalents that has helped the company to improve its solvency ratios particularly the

debt equity ratio and total assets to debt ratios.

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Figure No. -9

On the basis of the above analysis, we may conclude that business of Kotak Mahindra is doing

well and prospects of the company are bright.

But the company carries unusually high cash and cash equivalents, indicating inefficient cash

management. The management must consider this situation and take decision as to cash

management so that better standards are achieved.

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Chapter – 4

Lessons Learnt

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Learnings in the organization:

1. Practical learning about Insurance industry

The internship gave a good understanding of the Insurance Sector and its operations.

2. A business of Relationship

Insurance is one business which works best on personal networks, referrals and relationships

with the customers.

3. Maintain Relationships

While selling insurance policies, it is far easier to re-sell an existing client than to sell to

someone who doesn't know and trust you.

4. Create a Back-End for Your Business (Cross Selling)

It was easier to target an existing client and it turned to be more profitable as compared to

targeting a new customer.

5. Interaction

Good market interaction is needed to capture the market share.

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6. Efficiency and Effectiveness

This company is utilizing the talents of its employees in a very efficient and effective manner as

every person has been assigned different tasks to perform. This makes the company work in a

very efficient.

Contribution to the Organization:

During my 2 months summer internship at Kotak Mahindra Life Insurance, I worked on the

research work involving analyzing the importance of Life Insurance in the present scenario and

made efforts to target the particular class of customers with its products and hence contributed in

enhancing the business.

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BIBLIOGRAPHY

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1. Money Outlook, 2009 edition

2. Marketing Management, Kotler & Keller

3. Principles of Life Assurance, IC-23

4. Practice of Life Assurance, IC-02

5. IC-33

6. IRDA Annual Report, 2009-2010

Websites

1. www.irdaindia.org

3. www.insuranceworld.com

4. www.findarticles.com

5. www.kotaklife.com

Special Thanks to

Wikipedia, the free encyclopedia.htm

http://www.google.com

http://www.economywatch.com/business-and-financial/IPO-industry

Other sources

1. The Economic Times

2. Blogs by admin

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