contents - agriculture insurance company of · pdf filemr. lalit kumar mr. k. n. bhandari ms....

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CONTENTS

PAGE NO.

Directors and Management 2

Board of Directors 3

Senior Management Team 4

Team of Regional Managers 5

Chairman’s Speech 6

Director’s Report 9

Attendance log for the Meetings of Board of Directors 16

Management Report 17

CAG Report 19

Auditors’ Report 20

Revenue Account 23

Profit & Loss Account 24

Balance Sheet 26

Schedules to the Accounts 27

Significant Accounting Policies and Notes Forming Part of the Accounts 36

Summary of Financial Statements 49

Summary of Accounting Ratios 50

Cash Flow Statement 51

Balance Sheet Abstracts and Company’s Business Profile 52

A g r i c u l t u r e I n s u r a n c e C o m p a n y o f I n d i a L i m i t e d

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DIRECTORS AND MANAGEMENT

Chairman-cum-Managing DirectorMr. M. Parshad

DirectorsMr. G. C. Chaturvedi Shri Satish Chander Mr. Mukesh Khullar

Mr. Lalit Kumar Mr. K. N. Bhandari Ms. Bhagyam Ramani

Mr. S. K. Mitra Mr. Sujit Das Mr. S. K. Chanana

Mr. A. Asthana

General ManagerMr. P. C. James

Deputy General ManagersMr. B. M. Sharma Mr. R. Alagar Mr. Ramnath

Chief ManagersMr. K. N. Rao Mr. M. K. Poddar

Mr. Avinanda Ghosh Mr. Rajiv Choudhary

Appointed ActuaryMr. S. Chidambram

Assistant Company SecretaryMs. Kanika Sharma Shandil

AuditorsM/s Kishore & Kishore, CA

M/s S. P. Puri & Co., CA

Registered Office“AMBADEEP” (13th Floor)

14, Kasturba Gandhi Marg, New Delhi - 110001

Ph: 011 41081991-4 Fax: 011 41081995

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BOARD OF DIRECTORS

Mr. G. C. ChaturvediJS (B&I), MoF, GOI

Mr. M. ParshadChairman-cum-Managing Director

Mr. Satish ChanderJS (C&C), MoA, GOI

Mr. Lalit KumarDS (B&I), MoF, GOI

Mr. K. N. BhandariGS, General Insurance Council

Ms. Bhagyam RamaniGM, GIC

Mr. S. K. MitraED, NABARD

Mr. Mukesh KhullarJS (DM), MoA, GOI

Mr. Sujit DasGM, NIC

Mr. S. K. ChananaGM, OIC

Mr. A. AsthanaGM, UIIC


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TOP MANAGEMENT TEAM

Mr. K. N. RaoChief Manager

Mr. M. K. PoddarChief Manager

Mr. Avinanada GhoshChief Manager

Mr. Rajiv ChaudharyChief Manager

Mr. B. M. SharmaDy. General Manager

Mr. R. AlagarDy. General Manager

Mr. RamnathDy. General Manager

Mr. P. C. JamesGeneral Manager


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TEAM OF REGIONAL MANAGERS

Mr. K.K. BadgaiyanAhmedabad

Mr. N. SugumarBangalore

Ms. Rajeshwari SinghBhopal

Mr. S. PatnaikBhubhaneshwar

Mr. Ashok YadavChandigarh

Mr. C. AnbarasuChennai

Mr. K.K. GuptaDehradun

Mr. Anupam DasGuwahati

Mr. P. NagarjunHyderabad

Mr. B. S. RahulJaipur

Mr. D. SinghKolkata

Dr. M. DattaguptaLucknow

Mr. D. G. HalveMumbai

Mr. C. P. AwasthiPatna

Mr. Ch. B. N. PraharajRaipur

Mr. S. N. BasuRanchi

Ms. Bharathi VijjiraveluThiruvananthapuram


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Good Morning Ladies and Gentlemen,

On behalf of the Board of Directors and my colleagues at AIC, I have great pleasure in welcoming you all at the4th Annual General Meeting of your Company. I thank you for making it convenient to attend this importantmeeting and registering your solidarity with us.

The notice convening the Annual General Meeting, the Directors’ Report, the Annual Audited Accounts and thereview of accounts by the Comptroller & Auditor General of India have been with you for some time now, andwith your permission I take them as read.

Before I embark on the business aspect of this meeting, let me introduce Mr. P. C. James, the first GeneralManager that your Company has received since its commencement of operation from 1st April 2003.Mr. James is a very well known personality in the general insurance industry for his academic brilliance, andall round knowledge of the insurance market. He has 30 long years’ insurance experience behind him, and themost important part of his career is the tenure with the Regulator, which, I am sure will be of tremendous helpto your Company in the years to come.

Also, I am happy to announce that Annual Accounts for the year 2006-07 of AIC were approved & adopted bythe Board on 30th June 2007, which was accomplished well within the stipulated time limit and, in fact,2 months earlier as compared to the previous year. Also, the quality of accounts in terms of better informationand disclosures has shown significant improvement this time which has received commendation from the Board.

As far as the financial performance is concerned, your Company has booked a net earned premium ofRs. 558.76 crore during 2006-07 as compared to Rs. 550.92 crore during the previous year, by covering170 lakh of farmers, up from 167 lakh last year. This is approximately 15% of the total farm holdings in thecountry. During 2006-07, claims of Rs. 550.75 crore have been incurred as compared to Rs. 518.73 croreduring 2005-06. After transferring Rs. 48.98 crore, as net profit after tax, to General Reserve, the net-worth ofthe Company stands increased to Rs. 385.40 crore as on 31st March 2007, from Rs. 335.52 crore previousyear and ‘Reserve for Unexpired Risk’ stands at Rs. 281.80 crore on the Balance Sheet date.

The subject of my speech today is not confined to financial performance only but beyond it. A Company’scontribution can be more comprehensively measured along three dimensions, commonly referred to as the“triple bottom line”. These dimensions are economic, industrial and social. Envisioning a larger societal goalhas always been an integral part of your Company’s philosophy which I would call ‘a commitment beyond themarket’. In fact this philosophy is very much enshrined in the objective with which the Company has beenestablished. In a bid to enhance your Company’s contribution to the national level policy making process, as

From the Chairman’s Desk


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you are aware that, your Chairman was entrusted with the responsibility of being Member-Secretary of aWorking Group called “Risk Management in Agriculture” under the aegis of the Planning Commission constitutedfor addressing the issues of managing risks associated with Indian Agriculture. Your Company had organizeda series of meeting involving the prominent experts in the field of agriculture and the Working Group’s finalreport which inter alia has recognized insurance as a significant tool of risk management in agriculture, hassince been placed to the Planning Commission for its consideration.

Although, the sectoral contribution of agriculture in Indian economy has been steadily declining, currentlystanding at 18.5% of GDP, yet it continues to support two-thirds of the work force of the country. With recentdevelopments and renewed thrusts from the Government of India, it is slated to play a more significant role inthe socio-economic fabric of the country.

Agricultural productivity and prospects are inextricably linked to the performance of monsoon rains. Rainfedagriculture continues to constitute nearly 60% of the net sown area. These areas are the major domain ofpulses, oilseeds and coarse cereals. Heavy rains during August-September 2006 in Andhra Pradesh, Gujarat,Madhya Pradesh, Maharashtra and Rajasthan has led to inundation/flooding in several parts of these Statesaffecting a sizeable area of crops in one hand, late monsoon rains during September in other States havebrightened production prospects of Kharif crops on the other. These late rains would expectedly trigger earlysowing of Rabi crops, especially wheat in Madhya Pradesh, Maharashtra and Rajasthan.

Against this backdrop, AIC remains committed to developing affordable products for the cross section of thefarming community to meet their diversified need, covering risks which were not conceptualized hitherto. Allthese new products are supplementing the coverage already available for 65 different crops under NAIS. Toname some of these products – I may mention your Company’s Rainfall Insurance Scheme - “Varsha Bima-2006”, which was implemented during Kharif 2006, in 150 districts/rain gauge station areas covering 16 States.AIC has also piloted other weather index based insurance product for Rabi season for the farmers serviced by‘e-chaupals’ of ITC in the States of Madhya Pradesh, Maharashtra, Rajasthan & Uttar Pradesh. The productcovered potato, wheat, barley, lentil, gram etc. Apart from this, Coffe rainfall insurance was introduced in23 coffee zones of Karnataka, Mango insurance in 2 districts in Maharashtra and Andhra Pradesh. Recentlyintroduced new products include Bio-Fuel Tree / Plant Insurance, Potato Insurance, and further modifiedsome of the earlier products viz. Poppy insurance and Wheat Crop Vigor & Weather Insurance.

Your Company’s excellent contribution to the development of weather insurance in India has been acclaimedby Government of India also. I have the pleasure of informing you that the Honorable Union Finance Ministerwhile presenting the Budget for 2007-08 on 28th February 2007 made an announcement on Weather Insurance:

“Agriculture Insurance Corporation (AIC) has been running a pilot weather insurance scheme since Kharif2004 and it appears to be a more promising risk mitigation scheme. Hence, Government will ask AIC to starta weather based crop insurance scheme on a pilot basis in two or three States, in consultation with the StateGovernments concerned, as an alternative to the NAIS. The Scheme will be operated on an actuarial basiswith an element of subsidy. I intend to allocate Rs. 100 crore for this purpose in 2007-08”.

On behalf of your Company I take great pride on receiving this assignment from Government of India and Iassure you that your company will leave no stone unturned to make this project a grand success and willcertainly live upto the task entrusted upon it by the Hon’ble Finance Minister.

During the year, your Company has undertaken various intensive awareness and publicity activities, bothdirect and indirect. Publicity has been done through various media like newspaper, radio, TV, fairs and exhibitionsetc. A formal Publicity Policy of the Company was devised and adopted by the Board. Special efforts weremade to give wide publicity to the newly launched schemes.

The competence, commitment and experience of AIC’s employees are the key drivers of your Company’sperformance in the crop insurance market. Keeping in view the new and emerging business prospects, yourCompany’s Personnel Department has undertaken a comprehensive exercise of aligning the roles of individualemployees with the overall goals of the organisation. Attracting qualified employees and matching theircompetency to the functional area job profile to which they are best suited is significant for the success of the


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organization and this particular issue is drawing attention and accordingly we are in the process of drawing upfuture human resource plans. Under the process 14 Agriculture specialists at AO level (Scale – I), 10 GeneralistOfficers at AO level (Scale – 1), and 5 Managers (Scale – IV) were recruited and were provided training indifferent fields and disciplines.

The challenges that lie ahead are enormous. AIC, has a major responsibility for ensuring that the agriculturesector fully supports the growth of the economy. Along with this challenge come a number of potentialopportunities, which can take the company onto a different growth path. As a part of the process of constantlychallenging ourselves, we have set ambitious targets for the coming years. By the year 2010, we would like tobring 40% of the farming community under the crop insurance umbrella. This will require a sharp increase,both in terms of expansion of infrastructure and premium turnover. AIC believes that while there are severalconstraints, yet, the goals set are achievable. Besides, the robust recruitment programme will take care of themanpower requirements for these initiatives. AIC is in the process of developing a holistic IT Plan also tosupplement the data generation needs. Integrated web-based software supporting various contemporarytechnologies like Business Intelligence, Statistical Analysis Technology etc. shall be developed and deployed,backed-up with state-of-the-art IT hardware, inter-connectivity between AIC offices, Stake holders’ access(e.g. Governments, Bank and other Agencies and farmers) and a Data Center.

Our website is being revamped with many contemporary and enhanced features. The website is proposed tobe dynamic, multi-lingual and with complete information on all our existing and upcoming products. It will beupdated with regular flow of information, particularly data pertaining to various Weather Based Crop InsuranceProducts.

At AIC, we understand the unique needs of the agriculture sector. Our team of agriculture insurance professionalsare seized of this situation and are committed to live up to the aspirations of the Government and as well asthat of farming community. Your Chairman firmly believes that with the able guidance of your Directors and thevaluable support from employees, your Company will certainly be able to rise to the occasion and deliver the goods.

On the marketing side, your Company is exploring all the possibilities of tying-up with as many Brokers andCorporate Agents as possible. To reach out to the door-steps of the farmers, Krishi Bima Sansthan (KBS) isalready in operation in Uttar Pradesh and Maharashtra and in near future the model will be replicated in otherimportant States.

In conclusion, I wish to thank the Central and State Governments, Financial Institutions, Banks, GovernmentAgencies and Non-Government Institutions who have extended their support in the development and growthof your Company.

On behalf of the Board, I would like to thank all the shareholders for their unstinted support in helping yourCompany to enhance its technological and business strengths and remain on the path of growth.

I would like to conclude by commending the employees’ commitment and contribution which has been thecornerstone of the Company’s growth over the years.

Thank you for your attention!


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DIRECTORS’ REPORTfor the Financial Year ended on 31st March 2007

Your Directors have pleasure in presenting the Fourth Annual Report and the Audited Statement of AnnualAccounts for the year ended on 31st March, 2007.

Financial Results (Rupees in crore)

S.N. Particulars 2006-07 2005-06

REVENUE ACCOUNT

1. Net Premium Earned 558.76 550.92 2. Net Incurred Claims 550.75 518.73 3. Commission earned (Net) 0.00 0.24 4. Operating Expenses 10.23 12.17 5. Net Investment Income apportioned to Revenue A/c 64.54 45.42 6. Revenue Profit/(Loss) [1 – 2 + 3 – 4 + 5] 62.32 65.68

PROFIT & LOSS ACCOUNT 7. Net Investment Income apportioned to P & L A/c 24.87 20.97 8. Other Incomes 0.44 0.56 9. Preliminary Expenses written off 0.91 0.45 10. Prior Period Expenses & Adjustments 0.01 3.13 11. Other Expenses & Provisions 1.49 0.91 12. Profit Before Tax [6 + 7 + 8 – 9 –10 –11] 85.22 82.72 13. Provision for Taxes 36.24 30.91 14. Profit After Tax [12 –13] 48.98 51.81 15. Profit available for Appropriation 48.98 51.81 16. Transfer to General Reserve 48.98 51.81 17. Previous year set-off & adjustments NIL NIL 18. Balance of Profit c/f NIL NIL

The Annual Accounts for the year 2006-07 were approved & adopted by the Board on 30th June 2007, whichis well within the stipulated time limit and, in fact, 2 months earlier as compared to the previous year. Also, thequality of accounts in terms of better information and disclosures has shown significant improvement.

OPERATIONAL REVIEW

Agriculture ScenarioWhile macro-economic fundamentals remained robust and characterized the overall development during2006-07, growth in agriculture has witnessed up-and-down pattern over the last two years. Having shown anannual average growth of 3% during the first five years of the millennium, the growth in agriculture during2006-07 dipped to 2.7%, on a base of 6% during the previous year. This is viewed as a cause of concern bythe Government. The major factors identified for low growth are low public investment, imbalance in fertilizeruse, low seed replacement rate, distorted incentive system and the little post harvest value addition, etc.Ironically, even though agriculture’s share in Gross Domestic Product has steadily declined to 18.5% during2006-07, till today, more than half of the population directly depends on this sector and that is the reason whyagriculture is so crucial in the socio-economic fabric of the country.

It is well known that a vast majority of the farmers cultivate their crops in rain-fed conditions during monsoonseason which impacts every stage of agricultural operations from land preparation to selection of seed variety,timing of sowing, transplantation, schedule of irrigation, fertilizer application, usage of pesticide, harvesting,etc. It is in this context that the agricultural risk management products, viz. insurance, particularly for the smalland marginal farmers, are of critical importance. Study reveals that ‘variability in rainfall’ accounts for morethan 50% variability in crop yields. It is also found that the negative impact of excess rainfall is not as high as


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the adverse impact of deficit rainfall. In this backdrop, the 2006 monsoon rainfall was at 99% of the long periodaverage but distribution over time and space was uneven which affected east India, north-west India andsouth peninsula. Of 36 met-subdivisions, monsoon was normal in 20, excess in 6 and deficient in remaining10 subdivisions, resulting into 130 met-districts experiencing moderate drought and 30 districts facing severedrought conditions. Therefore, a considerable amount of claim pertaining to Kharif 2006 season is expectedfrom these affected regions.

Spread of operationsThe Company enjoys the distinction of being the largest crop insurance provider in the world in terms of thenumber of farmers insured annually. During 2006 – 07, the Scheme insured around 170 lakh farmers constituting15% of the total farm holdings in the country. The main product i.e. “National Agricultural Insurance Scheme”(NAIS) is presently implemented in 23 States and 2 Union Territories. The total sum insured under the Schemeamounted to approximately Rs. 20200 crore, with premium income of Rs. 562.32 crore. The Company ismaking efforts to bring the remaining States/ UTs into the fold of NAIS. In addition to NAIS, as pursued in theprevious years, this year also new tailor-made products were developed to bring more specialized farminginto the insurance net. The Company recorded operating profit of Rs. 62.32 crore during 2006-07 as againstRs. 65.68 crore during 2005-06. Gross Direct Premium this year is Rs. 564.67 crore which includes 2.35 crorefrom non-NAIS products.

PRODUCT DEVELOPMENT

The Company has undertaken studies to design various farmer-friendly, tailor-made, affordable products, inaccordance with the sound actuarial principles to cater to the specific needs of different farmer groups. Someof the new products launched during the year are:-

Rainfall InsuranceRainfall Insurance product, more popularly known as Varsha Bima, was developed to combat the impact ofadverse rainfall incidence. The product was aimed at mitigating some of the adverse financial effects ofrainfall variation on crop yield. A correlation between the deviation in crop output and the deviation in theadverse rainfall is established and payout structures are created and the insured farmers are accordinglycompensated. The main advantage of the product is quick settlement of claims on the basis of rainfall dataobtained from the designated Rain Gauge Stations.

Rabi Weather Insurance for Field CropsThe Company designed a tailor-made weather index based insurance product for Rabi season for the farmersserviced by ‘e-chaupals’ of ITC in the States of Madhya Pradesh, Maharashtra, Rajasthan & Uttar Pradesh.The product covered potato, wheat, barley, lentil, gram etc.

Bio-Fuel Tree / Plant InsuranceThe Company designed a named peril product to insure six different species commercially grown for bio-fuelproduction. The annual policy is being sold to corporates / institutions involved in commercial production ofbio-fuel.

Potato Crop InsuranceThere has been a demand from potato growers for an ‘individual farm’ based potato insurance against naturalcalamities, pests & diseases. Considering this, AIC has designed “Potato Crop Insurance (Input) Policy”. Theproduct has been designed after a careful study of package of practices, lending arrangements and buy-backarrangements by the agencies. Initially, during Kharif 2006 season, the product was tried out in and aroundPune.

MODIFIED PRODUCTS

Poppy insurancePoppy insurance introduced during Rabi 2005-06 season has been modified on the basis of experience andreview; and got it approved as ‘Micro Insurance Product’ for Rabi 2006-07 season. This policy was madeavailable to the licensed poppy growers in the States of Madhya Pradesh, Rajasthan & Uttar Pradesh.


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Wheat Crop Vigor & Weather InsuranceWheat Crop Vigor & Temperature based insurance product piloted in a few districts of Haryana & Punjabduring Rabi 2005-06 season has been modified on the basis of the review. We have also added a new triggerin terms of ‘unseasonal rainfall’. The product is being marketed as ‘Wheat Crop Vigor & Weather Insurance’product from Rabi 2006-07 season.

INVESTMENTS

The surplus funds, as and when available, were invested by the Company as per the IRDA guidelines and theCompany’s Investment Policy under the supervision of the Investment Committee of the Board. As regardsthe Government Securities, since the investment in such securities is on long term basis (held to maturity), themarket fluctuations do not have any impact on YTM. The Company has made limited investment in equityshares through IPOs. Such investments, which are mainly in Power, Banking and InfoTech sectors, haveshown capital appreciation during the year. The total income from Investments increased to Rs. 95.17 croreduring 2006-07 from Rs. 68.81 crore during 2005-06.

Expenses of ManagementDuring the year under review, the Company has incurred “expenses of management” to the tune ofRs. 10.23 crore (previous year Rs. 12.17 crore), which is 1.81% (previous year 2.19%) of the Gross DirectPremium of the Company. The expenses incurred were not only kept under the approved budget for the year,but were even less than the actual expenses incurred during 2005-06 in absolute terms.

General ReserveDuring the year under review, the Company earned a post-tax Profit of Rs. 48.98 crore (previous yearRs. 51.81 crore), after making the required Provisions, and the same has been transferred to the GeneralReserve where after the General Reserve stood at Rs. 185.40 crore as on 31st March 2007.

DividendWith a view to conserve the resources of the Company and to improve upon the Company’s financial strength,the Board while approving & adopting the accounts at its meeting held on 30th June, 2007 decided to ploughback the entire amount of net profit (after tax) of Rs 48.98 crore by appropriating the same to General Reserveas stated above and did not recommend payment of any dividend for 2006-07.

ReinsuranceThe Company secured reinsurance on ‘Quota Share’ basis for all its new insurance products introduced duringthe year with the support of national reinsurer and other PSU general insurance companies. Apart from this,the Company has also explored the international reinsurance market.

Solvency MarginThough the IRDA (Solvency Margin) Regulations may not be directly applicable to the Company as more than99% of its business comes from the Government sponsored Scheme i.e. NAIS, but the Company, at its presentlevel of operations, enjoys a comfort level by maintaining the Available Solvency Margin at 2.05 as at31st March 2007 as against the Required Solvency Margin of 1.5.

Awareness & Publicity ProgramTo reach out to the poorest and the remotest farmer has always been a challenge to the Company. To this end,the Company has undertaken various intensive awareness and publicity activities, both direct and indirect. Anumber of awareness workshops were organized at the State and District levels where farmers, bank officials,district level government functionaries and others were briefed about the services on offer. A special effort wasmade to give wide publicity to the newly launched schemes. Publicity has been done through various medialike newspaper, radio, TV, fairs and exhibitions etc. A formal Publicity Policy of the Company was devised andadopted by the Board during 2006-07.

PERSONNEL AND INDUSTRIAL RELATIONS

Human Resource DevelopmentThe Company is servicing the vast portfolio of crop insurance with a very lean and thin personnel structure of156 employees. The Company feels that its performance potential is directly proportional to its human resourcepotential. Since the Company is sincerely looking for growth, the need for skilled, trained, and experiencedpersonnel is acutely felt. To this end, the Company is in the process of drawing up its future human resourceplans. During the year, the Company recruited 14 Agriculture specialists at AO level (Scale – I), 10 GeneralistOfficers at AO level (Scale – 1), and 5 Managers (Scale – IV).


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Imparting training to its employees is a priority area for the Company-not only to impart domain knowledge tothe new recruits, but also to increase the skill-levels of the existing employees. During the year under review,a number of officers were provided training in different fields and disciplines.

Industrial Relations remained cordial throughout the year and the Company continued to receive unstintedcooperation from its employees.

Particulars of EmployeesThe information as required under Section 217(2A) of the Companies Act, 1956 read with the Companies(Particulars of Employees) Rules may be treated as ‘NIL’ for the year ended 31st March, 2007.

Board of DirectorsDuring the year under review, the Board met five times, besides a number of meetings of its variousSub-Committees constituted for specific purposes.

Mr. K. N. Bhandari, Mr. G. C. Chaturvedi, and Mrs. Bhagyam Ramani, rotational Directors, who have heldoffice for the longest period, will retire by rotation at the ensuing fourth Annual General Meeting, and areeligible to offer themselves for re-appointment.

Mr. Mukesh Khullar and Mr. Lalit Kumar were appointed as Additional Directors in place of Mr. S. S. Prasadand Mr. Naved Masood. Also, Mr. A. V. Muralidharan, who has been representing New India AssuranceCompany Ltd. on the Board of the Company, has resigned from the Board upon his appointment as theChairman-cum-Managing Director of ECGC, and the Company has still to receive fresh nomination from NewIndia Assurance Co. Ltd. in substitution.

The above-named Additional Directors will relinquish their office on the date of Annual General Meeting underthe provisions of Section 253 of the Companies Act, 1956, and being willing and eligible, offer themselves forappointment. The Company has received nomination letters from Members for their appointment.

The Board of Directors wishes to place on record its appreciation for the valuable contribution made by theretired/outgoing Directors.

Statutory AuditorsM/s Kishore & Kishore, Chartered Accountants and M/s. S. P. Puri & Co., Chartered Accountants, New Delhiwere appointed by the Comptroller and Auditor General of India (C & AG) as the Joint Auditors of the Company.Branch Auditors were also appointed by the C & AG for the Company’s various Regional Offices. TheShareholders are requested to consider their appointment.

The Report of the Auditors’ to the Shareholders of the Company is annexed to the financial statements for theyear ended on 31st March, 2007. The Board of Directors wishes to place on record its appreciation for theservices provided by the Auditors.

Renewal of License issued by Insurance Regulatory and Development Authority of India (IRDA)The Company being in the insurance sector is governed by IRDA. The Company’s existing paid-up equitycapital of Rs. 200 crore conforms to the minimum capital requirement as prescribed by IRDA. The accounts ofthe Company are drawn up according to the stipulations prescribed in the IRDA (Preparation of FinancialStatements and Auditor’s Report) Regulations, 2002. The Company has obtained the Certificate of Renewalof Registration for the year 2007-08.

Additional Information required under the Companies (Disclosure of Particulars in the Report to theBoard of Directors) Rules 1988The Company is not engaged in any manufacturing activity and as such, there are no particulars to be disclosedunder the Companies (Disclosure of Particulars in the Report to the Board of Directors) Rules, 1988 as regardsconservation of energy of technology absorption. During 2006-07, the Company has no foreign operationsand thus, no foreign exchange earning / outgo.


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CORPORATE GOVERNANCE

It has been the endeavor of the Company to adopt systems and procedures which would strengthen goodcorporate governance, transparency, accountability and full disclosure of information to its shareholders andother stakeholders.The Board of Directors had accordingly constituted the following Committees:-Pursuant to the provisions contained in the IRDA (Investment) Regulations, 2000, the Board of Directors hadconstituted the Investment Committee comprising of the following Directors:

1. Mr. M. Parshad, CMD2. Mrs. Bhagyam Ramani, GM, GIC, Mumbai3. Mr. S. K. Mitra, ED, NABARD, Mumbai4. Mr. S. K. Chanana, GM, OIC, New Delhi

The Committee is responsible for:

1. Formulation of the Annual Investment Policy2. Laying down guidelines for investment of surplus funds3. Approval of investment decisions4. Monitoring the implementation of approved investment policy and guidelines and also compliance of IRDA

(Investment) Regulations

During the year 2006-07, the Committee met on two occasions.

Pursuant to the provisions of Section 292A of the Companies Amendment Act, 2000, the Board hasconstituted an Audit Committee of the Board of Directors, which presently consists of the following:

1. Mr. K. N. Bhandari, Government of India Nominee2. Mr. Satish Chander, Jt. Secy (Credit & Coop.), MoA, GoI3. Mrs. Bhagyam Ramani, GM, GIC, Mumbai4. Mr. S. K. Mitra, ED, NABARD, Mumbai5. Mr. S. K. Chanana, GM, OIC, New Delhi6. Mr. A. Asthana, GM, UIICL, Chennai

During the year 2006-07, the Committee met four times and the terms of reference to the committee inter aliainclude:

1. Review of Financial and Accounting policies and practices of the Company2. Review the efficiency of the internal control; mechanism of the Company3. Review the reports furnished by the internal auditors, statutory auditors and also of the C&AG Audit matters4. Review the periodical and annual financial statements before submission to the Board

Other Committees of the Board viz., Marketing Strategy, HRD, IT and Committee for evaluating IIM-AReport also met as and when required and were well attended.

The said Committees were reconstituted once during 2006-07 due to changes in the Board of Directors.Sittingfee is paid only to Mr. K. N. Bhandari, the non-executive Director nominated by the Govt. of India as domainexpert on the Board of the Company. No sitting-fee is paid to any other Director. The Chairman-cum-ManagingDirector is paid salary as fixed by the Government of India and no sitting-fee is paid to him.

The details of the last three Annual General Meetings of the Company are as given below:-

Date of AGM Venue of AGM

18th June, 2004 Hotel Grand Inter Continental, New Delhi 25th November, 2005 ‘AMBADEEP’ (13th Floor), 14, Kasturba Gandhi Marg, New Delhi 29th September, 2006 ‘AMBADEEP’ (13th Floor), 14, Kasturba Gandhi Marg, New Delhi

Capital StructureThe Authorized Share Capital of the Company is Rs. 1500 crore.The Equity paid-up Share Capital of theCompany is held by:-


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S.N. Shareholders of the Company Holding (Rs.) %age Holding

1. General Insurance Corporation of India 700000000 35

2. National Bank for Agriculture and Rural Development 600000000 30

3. The New India Assurance Company Limited & its nominee 175000000 8.75

4. National Insurance Company Limited & its nominee 175000000 8.75

5. Oriental Insurance Company Limited 175000000 8.75

6. United India Insurance Company Limited 175000000 8.75

TOTAL 2000000000 100

There being no further issue of shares during 2006-07, the Issued and / or Paid up Share Capital of theCompany, remained at Rs. 200 crore. The Board comprises of Chairman-cum-Managing Director and the tenmembers from Govt. of India and Promoter Companies. The particulars of the Directors during 2006-07 areannexed herewith.

Directors’ Responsibility StatementPursuant to section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

i) in preparation of Annual Accounts for the year ended 31st March 2007, the applicable Accounting Standardshave been followed along with proper explanations relating to material departures, if any;

ii) appropriate Accounting Policies have been selected and have been applied consistently, andthat the judgments and estimates made are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at the end of the financial year, and the Profit of the Companyfor the year ended on 31st March, 2007;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956, for safeguarding the Assets of theCompany, and for prevention and detection of fraud and other irregularities;

iv) the Annual Accounts have been prepared on a “going concern” basis.

BUSINESS PLAN FOR 2007- 08

Marketing StrategyIn its quest to connect with the farmers at their doorsteps, the Company has set up “Krishi Bima Sansthans”[KBS], which conceptualizes utilization of trained agri-graduates for creation of awareness about crop insuranceamongst the farmers. Already 13 KBSs have been established at district level each in Uttar Pradesh andMaharashtra.

During the year 2007-08, the Company is focusing on developing its distribution channels through utilising theservices of NGOs, SHGs and MFIs as Micro Insurance Agents to expand the Company’s operations in ruralareas. A few of our Regional Offices (Ahmedabad, Chennai and Mumbai) have trained certain NGOs of repute,who, in turn will conduct insurance awareness among the farmers. The bank assurance arrangements havebeen finalized with a couple of Banks, having rural network for marketing our Non-NAIS products. Further,attempts are being made to engage all India organizations with rural presence and certain Regional RuralBanks as Corporate Agents.

International ForumThe 2nd phase of Technical Assistance Project (TAP) of the World Bank, comprising of ‘Weather Insurance –Product Design & Pricing’ and ‘Risk Portfolio Management’ has been undertaken during 2006-07. The taskhas been handled by a NOIDA based International Risk Management Firm. The draft report of the 2nd phasehas already been received and is being examined.


15

AIC organized a ‘Reinsurance Road-show’ in Europe during April 2007, presenting the broad findings of theTAP and sharing the Premium Rating methodology in respect of Area Yield Insurance and Weather Insurance.A pilot project based on the 2nd phase of TAP on ‘Weather Insurance’ is being implemented by AIC in a fewlocations during 2007-08.

Information TechnologyThe Company recognizes the importance of Information Technology in the conduct of business and the needfor investing in new technology. To meet the increasing documentation in terms of increase in number ofpolicies / declarations and the resulting claims, database management has gained paramount importance. Inview of this, communication infrastructure will be strengthened by upgrading the existing hardware at HeadOffice and Regional Offices. In order to have a comprehensive IT Solution for the Company, a Vision Documentis contemplated to facilitate phase-wise implementation under the guidance of a Committee of the Boardconstituted for this purpose.

Risk ManagementIn recent years, risk management in agriculture has assumed a great significance. To look into the variousaspects relating to agriculture & allied activities, including Credit & Insurance, a Working Group had beenconstituted last year under the Planning Commission. The Working Group has concluded its study and submittedits Report to the Government, wherein they have recognized insurance as a significant tool of risk managementin agriculture.

ACKNOWLEDGEMENTSThe Directors place on record their deep appreciation for the enthusiasm shown by the officers and employeesof the Company in running its operations.

They are grateful to the Financial Institutions and other associates for their valuable assistance towardsimplementation of the various crop insurance schemes.

The Directors express their gratitude to the Union Ministry of Finance and the Union Ministry of Agriculture,the State and Union Territory Governments, Insurance Regulatory & Development Authority, the Office of theComptroller & Auditor General of India for their guidance and support.

The Directors also acknowledge the valuable recommendations received from IIM Ahmedabad and the WorldBank.

We also wish to express our sincere gratitude to the Insurance Ombudsman in various states, the GoverningBody of Insurance Council (GBIC) and General Insurance Council for their guidance.

For and on behalf of the Board of Directors

Place : New Delhi M. PARSHADDate : 30.06.07 Chairman-cum-Managing Director


16

ATTENDANCE LOG FOR THE MEETINGS OF THE BOARD OF DIRECTORS DURING 2006-07

Date of Board Meetings

Name of Date of Date of 1 2 3 4 5 Director Appointment Cessation 28.06.06 01.09.06 29.09.06 03.01.07 13.03.07

Mr. M. Parshad 1st January 2006 N. A. Present Present Present Present Present

Mr. G. C. Chaturvedi 28th June 2003 N. A. Present Present Present Present Present

Mr. Satish Chander 31st March 2004 N. A. Leave Leave Present Present Leave

Mr. Naved Masood 29th December 2003 3rd January 2007 Leave Leave Leave Leave -

Mr. S. S. Prasad 31st March 2004 3rd January 2007 Present Present PresentPresent -

Mr. Mukesh Khullar 3rd January 2007 N. A. - - - - Present

Mr. Lalit Kumar 3rd January 2007 N. A. - - - - Leave

Mr. K. N. Bhandari 9th May 2003 N. A. Present Present Present Present Present

Ms. Bhagyam Ramani 24th February 2006 N. A. Present PresentLeave Leave Leave

Dr. K. G. Karmakar Since Incorporation 1st September 2006 Leave - - - -

Mr. S. K. Mitra 1st September 2006 N. A. - Leave Leave Leave Present

Mr. Sujit Das 24th February 2006 N. A. Present Present Leave Present Present

Mr. A. V. Muralidharan 25th November 2005 13th March 2007 Present Present Leave Leave Leave

Mr. S. K. Chanana 28th June 2003 N. A. Present Present Leave Leave Present

Mr. A. Asthana 28th June 2006 N. A. Present Leave Present Leave Present


17

MANAGEMENT REPORT

In accordance with Part IV of Schedule B of the Insurance Regulatory and Development Authority (Preparation

of Financial Statements and Auditor’s Report of Insurance Companies) Regulations 2002, the Management of

the Company hereby:-

1. Confirms that the Registration Number 126 granted by the IRDA continues to be valid.

2. Certifies that all dues payable to the Statutory Authorities have been duly paid.

3. Confirms that the Shareholding pattern and any transfer of Shares during the year are in accordance with

the Statutory or Regulatory requirements.

4. Declares that the Management has not directly or indirectly invested outside India the funds of the holders

of Policies issued in India.

5. Confirms that the Company has maintained the required Solvency Margins.

6. Certifies that the value of all the Assets have been reviewed on the date of the Balance Sheet and that, in

their (insurer’s) belief the Assets set forth in the Balance Sheet are shown in the aggregate at amounts

not exceeding their realisable or market value under the several headings – “Loans”, “Investments”,

“Agents’ Balances”, “Outstanding Premiums”, “Interest, Dividends and Rents Outstanding”, “Interest,

Dividends and Rent Accruing but not due”, “Amounts due from other persons or bodies carrying on insurance

business”, “Sundry Debtors”, “Bills Receivable”, “Cash”, and the several items specified under “Other

Accounts”.

7. Confirms that the Company’s risk exposure under “National Agricultural Insurance Scheme (NAIS)” is

adequately limited by the provisions of the Scheme which restricts the Company’s liability under NAIS to

100% of premium for food crops & oilseeds, and 150% of premium for annual commercial and horticultural

crops. Adequate provisions in respect of the Company’s share of claims have been made in the accounts

as per the Actuarial Certificate. Further, for the Company’s own products, appropriate reinsurance

has been arranged.

8. Certifies that the Company does not operate outside India.

9. The trend in ageing of outstanding claims during the last four years is mentioned in the “Notes forming

part of Accounts” (Notes 5.6).

10. Certifies that the value of Investments, Stocks and Shares, as shown in the Balance Sheet, have been

arrived at as stated in the “Significant Accounting Policies” (No. 5).

11. Certifies that the review of quality and performance of Investments is as mentioned below. No loans,

except loans to staff members, have been granted by the Company.

Investments

The Company has invested its funds as per the investment pattern prescribed by the IRDA Regulations on

Investments, and the Company’s Investment Policy. The Book value of Investments of the Company as on

31st March, 2007 is Rs. 1306,00,98 thousand (previous year Rs. 1222,76,69 thousand), and the Market value

of the Company’s Investments as on that date is Rs. 1252,77,99 thousand (previous year Rs. 1191,39,93

thousand). Income from Investments amounted to Rs. 102,40,03 thousand (previous year

Rs. 73,07,98 thousand) during the financial year under review.


18

12. Confirms that:-

(i) In the preparation of financial statements, the applicable Accounting Standards, principles and policies

have been followed along with proper explanations for material departures, if any;

(ii) The Management has adopted accounting policies and applied them consistently (including those

specifically required by various IRDA Regulations) and made judgments and estimates that are

reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end

of the financial year and of the profit of the Company for the year.

(iii) The Management has taken proper and sufficient care for the maintenance of adequate accounting records

in accordance with the applicable provisions of the Insurance Act, 1938 (4 of 1938)/ Companies Act,

1956 (1/1956), for safeguarding the assets of the Company and for preventing and detecting fraud and

other irregularities;

(iv) The Management has prepared the financial statements on a “going concern” basis;

(v) The Management has ensured that an internal audit system commensurate with the size and nature of

the business exists and is operating effectively.

13. Certifies that no payment has been made to individuals, firms, companies and organisations in

which the Directors of the Company are interested.

M. Parshad

Chairman-cum-Managing Director

G. C. Chaturvedi Satish Chander Mukesh Khullar Lalit Kumar

Director Director Director Director

K. N. Bhandari S. K. Chanana A. Asthana

Director Director Director

Kanika Sharma Shandil

Assistant Company Secretary

Place : New Delhi

Date : 30.06.2007


19

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIAUNDER SECTION 619 (4) OF THE COMPANIES ACT, 1956 ON THEACCOUNTS OF AGRICULTURE INSURANCE COMPANY OF INDIA LIMITEDFOR THE YEAR ENDED 31 MARCH 2007

The preparation of financial statement of Agriculture Insurance Company of India Limited for the

year ended on 31 March 2007 in accordance with the financial reporting framework prescribed under

the Companies Act, 1956 is the responsibility of the management of the company. The Statutory

Auditor appointed by the Comptroller and Auditor General of India under Section 619 (2) of the

Companies Act, 1956 is responsible for expressing opinion on these financial statements under section

227 of the Companies Act, 1956 based on independent audit in accordance with the auditing and

assurance standards prescribed by their professional body the Institute of Chartered Accountants of

India. This is stated to have been done by them vide their Audit Report dated 30.06.07

I, on behalf of Comptroller and Auditor General of India have conducted a supplementary audit under

section 619 (3) (b) of the Companies Act 1956 of the financial statement of Agriculture Insurance

Company of India Limited for the year ended 31 March 2007. The supplementary audit has been

carried out independently without access to the working papers of the statutory auditors and is limited

primarily to enquiries of the statutory auditors and company personnel and a selective examination of

some of the accounting records. On the basis of my audit nothing significant has come to my knowledge

which would give rise to any comment upon or supplement to the Statutory Auditors’ report under

section 619 (4) of the Companies Act, 1956.

For and on behalf of the

Comptroller and Auditor General of India

Saroj Punhani

Principal Director of Commercial Audit

& Ex-officio Member Audit Board-II,

New Delhi

Place : New Delhi

Dated : 27.08.2007


20

AUDITORS’ REPORT

To The Members ofAGRICULTURE INSURANCE COMPANY OF INDIA LTD.

1. We have audited the attached Balance Sheet of AGRICULTURE INSURANCE COMPANY OF INDIALIMITED as at 31st March 2007, the annexed Miscellaneous Insurance Revenue Account of Crop Insuranceand Profit and Loss Account and Cash Flow Statement for the year ended on that date, in which areincorporated returns of seventeen Regional Offices audited by the other firms of Chartered Accountants.These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. The Balance Sheet, the Profit and Loss Account and the Revenue account have been prepared inaccordance with the provisions of Section 11(1) of the Insurance Act, 1938 read with the provisions of subsections (1), (2) and (5) of Section 211 and sub section (5) of Section 227 of the Companies Act, 1956 tothe extent applicable and also as per the provisions of Insurance Regulatory and Development Authority(IRDA) Act, 1999.

3. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by the management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.

4. We report that:(a) (i) The Company had been nominated as the Implementing Agency for National Agricultural Insurance

Scheme by the Ministry of Agriculture from April 1, 2003 vide its letter ref. No. 13011/02/2003-Credit IIdated October 22, 2003. Assets amounting to Rs. 58,95,66 thousands and Liabilities amounting toRs. 450,03,29 thousands of crop insurance business as given by GIC of India were accounted for bythe Company without any formal agreement/ scheme of arrangement between the Companies andwithout obtaining approval from the Government of India. In view of the aforesaid, claims paid relatingto the period prior to April 1, 2003 aggregating to Rs.2 thousands has been debited to the Revenueaccount.

(ii) Balance of amount due from GIC of India as at March 31, 2007, aggregating to Rs. 13,46,13 thousandis pending reconciliation. (Refer Note no 2.2 of ‘Notes on Accounts’ of Annexure II).

(iii) Non compliance of Employees Provident Fund and Miscellaneous Provisions Act, 1952 to the extentthat deduction has been made at the rate of 10% instead of 12% as prescribed by the Act and nondeposit of the same with relevant authorities (amount unascertainable).

M/s. Kishore & Kishore, (DE 1193)Chartered Accountants,Mansarover Apartments,1st Floor, 23/24, Ansari Road,Daryaganj, New Delhi – 110002Phone: (011) 23277041/23281035.

M/s. S. P. Puri & Co., (DE 0159)Chartered Accountants,

4/18, Asaf Ali Road,New Delhi – 110002

Phone – (011) 23277410/23274888.


21

(iv) Fixed Assets Register maintained by Head office is not as per statutory requirements.

(v) On account of the change in accounting policy No.3.2 during the year, insurance premium collectedby banks on loans disburse to farmers upto March, 2007, where risk, has also commenced as per thescheme of things under National Agriculture Insurance Scheme, the Company has not recognizedpremium income amounting to Rs 42,59,69 thousand which is not in consonance with AS-9 on RevenueRecognition and the Insurance Act, 1938, which requires that premium must be accounted forsimultaneous with the assumption of risk. As a result premium income for the year and premiumreceivable as on 31.03.2007 are understated by said amounts of Rs 42,59,69 thousand each (referNote no. 4 of Notes on Account Annexure II ).

(vi) Consequent upon non-accounting of insurance premium as reported in preceding para (v) the amountof claims for the year and claims payable as on 31.3.2007, as per the said scheme, are understatedby Rs. 48,63,96 thousand each.

(b) We have obtained all the information and explanations, which, to the best of our knowledge andbelief, were necessary for the purpose of our audit and found them satisfactory.

(c) In our opinion, proper books of accounts as required by law have been kept by the Company so far asit appears from our examination of those books.

(d) In our opinion, proper returns audited from other Regional Offices have been received and areadequate for the purpose of our audit.

(e) The Company’s Balance Sheet, Revenue Account and Profit & Loss Account and Cash flow statementdealt with by this report are in agreement with the books of account and returns.

(f) The actuarial valuations of liabilities as at the year end, are duly certified by the Appointed Actuary.We have relied upon such certification for forming our opinion on the financial statement of the Company.

(g) All the directors of the company are nominees of public financial institutions or Government ofIndia and as per General Circular No. 8/2002 dated 22/08/2002 of the Department of Company Affairs,the nominee directors appointed on the board of the Company by public financial institutions, withinthe meaning of section 4A of the Companies Act, 1956, and Central Government are exempt from theapplicability of the provisions of Section 274 (1) (g) of the Companies Act, 1956.

(h) In our opinion, the Balance Sheet, Revenue Account and Profit & Loss Account comply with the AccountingStandards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable to theCompany and are also in conformity with the accounting principles as prescribed in the IRDA (Auditor’sReport ) and IRDA ( Preparation of Financial Statements ) Regulations or any order or direction issuedby IRDA in this behalf.

(i) In our opinion, the investments have been valued in accordance with the provisions of the InsuranceAct, 1938 and the applicable IRDA Regulations, 2002.

(j) In our opinion and to the best of our information and according to the explanations given to us, thesaid accounts read with significant accounting policies and notes thereon are prepared and give theinformation as required by the Insurance Act, 1938, the Insurance Regulatory and Development AuthorityAct, 1999, and the Companies Act, 1956, to the extent applicable and in the manner so requiredand, subject to our observations in paragraph 4.(a)(i)(ii),(iii),(v) and (vi) and the consequentialeffect in respect of paragraph 4(a)(i) to (iii) on Revenue Account, Profit & Loss Account, Assets,L iab i l i t ies and Reserves and S u r p l u s a s o n 3 1 . 0 3 . 2 0 0 7 , b e i n g unascertainable andin respect of paragraph (v)& (vi) the consequential effect on revenue is that the prof i t forthe year and Reserves and Surplus are understated by Rs. 6,04,27 thousand and currentliabilities by Rs. 48,63,96 thousand and current Assets by Rs. 42,59,69 thousand , give a trueand fair view in conformity with the accounting principles generally accepted in India:


22

(i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2007;

(ii) in the case of the Revenue Account, of the surplus in Miscellaneous insurance business for the yearended on 31st March, 2007;

(iii) in the case of the Profit & Loss Account, of the Profit of the Company for the year ended on 31st March,2007; and

(iv) in the case of Cash Flow Statement, of the cash flow for the year ended on 31st March, 2007.

1. Further on the basis of our examination, we certify that:(a) We have reviewed the management report and there is no apparent mistake or material inconsistency

with the financial statements.

(b) As per information and explanations given by the management, the terms and conditions as laiddown in Section 3(4) of the Insurance Act, 1938 regarding registration have been complied with.

(c) To the best of our information and explanations given to us and representations made by the Company,the Company is not a trustee of any trust.

(d) We have verified the cash and bank balances, investments on the following basis:

Cash : Physical verification and Branch Auditors report.Bank Balance : Bank certificate and Branch Auditors report.Investments : Custodian certificate and Management certificate.

(e) To the best of our information and explanations given to us and on the basis of representationsmade by the Company, no part of the assets of the policyholders’ funds has been directly or indirectlyapplied in contravention of the provisions of the Insurance Act, 1938, relating to the application andinvestments of the policyholder’s funds.

For M/s. Kishore & Kishore For M/s. S. P. Puri & Co. Chartered Accountants Chartered Accountants

(S.C.KISHORE) ( VIDUR PURI ) Partner Partner M. No: 3390 M. No. 90163

Place : New DelhiDate : 30.06.2007


23

Registration No.: 126Date of Registration with IRDA : 25.04.07

REVENUE ACCOUNTfor the Period ended on 31st March 2007

CROP INSURANCE BUSINESS

S.N. Particulars Schedule Current Year Previous Year01.04.06-31.03.07 01.04.05-31.03.06

(Rs. ‘000) (Rs. ‘000)

1. Premium earned (Net) 1 5587550 5509215 2. Profit/Loss on sale/redemption of Investments 410 0 3. Others 0 0 4. Interest, Dividend & Rent -Gross 666149 471101

TOTAL (A) 6254109 5980316 1. Claims Incurred (Net) 2 5507534 5187336 2. Commission 3 (33) (2397) 3. Operating Expenses related to Insurance Business 4 102275 121741 4. Expenses related to Investment :

a) Amortization of Premium on Investments 20795 16656b) Stock Holding & Other Charges 330 275

TOTAL (B) 5630901 5323611Operating Profit from Crop Insurance Business : C=(A-B) 623208 656705

APPROPRIATIONSTransfer to Shareholders’ Account 623208 656705Transfer to Catastrophe Reserve 0 0Transfer to Other Reserves 0 0

TOTAL (D) 623208 656705

As required by Section 40C (2) of the Insurance Act, 1938, we certify that to the best of our knoweldge andaccording to the information and explanations given to us and so far as appears from our examination of thebooks of accounts of the company, all expenses of management, wherever incurred, whether directly or indirectlyin respect of Crop Insurance Business have been fully debited in the Revenue Account as expenses inaccordance with Accounting Policy No. 6.

For M/s S. P. Puri & Co. For M/s Kishore & Kishore M. Parshad Chartered Accountants Chartered Accountants Chairman-cum-Managing Director Vidur Puri S.C.Kishore Partner Partner

G. C. Chaturvedi Satish Chander Mukesh Khullar Lalit Kumar Director Director Director Director

K. N. Bhandari S. K. Chanana A. Asthana Director Director Director

Kanika Sharma ShandilAssistant Company Secretary



24


PROFIT & LOSS ACCOUNTfor the Period ended on 31st March 2007



(Rs. ‘000) (Rs. ‘000)

1. OPERATING PROFIT / (LOSS)

Crop Insurance Business 623208 656705

2. INCOME FROM INVESTMENTS

a) Interest,Dividend & Rent-Gross 284923 201982

b) Profit on Sale of Investments 175 14976

3. OTHER INCOME

a) Miscellaneous Receipts 3167 5546

b) Profit on Sale of Assets 46 89

c) Prior Period Income 1174 0

TOTAL (A) 912693 879299

4. PROVISIONS (other than Taxation)

a) Dimunition in the value of Investments written-off 0 0

b) Amortisation of Premium on Investments 8894 7141

c) Stock Holding & Other Charges 140 118

d) Provision for Doubtful Debts 1896 0

e) Provision for Premium Defalcation 12503 0

f) Provision on Standard Assets 27367 0

g) Provision for difference in cenvat input credit 76 0

5. OTHER EXPENSES

a) Expenses other than those related to insurance business 445 9103

b) Loss on Sale of Assets 0 6

c) Preliminary Expenses Written off 9054 4527

d) Prior Period Expenses 67 31262

TOTAL (B) 60442 52157

PROFIT BEFORE TAX (C=A-B) 852251 827141

PROVISION FOR TAXATION

a) Income Tax (Current Year) 307773 306753

b) Income Tax (pertaining to earlier years) 53843 0

c) Wealth Tax 33 25


25

d) Fringe Benefit Tax 828 2296

e) Deferred Tax 0 0

TOTAL (D) 362477 309074

PROFIT AFTER TAX AVAILABLE FOR APPROPRIATION (E=C-D) 489774 518068

APPROPRIATIONS

a) Interim Dividend paid during the year 0 0

b) Proposed Final Dividend 0 0

c) Dividend Distribution Tax 0 0

d) Transfer to General Reserve 489774 518068

TOTAL 489774 518068

PROFIT AFTER TAX & APPROPRIATIONS

Add: Balance of Profit/(Loss) b/f from last year 0 0

Balance C/F to Balance Sheet 0 0

Basic & Diluted Earning per Share 2.45 2.59

Number of Equity Shares 200000 200000

Nominal Value per Share Rs.10/- Rs.10/-

Accounting Policies and Notes - Annexure I As per our separate Report of even date attached

For M/s S. P. Puri & Co. For M/s Kishore & Kishore M. ParshadChartered Accountants Chartered Accountants Chairman-cum-Managing Director Vidur Puri S.C.Kishore Partner Partner

G. C. Chaturvedi Satish Chander Mukesh Khullar Lalit KumarDirector Director Director Director





26


BALANCE SHEETfor the Period ended on 31st March 2007



(Rs. ‘000) (Rs. ‘000)SOURCES OF FUNDS

1. Share Capital 5 2000000 19909462. Reserves & Surplus 6 1853992 13642183. Fair Value Change Account 24315 166614. Borrowings 7 0 0

TOTAL 3878307 3371825APPLICATION OF FUNDS

1. Investments 8 6930784 61813182. Loans 9 14579 33963. Fixed Assets 10 47476 459494. Current Assets:

Cash & Bank Balances 11 7453672 8125244Advances & Other Assets 12 1595689 1388232

Sub - Total (A) 9049361 9513476Current Liabilities 13 9199723 9508043Provisions 14 2964170 2864271

Sub - Total (B) 12163893 12372314Net Current Assets (C) = (A - B) (3114533) (2858838)

5. Miscellaneous Expenditure(to the extent not written off or adjusted) 15 0 0

6. Debit Balance in Profit and Loss Account 0 0TOTAL 3878307 3371825

Contingent Liabilities - Claims, other than againstPolicies, not acknowledged as debts by the Company 0 0

Accounting Policies and Notes - Annexure I As per our separate Report of even date attached







27

SCHEDULES FORMING PART OF FINANCIAL STATEMENTS for the Period ended 31st March 2007

SCHEDULE 1 : PREMIUM EARNED (NET)

Particulars Current Year Previous Year01.04.06-31.03.07 01.04.05-31.03.06

(Rs. ‘000) (Rs. ‘000)

Premium from Direct Business written 5646685 5558331

Add: Premium on Reinsurance accepted 0 0

Less: Premium on Reinsurance ceded 10760 19156

Net Premium 5635925 5539176

Adjustment for change in Reserve for Unexpired Risks (48375) (29961)

TOTAL PREMIUM EARNED (NET) 5587550 5509215

SCHEDULE 2 : CLAIMS INCURRED (NET)

Particulars Current Year Previous Year

01.04.06-31.03.07 01.04.05-31.03.06

(Rs. ‘000) (Rs. ‘000)

Claims Paid - Direct 3951352 3982563

Add: Reinsurance accepted 0 0

Less: Reinsurance ceded 12784 2944

Net Claims paid 3938568 3979619

Add: Claims Outstanding at the end of the year 6643736 5074770

Less: Claims Outstanding at the beginning of the year 5074770 3867053

TOTAL CLAIMS INCURRED 5507534 5187336

SCHEDULE 3 : COMMISSION


01.04.06-31.03.07 01.04.05-31.03.06

(Rs. ‘000) (Rs. ‘000)

Commission Paid - Direct 1586 0

Add: Reinsurance accepted 0 0

Less: Commission on Reinsurance ceded 1619 2397

NET COMMISSION (33) (2397)


28

SCHEDULE 4 : OPERATING EXPENSES RELATED TO INSURANCE BUSINESS

S.N. Particulars Current Year Previous Year01.04.06-31.03.07 01.04.05-31.03.06

(Rs. ‘000) (Rs. ‘000)

1. Employees ’ Remunerat ion & Wel fare benef i ts 45204 48146

2. Travel, Conveyance and Vehicle running expenses 5558 7053

3. Training Expenses 801 195

4. Rent, Rates & Taxes 12014 11390

5. Repairs 2288 2629

6. Printing & Stationery 2218 2317

7. Communication 2540 2950

8. Legal & Professional Charges 6450 9546

9. Auditor’s fees, expenses etc. a) as Auditor 822 698 b) as Advisor or in any other capacity, in respect of (i) Taxation matters 0 0 (ii) Insurance matters 0 0 (iii) Management Services in any other capacity 0 0

10. Advertisement & Publicity 2979 11189

11. Research & Development Expenses 2558 6825

12. Fees & Subscription to Statutory Authorities 6251 2961

13. Interest & Bank Charges 350 2118

14. Depreciation 5355 6364

15. Others 6887 7359

TOTAL 102276 121741

SCHEDULE 5 : SHARE CAPITAL


(Rs. ‘000) (Rs. ‘000)

1. Authorised Capital 150 crore Equity Sharesof Rs.10/- each 15000000 15000000

2. Issued Capital 20 crore Equity Sharesof Rs.10/- each 2000000 2000000

3. Subscribed Capital 20 crore Equity Sharesof Rs.10/- each 2000000 2000000

4. Called-up Capital 20 crore Equity Sharesof Rs.10/- each 2000000 2000000

Less: Preliminary Expenses 0 9054

TOTAL 2000000 1990946


29

SCHEDULE 5A : SHARE CAPITAL PATTERN OF SHAREHOLDING(AS CERTIFIED BY THE MANAGEMENT)

S.N. Shareholders Current Year Previous YearNumber of Shares % of Number of Shares % of (‘000) Holding (‘000) Holding

A. PROMOTERS - INDIAN

1. General Insurance Corporation of India 70000 35 70000 35

2. National Agriculture Bank for RuralDevelopment 60000 30 60000 30

3. National Insurance Company Ltd.& its nominee 17500 8.75 17500 8.75

4. The Oriental Insurance Company Ltd. 17500 8.75 17500 8.75

5. United India Insurance Company Ltd. 17500 8.75 17500 8.75

6. The New India Assurance Company Ltd.& its nominee 17500 8.75 17500 8.75

TOTAL 200000 100 200000 100

B. PROMOTERS - FOREIGN NIL NIL NIL NIL

TOTAL 200000 100 200000 100

SCHEDULE 6 : RESERVES & SURPLUS

S.N. Particulars Current Year Previous Year01.04.06-31.03.07 01.04.05-31.03.06 (Rs. ‘000) (Rs. ‘000)

1. Capital Reserve 0 0

2. Capital Redemption Reserve 0 0

3. Share Premium 0 0

4. General Reserve 1364218 846150

Add : Profit transferred during the year 489774 518068 1364218

5. Catastrophe Reserve 0 0

6. Other Reserves 0 0

7. Balance of Profit in Profit & Loss Account 0 0

TOTAL 1853992 1364218

SCHEDULE 7 : BORROWINGS

S.N. Particulars Current Year Previous Year01.04.06-31.03.07 01.04.05-31.03.06 (Rs. ‘000) (Rs. ‘000)

1. Debentures & Bonds 0 0

2. Banks (Secured against Deposits) 0 0

3. Financial Institutions 0 0

4. Others 0 0

TOTAL 0 0


30

SCHEDULE 8 : INVESTMENTS


(Rs. ‘000) (Rs. ‘000)

A. LONG TERM INVESTMENTS

1. Government Securities and Govt. GuaranteedBonds including Treasury Bills 4076192 3324017

2. Other Approved Securities - Housing Sector Bonds 814444 702490

3. Other Investments

a) Shares (i) Equity 93591 78809 (ii) Preference 0 0 b) Mutual Funds 0 0 c) Derivative Instruments 0 0 d) Debentures/Bonds e) Other Securities f) Subsidiaries 0 0 g) Investment in Properties - Real Estate 0 0

4. Investments in Infrastructure & Social Sector 1706682 1456182

5. Other than Approved Securities - Tier-II Bonds 120000 120000

Sub - Total (A) 6810909 5681497

B. SHORT TERM INVESTMENTS

1. Government Securities and Govt. GuaranteedBonds including Treasury Bills 0 0

2. Other Approved Securities - Housing Sector Bonds 21429 0

3. Other Investments

a) Shares (i) Equity 0 0 (ii) Preference 0 0 b) Mutual Funds 98446 499821 c) Derivative Instruments 0 0 d) Debentures/Bonds 0 0 e) Other Securities f) Subsidiaries 0 0 g) Investment in Properties - Real Estate 0 0

4. Investments in Infrastructure & Social Sector 0 0

5. Other than Approved Securities 0 0

Sub - Total (B) 119875 499821

GRAND TOTAL (A+B) 6930784 6181318

Note : Provision of Rs. 27367 thousand against Investment in debentures/bonds is grouped under provisionon Standard Assets under the head ‘Others ‘ in Schedule 14

Market Value of Investments on 31.03.2007 13084413 12244330Less: Fair Value Change Account 24315 16661Book Value of Investments as on 31.03.2007 13060098 12227669


31

SCHEDULE 9 : LOANS


(Rs. ‘000) (Rs. ‘000)

1 SECURITY-WISE CLASSIFICATION

A. Secured

a) On mortgage of Property (i) In India 0 0 (ii) Outside India 0 0 b) On Shares, Bonds, Government Securities 0 0 c) Others (i) Loans to Staff 14579 3396

B. Unsecured 0 0

TOTAL 14579 3396

2 BORROWER-WISE CLASSIFICATION

a) Central & State Governments 0 0 b) Banks & Financial Institutions 0 0 c) Subsidiaries 0 0 d) Industrial Undertakings 0 0 e) Others (Loans to Staff) 14579 3396

TOTAL 14579 3396

3 PERFORMANCE-WISE CLASSIFICATION

a) Loans classified as Standard (i) In India 14579 3396 (ii) Outside India 0 0 b) Non-Performing Loans, less provisions (i) In India 0 0 (ii) Outside India 0 0

TOTAL 14579 3396

4 MATURITY-WISE CLASSIFICATION a) Short Term 0 0 b) Long Term 14579 3396

TOTAL 14579 3396


32

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33

SCHEDULE 11 : CASH AND BANK BALANCES


(Rs. ‘000) (Rs. ‘000)

1. Cash (including Cheques,drafts & Stamps) 6612 4

2. Bank Balances

a) Deposit Account (i) Short term (due within 12 months) 6050683 5959378 (ii) Others b) Current Accounts 42677 163362 c) Others (Remittances in Transit) 1353700 2002500

3. Money at Call and Short Notice a) With Banks 0 0 b) With Other Institutions 0 0

4. Others 0 0

TOTAL 7453672 8125244

Balances with non-Scheduled 0 0Banks included in 2 & 3 above

SCHEDULE 12 : ADVANCES AND OTHER ASSETS


(Rs. ‘000) (Rs. ‘000) A. ADVANCES

1. Reserve Deposits with Ceding Companies 0 0

2. Application Money for Investments 9900 0

3. Prepayments 6950 7423

4. Advances to Officers & Staff 774 1129

5. Advance Tax Paid & Taxes Deducted at Source

a) Current Period (Net of Provision for Taxation) 303528 628118 b) Previous Period (Net of Provision for Taxation) 639510 65235

6. Others

a) Advance to NSSO 1800 1800 b) Advance Rent paid 0 8 c) Sundry Advances 218 88

Sub - Total (A) 962680 703801

B. OTHER ASSETS

1. Income accrued on investments 367383 180675

2. Outstanding Premiums 0 0

3. Agents’ Balances 0 0

4. Foreign Agencies’ Balances 0 0

5. Due from other entities carrying on Insurance 138346 141218Business (including reinsurers)

6. Due from subsidiaries/ 0 0holding company


34

7. Deposit with Reserve Bank of India(Pursuant to Section 7 of Insurance Act, 1938) 102947 103634

8. Others

a) Sundry Deposits 8043 3977

b) Short Collection of Premium 2788 2191

c) Premium Receivable 0 252723

d) Others 13502 13Sub - Total (B) 633009 684431GRAND TOTAL (A+B) 1595689 1388232

Notes :1. Provision of Rs.1800 thousand against advance to NSSO is grouped under Provision for doubtful debts

under the head ‘Others’ in Schedule 142. Provision of Rs. 96 thousand against sundry advances is grouped under Provision for doubtful debts

under the head ‘Others’ in Schedule 143. Provision of Rs.12503 thousand against premium defalcation is shown under the head‘Others’ in

Schedule 144. Provision of Rs.76 thousand included in B.8.(d) above is shown under the head ‘Others’ in Schedule 14

SCHEDULE 13 : CURRENT LIABILITIES


(Rs. ‘000) (Rs. ‘000)

1. Agents Balances 0 0

2. Balance Due to other Insurance Companies 0 0

3. Deposits held on reinsurance ceded 0 0

4. Premium received in advance 6 0

5. Unallocated Premium 0 0

6. Sundry Creditors 80987 40608

7. Due to subsidiary/holding company 0 0

8. Claims Outstanding 6643736 5074770

9. Due to Officers/Directors 0 0

10. OTHERS

a) Excess Collection of Premium 18064 8685

b) Provision for Outstanding Expenses 8969 10374

c) Earnest Money Deposit 505 356

d) Government (Centre/States/UTs) - NAIS & FIIS 2444945 4373250

e) Pension Contribution – New Employees’ 2511 0

TOTAL 9199723 9508043


35

SCHEDULE 14 : PROVISIONS


(Rs. ‘000) (Rs. ‘000)

1. Reserve for Unexpired Risk 2817962 2769588

2. For Taxation

(Net of Advance Tax & TDS)

Income Tax 0 0

Wealth Tax 33 25

Fringe Benefit Tax 1491 663

3. For Proposed Dividend 0 0

4. For Dividend distribution tax 0 0

5. Others:

Provision for Retirement Benefits 102843 93995

Provision for Doubtful Debts 1896 0

Provision for Premium Defalcation 12503 0

Provision on Standard Assets 27367 0

Provision for difference in Cenvat input credit 76 0

TOTAL 2964170 2864271

SCHEDULE 15 : MISCELLANEOUS EXPENDITURE (To the extent not written off)

S.N. Particulars Current Year Previous Year

01.04.06-31.03.07 01.04.05-31.03.06

(Rs. ‘000) (Rs. ‘000)

1. Discount allowed in issue of shares 0 0

2. Research & Development Expenses 0 0

3. Preliminary Expenses 0 0

4. Others 0 0

TOTAL 0 0


36

Annexure – I

ACCOUNTING POLICIES AND NOTESA. Significant Accounting Policies1. Accounting Convention

1.1 The Balance Sheet, Profit and Loss Account and Revenue Account are drawn up in accordancewith the provisions of Section 11 (1) of the Insurance Act, 1938, read with the provisions ofsub-sections (1), (2) and (5) of Section 211 and sub-section (5) of Section 227 of the CompaniesAct, 1956.

1.2 The Financial Statements also conform to the stipulations specified under the InsuranceRegulatory and Development Author i ty (Preparat ion of Financial Statements and Auditors’Report of Insurance Companies) Regulations, 2002, to the extent applicable.

1.3 The said statements are prepared on “Historical Cost” convention, on “Accrual” & “Going Concern”basis, in accordance with the generally accepted Accounting Principles, and other statutoryprovisions and practices prevailing in the general insurance industry in India, to the extent applicable,complying with the Accounting Standards issued by the Institute of Chartered Accountants of India andthe relevant provisions of the Companies Act, 1956, as far as applicable to the Company, except asotherwise stated.

2. Policyholders’ Fund and Shareholders’ Fund

The Policyholders’ Fund shall include Technical Reserves (including Reserve for Unexpired Risks)and Provision for Outstanding Claims (including IBNR & IBNER). The Shareholders’ Fund includesShare Capital, General Reserve, any other free Reserve, balance in Profit & Loss and Capital Reserve.

3. Revenue Recognition

3.1 Premium is recorded, net of reinsurance, based on assumption of risk, in the Revenue Account.3.2 In respect of National Agricultural Insurance Scheme [NAIS], premium received from the Nodal Banks

upto 31st March as per the Scheme has been accounted for, in conformity with the accounting year ofthe Company.

3.3 Premium refunds/adjustments are accounted for on the basis of endorsements passed during the year.3.4 Interest Income is accounted for on accrual basis in respect of investments in Time Deposits in

Banks, Government Securities, Bonds & other Instruments.3.5 Dividend is accounted for in the year of declaration. Dividend/Interest on Shares/Debentures pending

delivery/under objection is accounted for on realization. Interim Dividend is accounted for where thewarrants are issued by 31st March.

4.1 Fixed/ Intangible Assets

Fixed Assets are valued at cost less depreciation. Cost includes cost of acquisition (includingduties, levies and taxes), and other directly attributable costs to bring the Asset to its workingcondition for its intended use.

4.2 Depreciation On Fixed Assets

4.2.1 Depreciation on Fixed Assets is charged on “Written Down Value” at the rates specified in ScheduleXIV of the Companies Act, 1956.

4.2.2 Depreciation is provided on addition/sale/loss of Fixed Assets on pro-rata basis. Individual Asset costingupto Rs. 5000/- is depreciated in full in the year of purchase.

4.2.3 Depreciation on Leasehold Improvements is amortized over the period of the lease from the date ofcapitalization.

5. Investments

5.1 Investment in debt securities including Government Securities are considered as held to maturitysecurities and valued at historical cost. In terms of IRDA regulations, the premium paid at the time ofacquisition of such securities is amortized over the residual period of maturity.


37

5.2 Investments in Mutual Funds are valued at Net Asset Value (NAV) at the year end and the differencebetween cost/book value and NAV is accounted for in Fair Value Change Account. However, if there isimpairment in value, the same is charged to Revenue and the book value of investment is reducedaccordingly. Any reversal of impairment loss earlier recognized is taken to Revenue Account to theextent of reduction in impairment recognized earlier.

5.3 Investment Portfolio in respect of Equity / Equity related instruments is segregated into Actively Tradedand Thinly Traded as prescribed by IRDA Regulations. The shares are treated as thinly traded takinginto consideration the prescribed SEBI guidelines governing mutual funds.

5.4 Actively traded equity / equity related instruments are shown at their Fair Value. “Fair Value” for thispurpose is the lower of the closing prices at NSE and BSE on the Balance Sheet Date, as per IRDARegulations, and the net unrealised gain/loss on such valuation is reflected in the “Fair Value ChangeAccount”. On realization, it is reported in the Profit & Loss Account and unrealized gains/losses arisingdue to changes in the fair value of actively traded equity shares are accounted in “Fair Value ChangeAccount.” Pending realization, the credit balance in the “Fair Value Change Account” is not availablefor distribution.

5.5 Investment in thinly traded equity shares and unlisted equity shares are shown at cost. However,difference between cost and break-up value is provided for as diminution in value. If the break-upvalue is negative then the provision is made for the entire cost. Further, if the published accounts ofan unlisted company are not available for last three accounting years ending on or immediatelypreceding the date of working out diminution in value, then the provision is made for the entire cost.

5.6 Investment in listed equity / equity related instruments / preference shares made in those companieswhich are making losses continuously for last 3 years and where capital is eroded, are considered tohave impaired in value. Further, if the published accounts of a company are not available for last threeaccounting years ending on or immediately preceding the date of working out impairment in value, it ispresumed that the value of investment is fully impaired and is written off to a nominal value ofRe. 1/- per company. Valuation of such investments is done as under:-

5.6.1 In respect of other than actively traded equity shares, the least of the Cost Price, Market Price ofBreak-up Value, provided Break-up value is positive. However if the Break-up Value is negative, thenominal value is taken as Re. 1/- per company.

5.6.2 In respect of preference shares, if the dividend is not received for the last three years, the preferenceshares are written down to a value which will bear to its face value, the same proportion as valuetaken / which would have been taken for writing down equity shares / bears to the face value of theequity shares. However, if the equity shares are written down to Re. 1/- per company, preferenceshares are also written down to a nominal value of Re. 1/- per company.

5.7 “Collateralised Borrowing and Lending Obligation” (CBLO) which is issued at discount to the FaceValue, is treated as Money Market Instrument as per RBI Notification. Discount earned, if any, at thetime of lending through CBLO is shown as income, which is apportioned on time basis.

5.8 Provisions for standard/non-performing loans/debt securities are made on the basis of prudential normsissued by RBI as applicable to Financial Institutions or by IRDA.

5.9 In respect of Crop Insurance Schemes sponsored by the Government, amounts received from theGovernment are either towards specific Funds (viz. “NAIS-Corpus Fund”) – the income on investmentfrom such Fund is credited to the relevant Fund; or to meet the financial liabilities for implementation ofthe Scheme.

5.10 Income from Investments is apportioned between the “Revenue Account”, “Profit and Loss Account”,and the “NAIS-Corpus Fund” in the ratio of the balances standing in the “Policyholders’ Fund”,“Shareholders’ Fund”, & “NAIS-Corpus Fund” at the beginning of the year.

5.11 Expenses relating to Investments, such as for safe custody, collection of interest/ dividend, bank charges,etc., on investments are apportioned between “Revenue Account” and “Profit and Loss Account” in theratio of the balances standing in the “Policyholders’ Fund” and “Shareholders’ Fund” at the beginning ofthe year.

6. Apportionment of Expenses

Expenses not directly allocable to a particular Insurance Scheme/Product and/or a particular State/UTare apportioned amongst the relevant Schemes/Products and States/UTs annually on the basis of GrossPremium.


38

7. Short and Excess Collection

Short and Excess Collection of Premium is accounted for Scheme-wise, State/UT- wise. Net ExcessCollection above Rs. 100/- per Nodal Bank per season is refunded. Recovery of Short Collection,Refund of Excess Collection, and adjustment of Short against Excess of the same Nodal Bank, aremade season-wise, from time to t ime. The net residual balance remaining thereafter istransferred to “Miscellaneous Income” account.

8. Provisions in Respect of Crop Insurance Business

Provisions are made at the time of annual closing of accounts. Currently, as per Statutory requirements,and the Policy of the Company in force, the following Provisions are made:

8.1 Reserve for Unexpired Risks [RUR]

RUR is made to the extent of 50% of Net Premium Income of the year.[Net Premium = Direct Premium(received or receivable during the year) – Premium Refund – Premium on reinsurance ceded]

9. Provisions in Respect of Crop Insurance Claims

Provisions are made at the time of annual closing of accounts. The total of the Provision for OutstandingClaims (including IBNR & IBNER), under NAIS, is not to exceed the “Maximum Potential Liability” [MPL]of the Company as the claims in excess thereof are borne by the Government. Currently, as perStatutory requirements, and the Policy of the Company in force, the following Provisions are made:

9.1 Provision for Outstanding Claims

9.1.1 Estimated Liability for Outstanding Claims in respect of Crop Insurance Business is provided for at theyear-end, in terms of the concerned scheme/policy provisions.No Provision is made for claims contested by the claimants through litigation but not acknowledged asdebts by the Company.

9.1.2 In respect of litigation cases, where awards have been made against the Company and the Company,in turn, has gone for appeal before a higher Court, appropriate Provisions are made to the extent of theCompany’s liability.

9.2 Claims – IBNR & IBNER

Provisions for Claims Incurred but Not Reported (IBNR), and Provisions for Claims Incurred but NotEnough Reported (IBNER) are made as per Actuarial Certification.

10. Contingent Assets

Contingent Assets are neither recognized nor disclosed.

11. Income Tax

11.1 Tax Expense (tax saving) is the aggregate of current year tax, earlier year tax and deferred tax. Theseare charged / credited to the Profit & Loss Account.Provision for taxation in respect of current year’s income is based on the assessable profits of theCompany as per the Income Tax Act, 1961.

11.2 Provisions for earlier years are recorded, as considered appropriate, for matters under appeal.11.3 The Company provides for deferred tax based on the tax effect of timing differences resulting from the

recognition of items in the financial statements and in estimating its current income tax provision. DeferredTax Assets arising from temporary timing differences are recognized to the extent there is reasonablecertainty that the Assets can be realised in future.

12. Employees’ Retirement Benefits

Liabilities on account of retirement benefits to the employees such as Pension, Gratuity and LeaveEncashment are provided for as per actuarial valuation.

13. Amortization of Preliminary Expenses

Preliminary Expenses are being amortized as per AS-26.

14 Miscellaneous

14.1 Telephone/Electricity/Water or such other deposits with the Local / Statutory Authorities standingin the books of accounts, are charged off to Revenue Account after retaining Re. 1 under the Deposit


39

Head, for control purposes. If any amount is subsequently recovered towards these deposits, thesame is credited to “Miscellaneous Income”.

14.2 Only those prepaid expenses which are of Rs. 5000/- or more are carried forward to the next financialyear.

B. NOTES FORMING PART OF ACCOUNTS

1. IRDA Compliance

The Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’sReport of Insurance Companies) Regulation, 2002, have been complied with in the presentation ofthese accounts.

2. Takeover of Crop Insurance Business

2.1 The Company was designated as the “Implementing Agency” for “National Agricultural InsuranceScheme (NAIS)” w.e.f. 1st April 2003 by the Ministry of Agriculture, Govt. of India, vide its letter ref.no. 13011/ 02/2003 – Credit II dated 22nd October 2003.

2.2 Pursuant to the main objective for which the Company was incorporated, the Crop Insurance Businesswas taken over from General Insurance Corporation of India (GIC). Based on their audited Statement ofAssets and Liabilities as on 31st March 2003 (received from GIC vide their letter dated 3rd February2004), the same were incorporated in the books of accounts of the Company, subject to reconciliationand confirmation, including amounts relating to retirement benefits and loans/ advances given toemployees transferred from GIC.

3. Business & Geographical Segment

As per the Accounting Standard – 17 of the Institute of Chartered Accountants of India, it is disclosedthat the Company has only one Business Segment, i.e. “CROP INSURANCE”, and only oneGeographical Segment, i.e., “INDIA”.

4. Changes in the Significant Accounting Policies

S.N. Policy No. Change in Accounting Policy Impact on Accounts 1. 3

5. Disclosures Forming Part of Financial Statements

5.1 Contingent liabilities5.1.1 Partly paid-up Investments: NIL (previous year NIL)

Underwriting commitments outstanding: NIL (previous year NIL)5.1.2 Claims, other than those under Policies, not acknowledged as debts: NIL (previous year NIL)5.1.3 Guarantees given by or on behalf of the Company: NIL (previous year NIL)5.1.4 Statutory Demands /Liabilities in dispute not provided for: NIL (previous year NIL)5.1.5 Reinsurance obligations to the extent not provided for in Accounts: NIL (previous year NIL).5.1.6 Others: NIL (previous year NIL).5.2 As at 31st March 2007, all the Assets of the Company are free from encumbrances, except for the

Central Government Security – 6.72%, 2012, amounting to Rs. 10,29,47 thousand (previous year Rs.10,36,34 thousand) deposited with PNB Gilt (approved by RBI), mandatory under Section 7 ofInsurance Act, 1938.

Premium amounting toRs. 42,59,69,446 receivedduring April & May 2007and consequently, thecorresponding IBNRprovision towards claims, ifany, amounts toRs. 48,63,96,139.

In respect of NAIS,Premium has beenaccounted for upto31st March in conformitywith the accounting yearof the Company, asagainst the cut-off dateof 31st May followedin the past, for receiptof premium remittancesfrom Nodal Banks.


40

5.3 Commitments made and outstanding for Loans, Investments and Fixed Assets as at 31st March, 2007are NIL (previous year NIL).

5.4 Net claims paid in India during the year is Rs. 393,85,68 thousand (previous year Rs. 397,96,19thousand) i.e. direct claims paid Rs. 395,13,52 thousand (previous year Rs. 398,25,63 thousand), lessreinsurance ceded Rs. 1,27,84 thousand (previous year Rs. 29,44 thousand). Claims paid include refundof claim.

5.5 In cases where the claims payment period exceeds four years, the claim- liabilities have been determinedin accordance with the standard methodology and certification from the actuary.

5.6 Ageing of claims is presented below, distinguishing between “claims outstanding (i.e. claims approved butnot paid) for more than six months” and “Other claims, i.e. those outstanding upto six months”:

(Rupees in thousand’)Particulars 2006-07 2005-06

Foreign Business NOT APPLICABLEIndian BusinessClaims o/s for more than six months 6,27,93 3,24,25Claims o/s upto six months 31,88,85 219,40,49

5.7 Net premium written in India during the year is Rs. 563,59,25 thousand (previous year Rs. 553,91,76thousand) i.e. premium from direct business written Rs. 564,66,85 thousand (previous year Rs. 555,83,31thousand), less premium on reinsurance ceded Rs. 1,07,60 thousand (previous year Rs. 1,91,56thousand).

5.8 Defalcation of premium remittances amounting to Rs. 1,25,03 thousand during the year has beenaccounted for by making appropriate provision.

5.9 Premium is recognized as stated in the Significant Accounting Policy No. 3.5.10 Value of contracts in relation to Investments for :-5.10.1Purchases where deliveries are pending: NIL (previous year NIL)5.10.2 Sales where payments are overdue: NIL (previous year NIL).5.11 The historical cost of those Investments which are valued on “Fair Value” basis is Rs. 6,92,76 thousand

(previous year Rs. 6,21,48 thousand).5.12 Computation of Managerial Remuneration as per Section 198 [pursuant to sub- section (A) of Section II

of Part II of Schedule XIII] of the Companies Act, 1956 is presented below:-

(Amount in Rs.)

Name Designation Gross Salary Co’s Contribution Other Perquisitesto PF/ PensionFund

Current Previous Current Previous Current Previous

Year Year Year Year Year Year

Mr. M Parshad CMD 556796 131852 43587 10824

(1.1.06 (1.1.06to 31.03.06) to 31.03.06) NIL NIL

5.13 The basis of amortization of Debt Securities is stated in the Significant Accounting Policy No. 5.1.5.13.1 Unrealized Gain due to change in Fair Value of listed Equity Shares is shown separately under the head

“Fair Value Change Account”.5.13.2 Pending realization, the credit balance in the “Fair Value Change Account” is not available for distribution.5.14 The Company does not hold any immovable property for investment purposes.5.15 Claims settled and remaining unpaid for a period of more than six months as on 31st March 2007 are

Rs. 6,27,93 thousand (previous year Rs. 3,24,25 thousand), as the State/UT Govt. and Central Govt.share of claims have not been received.


41

6. Related Party Disclosure as per Accounting Standard – 18 of the Institute of CharteredAccountants of India

6.1 Key Management PersonnelMr. M.Parshad, Chairman-cum-Managing Director

Nature of Transactions:1. Salaries, allowances and contributions: Rs. 6.00 lakh (previous year Rs. 1.43 lakh – from 01.01.2006

to 31.03.2006)

2. Loan balances due as on 31.03.2007: NIL (previous year NIL).

6.2 A net balance of Rs. 13,46,13 thousand, subject to reconciliation, (previous year Rs. 13,98,61 thousand)is due from General Insurance Corporation of India (GIC), which holds 35% of the Share Capital of theCompany, besides the other amounts in respect of transfer of Assets & Liabilities. During the year,the Company paid reinsurance premium of Rs. 70,30 thousand (previous year Rs. 97,06 thousand),and received reinsurance commission of Rs. 9,37 thousand (previous year Rs. 11,37 thousand) andreinsurance claims of Rs. 98,41 thousand (previous year Rs. 6,87 thousand).

7. Government (Centre / States/UTs) – during the year under review, the Company has received the followingamounts from them towards implementation of NAIS :

(Rs. in crore) S.N. Particulars Current Year Previous Year

2006-07 2005-06 1. NAIS - Corpus Fund 14.67 3.80 2. NAIS – A & O Expenses 3.50 1.58 3. NAIS – Publicity Exps. 0.14 NIL 4. NAIS – Premium Subsidy 39.92 71.31 5. NAIS – Bank Service Charges 15.73 22.89

6. NAIS – Others (Claims) 1157.16 1114.48

TOTAL 1231.12 1214.06

Further, the Government-wise balances as at 31.03.06 are detailed in Annexure-7

8. Sharing of Expenses of NAIS

As per NAIS, the Administrative & Operative Expenses are shared by the Company, the Govt. of India,and the State/Union Territory Government on a specified basis. For the year under review, 20% (previousyear 20%) of the total Administrative & Operative Expenses incurred for NAIS are recoverable fromthe Govt. of India and the respective State/UT Govts. in equal proportion. The total recoverableshare amounts to Rs. 2,50,28 thousand (previous year Rs. 3,70,38 thousand). Expenses (includingdepreciation incurred towards NAIS shown under Schedule 4 are net of the 20% (previous year 20%),share receivable from the Government (Centre/ States / UTs).

9. Investment

The Company has invested its funds as per the investment pattern prescribed by the IRDA Regulationson Investments, and the Company’s Investment Policy. The Book value of Investments of the Companyas on 31st March, 2007 is Rs. 1306,00,98 thousand (previous year Rs. 1222,76,69 thousand), and theMarket value of the Company’s Investments as on that date is Rs. 1252,77,99 thousand (previous yearRs. 1191,39,93 thousand). Income from Investments amounted to Rs. 102,40,03 thousand during thefinancial year under review (previous year Rs. 73,07,98 thousand).

10. Interest on Corpus Fund

Interest earned on investment of the Corpus Fund provided by the Government (Centre/ States/UTs)during the year amounts to Rs. 7,23,46 thousand (previous year Rs. 5,77,15 thousand), and has beencredited back to the said Fund.


42

11. Reinsurance

During the year under review, the Company paid a sum of Rs. 1,07,60 thousand (previous yearRs. 1,91,56 thousand) as reinsurance premium and earned a commission of Rs. 16,19 thousand(previous year Rs. 23,97 thousand), and received reinsurance claims of Rs. 1,27,84 thousand (previousyear Rs. 29,44 thousand)

12. Borrowings

During the year under review, the Company has no borrowings (previous year Rs. NIL)

13. Retirement Benefits to Employees

While the past liabilities on account of Retirement benefits i.e. Pension and Gratuity in respect of theemployees transferred from GIC on 1st March 2004, have not been passed on to the Company, thesame pertaining to Leave Encashment for such employees has been transferred and accounted forunder the head “Retirement Benefits” in Schedule 14 of the Balance Sheet.

14. Taxes Paid in Advance

During the year, the Company has not been subjected to any Tax Deducted at Source (previous yearRs. 48,59 thousand). The Company has paid Advance Income Tax amounting to Rs. 61,00,00 thousand(previous year Rs. 93,00,00 thousand), Fringe Benefit Tax amounting to Rs. 8,31 thousand (previousyear Rs. 16,33 thousand), and Wealth Tax amounting to Rs. 4 thousand (previous year NIL), totaling toRs. 61,08,35 thousand. The Company has not paid any Securities Transaction Tax during the currentyear (previous year Rs. 12 thousand).

15. Deferred Tax Assets / Liability

The computation of Deferred Tax Asset/Liability in accordance with Accounting Standard – 22(Accounting for Taxes on Income) of the Institute of Chartered Accountants of India, has resulted in aDeferred Tax Asset of Rs. 3,62,04 thousand as at 31.03.2007. However, in view of no reasonableexpectation of operational taxable profit in future, the same has not been provided for on prudentbasis.

16. Impairment in the Value of Fixed Assets

In accordance with the Accounting Standard – 28 of the Institute of Chartered Accountants of India,the Management has assessed the possibility of impairment of Fixed Assets, and there is no impairmentin the value of Fixed Assets.

17. Accounts of the Regional Offices

Accounts of the Regional Offices are duly audited by the Statutory Auditors appointed by C&AG and thesame have been incorporated in the annual accounts of the Company.

18. Cash Flow Statement

The Company has prepared the “Cash Flow Statement” for the period under review, adopting the DirectMethod as required under the IRDA Regulations (Annexure - A).

19. Summary of Financial Statements

The Company has prepared the “Summary of Financial Statements” for the period under review (Annexure - B).

20. Accounting Ratios

The Company has prepared the “Accounting Ratios” for the period under review (Annexure - C).

21. Earnings Per Share [EPS]

The Earnings per Share (EPS) of the Company as per Accounting Standard – 20 of the Institute ofChartered Accountants of India is calculated as under:


43


2006-07 2005-06

Profit after Tax (net of prior period adjustments) 48, 97,74 thousand 51,80,68 thousand

Weighted number of Equity Shares 20,00,00 thousand 20,00,00 thousand

Nominal Value of Share Rs. 10/- per Share Rs. 10/- per Share

Basic & Diluted EPS Rs. 2.45 Rs. 2.59

22. Provisions, Contingent liabilities and Contingent Assets (AS 29)Disclosure relating to provisions

(Rupees in thousand’)

Particulars Provision for Provision for Provision for Bad Income Tax Retirement Benefits and Doubtful Debts

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Opening Balance 863895 557142 93995 76134 NIL NIL

Additions NIL 306753 8848 17861 14475 NIL

Utilisation NIL NIL NIL NIL NIL NIL

Reversals NIL NIL NIL NIL NIL NIL

Closing Balance NIL 863895 102843 93995 14475 NIL

a. Provision for Income Tax has been grouped under the head ‘Advance Tax Paid’ and ‘Taxes Deducted atSource’ (net of provision for taxation) in Schedule 12.

b. Provision for Leave Encashment, Gratuity and Pension has been grouped under the head ‘Others(Retirement Benefits)’ in Schedule 14.

c. Provision for doubtful debts, premium defalcation and difference in input credit has been shown underthe head ‘Others’ in Schedule 14.

(i) Income Tax provision is made towards matters disputed at various appellate levels.(ii) Provision for doubtful debts is made based on the Management’s estimates.

22. Presentation

Figures in brackets reflect negative figures.

23. Previous Year’s Figures

Previous year figures have been regrouped and restated, as per the requirements of IRDA reportingnorms, or else wherever deemed necessary, to make it comparable with the current year figures.


G. C. Chaturvedi Satish Chander Mukesh Khullar Lalit Kumar Director Director Director Director





44

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Rece

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6,34

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Cred

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Debit

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(155

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960,

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28)

(11,

512,

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Appo

rtion

men

t(2

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Open

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Bal.

(01.0

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-(3

,170

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(601

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(319

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1)As

sam

Rece

ipts

(from

Gov

t.) -

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64,5

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881,

309,

975.

221,

378,

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00Cr

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adjus

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Paym

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bit-a

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rtion

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t(3

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g Ba

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Open

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508,

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8,34

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397,

931.

5449

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(from

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Debit

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mt)

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01)

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Appo

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men

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99,7

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edit-

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936,

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ymen

ts (to

Gov

t.)-

--

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Debit

-adju

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mt)

(517

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(36,

930,

276.

10)

(12,

255,

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11)

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Appo

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Rece

ipts

(from

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630,

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it-ad

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Paym

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porti

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Inte

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on

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us F

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Clos

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394,

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68


47

SL.

STA

TE /

Par

ticul

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Corp

usA

& O

Publ

icity

Prem

ium

Bank

Ser

vice

Oth

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NAI

S TO

TAL

NO.

UT G

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Fund

Expe

nses

Expe

nses

Subs

idy

Char

ges

12 (A

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KATA

Open

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Bal.

(01.0

4.06)

2,84

1,39

3.72

(3,5

94,9

23.2

2)(5

85,0

70.3

4)(7

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1,44

5,67

4.56

-(7

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Wes

t Ben

gal

Rece

ipts

(from

Gov

t.)96

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183.

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16,

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3,99

8,70

4.59

289,

449,

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edit-

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ts (rc

t)14

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--

589.

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36)

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Inte

rest

on

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us F

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228,

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3,71

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6.96

Rece

ipts

(from

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t.)1,

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2,50

8.86

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Cred

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--

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--

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Debit

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30,2

87.5

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(31.0

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4,15

8,72

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mt)

--

(1,2

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93.7

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men

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2.13

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29,3

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4,91

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99,7

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0,02

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2,93

1.68

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48

SL.

STA

TE /

Par

ticul

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Corp

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& O

Publ

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Prem

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Bank

Ser

vice

Oth

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NAI

S TO

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NO.

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Fund

Expe

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Expe

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15PA

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4.06)

40,9

93,1

82.9

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64,9

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-5,

414,

630.

573,

396,

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4170

5,92

5,41

6.73

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,130

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292,

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25,2

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--

-19

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23,9

28.4

67,

386,

213.

307,

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tmen

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--

80.0

384

3.18

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--

--

Debit

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mt)

--

(397

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(3,4

13,8

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2,02

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(01.0

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24,3

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0,67

7.81

1,13

5,92

1.97

(1,5

79,11

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(from

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400,

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0,00

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1,20

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494,

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Cred

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49


(Rs. ‘000) (Rs. ‘000)

OPERATING RESULTS

1. Gross Premium Written 5646685 5558331

2. Premium Income Earned 5587550 5509215

3. Income from Investments (Net) 645434 454170

4. Profit on Exchange Fluctuation 0 0

5. Total Income 6232985 5963385

6. Commissions 33 2397

7. Brokerage 0 0

8. Operating Expenses (102276) (121741)

9. Claims Incurred (Net) (5507534) (5187336)

10. Operating Profit/Loss 623208 656705

NON-OPERATING RESULTS

11. Total Income under Shareholder’s account (Net) 229043 170436

12. Profit before Tax 852251 827141

13. Provision for Tax & Deferred Tax Liability (362477) (309074)

14. Profit after Tax 489774 518068

MISCELLANEOUS

15. POLICYHOLDERS’ ACCOUNT

Total Funds 9461699 7844358

Total Investments 8665215 7968156

Yield on Investments 8.43 6.46

16. SHAREHOLDERS’ ACCOUNT

Total Funds 3853992 3355164

Total Investments 3529974 3408115

Yield on Investments 8.43 6.46

17. Paid up Equity Capital 2000000 2000000

18. Net Worth 3853992 3355164

19. Total Assets 16042201 15744140

20. Yield on Total Investments 8.43 6.46

21. Earnings per Share (Rs.) 2.45 2.59

22. Book Value per Share (Rs.) 19.27 16.78

23. Total Dividend NIL NIL

24. Dividend per Share (Rs.) NIL NIL

ANNEXURE - B

SUMMARY OF FINANCIAL STATEMENTSFOR THE YEAR ENDED 31ST MARCH, 2007


50

S.N. Particulars Current Year Previous Year01.04.06-31.03.07 01.04.05-31.03.06(in percentage) (in percentage)

1. Gross Premium Growth Rate[Gross premium for the current year dividedby Gross Premium for the previous year] 101.59 101.11

2. Gross Premium to Shareholders’ Funds[Gross Premium for the current year dividedby Paid up Capital plus free Reserves] 146.52 165.66

3. Growth Rate of Shareholders’ Funds[Shareholders’ Funds at the current BalanceSheet date divided by Shareholders’ 114.87 118.45Funds as at the previous Balance Sheet date]

4. Net Retention Ratio[Net Premium divided by Gross Premium] 99.81 99.66

5. Net Commission Ratio[Commission net of Reinsurance -0.31 -12.51divided by Net Reinsurance Premium]

6. Exp. of Mgt. to Gross Premium Ratio[Expenses of Management (net of Subsidy)divided by the Gross Total Premium] 1.81 2.19

7. Combined Ratio[Claims paid plus Expenses (net of Subsidy) 99.72 96.76divided by Gross Premium]

8. Technical Reserves to Net Premium Ratio[Reserve for Unexpired Risks plus ReservePremium Deficiency Reserve plus for OutstandingClaims divided by Net Premium] 167.88 141.62

9. Operating Profit Ratio[Underwriting Profit plus Investment income divided 11.06 11.86by Net Premium]

10. Liquid Assets to Liabilities Ratio[Liquid Assets of the insurer divided by the 84.38 103.69Policyholders’ Liabilities]

11. Net Earnings Ratio[Profit after Tax divided by Net Premium] 8.69 9.35

12. Return on Net Worth[Profit after Tax divided by Net Worth] 12.71 15.44

PLACE : New DelhiDATE :30.06.07

ANNEXURE - C

ACCOUNTING RATIOSFOR THE YEAR ENDED 31ST MARCH, 2007


51

ANNEXURE - A

CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2007

(as per Direct method)

S.N. Particulars Current Year Previous Year01.04.06-31.03.07 01.04.05-31.03.06(Rs. ‘000) (Rs. ‘000)

A) CASH FLOW FROM OPERATING ACTIVITIESCash receipts from Premium income 5895687 5433709Less:Cash paid for Claims payment 3938568 3979619Cash paid for Reinsurance Premium (less Commission) 9141 16759Cash paid for expenses 122140 4069849 125814 4122193Cash generated from Operations 1825838 1311516Miscellaneous receipts 3167 5546Income Tax paid (610835) (1153492)Cash Flow before extraordinary items 1218170 163570Extraordinary items 0 0

Net Cash from Operating Activities (A) 1218170 163570 B) CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (10961) (5745)Proceeds from sale of Fixed Assets 0 148Investments made (872018) (1872594)Interest Income 816176 641141Expenses incurred (471) (393)Funds Advanced (17330) 1893

Net Cash used in Investing Activities (B) (84604) (1235550) C) CASH FLOW FROM FINANCING ACTIVITIES

Issue of Share Capital 0 0Increase in Borrowings 0 (206071)Increase in Loans given (11183) (894)Increase in Liabilities (1885260) 3250511

Net Cash from Financing Activities (C) (1896443) 3043546Net increase in Cash & Cash equivalents: (762877) 1971567Cash & Cash equivalents at the end of the period 1402990 2165867Cash & Cash equivalents at the beginning of the period 2165867 194300Net increase in Cash & Cash equivalents (762877) 1971567As per our report attached







52

S. N. Particulars

I Registration DetailsRegistration No 118123State Code 55Balance Sheet Date 3/31/2007

II Capital raised during the year (Rs. ‘000)Public Issue NilRight Issue NilBonus Issue NilPvt.Placement Nil

III Position of Mobolisation and Development of Funds (Rs. ‘000)Total Liabilities 15552427Total Assets 16042201

Sources of Funds :Paid-up Capital 2000000Reserves and Surplus 1364218Secured Loans 0Unsecured Loans 0Deferred Tax Liability 0Fair Value Change Account 24315

Application of Funds :Net Fixed Assets 47476Investments 6930784Deferred Tax Assets 0Net Current Assets (3114533)Misc.Expenditure 0

IV Performance of Company (Rs. ‘000)Turnover 5646685Total Expenditure 5691343Profit before tax 852251Profit after tax 489774Earning Per Share (in Rs.) 2.45Dividend Rate NIL

V Generic Names of Three Principal products/services of Company :Item Code No (ITC Code) N.A.Product description Crop Insurance

ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART IV OF SCHEDULE VI OF COMPANIES ACT,1956

BALANCE SHEET ABSTRACTS ANDCOMPANY’S GENERAL BUSINESS PROFILE

contents - agriculture insurance company of · pdf filemr. lalit kumar mr. k. n. bhandari ms....

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