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DECLARATION

I hereby declare that this project report titled “A Project Report On Life

Insurance” has been submitted by me for the award of certificate. This is result of

original work carried out by me. This report has not been submitted anywhere

else for the award of any other internship Certificate.

Date : Neetu Dubey

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ACKNOWLEDGEMENT

I Sincerely want to thank all the people helped me throughout the procedure of

my survey report. It really has been a learning experience for me.

I would also like to thank Dr. Meeraj Ahamad, my supervisor at GBAMS and staff

for giving me their precious time and for the guidance and he/she directed me

whenever I was in need of it. I am highly obliged for his/her assistance.

I would also like to appreciate the help given by the all faculty of GBAMS

for giving their valuable time sharing their experience with us, with their valuable

practical experience of their working life.

Neetu Dubey

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Chapter 1
Industrial Profile

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Life Insurance

Life insurance (or life assurance, especially in the Commonwealth of


Nations), is a contract between an insurance policy holder and an insurer
or assurer, where the insurer promises to pay a designated beneficiary a
sum of money (the benefit) in exchange for a premium, upon the death
of an insured person (often the policy holder). Depending on the
contract, other events such as terminal illness or critical illness can also
trigger payment. The policy holder typically pays a premium, either
regularly or as one lump sum. Other expenses, such as funeral expenses,
can also be included in the benefits.

Life policies are legal contracts and the terms of the contract describe
the limitations of the insured events. Specific exclusions are often
written into the contract to limit the liability of the insurer; common
examples are claims relating to suicide, fraud, war, riot, and civil
commotion.

Life-based contracts tend to fall into two major categories:

 Protection policies – designed to provide a benefit, typically a


lump sum payment, in the event of a specified occurrence. A

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common form - more common in years past - of a protection policy
design is term insurance.

 Investment policies – the main objective of these policies is to


facilitate the growth of capital by regular or single premiums.
Common forms (in the U.S.) are whole life, universal life,
and variable life policies.

History
Main article: History of insurance
Amicable Society for a Perpetual Assurance Office, established in 1706,
was the first life insurance company in the world.

An early form of life insurance dates to Ancient Rome; "burial clubs"


covered the cost of members' funeral expenses and assisted survivors
financially. The first company to offer life insurance in modern times
was the Amicable Society for a Perpetual Assurance Office, founded in
London in 1706 by William Talbot and Sir Thomas Allen.[1][2]

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Each member made an annual payment per share on one to three shares
with consideration to age of the members being twelve to fifty-five. At
the end of the year a portion of the "amicable contribution" was divided
among the wives and children of deceased members, in proportion to the
number of shares the heirs owned. The Amicable Society started with
2000 members.[3][4]

The first life table was written by Edmund Halley in 1693, but it was
only in the 1750s that the necessary mathematical and statistical tools
were in place for the development of modern life insurance. James
Dodson, a mathematician, and actuary, tried to establish a new company
aimed at correctly offsetting the risks of long term life assurance
policies, after being refused admission to the Amicable Life Assurance
Society because of his advanced age. He was unsuccessful in his
attempts at procuring a charter from the government.

His disciple, Edward Rowe Mores, was able to


establish the Society for Equitable Assurances on Lives and
Survivorship in 1762. It was the world's first mutual insurer and it
pioneered age based premiums based on mortality rate laying "the
framework for scientific insurance practice and development and "the

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basis of modern life assurance upon which all life assurance schemes
were subsequently based".

Mores also gave the name actuary to the chief official - the earliest
known reference to the position as a business concern. The first modern
actuary was William Morgan, who served from 1775 to 1830. In 1776
the Society carried out the first actuarial valuation of liabilities and
subsequently distributed the first reversionary bonus (1781) and interim
bonus (1809) among its members.[5] It also used regular valuations to
balance competing interests.[5] The Society sought to treat its members
equitably and the Directors tried to ensure that policyholders received a
fair return on their investments. Premiums were regulated according to
age, and anybody could be admitted regardless of their state of health
and other circumstances.[7]

Life insurance premiums written in 2005

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The sale of life insurance in the U.S. began in the 1760s.
The Presbyterian Synods in Philadelphia and New York City created the
Corporation for Relief of Poor and Distressed Widows and Children of
Presbyterian Ministers in 1759; Episcopalian priests organized a similar
fund in 1769. Between 1787 and 1837 more than two dozen life
insurance companies were started, but fewer than half a dozen survived.
In the 1870s, military officers banded together to found both the Army
(AAFMAA) and the Navy Mutual Aid Association (Navy Mutual),
inspired by the plight of widows and orphans left stranded in the West
after the Battle of the Little Big Horn, and of the families of U.S. sailors
who died at sea.

Overview

Parties to contract

The person responsible for making payments for a policy is the policy
owner, while the insured is the person whose death will trigger payment
of the death benefit. The owner and insured may or may not be the same
person. For example, if Joe buys a policy on his own life, he is both the
owner and the insured. But if Jane, his wife, buys a policy on Joe's life,
she is the owner and he is the insured. The policy owner is the guarantor
and he will be the person to pay for the policy. The insured is a
participant in the contract, but not necessarily a party to it.

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Chart of a life insurance

The beneficiary receives policy proceeds upon the insured person's


death. The owner designates the beneficiary, but the beneficiary is not a
party to the policy. The owner can change the beneficiary unless the
policy has an irrevocable beneficiary designation. If a policy has an
irrevocable beneficiary, any beneficiary changes, policy assignments, or
cash value borrowing would require the agreement of the original
beneficiary.

In cases where the policy owner is not the insured (also referred to as
the celui qui vit or CQV), insurance companies have sought to limit

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policy purchases to those with an insurable interest in the CQV. For life
insurance policies, close family members and business partners will
usually be found to have an insurable interest.

The insurable interest requirement usually demonstrates


that the purchaser will actually suffer some kind of loss if the CQV dies.
Such a requirement prevents people from benefiting from the purchase
of purely speculative policies on people they expect to die. With no
insurable interest requirement, the risk that a purchaser would murder
the CQV for insurance proceeds would be great. In at least one case, an
insurance company which sold a policy to a purchaser with no insurable
interest (who later murdered the CQV for the proceeds), was found
liable in court for contributing to the wrongful death of the victim
(Liberty National Life v. Weldon, 267 Ala.171 (1957)).

Contract terms

Special exclusions may apply, such as suicide clauses, whereby the


policy becomes null and void if the insured commits suicide within a
specified time (usually two years after the purchase date; some states
provide a statutory one-year suicide clause). Any misrepresentations by
the insured on the application may also be grounds for nullification.

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Most US states specify a maximum contestability period, often no more
than two years. Only if the insured dies within this period will the
insurer have a legal right to contest the claim on the basis of
misrepresentation and request additional information before deciding
whether to pay or deny the claim.

The face amount of the policy is the initial amount that the policy will
pay at the death of the insured or when the policy matures, although the
actual death benefit can provide for greater or lesser than the face
amount. The policy matures when the insured dies or reaches a specified
age (such as 100 years old).

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Costs, insurability, and underwriting

The insurance company calculates the policy prices (premiums) at a


level sufficient to fund claims, cover administrative costs, and provide a
profit. The cost of insurance is determined using mortality tables
calculated by actuaries. Mortality tables are statistically based tables
showing expected annual mortality rates of people at different ages. Put
simply, people are more likely to die as they get older and the mortality
tables enable the insurance companies to calculate the risk and increase
premiums with age accordingly. Such estimates can be important in
taxation regulation.[8][9]

In the 1980s and 1990s, the SOA 1975–80 Basic Select & Ultimate
tables were the typical reference points, while the 2001 VBT and 2001
CSO tables were published more recently. As well as the basic
parameters of age and gender, the newer tables include separate
mortality tables for smokers and non-smokers, and the CSO tables
include separate tables for preferred classes.[10]

The mortality tables provide a baseline for the cost of insurance, but the
health and family history of the individual applicant is also taken into

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account (except in the case of Group policies). This investigation and
resulting evaluation is termed underwriting. Health and lifestyle
questions are asked, with certain responses possibly meriting further
investigation. Specific factors that may be considered by underwriters
include:

 Personal medical history[11]


 Family medical history[12]
 Driving record[13]
 Height and weight matrix, otherwise known as BMI (Body Mass
Index)[14]

Based on the above and additional factors, applicants will be placed into
one of several classes of health ratings which will determine the
premium paid in exchange for insurance at that particular carrier.[13]

Life insurance companies in the United States support the Medical


Information Bureau (MIB),[15] which is a clearing house of information
on persons who have applied for life insurance with participating
companies in the last seven years. As part of the application, the insurer
often requires the applicant's permission to obtain information from their
physicians.[16]

Automated Life Underwriting is a technology solution which is designed


to perform all or some of the screening functions traditionally completed

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by underwriters, and thus seeks to reduce the work effort, time and/or
data necessary to underwrite a life insurance application.[17] These
systems allow point of sale distribution and can shorten the time frame
for issuance from weeks or even months to hours or minutes, depending
on the amount of insurance being purchased.[18]

The mortality of underwritten persons rises much more quickly than the
general population. At the end of 10 years, the mortality of that 25-year-
old, non-smoking male is 0.66/1000/year. Consequently, in a group of
one thousand 25-year-old males with a $100,000 policy, all of average
health, a life insurance company would have to collect approximately
$50 a year from each participant to cover the relatively few expected
claims. (0.35 to 0.66 expected deaths in each year x $100,000 payout per
death = $35 per policy).

Other costs, such as administrative and sales expenses, also


need to be considered when setting the premiums. A 10-year policy for a
25-year-old non-smoking male with preferred medical history may get
offers as low as $90 per year for a $100,000 policy in the competitive
US life insurance market.

Most of the revenue received by insurance companies consists of


premiums, but revenue from investing the premiums forms an important

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source of profit for most life insurance companies. Group
Insurance policies are an exception to this.

In the USA, life insurance companies are never legally required to


provide coverage to everyone, with the exception of Civil Rights
Act compliance requirements. Insurance companies alone determine
insurability, and some people are deemed uninsurable. The policy can be
declined or rated (increasing the premium amount to compensate for the
higher risk), and the amount of the premium will be proportional to the
face value of the policy.

Many companies separate applicants into four general categories. These


categories are preferred best, preferred, standard, and tobacco.
Preferred best is reserved only for the healthiest individuals in the
general population. This may mean, that the proposed insured has no
adverse medical history, is not under medication, and has no family
history of early-onset cancer, diabetes, or other conditions.[

Preferred means that the proposed insured is


currently under medication and has a family history of particular
illnesses. Most people are in the standard category.

People in the tobacco category typically have to pay higher premiums


due to the higher mortality. Recent US mortality tables predict that
roughly 0.35 in 1,000 non-smoking males aged 25 will die during the

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first year of a policy.[20] Mortality approximately doubles for every extra
ten years of age, so the mortality rate in the first year for non-smoking
men is about 2.5 in 1,000 people at age 65.[20] Compare this with the US
population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at
age 65 (without regard to health or smoking status).[21]

Death proceeds

Upon the insured's death, the insurer requires acceptable proof of death
before it pays the claim. The normal minimum proof required is a death
certificate, and the insurer's claim form completed, signed, and
typically notarized.[citation needed] If the insured's death is suspicious and the
policy amount is large, the insurer may investigate the circumstances
surrounding the death before deciding whether it has an obligation to
pay the claim.

Payment from the policy may be as a lump sum or as an annuity, which


is paid in regular installments for either a specified period or for the
beneficiary's lifetime.[22]

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Insurance vs assurance

The specific uses of the terms "insurance" and "assurance" are


sometimes confused. In general, in jurisdictions where both terms are
used, "insurance" refers to providing coverage for an event
that might happen (fire, theft, flood, etc.), while "assurance" is the
provision of coverage for an event that is certain to happen. In the
United States, both forms of coverage are called "insurance" for reasons
of simplicity in companies selling both products.[citation needed] By some
definitions, "insurance" is any coverage that determines benefits based
on actual losses whereas "assurance" is coverage with predetermined
benefits irrespective of the losses incurred.

Life insurance may be divided into two basic classes: temporary and
permanent; or the following subclasses: term, universal, whole life, and
endowment life insurance.

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Term assurance

Provides life insurance coverage for a specified term. The policy does
not accumulate cash value. Term insurance is significantly less
expensive than an equivalent permanent policy but will become higher
with age. Policy holders can save to provide for increased term
premiums or decrease insurance needs (by paying off debts or saving to
provide for survivor needs).

Mortgage life insurance

It insures a loan secured by real property and usually features a level


premium amount for a declining policy face value because what is
insured is the principal and interest outstanding on a mortgage that is
constantly being reduced by mortgage payments.

The face amount of the policy is always the amount of


the principal and interest outstanding that are paid should the applicant
die before the final installment is paid.

Group life insurance

Group life insurance (also known as wholesale life


insurance or institutional life insurance) is term insurance covering a
group of people, usually employees of a company, members of a union
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or association, or members of a pension or superannuation fund.
Individual proof of insurability is not normally a consideration in its
underwriting. Rather, the underwriter considers the size, turnover, and
financial strength of the group. Contract provisions will attempt to
exclude the possibility of adverse selection. Group life insurance often
allows members exiting the group to maintain their coverage by buying
individual coverage. The underwriting is carried out for the whole group
instead of individuals.

Permanent life insurance

Permanent life insurance is life insurance that covers the remaining


lifetime of the insured. A permanent insurance policy accumulates a
cash value up to its date of maturation. The owner can access the money
in the cash value by withdrawing money, borrowing the cash value, or
surrendering the policy and receiving the surrender value.

The three basic types of permanent insurance are whole life, universal
life, and endowment.

Whole life.

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Universal life coverage

Universal life insurance (ULl) is a relatively new insurance product,


intended to combine permanent insurance coverage with greater
flexibility in premium payments, along with the potential for greater
growth of cash values. There are several types of universal life insurance
policies, including interest- sensitive (also known as "traditional fixed
universal life insurance"), variable universal life (VUL), guaranteed
death benefit, and has equity-indexed universal life insurance.

Universal life insurance policies have cash values. Paid-in premiums


increase their cash values; administrative and other costs reduce their
cash values.

Universal life insurance addresses the perceived disadvantages of whole


life – namely that premiums and death benefits are fixed. With universal
life, both the premiums and death benefit are flexible. With the
exception of guaranteed-death-benefit universal life policies, universal
life policies trade their greater flexibility off for fewer guarantees.

"Flexible death benefit" means the policy owner can choose to decrease
the death benefit. The death benefit can also be increased by the policy
owner, usually requiring new underwriting. Another feature of flexible
death benefit is the ability to choose option A or option B death benefits
and to change those options over the course of the life of the insured.

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Option A is often referred to as a "level death benefit"; death benefits
remain level for the life of the insured, and premiums are lower than
policies with Option B death benefits, which pay the policy's cash
value—i.e., a face amount plus earnings/interest. If the cash value grows
over time, the death benefits do too. If the cash value declines, the death
benefit also declines. Option B policies normally feature higher
premiums than option A policies.

Endowments

The endowment policy is a life insurance contract designed to pay a


lump sum after a specific term (on its 'maturity') or on death. Typical
maturities are ten, fifteen or twenty years up to a certain age limit. Some
policies also pay out in the case of critical illness.

Policies are typically traditional with-profits or unit-linked (including


those with unitized with-profits funds).

Endowments can be cashed in early (or surrendered) and the holder then
receives the surrender value which is determined by the insurance
company depending on how long the policy has been running and how
much has been paid into it.

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Accidental death

Accidental death insurance is a type of limited life insurance that is


designed to cover the insured should they die as the result of an accident.
"Accidents" run the gamut from abrasions to catastrophes but normally
do not include deaths resulting from non-accident-related health
problems or suicide. Because they only cover accidents, these policies
are much less expensive than other life insurance policies.

Such insurance can also be accidental death and dismemberment


insurance or AD&D. In an AD&D policy, benefits are available not only
for accidental death but also for the loss of limbs or body functions such
as sight and hearing.

Accidental death and AD&D policies very rarely pay a benefit, either
because the cause of death is not covered by the policy or because death
occurs well after the accident, by which time the premiums have gone
unpaid. To know what coverage they have, insureds should always
review their policies. Risky activities such as parachuting, flying,
professional sports, or military service are often omitted from coverage.

Accidental death insurance can also supplement standard life insurance


as a rider.

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Senior and pre-need products

Insurance companies have in recent years developed products for niche


markets, most notably targeting seniors in an aging population. These
are often low to moderate face value whole life insurance policies,
allowing senior citizens to purchase affordable insurance later in life.
This may also be marketed as final expense insurance and usually have
death benefits between $2,000 and $40,000. One reason for their
popularity is that they only require answers to simple "yes" or "no"
questions, while most policies require a medical exam to qualify. As
with other policy types, the range of premiums can vary widely and
should be scrutinized prior to purchase, as should the reliability of the
companies.

Health questions can vary substantially between exam and no-exam


policies. It may be possible for individuals with certain conditions to
qualify for one type of coverage and not another.[citation needed] Because
seniors sometimes are not fully aware of the policy provisions it is
important to make sure that policies last for a lifetime and that premiums
do not increase every 5 years as is common in some circumstances.[citation
needed]

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Pre-need life insurance policies are limited premium payment, whole
life policies that are usually purchased by older applicants, though they
are available to everyone. This type of insurance is designed to cover
specific funeral expenses that the applicant has designated in a contract
with a funeral home. The policy's death benefit is initially based on the
funeral cost at the time of prearrangement, and it then typically grows as
interest is credited. In exchange for the policy owner's designation, the
funeral home typically guarantees that the proceeds will cover the cost
of the funeral, no matter when death occurs. Excess proceeds may go
either to the insured's estate, a designated beneficiary, or the funeral
home as set forth in the contract. Purchasers of these policies usually
make a single premium payment at the time of prearrangement, but
some companies also allow premiums to be paid over as much as ten
years.

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Related products

Riders are modifications to the insurance policy added at the same time
the policy is issued. These riders change the basic policy to provide
some feature desired by the policy owner. A common rider is accidental
death (see above). Another common rider is a premium waiver, which
waives future premiums if the insured becomes disabled.

Joint life insurance is either term or permanent life insurance that


insures two or more persons, with proceeds payable on the death
of either.

Unit Linked Insurance Plans

These are unique insurance plans which are basically a mutual fund and
term insurance plan rolled into one. The investor doesn't participate in
the profits of the plan per se, but gets returns based on the returns on the
funds he or she had chosen.

See the main article for a full explanation of the various features and
variations.

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With-profits policies[edit]

policies afford the policyholder a share of the profits of the insurance


company – these are termed with-profits policies. Other policies provide
no rights to a share of the profits of the company – these are non-
profit policies.

With-profits policies are used as a form of collective investment


scheme to achieve capital growth. Other policies offer a guaranteed
return not dependent on the company's underlying investment
performance; these are often referred to as without-profit policies, which
may be construed as a misnomer.

Taxation

Australia
Where the life insurance is provided through a superannuation fund, contributions
made to fund insurance premiums are tax deductible for self-employed persons and
substantially self-employed persons and employers. However where life insurance
is held outside of the superannuation environment, the premiums are generally not
tax deductible. For insurance through a superannuation fund, the annual deductible
contributions to the superannuation funds are subject to age limits. These limits
apply to employers making deductible contributions. They also apply to self-
employed persons and substantially self-employed persons. Included in these

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overall limits are insurance premiums. This means that no additional deductible
contributions can be made for the funding of insurance premiums. Insurance
premiums can, however, be funded by undeducted contributions. For further
information on deductible contributions see "under what conditions can an
employer claim a deduction for contributions made on behalf of their employees?"
and "what is the definition of substantially self-employed?". The insurance
premium paid by the superannuation fund can be claimed by the fund as a
deduction to reduce the 15% tax on contributions and earnings. (Ref: ITAA 1936,
Section 279).[24]

South Africa[edit]
Premiums paid by a policyholder are not deductible from taxable income, although
premiums paid via an approved pension fund registered in terms of the Income Tax
Act are permitted to be deducted from personal income tax (whether these
premiums are nominally being paid by the employer or employee).

The benefits arising from life assurance policies are generally not taxable as
income to beneficiaries (again in the case of approved benefits, these fall under
retirement or withdrawal taxation rules from SARS). Investment return within the
policy will be taxed within the life policy and paid by the life assurer depending on
the nature of the policyholder (whether natural person, company-owned, untaxed
or a retirement fund).

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United States[edit]

Premiums paid by the policy owner are normally not deductible for federal and
state income tax purposes, and proceeds paid by the insurer upon the death of the
insured are not included in gross income for federal and state income tax
purposes.[25] However, if the proceeds are included in the "estate" of the deceased,
it is likely they will be subject to federal and state estate and inheritance tax.

Cash value increases within the policy are not subject to income taxes unless
certain events occur. For this reason, insurance policies can be a legal and
legitimate tax shelterwherein savings can increase without taxation until the owner
withdraws the money from the policy. In flexible-premium policies, large deposits
of premium could cause the contract to be considered a modified endowment
contract by the Internal Revenue Service (IRS), which negates many of the tax
advantages associated with life insurance. The insurance company, in most cases,
will inform the policy owner of this danger before deciding their premium.

The tax ramifications of life insurance are complex. The policy owner would be
well advised to carefully consider them. As always, both the United States
Congress and state legislatures can change the tax laws at any time.

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United Kingdom[edit]

Premiums are not usually deductible against income tax or corporation tax,
however qualifying policies issued prior to 14 March 1984 do still attract LAPR
(Life Assurance Premium Relief) at 15% (with the net premium being collected
from the policyholder).

Non-investment life policies do not normally attract either income tax or capital
gains tax on a claim. If the policy has as investment element such as an endowment
policy, whole of life policy or an investment bond then the tax treatment is
determined by the qualifying status of the policy.

Qualifying status is determined at the outset of the policy if the contract meets
certain criteria. Essentially, long term contracts (10 years plus) tend to be
qualifying policies and the proceeds are free from income tax and capital gains tax.
Single premium contracts and those running for a short term are subject to income
tax depending upon the marginal rate in the year a gain is made. All UK insurers
pay a special rate of corporation tax on the profits from their life book; this is
deemed as meeting the lower rate (20% in 2005–06) of liability for policyholders.

Therefore, a policyholder who is a higher rate taxpayer (40% in


2005-06), or becomes one through the transaction, must pay tax on the gain at the
difference between the higher and the lower rate. This gain is reduced by applying
a calculation called top-slicing based on the number of years the policy has been
held. Although this is complicated, the taxation of life assurance-based investment
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contracts may be beneficial compared to alternative equity-based collective
investment schemes (unit trusts, investment trusts and OEICs). One feature which
especially favors investment bonds is the '5% cumulative allowance' – the ability to
draw 5% of the original investment amount each policy year without being subject
to any taxation on the amount withdrawn. If not used in one year, the 5%
allowance can roll over into future years, subject to a maximum tax-deferred
withdrawal of 100% of the premiums payable.

The withdrawal is deemed by the HMRC (Her Majesty's Revenue and


Customs) to be a payment of capital and therefore, the tax liability is deferred until
maturity or surrender of the policy. This is an especially useful tax planning tool
for higher rate taxpayers who expect to become basic rate taxpayers at some
predictable point in the future, as at this point the deferred tax liability will not
result in tax being due.

The proceeds of a life policy will be included in the estate for death duty (in the
UK, inheritance tax) purposes. Policies written in trust may fall outside the estate.
Trust law and taxation of trusts can be complicated, so any individual intending to
use trusts for tax planning would usually seek professional advice from
an Independent Financial Adviser and/or a solicitor.

Pension term assurance

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Although available before April 2006, from this date pension term
assurance became widely available in the UK. Most UK insurers adopted the name
"life insurance with tax relief" for the product. Pension term assurance is
effectively normal term life assurance with tax relief on the premiums. All
premiums are paid at a net of basic rate tax at 22%, and higher rate tax payers can
gain an extra 18% tax relief via their tax return. Although not suitable for all, PTA
briefly became one of the most common forms of life assurance sold in the UK
until, Chancellor Gordon Brown announced the withdrawal of the scheme in his
pre-budget announcement on 6 December 2006.

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Stranger originated

Stranger originated life insurance or STOLI is a life insurance policy that is held
or financed by a person who has no relationship to the insured person. Generally,
the purpose of life insurance is to provide peace of mind by assuring that financial
loss or hardship will be alleviated in the event of the insured person's death.

STOLI has often been used as an investment technique whereby investors will
encourage someone (usually an elderly person) to purchase life insurance and
name the investors as the beneficiary of the policy. This undermines the primary
purpose of life insurance, as the investors would incur no financial loss should the
insured person die. In some jurisdictions, there are laws to discourage or prevent
STOLI.

Criticism

Although some aspects of the application process (such as underwriting and


insurable interest provisions) make it difficult, life insurance policies have been
used to facilitate exploitation and fraud. In the case of life insurance, there is a
possible motive to purchase a life insurance policy, particularly if the face value is
substantial, and then murder the insured. Usually, the larger the claim, and the
more serious the incident, the larger and more intense the ensuing investigation,
consisting of police and insurer investigators.[26]

The television series Forensic Files has included episodes that feature this
scenario. There was also a documented case in 2006, where two elderly women

32
were accused of taking in homeless men and assisting them. As part of their
assistance, they took out life insurance for the men. After the contestability period
ended on the policies, the women are alleged to have had the men killed via hit-
and-run car crashes.[27]

Recently, viatical settlements have created problems for life


insurance providers. A viatical settlement involves the purchase of a life insurance
policy from an elderly or terminally ill policy holder. The policy holder sells the
policy (including the right to name the beneficiary) to a purchaser for a price
discounted from the policy value. The seller has cash in hand, and the purchaser
will realize a profit when the seller dies and the proceeds are delivered to the
purchaser. In the meantime, the purchaser continues to pay the premiums.

Although both parties have reached an agreeable settlement, insurers are


troubled by this trend. Insurers calculate their rates with the assumption that a
certain portion of policy holders will seek to redeem the cash value of their
insurance policies before death. They also expect that a certain portion will stop
paying premiums and forfeit their policies.

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However, viatical settlements ensure that such policies will with absolute
certainty be paid out. Some purchasers, in order to take advantage of the
potentially large profits, have even actively sought to collude with uninsured
elderly and terminally ill patients, and created policies that would have not
otherwise been purchased. These policies are guaranteed losses from the
insurers' perspective.

On Apr 17, 2016, a report by 60 minutes claimed that life insurance


companies do not pay significant numbers of beneficiaries.[28]

 Corporate-owned life insurance


 Critical Illness Insurance
 Economic capital
 Estate planning
 False insurance claims
 General insurance
 Life expectancy
 Pet insurance
 Retirement planning

34
And Some others common were given below:

 Return of premium life insurance


 Internal Revenue Code section 79
 Segregated funds
 Servicemembers' Group Life Insurance
 Term life insurance
 Tontine

35
Chapter 2

Company Profile

36
The business of the ‘Fintellect Intelligent
Financial Solutions LLP’
• To transact and carry on all kinds of shares, securities & financial
advisory business and to be appointed to act as agents of any
company or concern and to do and platform all or any of the
several duties, services and authorities appertaining to such office
or imposed by the terms of and agreement entered into for the
purpose aforesaid.

• To organize seminars, do and conduct research work in the field of


financial market and in all areas of corporate activities and to
publish the results, opinions, journals and books in connection
there with and to carry on all the work incidental to the research
activities.

• To sell, distribute and promote financial market products and


services of its own or of others, either directly though network
marketing by creation of network base or through indirect
distribution channels consisting of distributors, agents ,
franchisees, etc. either in india or otherwise.

37
• To carry on business as financiers (financers), commercial agents,
merchant bankers, mortgage brokers, insurance and mutual fund
brokers, stock market brokers, portfolio management services and
advices on tax planning, cash flow, financial and investment
planning and analysis, retirement planning and such other services
as may be required to carry the above said activities.

DETAILS OF PRODUCT/SERVICES

FINTELLECT INTELLIGENT FINANCIAL SOLUTIONS


PROVIDES ADVICES AND /OR ON THE FOLLOWING BY
CERTIFIED FINANCIAL MARKET PROFESSIONALS

• Financial Planning

• Portfolio Management Servises

• Mutual Funds

• Bunds & Debentures

• New Pension Scheme (NPS)

• Taxation

• Exchange Traded Funds ETF / Gold ETF

38
• Equity/IPO

• Health, Life & General Insurance

• Retirement Plans / Senior Citizen Schemes

• NCFM/NISM Modules Training

• III Licentiate / Associateship Training

• CFP & CFPA Training

MISSION STATEMENT OF ‘FINTELLECT


INTELLIGENT FINANCIAL SOLUTIONS LLP’

• Wealth management and Peace of Mind

• Make a Difference in Life of Other by leading, Guiding and


Teaching.

• Committed to Create Strong Relations with Clients.

• Independent Top-notch Advices; Excellent services and Idea.

• Point Sharp Focus on Financial Advisory, Financial Training and


Financial Services.

39
VISION STATEMENT OF ‘FINTELLECT
INTELLIGENT FINANCIAL SOLUTIONS LLP’

• We offer our services in area of Financial Advisory, Financial


Services and Financial Education and Training. For each Segment
we follow high level of Transparency, Integrity and Business
Ethics. Our goal is to being one among most admired Financial
Advisory, Financial Training And Financial Service Provider
Company in India.

BIRLA SUN LIFE INSURANCE

• Birla Sun Life Insurance Company Limited is a joint venture


between the Aditya Birla Group, one of the largest business houses
in India and Sun Life Financial Inc., a leading international
financial services organisation. The local knowledge of the Aditya
Birla Group combined with the expertise of Sun Life Financial
Inc., offers a formidable protection for your future.

• Birla Sun Life Insurance is distinguished as the first company in


the sector of financial solution to began Business Continuity Plan.
This insurance company has pioneered the unique Unit Linked
Life Insurance Solution in India. BSLI becomes one of the leading
player in the industry of private Life Insurance Scheme.
40
• Birla Sun Life Insurance believes in passion, integrity, speed
commitment and seamlessness. The mission of the company is to
help people with risk management. It also helps in managing the
financial situation of firms as well as individuals.

Share Holding Pattern

In birla sun Life, the two companies are having shareholding pattern as
follows:

• 1. 74%->Aditya Birla Group

• 2. 26%->Sun Life financial Insurance.

The group has 3 businesses:

• Mutual Funds

• Wealth Management

• Life insurance

Type Private

41
Industry Insurance

Founded 2000

Founders Aditya Vikram Birla

Headquarters Elphinstone Road, Mumbai, India

Key people Kumar Mangalam Birla (Chairman)

Pankaj Razdan (MD and CEO)

Amit Jain (Chief Financial Officer)

Rajesh Nambiar (Chief Marketing Officer)

Insurance
Services

42
BIRLA SUN LIFE INSURANCE
With an experience of over a decade, Birla Sun Life Insurance Company
Limited (BSLI) is one of the leading life insurance companies in India. .
BSLI is a joint venture between the Aditya Birla Group, a globally
trusted multinational company and Sun Life Financial Inc., one of the
top international financial services companies from Canada. Birla Sun
Life Insurance is one of the seven companies representing the Aditya
Birla Financial Services Group.

Aditya Birla Financal Services is the financial services arm of the Aditya
Birla Group and is one of the top 5 fund managers in India (excluding
LIC).

Enjoying the trust of over 2.5 million customers, BSLI is known for its
innovative ideas and creating industry benchmarks, and has also
consistently contributed to the growth and development of the Indian life
insurance industry.

Birla Sun Life Insurance ranks among the top innovative companies and
is the first Indian insurance company to introduce the Free Look Period
before it was made mandatory by Insurance Regulatory and
Development Authority (IRDA). It pioneered the launch of Unit Linked
Life Insurance plans.
43
The company is also the originator of the practice to
disclose monthly portfolio which establishes credibility and additional
transparency. The idea behind these category development initiatives is
to be closer to its policy holders.

44
BIRLA SUN LIFE INSURANCE OFFERS A
COMPLETE RANGE OF INSURANCE PRODUCTS

• Protection Plan

• Savings Plan

• Child Plans

• Investment Plans

• Retirement Plans

• Group Plans

• Rural Plans

COMPETITORS

• Life Insurance Corporation

• Max network Life insurance

• MetLife Insurance

• Aviva life insurance

• Bharathi Axa life insurance

45
• Bajaj Allianz life insurance

• Tata AIG life insurance

• ING vysya life insurance

VISION

• To be a world class provider of financial security to


individual and corporates and to be amongst the top three
private sector life insurance companies in India.

46
OBJECTIVE OF THE REASEARCH

• To determine and analyze the Market Potential of the Birla


Sun Life Insurance Company in Mirzapur City.
• To determine whether the customer are satisfied with the
policies of the company.
• To study and determine the competitor position in the market.

Offerings

Birla Sun Life Insurance has attained recognition as the 'third Most
Trusted Life Insurance Company in the ‘Most Trusted Brands’ survey
2013 conducted by Brand Equity (The Economic Times Group) with
Neilsen.

The company offers a complete range of insurance services


offerings comprising protection solutions, children's future solutions,
and wealth with protection, life stage products, health and wellness as
well as retirement solutions for its retail customers further accentuates
this initiative.

Birla Sun Life Insurance believes that employee benefit plans provided
by employers to their employees play a very important role in increasing

47
employee loyalty and productivity.The company uses its vast expertise
in helping organisations and groups design customised group insurance
solutions for their employees.

BSLI has an extensive distribution reach of over 500 cities through its
network of about 600 branches, 10500 empanelled advisors and over
150 partnerships with corporate agents, brokers and banks.

The Assets under Management (AUM) of Birla Sun Life


Insurance is close to Rs. 23350 crore and has a robust capital base of
over Rs. 2450 crore as on 31 Dec 2013.

Birla Sun Life ranks among the top seven private sector life insurance
companies in India and has won the prestigious ‘Good Corporate Citizen
Award’ for the year 2009-10 in Mumbai under the Banking and
Financial Institutions category. This award aims to recognise and honour
conspicuous achievement by corporate in terms of service to the civic
community, in addition to outstanding operational performance.

48
Secure your family’s future in this increasingly uncertain world and
don’t leave their dreams to fate.

If your dream for yourself and your loved ones is to live life on your
own terms, then you will need to ensure that this dream comes to
fruition. The best way to do this is to take term insurance. Aditya Birla
Sun Life Insurance Company Limited (ABSLI) offers you the chance to
take term insurance plans that go a long way in ensuring that your family
is cared for even when storm clouds gather over the horizon.

ABSLI's Protection Solutions offer plans that provide complete financial


security for your family. One simple step you take today - of taking term
insurance will offer you the chance to get sizeable life coverage at low
premiums.

49
The Aditya Birla Group is an Indian multinational conglomerate named
after Aditya Vikram Birla, headquartered in the Aditya Birla Centre
in Worli, Mumbai, India.[3][4] It operates in 40 countries with more than
120,000 employees worldwide.[5] The group was founded by Seth Shiv
Narayan Birla in 1857. The group interests in sectors such as viscose
staple fibre, metals, cement (largest in India), viscose filament yarn,
branded apparel, carbon black, chemicals, fertilisers, insulators, financial
services, telecom (third largest in India), BPO and IT services. The
group had a revenue of approximately US$41 billion in year 2015.[6]

Aditya Birla Financial Services Group (ABFSG) is the umbrella brand


for all the financial services business of The Aditya Birla Group. They
have a strong presence across the life insurance, asset management,
lending (excluding Housing), housing finance, equity and commodity
broking, wealth management and distribution, online money
management portal—Aditya Birla Money MyUniverse, general
insurance advisory and private equity and health insurance businesses

ABFSG is committed to serve the end-to-end financial


services needs of its retail and corporate customers. In FY 2013–14,
ABFSG reported consolidated revenue from these businesses at just

50
under ₹70 billion (US$1.1 billion) and profits of about ₹7.5
billion (US$120 million). Anchored by over 14,000 employees and
trusted by over 6 million customers, ABFSG has a nationwide reach
through 1,500 points of presence and about 130,000 agents/channel
partners.

Sun Life Financial

Sun Life Financial, Inc. is a Canada-based financial services company


known primarily as a life insurance company. It is one of the largest life
insurance companies in the world, and also one of the oldest with the
history spanning back to 1865.

Sun Life Financial has a strong presence in investment


management with over CAD$734 billion in assets under
management operating in a number of countries.[7] Sun Life had about
$734 billion of assets under management as of Dec. 31 2014 including
mutual funds and insurance-unit holdings.

Growth

BSLI is the first Indian Insurance Company to introduce "Free Look


Period", by which consumer can return the policy to an insurance
51
company within this period after receiving the policy.[7] “Free Look
Period” was later made mandatory by Insurance Regulatory and
Development Authority of India for all other life insurance companies In
2013. Additionally, BSLI pioneered the launch of Unit Linked
Plan.[8] BSLI has a policy of disclosing their portfolio on a monthly
basis.
[9]
On 5 February 2015, Birla Sun Life Insurance signed an IT
outsourcing deal with International Business Machines Corporation
(IBM) with a view to leveraging mobility and cloud solutions developed
by IBM Research and the IBM India Software Lab.[10]

52
Awards and recognition

 'Gold Trophy' for Financial Reporting by The Institute of

 Chartered Accountants of India (ICAI) in 2012.[11][12]

 Media Abby Awards at Goa Fest Advertising Agencies

Association of India & Advertising Club Bombay (2011)[13]

 Grand Midas at the Midas Awards 2013 in Public Service

Category for work titles as 'Death Track'.[14]


Gold Midas Awards 2013 in Direct Mail/Collateral competition

for work titled as 'Karva Chauth'.[14]

53
Non-ferrous metals[edit]

The Group's non-ferrous metals are under Hindalco Industries.[8] Its


manufacturing locations are primarily in India and it owns mines in
Great Sandy Desert, Australia near Nifty Airport called Birla Nifty
Copper Operation. On 11 February 2007, the company entered into an
agreement to acquire the Canadian company Novelis for
US$6 billion,[9] making the combined entity the world's largest rolled-
aluminium producer.

On 15 May 2007, the acquisition was completed with Novelis


shareholders receiving $44.93 per outstanding share of common stock.
The Group plans to close a part of its aluminium foil making mill in UK
and shift that to its plant near Nagpur.[10][11]

Hindalco makes alumina chemicals, primary aluminium, rolled products,


alloy wheels, roofing sheets, wire rods, cast copper rods, copper
cathodes and several other products.[12]

54
Cement

Main articles: UltraTech Cement and Grasim Industries

The Group's cement business was earlier under Grasim Industries and UltraTech
Cement. The two entities have now been merged into UltraTech Cement to form
India's largest cement company. UltraTech Cement was acquired from L&T in
2004.

Carbon black

After purchasing Columbian Chemicals Co (Press Release), the Group is now the
largest manufacturer of Carbon black worldwide.[13]

Textile business

The Aditya Birla Group is the world's largest producer of Viscose staple fibre.[14] It
operates from India, Laos, Thailand, Malaysia and China. It owns the Birla
Cellulose brand. Apart from viscose staple fibre, the group also owns acrylic
fibre businesses in Egypt and Thailand, viscose filament yarn businesses and
spinning mills in India and South East Asia. The group has pulp and plantation

55
interests in Canada and Laos. It also owns the Domsjö factory in Sweden which
exports viscose today. The Swedish government is hoping to negotiate further
investments in Sweden, in particular in the hyper-modern future biorefinery in the
city of Örnskökdsvik.[15] Its two companies i.e. Aditya Birla Nuvo Ltd and Grasim
Bhiwani Textiles Ltd which is a subsidiary of Grasim Industries are in textile
business.

Fashion[edit]
See also: Abof

Aditya Birla Group sells in-house and other branded apparel via brick-and-mortar
and online stores. The group's firm Aditya Birla Fashion & Retail Ltd sells in-
house brands such as Louis Philippe, Van Heusen, Allen Solly, Peter England and
People via their individual brand stores and through other multi brand outlets. It
also operates a multi brand fashion retail chain Pantaloons.[16]

The group ventured into niche target and select portfolio apparel in October 2015
with Abof.[17]

Planet fashion[edit]

'Planet Fashion' is a men’s clothing brand. Commencing in 2001, Planet Fashion


now has more than one hundred fifty retailers in 100 villages throughout India.
Planate Fashion,[18]right now, is an acronym being a menswear getaway giving
comprehensive closet alternatives for all those occasions, around price things,
while using greatest brands throughout each category.[19]

The Aditya Birla Group’s retail store enterprise – Madura Fashion & Lifestyle – is
one of the strongest developing brand clothes corporations throughout The Indian

56
subcontinent. Global marketing involves models like Van Heusen, Allen Solly,
Philip Britain and Louis Philippe. Madura Fashion & Lifestyle has 1607 shops,
covering 2.2 sq. ft. connected with retail store room. It has 1,500 premium multi-
brand shops along with 320+ departmental shops worldwide. The company
outsources engineering, textiles and apparel.

Telecom Services[edit]

Main article: Idea Cellular

Aditya Birla Group is the majority shareholder of Idea Cellular.[20] Idea Cellular
was started as a joint venture with the AT&T and the Tata Group. After an IPO on
the Indian stock markets, Idea Cellular now accounts for a third of the group's
market capitalisation. The company is headquartered in Mumbai.

57
Financial Services[edit]

Aditya Birla Financial Services Group (ABFSG)

Aditya Birla Financial Services Group (ABFSG) is the umbrella brand for all the
financial services business of The Aditya Birla Group. ABFSG ranks among the
top 5 fund managers in India (including LIC) with an AUM of US$23 billion.
Having a strong presence across the life insurance, asset management, lending
(excluding Housing), housing finance, equity & commodity broking, wealth
management and distribution, online money management portal—Aditya Birla
Money MyUniverse, general insurance advisory and private equity and health
insurance businesses.

ABFSG is committed to serve the end-to-end financial services needs of its retail
and corporate customers.

In FY 2013–14, ABFSG reported consolidated revenue from these businesses at


just under ₹70 billion (US$1.1 billion) and profits of about ₹7.5
billion (US$120 million). Anchored by over 14,000 employees and trusted by over
6 million customers, ABFSG has a nationwide reach through 1,500 points of
presence and about 130,000 agents/channel partners. The financial services arm of
the group is currently headed by Ajay Srinivasan.

58
Philanthropy

The group's philanthropic activities are looked after by Mrs Rajashree Birla.[21] The
group also runs 45 schools and 18 hospitals.

Schools[edit]

 B.K. Birla Centre For Education, Pune.

 Birla Public School, Pilani

 Birla Vidya Niketan, New Delhi[22]

 Aditya Birla Public School, Nagda Jn

 Aditya Birla Senior Secondary School, Nagda Jn

 Aditya Birla Vani Bharati, Rishra, Hooghly( Near

Kolkata)[23]

 Sarala Birla Academy

 Aditya Birla Public School, Renusagar

 Aditya Birla Public School, Renukoot

 Aditya Birla World Academy, Mumbai

59
 Aditya Birla Intermediate College, Renukoot

 Aditya Birla Public School, Kotputli Distt Jaipur,

Rajasthan

 Aditya Birla Public School, Kharach

 Aditya Birla Higher Secondary School, Veraval

 Aditya Birla Public School, Veraval

And Some others which are also running are given below:

 Aditya Birla Public School, Jagdishpur, Uttar Pradesh

 Birla Public School, Doha, Qatar

 Sarla Birla Academy, Bengaluru[24]

 Aditya Birla Public school, Tikiri-Rayagada

 Aditya Birla Public School, Khor, Madhya Pradesh

 Aditya Birla Public School, Chittaurgarh, Rajasthan

60
 Aditya Birla Public School, Reddipalayam, Ariyalur

Distt, Tamil Nadu

 Sarala Birla Public School, Ranchi

 Aditya Birla Public School, Grasim Vihar, Rawan

61
Institutes

 Birla Institute of Technology and Science-

Pilani, Goa, Dubai, Hyderabad

 Birla Institute of Management Technology BIMTECH-

Greater Noida, Bhubaneshwar

 Technological Institute of Textile & Sciences, Bhiwani

Companies portal

 Kumar Mangalam Birla

 Birla family

 Birla Foundation

 Aditya Birla Minacs

 Grasim Industries

 Yash Birla Group

62
 CK Birla Group

 Columbian Chemicals Plant explosion hoax

COMPANIES
A US $41 billion corporation, the Aditya Birla Group is in the League of
Fortune 500. It is anchored by an extraordinary force of over 120,000
employees, belonging to 42 different nationalities.

Group Companies

 ABOF.COM - ALL ABOUT FASHION

 ADITYA BIRLA CAPITAL ADVISORS PRIVATE LIMITED

 ADITYA BIRLA CHEMICALS (THAILAND) LIMITED

 ADITYA BIRLA FASHION AND RETAIL LIMITED

 ADITYA BIRLA FINANCE LIMITED

63
 ADITYA BIRLA FINANCIAL SERVICES GROUP

 ADITYA BIRLA GRASUN CHEMICALS

(FANGCHENGGANG) LIMITED

 ADITYA BIRLA GROUP POWER PROJECTS

 ADITYA BIRLA INSURANCE BROKERS

 ADITYA BIRLA MONEY

 ADITYA BIRLA RETAIL LIMITED

 ADITYA BIRLA SCIENCE AND TECHNOLOGY

COMPANY PRIVATE LIMITED

 ALEXANDRIA CARBON BLACK (BIRLA CARBON)

 AV GROUP NB INC

 BIRLA JINGWEI FIBRES COMPANY LIMITED

 BIRLA LAO PULP AND PLANTATIONS COMPANY

LIMITED

64
 BIRLA SUN LIFE ASSET MANAGEMENT

 BIRLA SUN LIFE INSURANCE COMPANY

 CAMEROON ALUMINA LIMITED

 COLUMBIAN CHEMICALS COMPANY (BIRLA CARBON)

 DAHEJ HARBOUR & INFRASTRUCTURE LIMITED

 DOMSJÖ FABRIKER

 ESSEL MINING AND INDUSTRIES LIMITED

 GRASIM INDUSTRIES LIMITED

 HINDALCO INDUSTRIES LIMITED

 HINDALCO-ALMEX AEROSPACE LIMITED

 IDEA CELLULAR LIMITED

 INDO PHIL COTTON MILLS

 INDO PHIL TEXTILE MILLS

 INDO THAI SYNTHETICS


65
 MAHAN COAL LIMITED

 NOVELIS INC.

 PAN CENTURY SURFACTANTS INC.

 PT ELEGANT TEXTILE INDUSTRY

 PT INDO BHARAT RAYON

 PT INDO LIBERTY TEXTILES

 PT INDO RAYA KIMIA

 PT SUNRISE BUMI TEXTILES

 SKI CARBON BLACK (INDIA) PRIVATE LIMITED

(BIRLA CARBON)

 SWISS SINGAPORE OVERSEAS ENTERPRISES PTE

LIMITED

 TANFAC INDUSTRIES LIMITED

 TERRACE BAY PULP MILL

66
 THAI ACRYLIC FIBRE

 THAI CARBON BLACK (BIRLA CARBON)

 THAI PEROXIDE COMPANY LIMITED

 THAI RAYON

 ULTRATECH CEMENT LANKA (PVT.) LTD.

 ULTRATECH CEMENT LIMITED

 ULTRATECH SUBSIDIARIES

 UTKAL ALUMINA INTERNATIONAL LIMITED

The month gone by was by far the most action packed month in the
recent past. As if base changes of the key macroeconomic variables
weren’t enough to keep markets busy and buzzing, the economic survey,
the railway budget, the scheduled as well as a surprise RBI policy
meet brought interesting twists to almost every day of the shortest month
in the calendar.

67
Growth

With the rebasing of GDP growth to 2012=100, previous years (FY13


and FY14) growth rates were revised upwards markedly. In light of this,
the advance estimates for FY15 were being keenly watched by markets.
Central Statistic Organisation has estimated growth in FY15 to rise
to 7.4%, up 50bps from FY14’s rate of growth. While the increase is
broadly in line with expectations, the levels have been restated as GDP
growth now also measures value addition. Accordingly, we expect FY16
GDP to grow further to ~8.4%. A major driver of this is the
reflationary impact of oil price decline. As far as the high frequency
indicators are concerned, correcting for data capturing and sudden
revision related issues, general economic activity seems to be picking up
so far. (source: MOSPI, BSLAMC internal research)

Inflation

CPI inflation also saw a base change (2012=100). The key take away
from this exercise was the move away from arithmetic mean to
geometric mean, with the objective of reducing volatility caused by
some items.

68
This is expected to pull a statistical downward pressure on
CPI. Resultantly, headline CPI inflation came in at 5.1% in January’15,
rising from 4.3% in Dec’14 (new base).

Core CPI also declined to


3.9%, most of this being a reflection of decline in the price of crude.
WPI inflation turned negative again to -0.4% for the month of Jan. Apart
from fuel disinflation, the core WPI inflation has also been on a
softening trend, courtesy the commodity bear cycle underway.

Continuous
moderation in both retail and wholesale inflation, created conditions
conducive for monetary easing. (source: MoSPI)

External Equation

Owing to falling oil prices, trade Deficit for Jan moderated by ~1bn$ to
8.3bn$. Keeping aside the price effect, the volume of oil imports seems
to be growing. The same hold true for exports, where net of oil exports,
the story doesn’t look as gloomy. We expect CAD in Q3 to rise to ~12-

69
13bn$ and FY15 to range between ~25-27bn$. This is expected to
improve further in FY16. (Source: Ministry of Commerce, BSLAMC
internal
Research)

Fiscal front

Even after exhausting more than the budgeted fiscal deficit by the month
of Jan, the finance minister in the revised estimates for FY15
assured that 4.1% of GDP would be acheievd as the fiscal deifict
number. For FY16, in a welcome deviation from the FRBM roadmap
laid out
by the Kelkar committee, the finance minister decided to defer it by a
year and announced a fiscal deficit of 3.9% of GDP for FY16 (as against
3.6% suggested by the Kelkar committee).

A large part of this etra stimulus in both a direct and an indirect (via the
leverage route) is expected.

70
Birla Sun Life Dynamic Bond Fund
(An Open-ended Income Scheme)
Savings
Solutions
March 2015

The above parameters are indicative and can change from time to time at
the discretion of the fund manager.
Internal views, estimates, opinions of Birla Sun Life Asset Management
Company Ltd. (BSLAMC) expressed herein may or may not materialize.

These views, estimates,


opinions alone are not sufficient and should not be used for the
development or implementation of an investment strategy. The portfolio
of the scheme is subject to changes
within the provisions of the Scheme Information Document (SID) of the
scheme.
Please refer to the SID for asset allocation, investment strategy and
scheme specific risk

71
factors. Forward looking statements are based on internal views and
assumptions and subject to known and unknown risks and uncertainties
which could materially impact or
differ the actual results or performance from those expressed or implied
under those statements. to go for capital spending.

This in turn is expcted to have a multiplier effect on growth.


As supply side improves, this is expected to exert some
disinflation in the medium term. The FY16 Union Budget chose growth
over consolidation in the backdrop of improved macroeconomic
environment, expressed realistic growth targets and pragmatism basis
the current stage of the economic cycle that we are in. RBI
acknowledged these efforts and in another out of policy move, cut rates
by 25bps on Mar 4th, taking repo to 7.5%. (Source: RBI, Ministry of
Finance)

One more key reason behind this move in our view is


the legislation on monetary policy framework which binds RBI to the
mandate of
maintaining price stability. While the operating procedure needs some
more clarity, RBI as per this monetary policy framework would have to
ensure CPI inflation of 4% by FY18 (starting Fy17). (Source: Ministry
of Finance, RBI)

72
All this is likely to have the following impact on portfolio positioning-

Duration Funds shall be impacted positively by the budget and the


rate cut. Formalization of monetary policy framework,
focus on
infrastructure creation, and credible budget math marginally outweigh
negatives such as rise in service taxes, and fiscal stimulus from the
Government.
Credit funds shall be benefitted because of focus of the government to
bring back growth.

A decent growth in the economy shall benefit the


borrowers to improve their creditworthiness and command tighter
spreads over the base curve.
No impact on Liquidity funds.

73
Portfolio Action and Strategy

As on 27th Feb 2015, the modified duration of the scheme stands at 3.15
years and the YTM is 7.89%. The higher portfolio duration
had been built chiefly through exposure to Sovereign Bonds which
currently accounts for ~60% of the portfolio.
After benefiting from the 10 year benchmark rally in the last few
months, we have gradually reduced the duration in the portfolio. Going
forward, for an “absolute return oriented fund” like BSL Dynamic Bond
Fund we believe that the risk-reward proposition is in favour of a
more conservative accrual led strategy while keeping sufficient leeway
for any opportunity on duration from time to time.

The above parameters are indicative and can


change from time to time at the discretion of the fund manager.
Internal views, estimates, opinions of Birla Sun Life Asset Management
Company Ltd. (BSLAMC) expressed herein may or may not materialize.
These views, estimates,
opinions alone are not sufficient and should not be used for the
development or implementation of an investment strategy. The portfolio
of the scheme is subject to changes

74
within the provisions of the Scheme Information Document (SID) of the
scheme. Please refer to the SID for asset allocation, investment strategy
and scheme specific risk
factors.

Forward looking statements are based on internal views and


assumptions and subject to known and unknown risks and
uncertainties which could materially impact or
differ the actual results or performance from those expressed or implied
under those statements.

75
Know Your Fund

• An actively managed open ended short term income scheme that


endeavors to generate superior levels of yields at relatively lower
level of risk with low volatility.

• The scheme, as per provisions of SID, has the flexibility to invest in


diversified portfolio of securities issued by corporate or state/central
government and money market instruments with short to medium term
maturity.

• However, to contain volatility in the portfolio, it seeks to follow a


discipline of restricting its exposure in government securities.

• Intends to maintain good quality portfolio by investing in highly rated


debt securities (AAA/AA+) with more emphasis on AAA corporate
bonds.

• It may be considered by investors with investment horizon of 6 months


and above.

76
RESEARCH

METHODOLOGY

77
 Problem defining/Scope of the study

Research methodology is a way to systematically solve the research

problem. A methodology is needed to conduct a research in successful

manner. This section highlight the objective and procedure of the study.

Further, this section discuss the research methodology adopt for

attaining the objective of study.

 RESEARCH DESIGN :

A good research design depends on to aspect of its designing.

1. What one wants to find out that is properly posing the problems or

properly phrasing the issues to be study or the logical structure of

enquiry.

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2. How to do it . That is collecting data through scientific and

appropriate method using the effective technique of data analysis.

Three Types of Research Design-

• Exploratory

• Descriptive

• Experimental

 Types of Data Collection

There are two types of data used. They are primary and secondary

data. Primary data is defined as data that is collected from the

quesstionniare. Secondary data is data collected from indirect sources.

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I. Primary Sources

These include the survey or questionnaire method to fill the 50

people in questionnaire of data collection.

II . Secondary Sources

These include books, the internet, company brochures, product

brochures, the company website competitor’s websites etc, newspaper articles

etc

SAMPLING PLAN

 Sampling Technique :

RANDOM SAMPLEING

 Sample size :

The sample size was of only 100 Respondents

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 Sampling Area:

The area of the research was mirzapur city.

 Time period:

The total time period that was spent by me during this summer Training

was fourty five days.

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Chapter 4

ANALYSIS and
INTERPRETATION

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