INTRODUCTION OF FUND FLOW STATEMENT

The balance sheet discloses the financial position of the business on a particular date. It is merely a statement of the assets and liabilities. it depicts the effect of various transaction in a particular period and show the resources position after transaction in a period. The balance sheet at the end of the period is generally quite different from the balance sheet at the beginning of the year. But how the changes have come about is not reflected in the balance sheet. The analysis method which discloses these changes is called funds flow statement. In short, funds flow statement is a statement which is prepared to disclose the changes in financial data of balance sheets of two periods. The statement is a report on major financial operation that is changes, flow of movements during the period. It is known by other names also statement of sources and applications of funds; statement of changes in financial position.

Meaning of fundIn a narrow sense, the word fund is synonymous with cash. In this sense, the funds flow statement is simply a statement of cash receipts and disbursements. Such a statement is called cash flow statement; it portrays the inflow and outflow of cash during a period and, consequently, the balance in hand. The term funds, however, is broader than cash, it means working capital, i.e., the difference between current assets and current liabilities.

Meaning of flowThe term flow means change. Therefore , the term flow of funds means change in funds or change in working capital. Accordingly the term of flow of funds means the movement of funds as a flow in and out of the working capital. Thus any increase or decrease in working capital means flow of funds.

Definition
According to: Almond Coleman, The fund flow statement summarizing the significant financial changes which were occurred between the beginning & the end of a companys accounting periods. This fund flow statement has two parts: 1. Sources of fund 2. Application of fund The difference between these two parts that is sources & uses of funds represents net changes in working capital. The excess of sources of funds over uses of fund is the net increase in working capital & excess of uses over sources of fund is net decrease in working capital. The amount of net increase or decrease as shown in fund flow statement should be equal to the amount shown by schedule of working capital changes.

CHART-1

OBJECTIVES OF FUND FLOW STATEMENT

Funds flow statement highlights the sources and applications of funds and reveals changes in the financial structure of the firm between two balance sheet dates. Therefore, we may state its basic objective is to determine where the funds came from and how they were used. Funds flow statement enables the management to know, with reasons, the causes of changes in the net working capital. The other basic objectives are-: To know the changes in working capital during a period. To know the sources where funds came from and the purposes for which they were used during a period. To assess the financial condition of the enterprise more realistically, e.g., to have more reliable picture of the results of HDFC standard life insurance operations, one should know the figure of funds from operations rather than usual net profit or loss figures of an company. To provide a basis for budgeting. To anticipate the working capital position. To grasp features of financial operations and policies. Thus, fund flow statements are able to present that information which either is not available or not readily apparent from an analysis of other financial statements.

USES AND ADVANTAGES OF FUND FLOW STATEMENT

1-It reveals the net result of operations during the year in the year in term of cash -: the funds flow statement gives a better view of profitability since profit as such is subject to rather personal decision of management.

2-It provides answers to intricate questions -: funds flow statement, being a

tool of historical analysis, provides answers to questions such as; o Where did profit go? o Why are dividends not larger? o How was it possible to distribute dividends in excess of current earnings or in the presence of net loss for the period? o How was increase in working capital financed?

3-It is a basis of budgeting-: since funds are the basis for carrying on
operations, the funds flow statement, prepared on an estimated basis for the next period, will enable a firm to plan its financial operations properly-the firm will know how much funds it requires, how much it can raise internally and for how much it should make arrangements from outside. This is a process of budgeting.

4-It is a test as to effective use of funds-: funds flow statements provides

information of funds flow, it, in the process, helps in knowing if the funds have been used effectively.

5-It supplements the information given in financial statements-: funds

flow statement provides additional information, i.e., sources and utilization of funds. This information is not provided by the financial statements.
4

LIMITATIONS OF FUNDS FLOW STATEMENT

Despite the above advantages there are certain limitations also. These ares-:

1-It ignores the non-fund transactions. It does not take into considerations
those transactions which do not affect the working capital, such considerations of fixed assets etc.

2-It is based on the secondary data stated in the income statements and balance sheets. If these statements do not provide clear and authentic
information then funds flow statements will not be helpful to the management for accomplishment of determined goals

3-It is historical in nature unless projected funds flow statement is prepared to

plan for the future.

4-Changes in the cash position are not analyzed. In the short run changes in
cash position are more relevant as compared to changes in the net working capital.

5-It is a static statement. It is prepared by taking into account figures of two

points of time. Thus, it cannot reveal continuous changes.

6-It is not a substitute of balance sheet or that of profit or loss account. It

only supplements these conventional statements for better analysis of financial position

DISTINCTION BETWEEN FUNDS FLOW STATEMENT AND POSITION STATEMENT (BALANCE SHEET)
Basis of distinction
1-Meaning

Funds flow statement

Funds flow statement Of changes in assets and liabilities.

Balance sheet
It is a statement of assets and liabilities.

2-Objectives

Funds flow statement is prepared to show the sources and uses of funds during a period of time.

Balance sheet is prepared to show the financial position of the company at a particular date. Balance sheet contains current as well as noncurrent items.

3-contents

It contains only those non- current items which affect working capital.

4-concept

It is a dynamic concept. It It is a static concept. It shows the reasons for changes in working capital . shows assets and liabilities at the end of the year. There is a prescribed form for balance sheet.

5-prescribed form

There is no prescribed form for funds flow statement.

6-basis

it is prepared with the help of balance sheets, profit and loss account etc.

Balance sheet is prepared with the help of trial balance.

7-legal

It is discretionary

It is mandatory

Table 1.1

DISTINCTION BETWEEN FUNDS FLOW STATEMENT AND INCOME STATEMENT (PROFIT AND LOSS ACCOUNT)
Meaning
1-Meaning

Funds flow statement

Funds flow statement Of changes in assets and liabilities.

Income statement
Income statement is a statement that summarises the financial activities ti ascertain profit and loss.

2-objectives

Funds flow statement is prepared to show the sources and uses of funds during a period of time

Income statement is prepared to find out net results of the business.

3-legal

It is discretionary

Preparing income statement for accounting period is mandatory.

4-net results

Funds flow statement shows net increase or decrease in working capital

Income statement shows net profit and net loss.

5-Basic data

Funds flow statement is based on non-current items.

Income statement is based on nominal accounts.

6-tools of financial analysis

It is an important tool of financial analysis

It is one of the basic financial statements which provides

information for financial analysis.

Table 1.2

PREPARATION OF FUNDS FLOW STATEMENT

A fund flow statement shows changes in working capital. It will be better to prepare first a schedule of changes in working capital before preparing of funds flow statement.

Schedules of changes in working capital

Since working capital is affected by the net effect of sources and applications of funds, the funds flow statement is usually accompanied by a schedule showing changes in working capital. This schedule naturally takes into account only current assets and current liabilities, in the beginning and at the end of the concerned period. The changes in all current assets and current liabilities are marked as increases or decreases in working capital over the period are entered in two columns. The schedule shows up the increase or decrease in working capital.

While preparing a schedule of changes in working capital, it should be noted that:

1. An increase in current assets increases working capital. 2An decrease in current assets decreases working capital. 3A decrease in current liabilities increases in working capital. 4 An increases in current liabilities decreases working capital. 5 When either a current assets or current liability remains unchanged between the beginning and of an accounting period it has no effect on working capital.
8

Schedules of change in working capital

Particulars Previous year Rs. A- Current asset: Cash in hand Cash at bank Advance and other assets total B-Current liabilities: ---Provisions total C-Working capital (A-B) D-Increase/decrease in working capital ---------------------------------------------Current year Rs. Increase (Debit) rs. Decrease (credit) rs.

Table 1.3

Funds flow statement-:

Funds flow statement has two parts -: (1) Sources (2) Applications. Only noncurrent assets and noncurrent liabilities are considered for preparing the statement.net increase and decrease in working capital is considered while preparing the funds flow statement. The statement can be prepared either in t form , i.e., left side showing sources of funds while the right side showing the application of funds, or in single column form-first the sources and then the applications.

Fund flow statement in single column

Sources Shareholder funds Share capital Reserves & surplus Fair value

Amount in Rs. -------------

10

Applications Shareholder funds Policyholder Investment Assets held to cover linked Loans

---------------------

Table1.4

11

SOURCES OF FUNDS OF HDFC STANDARD LIFE INSURANCE

Shareholder funds Share capital Reserves & surplus Fair value

APPILCATION OF FUNDS
Shareholder funds Policyholder Investment Assets held to cover linked Loans

12

INTRODUCTION OF COMPANY

ABOUT HDFC STANDARD LIFE INSURANCE

HDFC Life, one of Indias leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), Indias leading housing Finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom. HDFC Lifes product portfolio comprises 26 retail and 6 group products, which meet various customer needs such as Protection, Pension, Savings, Investment and Health. HDFC Life continues to have one of the widest reaches with more than 500 branches servicing customer needs, along with a strong base of Financial Consultants. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, Mauritius, and Bangladesh in the setting up of housing finance companies. Standard Life Established in 1825, Standard Life is a leading provider of long term savings and investments to around 6 million customers worldwide. The Standard Life group includes savings and investments businesses, which operate across its UK, Canadian and European markets; corporate pensions and benefits businesses in the UK and Canada; Standard Life Investments, a global investment manager, which manages assets of over 157 bn globally; and its Chinese and Indian Joint Venture
13

businesses.

At the end of April 2011 the Group had total assets under

administration of 198.4 bn. Standard Life plc is listed on the London Stock Exchange and has approximately 1.5 million individual shareholders in over 50 countries around the world.

VISION STATEMENT
The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the vest values for money, and easiest the standards in the industry, In short, The most obvious choice for all.

VALUES
ty

INDUSTRY PROFILE
Insurance:
Insurance can be defined as assurance for uncertainty. Insurance is 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. The

insurance sector in India has come a full circle from being an open competitive market to nationalization and back to liberalized market again. Tracking the development in Indian insurance sector reveals the 360 degree turn witnessed over
14

a period of almost two centuries.

The business of life insurance in Indian in its

existing form started in India in the year 1818 with the establishment of Oriental Life. Insurance Company in Calcutta. Some of the important milestones in life insurance business in India are. 1912: The Indian Life insurance Companies Act enacted as first statue to regulate the life insurance business. 1928: The Indian

Insurance Compan9es Act enacted to enable the government to collect statistical information about life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the insurance Act with the objective of protecting the interests of the insuring public. 1965: 245 Indian and foreign insurers and provident societies take over by the central government and nationalized. LIC formed by an act of parliament viz. LIC. Act. 1956, with a capital contribution of Rs. 5 Crore from the government of India.

Insurance Regulatory and Authority

Reforms in the Insurance sector were initiated with the passes of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously such to its schedule of framing regulations and registering the private sector insurance companies.

COMPANY PROFILE
HDFC Standard Life Insurance Company ltd -:
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since emerged as the largest residential mortgage finance institution in the country The Corporation has had a series of share issues raising its capital to Rs. 119 crores. The gross premium income for the year ending March 31, 2007 stood at Rs. 2, 856 crores and new business premium income at Rs. 1,624 crores. The company has covered over 8, 77, 000 lives year ending March 31, 2007. HDFC operates through almost 450 locations throughout the country with its corporate head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE, with
15

service associates in Kuwait, Oman and Qatar. HDFC is the largest housing Company in India for the last 27 years.

Snapshot-I
Incorporated in 1977 as the first specialized Mortgage Company in India.

investors. Current 77% of shares held by foreign institutional investors. besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings in: - HDFC holds 78.07 %. HDFC holds 50.1% - HDFC holds 22.25%. siness Process Outsourcing) HDFC holds 50%. HDFC holds 74%.

Snapshot-II

04) financed 2.5 million.

(US $ 15.20 bn)

Key Players

16

1. Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC Limited in a senior management position in 1978. He was inducted as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. 2. Mr. Deepak M Satwalekaris the Managing Director and CEO of the Company since November, 2000. Prior to this, he was the Managing Director of HDFC Limited since 1993. 3. Mr. Keki M. Mistry joined the Board of Directors of the Company in December, 2000. He is currently the Vice Chairman and Chief Executive Officer of HDFC Limited. He joined HDFC Limited in 1981 and became an Executive Director in 1993. He was appointed as its Managing Director in November, 2000. 4. Ms. Renu Sud Karnad is the Managing Director of HDFC Limited.. She has been employed with HDFC Limited since 1978 and was appointed as the Executive Director in 2000. 5. Mr. David Nish joined Standard Life on 1 November 2006 as Group Finance Director and remained in that position until December 2009. He is the Chief Executive at Standard Life Plc. In 2000 he was awarded the Scottish Business Awards Finance Director of the Year and from 2004 to 2005 he served on the Government Employers Pension Task Force. 6. Mr. Nathan Parnaby is appointed as the Chief Executive, Europe & Asia of Standard Life in the year 2010. Nathan joined Standard Life in 1982 as Investment Manager, responsible for all UK net funds. He was appointed a Director of the Standard Life Investments board. . He joined the Board of Directors in December 2009. 7. Mr. Norman K. Skeoch is currently the Chief Executive in Standard Life Investments Limited and is responsible for overseeing Investment Process & Chief
17

Executive Officer Function. Prior to this, Mr. Skeoch was working with M/s. James Capel & Co. holding the positions of UK Economist, Chief Economist, and Executive 8. Mr. Skeoch joined the Board of Directors in November 2005. He is a Fellow of the Securities Institute, Fellow of the Royal Society for the Encouragement of the Arts, Manufacture and Commerce, BA, MA. HDFC Standard Life Insurance Company Limited Annual Report 10-11 9. Mr. Gautam R. Divan is a practicing Chartered Accountant and is a Fellow of the Institute of Chartered Accountants of India. Mr. Divan was the Former Chairman and Managing Committee Member of Midsnell Group International, an International Association of Independent Accounting Firms and has authored several papers of professional interest. 10. Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards on Strategy and Change Management. Mr. Pant, until 2002 was a Partner & VicePresident at Bain & Company, Inc., Boston, where he led the worldwide Utility Practice. 11. Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of India Limited. Mr. Ravi Narain was a member of the core team to set-up the Securities & Exchange Board of India (SEBI) and is also associated with various committees of SEBI and the Reserve Bank of India (RBI). 12. Mr. A K T Chari has joined HDFCSL as a Director on March 10, 2010. He is associated with Infrastructure Development Finance Company Ltd. (IDFC) for last 11 years. Currently he is handling project Finance for infrastructure projects at IDFC. Prior to this he was associated with Infrastructure Development Bank of India (IDBI) from 1975 to 1999. 13. Mr. Gerald E. Grimstone was appointed Chairman of Standard Life Plc. in May 2007, having been Deputy Chairman since March 2006. He became a director of The Standard Life Assurance Company in July 2003. He is also Chairman of
18

Candover Investments plc and was appointed as one of the UKs Business Ambassadors by the Prime Minister in January 2009. He was appointed as the Alternate Director to Sir Alexander Crombie 14. Mr. Michael Connarty joined the Board as an Alternate Director to Mr. Norman K. Skeoch in November 2007. He has worked with Standard Life for 33 years in managerial positions covering a number of Fields such as Pensions law, International Marketing, Operational Management, Strategy, Risk, Compliance, Company Secretarial and Banking. He has acted as Project Manager for the startup project of the Company in 2000. 15. Mr. Amitabh Chaudhry is the Managing Director and Chief Executive Officer of HDFC Standard Life. Before joining HDFC Standard Life in January 2010, he was the Managing Director and CEO of Infosys BPO and was also heading an Independent Validation Services unit in Infosys Technologies. 16. Mr. Paresh Parasnis is the Executive Director and Chief Operating Officer of the company. A fellow of the Institute of Chartered Accountants of India, he has been associated with the HDFC Group since 1984. During his 16-year tenure at HDFC Limited, he was responsible for driving and spearheading several key initiatives.

GROUP COMPANIES
HDFC Bank: World Class Indian Bank- among the top private banks in India. HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager. Intelent Global: BOP services for international customers. CIBIL: Credit information services bureau. HDFC Chubb: Upcoming Private companies in the field of General Insurance.

19

STANDARD LIFE
Standard Life is Europes largest mutual life assurance company. Standard Life, which has been in the life insurance business for the past 175 years is a modern company surviving quite a few changes since selling its first policy in 1825. The company expanded in the 19th century from kits original Edinburgh premises, opening offices in other towns and acquitting other similar businesses. Standard Life Currently has assets exceeding over 70 billion under its management and has the distinction of being accorded AAA rating consequently for the six years by Standard and Poor.

Snapshot
1 Founded in 1875, company supporting generation for last 179 years. 2 Currently over 5 m. Policy holders benefiting from the services offered. 3 Europes largest mutual life insurer.

JOINT VENTURE
HDFC Standard Life Insurance Company Limited was one of the first companies to be granted license by the IRDA to operate in life insurance sector. Reach of the JV player is highly rated and been conferred with many awards. HDFC is rated AAA by both CRISIL and ICRA. Similarly, Standard Life is rated AAA both by Moodys and Standard and Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. Respectively. HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4 %stale and Standard: of as a staple pf 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture. HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life Insurance Companies., which
20

offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd.) Indias leading housing finance institution and the Standard Life Assurance Company, a leading provider of financial services from the United Kingdom. Both the promoters are well known for their ethical dealings and financial strength and are thus committed to being a long-term player in the life insurance industry- all important factors to consider when choosing your insurer.

BUSINESS GROWTH
Track Record so far
The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs. 2, 856 crores and new business premium income at Rs. 1,624 crores. The company has covered over 8, 77,000 lives year ending March 31, 2007. Company also declared our 5th consecutive bonus in as many years for our with profit policyholders

FINANCIAL EXPERTISE
As a joint venture of leading financial services groups. HDFC standard Life has the financial expertise required to manage your long-term investments safely and efficiently

Range of Solutions
We have a range of individual and group solutions, which can be easily customized to specific needs. Our group solutions have been designed to offer you complete flexibility combined with a low charging structure.

Strong Ethical Values:

HDFC is an ethical and Cultural Organization. False selling or false commitment with the customers is not allowed.
21

Most Respected Private Insurance Company

HDFC was awarded No-1 Private Insurance Company In 2004 by the World Class Magazine Business World. Integrity, Innovation and Customer Care.

MAJOR PLAYERS IN INSURANCE INDUSTRY

Life Insurance Corporation
Life insurance made its debut in India well ob4er 100 years ago. Its salient features are not as widely understood in our county, as they ought to be. What follows is an attempt to acquaint readers with some of the concept of life insurance, with special reference to LIC. It should, however, be clearly understood that the

following narration is by no means an exhaustive description of terms and conditions of LIC policy or its benefits or privileges. For more details, please contact our branch or divisional office. An LIC it will be glad to help you choose the life insurance plan to meet your needs and render policy servicing.

ICICI Prudential
ICICI Prudential Life Insurance Company is a joint venture between ICICI bank, a premier financial powerhouse and prudential plc. A leading international financial service group headquartered in the United Kingdom. ICICI prudential was amongst the first private insurance company to being operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA) . ICICI Prudential equity base 74% and 26 stake respectively. In the period April-December 2004, the company garnered Rs. Billion of new business premium for a total sum assured of over Rs 73.6 billion and wrote nearly 345000 policies. The company has a network of over 50000 advisor; as well as 7 bank

assurance tie-ups. Today, ICICI Prudential has emerged as the No -1 Private Life insured in the country. With a wide range of flexible products that meet the needs of the customer at every step in life.

22

WHY HDFC IS BETTER ?

1. Investment Returns: Investment returns and business growth provided by HDFC is validated by Bajaj Capital report. HDFC pacify the need of invertors up to healthy level and make the strong relationship with them.

2. Financial Background And Experience: HDFC existing in the market

since 1977. It has a very handsome experience in the field of finance because it completely involved in finance Sector only where as the others are running in many other field also like Reliance (Petroleum, Textile, Telecom etc.)

3. Ethics and Values: HDFC is an ethical and cultural organization which

prevents the false selling and prohibits the false commitment to the customer.

4. Sales Force: Properly trend licensed and Educated People are the strength of
the company. So that they could give the best customer service.

5. Online accessibility: It makes the process faster and makes the customer
delighted.

STRATEGIES:
Strategies Employed to achieve the target are as follows:*Telecalling * Contacting the person directly (interview) * Collect references. Some important steps to make effective telecalling: - Open the call in a friendly and positive way. State the name, position and company name. Check the

prospect has time to speak. State the reason for the call. Clearly succinctly explain how the meeting will be benefiting the prospect.
23

ACHIEVEMENTS:
Recruited eight financial consultants for company. Increase in confidence level. Got the knowledge about, how to differentiate our product form that of LIC. Made more and more people aware about my companies Products (Policies) taken some appointments for policies and got positive response from 8 persons with the help of my BDM.

LIMITATIONS
So though the study aims to achieve the above mentioned Objective in full earnest and accuracy, it may be hampered due to certain limitation. Some of the limitations are as follows: *To cover the various section for the society. * Respondents may not be at home and may have to re-contacted or replaced by others. * Getting accurate response from the respondents due to their inherent problem is difficult. * Limited response from client. * There is a time limitation it is not possible to study whole thing I covered some special aspect as well as some topics.

24

SWOT ANALYSIS
HDFC and Standard Life first came together for a possible joint venture, to enter the life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995, the companies signed a 3-year joint venture agreement.

Strength
1. Domestic image of HDFC supported by Prudentials international image is strength of the company. 2. Strong and well spread network of qualified intermediaries and sales person. 3. Strong capital and reserve base. 4. The company provides customer service of the highest order. 5. Huge basket of product range which are suitable to all age and income groups. 6. Large pool of technically skilled manpower with in depth knowledge and understanding of the market. 7. The company also provides innovative products to cater to different needs of different customers

Weaknesses
1 Heavy management expenses and administrative costs. 2. Low customer confidence on the private players. 3. Vertical hierarchical reporting structure with many designations and cadres leading to power politics at all levels without any exception. 4. Poor retention percentage of tied up agents.

Opportunities
25

1. Insurable population According to ING only 10% of the population is insured, which represents around 30% of the insurable population. This suggests more than 300m people, with the potential to buy insurance remain uninsured. 2. There will be inflow of managerial and financial expertise from the worlds leading insurance markets. Further the burden of educating consumers will also be shared among many players. 3. International companies will help in building world class expertise in local market by introducing the best global practices. 4. Insurance liberalization in India is expected to result in a wider choice of major commercial insurance covers, such as fire, export credit...

THREATS.
1. LICs brand name. 2. People prefer short investment rather than in insurance. 3. Other private insurance companies.

26

HDFC LIFE INSURANCE PLANS

A-Protection plans B-Childrens plans C-Retirement Plans D-Savings and Investment Plans E-Health Plans

A-PROTECTION PLANS

Why do I need Protection Plans? Protection Plans help you shield your family from uncertainties in life due to financial losses in terms of loss of income that may dawn upon them in case of your untimely demise or critical illness. Securing the future of one's family is one
27

of the most important goals of life. Protection Plans go a long way in ensuring your family's financial independence in the event of your unfortunate demise or critical illness. They are all the more important if you are the chief wage earner in your family. No matter how much you have saved or invested over the years, sudden eventualities, such as death or critical illness, always tend to affect your family financially apart from the huge emotional loss. For instance, consider the example of Amit who is a healthy 25 year old guy with a income of Rs. 1,00,000/- per annum. Let's assume his income increases at a rate of 10% per annum, while the inflation rate is around 4%; this is how his income chart will look like, until he retires at the age of 60 years. At 50 years of age, Amit's real income would have been around Rs. 10, 00,000/- per annum. However, in case of Amit's unfortunate demise at an early age of 42 years, the loss of income to his family would be nearly Rs. 5,00,000/- per annum.

CHART-2 However, with a Protection Plan, a mere sum of Rs. 2,280/- annually (exclusive of service tax & educational cess) can help Amit provide a financial cushion of up to Rs. 10, 00,000/- for his family over a period of 25 years.

Types of Production Plans

1. HDFC term Assurance Plan
28

2. HDFC Premium Guarantee Plan 3. HDFC Loan Cover Term Assurance Plan 4. HDFC Home loan Protection Plan

1. HDFC term Assurance Plan

This plan is designed to help secure your family's financial needs in case of uncertainties. The plan does this by providing a lump sum to the family of the life assured in case of death or critical illness (if option is chosen) of the life assured during the term of the contract. One can choose the lump sum that would replace the income lost to one's family in the unfortunate event of one's death. This helps your family to maintain their financial independence, even when you are not around

Advantages
1. High cover at a very nominal cost. 2. Flexibility to choose the Sum Assured. 3. Additional benefit options can be availed at marginal costs. 4. Option of paying single premium or regular premium.

2. HDFC Premium Guarantee Plan

29

HDFC Premium Guarantee Plan is an insurance plan that comes with twin advantage of protection and return of premiums* on maturity. So, you can enjoy life knowing that your family's financial independence is secure even in your absence. And your premiums are yours on your survival at maturity.

Advantages 1. High cover at a very nominal cost.

2. Flexibility to choose the Sum Assured. 3. Return of all your premiums paid on maturity* 4. Tax benefits under sections 80C and 10(10D) of Income Tax Act, 1961.

3. HDFC Loan Cover Term Assurance Plan

This plan aims to protect your family from your loan liabilities in case of your unfortunate demise within the policy term. It provides the beneficiary with a lump sum amount, which is a decreasing percentage of the initial Sum Assured. This means that as the outstanding loan decreases as per the loan schedule, the cover under the policy also decreases as per the policy schedule.

30

CHART-3

Advantages
1. Flexibility to choose the Sum Assured. 2. Decreasing Sum Assurance as the outstanding loan decreases ensures that you do not pay for the protection you don't need. 3. Additional Optional Benefit is available at a nominal cost. 4. Option of paying single premium or regular premium. 5. Tax benefits are offered under section 80C, 80 D and 10(10D) of the Income Tax Act, 1961.

4. HDFC Home loan Protection Plan

This plan aims to protect your family from your loan liabilities in case of your unfortunate demise within the policy term. It ensures that your family
31

does not lose the dream house that you have purchased for them, in case you are not around to repay the outstanding monthly installments on your housing loan. This provides you with the comfort of knowing that in your absence, a sum of money will be available towards repaying your housing loan, making sure that your family will be secure in your family home.

Advantages 1. A decreasing Sum Assured payable if you die during the term of the contract.
This sum assured is intended to help pay-off your outstanding home loan 2. Policy can be availed by paying a single premium in advance

B-CHILDREN PLANS

Why do I need Childrens Plans?

Children's Plans helps you save so that you can fulfill your child's dreams and aspirations. These plans go a long way in securing your child's future by financing the key milestones in their lives even if you are no longer around to oversee them. As a parent, you wish to provide your child with the very best that life offers, the best possible education, marriage and life style. Most of these goals have a price tag attached and unless you plan your finances carefully, you may not be able to provide the required economic support to your child when you need it the most. For example, with the high and rising costs of education, if you are not financially prepared, your child may miss an opportunity of a lifetime.
32

Today, a 2-year MBA course at a premiere management institute would cost you nearly Rs. 3,00,000/- At a assumed 6% rate of inflation per annum, 20 years later, you would need almost Rs. 9,07,680/- to finance your child's MBA degree. An illustration of how education expenses could rise with passing time due to inflation so, how can you cope with these costs? Children's Plans help you save steadily over the long term so that you can secure your child's future needs, be it higher education, marriage or anything else. A small sum invested by you regularly can help you build a decent corpus over a period of time and go a long way in providing your child a secured financial future along with

CHART-4

Types of Children's Plans

1. HDFC Children's Plan 2. HDFC SL Young Star Super II 3. HDFC SL Young Star Super Premium

1. HDFC Children's Plan

33

As a parent, your priority is your child's future and being able to meet your child's dreams and aspirations. With our HDFC Children's Plan, you can start building your savings today and ensure a bright future for your child.

Advantages
1.

you customize an ideal plan for your child and provide invaluable financial support

2.

The Double Benefit Plan Option helps you secure your child's immediate and future needs. In case of your unfortunate demise, we will pay the Sum Assured to your child (Beneficiary). Your family need not pay any further premiums and the policy continues. And on maturity of the plan, we will pay you the Sum Assured plus Bonuses Declared

3.

You can choose to pay your premium as either Annually, Half-Yearly or Quarterly depending on your convenience. You also have a range of convenient auto premium payment options

4.

Tax benefits are offered under section 80C and 10(10D) of the Income Tax Act, 1961

2. HDFC SL Young Star Super Premium

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There is no bigger joy than being able to fulfill your child's dream on your own. With HDFC SL Young Star Super II you can fulfill your child's immediate and future needs. So tomorrow when your child needs your support you don't have to depend on anyone else.

Advantages
1. In case of your unfortunate demise or critical illness, we will pay the greater of Sum Assured (less partial withdrawals) or Fund Value to your child (Beneficiary). The policy will terminate. We will pay 100% of all the future regular premiums to the Beneficiary as and when due, on an annual basis. Please refer to the sales brochure for details. 2. You can customize the ideal plan for your child by choosing the premium you wish to invest along with the Sum Assured, depending on the level of protection required. 3. This plan can be taken by filling Short Medical Questionnaire, which may not require you to go for medicals. Kindly refer to the product brochure for details. 4. You can change your investment fund choices in two ways: Switching: You can move your accumulated funds from one fund to another anytime

35

 Premium Redirection: You can pay your future premiums into a different selection of funds, as per your need 5. Tax benefits are offered under section 80C and 10(10D) of the Income Tax Act, 1961

3. HDFC SL Young Star Super II

With HDFC SL Young Star Super Premium you can fulfill your child's immediate and future needs- all on your own. Start saving now with this unit linked insurance plan and be assured that savings for your child will continue, even in your absence. This plan offers you choice of cover options and benefit payment preferences- all designed to suit your needs.

Advantages
1. The Triple Insurance Benefit helps you secure your child's immediate and future needs. In case of your unfortunate demise or critical illness, we will pay the Sum Assured to your child (Beneficiary). Your family need not pay any further premiums. With Save -n- Gain benefit, we will pay 50% of all the original regular premiums towards your policy and 50% of the premiums will be paid to the Beneficiary as and when due, on an annual basis. Any Death Benefit or Critical Illness cover terminates immediately. 2. You can customize the ideal plan for your child by choosing the premium you wish to invest along with the Sum Assured, depending on the level of protection required and Benefit payment preference.

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3. This plan can be taken by filling Short Medical Questionnaire, which may not require you to go for medicals. Kindly refer to the product brochure for details. 4. You can change your investment fund choices in two ways: 5. Switching: You can move your accumulated funds from one fund to another anytime

C-RETIREMENT PLANS

Why do I need Retirement Plans? Retirement Plans provide you with financial security so that when your professional income starts to ebb, you can still live with pride without compromising on your living standards. By providing you a tool to accumulate and invest your savings, these plans give you a lump sum on retirement, which is then used to get regular income through an annuity plan. Given the high cost of living and rising inflation, employer pensions alone are not sufficient. Pension planning has therefore become critical today. India's average life expectancy is slated to increase to over 75 years by 2050 from the present level of close to 65 years. Life spans have been increasing due to better health and sanitation conditions in the country. However, the average number of years of employment has not been rising commensurately. The result is an increase in the number of post-retirement years.

37

Accordingly, it has become necessary to ensure regular income for life after retirement, so that you can live with pride and enjoy your twilight years.

Priorities at different stages of life:-

CHART-5 However, skyrocketing costs can throw even a well-laid plan off balance. With costs rising every day, you can just imagine how high they will be when you are ready to hang up your boots. So, what should you do to counter this? It's time to plan your retirement and that too sooner than later.

38

However, skyrocketing costs can throw even a well-laid plan off balance. With costs rising every day, you can just imagine how high they will be when you are ready to hang up your boots. So, what should you do to counter this? It's time to plan your retirement and that too sooner than later.

CHART-6 The above illustration shows how with each passing year your annual savings requirement would increase. For instance, if you are 30 years old and plan to retire at 60, then, with a current annual expenditure of Rs. 3,00,000/- , you would need a corpus in excess of Rs. 2,00,00,000/- to maintain your living standards, assuming you live till 85 years and the inflation rate is 4%. To build this retirement corpus, you need to invest Rs 3, 60,000/- per annum in a retirement plan that offers 8% returns per annum. In case you delay planning your retirement by 5 years then the investment amount would increase to Rs 6,90,000/- per annum.

Types of Retirement Plans

1. HDFC Life Classic Pension Insurance Plan
2.

Personal Pension Plan

3. HDFC Immediate Annuity

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1. Life Classic Pension Insurance Plan

With HDFC Life Classic Pension Insurance Plan, you can be financially prepared for your life - post retirement. This with profit traditional pension plan is designed to assist you to live your post retirement days to a maximum - without any compromise. This pension plan will build a corpus during the policy term so that you can enjoy post retirement income for life. This limited pay plan offers guaranteed reversionary bonus.

Advantages
1.

This plan is designed to build your corpus during the policy term of your choice, by giving you vesting benefit at end of the policy term. This vesting benefit will be used to provide you with the annuity in your golden years.

2.

Also, provides financial protection to your spouse (nominee) by way of lump sum payment in case of unfortunate demise within policy term.

3. 4.

On Vesting you will receive Sum Assured + attached bonuses. As per prevailing Government regulations: *You can take up to 1/3rd of the total Vesting benefit as a tax-free cash lump sum *The rest must be converted to annuity

2. HDFC Personal Pension Plan

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Today, you are busy climbing the ladder of success and realizing your dreams. Today, time is with you. Just take a moment and think. Will you be able to continue at the same pace? Will your income be the same forever? Will you be able to live life on your own terms even after you retire? The HDFC Personal Pension Plan is a 'With Profits' insurance policy that is designed to provide a post-retirement income for life with the freedom to choose your retirement date

Advantages
1.

This plan is designed to provide you a post retirement income for life- You can choose your premium, the Sum Assured and your retirement date. At the end of the policy term, you will receive the Sum Assured plus any attaching bonuses, which will provide you a post retirement income in your golden years

2.

On your chosen retirement (Vesting) date, you will get the lump sum comprising the Sum Assured plus any attaching bonus. *You can take up to 1/3rd of your Sum Assured as a tax free cash lump sum *The rest must be converted to annuity *You can buy the annuity from us or any other insurer

3.

Tax benefits under sections 80CCC of the Income Tax Act, 1961 subject to the provisions contained therein.

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3. Immediate Annuity

The HDFC Immediate Annuity is a contract that uses your capital to provide you with a guaranteed gross income throughout your lifetime or over a period of your choice. The income is guaranteed and is unaffected by the rise and fall of interest rates. This means you can plan your life the way you want it to be, safe in the knowledge that your gross income will not fall during the period you have selected. The HDFC Immediate Annuity offers a number of options to meet all your income needs

Advantages 1. Already paid under the annuity Income for Temporary Period Option: You
can choose to limit the payment period of annuity if you only require an income for a specified time. The annuity is payable for your selected term provided you are still alive.

2. Death Benefits: In addition to a regular income, you can choose an annuity

that will pay out a benefit on your death or, if you have chosen to provide an annuity for a named individual, on the later of your and the named individual's death.

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D.SAVING & INVESTMENT PLANS

Why do I need Savings & Investment Plans?
You have always given your family the very best. And there is no reason why they shouldn't get the very best in the future too. As a judicious family man, your priority is to secure the well-being of those who depend on you. Not just for today, but also in the long term. More importantly, you have to ensure that your family's future expenses are taken care, even if something unfortunate were to happen to you. A big factor that you need to consider while building your wealth is inflation. It has a dual impact on your hard-earned savings. Inflation not only erodes your current purchasing power but also magnifies your monetary requirements for the future. Sample this: An 35 Year individual needs to invest Rs. 36,000/- per year with 8% returns to build a corpus of Rs. 10,00,000/- by the age of 50 Years.
.

CHART-7 However, Rs. 10, 00,000/- after 15 years would be worth roughly around half of what it is today once adjusted for inflation at the rate of 4%. Therefore, an individual will need to save nearer to Rs 50,000/- annually to reach your targeted savings at the age of 50 Years, if you consider inflation.

43

Our Savings & Investment Plans provide you the assurance of lump sum funds for you and your family's future expenses. While providing an excellent savings tool for your short term and long term financial goals, these plans also assure your family a certain sum by way of an insurance cover. With HDFC Standard Life's range of Saving & Investment Plans, you can therefore ensure that your family always remains financially independent, even if you are not around.

Types of Savings and investment Plan 1-HDFC SL New Money Back Plan

Being self reliant is a nice feeling. Its comforting to be assured that you have necessary funds to live a fulfilling life. With HDFC SL New Money Back Plan, you will get regular cash back at periodic intervals, so that you can fulfill your dreams & aspirations. This plan also offers the financial protection to your loved ones when they need it the most, enabling you to live life with peace of mind.

Advantages
1. Money Back on completion of every 4 years, you would get a percentage of your sum assured as cash payout. The payout will be as defined below. 2.Provides valuable protection to your family by way of lump sum payment i.e. Sum Assured plus attaching bonuses, in case of unfortunate demise within policy term, over and above any earlier payouts.

44

3. You can choose to pay your premium as either Annually, Half-Yearly, Monthly or Quarterly depending on your convenience. You also have a range of convenient auto premium payment options 4. Tax benefits under sections 80C and 10(10D) of Income Tax Act, 1961

CHART-8

E-HEALTH PLANS

Why do I need Health Plans?

Health plans give you the financial security to meet health related contingencies. Due to changing lifestyles, health issues have acquired completely new dimension overtime, becoming more complex in nature. It becomes imperative then to have a
45

health plan in place, which will ensure that no matter how critical your illness is, it does not impact your financial independence. In the race to excel in our professional lives and provide the best for our loved ones, we sometimes neglect the most important asset that we have - our health. In the race to excel in our professional lives and provide the best for our loved ones, we sometimes neglect the most important asset that we have - our health. With increasing levels of stress, negligible physical activity and a deteriorating environment due to rapid urbanization, our vulnerability to diseases has increased at an alarming rate.

CHART-9 Source: National Commission on Macroeconomics and Health Report 2005. Note: Current figures are for the year 2000(Cardiovascular diseases)), 2001 (COPD and Asthma), 2004 (Cancer) and 2005(Diabetes and Mental Health). All figures above are on a per lakh basis.As can be seen in the above chart, lifestyle diseases are set to spread at disturbing rates. The result - increased expenditure. In many cases, people need to borrow money or sell assets to cover their medical expenses. All it takes is a suitable plan to help you overcome the financial woes related to your health by paying marginal amounts as premiums. For example, if you are 30 years old, then a mere sum of approximately Rs 3500* annually (exclusive of taxes) can provide you a health insurance plan of Rs 5 lakh over a period of 20 years, and a worry-free future for you and your family.

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Types of Health Plans 1. HDFC Critical Care Plan

Critical Illness can strike anyone. Today with advancement in medical science it is possible to survive a critical illness. Expenses on survival with a critical illness can be very high. HDFC Critical care plan provides for a lump sum payment on survival post diagnosis of a critical illness, so that in the event a critical illness strikes, you don't have to dig into those precious savings of yours.

Advantages
1. 2. 3. 4. 5. 6. 7.

Provides valuable protection on survival post diagnosis of a critical illnesses Covers as many as 30 critical illnesses Lump sum benefit payment paid irrespective of medical expenses The policy continues even after the benefit payment paid on selected illness Choice of the level of health cover and premium payment Convenient and hassle free claims Tax benefits are available under section 80D under Income Tax Act, 1961

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2. HDFC Surgi Care Plan

In the fast paced lives that we lead, medical contingencies may arrive at our doorstep uninvited. Surgery costs form a substantial portion of health care expenditure and needs to be provided for. Health issues can get compounded if left unattended and may require a surgery. Plus, the ever increasing costs of surgical procedures are sure to burn a hole in our pockets. HDFC Surgi Care Plan provides you with timely support in case you have to undergo a major surgery and hospitalization, as the case maybe, ensuring your financial independence at all times.

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Advantages
1. 2. 3.

82 major surgical procedures are covered. Option to include hospital cash benefit Automatic increase in the level of health cover (subject to terms and conditions) ensures that the increasing medical costs are taken care of.

4. 5.

Lump sum benefits are paid regardless of the actual medical expenses. The policy continues even after the after the payment of first or subsequent surgical procedures, subject to terms and conditions as stated in the policy brochure.

6.

Flexibility to tailor-make the policy by choosing level of health cover, benefit options level and premium payment as per your needs.

7.

Convenient and hassle free claims with cashless benefits on surgeries hospitalization in any of the network hospitals..

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OBJECTIVES OF THE STUDY

To develop an understanding about the Working capital management in a running organization. To study the main source of Working capital in HDFC standard life insurance. To analyze the short term financial position of the company. To analyze the fund flow statement and net working capital requirements for the company. To determine the total working capital requirement of the firm keeping in view the level of operation and changing economic scenario in the country. To assess the relative significance of various sources of finance of working capital. .

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REVIEW LITERATURE

Meharajan, T.; Vanniarajan, T.. Global Management Review,( 1999)

Vol. 5 Issue 3, p12-25, 14p, 7 ChartsHigh retention rates are closely related to the economic performance of the banks. The retention is the outcome of customers' satisfaction and their perception on service quality in private sector banks.

Pathak, Suman; Tripathi, Vibhuti(2010)

The banking sector in India is rising rapidly to bring in growth and employment opportunities. Private companies are basically human intensive, and human resources act as an undoubted.

Maheshwari, Sunil. Vikalpa (2010) Full Text Available By: Krishnamurthy, S.; Mony, S. V.; Jhaveri, Nani; Bakhshi, Sandeep; Bhat, Ramesh; Dixit, M. R.;: The Journal for Decision Makers, Jul-Sep2010, Vol. 30 Issue 3, p93-119, 27p With the liberalization and entry of private companies in banking, the Indian banking sector has started showing signs of significant change.

ICFAI Journal of Management Research, Apr2010

Full Text Available, Vol. 8 Issue 4, p67-86, 20p, 35 Charts .This paper studies the employer's perspectives regarding performance appraisal and reward philosophy and the effect of demographic variables on it.

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RESEARCH METHODOLOGY
Research design describes the layout for carrying on the research. The study is of descriptive type, as it describes the state of affairs as it exists at present and there are no controls over variables. Research can be defined as the search for knowledge, or as any systematic investigation, with an open mind, to establish novel facts, solve new or existing problems, prove new ideas, or develop new theories, usually using a scientific method. The primary purpose for basic research (as opposed to applied research) is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe.

OBJECTIVES OF RESEARCH METHODOLOGY To gain familiarity with the phenomena. To judge accurately the characteristics of a particular or individual To determine the frequency with which something occurs. To test the hypothesis of a casual relationship among variables. PROCESS OF RESEARCH
The following steps are usually part of most formal research, both basic and applied: 1. Situation analysis 2. Formulation of Hypothesis 3. Significance of problem 4. Scope of the study
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5. Data collection 6. Data processing 7. Data analysis 8. Suggestions and solutions 9. Report writing 10. Verification and prediction

RESEARCH PROCESS LIFE CYCLE

CHART-10

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ANALYSIS AND INTERPRETATION OF DATA

1. Statement or Schedule of Changes in Working Capital as on balance sheet at March 31 2009.

Item

Previous Year (RS 000)

Current Year (RS 000)

Effect on working capital

increase A. Current assets Cash 4493238 4108660 --------

Decrease

384578

Advance and other Assets

4082489

5534969

1452480

-------

Total Current Assets(A)

8575727

9643629

Current Liabilities Provisions

2691076 6129149 122019 8820225 208813 86794

--------------

Total Liabilities(B)

6251168

9029038

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Net working capital (A-B)

2324559

614591

Increase in working capital

38455772

Table 1.5

Interpretation
The above statement shows that working of HDFC LIFE for the year 2008-2009 increases in advance and other assets and current liabilities and provisions also increase but cash is decreases so the overall working capital increase

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2. FUND FLOW STATEMENT AS PER 31 MARCH 2011

Amount in Rs. 31 march 2011 Sources Share capital Reserves and surplus Fair value change 19,948,801 2206790 350 22,155,241 Less application Investment in Shareholder Policyholders Assets held to cover linked Loans 6,999,708 53,349,840 205,231,336 331,239 265,912,123 Funds from operation 243,756,882 Table 1.6

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3. FUND FLOW STATEMENT AS PER 2010

Amount in Rs. 2010 Sources Share capital Reserves and surplus Fair value change 19,680,000 552,892 184,435

20,417,327 Less application Investment in Shareholder Policyholders Assets held to cover linked Loans 6,304,757 43,415,382 155,217,800 40,366

204,978,305 184,560,978 Funds from operation

Table 1.7

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Interpretation
The above funds flow statement shows the funds from operations of HDFC standard life insurance. This fund flow statement shows that the fund from operation in the year 2010 is 184,560,978 which less, comparative to the fund from operations in the year 2011 which is 243,756,882.It means the company is growing.

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SHOWING GROWTH OF BUSINESS

CHART-11

CHART-12

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FINDINGS
After overall analysis of the companys annual report various aspects came across. These ares-: 1. HDFC has very efficient management, due to which they are upgrading day by day by increasing their efficiency and are able to do their expenditures. 2. FUNDS OF OPERATIONS of the company has been increased in year 2011 than 2010 due to efficient management and proper working environment. 3. They are providing their customers best opportunities to secure their lives and also for investment. 4. They are providing their customers best services as much as they can with which they are earning more and more profit. 5. They provide a facility to their customers that SAR UTHA KE JIYO

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CONCLUSION
The study of funds flow statement of HDFC standard life insurance shows that the system of life insurance is very efficient. As I take the date of current liabilities for the year 2010 and 2011. When I compare both of them the result is that the funds of operations Is increased because of their proper management. It also shows that companys profit is also increasing. So we can say that the company has a good investment position and is growing day by day. So I can say that the overall performance of the company is excellent.

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SUGGESTIONS
* Attempts should be made to reduce the other liabilities so that there is enhancement of working capital. * Usages of proper format and schedule to be shown the working capital and fund flow statement, so that there is a proper understanding even for a layman. * Conduct of market survey should be there in order to give awareness to the public about the insurance plans. * Proper presentation of plans should be there in combined form because for one it is very difficult to read the theory. * The data should be clearly mentioned on their websites.

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BIBLIOGRAPHY
For analyzing the working capital of HDFC standard life insurance the data has been taken from -:

1. Book---a) Pandey IM, Financial Management, kalyani publishers, edition (2004).

b) Shashi k Gupta and R.K Sharma, Financial Management, Kalyani Publisher, edition (2000).

2. Internet-: www.hdfclife.com
www.google.com 3. Persons-: Mr. Vikas Pathania Mr. Vivek Mrs. Kaveri

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SAR UTHA KE JIYO

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