A SUMMER TRAINING PROJECT REPORT ON Marketing Analysis of ICICI Prudential Life Insurance.

Submitted in the partial fulfillment for the award of Bachelor of Business Administration (BBA) (2007-2010)

SUBMITTED BY:

Jyoti BBA 3rd B Regd. No. :2007. GIM/A.90

Preface

An Industrial, Business or service organization by taking up a project study is most important part of our BBA course & is must as per the syllabus prescribed by Guru Nanak Dev university BBA course is of administrative and managerial activity of industrial, Business or service organization. The main objective of this project study is to help the student to develop ability to practical technique to solve real life problem related industrial. Business or Service organization. According to the rules, I have taken my summer training in ICICI Prudential Life Insurance. Our gardeners, professors and banks sum managers gives the knowledge and guidance of this bank to us. The summer training programmed for student of BBA training is for two months in the time of summer vacation theoretically knowledge and class room discussion is not sufficient for the student but training given them practical and day to day working of bank. In this project report I had tried to analyze the needs of the customers and suggest them the most suitable insurance solution. As well as I also analyzed the brand awareness among the people.

ACKNOWLEDGEMENT
To take training is a part of our BBA Programming and is an important part. Training quit valuable and important aspect to provide practical knowledge student of management studies. It was very useful and experience which I got during my training in ICICI Prudential Life Insurance. I was able to prepare this training report with the co-operation of various people. First of all I am very much thankful to in charge Director and professor of our institute our professor Mrs Riti Passi who has given me an opportunity and she has helped me very much in preparing the report by her guidance

Thanking you

JYOTI

GUIDE CERTIFICATE
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This is to certify that the project titled MARKETING ANALYSIS OF ICIC LIFE PRUDENTIAL is an original work of Mrs. Jyoti Enrollment student of Guru Nanak Institute of Management & IT , New Delhi submitted in partial fulfillment of the requirements for the award of Bachelor of Business Administration(BBA) (2007-2010) under the guidance of the committee.

Signature of committee members Mrs.Riti Passi

Signature of HOD Mrs. Maninder Kaur

Objective of the Study

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Management as a profession cant be taught merely in the four walls of classrooms. Only theoretical knowledge is not sufficient to build competitive managers. Practical knowledge of the business environment is equally important. In today business world, insurance sector is running towards its booming stage. This industry still has many things to come up to, so many changes and opportunities will be given by insurance industry. So I choose insurance industry for my training session in M.B.A. I choose ICICI Prudential Life Insurance is one of those private insurance players who entered the market before few years and made its own place among all its competitors. This report is shows insurance sector & how insurance is most important part of life. And understand insurance definitions, different providers of life insurance and comparisons. It also shows ICICI Prudential Life Insurances Products. As a Trainee ICICI Prudential Life Insurance give me very practical knowledge about life insurance and how to working in organization, How manage work, how to maintain relations with top level management as well as colleges and bottom level management. So, this experience will helpful in future. I am pleased by taken training at Indias one of the best insurance company.

T ABLE

OF

C ONTENT
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No.
1 2 3 4 5

Particulars
Introduction Reserch Methodology Life insurance at a glance

6 7 8 9 10

Retail Market Share: Private Players Introduction of ICICI Prudential Prudential Plc ICICI Life Insurance Management ICICI Prus Products Finance Department Marketing Department SWOT Analysis Conclusion

PageNo. 7 20 32 37 41

49 55 64 68 70

INTRODUCTIUON

Insurance is defined as a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to ensure themselves against that risk. Risk is uncertainty of a financial loss. It should not be confused with the chance of loss, which is the probable number of losses out of confused with peril, which is defined as the cause of loss or with hazard, which is a condition, may increase the chance of loss.
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Every risk involves the loss of one or other kind. The function of insurance is to spread the loss over a large number of persons who are agreed to co-operate each other at the time of loss. The risk cannot be over rated but loss occurring due to a certain risk can be distributed amongst the agreed persons. They are agreed to share the loss because the chance of loss is there. Everybodys greatest asset during his/her working years is his/her ability to earn an income. It is important to adequately safeguard this asset to ensure his/her cash flow will continue in the event of an unexpected disaster. His/her insurance policies will help to protect him/her (if any) against any unforeseen odds. There are two kinds of insurance available viz. Life Insurance and General Insurance.

Life Insurance
Provides for dependents in case of death. Replaces earning power, if disabled. Protects his/her ability to meet accumulation / education / marriage goals.

General Insurance
Addresses health care concerns. Provides for auto, home and personal liability protection. Provides for potential long-term care costs. Plans for business continuation.

GENERAL DEFINITION
The general definitions are given by the social scientists & they consider insurance as a device to protection against risks, or a provision against inevitable contingencies or a co-operative device of spreading risks. Some of such definitions are given below: In the words of John Magee , Insurance is a plan by which large number of people associate themselves & transfer to the shoulder of all, risks that attach to individuals. In the words of Sir William Bevridges , The collective bearing of risks is insurance. In the words of Boone & Kurtz , Insurance is a substitution for a small known loss (the insurance premium) for a large unknown loss, which may or may not occur. In the words of Thomas , Insurance is a provision, which a prudent man makes against for the loss or inevitable contingencies, loss or misfortune. In the words of Allen Z. Mayerson , Insurance is a device for the transfer to an insurer of certain risks of economic loss that would otherwise come by the insured. In the words of Ghosh & Agarwal , Insurance is a cooperative form of distributing a certain risk over a group of persons who are exposed to it.

FUNDAMENTAL STATEMENT
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These are based on economic or business oriented since it is a device providing financial compensation against risk or misfortune. In the words of D. S. Harsell , Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payments being made from the accumulated contribution of all parties participating in the scheme. In the words of Robert I. Mehr & Emerson Cammark , Insurance is purchased to offset the risk resulting from hazards, which exposes a person to loss. In the words of Riegel & Miller , Insurance is a social device whereby the uncertain risks of individuals may be combined in a group & thus made more certain small periodic contributions, by the individuals providing a fund, out of which, those who suffer losses may be reimbursed. Insurance follows important characteristics.

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CHARACTERISTICS OF INSURANCE

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Sharing of Risks Insurance is a co-operative device to share the burden of risk, which may fall on happening of some unforeseen events, such as the death of head of the family, or on happening of marine perils or loss of by fire. Co-operative Device Insurance is a co-operative form of distributing a certain risk over a group of persons who are exposed to it (Ghosh & Agarwal). A large number of persons share the losses arising from a particular risk. Evaluation of Risk For the purpose of ascertaining the insurance premium, the volume of risk is evaluated, which forms the basis of insurance contract. Payment of happening of specified event On happening of specified event, the insurance company is bound to make payment to the insured. Happening of the specified event is certain in life insurance, but in the case of fire, marine or accidental insurance, it is not necessary. In such cases, the insurer is not liable for payment of indemnity. Amount of payment The amount of payment in indemnity insurance depends on the nature of losses occurred, subject to a maximum of the sum insured. In life insurance, however, a fixed amount is paid on the happening of some uncertain event or on the maturity of the policy. Large number of insured persons The success of insurance business depends on the large number of persons insured against similar risk. This will enable the insurer
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to spread the losses of risk among large number of persons, thus keeping the premium rate at the minimum. Insurance is not a gambling Insurance is not a gambling. Gambling is illegal, which gives gain to one party & loss to the other. Insurance is a valid contract to indemnity against losses. Moreover, insurable interest is present in insurance contracts & it has the element of investment also. Insurance is not charity Charity pays without consideration but in the case of insurance, premium is paid by the insured to the insurer in consideration of future payment. Protection against risks Insurance provides protection against risks involved in life, materials & property. It is a device to avoid or reduce risks. Spreading of risk Insurance is a plan, which spread the risks & losses of few people among a large number of people. John Magee writes, Insurance is a plan by which large number of people associates themselves & transfer to the shoulders of all, risks attached to individuals. Transfer of risk Insurance is a plan in which the insured transfers his risk on the insurer. This may be the reason that Mayerson observes, that insurance is a device to transfer some economic losses to the insurer, and otherwise such losses would have been borne by the insured themselves. Ascertaining of losses By taking a life insurance policy, one can ascertain his future losses in terms of money. This is done by the insurer to
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determining the rate of premium, which is calculated on the basis of maximum risks.

A contract Insurance is a legal contract between the insurer & insured under which the insurer promises to compensate the insured financially within the scope of insurance policy, & the insured promises to pay a fixed rate of premium to the insurer. Based upon certain principle Insurance is a contract based upon certain fundamental principles of insurance, which includes utmost good faith, insurable interest, contribution, indemnity, causa proxima, subrogation, etc., which are the basis for successful operation of insurance plan. Utmost Good Faith Insurance is a contract based on good faith between the parties. Therefore, both the parties are bound to disclose the important facts affecting to the contract before each other. Utmost good faith is one of the important principles of insurance. To conclude, insurance is a device for the transfer of risks from the insured to the insurers, who agree to it for a consideration (known as premium), & promises that the specified extent of loss suffered by the insured shall be compensated. It is a legal contract of a technical nature. To conclude, insurance is a device for the transfer of risks from the insured to the insurers, who agree to it for a consideration (known as premium), & promises that the specified extent of loss suffered by the insured shall be compensated

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INTRODUCTION INSURANCE COMPANY

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In order to go through the journey of LIC Path of private sector insurance companies to nationalize company to again private sector insurance companies is given as below: Path Private Life Insurance Companies

Nationalization

Privatization of Life Insurance Sector

Life Insurance concept was accepted with almost 250 Private Life Insurance Companies Merging of almost 250 Private Sector Life Insurance Companies in one nationalized Life Insurance Corporation of India Proposal to privatize life insurance business Registration process was notified Application was filed 1 s t license was issued with introduction of IRDA During the month of January, 11 Life and Non-Life Private Insurance license were issued

1870 1956

1956

1995 June 2000 August 2000 October 2000 2002

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In order to elaborate the above path lets go through the history of Life Insurance Sector. On 3 r d December 1670, seven earnest men of Bombay with just seven rupees for initial expenses gave shape to a plan of offering insurance to the public without the risk of ruin and the Bombay Mutual Life Insurance Society came into existence. Right up to the end of the 19 t h century, foreign insurance companies had an upper hand in the matter of insurance business and they enjoyed mere monopoly and the partiality were observed in the form that Indian lives were insured with 10% extra premium as a common practice, at that time Lala Harikishan Lal from Lahore was called The Napoleon of Indian Finance as he was then called to launch the Bharat Insurance Company at Lahore (1896) in Punjab. Prior to 1912, India had no legislation for regulating insurance. The Life Insurance Companies Act 1912 and the Provident Fund Act 1912 were passed. The Insurance Act 1938 was the first comprehensive legislation governing not only life but also non-life branches of insurance to provide strict state control over insurance business. But after the introduction of Insurance Act 1938, the demand for nationalization of Life Insurance Industry was raised, there were so many reasons in order to nationalize the insurance sector. They are: Policyholders will be provided cent percent security. Expenses will be reduced due to Absence of duplication, wasteful competition Better service due to absence of profit motive.
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The funds will be available for nation building activities. Insurance is servicing sector and so that it should be in the hands of government only.

Above are few but strong reasons, which have contributed towards nationalization of insurance sector, and then after in the year 1956, all insurance companies were merged in to one and Life Insurance Corporation of India came into existence. Till the year 1999, LIC of India was the only insurance sector in economic market with ever-increasing growth rate and market share with the capacity to earn high rate of profit and thus profitability. In spite of all these merits of LIC, the overall status of insurance sector was not so satisfactory. Business figure before the introduction of IRDA Population Insurable Population No. Of insured individuals Potential uninsured individuals New Business premium 1.00 0.36 0.08 0.28 Billion Billion Billion Billion

0.66 Billion

Above stated figures clearly shows that from 1 Billion population

of India, almost 0.28 Billion population was uninsured. Again the existing government unit did not properly meet the emerging segments like retirement, disability. Moreover, the government wanted 25% p.a. growth rate in new business premium from insurance sector. All these factors combine forced the government to take the decision about the privatization of insurance sector.
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In order to increase the business activities, the introduction of IRDA was made by Government. Thus, IRDA (Insurance Regulatory and Development Authority) witnessed the existence power to co-ordinate regular and control the insurance business.

Private Insurers in Indian Insurance Market Registration Date of Name of the Company No. Registration 101 23.10.2000 HDFC Standard Life 104 15.11.2000 Max New York Life 105 24.11.2000 ICICI Prudential Life 107 10.01.2001 Om Kotak Mahindra Life 109 31.01.2001 Birla Sun Life Insurance 110 12.02.2001 TATA AIG Life Insurance 111 30.03.2001 SBI Life Insurance

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RESERCH & METHODOLOGY

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Objectives

To Study the Brand awareness of the new product i.e. Unit Linked Insurance Plans in Ahmedabad City. To know what are the priorities of people of city for making investment in Insurance. To know what are the perception of the consumer about ICICI Prudential Life Insurance Co. To know the standing of the ICICI Prudential Life Insurance Co. in Ahmedabad City.

Data Source:
The data would be collected from both primary as well as secondary source. Consumers would be asked to fill questionnaires to arrive at the information. Various secondary sources of data as magazines, journal, Internet etc. would also be explored.

Sampling Area:
The sampling areas of this research are Ahmedabad.

Sampling method:
The convenient sampling method was used for this research and the respondents were those who have already taken life insurance policy.

Sample Size:
The size of this research is 50 respondents.

Research Instrument:
The research instruments, which was used, for collecting the data is questionnaire. Method of contact:
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The method of contact would be personal and direct as this would help to qualify the customers issues while filling up the questionnaire and also helps them if they do not have the knowledge about any insurance plan of the company. Method of making an approach for Sales: After analyzing the data form the questionnaires the needs of prospects were identified and the best suitable insurance solution was suggested to them accordingly.

Data Collection and Analysis

Q.1. Do you have a Life Insurance Policy? Criteria Yes No No. Of Respondents 50 0

As our sample is those people who have insurance so all the respondents are falling under the Yes criteria. Q.2. Which Companys Insurance Policies do you have?

Company LIC Birla Sunlife SBI ICICI Pru. Life Kotak Mahindra Post Office

No. of Respondents 50 2 3 10 3 15
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HDFC

No. of Respondents 60 50 40 30 20 10 0 LIC SBI Kotak Mahindra HDFC

No. of Respondents

Fig:- 3 As from the above chart it is very clear the all of the respondents have an insurance of the LIC while some of them have an insurance of the other companies like post Office, ICICI Prudential Life insurance Co., HDFC Co. Etc. The reason behind this is that the LIC competitor since more than four decades and the Indian Govt. allowed the Introduction of private player in Insurance in the year 2000. Q.3 What is amount of insurance premium you pay annually? Criteria Below Rs. 10,000 10,000 to 20,000 20,000 to 30,000 30,000 to 40,000 Above 40,000 No. of Respondents 11 18 6 5 10

The analysis of the above available data is merely to find out the percentage of income that one is willing to invest in insurance
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Q.4

What priorities would you consider most important, while purchasing a policy? 1 29 7 5 8 2 2 10 13 5 18 5 3 6 21 6 8 3 4 2 3 20 8 11 5 3 0 7 6 25 Total 50 44 43 48 46

Criteria/Rank Death Benefit Childrens Future Retirement Planning Tax Planning Financial Planning

No. of Respondents

Priorities of Respondents
60 50 40 30 20 10 0
T o ta l 1 2 3 4 5

Death Benefit Childrens Future Retirement Planning Tax Planning Financial Planning

Rank

Fig:- 4 From the table and chart it can be say that most of the people rank death benefit first for the decision to make investment in Insurance. Their second priority is tax planning because the premium, which is paid by the people towards Insurance, is deductible up to certain limit from the income and also the
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maturity amount is also tax free. The third and fourth priorities are childrens future and retirement planning.

Q.5

Do you have any knowledge of the stock market? Criteria Yes No No. of Respondents 32 18

Q.6 If Yes do you have any knowledge about unit linked insurance plans? Criteria Yes No No. of Respondents 25 7

The question number 5 and 6 are designed to know the awareness of people who have knowledge of share market or deals in shares also have the knowledge of the new modern insurance product i.e. Unit Linked Insurance Plan. From the available data it can be say that those who deal in shares are also aware of the ULIP. Q.7 Is your current Insurance policy Unit Linked or Traditional? Criteria Only Unit Linked Only Traditional Both No. of Respondents 0 39 11

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Respondents Having ULIP and Traditional Insurance Products

22%

0% Only Unit Linked Only Traditional 78% Both

Chart:- 2 From the Q. No. 7 we can say that even though the modern products available in the market since more than two years and which are having the more flexibility and also giving the higher return than traditional one most of the people do not have or may be not aware of it which shows the lack of brand awareness and it requires an aggressive promotional efforts on the part of company. There is a lot of scope available for the company to attract more customers by giving or introducing most suitable ULIP products and at the same time increase the customer base. Q.8 If given a choice, where would you like to invest your money? (Please Rank Your Choice) 1 0 4 4 17 22 0 0 10 2 1 12 8 3 12 2 6 5 3 5 14 1 0 12 4 12 0 4 1 4 2 5 2 10 19 2 5 25 8 2 2 2 1 1 1 6 12 3 5 6 0 14 0 0 7 5 0 13 1 0 2 3 0 8 1 0 13 0 0 0 1 2 Total 50 45 48 34 50 33 42 20
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Choice/Rank Mutual Fund Insurance Gold Equities Post Office Debenture Bank Deposit Other

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Investment Priorities
No. of Respondents 60 50 40 30 20 10 0 Total 1 2 3 4 5 6 7 8 Mutual Fund Insurance Gold Equities Post Office Debenture Bank Deposit Other

Rank

Fig:- 5 This question is mainly designed to know the investment priorities of the people of Ahmedabad town. The objective behind this Q. is that after the Charotar Nagrik Co-oprerative Bank and other Credit Societies, which are giving higher interest on deposits, the whole scenario of city is changed. Most of the people prefer to invest in post office saving schemes and where their money is safe even though the return is very less. So there is a great need to divert the efforts of the company towards the safety and security as ICICI Prulife is a private insurance Company. Q.9 According to you what are the factors that would affect you decision while purchasing an insurance policy? 1 12 21 20 1 2 15 17 14 1 3 15 8 15 9 4 6 2 1 18 5 2 2 0 21 50 50 50 50 50
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Criteria/Rank Premium Return Safety Liquidity

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Market Condition

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Factors Affecting the Insurance Decision

No. of Respondents 60 40 20 0 1 2 3 4 5 6 Rank Criteria/Rank Premium Return Safety Liquidity Market Condition

Fig:- 6 The question No. 9 is designed to know which the factors are affecting the most to the prospect while making decision to invest in insurance. As far as investment in insurance is concerned most of the people want that it should be safe and at the same time giving the compatible returns because insurance is not only for death benefit it is also a saving tool for future. So the mix response of respondents is welcomed. Available data is such that there is a bit ambiguity. But we can say that the most affecting factors to the prospect are return and safety. As per the finance theory risk and return goes in hand in hand but as far as insurance is concerned it is all about the compatible and safe returns over others. Q. 10 Are you or ay of your family members are planning to buy an insurance policy in near future? Criteria No. of Respondents
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Yes No

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This question is taken to collect the information of those respondents who are going to plan to purchase insurance within near future that is used by the company for making personal contact for sale. Q. 11 Are your needs satisfied with your current investment in insurance? Criteria Yes No Q. 11(a) No. of Respondents 10 30

If No, then give reasons? No. of Respondents 0 1 7 2

No. of Respondents

Criteria High Premium Low Return Poor Services Others

20%

0%

10%

High Premim Low Return Poor Services Others

70%

The question No.11 and 12 are designed to know the percentage of people who are not satisfied with the current investment in insurance and also to know the reasons behind it. So that the company can focus on those areas where the
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competitors fail. Because now a days the competition is very stiff in the insurance industry. All companies are trying to attract more customers by anyhow. So it will be useful for designing the promotional schemes of the company. From the above table and chart it can be seen that the respondents who are dissatisfied give the main reason behind it are poor services. There are many others reasons like more time taken by the company for claim settlement, nondispatchment of cheques and other important vouchers, etc. So the company can improve upon these and increase its market share by offering quality service to the customers. Q. 12 Do you know anything ICICI Prudential Life Insurance? Criteria Yes No No. of Respondents 30 20

Q. 13 If Yes, from where did you come to know about the company? Criteria Television News Paper Sales Representative Others source No. of Respondents 4 3 14 9

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Toal No. of Advertisement

Television 30% 13% 10% News Paper Sales Representative 47% Others source

Chart:- 4 Q. 14 What do you feel about ICICI Prudential Life Insurance? (Open Ended) The question No.13, 14 and 15 are designed to know the company awareness the respondents of the city and also the source of awareness. But I felt very much difficulty while filling up these questions because most of the people know about the company but they know it as an ICICI Bank not as a different identity. So there is a great need to design the advertisement campaign in such a way that it will create the different image of the company. The main reason behind this is that the image of ICICI Bank in city is such that most of the people ask for charges first than the service that it provides.

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LIFE INSURANCE AT A GLANCE

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LIFE INSURANCE CORPORATION OF INDIA On January 19, 1956 the President of the Indian Union issued an ordinance, providing for the taking over, in public interest, of the management of life insurance pending nationalization of such business, & the then Finance Minister explained the objectives of nationalization of life insurance business. In June 1956, the parliament passed a bill for nationalization of life insurance business in India and for setting up a corporation as the sole agency for carrying on this business in India. The corporation, set up under this Act, is known as Life Insurance Corporation of India, which started functioning on September 1, 1956 . For the purpose of servicing of policies issued before September 1, 1956, some integrated head offices & integrated branch office units were created. These offices have nothing to do with the policies issued by the corporation. Corporation also took over foreign life business of the Indian insurers.

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Objectives of LIC Maximize mobilization of peoples savings by making insurance linked savings adequately attractive. Conduct business with utmost economy & with the full realization that the moneys belong to the policyholders. To publicize & extent the insurance business specifically in rural & remote areas. To provide suitable financial security at reasonable cost. To make the investments more dynamic by popularizing the savings plans attached with insurance. To invest the insurance fund keeping with maximum benefit & interest of insureds. To run the insurance business at minimum administrative costs. To function as trusts of the insureds. To fulfill the needs of the society in a changing social and economic environment. To make the employees collectively responsible for providing efficient services to the insureds. To develop work satisfaction among agents & employees. HDFC STANDARD LIFE INSURANCE COMPANY HDFC Standard Life Insurance Co. Ltd. Is a joint venture between HDFC, Indias largest housing finance institution and Standard Life Assurance Company, Europes largest mutual life company. HDFC manages Rs. 21,450 Crores in assets and Standard Life manages over US $100 billion in assets. Both the promoters are well known for their ethical dealings, their financial strength and their commitment to be a long-term player in the life insurance industry.

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MAX NEW YORK LIFE INSURANCE COMPANY Max New York Life Insurance Company is a joint venture between New York Life International Inc. and Max India Limited. New York Life, a Fortune 100 Company, is one of the worlds experts in life insurance with over 156 years of experience in the business and over US$ 165 billion (Rs. 775,000 Crores) in assets under management. Max India Limited is a multi-business corporate, focused on the knowledge, people, and service-oriented business of life insurance, healthcare and information technology.

ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).

OM KOTAK MAHINDRA LIFE INSURANCE

Om Kotak Mahindra Life Insurance, a company under Kotak Mahindra Group is a 74:26 life insurance joint venture between Kotak Mahindra Finance Limited with Old Mutual, U.K. The philosophy of Om Kotak Mahindra is helping their customers take financial decisions at every stage in life. Their aim is to
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consistently offer a wide range of innovative life insurance products, to help their customers remain financially independent, which is why they believe that freedom to take life on Jeene Ki Aazadi The alliance of Om Kotak Mahindra with Old Mutual has given it unmatched expertise in life insurance area. With 156 years of experience in life insurance business, Old Mutual is today an International Financial Service Group based in London.

BIRLA SUN LIFE INSURANCE COMPANY

It is a joint venture of Aditya Birla Group and Sun Life Financial Services with the objective that Insurance is not about something going wrong. Its often about things going right. One of the wonders of human nature is that we never believe anything can actually go wrong. Surely, life has its share of ifs. At Birla Sun Life however, we believe it has its equally pleasant share of buts as well. We at Birla Sun Life stand committed to helping you realize those happy moments, which make a life. Be it living the same lifestyle in your post retirement days or providing a secure future for your loved ones, in case something happens to you.

TATA AIG LIFE INSURANCE COMPANY

Tata AIG is a joint venture that is backed by the Tata Group Indias most respected industrial conglomerate, with revenues of more than US $8.4 billion, and American International Group, Inc. (AIG) the leading US-based international insurance and financial services organization, with a presence in over 130 countries and jurisdictions throughout the world. Tata AIG offers a gamut of innovative products in the Life Insurance sector.
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RETAIL MARKET SHARE

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As per the figure available with IRDA reports for the period ended in August 2005, the 13 private players have grabbed nearly 26% market share from LIC in terms of premium underwritten as against 17.70% in August 2004 The list of insurer with premium underwritten, investment and their market share have been presented in table. Table shows that the life insurance market has collected Rs. 16,604cr as a fresh premium. It grew about 2.8 times bigger than he 3 players put together in terms of premium collection. It is still growing at the rate 26% per annum. It is relevant to that the market share by them. Out of 13 pvt. Players, ICICI prudential has leading pvt. Player in the Life insurance, invested rs. 625 cr which is the highest investments among the private players and captured first position with 7.11% of the market share. Secondly, Max New York life has invested Rs. 305 cr and had failed to capture the second position in terms of market share and was satisfied with only 1.32% Followed by HDFC standard Life had invested Rs. 255 cr and 2.96% of the market share was captured and stood third position interims of investments and capturing market share. Allianz Bajaj has invested Rs. 250 cr and stands fourth in terms of investment but captured second position with 6.12% of the market share. This indicates that there is no relation between investment and acquiring market share and mere capital is not alone playing any significant role in terms of capturing market share. There may be some other variables like: (a) innovative schemes, (b) brand loyalty, (c) professional outlook, (d) transference in their transactions, etc. It can be noticed that the capital is not playing any attaching, kindly significant role in terms of premium collection and capturing market share. It seems to be Bajaj Allianz would occupy the first position in near future in terms of market share as well as annual growth rate. Chart 1 shows that. Among private players, the ICICI prudential has captured the 28% of the market share up to December 2005, followed by Allianz Bajaj with 23% and HDFC Standard Life with 11% TATA Aig life and
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Birla Sunlife with 7% each and remaining other players have captured less than 5% of market share.

2% 4% 3% 7%

6%

2% 2% 28%

LIC ICICI Pru. Life New York MaxLife HDFC Standard Life Alliance Bajaj TATA AIG OM Kotak Mahindra AVIVA Life

7%

5% 11% 23%

ING Vysya SBI Life Insu. AMP Sanmar Metlife

Chart:- 1

Chart 2 shows that the annual growth rate of the private life insurance players from November 2004-05. it is interesting to note that Allianz Bajaj has achived 264.09% annual growth rate in terms of premium collection and the fastest growing insurance players, followed by HDFC Standard with 143.1% and Metlife with 136.45%, and remaining other players have doubled their premium in a span of one year, whereas Birla Sunlife and SBI life have failed to collect the premium consistently and registered negative growth rates 7.93% and 2.48% respectively. Surprisingly, ICICI Prudential Co. has not been retrained in their leading position in 2005.

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The market share of the LIC has been declining since 2000, after opening up of the sector to private companies, LICs higher market share in the number of policies sold compared with premium income, so it is to be inferred that the private players are cornering a larger share of high premium policies. Further all policymakers are expected that, insurance business will take wings under bancassurance but despite the belief SBI Life was registered negative 2.48% annual growth rate in corresponding period. It is need to be viewed serious by the RBI and IRDA authorities.

Annual Growth rate of Private Insu. Players from Nove. 2004-05

Annual growth rate 300 200 100 0 -100 264.09 164.31 136.48 93.9 9 78.06 73.02 0.41 66.23 8.24 100.43 98.69 4 -2.48 -7.93 HDFC Standard Birlasunli fe TATA AIG SBI Life Insu. AVIVA Life Metlife

ICICI Pru. Life

Insurers

Fig:- 2

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INTRODUCTION OF ICICI GROUP

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Fig:- 3 ICICI Bank is Indias second-largest bank with total assets of about Rs.112.024 crore and a network of about 450 branches and offices and about 1750 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customer through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital, asset management and information technology. ICICI Banks equity shares are listed in India on stock exchanges at Chennai. Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary. ICICIs shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on
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the NYSE in fiscal 2000, ICICI Banks acquisition of Bank of Mathura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium term and long term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank, In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the management of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI groups universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entitys access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payment system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICIs strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, Particularly feebased services, and access to the vast talent pool of ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, With ICICI Bank. Shareholders of ICICI and ICICI BANK approved the merger in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of

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Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI groups financing and banking operations, both wholesale and retail, have been integrated in a single entity. ICICI Bank is the only Indian company to be rated above the country rating by the international rating agency moody s and the only Indian company to be awarded an investment grade international credit rating. The Bank enjoys the highest AAA (or equivalent) rating from all Leading Indian rating agencies.

Prudential P.L.C.
Established in 1848, today prudential plc is a leading international financial services company with some 16 million customers, policyholders and unit holders and some 20,000 employees worldwide. In the UK Prudential is a leading life and pensions provider with around seven million customers. M&G was acquired by Prudential in 1999 and is the Groups UK and European fund manager, responsible for managing over of 111 billion of funds (as at December 2003). Launched by Prudential in 1998, Egg is an innovative financial services company, with over three million customers, with nearly six per cent of UK credit card balances. In Asia, Prudential is the leading European life insurer with 23 life and fund management operations in 12 countries serving some five million customers. In the US, Prudential owns Jackson National Life, a leading life insurance company, and has more than 1.5 millions policies and contracts in force. Prudential has brought to market an integrated range of financial services products that now includes life assurance, pensions, mutual funds, banking, investment management and general insurance. In Asia, Prudential is UKs Largest life insurance company with a vast network of 22 life and mutual fund operations in twelve countries China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam. Since 1923, Prudential has championed customer-centric products and services, supported by over 60,000 staff and agents across the region.
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Prudential plcs strong mix of business around the world positions us well to benefit form the growth in customer demand for asset accumulation and income in retirement. Our international reach and diversity of earnings by geographic region and product will continue to give us significant advantage. Our commitment to the shareholders who own Prudential is to maximize the value over time of their investment. We do this by investing for the long term to develop and bring out the best in our people and our businesses to produce superior products and services, our international peer group in terms of total shareholder returns. At Prudential our aim is lasting relationships with our customers and policyholders, through products and services that offer value for money and security. We also seek to enhance our Companys reputation, built over 150 years, for integrity and for acting responsibly within society.

ICICI Prudential Life Insurance:

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and Prudential Plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from insurance Regulatory Development Authority (IRDA). ICICI Prudential s equity base stands at Rs.6.75 billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the year ended March 31,2004 the company had issued over 430,000 policies, for a total sum assured of over Rs 8,000 crore and premium income in excess of Rs.980 crore. The company has a network of about 30,000 advisors; as well as 12 banc assurance tie-ups. Today the company is the number one private life insurer in the country

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Management

K. V. Kamath Managing Director and Chief Executive Officer

Lalita Gupte Joint Managing Director

Kalpana Morparia Joint Managing Director

Chanda Kochhar Deputy Managing Director

Nachiket Mor Deputy Managing Director

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Board Committees Audit Committee Mr. Sridar Iyengar Mr. Narendra Murkumbi Mr. M. K. Sharma Customer Service Committee N. Vaghul Narendra Murkumbi M.K. Sharma Board Governance & Remuneration Committee Mr. N. Vaghul Mr. Anupam Puri Mr. M. K. Sharma Mr. P. M. Sinha Prof. Marti G. Subrahmanyam Credit Committee Mr. N. Vaghul Mr. Narendra Murkumbi Mr. M .K. Sharma
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P.M. Sinha K. V. Kamath Fraud Monitoring Committee Mr. M. K. Sharma Mr. Narendra Murkumbi Mr. K. V. Kamath Ms. Kalpana Morparia Ms. Chanda D. Kochhar Share Transfer & Shareholders'/ Investors' Grievance Committee Mr. M. K. Sharma Mr. Narendra Murkumbi Ms. Kalpana Morparia Ms. Chanda D. Kochhar Committee of Directors Mr. K. V. Kamath Ms. Lalita D. Gupte Ms. Kalpana Morparia Ms. Chanda D. Kochhar

Mr. P. M. Sinha Mr. K. V. Kamath Risk Committee Mr. N. Vaghul Mr. Sridar Iyengar Prof. Marti G. Subrahmanyam Mr. V. Prem Watsa Mr. K. V. Kamath

Asset-Liability Management Committee

Ms. Lalita D. Gupte Ms. Kalpana Morparia Ms. Chanda D. Kochhar Dr. Nachiket Mor

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Dr. Nachiket Mor

ICICI PRUS PRODUCT

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Insurance solution for individuals..

ICICI Prudential Life Insurance offers a range of innovative, customercentric products that meet the needs of customers at every life stage. Its 17 products cab is enhanced with up to 6 riders, to create a customized solution for each policyholder.

Savings Solutions..
Secure Plus is a transparent and feature-packed savings plan that offers 3 levels of protection. Cash Plus is a transparent, feature-packed savings plan that offers 3 levels of protection as well as liquidity options. Save n Protect is a traditional endowment savings plan that offers life protection along with adequate returns. Cash Back is an anticipated endowment policy ideal for
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meeting milestone expenses like a childs marriage, expenses for a childs higher education or purchase of an asset.

Protection Solutions.
LifeGuard is a protection plan, which offers life cover at very low cost. It is available in 3 coupons level term assurance, level term assurance with return or premium and single premium.

Child Solutions.
Smart kid child plans provide guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in the childs life. SmartKid child planed are also available with in unit-linked form both single premium and regular premium.

Market-linked Solutions
LifeLink is a single premium Market Linked Insurance Plan, which combines life insurance cover with the opportunity to stay, invested in the stock market. Life Time offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers 3 investment options Growth Plan, Income plan and Balance plan.

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Retirement Solutions
Forever Life is a retirement products targeted at individual in there thirties. Secure Plus Pension is a flexible pension plan that allows one to select between 3 levels of cover.

Market-linked retirement products

Life Time Pension is a regular premium market-linked pension plan. Life Link Pension is a single premium market linked pension plan. ICICI Prudential also launched Salaam Zindagi, a social sector group insurance policy targeted at the economically underprivileged sections of the society.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees.

Group Gratuity Plan

ICICI Prus group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also customize to structure schemes that can provide benefits beyond the statutory obligations.
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Group Superannuation Plan

ICICI Bank offers flexible defined contribution superannuation scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options or opting for partial commutation of the annuity at the time of retirement. Group Term Plan

Group Term Plan

ICICI Prus flexible group term solution helps provides affordable cover to members of group. The cover could be uniform or based on designation/rank or a multiple of salary. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death.

Flexible Rider Options

ICICI Pru Life offers flexible riders, which can be added to the basic policy at marginal cost, depending on the specific of the customer. Accident & disability benefit: If death occurs as the result of an accident during the term of the policy, the beneficiary receives an additional amount equal to the sum assured under the policy. If the death occurs while traveling in an authorized mass transport vehicle, the beneficiary will be entitled to twice the sum assured as additional benefit.

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Accident benefit: This rider option pays the sum assured the rider on death due to accidents. Critical Illness Benefit: protects the insured against financial loss in the event of 9 specified critical illnesses. Benefits are payable to the insured for medical prior to death. Major Surgical Assistance Benefits: provides financial support in the event of medical emergencies, ensuring that benefits are payable to the life assured for medical expenses Incurred for surgical procedures. Cove is offered against 43 different surgical procedures. Income Benefit: This rider pays the 10% of the sum assured to the nominee every year, till maturity, in the event of the death of the life assured. It is available on SmartKid, SecurePlus and Cashplus. Waiver of Premium: In Case of total and permanent due to an accident, the premiums are waived till maturity. This rider is available with SecurePlus and CashPlus.

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FINANCE DEPARTMENT

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INTRODUCTION TO FINANCE MANAGEMENT

Financial management, as an academic discipline, has undergone fundamental changes in its scope and coverage. In the early years of its evolution it was treated synonymously with the raising of funds. In the current literature pertaining to financial Management, a broader scope so as to include, in addition to procurement of funds, efficient use of resources is universally recognized. Similarly, the academic thinking as regards the objective of financial management is also characterized by a change over the years. Financial management, as an integral part of overall management, is not a totally independent area. It draws heavily on related disciplines and fields of study, such as economics, accounting, marketing, production and quantitative methods. Although these disciplines are interrelated, there are key differences among them. The relationship between finance and accounting, conceptually speaking, has two dimensions: (1) They are closely related to the extent that accounting is an important input in financial decision-making and (2) There are key differences in viewpoints between them.
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The viewpoint of accounting relating to the funds of the firm is different from that of finance. The measurement of funds (income and expenses) in accounting is based on the accrual principle/system.

Capitalization and Capital Structure:

Capital structure can affect the value of a company by affecting either its expected earnings or the cost of capital, or both. While it is true that financingmix cannot affect the total operating earnings of a firm, as they are determined by the investment decisions, it can affect the share of earnings belonging to the ordinary shareholders. The capital structure decision can influence the value of the firm through the earnings available to the shareholders. But the leverage can largely influence the value of the firm through the cost of capital. In exploring the relationship between leverage and value of a firm the relationship between leverage and cost of capital from the standpoint of valuation. The importance of an appropriate capital structure is, thus, obvious. There is a viewpoint that strongly supports the close relationship between leverage and value of a firm. There is an equally strong body of opinion, which believes that financing-mix or the combination of debt and equity has no impact on the shareholders wealth and the decision on financial structure is irrelevant. In other words, there is nothing such as optimum capital structure. Capital structure theories are based on certain assumptions, they are: There are only two sources of funds used by a firm: perpetual risk less debt and ordinary shares. There are no corporate taxes. This assumption is removed later. The dividend-payout ratio is 100. That is, the total earnings are paid out as dividend to the shareholders and there are no retained earnings. The total assets are given and do not change. The investment decisions are, in other words, assumed to be constant. The total financing remains constant. The firm can change its degree of leverage (capital structure) either by selling shares and use the proceeds to retire debentures or by raising more debt and reduce the equity capital. The operating profits (EBIT) are not expected to grow.
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[1] [2] [3] [4] [5]

[6]

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[7] [8] [9]

All investors are assumed to have the same subjective probability distribution of the future expected EBIT for a given firm. Business risk is constant over time and is assumed to be independent of its capital structure and financial risk. Perpetual life of the firm.

Leverage Analysis:
A firm can make use of different sources of financing whose costs are different. These sources may be, for purposes of exposition, classified into those that carry a fixed rate of return and those on which the returns vary. The fixed returns on some sources of finance have implications for those who are entitled to a variable return. Thus, since debt involves the payment of a stated rte of interest, the return to the ordinary shareholders is affected by the magnitude of debt in the capital structure of a firm. The employment of an asset or source of funds for which the firm has to pay a fixed cost or fixed return may be termed as leverage. Consequently, the earnings available to the shareholders as also the risk are affected. If earnings les the variable costs exceed the fixed cost, or earnings before interest and taxes exceed the fixed return requirement, the leverage is called favorable. When they do not, the result is unfavorable leverage. There are 2 types of leverage- operating and financial. The leverage associated with investment (asset acquisition) activities is referred to as operating leverage, while leverage associated with financing activities is called financial leverage. While we are basically concerned with financial leverage for purposes of the financing decision of a firm, the discussion of operating leverage is to serve as a background to the understanding of financial leverage because the two types of leverage are closely related. Operating leverage is determined by the relationship between the firms sales revenues and its earnings before interest and taxes (EBIT). The earnings before interest and taxes are also generally called as operating profits. Financial leverage represents the relationship between the firms earnings before interest and taxes
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(operating profits) and the earnings available for ordinary shareholders. The operating profits (EBIT) are thus, used as the pivotal point in defining operating and financial leverage. In a way, operating and financial leverage represent two stages in the stages in the process of determining the earnings available to the equity shareholders and, hence, their discussion in this chapter. Apart from the elaboration of the return-risk implications, their combined effect has also been discussed. Operating leverage results from the existence of fixed operating expenses in the firms income stream. The operating leverage may be defined as the firms ability to use fixed operating costs to magnify the effects of changes in sales on its earnings before interest and taxes. Operating leverage occurs any time a firm has fixed costs that must be met regardless of volume. We employ assets with fixed cost in the hope that volume will produce revenues more than sufficient to cover all fixed and variable costs. In other words, with fixed costs, the percentage change in profits accompanying a change in volume is greater than the percentage change in volume. This occurrence is known as operating leverage. Financial leverage relates to the financing activities of a firm. The sources from which funds can be raised by a firm, from the point of view of the cost/charges, can be categorized into [1] those which carry a fixed financial charge, and [2] those which do not involve any fixed charge. The sources of funds in the first category consist of various types of long-term debt, including bonds, debentures, and preference shares. Long-term debts carry a fixed rate of interest which is a contractual obligation for the firm. Although the dividend on preference shares is not a contractual obligation, it is fixed charge and must be paid before anything is paid to the ordinary shareholders. The equity shareholders are entitled to the remainder of the operating profits of the firm after all the prior obligations are met. Financial leverage results from the presence of fixed financial charges in the firms income stream. These fixed charges do not vary with the earnings before interest and taxes (EBIT) or operating profits.

Capital Budgeting:
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Capital budgeting decision pertains to fixed/long-term assets which by definition refer to assets which are in operation, and yield a return, over a period of time, usually, exceeding one year. They therefore, involve a current outlay or series of outlays of cash resources in return for an anticipated flow of future benefits. In other words, the system of capital budgeting is employed to evaluate expenditure decisions which involve current outlays but are likely to produce benefits over a period of time longer than one year. These benefits may be either in the form of increased revenues or reduced costs. Capital expenditure management, therefore, includes addition, disposition, modification and replacement of fixed assets.
Capital budgeting decisions are of paramount importance in financial decisionmaking. In the first place, such decisions affect the profitability of a firm. They also have a bearing on the competitive position of the enterprise mainly because of the fact that they relate to fixed assets. The fixed assets represent, in a sense, the true earning assets of the firm. They enable the firm to generate finished goods that can ultimately be sold for profit. The current assets are not generally earning assets. Rather, they provide a buffer that allows the firms to make sales and extend credit. True, current assets are important to operations, but without fixed assets to generate finished products that can be converted into current assets, the firm would not be able to operate. Further, they are strategic investment decisions as against tactical- which involve a relatively small amount of funds. Therefore, such capital investment decisions may result in a major departure from what the company has been doing in the past. Acceptance of a strategic investment will involve a significant change in the companys expected profits and in the risks to which these profits will be subject.

Working Capital Management:

Working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the interrelationship that exists between them. The term current assets refer to those assets which in the ordinary course of business can be, or will be, converted into cash within one year without undergoing a diminution in value and without disrupting the operations of the firm. The major current assets are cash, marketable securities, accounts receivable and inventory.

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Current liabilities are those liabilities which are intended, at their inception, to be paid in the ordinary course of business, within a year, out of the current assets or earnings of the concern. The basic current liabilities are accounts payable, bills payable, bank overdraft, and outstanding expenses. The goal of working capital management is to manage the firms current assets and liabilities in such a way that a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy. The current assets should be large enough to cover its current liabilities in order to ensure a reasonable margin of safety. Each of the current assets must be managed efficiently in order to maintain the liquidity of the firm while not keeping too high a level of any one of them. Each of the short-term sources of financing must be continuously managed to ensure that they are obtained ad used in the best possible way. The interaction between current assets and current liabilities is, therefore, the main theme of the working capital management.

Receivables Management:
The receivables represent an important component of the current assets of a firm. The receivables are defined as debt owned to the firm by customers arising from sale of goods or services and in the ordinary course of businesses. When a firm makes an ordinary sale of goods or services and does not receive payment, the firm grants trade credit and creates accounts receivable, which could be collected in the future. Receivables management is also called trade credit management. Thus, accounts receivables represent an extension of credit to customers, allowing them a reasonable period of time in which to pay for the goods received. The sale of goods on credit is an essential part of the modern competitive economic systems. In fact, credit sales and, therefore, receivables are treated as a marketing tool to aid the sale of goods. The credit sales are generally made on open account in the sense that there are no formal acknowledgements of debt obligations through a financial instrument. As a marketing tool, they are intended to promote sales and thereby profits. However, extension of credit involves risk and cost. Management should weigh the benefits as well as cost to determine the goal of receivables management. The objective of receivables management is to promote sales and profits until point is reached where the
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return on investment in further funding receivables is less than the cost of funds raised to finance that additional credit (i.e. cost of capital). The specific costs and benefits, which are relevant to the determination of the objectives of receivables management, are:

o o o o o

Cost Collection cost Capital cost Delinquency cost Default cost

Dividend policy:
Dividend refers to that portion of a firms net earnings which are paid out to the shareholders. Since dividends are distributed out of profits, the alternative to the payment of dividends is the retention of earnings/profits. The retained earnings constitute an easily accessible important source of financing the investment requirements of firms. There is, thus, a type of inverse relationship between retained earnings and cash dividends. Larger the retention, lesser dividends; and smaller retentions, larger dividends. Thus, the alternative uses of the net earnings-dividends and retained earnings-are competitive and conflicting. A major decision of financial management is the dividend decision in the sense that the firm has to choose between distributing the profits to the shareholders and plugging them back into the business. The choice would obviously hinge on the effect of the decision on the maximizing present values; the firm should be guided by the consideration as to which alternative use is consistent with the goal of wealth maximization. That is, the firm would be well advised to use the net profits for paying dividends to the shareholders if the payment will lead to the maximization of wealth of the owners. If not, the firm should rather retain them to finance investment programes. The relationship between dividends and value of the firm should, therefore, be the decision criterion.
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There are however, conflicting opinions regarding the impact of dividends on the valuation of a firm. According to one school of thought, dividends are irrelevant so that the amount of dividends paid has no effect on the valuation of a firm. On the other hand certain theories consider the dividend decision as relevant to the value of the value of the firm measured in terms of the market price of the shares. The crux of the argument supporting the irrelevance of dividends to valuation is that the dividend policy of a firm is a part of its financing decision. As a part of the financing decision, the dividend policy of the firm is a residual decision and dividends are a passive residual. If the dividend policy is strictly a financing decision, whether dividends are paid out of profits, or earnings are retained, will depend upon the available investment opportunities. It implies that when a firm has sufficient investment opportunities, it will retain the earnings to finance them. Conversely, if acceptable investment opportunities are inadequate, the implication is that the earnings would be distributed to the shareholders. The test of adequate acceptable investment opportunities is the relationship between the return on investments and the cost of capital. As long as investments exceed cost of capital, a firm has acceptable investment opportunities. In other words, ifs firm can earn a return higher tan its cost of capital; it will retain the earnings to finance investment projects. If the retained earnings fall short of the total funds required, it will raise external funds-both equity and debt-to make up the shortfall

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MARKETING DEPARTMENT

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Marketing Yesterday and Today

Today the definition of marketing has been changed. The marketing activity of an organization before the product is produced and continues even after the product is sold. In the buyer market of recent times the sharpest weapon that a company can develop is globalize marketing place in the value creation and delivery. The proud and demanding customer of today brings before corporate a critical fact, when the customer is jury. It is the value generation for the customer that will separate the victor from vanquished. The value of customer service cascades all over the company. The aim of customer focus is not just satisfaction but delight satisfaction. Till the year 1999 the life insurance business was exclusively conducted by the Life Insurance Corporation (LIC) while the general insurance business in India, was exclusive by General Insurance Corporation and its four subsidiaries. The insurance sector is opened for private participation since November, 2000. Before 1999 there was no marketing done by LIC due to its monopoly but now after 5 years the picture has changed. Now there are private players in market. With the effective marketing techniques the private players has changed the whole scenario of the insurance sector. They are slowly and gradually driving the business out of the hands of the LIC. Before 1999 customer had no option other then LIC, but now they have got many options. This is the significant change in insurance industry. Now the customer is back in the center state. All the companies are trying to please the customer with the innovative schemes and better service. 65

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Relationship Marketing in Insurance

Introduction
It is five times more expensive to acquire a new customer than to retain an old one. Relationship marketing is the practice of building long term satisfying relationship with key parties customers and suppliers. They accomplish this by promoting and delivering high quality, goods, services, and fair prices to other parties overview. Relationship marketing results in strong economic, technical and social ties among the parties.

Definition of Relation Marketing:

Relationship marketing can be defined as the process to identify, establish, maintain and other stakeholders at a profit so that the objective of all parties involved are net and this is done by mutual exchange and fulfillment of promises. The important objectives of relationship marketing to acquire new customers maintain and enhance relationship with existing customers, re-activities of ex-customers and handling of customer terminations. The key objective of relationship marketing is to establish one to one relationship with all the customers. This may have sound like a day dream few dream few years ago but thanks to the technological breakthrough and technological solution providers, it is very much of a reality.

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How to add value through relationship Marketing

Identify loyal customers Recognize their special needs Provide special reward for loyalty Establish continuing relationship Ensure increase in customer value

Relationship marketing is one of the hottest tread in the present marketing scenario. Satisfied customers not only stay with a company but they are also walking talking advertisement for the companys product.

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SWOT ANALYSIS

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o o

Strengths
Flexible Products Partners having experience in different markets of the world. Synergy with exiting operations Expertise in the field of insurance Professional management Good Customer service Create a brand name

o o o o o

Weakness
Low capital base Yet to build strong distribution network Cannot tap rural market Untapped market Banks ready to tie up for as a readymade distribution network for a small fee. Large distribution network of LIC Decades of experience and brand name of LIC
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Opportunities
o o

Threats

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5% service tax on investments.

CONCLUSION

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At ICICI prudential Life Insurance Company Ltd. Aurangabad. I observed very systematic and professional approach toward marketing. People are engaged in compulsory task, relates themselves to reach other systematic establishment & accomplishment of the Marketing Process. After studying various theoretical approach of company. I have come to a conclusion that ICICI Prudential is a profit making company and gradually the demand of the product is also increasing.

The main areas of company are:-

1. Well defined objective. 2. Well organized and co-ordinate group of people. 3. Clear & well defined policies & responsibility. 4. An effective system of the company.

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BIBLIOGRAPHY

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BIBLIOGRAPHY
BOOKS

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

Mishra, M.N.; Modern Marketing Research Shani, N.K. and Kumar, Yogesh; Modern Marketing. Kotler, Phillip; Marketing Management

INTERNET SITES www.spiceindia.com www.airtelworld.com

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www.google.com

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QUESTIONNAIRE

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

No

Q.2. Which Companys Insurance Policies do you have? (Please specify the numbers) LIC

SBI Life Insurance

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HDFC Standard Life Birla Sunlife Cholamandalam TATA AIG Insurance ING Vysya AVIVA Life Q.3

New York MaxLife Alliance Bajaj ICICI Pru. Life Insurance MetLife Insurance OM Kotak Mahindra AMP Sanmar

What is amount of insurance premium you pay annually? Amount

Q.4

What priorities would you consider most important, while purchasing a policy? (Please Rank Your Choice) Death Benefit
Childrens Education Retirements Benefit Tax Planning Financial Plannin

Q.5

you have any knowledge of the stock market? Yes

No

Q.6

If Yes do you have any knowledge about unit linked insurance plans?
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Yes Q.7

No

Is your current Insurance policy Unit Linked or Traditional? Yes No

Q.8

If given a choice, where would you like to invest your money? (Please Rank Your Choice) Mutual Funds Insurance Policies Gold Equities

Post Office Schemes Debentures Banks (FDs etc.)

If other (specify)___________

Q.9

According to you what are the factors that would affect you decision while purchasing an insurance policy? (Please Rank Your Choice) Premium
Return Safety Liquidity Market Condition

Q. 10 Are you or any of your family members are planning to buy an insurance policy in near future? Yes

No

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Q. 11 Are your needs satisfied with your current investment in insurance? Yes Q. 11 (a)

No

Poor Services

If No, then give reasons?

High Premium Low Return

Other Reasons__________ ______________________

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

No

Newspaper Internet

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

Magazine Hoarding

Others (Please Specify)_____________________________

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

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