23-03-2011, 12:53 PM
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The Indian Life Insurance Company has seen a remarkable shift since the time of establishment of the first company, Oriental Life Insurance Company in 1823. At the time of Independence and thereafter, there were more than 200 companies operating in India and not all of them on sound ethical principles. Many factors combined together to prompt the then Government to nationalize the life insurance industry in 1956 to form the Life Insurance Corporation of India.
Insurance sector was once a monopoly, with LIC as the only company, a public sector enterprise. But nowadays the market opened up and there are many private players competing in the market. There are thirteen private life insurance companies who has entered the industry.
The study in the first part gives detail information on the on-job training provided the competitive analysis of product of Kotak Mahindra Old Mutual Life Insurance Ltd. with ICICI Prudential Life Insurance. Also, analysis of financial statements.
In the second part, is a project on “How does the Indian mutual fund industry compare vis - a - vis global standards and what should be our future expectations from it?”
The paper begins by analyzing the current scenario in the industry characterized by problems with distribution, low investor awareness and concentration of corporate investors. In the next section, a comparison of the Mutual Fund Industry with global standards reveals that the industry still compares unfavorably with developed countries in terms of penetration, investor awareness and diversity of products and the extent of use of risk management techniques. Further comparison reveals that the attitude of regulator towards investor protection and the governance of mutual funds are at par with global standards. The paper then analysis the future expectations from the mutual fund industry in terms of increased investor awareness, product diversity and improvement in penetration and distribution. In the end I recommend certain steps that SEBI and AMCs should take in order to build investor confidence and trust.
CH NO. 2: RESEARCH METHODOLOGY
Primary Objective(s)
The Basic objective of cash management is two fold:
• To meet the cash disbursement needs (payment schedule);
• To minimize funds committed to cash balances.
These are conflicting and mutually contradictory and the task of cash management is to reconcile them.
Hypothesis:
1. Customers have basis of preference in selection of the final Kotak Mahindra Old Mutual Life Insurance
2. The choice of the Kotak Mahindra Old Mutual Life Insurance might have an effect either of the personal preference or the country of origin
3. The final decision is based on prior experience
Sample Size:
The size of the sample was around 70 people considering the time constraint.
Research Design:
Data Collection: Data has been collected through both primary and secondary approach.
Data Sources
The research involved gathering Secondary data as well as Primary data. For the purpose two types of survey was conducted by me to collect the data -
• Customer survey and
• Consumer survey
Primary Data
Consumer survey was done to know their purchasing behaviour because they are the one who constitute the market and are the target of the business . In Insurance Industry untill and unless we have the knowledge of the consumer behaviour and factor which influence them to buy a paticular brand ,companies cannot focus upon the target market. Hence a consumer survey was done to know their wants, purchasing power, and buying habits in order to segment the market , and based on this consumer profile was identified.
Secondary Data
Secondary data regarding sales figures, promotional expenses and other related expenses was collected from the company’s own record to analyse the impact on sales due to the running schemes and make cost benefit analysis.
Scope of the Study
Both primary and Secondary data has been be used for the study. Primary data was collected through direct interaction with the company’s finance and accounts department. If needed schedule/questionnaires would be devised to get the information on all the relevant areas of the study such as receivable management, inventory management, management of cash etc.
And I collected the data from the secondary sources comprising Annual Reports of the firm, other journals and peridocials.
Apart from the conducting this research work on the basis of these informations, various techniques of financial management e.g., comparative statement, trend analysis and ratio analysis etc. were used in the present study. To present a broad view so far the purpose of the analysis and to make it easy to understand the problem/concept of a few graphs and tables shall also be presented. In each chapter, the analysis has been compared with actual management practices of the company under study.
Limitation of the Study
The present study is limited to one Co., i.e. Kotak Mahindra Life Insurance Ltd., and covers a period from 2005 and 2006 due to limitation of time and accessibility to data base.
The authenticity of the suggestions and recommendations depend upon the rationality of the data provided to me.
Have to rely upon the data supplied.
Executives are not ready to part with the information beyond a limit.
CH NO. 3: CRITICAL REVIEW OF LITERATURE
WORKING CAPITAL - OVERALL VIEW
Working Capital management is the management of assets that are current in nature. Current assets, by accounting definition are the assets normally converted in to cash in a period of one year. Hence working capital management can be considered as the management of cash, market securities receivable, inventories and current liabilities. In fact, the management of current assets is similar to that of fixed assets the sense that is both in cases the firm analyses their effect on its profitability and risk factors, hence they differ on three major aspects:
1. In managing fixed assets, time is an important factor discounting and compounding aspects of time play an important role in capital budgeting and a minor part in the management of current assets.
2. The large holdings of current assets, especially cash, may strengthen the firm’s liquidity position, but is bound to reduce profitability of the firm as ideal car yield nothing.
3. The level of fixed assets as well as current assets depends upon the expected sales, but it is only current assets that add fluctuation in the short run to a business.
To understand working capital better we should have basic knowledge about the various aspects of working capital. To start with, there are two concepts of working capital:
Gross Working Capital
Net working Capital
Gross Working Capital: Gross working capital, which is also simply known as working capital, refers to the firm’s investment in current assets: Another aspect of gross working capital points out the need of arranging funds to finance the current assets. The gross working capital concept focuses attention on two aspects of current assets management, firstly optimum investment in current assets and secondly in financing the current assets. These two aspects will help in remaining away from the two danger points of excessive or inadequate investment in current assets. Whenever a need of working capital funds arises due to increase in level of business activity or for any other reason the arrangement should be made quickly, and similarly if some surpluses are available, they should not be allowed to lie ideal but should be put to some effective use.
Net Working Capital: The term net working capital refers to the difference between the current assets and current liabilities. Net working capital can be positive as well as negative. Positive working capital refers to the situation where current assets exceed current liabilities and negative working capital refers to the situation where current liabilities exceed current assets. The net working capital helps in comparing the liquidity of the same firm over time. For purposes of the working capital management, therefore Working Capital can be said to measure the liquidity of the firm. In other words, the goal of working capital management is to manage the current assets and liabilities in such a way that a acceptable level of net working capital is maintained.
Importance of working capital management:
Management of working capital is very much important for the success of the business. It has been emphasized that a business should maintain sound working capital position and also that there should not be an excessive level of investment in the working capital components. As pointed out by Ralph Kennedy and Stewart MC Muller, “the inadequacy or mis-management of working capital is one of a few leading causes of business failure.
Current assets, in fact, account for a very large portion of the total investment of the firm.
The Indian Life Insurance Company has seen a remarkable shift since the time of establishment of the first company, Oriental Life Insurance Company in 1823. At the time of Independence and thereafter, there were more than 200 companies operating in India and not all of them on sound ethical principles. Many factors combined together to prompt the then Government to nationalize the life insurance industry in 1956 to form the Life Insurance Corporation of India.
Insurance sector was once a monopoly, with LIC as the only company, a public sector enterprise. But nowadays the market opened up and there are many private players competing in the market. There are thirteen private life insurance companies who has entered the industry.
The study in the first part gives detail information on the on-job training provided the competitive analysis of product of Kotak Mahindra Old Mutual Life Insurance Ltd. with ICICI Prudential Life Insurance. Also, analysis of financial statements.
In the second part, is a project on “How does the Indian mutual fund industry compare vis - a - vis global standards and what should be our future expectations from it?”
The paper begins by analyzing the current scenario in the industry characterized by problems with distribution, low investor awareness and concentration of corporate investors. In the next section, a comparison of the Mutual Fund Industry with global standards reveals that the industry still compares unfavorably with developed countries in terms of penetration, investor awareness and diversity of products and the extent of use of risk management techniques. Further comparison reveals that the attitude of regulator towards investor protection and the governance of mutual funds are at par with global standards. The paper then analysis the future expectations from the mutual fund industry in terms of increased investor awareness, product diversity and improvement in penetration and distribution. In the end I recommend certain steps that SEBI and AMCs should take in order to build investor confidence and trust.
CH NO. 2: RESEARCH METHODOLOGY
Primary Objective(s)
The Basic objective of cash management is two fold:
• To meet the cash disbursement needs (payment schedule);
• To minimize funds committed to cash balances.
These are conflicting and mutually contradictory and the task of cash management is to reconcile them.
Hypothesis:
1. Customers have basis of preference in selection of the final Kotak Mahindra Old Mutual Life Insurance
2. The choice of the Kotak Mahindra Old Mutual Life Insurance might have an effect either of the personal preference or the country of origin
3. The final decision is based on prior experience
Sample Size:
The size of the sample was around 70 people considering the time constraint.
Research Design:
Data Collection: Data has been collected through both primary and secondary approach.
Data Sources
The research involved gathering Secondary data as well as Primary data. For the purpose two types of survey was conducted by me to collect the data -
• Customer survey and
• Consumer survey
Primary Data
Consumer survey was done to know their purchasing behaviour because they are the one who constitute the market and are the target of the business . In Insurance Industry untill and unless we have the knowledge of the consumer behaviour and factor which influence them to buy a paticular brand ,companies cannot focus upon the target market. Hence a consumer survey was done to know their wants, purchasing power, and buying habits in order to segment the market , and based on this consumer profile was identified.
Secondary Data
Secondary data regarding sales figures, promotional expenses and other related expenses was collected from the company’s own record to analyse the impact on sales due to the running schemes and make cost benefit analysis.
Scope of the Study
Both primary and Secondary data has been be used for the study. Primary data was collected through direct interaction with the company’s finance and accounts department. If needed schedule/questionnaires would be devised to get the information on all the relevant areas of the study such as receivable management, inventory management, management of cash etc.
And I collected the data from the secondary sources comprising Annual Reports of the firm, other journals and peridocials.
Apart from the conducting this research work on the basis of these informations, various techniques of financial management e.g., comparative statement, trend analysis and ratio analysis etc. were used in the present study. To present a broad view so far the purpose of the analysis and to make it easy to understand the problem/concept of a few graphs and tables shall also be presented. In each chapter, the analysis has been compared with actual management practices of the company under study.
Limitation of the Study
The present study is limited to one Co., i.e. Kotak Mahindra Life Insurance Ltd., and covers a period from 2005 and 2006 due to limitation of time and accessibility to data base.
The authenticity of the suggestions and recommendations depend upon the rationality of the data provided to me.
Have to rely upon the data supplied.
Executives are not ready to part with the information beyond a limit.
CH NO. 3: CRITICAL REVIEW OF LITERATURE
WORKING CAPITAL - OVERALL VIEW
Working Capital management is the management of assets that are current in nature. Current assets, by accounting definition are the assets normally converted in to cash in a period of one year. Hence working capital management can be considered as the management of cash, market securities receivable, inventories and current liabilities. In fact, the management of current assets is similar to that of fixed assets the sense that is both in cases the firm analyses their effect on its profitability and risk factors, hence they differ on three major aspects:
1. In managing fixed assets, time is an important factor discounting and compounding aspects of time play an important role in capital budgeting and a minor part in the management of current assets.
2. The large holdings of current assets, especially cash, may strengthen the firm’s liquidity position, but is bound to reduce profitability of the firm as ideal car yield nothing.
3. The level of fixed assets as well as current assets depends upon the expected sales, but it is only current assets that add fluctuation in the short run to a business.
To understand working capital better we should have basic knowledge about the various aspects of working capital. To start with, there are two concepts of working capital:
Gross Working Capital
Net working Capital
Gross Working Capital: Gross working capital, which is also simply known as working capital, refers to the firm’s investment in current assets: Another aspect of gross working capital points out the need of arranging funds to finance the current assets. The gross working capital concept focuses attention on two aspects of current assets management, firstly optimum investment in current assets and secondly in financing the current assets. These two aspects will help in remaining away from the two danger points of excessive or inadequate investment in current assets. Whenever a need of working capital funds arises due to increase in level of business activity or for any other reason the arrangement should be made quickly, and similarly if some surpluses are available, they should not be allowed to lie ideal but should be put to some effective use.
Net Working Capital: The term net working capital refers to the difference between the current assets and current liabilities. Net working capital can be positive as well as negative. Positive working capital refers to the situation where current assets exceed current liabilities and negative working capital refers to the situation where current liabilities exceed current assets. The net working capital helps in comparing the liquidity of the same firm over time. For purposes of the working capital management, therefore Working Capital can be said to measure the liquidity of the firm. In other words, the goal of working capital management is to manage the current assets and liabilities in such a way that a acceptable level of net working capital is maintained.
Importance of working capital management:
Management of working capital is very much important for the success of the business. It has been emphasized that a business should maintain sound working capital position and also that there should not be an excessive level of investment in the working capital components. As pointed out by Ralph Kennedy and Stewart MC Muller, “the inadequacy or mis-management of working capital is one of a few leading causes of business failure.
Current assets, in fact, account for a very large portion of the total investment of the firm.
