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Page 1: Project Report On
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Birla Sun Life Insurance

PROJECT REPORT ON

FINANCIAL STATEMENT ANALYSIS

OF

SUBMITTED BY:

A report submitted in partial fulfillment of MBA programme at

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ACKNOWLEDGEMENT

We would like to express our sincere gratitude and thanks to Mr.

TARUN GOEL, Agency Manager, Birla sun life insurance ltd,

AMBALA CANTT. for giving us the guidance. We owe everything

we have gained from the project in terms of knowledge and

experience to them, as without their timely support and

encouragement the project would not have been as fruitful as it has

been.

We also thank Mr. PARVEEN BAJAJ for his constant

encouragement and guidance at every stage of this project, acting as

my faculty guide. He has been kind enough to spare his valuable

time and share his corporate experiences, which helped me to

approach the project in the right way.

We are grateful also to the entire staff of “Birla sun life insurance

ltd.” who helped us to collect the relevant data and get the real gist

of current scenario.

We would also like to extend sincere thanks to few people who were

not part of our project but without their help things would not have

been as easy as they were.

THANK YOU ALL

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POONAM KUMARI (MBA 3rd SEMESTER)

FINANCIAL STATEMENT ANALYSIS

SUBMITTED BY:- POONAM KUMARI

ROLL NO. MBA 3rd SEM

KALPI INSTITUTE OF TECHNOLOGY KALPI

SESSION (2011-13)

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KURUKSHETRA UNIVERSITY

KURUKSHETRA

STUDENT DECLARATION

I hereby declare that the project report titled “FINANCIAL STATEMENTS OF BIRLA SUN LIFE INSURANCE CO. LTD”, submitted in the partial fulfillment of the requirement of Master of Business Administration to KALPI INSTITUTE OF TECHNOLOGY KALPI is my original work. POONAM KUMARI

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CERTIFICATE BY THE GUIDE

This is to certify that the work entitled “FINANCIAL STATEMENT ANALYSIS” is a piece of research done by Poonam Kumari, a student of MBA 3rd semester bearing enrolment no. under my guidance and supervision for partial fulfillment of summer training project of Kurukshetra university Kurukshetra . To the best of my knowledge and belief the project report:

1. Embodies the work of the candidate herself

2. Has been duly completed 3. Is up to the standard in respect to

contents and language for being referred to the examiner.

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GUIDE

PREFACE

During my six week training at “BIRLA SUN LIFE INSURANCE CO. LTD.” .I worked on a project “FINANCIAL STATEMENT ANALYSIS OF BIRLA SUN LIFE INSURANCE CO. LTD.”

Financial statement analysis is a powerful mechanism that helps in ascertaining the strength and weakness in operation and financial position of any business unit. It has been rightly said; “God is architect of money” it is adequate flow of finance with which business is started and run

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smoothly in a successful way. Financial statement analysis is a best mean for drawing meaningful conclusion regarding financial operation, thus benefiting those who are in the working of business concern.

This project was undertaken to make the complete analysis of financial statement and also to get an experience of working with concern itself.Birla Sun Life Insurance co. ltd. To be a world class provider of financial security to individuals and corporates and to be amongst the top three private sectors life insurance companies in India.

CONTENTS

1. Introduction to insurance 5

2. Fundamental principles of insurance 6-8

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3. Reasons for taking a life insurance policy 9-10

4. Vision, Mission, Values 11

5. Company Profile 12-16

6. Sales Procedure 17-19

7. Company’s Products 19-34 7.1 Flexi Plans 7.2Classic Life Premier 7.3 Gold plus II Plan 7.4 Supreme Life Plan 7.5 Platinum plus Plan

9. Funds by BSLI 34-39

11. Conclusion 40

12. Recommendation 41

13. Bibliography 41

14. Annexure 42-44

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INTRODUCTION

“Insurance, in law and economics, is a form of risk

management primarily used to hedge against the risk of a

contingent loss. Insurance is defined as the equitable transfer

of the risk of a loss, from one entity to another, in exchange

for a premium. An insurer is a company selling the

insurance. The insurance rate is a factor used to determine

the amount, called the premium, to be charged for a certain

amount of insurance coverage. Risk management, the practice

of appraising and controlling risk, has evolved as a discrete

field of study and practice.”

The evolution of human beings from the primordial ‘wild’

stage to the ‘cave dwelling’ stage is nothing but their saga of

search for security. Their quest for security is eternal. Life

insurance is a device invented by them to seek security

against the most important hazards against which they found

themselves quite helpless. It will not be an exaggeration to

say that progress of civilization is due to human beings’

unending pursuit for security.

Life insurance in its modern form is a western concept.

Although it started taking shape since last 300 years, it came

to India with the arrival of the Europeans .the first life

insurance company was established in India in 1818 as

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oriental life insurance company mainly by Europeans to

provide for widows of Europeans. The companies that

followed mainly catered to Europeans and charge extra

premium on Indians lives. The first Indian company, insuring

Indian lives at standard rates, was Bombay mutual life

insurance company, which was formed in 1870.this was the

year also when the first Insurance Act was passed by the

British parliament. The years subsequent to the Swedishi

Movement saw the emerging of several insurance companies.

The end of the year 1955, there were 245 insurance

companies and provident societies out of which 16 were non-

Indian companies. These companies were nationalized in

1956 and brought under one umbrella – the life insurance

corporation of India, which enjoyed monopoly of life

insurance business, till almost up to the end of year 2000.By

enacting the IRDA Act 2000,the government of India

effectively ended LIC’s monopoly and opened the doors for

private insurance companies

FUNDAMENTAL PRINCIPLES OF INSURANCE

Some useful terms in Insurance:

A) INDEMNITY

A contract of insurance contained in a fire, marine, burglary

or any other policy excepting life assurance and personal

accident and sickness insurance) is a contract of indemnity.

This means that the insured, in case of loss against which the

policy has been issued, shall be paid the actual amount of loss

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not exceeding the amount of the policy, i.e. he shall be fully

indemnified. The object of every contract of insurance is to

place the insured in the same financial position, as nearly as

possible, after the loss, as if his loss had not taken place at all.

It would be against public policy to allow an insured to make

a profit out of his loss or damage.

B) UTMOST GOOD FAITH

Since insurance shifts risk from one party to another, it is

essential that there must be utmost good faith and mutual

confidence between the insured and the insurer. In a contract

of insurance the insured knows more about the subject matter

of the contract than the insurer. Consequently, he is duty

bound to disclose accurately all material facts and nothing

should be withheld or concealed. Any fact is material, which

goes to the root of the contract of insurance and has a bearing

on the risk involved. It is only when the insurer knows the

whole truth that he is in a position to judge

(a) Whether he should accept the risk and

(b) What premium he should charge.

If that were so, the insured might be tempted to bring about

the event insured against in order to get money.

C) Insurable Interest - A contract of insurance affected

without insurable interest is void. It means that the insured

must have an actual pecuniary interest and not a mere

anxiety or sentimental interest in the subject matter of the

insurance. The insured must be so situated with regard to the

thing insured that he would have benefit by its existence and

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loss from its destruction. The owner of a ship run a risk of

losing his ship, the charterer of the ship runs a risk of losing

his freight and the owner of the cargo incurs the risk of losing

his goods and profit. So, all these persons have something at

stake and all of them have insurable interest. It is the

existence of insurable interest in a contract of insurance,

which distinguishes it from a mere watering agreement.

D) Causa Proxima - The rule of causa proxima means that

the cause of the loss must be proximate or immediate and not

remote. If the proximate cause of the loss is a peril insured

against, the insured can recover. When a loss has been

brought about by two or

more causes, the question arises as to which is the causa

proxima, although the result could not have happened without

the remote cause. But if the loss is brought about by any cause

attributable to the misconduct of the insured, the insurer is not

liable.

E) Risk - In a contract of insurance the insurer undertakes to

protect the insured from a specified loss and the insurer

receive a premium for running the risk of such loss. Thus, risk

must attach to a policy.

F) Mitigation of Loss - In the event of some mishap to the

insured property, the insured must take all necessary steps to

mitigate or minimize the loss, just as any prudent person

would do in those circumstances. If he does not do so, the

insurer can avoid the payment of loss attributable to his

negligence. But it must be remembered that though the

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insured is bound to do his best for his insurer, he is, not bound

to do so at the risk of his life.

G) Subrogation - The doctrine of subrogation is a corollary

to the principle of indemnity and applies only to fire and

marine insurance. According to it, when an insured has

received full indemnity in respect of his loss, all rights and

remedies which he has against

Third person will pass on to the insurer and will be exercised

for his benefit until he (the insurer) recoups the amount he has

paid under the policy. It must be clarified here that the

Insurer’s right of subrogation arises only when he has paid for

the loss for which he is liable under the policy and this right

extends only to the rights and remedies available to the

insured in respect of the thing to which the contract of

insurance relates.

H) Contribution - Where there are two or more insurance on

one risk, the principle of contribution comes into play. The

aim of contribution is to distribute the actual amount of loss

among the different insurers who are liable for the same risk

under different policies in respect of the same subject matter.

Any one insurer may pay to the insured the full amount of the

loss covered by the policy and then become entitled to

contribution from his co-insurers in proportion to the amount

which each has undertaken to pay in case of loss of the same

subject-matter.

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In other words, the right of contribution arises when

1) There are different policies, which relate to the same

subject matter

2) The policies cover the same peril which caused the

loss, and

3) All the policies are in force at the time of the loss, and

4) One of the insurers has paid to the insured more than

his share of the loss.

Life Insurance Policy is a form of security for the person who

insures his life and his family. Life insurance policies have

helped trade and other economic activities to flourish in a

great manner. It has generated lots of job opportunities. It is

looked upon as a lucrative career option. Life insurance

companies have also entered the international business

scenario.

The following reasons substantiate why a life

insurance policy should be taken :

A) Early Deaths

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The mortality rate is experiencing a declining trend in many

parts of the world. However it is also important to note that

the age at which People die is also ever decreasing. Some

reasons for this include unhealthy living style, stress,

pollution, and some natural calamities. This necessitates

people to make adequate measures to yield income for their

family and dependents. This could be a serious concern if the

insured happens to be the sole breadwinner. Some individuals

see this as an option to plan their retirement.

B) Advancements in Health Care

The mortality rate has declined rapidly even though the fact

remains that the number of people who die at an early age is

on the increase. This is mainly due to the advancement in

healthcare and the awareness on medical facilities. This

results in an increased spending at an old age. This increased

spending is also due to increase in the costs of living apart

from paying expensive medical bills. Unless they invest in

Life insurance or other forms of insurance like health

insurance it becomes next only too impossible to meet the

financial demands especially during the old days.

C) Increase in the Cost of Living and Spending

Power

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The purchasing power of the consumers and the standard of

living has experienced a steep rise over the years. The

increase in National Income and gross domestic product are

Partly responsible for this. Individuals incur many unexpected

expenses due to the growing needs. Insurance comes in handy

to meet such an unexpected expense. It also

Makes sure that an individual is able to meticulously plan his

finances.

Insurance option is more or less an interest free loan. An

individual can cancel his insurance policy and obtain a huge

amount if it is imperative in meeting an urgent expenses and

he does not have alternative sources for finance. Life

insurance companies therefore do the needful to consumers.

D) Tax Concessions

Income tax concessions are available to individuals and

corporate houses that adopt insurance policies. Many have

been making investments in Insurance with the sole aim of

enjoying tax benefits. This naturally increases spending

power. Since the investments increases the economic

activities in the country automatically increases.

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Birla Sun Life – A Coming

Together Of Values

Birla Sun Life Insurance Company (BSLI) is a joint venture between the Aditya Birla Group and Sun Life Financial Inc of Canada and was established in India in the year 2000. Aditya Birla Group has established a strong financial presence in India through Aditya Birla Financial Services Group with expertise in a wide array of products which include wealth management, consumer finance, broking, lending and private equity. The Aditya Birla Group is common and trusted name in India with decades of presence in sectors ranging from cement, metals, textile, telecom and retail business to name a few. Sun Life Financial is a Canadian based financial services conglomerate with a major chunk of its business in the insurance domain with a history of over 140 years and hence provides the much needed expertise to this joint venture in India.  Birla Sun Life Insurance Company has a vast distribution network of almost 600 branches across India reaching out t more than 1500 towns. The already established companies of the Aditya Birla Financial Services Group give it the expertise and reach to service and add more consumers to the life insurance business. The company has a wide array of life insurance products catering to all aspects of a person’s life from traditional plans to unit linked market plans. They have had Virendra Sehwag and Yuvraj Singh as their branch ambassadors endorsing life insurance products of Birla Sun Life.  

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Birla Sun Life is a joint venture between The Aditya Birla

Group, one of the largest business house in India and Sun

Life Financial Inc., a leading International Financial Services

Organization. The local knowledge of the Aditya Birla Group

combined with the expertise of Sun Life Financial Inc. offers

a formidable protection for our future.

The Aditya Birla Group is led by its chairman- Mr. Kumar

Manglam Birla. The Group has over 88000 employees across

all its units worldwide. Some of the key organizations with

the group are Hindalco, Grasim, Aditya Birla Nuvo, etc.

The group is India's leading business house with a number of

key organizations. These are as follows:

1. Grasim

2. UltraTech Cement Ltd

3. Hindalco

4. Indian Aluminium Company Ltd

5. Aditya Birla Nuvo

6. Idea Cellular Ltd.

7. Birla Sun Life Insurance Co.Ltd

8. Birla Sun Life Asset Mgmt. Co.Ltd

9. Birla Sun Life Distribution Co. Ltd

10. PSI Data Systems

11. Indo Gulf Fertilizers Ltd.

12. Birla Global Finance Ltd

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Sun Life Financial Inc. and its partners today have operations

in key markets worldwide, including Canada, the United

States, the United Kingdom, Hong Kong, the Philippines,

Japan, Indonesia, India, China and Bermuda. Sun Life

Financial Inc. is a leading player in the life insurance market

in Canada.

Share Holding Pattern:

In Birla-Sun Life, the two companies are having shareholding

pattern as follows:

74 %--> Aditya Birla Group

26 %--> Sun Life Financial Inc.

The group has 3 businesses:

1. Mutual Funds

2. Wealth Management

3. Life Insurance

Birla Sun Life Insurance co ltd. is the Life-Insurance arm

of Birla-Sun Life

Birla Sun Life Insurance in its 7 successful years of

operations has contributed significantly to the growth and

development of life insurance industry in India. It pioneered

the launch of Unit Linked Life Insurance plans amongst the

private players in India. It was the first player in the industry

to sell its policies through the Bancassurance route and

through the Internet. It was the first private sector player to

introduce a Pure Term plan in the Indian market. This was

supported by sales practices, which brought a degree of

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transparency that was entirely new to the market. The process

of getting sales illustrations signed by customers, offering a

free look period on all policies, which are now industry

standards were introduced by BSLI. Being a customer centric

company, BSLI has covered more than a million lives since

inception and its customer base is spread across more than

1000 towns and cities in India. All this has assisted the

company

in cementing its place amongst the leaders in the industry in

terms of new business premium income. The company has a

capital base of more than Rs.672 crores.

Many ONEs with Birla Sun Life Insurance:

BSLI is a company that has a very unique contribution in the

history of Insurance sector. The company not only has

varying plans and funds, rather also is a pioneer in many

aspects. These pioneering features of BSLI are as follows:

1. Free Look Period: BSLI offers its policyholders

with a free look period of 15 days. Client gets

freedom to have an in-depth look over all the terms

and conditions regarding his/her life-insurance

policy. If he finds policy not worth opting for, he

can also return the policy, but at BSLI, co. people

ensures this not to happen.

2. Bancassurance: BSLI pioneered Bancassurance in

India. Bancassurance means to include Banks as one

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of the distribution channels with the company. BSLI

is the first company, which realized that banks, with

their huge customer base and strong customer

loyalty, are a readymade platform to acquire new

business on a more cost effective and sustainable

basis.

3. Unit Linked Life Insurance Plans: BSLI was the

first in India to introduce Unit Linked Plans. A ULIP

is an auspicious coming together of security from

life

4. insurance and earnings from investment. Which

means, apart from securing the future they offer

efficient returns. These plans provide the customer

with a certain number of units, in the same way as a

mutual-fund holder gets units. ULIPs offer market-

linked returns to policyholders.

5. Sales Illustrations: BSLI is the first company to

introduce Sales Illustrations in the Insurance

Industry. Sales people of BSLI give demonstrations

of fund

6. Performance on two points of projections i.e. on 6%

and 10%. Now IRDA has also made it mandatory to

have sales illustrations.

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BSLI’s has launched Century SIP, a unique systematic

investment plan offering an opportunity to create wealth with

as little as Rs 1000 per month plus a life insurance cover of up

to 100 times the monthly installment.

This plan comes along with free term insurance for an

individual up to 55 years of age.

The life insurance cover comes at no extra cost to the

investor. The cover is hassle free. The investor need not go

thru any medial test to avail of the life cover. All an investor

needs to do is enroll for CSIP & sign a “Declaration of Good

Health”. In case of unfortunate demise of investor the

insurance claim will be directly paid to the nominee by the

insurance company (Birla Sun Life Insurance Company).

Announcing the launch of Century SIP, Anil Kumar, CEO,

and Birla Sun Life MF said,

“This offering touches all aspects of an investor’s financial

planning needs. We wish to encourage the investment habit

among investors by providing them life insurance cover.”

Insurance cover to the investor would continue even after the

SIP’s minimum maturity tenor of 3 years. Any individual

between 18 to 46 years of age may invest in this plan.

Investment in this plan may be made through Electronic

clearing system (ECS), direct debits or post dated cheques.

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7. Others: Some other ONEs with BSLI are:

1st to issue daily NAVs of funds for better

transparency.

1st to have a distinct CRISIL benchmark.

1st to disclose portfolio on a monthly basis.

Policyholders can view their policy details

online; they can be accessed from BSLI

website using your unique password.

Out of every 100 claims intimated to BSLI

98.28 stands cleared.

Also the average Turn Around Time (TAT) :

(i) From the receipt of the last

requirement till dispatch of

cheque is 5 days and

(ii) From intimation of claim till its

decision & dispatch of cheque is

36 days.

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Sales Procedure of Insurance in BSLI:

BSLI ensures that its policyholders get the best out of the

policy offered to them by their Advisors. For this, BSLI

follows a set procedure of selling Insurance to the clients. The

sales procedure can be diagrammatically presented as follows:

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This procedure can be stepped down as follows:

1. Pitching the customer: The first and foremost thing is

that, client should be ready to purchase the Insurance plan.

Insurance is not a very preferable product yet in India. And,

thus, co. has to be very vigilant. Advisors, at BSLI, maintain

relationships and make the most of their Goodwill. Insurance

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SUSPECTING

PROSPECTING

APPOINTMENT

FIRST SALES CALL

FOLLOW UPS

SALES CLOSED

OFFICE WORK

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is a Relationship oriented business. Keeping this in mind

BSLI also initiated Bancassurance, where Banks’ image of

being loyal to the customers, plays a major role in pitching the

customer to buy Insurance. BSLI uses following routes for

distributing their Product to general public:

a. Direct Personal Contacts (through Advisors)

b. Bancassurance (through Banks)

c. Personal Relations (through co. employees)

d. Existing Policyholders.

2. Sales Illustration: BSLI is the first company to give

demonstration of the fund performance i.e. how a certain

policy will perform or will give returns. BSLI Advisors give

sales illustration. Fund performance is shown on 6% and 10%

projections. If client find these projected returns suitable to

his/her risk profile, he go for purchasing the policy.

3. Proposal Form : Now as client is ready to get insured,

advisor gives him the proposal form and asks for all

the documents required. Proposal form is a 4 page

document that contains all the necessary information

related to the Insured and the Owner of the policy.

Documents required along with the proposal form are:

Date-Of-Birth Proof

Address & ID Proof

Income Certificate

Medical Certificates (only if Insurer is a senior

citizen)

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4. After Sales Service : Now after the Insurance is sold,

follow-ups are required. Advisor needs to maintain

good relations with the policyholder. Insurance co. can

Generate further business, only if, existing policyholders

are satisfied with the services being provided by the

advisor of the co. Thus, BSLI keeps this in mind and

Business Development Executives continuously track the

needs of the policyholders. BSLI provides the

policyholders with monthly updates of the fund

performance and

also discloses the asset portfolio of the fund. This assists

the policyholders to manage their policy according to their

risk profile. They can, thus, change their fund allocation

as well as the asset allocation in any fund, chosen by

them.

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COMPANY PRODUCTS /

PLANS

All the plans associated with BSLI are Unit Linked Plans.

Flexi Plans

Flexi Plans have three variants. These variants are:

1. Flexi Save Plus (Endowment Plan)

2. Flexi Cash Flow (Money Back Plan)

3. Flexi Lifeline (Whole of Life Plan)

Features:

This is a Unit Linked Plan with guaranteed returns.

Provides flexibility with Top-Up Facility.

For Quarterly modal premium less than Rs.5000,

payment can be made through ECS.

Policyholder can attach riders to the plan according to

his/her needs.

Liquidity in the form of Partial withdrawals.

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Three Investment Fund options are available with the

policy and policyholder is free to switch between

funds anytime during the tenure of the policy.

The Sum Assured may be increased once in every 5

policy years, starting from the 6th policy year.

Premium can be paid annually, semi-annually,

quarterly and monthly

Premium Invested: Collected Premium is invested in three

Investment Fund Options. These funds are:

1. Protector

2. Builder

3. Enhancer

Benefits:

1. Maturity Benefits : At maturity, Policyholder gets the

higher of the guaranteed fund value (min. 3% on

premium) or the Total Fund value.

2. Survival Benefits :

(i) At the end of every 5th Coverage Benefit Period

and the remainder on maturity, an amount equals

to the minimum of (a) or (b) mentioned below will

be reduced from the guaranteed fund value and

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transferred to the holding account for the purpose

of partial withdrawals, where-

(a) Guaranteed Fund Value

(b) Sum Assured % as stated below:

30% if the Coverage Benefit Period is

10 years.

25% if the Coverage Benefit Period is

15 years.

20% if the Coverage Benefit Period is

20 years.

15% if the Coverage Benefit Period is

25 years.

If survival benefits are not withdrawn, they will

continue to be a part of the Fund Value.

(ii) If the life insured is a minor, policyholder

can withdraw the survival benefit payout

within one month from the scheduled

payout date from the fund value.

3. Death Benefits :

Age at time of

DeathDeath Benefits

30 days to 1 year Fund Value Only

Age 1 Year to 60

Year

Higher of Sum Assured less all partial withdrawals made in 24

months preceeding the death of life insured or the fund value or

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the guaranteed fund value.

On or After

attainment of 60

Years

Higher of Sum Assured less all partial withdrawals made since

the life insured attained the age 58 or the fund value or the

guaranteed fund value.

Charges:

1. Mortality Charges : These charges are deducted by

canceling units on a monthly basis at the prevailing

NAV. The annual mortality charges per 1000 sum

assured for sample ages are as follows:

Age 20 30 40 50 60

Male 1.016 1.171 2.150 5.532 13.732

Female 0.896 1.163 1.657 4.030 10.660

2. Partial Withdrawal Charges : 2 withdrawals in a policy

year are free of charge. Rs100 for every additional

partial withdrawal are charged.

Classic Life Premier

This is the plan that not only helps to save for the future but

also helps to get rich benefits from the investments, especially

at a time when the need for family protection reduces

significantly.

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Features:

The plan is a unit linked, non-participating plan.

This plan has the option of seven-investment fund

with the flexibility to allocate the premiums in varying

proportions into the different Fund Option.

Top up facility is there. The minimum amount of top

ups is 10000.

The plan offers further benefits in the form of

additional units, which will be added to the Fund value

at the end of the 10th policy year.

There is high liquidity in the form of Partial

Withdrawals and Surrender Benefits.

Death Benefits, which will be higher of the Fund value

or Sum Assured, reduced by the applicable partial

withdrawals.

Eligibility:

Entry Age:

Minimum: 30 days for 20 & 30 term

8 years for 10 terms

30 years for whole life

Maximum: For 10 years term- 60 years

For 20 years term- 50 years

For 30 years term- 40 years

For Whole Life- 60 years

Duration:

Minimum: 10 years

Maximum: 70 years (assuming whole life to be

100 years)

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Maturity Age: 70 years for the term- 10,20,30 years

100 years for whole life

Premium Payment Term: For 10 years term- 3, 5yrs or

regular coverage paying

period.

For 20 yrs, 30yrs term and

Whole Life- 5yrs, 10 yrs or

regular coverage paying

period.

Premium Investment: Premium collected is invested in

Seven Investment Fund Options:

1. Assure

2. Protector

3. Builder

4. Enhancer

5. Creator

6. Magnifier

7. Maximiser

Benefits:

1. Guaranteed Addition : It is in the form of additional

units, which is added to the fund value on the 10 th

policy anniversary and on every 5th policy anniversary

thereafter, while policy is in effect.

2. Partial Withdrawal Options : Partial Withdrawals can

be made after 3 policy years or when the life insured

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attains maturity, whichever is later. The minimum

partial withdrawal amount is Rs.10000

3. Surrender Benefits : Policy offers the flexibility of

surrendering the policy, if the need arises. There is no

surrender charge after 6 completed policy years.

However, if the policy is surrendered within 3 years from

inception, the surrender value is paid after the completion

of the third policy anniversary.

4. Death Benefits :

Below 5 years: If the death of the life insured

take place before 5 years, only the fund value

shall be payable to the policy owner.

Between 5 to 60 years: Higher of the fund

value or the sum assured less all applicable

partial withdrawals made in the last 24 months

preceding the death of the life insured.

60 years and Above: Higher of the fund value

or the sum assured less all applicable partial

withdrawals made since the life insured

attained the age of 58.

5. Maturity Benefits : On maturity of the policy, the fund

value is payable. Under the whole life option, on

maturity of the policy, when the life insured attains the

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age of 100, then fund value is payable and the policy

will be terminated.

6. Tax Benefits : Tax benefits on premium payment are

governed by section 80C of the Income Tax Act 1961.

Tax Exemptions on the amount received on maturity

in the unfortunate event of death and the withdrawals

are governed by section 10(10D).

7. Addition of Riders : Policy holder can customize the

plan by adding any of the following 6 riders:

1. Accidental Death & Dismemberment Rider

2. Term Rider

3. Critical Illness Rider

4. Critical Illness Plus Rider

5. Critical Illness Women Rider

6. Waiver of Premium Rider

Charges:

1. Premium Allocation Charges : These charges during

the premium paying term are as under:

Policy Year 1 2 or 3 Thereafter

Charge 13% 4% 2%

This charge on Top-up and underwriting extra is 2%.

2. Mortality Charge : This charge will be deducted by

cancellation of units on a monthly basis at the

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prevailing NAV. The Annual Mortality charge per

1000 of the Sum at risk for sample ages are as follows:

Age 25 35 45 55 65

Female 1.023 1.162 2.385 6.441 15.92

Male 1.083 1.363 3.110 8.571 21.06

3. Fund Management Charge : This is charged by

adjustment of the daily NAVs. The charge is:

1% p.a. for Assure, Protector, Builder and

Enhancer Fund.

1.25% p.a. for Creator, Magnifier and

Maximiser Fund.

4. Policy administration Charge : The charge is deducted

by canceling units on a monthly basis at the prevailing

NAV. The annual charge differs according to the

5. Life Insurance Coverage Sum Assured and Life

Insurance Coverage Paying Period. The maximum

charge is 6.10 and the minimum charge is 0.00

6. Surrender Charge : These charges are levied as the

percentage of the annual life insurance coverage

Premium payable. Charges are as follows:

Policy Year 1 2 3 4 5 6 7+

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Surrender

Charge30% 20% 15% 10% 8% 6% NIL

7. Rider Premium Charge : If the riders are attached, this

charge will be realized by cancellation of units on a

monthly basis based on the equivalent monthly rider

coverage premium payable, when rider coverage

payment period equals the rider coverage benefit

period.

Gold Plus II Plan

The plan gives much more than a good insurance cover, an

opportunity to grow investment for the medium term. It is

worth more than Gold.

Features:

It is a Unit Linked, Non-Participating, Insurance plan.

Duration of plan is 8 years.

Premium paying term of 3 years with the flexibility to

reduce premium up to Rs. 10000 from the second

policy year.

Plan also has Top-up facility.

Liquidity in the form of Partial Withdrawals and

Surrender Benefits.

Plan has 7 fund options.

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Free unlimited fund switching and premium

redirection

Eligibility:

Entry Age: 18 to 70 years.

Minimum Premium: Rs.50000

Minimum sum Assured: 5 x Annual Premium

Premium Investment: Premium collected is allocated in

varying proportions in seven investment fund options.

Policyholder can switch between the fund options anytime

during the tenure of the policy. The seven Investment Funds

available are:

1. Assure

2. Protector

3. Builder

4. Enhancer

5. Creator

6. Magnifier

7. Maximiser

Benefits:

1. Maturity Benefits :

On maturity fund value will be paid to the

policyholder.

2. Death Benefits :

In the Unfortunate event of the Death of the Life

Insured prior to the maturity date of the policy, the

nominee gets the greater of

(a) Fund Value

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(b) Sum Assured reduced for partial withdrawal as

follows:

Before the life insured attains the age

of 60, the sum assured payable on

death is reduced by partial

withdrawals made in the preceeding

years.

Once the Life Insured attains the age

of 60, the Sum Assured payable on

death is reduced by all partial

withdrawals made from age 58

onwards.

3. Tax Benefits :

Policyholder is eligible for tax benefits U/S 80C and

U/S 10(10D) of the Income Tax Act 1961.

U/S 80C- Premium up to Rs.100000 is allowed

as deduction from taxable income each year.

U/S 10(10D) - The Benefits received under

plan are exempted from tax.

Charges:

1. Premium Allocation Charges:

It is deducted from premium when received and before

allocation of units.

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Policy

Charges

Policy Years

1 2 3 4+

On Policy

Premium 8% 4% 4%  

On top-up

Premium 2% 2% 2% 2%

2. Fund Management Charges :

Fund Management charge not exceeding 1.5% per

annum of the fund value will be charged by

adjustments of the daily unit price. The charge is

1% p.a.- Assure, Protector, Builder and

Enhancer

1.25% p.a. – Creator, Magnifier and

Maximiser

3. Policy Administration Charges :

These charges are recovered by canceling units on a

monthly basis proportionately from each investment

fund. The annual Rate per 1000 of Sum Assured is:

Policy

Charges

Policy Years

1 2 3 4+

Policy

Administration

Charge *

19.4 19.4 19.4 14.4

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* An additional 5 per 1000 will be charged in the first

3 policy years only on any excess Sum Assured over

Rs. 50000

4. Mortality Charges : These charges are deducted on a

monthly basis. These charges are taken by canceling

units proportionately from each of the investment

funds at that time. The annual rate per 1000 of Sum

Assured less fund value for sample ages are:

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Age 25 35 45 55 65

Female 1.023 1.162 2.385 6.441 15.92

Male 1.083 1.363 3.110 8.571 21.06

5. Surrender Charges :

These charges are applied when the policyholder

surrender their policy in the first 3 policy years. The

surrender charge as a percentage of the annual policy

premium chosen at issue is

Policy

Charges

Policy Years

1 2 3 4+

Surrender

Charges15% 12.5% 10% nil

Supreme Life Plan

Features:

The plan is a Unit Linked Insurance Plan.

It provides the nominee with an increased sum assured

and builds savings faster.

The plan offers more protection of money at

supremely low cost.

Provides with Supreme Accidental TPD (Total

Permanent Disability).

Policyholder gets freedom to choose premium amount

as low as Rs.25000

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The plan provides with 6 Investment Fund Options.

The plan is flexible as it provides the policyholder

with Top-Up Premium facility to ensure faster growth

in the Fund Value.

Partial Withdrawals, are allowed, after 3 years to meet

liquidity needs of the policyholder

Duration:

Policy Term : 10, 15, 20, 25, 30, 35, 40 Years.

Premium Payment Term : Policyholder can choose to

pay premium at short or regular intervals.

Premium Investment: Premium Collected is investment in

six investment fund options. These funds are:

1. Assure

2. Protector

3. Builder

4. Enhancer

5. Creator

6. Magnifier

Benefits:

1. Death Benefits :

Double Death Benefits i.e. Death Benefits= Sum

Assured + Savings

Increasing Death benefits i.e. Death Benefit= Sum

Assured + 25% every 5th year

2. Accidental TPD Benefit :

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Policyholder immediately gets the original sum

assured up to Rs.50 lac

Co. pays the future premiums up to age 60.

3. Switches & Redirection :

Policyholder gets flexibility to switch between the

fund options. Two switches are free per annum.

Charges:

1. Mortality Charges : Charges are deducted monthly by

canceling units from the associated fund option. The

charge is 95%

2. Policy Administration Charges : These charges are

deducted monthly by canceling units from the

investment fund. The annual charge is Rs. 720 on the

first 1000 Sum Assured in all years i.e. Rs.3.60 per

1000 Sum Assured p.a. The additional charges for

years 1-5 are as follows:

Term Band 1 Band 2 Band 3

10/15 4.75 4.25 4.00

20+ 3.75 3.25 3.00

3. Premium Allocation Charges : These charges are 5%

for the 1st policy year and 2% for subsequent policy

years.

4. Fund Management Charges : These charges are 1 –

1.25% p.a. for all associated funds.

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Platinum Plus Plan

Features:

This plan is a Unit Linked, Non-Participating,

Insurance plan.

A policy term of 10 years.

A premium paying term of 3 years.

One Innovative Investment fund, namely Platinum

Plus Fund I.

Full Liquidity after three policy years to meet any cash

needs.

Unique Guaranteed Maturity Unit Price representing

the highest unit plus price of Platinum Plus Fund I

recorded on 88 reset dates starting on March 17, 2008

and ending on June 15, 2015.

Eligibility:

Entry Age of Life Insured: 18 to 70 Years.

Minimum Annual Premium: Rs. 1,00,000

Minimum Sum Assured: 5xAnnual Premium.

Premium Collected is invested in the Equity & Debt

Market according to the preset Asset Allocation of the

Platinum Plus Fund I.

Benefits:

1. Guaranteed Maturity Unit Price

Minimum of Rs. 10 on the first Reset Date

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At maturity, is the highest Unit Price recorded on 88

Reset Dates

2. Maturity Benefits

Number of units multiplied by higher of Guaranteed

Maturity Unit Price or prevailing Unit Price at

maturity

3. Surrender Benefits

Full liquidity after 3 policy years –100% Fund Value*

4. Death Benefits

Higher of Fund Value (as per the then

prevailing unit price) or Sum Assured (less

applicable partial withdrawals)

5. Tax Benefits

U/S 80C- Premium up to Rs.100000 is

allowed as deduction from taxable income

each year.

U/S 10(10D) - Benefits from the plan are

exempted from tax.

Charges:

1. Premium Allocation Charges : 10% of

premium in the first year and 4% of premium

in subsequent years.

2. Fund Management Charges : 1.00%-1.50% p.a.

for Assure & 1.50%-2.00% p.a. for Platinum

Plus Fund I.

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3. Policy Administration Charges : These charges

are deducted monthly by canceling units from

the investment fund Assure first and then,

from Platinum Plus I, if required. The annual

charge is Rs. 720 on the first 1000 Sum

Assured in all years plus Rs.6 per 1000 Sum

Assured in years 1 to 3 only.

4. Mortality Charges : Charges are deducted

monthly by canceling units from the

associated investment funds. The Annual

Charges for sample ages are as follows:

Attained

Age25 35 45 55 65

Female 1.023 1.162 2.385 6.441 15.920

Male 1.083 1.363 3.110 8.571 21.060

5. Surrender Charges : This charge, as a

percentage of the annual premium at issue, is

16%, 13% and 10% for policy year 1, 2 and 3

respectively.

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6. Revival Charge : The charge for policy revival

is Rs. 100-1000 per revival

FUNDS BY BSLI

Birla Sun Life Insurance, a leading Life Insurance company,

offers its clients with a long range of Funds. These funds are

designed to cater to a variety of needs of people who are from

different life stages. BSLI offers a broad range of 12 funds,

each having differing asset allocations.

12 funds offered are:

1. Individual Protector

2. Individual Assure

3. Individual Balancer

4. Individual Builder

5. Individual Creator

6. Individual Enhancer

7. Individual Life Maximiser

8. Individual Magnifier

9. Individual Multiplier

10. Pension Nourish

11. Pension Enrich

12. Pension Growth

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A new fund named Platinum Plus Fund I is also added in

this list of funds.

Asset Allocation is decided by the Fund Managers of the

company. These fund managers continuously tracks the

movements of volatile market and combine this volatility with

the fund requirements of the policyholders. Accordingly he

decides allocation of assets in 5 major investment options:

Government Securities

Corporate Debt

Securitized Debt

Equity

Money Market Instruments

Proportion of allocating the fund in these options, vary

according to the needs and fund requirements of

policyholders. The most important thing to be noticed here is

that this portfolio is decided, based on the regulations of

IRDA. Performances of these funds are rated by the rating

agency-CRISIL.

All the 12 funds by BSLI are described below along with their

respective Asset Allocations.

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Individual Assure

Objective: The primary objective of this fund is to provide

Capital Protection, at a high level of safety and liquidity

through judicious investments in high quality short-term debt.

Strategy: Generate better return with low level of risk

through investment into fixed interest securities having short-

term maturity profile.

Asset Allocation:

SECURITIES HOLDING

Corporate Debt 59.57%

Money Market Instruments 17.97%

TOTAL 100.00%

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Individual Balancer

Objective: The objective of this fund is to achieve value

creation of the policyholder at an average risk level over

medium to long-term period.

Strategy: The strategy is to invest predominantly in debt

securities with an additional exposure to equity, maintaining

medium term duration profile of the portfolio.

Asset Allocation:

SECURITIES HOLDINGS

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Government Securities 10.67%

Corporate Debt 39.04%

Equity 23.44%

Money Market Instruments 26.85%

TOTAL 100.00%

HOLDINGS

10.67%

39.04%

23.44%

26.85%Government Securities

Corporate Debt

Equity

Money Market Instruments

Pension Growth

Objective: This fund option is designed to build the capital

and to generate better returns at moderate level of risk, over a

medium or long-term period through a balance of investment

in equity and debt.

Strategy: Generate better return with moderate level of risk

through active management of fixed income portfolio and

focus on creating long term equity portfolio which will

enhance yield of composite portfolio with low level of risk

appetite.

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Asset Allocation:

SECURITIES HOLDINGS

Government Securities 13.90%

Corporate Debt 45.41%

Equity 18.63%

Money Market Instruments 22.06%

TOTAL 100.00%

HOLDINGS

13.90%

45.41%18.63%

22.06%

Government Securities

Corporate Debt

Equity

Money Market Instruments

Pension Enrich

Objective: Helps to grow the capital through enhanced

returns over a medium to long-term period through

investments in equity and debt instruments, thereby providing

a good balance between risk and return.

Strategy: To earn capital appreciation by maintaining

diversified equity portfolio and seek to earn regular return on

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fixed income portfolio by active management resulting in

wealth creation for policyholders.

Asset Allocation:

SECURITIES HOLDINGS

Government Securities 14.35%

Corporate Debt 39.40%

Equity 32.69%

Money Market Instruments 13.57%

TOTAL 100.00%

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HOLDINGS

14.35%

39.40%32.69%

13.57%

Government Securities

Corporate Debt

Equity

Money Market Instruments

VISION

To be a world class provider of financial security to individuals and corporates and to be amongst

the top three private sectors life insurance companies in India.

MISSION

To be the first preference of our customers by providing innovative, need based life insurance and retirement solutions to individuals as well as corporates. These solutions will be made

available by well-trained professionals through a multi channel distribution network and

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Superior technology.

Our endeavor will be to provide constant value addition to customers throughout their

relationship with us, within the regulatory framework.

We will provide career development opportunities to our employees and The highest possible returns to our

shareholders.

VALUES

Integrity: Honesty in every action. Commitment: Deliver on the

promise Passion: Energized action Seamlessness: Boundary less in

letter & spirit Speed: One step ahead always

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RESEARCH METHODOLOGY

For analysis the financial position of Birla Sun Life Insurance co. ltd. Both primary and secondary data have been collected. Primary data has been obtained by conducting direct interviews and indirect oral interviews with the staff of the company. Secondary data has been using Annual report, in the form of Balance Sheet and Profit & loss Account, and website of the company.

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For calculating the financial ratio, Balance Sheet and Profit & Loss Account of the company has been taken as major tool.Balance sheet of the company has been taken as a tool for calculating Liquidity ratio, Efficiency/ Activity ratios and Solvency ratios. Profit & Loss Account has been taken as a tool for calculating Profitability ratios.All the ratios have been calculated from the figures as shown in the Balance Sheet and Profit & Loss account of the year for which the figures as shown in the Balance Sheet and Profit & Loss Account of the year for which the financial analysis of the company is being done.

PERIOD OF THE STUDY

The time period of the study of the topic “Financial Statement Analysis” was to be conducted and competed in the summer vacation from 15-06-2012 to 16-08-2012, which was very short duration.

RESEARCH PLAN

The research study is exploratory in nature. The established objectives were kept in mind during the study, however no hypothesis was formed as the study was more in the form of descriptive design attempting to analysis the attitude of respondents towards the project.

DATA COLLECTION

The information collected for the concerned topic is extracted through primary as well as secondary sources. This study is mainly based upon secondary data that is collected from balance sheets, trading & profit &loss a/c, reports, documents and other financial records. The major source of information has been published annual reports of the company.

METHODS OF DATA COLLECTION

Primary data- it is collected with help of questionnaire as it has been filled by selected sample. Respondents fill the questionnaire as per they perceive.

Secondary data- it is collected from internet, journals, electronic media, magazines, newspapers, books etc.

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Instruments used – Questionnaires- A judicious mix of open ended and close ended question is used.

TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS

Various tools and techniques are used to complete the project work:-1. Comparative Statement2. Common Size Statement3. Trend Analysis4. Ratio Analysis

PRESENTATION OF DATA

The data has been resented in the form of one or more statements and tables. Each of such statement/table is accompanied by appropriate analysis and explanation and moreover significance of specific data has been highlighted there in.

LIMITATION OF THE STUDY

1. It was not an easy task. The respondent was not always open and forthcoming with their view.

2. This study is based on the assumption that respondents are true and factual although at times that my not be the case.

3. Another limiting factor could be existence of biasness in the respondents mind.

4. Though every care has been taken to eliminate such biasness, but considering the human factor the possibility of small bias having come up cannot be ruled out altogether.

5. As a financial statement is reared on basis of a going concern concept, it does not give exact position. The accounting concepts and conventions cause serious limitation to financial analysis.

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6. Change in financial procedure by firm may often make financial analysis misleading.

7. Analysis is only a mean not end itself. The analyst has to make interpretation and draw conclusion. Different people may interpret the same analysis in different way.

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FINACIAL STATEMENTS ANALYSIS - AN

INTRODUCTION

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FINANCIAL STATEMENTS ANALYSIS (MEANING,PURPOSE AND PARTIES INTERESTED)

Meaning:

We know business is mainly concerned with the financial activities. In orderto ascertain the financial status of the business every enterprise preparescertain statements, known as financial statements. Financial statements aremainly prepared for decision making purposes. But the information as isprovided in the financial statements is not adequately helpful in drawinga meaningful conclusion. Thus, an effective analysis and interpretation offinancial statements is required.

Analysis means establishing a meaningful relationship between variousitems of the two financial statements with each other in such a way thata conclusion is drawn. By financial statements we mean two statements :

(i) Profit and loss Account or Income Statement(ii) Balance Sheet or Position Statement

These are prepared at the end of a given period of time. They are theindicators of profitability and financial soundness of the business concern.The term financial analysis is also known as analysis and interpretation offinancial statements. It refers to the establishing meaningful relationship

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between various items of the two financial statements i.e. Income statementand position statement. It determines financial strength and weaknesses ofthe firm.Analysis of financial statements is an attempt to assess the efficiency andperformance of an enterprise. Thus, the analysis and interpretation offinancial statements is very essential to measure the efficiency, profitability,financial soundness and future prospects of the business units.

Financial analysis serves the following purposes :

_ Measuring the profitabilityThe main objective of a business is to earn a satisfactory return on thefunds invested in it. Financial analysis helps in ascertaining whetheradequate profits are being earned on the capital invested in the businessor not. It also helps in knowing the capacity to pay the interest anddividend.

_ Indicating the trend of AchievementsFinancial statements of the previous years can be compared and thetrend regarding various expenses, purchases, sales, gross profits and netprofit etc. can be ascertained. Value of assets and liabilities can becompared and the future prospects of the business can be envisaged.

_ Assessing the growth potential of the businessThe trend and other analysis of the business provides sufficientinformation indicating the growth potential of the business.

_ Comparative position in relation to other firms

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The purpose of financial statements analysis is to help the managementto make a comparative study of the profitability of various firmsengaged in similar businesses. Such comparison also helps themanagement to study the position of their firm in respect of sales,expenses, profitability and utilising capital, etc.

_ Assess overall financial strengthThe purpose of financial analysis is to assess the financial strength ofthe business. Analysis also helps in taking decisions, whether fundsrequired for the purchase of new machines and equipments are providedfrom internal sources of the business or not if yes, how much? And alsoto assess how much funds have been received from external sources.

_ Assess solvency of the firmThe different tools of an analysis tell us whether the firm has sufficientfunds to meet its short term and long term liabilities or not.

PARTIES INTERESTED

Analysis of financial statements has become very significant due towidespread interest of various parties in the financial results of a businessunit. The various parties interested in the analysis of financial statementsare :(i) Investors : Shareholders or proprietors of the business are interestedin the well being of the business. They like to know the earningcapacity of the business and its prospects of future growth.(ii) Management : The management is interested in the financial positionand performance of the enterprise as a whole and of its variousdivisions. It helps them in preparing budgets and assessing theperformance of various departmental heads.(iii) Trade unions : They are interested in financial statements for

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negotiating the wages or salaries or bonus agreement with themanagement.(iv) Lenders : Lenders to the business like debenture holders, suppliersof loans and lease are interested to know short term as well as longterm solvency position of the entity.(v) Suppliers and trade creditors : The suppliers and other creditors areinterested to know about the solvency of the business i.e. the abilityof the company to meet the debts as and when they fall due.vi) Tax authorities : Tax authorities are interested in financial statementsfor determining the tax liability.(vii) Researchers : They are interested in financial statements in undertakingresearch work in business affairs and practices.(viii) Employees : They are interested to know the growth of profit. As aresult of which they can demand better remuneration and congenialworking environment.(ix) Government and their agencies : Government and their agenciesneed financial information to regulate the activities of the enterprises/industries and determine taxation policy. They suggest measures toformulate policies and and regulations.(x) Stock exchange : The stock exchange members take interest infinancial statements for the purpose of analysis because they provideuseful financial information about companies.

Thus, we find that different parties have interest in financial statements fordifferent reasons.

27.2 TECHNIQUES AND TOOLS OF FINANCIAL STATEMENTANALYSIS

Financial statements give complete information about assets, liabilities,

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equity, reserves, expenses and profit and loss of an enterprise. They are notreadily understandable to interested parties like creditors, shareholders,investors etc. Thus, various techniques are employed for analysing andinterpreting the financial statements. Techniques of analysis of financialstatements are mainly classified into three categories :

(i) Cross-sectional analysisIt is also known as inter firm comparison. This analysis helps inanalysing financial characteristics of an enterprise with financialcharacteristics of another similar enterprise in that accounting period.For example, if company A has earned 15% profit on capital invested.This does not say whether it is adequate or not. If we analyse furtherand find that a similar company has earned 16% during the sameperiod, then only we can make a conclusion that company B is better.Thus, it turns into a meaningful analysis.

(ii) Time series analysisIt is also called as intra-firm comparison. According to this method,the relationship between different items of financial statement isestablished, comparisons are made and results obtained. The basis ofcomparison may be :– Comparison of the financial statements of different years of thesame business unit.– Comparison of financial statement of a particular year of differentbusiness units.

(iii) Cross-sectional cum time series analysisThis analysis is intended to compare the financial characteristics of twoor more enterprises for a defined accounting period. It is possible toextend such a comparison over the year. This approach is most effectivein analysing of financial statements.The analysis and interpretation of financial statements is used to determine

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the financial positon. A number of tools or methods or devices are usedto study the relationship between financial statements. However, thefollowing are the important tools which are commonly used for analysingand interpreting financial statements :

METHODS OR DEVICES OF FINANCIAL ANALYSIS

The analysis &interpretation of financial statement is used to determine the financial position & results of operations as well. A number of methods or devices are used to study the relationship between different statements. As effort is made to use those devices that clearly analysis the position of the enterprise.

The following methods of analysis are generally used:

_ Comparative financial statements _ Common size statements_ Trend analysis _ Ratio analysis_ Funds flow analysis _ Cash flow analysis

1. Comparative financial statements

In brief, comparative study of financial statements is the comparison of thefinancial statements of the business with the previous year’s financialstatements. It enables identification of weakpoints and applying correctivemeasures. Practically, two financial statements (balance sheet and incomestatement) are prepared in comparative form for analysis purposes.

Comparative Balance SheetThe comparative balance sheet shows the different assets and liabilities of

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the firm on different dates to make comparison of balances from onedate to another. The comparative balance sheet has two columns for thedata of original balance sheets. A third column is used to show change(increase/decrease) in figures. The fourth column may be added for givingpercentages of increase or decrease. While interpreting comparative Balancesheet the interpreter is expected to study the following aspects :(i) Current financial position andLiquidity position(ii) Long-term financial position(iii) Profitability of the concern(i) For studying current financial position or liquidity position of aconcern one should examine the working capital in both the years.

Working capital is the excess of current assets over current liabilities.(ii) For studying the long-term financial position of the concern, oneshould examine the changes in fixed assets, long-term liabilities andcapital.(iii) The next aspect to be studied in a comparative balance sheet is theprofitability of the concern. The study of increase or decrease in profitwill help the interpreter to observe whether the profitability hasimproved or not.After studying various assets and liabilities, an opinion should beformed about the financial position of the concern.

Comparative Income statementThe income statement provides the results of the operations of a business.This statement traditionally is known as trading and profit and loss A/c.Important components of income statement are net sales, cost of goods sold,selling expenses, office expenses etc. The figures of the above components

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are matched with their corresponding figures of previous years individuallyand changes are noted. The comparative income statement gives an ideaof the progress of a business over a period of time. The changes in moneyvalue and percentage can be determined to analyse the profitability of thebusiness. Like comparative balance sheet, income statement also has fourcolumns. The first two columns are shown figures of various items for twoyears. Third and fourth columns are used to show increase or decrease infigures in absolute amount and percentages respectively.The analysis and interpretation of income statement will involve thefollowing :– The increase or decrease in sales should be compared with the increaseor decrease in cost of goods sold.– To study the operating profits– The increase or decrease in net profit is calculated that will give an ideaabout the overall profitability of the concern.

2. COMMON SIZE STATEMENTS AND TREND ANALYSIS

The common size statements (Balance Sheet and Income Statement) areshown in analytical percentages. The figures of these statements are shownas percentages of total assets, total liabilities and total sales respectively.Take the example of Balance Sheet. The total assets are taken as 100 anddifferent assets are expressed as a percentage of the total. Similarly, variousliabilities are taken as a part of total liabilities.

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Common size balance sheetA statement where balance sheet items are expressed in the ratio of eachasset to total assets and the ratio of each liability is expressed in the ratioof total liabilities is called common size balance sheet

Trend percentage analysis (TPA)The trend analysis is a technique of studying several financial statementsover a series of years. In this analysis the trend percentages are calculatedfor each item by taking the figure of that item for the base year taken as100. Generally the first year is taken as a base year. The analyst is able tosee the trend of figures, whether moving upward or downward. In brief, the procedure for calculating trends is as :– One year is taken as a base year which is generally is the first year orlast year.– Trend percentages are calculated in relation to base year

3. Ratio Analysis : Ratio analysis is a technique of analysis and interpretation of analysis and interpretation.

4. Fund Flow Statement: fund flow statement is a method by which we study changes in financial position of a business enterprise between beginning and ending financial statement date. It is a statement showing and uses of funds for a period of time. Fund flow statement is called by various names such as previous name such as services and application of funds, statement of changes in financial position, sources and uses of funds, summary of financial position, where gone statement, movement of fund statement, sources of increase and application of decrease, funds statements etc.

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5. Cash Flow Statement : Cash flow statement is a statement which describes the inflows(source) and outflow(uses) of cash and cash equivalents an enterprise during a specified period of time such a statement enumerates net effects of the various business transaction on cash and its equivalents and takes in to account receipts and disbursement of cash.

SIGNIFICANCE OF COMPARITIVE FINANCIAL STATEMENT

1. Comparative study of financial statements is the comparison of the

financial statements of the business with the previous years financialstatements.

2. Comparative Balance Sheet shows the different assets and liabilites of

the firm on different dates to make comparison of balances from thedate to another.

3. Common size balance sheet items are expressed in the ratio of each asset

to total assets and the ratio of each liability is expressed in the ratio oftotal liablities.

4. The trends are brought with in understanding which help in making important decisions.

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STATEMENT OF COMPREHENSIVE SIZE INCOME for the second quarter ended 29 Feb. 2012

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STATEMENT OF FINANCIAL POSITION AS OF 29 FEB 2012

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CONCLUSION

Our training was a very enriching experience for us, we have learnt

so many things, and we got insight into the insurance world.

Insurance sector today playing a major role in everyone’s life lot

more than ever before life currently there is a comprehensive range

of products covering each type of policy available in the market. We

have studied various insurance plans covered under BSLI, and their

features. BSLI also gives various Riders, which provides extra

benefits to the customers. And we came to know about the

pioneering features of BSLI, like sales procedure, SIP, etc.

While most insurance plans block money for certain period of time, a

BSLI plan gives the double benefit of life insurance along with easy

liquidity through lump sum cash.

Birla Sun Life Insurance (BSLI), one of the largest private life

insurers, is gearing itself to take advantage of the vast rural

opportunity that has opened up as a result of the revised definition of

rural areas by the IRDA. Over the last four years, BSLI has

painstakingly built its rural infrastructure to create a cost-effective

distribution network across the country.

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Our training gave us corporate exposure, and helped in improving

our communication skills. We learnt to deal with customers, we

made them aware about various plans, and their respective features,

even helped them to select the best plan as per their requirements.

RECOMMENDATIONS

1. Competition from public sector and foreign banks remains a key challenge

for private sector banks. They need to reorient their staff and effectively

utilize technology platforms to retain customers.

2. They have to update their portfolio timely.

3. Birla Sun Life Insurance Ltd should have proper division of departments

under heads.

4. Birla Sun Life Insurance Ltd should have more pension plans.

5. Birla Sun Life Insurance Ltd should have more children plans, and more

help line plans

6. They should provide more information to the customer so that they

become more aware about insurance

BIBLIOGRAPHY

1. www.birlasunlife.com Dated 13/6/08 Time 3:30

2. www.Paisawaisa.com/LifeInsurance Dated 13/6/08 Time 4:00

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3. Company brochure

4. Company brochure/ GOLD- PLUSII PLAN/ Ver 01/12/07

5. Company brochure/ Classic Life Premier/ Ver 8/9/07

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ANNEXURE

1. Do you make investments?

A.Yes

B.No

2. How much you earn annually?

A. Below 50,000

B. 50,000-100,000

C.100, 000-1, 50,000

D. Above 150000

3. Do you know about insurance?

A. Yes

B. No

4. Do you know about BSLI?

A. Yes

B.No

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5. How did you came to know about it?

A Newspapers

B. Online

C. Personal Reference

D. Other

6. What assets do you own?

A. Personal house

B.Car

C.Credit card

7. Where would you like to invest?

A. Mutual Fund

B.Stocks

C.Real estate

D.Insurance

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8. What would u like to insure?

A. Vehicle

B.Life insurance

9. Which insurance plan of BSLI are you

interested in?

A.Saral Jeevan

B.Gold Plus II

C.Platinum Plus

D.Classic Life Premier

10. How do you rate our plans?

A. Average

B. Good

C. Excellent

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