CHAPTER-1

INTRODUCTION
 INTRODUCTION:
In every business an optimum level of working capital is to be maintained for the purpose
of day-to-day remittances. Any business cannot grow in absence of satisfactory working
capital level. In case of large management of working capital becomes even more crucial
and significant and due to its pro found, influence on liquidity and profitability of the
business shortage of working capital, the business may suffer scarcity of resources. But it
should be also kept in mind that even working capital in excessive quantity, possibly will
result into superfluous cost. Therefore, the management of business firm should goal an
optimal level of working capital.
Working capital should be ample enough to carry out the current liabilities but should not
be much more than the genuine requirement. It must be ensured by the firm’s managing
people that the return yield through the funds engrossed in structuring working capital is
no less than the return earned from the other investment alternatives.In the circumstances
when the financial resources are inception and as a consequent capital cost is to be enlarge
management of working capital becomes even more crucial and significant and due to its
pro found,influence on liquidity and profitability of the business.
Source of working capital is very important as its important to keep business liquid as
well as stress free from financial burden. Basic current assets requirement must be met
with long term sources and current assets which are required for circulation should be met
with short term sources. It benefits business by keeping cost of capital low and increases
return on investments.
Relation between Current assets and current liabilities of a business firm is called
management of working capital.“Working capital management is concerned with the
problems that arise in attempting to manage the current assets and current liabilities and
the inter-relationship that exists between them. There is habitually a distinction made
amid the investment decisions concerning current assets and the financing of working
capital.

Definition of Working Capital:

Working Capital(WC) can be defined in simple words as that part of the total capital
which is required for daily working of business. It is the capital with which the business is
worked over, According the subbing working capital is the amount of funds necessary to
cover the cost of operating the enterprises.

(Sources M.O Patter,Management Accounting)

”Two major aspects of management of working capital are:

To ascertain the current assets

(1) To conclude the method of financing under two categories.

4 Working capital management can be conceptualize

 Quantitative and
 Qualitative

These concepts are well known as “gross working capital” concept and “net working
capital” concept. In quantitative working capital concept, current assets are considered
as working capital which is termed as gross working capital too. In qualitative, current
assets and current liabilities are taken into account, working capital is defined as excess or
deficit of current assets over current liabilities. “Variance of current assets over current
liabilities” L.J. Goutham also described working capital as “the portion of a firm’s current
assets which are financed from long–term funds.”

It becomes essential to know and understand the current assets components and current
liabilities components to understand working capital management.

Current assets – This is imperative to facilitate “Current assets have a short life span.
These types of assets are connected in current operation of a business and normally used
for short–term operations of the firm. The two important characteristics of these assets
are; (i) short life span, and (ii) swift conversion into other form of assets. Cash balance
may be held idle for few weeks, account receivable may have a period of 30 to 60 days”
Fitzgerald also described current assets, “cash & other assets which are expected to be
converted in to cash in the ordinary course of business within one year or within such
longer period as constitutes the normal operating cycle of a business.”

Current liabilities – Business generates liability for purchasing raw material and other
essential things on credit, these are called as creditors or account payable. Until
remittances towards creditors are made, it is categorized under liabilities section of balance
sheet. Current liabilities are explained as all obligations that are due in near future for
payment.

Current Liabilities Current Assets Creditors Inventories Bank Overdraft Cash and Bank
Balance Bills Payable Accounts Receivables Outstanding Expenses Bills Receivables
Short-term Loans Accrued Income Provision for Taxation Prepaid Expenses Other
Current Liabilities Other Current Assets.

Working Capital Structure Current Liabilities Current Assets Creditors Inventories Bank
Overdraft Cash and Bank Balance Bills Payable Accounts Receivables Outstanding
Expenses Bills Receivables Short-term Loans Accrued Income Provision for Taxation
Prepaid Expenses Other Current Liabilities Other Current Assets.

Fund or cash is required in business for carrying out operations. “Working capital
finances can be regarded as ‘life blood’ of a business firm. Business can live with no
profit but can’t survive with inadequate working capital. If a business is not yielding gains
it can be called as ‘sick’, although without adequate working capital the firm could suffer
its economic failure and the survival becomes difficult. Thus, every business firm should
make a decision how to arrive at right amount of working capital, to avoid risk of
breakdown.”

Working capital management is having immense significance and became prime object to
enhance liquidity and profitability of the business. With constant increase in capital costs
and scarcity of funds, management of working capital is the most vital subject capturing
attention of management. It is found that, “Regular management review is required to
maintain suitable level in the diverse working capital accounts.” Success of business
mainly depends on appropriate working capital management that is why “working capital
management is looked upon as the driving seat of financial manager.” It takes time to
enhance profitability and ensuring adequate liquidity simultaneously.

Working capital may be estimated by following methods:

• Proportion of Sales – This method is the easiest way of deciding the requirement of
working capital. Requirement of working capital in this method is determined on
forecasting of sales. With the help of historical experience, working capital
requirement can be projected. If relationship of working capital and sales is stable,
then ratio is taken as a base for deciding the amount of working capital required. This
method of estimating working capital is simple, tranquil and helpful in estimating
working capital

• Operating Cycle – All business starts with raw material

acquisition,machinery and stock at the time of collection of dues.

It might be part in these stages:

 Raw material

 Work in Progress

 Finished product
  Receivable
The operating cycle length for the objective of working capital estimation is equivalent to
summation of duration of each stage minus credit period permissible by the service or raw
material provider.

Regression Analysis Method – This is a statistical technique to forecast

requirement of working capital. It aids in projections post setting up the relationship
in earlier years between variables such as working capital and sales. Analysis is done
through mathematical formulae or through the graphic representations scatter
diagram. The bond between variables (working capital and sales) is simple & direct
revealing linear relation with different degrees relating linear regression or
curvilinear regression and multiple regression situations.

Various factors influence volume and requirement of working capital. Hence determining
working capital does not have a set formula or particular way. The condition and
information of company must be analyzed to conclude the requirement of working capital.

Below are the factors which influence requirement of working capital:

Nature of business – Some businesses are such that due to their very nature, their
requirement of fixed capital is more rather than working capital. These businesses
may sell services and not the commodities and that too on cash basis. As such, no
funds are blocked in piling the inventories and no funds are blocked in receivables.
For example Public utility services like railways, electricity boards, and infrastructure
oriented projects etc. Their requirement of working capital is less. Whereas if the
organization is a trading organization, the requirement of working capital will be on
the higher side, as huge amount of funds get blocked in mainly two types of current
assets, stock and receivables.

Size of the Organization – If we talk about undersized scale organizations, because of

huge overheads total, the necessity of working capital gets really high. It is also
influenced by high purchase costs as well as high selling costs. As such, medium sized
organizations have an edge over the small scale organizations. However, if the business
grows beyond a certain limit, the requirement of working capital may be adversely
affected by the increasing size.
Phase of Trade Cycles – During the inflationary conditions, the working capital
requirement will be on the higher side as the company may like to buy more raw material,
may increase the production to take the advantage of favorable market conditions and due
to increased sales more funds are blocked in stocks and receivables. During the
depression, the requirement of working capital will be on the lower side due to reduced
operations but more working capital may be required due to piling up of inventories and
due to nonpayment of dues by customers in time. As such, in both the extreme situations
of trade cycles, requirement of working capital may be high.

Trading Terms – The terms on which the organization makes the purchases and sales
affect the requirement of working capital in a big way. If the 10 purchases are required to
be made on cash basis and sales are to be made on credit basis to cope with competition
existing in the market, it will result into high requirement of working capital. Whereas, if
the purchases can be made on credit basis and sales can be made on cash basis, it will
trim down the prerequisite of working capital, as a part of working capital requirement
can be financed out of credit offered by the suppliers.

Length of Production Cycle – The term production cycle refers to the time duration from
the stage raw material is acquired till the stage finished product is manufactured. The
principle will be “Longer the duration of production cycle, higher the requirement of
working capital.” In some businesses like machine tool industry, the time gap between the
acquisitions of raw material till the completion of production is quite high. As such, more
amounts are blocked in raw materials or work in progress or finished goods and even in
receivables. Requirement of working capital is always very high in this case.

Profitability – High profitability reduces the strain on working capital as the profit to the
extent they are earned in cash can be used for financing the requirement of working
capital. However, the profit which reduces the strain on working capital is the post-tax
profit i.e. the profit earned after paying off the tax liability and Post- dividend profit i.e.
the profit remaining in the business after paying the dividend on the shares.
 Control of Working Capital Working capital needs used to be met mainly in the form
of cash credit facilities and these advances used to be totally security oriented rather
than end-use oriented. As such, the units which were able to provide securities to the
banks were able to get main chunk of the finances provided by the banks whereas
others experienced shortage of inputs, lower capacity utilization, high cost of
production and ultimately threat of closure. Reserve Bank of India 11 attempted to
detect weakness in financing of working capital needs through Banks with the
purpose of control the working capital finance. Attempts were made through these
committees:

(a) Dahejia Committee

(b) Tandon Committee

Work of these committees is described as below:

(a):Dahejia Committee

This committee was assigned in October, 1968 to assess the extent credit need of trade
and industry are expected to be overstated and how these movement could be assessed.
Committee has found out that it is the tendency of trade to get short term loan from Banks
far above growth rate discovered in production for inventory in terms of value. It also
found that purchase of long-term asset has been done through short-term bank loan. The
reason for this is that generally banks granted working capital finance in the form of cash
credit, as it was easy to operate. Banks took into consideration security offered by the
client rather than assessing financial position of the borrowers. As such, loan facility
given by the banks was not used for short term purposes.

Recommendations: The committee, firstly, recommended that the banks should not only be
security oriented, but they should take into consideration 12 total financial position of the
client. Secondly, it recommended that all loan accounts are categorized in two parts:

i) Hard core loan accounts - Represent the least level of raw material,
finished product and stores items which is required by any industry to store
for keeping definite level of production.
 ii) Short-term loan accounts - Elements that makes out the funds for provisional
purposes i.e. Short-term increase in inventories, tax, dividend and bonus payments
etc. It also suggested that hard core part in case of sound financial companies
must be put on a time loan basis focused to schedule of repayment. In other cases,
borrowers should be asked to arrange for long term funds to replace bank
borrowings.

iii) In practice, recommendations of the committee had only a marginal effect

on the pattern and form of banking.

(b) :Tandon Committee

In August 1975, Reserve Bank of India appointed a study group in the supervision of Mr.
P. L. Tandon, to make the research and recommendations on the following issues:

i) Can the norms be developed for current assets as well as for debt equity
ratio to make sure least reliance on bank finance?
ii) How the amount of bank loans may be concluded?
iii) Can the existing way and method of financing be made further superior?
iv) Can sufficient planning, appraisal and information system be developed
to make sure a disciplined loan process to meet up genuine production
requirement and its supervision?

The observations and recommendations made by the committee can be considered as

below:

Norms: The committee suggested the norms for inventory and accounts receivables
for as many as 15 industries excluding heavy engineering industry. These norms
suggested, represent maximum level of inventory and accounts receivables in each
industry. However if the actual levels are less than the suggested norms, it should be
continued.

The norms were suggested in the following forms: -

-For Raw Materials: Consumption in months

- For Work in Progress: Cost of production in months

- For Finished Goods: Cost of Sales in months

 - For Receivables: Sales in months
It was clarified that the norms suggested cannot be absolute or rigid and the deviations
from the norms may be allowed under certain circumstances.
It also concluded that the terms should be reviewed regularly.
It was recommended that trade borrower having a limit of more than Rs. 10 Lakh from the
Banks should be subjected to these terms initially and then later on it should be extended
even to the small borrower.

Methods of Borrowings: Committee suggested that amount of bank loan shouldn’t be

determined by the capability of the borrower to secure banks but 14 it must be determined
to complement the borrower’s resources in carrying a rational level of current assets to
meet his requirement of production. For the same purpose, it initiated the concept of gap in
working capital i.e. the surplus of current assets over current liabilities other than bank
loan. It also recommended progressive methods to determine the maximum permissible
limits to be followed by banks to provide credit.

Method I - Committee suggested banks should provide loan maximum 75% of gap of
working capital, rest 25% should arise from long term funds i.e. own funds and term
borrowings.

Method II - Committee in this method recommended that the borrowers should get
finance equal to 25% of current assets through long term funds and remaining amount
should be financed by banks.

Method III – In this method, committee established the core current assets concept to
point out permanent proportion of current assets and suggested the borrowers should
finance entire requirement of core current assets and 25% of remaining current assets
through long term funds and banks might provide the remaining amount.

It can be observed from above that the gradual implementation of these methods will
reduce the dependence of borrowers on bank finance and improve their current ratio. The
committee suggested that the borrowers should be gradually subjected to these methods
of borrowings from first to third.

However, if the borrower is already in second or third method of lending, he should not be
allowed to slip back to first or second method of lending respectively.
It was further suggested that if the definite bank borrowings are more than the upper
limit of allowable bank borrowings, the excess is ought to be converted into a term loan
to be amortized above a suitable stage depending upon the cash generating capacity.

(2) Style of Lending: The committee suggested changes in the manner of financing
the borrower. It suggested that the cash credit limit should be bifurcated into two
components i.e. Minimum level of borrowing required throughout the year should be
financed by way of a term loan and the demand cash credit to take care for
fluctuating requirements. It was suggested that both these limits should be reviewed
annually and that the term loan component should bear a slightly lower rate of
interest so that the borrower will be motivated to use the least amount of demand cash
credit. The committee also suggested that within overall eligibility , a part of the
limits may be in the form of bill limits (to finance the receivables) rather than in the
form of cash credit.

(3) Credit Information Systems: In order to ensure the receipt of operational data
from the borrowers to exercise control over their operations properly, the committee
recommended the submission of a quarterly reporting system, based on actual as well
as estimations, so that the requirements of working capital possibly will be estimated
depending on the production needs. As such, borrowers enjoy total credit limits
aggregating Rs. 1 Crore and above were required to submit certain statements in
addition to monthly stock statements and projected balance sheet and profit and loss
account at the end of the financial year. The working capital limits sanctioned were
to be reviewed on annual basis. Within the overall permissible level of borrowing,
the day to day operations were to be regulated on the basis of drawing power .

(4) Follow up, Supervision and Control: In order to assure that the assumptions
made while estimating the working capital needs still hold good 16 and that the funds
are being utilized for the intended purpose only, it was suggested that there should be
a proper system of supervision and control. Variations between the projected figures
and actual may be permitted to the extent of 10%, but variations beyond that level
will require prior approval. After the end of the year, credit analysis should be done in
respect of new advances when the banks should re-examine terms and conditions and
 should make necessary changes. For the purpose of proper control, it suggested the
system of borrower classification in each bank within a credit rating scale.

(5) Norms for Capital Structure: As regards the capital structure or debt equity
ratio, the committee did not suggest any specific norms. It opined that debt equity
relationship is a relative concept and depends on several factors. Instead of
suggesting any rigid norms for debt equity ratio, the co

(6) mmittee opined that if the trend of debt equity ratio is worse than the medians, the
banker should persuade the borrowers to strengthen the equity base as early as
possible.

Action Taken by RBI

According to the notification of RBI dated 21st August, 1975, Reserve Bank of India
acknowledged many recommendations suggested by the committee.

(1) Norms for Inventories and Receivables: Norms suggested by the committee
were accepted and banks were instructed to apply them in case of existing and new
borrowers. If the levels of inventories and receivables are found to be excessive than
the suggested norms, the matters should be discussed with the borrower. If excessive
levels continue without justification, after giving reasonable notice to the borrowers,
banks may charge excess interest on that portion which is considered as excessive.

(2) Coverage: Initially, all the industrial borrowers (including small scale
industries) having aggregate banking limits of more than Rs. 10/- Lakh should be
covered, but it should be extended to all borrowers progressively.

(3) Methods of Borrowing: RBI instructed the banks that all the covered borrowers
must be positioned in method I the same as recommended as a result of the committee
discussion. However; all those borrowers who are already complying with
requirements of Method II should not slip back to Method I. As far as Method III is
concerned, RBI has not taken any view. However, in case of the borrowers already in
Method TI, matter of application of Method III may be decided on case to case basis.

(4) Style of Credit: As suggested by the committee, instead of granting entire

facility by way of cash credit, banks may differentiate the limit as (i) Term loan to
take care
 of permanent requirement and (ii) fluctuating cash credit. Within the overall limits,
bill limits may also be considered.

(5) Information system: Suggestions made by the committee regarding the

information system were accepted by RBI and were made applicable to all the
borrowers having the overall banking limits of more than Rs. 1 crore.

The annotations as well as the recommendations made by the committee can be discussed
as below:

(1) An increasing functionality of short-term cash credits as well as financing of

bills has been recommended by the committee. Restricting the role of cash credit
limits was also recommended by the committee.

(2) The committee recommended that the borrowers are supposed to require and
improve their own involvement in the working capital. In isolation, they 18 must fall
under Second Method of lending as being suggested by Tandon Committee. In case
the real borrowings are in greater than maximum allowable borrowings as described
by Method II, the surplus portion is to be reassigned under Working Capital Term
Loan (WCTL) and the borrower should repay it by half annually installments within
a tenure of maximum 5 years. Interest on WCTL should usually be higher than of
interest on cash credit facility.

(3) The committee has suggested that the efforts should be made to inculcate further
discipline as well as planning awareness among the borrowers; their requirement
should be fulfilled on the basis of periodical projections deposited by them. Surplus
or under employment beyond acceptable limit of 10% which is to be treated as
irregularity and combined action must be taken.

(4) The committee has recommended that the banks must appraise and also decide
different limits for regular non-peak levels and peak levels too. It must be preceded in
reference to all borrowers availing the banking credit limit of greater than Rs.
10Lakh.

(5) The committee suggested that the borrowers must be dispirited from
impending the banks recurrently for ad hedged for such limits.
 CHAPTER -2

REVIEW OF LITERATURE
 Working capital is very important for every company to meet day to day operation
expenses and urgent payments.Effective working capital increase the company profit and
vice versa. For effective working capital,collection days should be less and payment days
should be more overall cash conversion cycle days should very low or in negative.
Many researches have studied working capital from different views and in
different environments. The following ones were very interesting and useful for our
research.

Eljelly : Identified the relation between profitability and liquidity who was examined,as
measured by current ratio and cash gap(cash conversion cycle) on a sample of joint stock
firms in Saudi Arabia.The study found that the cash conversion cycle was of more
importance as a measure of liquidity than the current ratio that affects profitability. The
size variable was found to have significant effect on profitability at the industry level.The
results were stable and had important implications for liquidity management in various
Saudi firms. First, it was clear that there was negative relationship between profitability
and liquidity indicators such as current ratio and cash gap in the Saudi sample examined.
Second, the study also revealed that there was great variation among industries with
respect to the significant measure of liquidity.

Bose S.K : Management of working capital studied the to cable manufacturing companies
and discussed the concept of working capital and found that the working capital needs
depends on certain elements like volume of investment in fixed assets , volume of
projected sales rate of turnover of current assets and credit terms of purchases.

Chowdhuri C.D: The study of managing working capital of observes that in the industry
dealing with long gestation products the ideal current ratio of 2:1 is not observe but 3:1 is
observed. Trading companies having quick turnover do not face the cash shortages.

Saswata Chatterjee: Focused on the importance of the fixed and current assets in the successful running of
any organization. It poses direct impacts on the profitability liquidity.There have been phenomenon
observed in the business that most of the companies increase the margin for the profits and losses because
this act shrinks the size of working capital relative to sales. But if the companies want to increase or
improve its liquidity ,then it has to increase its working capital .In the response of this policy organization
has to lower down its sales and hence the profitability will be affected due to this action. For this purpose
30 United Kingdom based companies were selected which were listed in the London stock exchange.The
data were taken of three years 2006-2008. It analyzed the impact of the working capital on the
profitability.The dimensions of working capital management included in this research which is quick
ratios,current ratios C.C.C, average days of payment, Inventory turnover, and A.C.P ( average collection
period). On the net operating profitability of the UK companies.

Mohamad and Saad: Used Bloomberg’s database of 172 listed companies randomly selected from Bursa
Malaysia main board for five year period from 2003 to 2007. Applying correlations and multiple
regression analysis, they found that current assets to total asset ratio shows positive significant relationship
with Tobin Q, ROA and ROL. Cash conversion cycle, current asset to current liabilities ratio and current
liabilities to total assets ratio illustrate negative significant relations with Tobin Q, ROA and ROC.
Lazaridis and Tryfonidis:Have explored the relationship between corporate profitability and WCM in the
Athens Stock Exchange. The findings of results shows a negative relationship between profitability and
working capital indicators like days of accounts receivable, account payable and cash conversion cycle.
They concluded that firms can create profits by effectively handling each components of the cash
conversion cycle.

All the above studies provide us a solid base and give us idea regarding working capital
management and its components. They also give us the results and conclusion of those researches already
conducted on the same area for different countries and environment from different aspects. On basis of
these researches done in different countries, we have developed our own methodology for research.
 CHAPTER-3
NEED OF THE STUDY
The projects is helpful in knowing the company’s position of funds maintainers and
setting the standards capital inventory levels, quick ratio current amount turnover level
and web torn turnover level .
This project is helpful to the management for expanding the dualism and the project
viability and present of funds.
This project is also useful as it companies the present year data with the previous year data
and thereby it show the trend analysis i.e.., increasing fund or decreasing fund.
The project is useful in further expansion decision to be taken by management.
OBJECTIVES OF THE STUDY

Everything in life holds some kinds of objectives to be fulfilled . This study is not an exception to it. The
following are a few straight forward goals which , I have tried to fulfill in my project.

To examine the effectiveness of working capital management policies with the help of
accounting ratio.
To evaluate the financial performances of the company .
To make suggestion for policy makes for effective management of working capital.

To study the various components of working capital.

To test the hypothesis.

To analyze liquidity trend.

SCOPE OF THE STUDY

Ensures business continuity : working capital management enables business in
continuing their activities uninterrupted. Proper management of working capital will lead
to availability of sufficient funds at all times. Business will receive regular supply of raw
materials from suppliers by paying them on time which will help in counting production
activities regularly.
Improves business solvency: business managing their working capital efficiently are able
to maintain proper liquidity. It will improve their cash management and will reduce their
dependency on external financing as large amount of funds is tied up in working capital.
Management of working capital will enable them in paying a short – term debts and
operating expenses on time.
Ability to face crisis: Efficient management of working capital enables business in facing
emergency situations such as depression. It ensures proper availability of funds at all times
so that business can easily face time of crisis of peak demand where they need to boost up
their production.
Increase credit worthiness: improving the business value and position in market is
another important advantage of working capital management . Business having sound
working capital position enjoy better liquidity and credits rating. it helps them in raising
funds from various external sources easily at favorable terms.
Better relations with creditors and suppliers : management of working capital
leads to better relations with suppliers and creditors. It enables business in paying all
dues to suppliers or trade creditors on time through always maintaining sufficient
amount of funds .This will result in gaining confidence of creditors towards business
.

Data Collection:
Sources of Data
Primary Data:
The primary data have been collected by questionnaries, schedules Method of data
collection used for the project was done in two ways.
And conversation with the farmers in Telangana .

Secondary Data:
It is the data which are not originally collected but rather obtained from published or
unpublished source thus ,the secondary data are that which have already been
collected by someone else and has been passed through statistical process.

LIMITATIONS OF THE STUDY

Study is limited to the accounting year 2019-2020.
Study is based on information provided by the
company.
Study the working capital management does not take into account the price level
changes.

STATISTICAL TOOLS
The tools which are used for the collection of data are:
Bar diagrams, Graphs and Pie diagrams have been using for the collection of data.
 CHAPTER -4

COMPANY PROFILE

ICICI Prudential Life Insurance Company Limited was incorporated on 20th July
2000 as a public limited company. The Company obtained the certificate of
commencement of business on October 16 2000.

It is registered with the Insurance Regulatory and Development Authority of

India (IRDAI) for carrying out the business of life insurance pursuant to the
registration certificate dated November 24 2000.

ICICI Prudential is a joint venture between ICICI Bank Limited India's largest private
sector bank in terms of total assets with an asset base of Rs. 7.2 trillion at March 31
2016 and Prudential Corporation Holdings Limited a part of the Prudential Group an
international financial services group with GBP 509 billion of assets under
management at December 31 2015. It is one of the first private sector life insurance
companies in India and commenced operations in fiscal 2001.

The company offers its customers a range of life insurance health insurance and
pension products and services. In 2001-02 ICICI Prudential Life Insurance crossed the
mark of 1 lakh policies. During the year 2004-05 the company crossed the mark of 1
million policies. During the year 2007-08 the company crossed the mark of 5 million
policies. Also during the year its total premium crossed Rs 10000 crore mark and the
assets under management crossed Rs 25000 crore mark.

During the year 2009-10 the company established a wholly owned subsidiary ICICI
Prudential Pension Funds Management Company Limited which is registered as a
fund manager with the Pensions Fund Regulatory and Development Authority of
India for the purposes of undertaking pension funds related business.

During the year ICICI Prudential Life Insurance turned profitable and registered
profit of Rs 258 crore. During the year the company's assets under management
crossed Rs 50000 crore mark. During the year 2011-12 the company announced
maiden dividend to the shareholders.

During the year 2014-15 ICICI Prudential Life became the first private life insurer
to attain assets under management of Rs 1 lakh crore. ICICI Prudential Life
Insurance Company initial public offer (IPO) opened for subscription on 19
September 2016 and closed on 21 September 2016. One its Promoters ICICI Bank
offered 18.13 crore shares in the price band from Rs 300 to Rs 334 per share in the
IPO.
 There was no fresh issue of shares from ICICI Prudential Life Insurance Company.
On 29 September 2016 ICICI Prudential Life was listed on the bourses and it became
the first pure play life insurance company in India to be listed on the Indian stock
exchanges.

On 27 March 2017 ICICI Prudential Life announced that the Insurance Regulatory
and Development Authority of India (IRDAI) has levied a penalty of Rs 20 lakh on
the company.

Earlier the IRDAI had conducted an onsite inspection of the company in December
2013 and subsequently the insurance sector regulator raised certain observations
which were followed by a show-cause notice to the company.

On 28 July 2017 ICICI Prudential Life announced that it has received an order from
Insurance Regulatory and Development Authority of India (IRDAI) directing it to
take over the assets and policyholder liabilities of Sahara Life Insurance.

This is not a merger between the two companies but purely a transfer of customers of
Sahara Life Insurance to ICICI Prudential Life. On 27 November 2017 ICICI
Prudential Life Insurance Company Limited (ICICI Prudential Life) announced that it
has implemented the Electronic - National Automated Clearing House (e-NACH)
service of the National Payment Corporation of India. ICICI Providential Life is the
first life insurance company in India to offer this service to its customers.
The e-NACH mandate service is a digital registration process wherein a customer
issues a mandate to the bank for his/her account to be debited at pre-determined
frequencies. e-NACH service is the most modern and paperless form for making
regular payments.
 INDUSTRY PROFILE

Company Overview
ICICI Prudential Life Insurance Company Limited (ICICI Prudential Life) is
promoted by ICICI Bank Limited and Prudential Corporation Holdings Limited.
ICICI Prudential Life began its operations in fiscal year 2001 and has consistently
been amongst the top players* in the Indian life insurance sector. Our Assets Under
Management (AUM) as on 31st March 2019 were `1,604.10 billion.
At ICICI Prudential Life, we operate on the core philosophy of customer centricity.
We offer long term savings and protection products to meet different life stage
requirements of our customers. We have developed and implemented various
initiatives to provide cost-effective products, superior quality services, consistent fund
performance and a hassle-free claim settlement experience to our customers.
In FY2015 ICICI Prudential Life became the first private life insurer to attain assets
under management of `1 trillion. ICICI Prudential Life is also the first insurance
company in India to be listed on NSE and BSE.

Fiscal Particulars

2001 Our Company started operations

2002 Crossed the mark of 100,000 policies

2005 Crossed the mark of 1 million policies

Crossed the mark of 5 million policies

2008 Crossed receipt of `100 billion of total premium
Crossed `250 billion of assets under
management
Established Subsidiary for the purposes of undertaking pension funds related
business
2010
Our Company turned profitable - registered profit of `2.58 billion
Crossed `500 billion of assets under management

2012 Started paying dividends

2015 Crossed `1 trillion of assets under management

2017 First insurance company in India to list on NSE and BSE

Vision:

To build an enduring institution that serves the protection and long-term saving needs
of customers with sensitivity.
 Values: The way we do things

The success of the company will be founded in its unflinching commitment to 5 core
values - Integrity, Customer First, Boundary-less, Humility and Passion. Each of the
values describes what the company stands for, the qualities of our people and the way
we work. Every member of the ICICI Prudential team is committed to the 5 core
values and these values shine forth in all that we do.

 Customer First: Keep customers at the center of everything we do

 Humility: Openness to learn and change
 Passion: Demonstrate infectious energy to win and excel
 Integrity: Do the right thing
 Boundary less: Treat organization agenda as paramount
 Chapter 5

Data Analysis

Protection New Business Premium

3 years CAGR -67.3%

35

30

25

20

15

10

0 fy2017 2018 2019 2020

The above graph represents that there is a rapid growth in ICICI prudential life insurance by every
financial year from 2017 to 2020
3 years CAGR -78.81%

12

10

2017 2018 2019 2020

The above graph shows that the compound annual growth rate if ICICI Prudential Life Insurances has
much growth in the various financial years.
 CHAPTER -6

FINDINGS

Project Finance

Project Finance is one of the key focus areas for ICICI Bank. The Project Finance
Group has institutionalized capabilities to successfully manage the unique and
multidimensional process of project finance transactions led by customized.

The group has been the sole lead arranger and underwriter of a significant amount of
project debt over the years. In the Indian project finance domain, the group enjoys a
leadership position and is acknowledged for its comprehensive domain expertise and
knowledge in the infrastructure, manufacturing and mining sectors, having ensured
timely financial closure of several big ticket projects.

A brief overview of the major sectors covered by the group is given below:

 Power: ICICI Bank is the first Indian bank to finance large hydro-power projects and
has been the lead arranger towards funding of a number of thermal power plants being
set-up by large infrastructure developers.
 Roads: The Infrastructure sector is a priority for the Bank. The group has ensured the
Bank's participation as lead arranger for a number of road projects and has financed
the first project for modernizing state border check posts.
 Ports / Airports: ICICI Bank has provided assistance to a number of container &
liquid port terminals. The Bank has been credited for being a lead arranger for the first
private sector green field international airport.
 Manufacturing & Mining: The funding requirements of large brown field expansions
and green field projects in the manufacturing sector viz. Steel, Aluminium , Cement,
Auto, and Hotels have been arranged by the group. In the mining sector, Bank has
provided financial assistance to several large conglomerates for overseas mine
acquisitions and has funded capex requirements of local miners.
 Oil & Gas: ICICI Bank is credited with being a lead arranger for one of the largest
refineries in the country and has financed the first oil securitization deal in the
country. Additionally, funding of gas pipeline projects remains a key area for bank.

The project finance team of ICICI Bank has also played a key role in assisting the
Government of India in formulating policies relating to various segments of the
infrastructure sector. This helps ICICI Bank to provide optimum solutions to its
clients with an appropriate decision support for strategic measures in future.
 Foreign currency term loans
 External Commercial Borrowings
 Export Credit Agency backed long term debt
 Lines of credit from different multilateral institutions
 Non fund based facilities like Letter of Credit, Bank Guarantee, Supplier’s Credit,
Buyer’s Credit etc.
 Subordinated debt and mezzanine financing.
 CHAPTER -7
CONCLUSION AND SUGGESTIONS

The present study examines the regulatory framework governing mutual funds,
growth and performance of mutual fund schemes and investors’ perception regarding
mutual funds. For the purpose of study, a sample of ten mutual funds namely SBI
Funds Management Pvt. Ltd.,
UTI Asset Management Company Ltd., Tata Asset Management Ltd., Taurus Asset
Management Co. Ltd., Franklin Templeton Asset Management (India) Private Ltd.,
Birla Sun Life Asset Management Co. Ltd., HDFC Asset Management Co. Ltd.,
ICICI Prudential Asset Management Co. Ltd., Sundaram BNP Paribas Asset
Management Co. Ltd. and Principal PNB Asset Management Co. Pvt. Ltd. has been
taken. All the equity and balanced mutual fund schemes of the selected mutual funds
have been studied from 2002-03 to 2010-11. The study used both secondary and
primary data. Secondary data for the study has been compiled from Capital Market,
Chartered Financial Analyst, Outlook, SEBI annual reports, RBI Reports on Currency
and Finance, RBI Bulletin, Management Accountant, Portfolio Organizer, Economic
and Political Weekly, Finance India and mutual funds related websites etc. However
for studying the aspect of growth of mutual fund industry period taken is from 2002-
03 to 2011-12. Primary data has been collected from 200 mutual fund investors of
Punjab (100 from Ludhiana district and 50 each from Jalandhar and Amritsar
districts). The data collected from the respondents has been analyzed with respect to
four variables namely age, occupation, annual savings and investment experience.
Age-wise the respondents have been classified into three categories namely up to 30
years (A1), 30-40 years (A2) and 40 years & above (A3). Occupation-wise the
respondents have been divided into three categories Service (O1), Business (O2) and
Others (O3). Annual Savings wise the respondents have been categorized into three
categories i.e. up to Rs. 100000 (S1), Rs.100000-200000(S2) and above Rs. 200000
(S3). Investment-experience wise the respondents have been categorized into three
categories i.e. up to 3 years (E1), 3-5 years (E2) and above 5years (E3). For analysis
of data, the statistical tools viz., percentage, simple growth rate,compound annual
growth rate, measurement of return, measurement of risk (coefficient of variation and
Beta(β), risk adjusted performance measures (Sharpe measure, Treynor measure and
Jensen measure), Chi-square test, Average Weighted Scores and Kendall’s
Coefficient of Concordance have been use.
On the basis of Sharpe and Treynor measures, ICICI Prudential Dynamic Plan,ICICI
Prudential Growth Plan and ICICI Prudential Power Plan outperformed the
benchmark S&P CNX Nifty in majority of the years under study.
However, ICICI Prudential Balanced Fund under performed the benchmark in
majority of the years.
• On the basis of Sharpe and Treynor measures, Sundaram BNP Paribas Growth Fund,
Sundaram BNP Paribas Select Focus, Sundaram BNP Paribas Select Mid-cap.
outperformed the benchmark S&P CNX Nifty in majority of the years under study.
However, Sundaram BNP Paribas Balanced Fund under-performed the benchmark
in majority of the years.
• All the selected schemes of HDFC Mutual Fund outperformed the benchmark index
BSE Sensex in terms of Sharpe and Treynor measures for majority of the years under
study.
• On the basis of Sharpe and Treynor measures, Franklin India Blue-chip Fund,
Franklin India Prima Fund and Franklin India Prima Plus Fund outperformed the
benchmark index BSE Sensex for majority of the years under study. However,
Franklin India Opportunity Fund outperformed in terms of both the measures for 4
years. It also under-performed the benchmark for 4 years.
Bibliography:
 ICICI prudential life insurance website.
 From recent magazines.
 Business world.
 http://ICICI prudential life insurance.com